EXHIBIT 10.3
ASSET PURCHASE AGREEMENT
by and among
Central States Equipment, Inc.
and
Equipment Lessors, Inc.
as "Sellers,"
▇▇▇▇▇▇ ▇▇▇▇▇ Equipment Company
as "Buyer"
and the stockholders of Sellers
April 26, 1997
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
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Page
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ARTICLE I - DEFINITIONS...................................................... 1
1.1 Defined Terms....................................................... 1
1.2 Other Defined Terms................................................. 6
ARTICLE II - PURCHASE AND SALE OF ASSETS..................................... 6
2.1 Transfer of Assets.................................................. 6
2.2 Assumption of Liabilities........................................... 7
2.3 Excluded Liabilities................................................ 7
2.4 Purchase Price...................................................... 8
2.5 Purchase Price Adjustments.......................................... 9
2.6 Prorations.......................................................... 11
2.7 Closing Costs; Transfer Taxes and Fees.............................. 11
ARTICLE III - CLOSING........................................................ 11
3.1 Closing............................................................. 11
3.2 Conveyances at Closing.............................................. 11
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLERS....................... 12
4.1 Organization of Central and EL Seller............................... 12
4.2 Authorization....................................................... 13
4.3 No Changes to the Assets............................................ 13
4.4 Assets.............................................................. 13
4.5 Facilities.......................................................... 14
4.6 Contracts and Commitments........................................... 14
4.7 Permits and Consents................................................ 15
4.8 No Conflict or Violation............................................ 15
4.9 Financial Statements................................................ 16
4.10 Books and Records................................................... 16
4.11 Litigation.......................................................... 16
4.12 Labor Matters....................................................... 16
4.13 Compliance with Law................................................. 17
4.14 No Brokers.......................................................... 17
4.15 No Other Agreements to Sell the Assets.............................. 17
4.16 Proprietary Rights.................................................. 17
4.17 Tax Matters......................................................... 18
4.18 Accounts Receivable................................................. 18
4.19 Inventory........................................................... 18
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4.20 Employees........................................................... 19
4.21 Compliance With Environmental Laws.................................. 19
4.22 Liabilities......................................................... 22
4.23 Securities Law Matters.............................................. 22
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER.......................... 23
5.1 Organization of Buyer............................................... 23
5.2 Authorization....................................................... 23
5.3 No Conflict or Violation............................................ 23
5.4 Consents and Approvals.............................................. 23
5.5 No Brokers.......................................................... 23
ARTICLE VI - COVENANTS OF SELLERS AND BUYER.................................. 24
6.1 Further Assurances.................................................. 24
6.2 No Solicitation..................................................... 24
6.3 Disclosure Schedule................................................. 25
6.4 Notification of Certain Matters..................................... 25
6.5 Access to Information............................................... 25
6.6 Conduct of Business................................................. 25
6.7 Employee Matters.................................................... 25
6.8 Environmental Assessments and Remediation........................... 26
6.9 Use of Name and Telephone Numbers................................... 27
6.10 Registration Rights................................................. 27
ARTICLE VII - CONDITIONS TO SELLERS' OBLIGATIONS............................. 27
7.1 Representations, Warranties and Covenants........................... 28
7.2 No Proceedings, Litigation or Laws.................................. 28
7.3 Assumption Document................................................. 28
7.4 New Leases.......................................................... 28
7.5 Plan of Remediation................................................. 28
7.6 RSC Common Stock.................................................... 28
7.7 Opinion of Counsel.................................................. 28
ARTICLE VIII - CONDITIONS TO BUYER'S OBLIGATIONS............................. 28
8.1 Representations, Warranties and Covenants........................... 28
8.2 Consents............................................................ 29
8.3 Disclosure Schedule................................................. 29
8.4 Assumption Agreement................................................ 29
8.5 No Proceedings or Litigation........................................ 29
8.6 Opinion of Counsel.................................................. 29
8.7 Certificates........................................................ 31
8.8 New Leases.......................................................... 31
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8.9 Employment and Non-Competition Agreements........................... 31
8.10 Conveyancing Documents; Release of Encumbrances..................... 31
8.11 Material Changes.................................................... 31
8.12 Corporate Documents................................................. 31
8.13 Due Diligence Review................................................ 31
8.14 Permits............................................................. 31
8.15 Completion of Environmental Remediation............................. 32
8.16 Financing........................................................... 32
ARTICLE IX - RISK OF LOSS; CONSENTS TO ASSIGNMENT............................ 32
9.1 Risk of Loss........................................................ 32
9.2 Consents to Assignment.............................................. 32
ARTICLE X - ACTIONS BY SELLERS AND BUYER AFTER THE CLOSING................... 33
10.1 Books and Records; Payment of Liabilities........................... 33
10.2 Survival of Representations, Etc.................................... 33
10.3 Indemnifications.................................................... 34
10.4 Payment of Holdback Amount.......................................... 37
10.5 Taxes............................................................... 37
10.6 Tax Clearance Certificate........................................... 37
10.7 Further Action...................................................... 37
ARTICLE XI - MISCELLANEOUS................................................... 37
11.1 Termination......................................................... 37
11.2 Assignment.......................................................... 38
11.3 Notices............................................................. 38
11.4 Choice of Law....................................................... 39
11.5 Entire Agreement; Amendments and Waivers............................ 39
11.6 Multiple Counterparts............................................... 40
11.7 Expenses............................................................ 40
11.8 Invalidity.......................................................... 40
11.9 Titles.............................................................. 40
11.10 Publicity; Confidentiality.......................................... 40
11.11 Cumulative Remedies................................................. 40
11.12 Consent of Seller Stockholder....................................... 40
11.13 Arbitration......................................................... 41
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated as of April 26, 1997, is by and
among ▇▇▇▇▇▇ ▇▇▇▇▇ Equipment Company, a Mississippi corporation ("Buyer"), and
wholly owned subsidiary of Rental Service Corporation, a Delaware corporation
("RSC"), Central States Equipment, Inc., a Kansas corporation ("Central"),
Equipment Lessors, Inc., a Kansas corporation ("EL;" EL and Central, each a
"Seller," and collectively, "Sellers"), and ▇▇▇▇ ▇▇▇▇▇▇ (the "Seller
Stockholder").
RECITALS
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A. Sellers own certain assets which they use in their conduct of
the Business (as defined below).
B. Buyer desires to purchase from Sellers, and Sellers desire to
sell to Buyer, such assets upon the terms and subject to the conditions of this
Agreement.
AGREEMENT
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NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
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1.1 Defined Terms. As used herein, the terms below shall have the
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following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.
"Affiliate" shall have the meaning set forth in the Securities
---------
Exchange Act of 1934, as amended, and the rules and regulations thereunder.
"Ancillary Agreements" shall mean the Employment and Non-Competition
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Agreement entered into, prior to the Closing Date, in the final form mutually
satisfactory to Buyer and Sellers and the New Leases entered into, prior to the
Closing Date, in the final form mutually satisfactory to Buyer and Sellers.
"Assets" shall mean (i) all of the right, title and interest of EL in
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and to the construction equipment assets listed in Exhibit 2.5.1.1(a) attached
hereto, and (ii) all of the right, title and interest of Central in and to the
business, properties, assets and rights of any kind, whether tangible or
intangible, and
1
constituting, or used or useful in connection with, or related to, the Business,
including without limitation all of Central's right, title and interest in the
following (but not including, in any case, the Excluded Assets):
1.1.1 all rights of Central under the Assumed Contracts listed on
Schedule 4.6.1;
1.1.2 all rental and non-rental Equipment related to the Business as
listed on Exhibit 2.5.1.1(b);
1.1.3 all Inventory related to the Business;
1.1.4 all Books and Records related to the Business;
1.1.5 all Proprietary Rights related to the Business;
1.1.6 to the extent transferable, all Permits related to the
Business;
1.1.7 all computers and, to the extent transferable, software used in
the Business;
1.1.8 all utility deposits;
1.1.9 all available supplies, sales literature, promotional
literature, customer, supplier and distributor lists, display units, telephone
and facsimile numbers and purchasing records related to the Business;
1.1.10 all rights under or pursuant to all warranties, representations
and guarantees made by suppliers in connection with the Assets or services
furnished to Central pertaining to the Business or affecting the Assets, to the
extent such warranties, representations and guarantees (i) are not required by
Central to fulfill its obligations under this Agreement and (ii) are assignable;
1.1.11 all claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind, against any person or entity,
including without limitation any liens, security interests, pledges or other
rights to payment or to enforce payment in connection with products delivered by
Central on or prior to the Closing Date; provided, however, that all such claims
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etc. related to acquired accounts receivable shall be deemed to be reassigned to
Central at the time such accounts receivable are returned to Central pursuant to
Section 2.5.3 hereof;
1.1.12 all accounts receivable as adjusted at the Closing and which
are not Excluded Assets; and
1.1.13 all Open Rental Contracts and customer deposits made in
connection therewith (including, without limitation, deposits made in the form
of cash, check, or a preliminary charge on a credit or debit card).
"Balance Sheet" shall mean the balance sheet of Central at the date
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indicated thereon, together with the notes thereon.
2
"Books and Records" shall mean (a) all records and lists of Sellers
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pertaining to the Assets, (b) all records and lists pertaining to the Business,
customers, suppliers or personnel of Sellers, (c) all product, business and
marketing plans of Sellers and (d) all books, ledgers, trial balances, files,
reports, plans, drawings and operating records of every kind maintained by
Sellers, but excluding the originals of Sellers' minute books, stock books, tax
returns and accounting ledgers (provided that Buyer will be provided copies of
tax returns and accounting records if it so requests); provided however, that
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only with regard to the Books and Records and accounts of EL, Buyer shall have
access to said documents which pertain only to the assets of EL listed in
Exhibits 2.5.1.1(a) and 2.5.1.2(a) hereto.
"Business" shall mean Sellers' equipment rental and sales business,
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operating under the "Central States Equipment" name, or otherwise.
"Central Rental and Non-Rental Asset Listing" shall mean the asset
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listing provided to Buyer by Central and attached as Exhibit 2.5.1.1(b) hereto,
listing all assets as of February 28, 1997, but not including any Excluded
Assets listed therein.
"Central Supplemental Rental and Non-Rental Asset Listing" shall mean
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the asset listing provided to Buyer by Central and attached as Exhibit
2.5.1.2(b) hereto, listing all assets acquired after February 28, 1997, through
the Closing Date, but not including any Excluded Assets listed therein.
"Closing Date" shall mean May 30, 1997 or such other date as Buyer and
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Sellers shall mutually agree upon; provided that either party may elect to defer
the Closing Date to a date on or prior to May 30, 1997 (which date shall be a
date which is reasonably satisfactory to both parties) if necessary to complete
the Closing.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
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the rules and regulations thereunder.
"Contract" shall mean any agreement, contract, note, loan, evidence of
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indebtedness, purchase, order, letter of credit, franchise agreement,
undertaking, covenant not to compete, employment agreement, license, instrument,
obligation or commitment to which either Seller is a party or is bound and which
relates to the Business or the Assets, whether oral or written.
"EL Rental and Non-Rental Asset Listing" shall mean the asset listing
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provided to Buyer by EL and attached as Exhibit 2.5.1.1(a) hereto, listing all
assets as of February 28, 1997, but not including any Excluded Assets listed
therein.
"EL Supplemental Rental and Non-Rental Asset Listing" shall mean the
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asset listing provided to Buyer by EL and attached as Exhibit 2.5.1.2(a) hereto,
listing all assets acquired after February 28, 1997, through the Closing Date,
but not including any Excluded Assets listed therein.
"Encumbrance" shall mean any claim, lien, pledge, option, charge,
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easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other right of third parties, whether voluntarily incurred or
arising by operation of law, and includes, without limitation, any agreement to
give any of the foregoing in the future, and any contingent sale or other title
retention agreement or lease in the nature thereof.
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"Equipment" shall mean (i) all of the furniture, fixtures,
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furnishings, machinery, automobiles, trucks, spare parts, tools, supplies,
equipment and other tangible personal property owned by EL and listed on the EL
Rental and Non-Rental Asset Listing and the EL Supplemental Rental and Non-
Rental Asset Listing and (ii) all of the furniture, fixtures, furnishings,
machinery, automobiles, trucks, spare parts, tools, supplies, equipment and
other tangible personal property owned by Central and used in connection with
the Business, including without limitation all items listed on the Central
Rental and Non-Rental Asset Listing and the Supplemental Rental and Non-Rental
Asset Listing (but not including any Excluded Assets listed thereon).
"Excluded Assets," notwithstanding any other provision of this
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Agreement, shall mean the following assets of Central which are not to be
acquired by Buyer hereunder:
1.1.14 all cash and cash equivalents held by Central except customer
deposits on Open Rental Contracts;
1.1.15 prepayments or prepaid expenses except utility deposits
(including all prepaid insurance premiums and prepaid taxes) of Central;
1.1.16 all Permits, to the extent not transferable;
1.1.17 the Owned Real Property;
1.1.18 all claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind against any person or entity arising
out of or relating to the Assets to the extent related to the Excluded
Liabilities; and
1.1.19 the cash surrender value of all life insurance policies.
"Facilities" shall mean the rental yards, stores, offices, maintenance
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and storage facilities, shops, warehouses, improvements, other structures, and
all real property and related facilities which are used (or will be used) in the
conduct of the Business, and which are located at:
- ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇., ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
- ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
- ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇., ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
- ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
"Financial Statements" shall mean the Year-End Financial Statements
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and the Interim Financial Statements.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
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Act of 1976, as amended.
"Interim Balance Sheet" shall mean the Balance Sheet dated the
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Interim Balance Sheet Date.
4
"Interim Balance Sheet Date" shall mean February 28, 1997.
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"Interim Financial Statements" shall mean the Interim Balance Sheet
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and the income statement of Central for the two months ended on the Interim
Balance Sheet Date.
"Inventory" shall mean (i) EL's inventory held for resale, new repair
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or replacement parts, supplies and packaging items, listed on the EL Rental and
Non-Rental Asset Listing and the EL Supplemental Rental and Non-Rental Asset
Listing and (ii) all of Central's inventory held for resale and all of Seller's
new repair or replacement parts, supplies and packaging items and similar items
with respect to the Business, in each case wherever the same may be located.
"Material Adverse Effect" or "Material Adverse Change" shall mean with
----------------------- -----------------------
respect to the Business or the Assets any significant and substantial adverse
effect or change in the condition (financial or other), business, results of
operations, prospects, assets, liabilities or operations of the Business and/or
the Assets or on the ability of either Seller to consummate the transactions
contemplated hereby, or any event or condition which would, with the passage of
time, constitute a "Material Adverse Effect" or "Material Adverse Change."
"Open Rental Contracts" shall mean (i) all Contracts pursuant to which
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Central has rented Equipment and, as of the Closing Date, the rentee under each
such Contract is still in possession of such Equipment and (ii) all Contracts
under which the rentee has returned the Equipment but has not yet been invoiced.
"Owned Real Property" shall mean the real property located at 4100
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▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ owned in fee by EL and which is used in the conduct of the
Business, including without limitation all rights, easements and privileges
appertaining or relating thereto, all buildings, fixtures, and improvements
located thereon and all Facilities thereon, if any.
"Permits" shall mean all licenses, permits, franchises, approvals,
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authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, or any other person,
necessary or desirable for the past, present or anticipated conduct of, or
relating to the operation of, the Business.
"Representative" shall mean any officer, director, principal,
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attorney, agent, employee or other representative.
"Seller Stockholder" shall mean ▇▇▇▇ ▇▇▇▇▇▇ who owns all of the
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outstanding capital stock of both Sellers.
"Tax" shall mean any federal, state, local, foreign or other tax,
---
levy, impost, fee, assessment or other government charge, including without
limitation income, estimated income, business, occupation, franchise, property,
payroll, personal property, sales, transfer, use, employment, commercial rent,
occupancy, franchise or withholding taxes, and any premium, including without
limitation interest, penalties and additions in connection therewith.
5
"Year-End Financial Statements" shall mean the Balance Sheets and
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income statements dated as of Central's fiscal years ended 1996, 1995, and 1994.
1.2 Other Defined Terms. The following terms shall have the meanings
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defined for such terms in the Sections set forth below:
Term Section
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Action 4.11
Agreed Value 2.5.1
Assumed Contracts 4.6
Assumed Liabilities 2.2
Assumption Document 3.2.2
CERCLA 4.21.2
Claim 10.3.4
Claim Notice 10.3.4
Closing 3.1
Damages 10.3.1
Employee Plans 4.20
Environmental Conditions 4.21.10.1
Environmental Laws 4.21.2
Environmental Assessments 6.8.1
Excluded Liabilities 2.3
Hazardous Substance 4.21.1
Holdback Amount 2.4.3
Inventory Value 2.5.2
New Leases 7.4
Non-Consented Assumed Contracts 4.8
Post-Closing Environmental Liability 10.3.1
Proposed Acquisition Transaction 6.2
Proprietary Rights 4.16.1
Purchase Price 2.4.1
RCRA 4.21.2
Release 4.21.1
Remediation Standard 6.8.2
Rental Ready 2.5.1
Retained Employees 6.7
Union 8.4
ARTICLE II
PURCHASE AND SALE OF ASSETS
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2.1 Transfer of Assets. Upon the terms and subject to the conditions
------------------
contained herein, at the Closing, Sellers will sell, convey, transfer, assign
and deliver to Buyer, and Buyer will acquire from Sellers, the Assets.
6
2.2 Assumption of Liabilities. Upon the terms and subject to the conditions
-------------------------
contained herein, at the Closing, Buyer shall assume all obligations and
liabilities accruing, arising out of, or relating to events or occurrences
happening after the Closing Date under, and only under, the Assumed Contracts
listed on Schedule 4.6.1, including, without limitation, the rolling stock
leases listed on Schedule 4.6.1, but not including any obligation or liability
for any breach of any Contract occurring on or prior to the Closing Date
(together with the liabilities assumed pursuant to the Assumed Contracts, the
"Assumed Liabilities"), except for any liability for any breach caused by the
assumption of the Non-Consented Assumed Contracts (as defined in Section 4.8
hereunder).
2.3 Excluded Liabilities. Notwithstanding any other provision of this
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Agreement, except for the Assumed Liabilities expressly specified in Section
2.2, Buyer shall not assume, or otherwise be responsible for, any of Sellers'
liabilities or obligations, whether actual or contingent, matured or unmatured,
liquidated or unliquidated, known or unknown, or related or unrelated to the
Business or the Assets, whether arising out of occurrences prior to, at or after
the date hereof (collectively, "Excluded Liabilities"), which Excluded
Liabilities include, without limitation:
2.3.1 Any liability or obligation to or in respect of any employees or
former employees of Sellers including without limitation (i) any employment
agreement, whether or not written, between either Seller and any person, (ii)
any liability under any Employee Plan at any time maintained, contributed to or
required to be contributed to by or with respect to Sellers or under which
either Seller may incur liability, or any contributions, benefits or liabilities
therefor, or any liability with respect to either Seller's withdrawal or partial
withdrawal from or termination of any Employee Plan and (iii) any claim of an
unfair labor practice, or any claim under any state unemployment compensation or
worker's compensation law or regulation or under any federal or state employment
discrimination law or regulation, which shall have been asserted on or prior to
the Closing Date or is based on acts or omissions which occurred on or prior to
the Closing Date;
2.3.2 Any liability or obligation of either Seller in respect of any
Tax, except those Taxes herein agreed to be paid by Buyer;
2.3.3 Any liability arising from any injury to or death of any person or
damage to or destruction of any property, whether based on negligence, breach of
warranty, strict liability, enterprise liability or any other legal or equitable
theory arising from defects in products sold or services performed by or on
behalf of Sellers or any other person or entity on or prior to the Closing Date,
or arising from any other cause, including without limitation any liabilities
arising (on a date of occurrence basis or otherwise) on or prior to the Closing
Date relating to the use or misuse of Equipment or to traffic accidents;
2.3.4 Any liability or obligation of either Seller arising out of or
related to any Action against such Seller or any Action which adversely affects
the Assets and which shall have been asserted on or prior to the Closing Date or
to the extent the basis of which shall have arisen on or prior to the Closing
Date;
2.3.5 Any liability or obligation of Sellers resulting from entering
into, performing their obligations pursuant to or consummating the transactions
contemplated by, this Agreement (including without limitation any liability or
obligation of Sellers pursuant to Article X hereof);
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2.3.6 Any liability or obligation related to the Facilities, except for
those expressly set forth in the New Leases; and
2.3.7 Any liability or obligation arising out of CERCLA, any equivalent
state statute, or any other Environmental Law.
2.4 Purchase Price.
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2.4.1 Purchase Price. At the Closing, upon the terms and subject to the
--------------
conditions set forth herein, Buyer shall pay to Sellers in consideration for the
Assets, by wire transfer of immediately available funds to an account designated
by Sellers, the aggregate amount of Eighteen Million Dollars ($18,025,000) (the
"Cash Portion of the Purchase Price"), and 102,432 shares of RSC Common Stock;
subject, however, to adjustment as set forth in Section 2.5 and less the
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Holdback Amount as described below. In addition, Buyer shall pay an aggregate of
102,435 additional shares of RSC Common Stock, payable in equal installments of
34,145 shares of RSC Common Stock over three years, if certain performance
objectives to be mutually agreed upon by Closing are met; provided however, in
any event, the additional 102,435 shares of RSC Common Stock will be payable in
equal installments of 20,487 shares of RSC Common Stock over five years. Any
RSC Common Stock paid to Sellers will be contributed by RSC to RSC Acquisition
Corp. and by RSC Acquisition Corp. to Buyer in a transaction intended to qualify
under Section 351 of the Code immediately prior to delivery of such RSC Common
Stock to Sellers. The Purchase Price shall be allocated among the Assets in the
manner required by Section 1060 of the Code and regulations thereunder. Exhibit
2.4 attached hereto sets forth the amount of the Purchase Price allocable to the
various Assets; provided that such allocation shall be subject to necessary
adjustments, to be completed and reflected in such allocation within 30 days
following the Closing Date, on account of the final Inventory and Equipment
valuations under Sections 2.5.1 and 2.5.2. Buyer and Sellers agree to each
prepare and file on a timely basis with the Internal Revenue Service
substantially identical initial and supplemental Internal Revenue Service Forms
8594 "Asset Acquisition Statements Under Section 1060" consistent with Exhibit
2.4 and which give effect to any adjustment to the Purchase Price determined in
accordance with Section 2.4 hereof.
2.4.2 Employment and Noncompetition Agreements. At the Closing, upon
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the terms and subject to the conditions set forth herein, Buyer and ▇▇▇▇ ▇▇▇▇▇▇
shall enter into an Employment and Noncompetition Agreement, prior to the
Closing Date, in the final form mutually satisfactory to Buyer and Sellers.
2.4.3 Holdback. The "Holdback Amount" shall be an amount equal to
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$1,000,000 cash, which Buyer, at the Closing, shall retain pending the
determination of the amount of the Equipment adjustment, Inventory adjustment
and Accounts Receivable adjustment pursuant to Sections 2.5.1, 2.5.2 and 2.5.3,
respectively, and Sellers' indemnification obligations, if any, as set forth in
Section 10.3, and pending the completion of any environmental remediation
required under Section 6.8 hereof which is not resolved by the Closing Date. Of
such Holdback Amount, (i) $200,000 will be allocated to the resolution of the
Equipment and inventory adjustments pursuant to Sections 2.5.1 and 2.5.2, (ii)
$200,000 will be allocated to the resolution of the Accounts Receivable
adjustment pursuant to Section 2.5.3, and (iii) $200,000 will be allocated to
the resolution of Seller's indemnification obligations pursuant to Section 10.3.
The remainder of the holdback will be held by Buyer and released after one year,
to the extent not the subject of a pending indemnification claim.
Notwithstanding anything in the foregoing to the contrary, if any portion of the
Holdback Amount specified in this Section 2.4.3 proves to be insufficient for
resolution of the matter subject
8
to adjustment therein, Buyer may in its sole discretion elect to transfer a
portion of the Holdback Amount allocated to another matter to resolve such
deficiency. Promptly upon the resolution of each of the foregoing adjustments or
indemnification or remediation obligations in accordance with the time periods
provided herein for its resolution, Buyer will remit to Sellers that portion of
the Holdback Amount allocated to the resolution of such item, net of any amount
which Buyer is entitled to retain under the provisions of Sections 2.5 and 10.3
hereof. In the event of any disagreement between Buyer and Sellers regarding the
dollar amount of any such adjustment or indemnification or remediation
obligation, Buyer shall nevertheless be obligated to remit to Sellers any
portion of the Holdback Amount which is allocable to such item and is not in
dispute. Promptly upon resolution of any such disagreement in accordance with
the terms hereof, Buyer shall remit to Sellers any remaining portion of the
Holdback Amount to which Sellers are entitled. Notwithstanding the foregoing,
Buyer shall not be limited to the Holdback Amount (or allocable portion thereof)
as a sole remedy in the event that any purchase price adjustment or
indemnification or remediation obligation exceeds the Holdback Amount (or
allocable portion thereof); rather, in such event, Buyer shall have the right to
collect promptly from Sellers, in cash, the amount of such excess. All Holdback
Amounts, including those amounts in dispute which are eventually paid to
Sellers, remitted to Sellers 121 days or later after the Closing shall include
interest on such unremitted amounts calculated at the annual interest rate of
6.5%.
2.5 Purchase Price Adjustments.
--------------------------
2.5.1 Equipment Adjustment. The EL Rental and Non-Rental Asset Listing
--------------------
and the Central Rental and Non-Rental Asset Listing attached as Exhibits 2.5.1.1
(a) and (b) respectively, set forth the asset description, make, model, original
cost and net book value of all Equipment which, on the Closing Date, will be
fully operable, Rental Ready and available for transfer to Buyer. (The net
book value of each item of Equipment shown on Exhibits 2.5.1.1(a) and (b) is
referred to herein as the "Agreed Value.") On or prior to the 10th business day
following the Closing Date, personnel of Buyer and Sellers jointly shall
complete a physical inventory of each item of Equipment comprising Exhibits
2.5.1.1(a) and (b), including by visiting renters' locations as necessary to
inspect such Equipment. The Purchase Price shall be reduced, except for up to
fifteen (15) pieces of equipment which are used for display or have been
depreciated to zero on Sellers' books and are inoperative (the "Display
Equipment") as provided in Schedule 2.5.1.3, within thirty (30) calendar days
after the Closing, for each item of Equipment contained in Exhibits 2.5.1.1(a)
and (b) which is missing, inoperable, not Rental Ready, or otherwise not
available for transfer to Buyer, provided that such reduction shall apply only
to the extent that the missing, inoperable, non-Rental Ready or unavailable
Equipment exceeds in the aggregate $25,000 in net book value and the cost of
repairs. The reduction in the Purchase Price shall be calculated by the
aggregate Agreed Value of all missing, inoperable, non-Rental Ready or
unavailable Equipment, except for Display Equipment as provided in Schedule
2.5.1.3. The result of the foregoing calculation shall be subtracted from the
Purchase Price. In the event of a Purchase Price reduction as contemplated
hereby, Buyer shall be entitled to retain a portion of the Holdback Amount equal
to such reduction as specified in, or to have the other remedies set forth in,
Section 2.4.3. For purposes of this Agreement, an item of Equipment is "Rental
Ready" only if all required maintenance has been performed and it does not
require any repairs in excess of $200 per item for those items having a net book
value greater than $5000 and $100 per item for those items having a net book
value less than $5000 per item. Any disputes as to the physical count or Rental
Readiness of any item of Equipment will, if possible, be resolved while the
physical inventory of such Equipment is being taken by Buyer and Sellers. Any
disputes regarding the foregoing not resolved by the 10th business day following
the Closing Date will be separately listed and settled as soon as expeditiously
practicable thereafter by the parties or by another independent
9
third party mutually acceptable to both parties, and shall not be the subject of
any indemnification claim by Buyer under Section 10.3.
In addition to the foregoing, the Purchase Price shall be increased, on a
dollar-for-dollar basis and with such increase to be payable in immediately
available funds on the Closing Date, by the cost to Sellers of any item of
Equipment which was acquired by Sellers subsequent to February 28, 1997,
including the period of time between the execution of this Agreement and the
Closing Date, which is listed in either the EL Supplemental Rental and Non-
Rental Asset Listing or the Central Supplemental Rental and Non-Rental Asset
Listing attached hereto as Exhibits 2.5.1.2 (a) and (b) respectively and as
amended prior to the Closing Date, net of the net book value on the Interim
Balance Sheet of any item of Equipment sold during the same period.
2.5.2 Inventory Adjustment. The Purchase Price shall be adjusted,
--------------------
thirty (30) calendar days after Closing, on a dollar-for-dollar basis pursuant
to the procedures set forth below, by the amount, if any, by which the Inventory
Value as of the Closing Date is greater or less than $834,000. In the event of a
Purchase Price reduction as contemplated hereby, the cash portion of the
purchase price will be reduced. "Inventory Value" shall mean the lower of (x)
vendor cost as last received (excluding all freight and other charges) and (y)
market value (excluding any non-salable or obsolete merchandise, parts or
supplies) as of the Closing Date, as determined in accordance with generally
accepted accounting principles. Inventory Value shall be determined pursuant to
a physical inventory to be taken on or promptly following the Closing Date, and
shall be finalized within 15 business days following the Closing Date (except to
the extent that particular matters are referred to a third party for resolution
as described below). In connection with such physical inventory, all items of
Inventory will be counted as to quantity, and assessed as to salability, by
personnel of Sellers and Buyer using the same procedures normally used by Buyer
to take inventories of the type of Inventory being counted. Any disputes as to
the physical count, condition, salability or obsolescence of any item of
Inventory will, if possible, be resolved while such physical inventory is being
taken. Any disputes regarding the foregoing not resolved by the 15th business
day following the Closing Date will be separately listed and settled as soon as
expeditiously practicable thereafter by the parties or by another independent
third party mutually acceptable to both parties, and in any event will be
resolved no later than the 30th calendar day following the Closing.
2.5.3 Central's Accounts Receivable Adjustment. The cash portion of the
----------------------------------------
Purchase Price shall be adjusted, one hundred twenty (120) calendar days after
the Closing, on a dollar-for-dollar basis, pursuant to the procedures set forth
below, by the amount, if any, by which Central's Accounts Receivable included in
the Assets are greater or have a value that is less than $1,278,000. Any
accounts receivable not collected within ninety (90) calendar days after the
Closing will be returned to the Central and deducted from the Holdback Amount.
All Open Rental Contracts and customer deposits in connection therewith become
the property of Buyer, and Buyer shall be entitled to all proceeds collected by
Central from any contract which would have been an Open Rental Contract but for
Central's failure to operate the Business in the ordinary course of the Business
and substantially in accordance with past practice, as provided in Section 6.6.
2.5.4 Finality of Third Party Determination. The determination of any
-------------------------------------
third party engaged pursuant to the foregoing provisions of this Section 2.5
shall be final and binding on the parties. The engagement of such third party
will be subject to the provisions of Section 11.13, provided that the parties
may retain an independent accounting firm rather than professional arbitrators
to settle a dispute, and may otherwise depart from the procedures specified in
Section 11.13, if they both so agree. No failure to resolve
10
any matters described in this Section 2.5 shall prevent the Closing or payment
of the Purchase Price for the Assets.
2.5.5 Adjustment for Permitted Encumbrances. In addition to the
-------------------------------------
foregoing, the Purchase Price shall be decreased, on a dollar-for-dollar basis
and with such decrease to be deducted from the Purchase Price payable on the
Closing Date, by the amount of any Encumbrance on any Asset which Buyer has
specifically accepted pursuant to Section 4.4 hereof, except for vehicular
leases and other leases and liabilities specifically assumed by Buyer.
2.6 Prorations. On the Closing Date, or as promptly as practicable following
----------
the Closing Date, but in no event later than sixty (60) calendar days
thereafter, the personal property taxes, water, gas, electricity and other
utilities, local business or other license fees or taxes, merchants' association
dues and other similar periodic charges payable with respect to the Assets or
the Business shall be prorated between Buyer and Sellers effective as of the
Closing Date. To the extent practicable, utility meter readings for the
Facilities shall be determined as of the Closing Date.
Sellers' prorated share of the personal property taxes shall be payable
notwithstanding the fact that such tax may become payable after the Closing
Date, and such tax shall be paid to Buyer or the appropriate taxing authority on
or prior to the date on which such tax becomes due.
2.7 Closing Costs; Transfer Taxes and Fees. Sellers shall be responsible for
--------------------------------------
any documentary and transfer taxes and any sales or other taxes (excluding (i)
use taxes on equipment constituting registered motor vehicles, which use taxes
will be paid one-half by each of Sellers and Buyer and (ii) any sales tax on
rolling stock listed on Schedule 4.6.1 which tax shall be paid by Buyer) imposed
by reason of the transfers of Assets provided hereunder and any deficiency,
interest or penalty asserted with respect thereto. Sellers shall pay all costs
of obtaining the transfer of existing Permits which may be lawfully transferred.
Sellers shall pay the fees and costs of recording or filing all applicable
conveyancing instruments described in Section 3.2.1, and shall pay the fees and
costs of recording or filing all UCC termination statements and other releases
of Encumbrances.
ARTICLE III
CLOSING
-------
3.1 Closing. The Closing of the transactions contemplated herein (the
-------
"Closing") shall be held on the Closing Date at a time and place as the parties
shall mutually agree.
3.2 Conveyances at Closing.
----------------------
3.2.1 Instruments and Possession. To effect the sale and transfer
--------------------------
referred to in Section 2.1 hereof, Sellers will, at the Closing, execute and
deliver to Buyer:
3.2.1.1 one or more bills of sale, each in the form of Exhibit
3.2.1.1 attached hereto, conveying in the aggregate all of Sellers' owned
personal property included in the Assets, free and clear of all Encumbrances,
except as otherwise provided in this Agreement;
11
3.2.1.2 subject to Section 9.2, Assignments of Contract Rights,
each in the form of Exhibit 3.2.1.2 attached hereto, with respect to the Assumed
Contracts;
3.2.1.3 assignments of Trademarks, Service Marks and other
Proprietary Rights, each in the form of Exhibit 3.2.1.3 attached hereto, in
recordable form to the extent necessary to assign such rights; and
3.2.1.4 such other instruments as shall be requested by Buyer to
vest in Buyer title in and to the Assets in accordance with the provisions
hereof.
3.2.2 Assumption Document. Upon the terms and subject to the conditions
-------------------
contained herein, at the Closing Buyer shall deliver to Central an instrument of
assumption substantially in the form attached hereto as Exhibit 3.2.2,
evidencing Buyer's assumption, pursuant to Section 2.2, of the Assumed
Liabilities (the "Assumption Document").
3.2.3 Form of Instruments. To the extent that a form of any document to
-------------------
be delivered hereunder is not attached as an Exhibit hereto, such documents
shall be in form and substance, and shall be executed and delivered in a manner,
reasonably satisfactory to the recipient.
3.2.4 Certificates; Opinions. Sellers shall deliver to Buyer the
----------------------
certificates, opinions of counsel and other documents described in Article VIII.
3.2.5 Consents. Subject to Section 9.2, Sellers shall deliver all
--------
Permits and any other third party consents required for the valid transfer of
the Assets as contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
Sellers hereby, jointly and severally, represent and warrant to Buyer as
follows, that, except as set forth on the Disclosure Schedule attached hereto
and made a part hereof are incorporated herein by this reference, which
representations and warranties are, as of the date hereof, and will be, as of
the Closing Date, true and correct:
4.1 Organization of Central and EL Seller. Central and EL are each
-------------------------------------
corporations duly organized, validly existing and in good standing under the
laws of the State of Kansas. Copies of the Articles of Incorporation and Bylaws
of each Seller, and all amendments thereto, heretofore delivered to Buyer are
accurate and complete as of the date hereof. Neither Central nor EL have direct
or indirect stock or other equity or ownership interests (whether controlling or
not) in any corporation, association, partnership, joint venture or other
entity.
4.2 Authorization. Each of Central and EL has all requisite corporate power
-------------
and authority, and has taken all corporate action necessary, to own, lease and
operate the Assets, to conduct the Business as it is presently being conducted,
to execute and deliver this Agreement and the New Leases to which it will be a
party, to consummate the transactions contemplated hereby and thereby and to
perform its obligations
12
hereunder and thereunder. A copy of the resolutions of each of Central's and
EL's respective boards of directors authorizing this Agreement and the related
transactions are attached hereto as Schedule 4.2. This Agreement has been duly
executed and delivered by each Seller and is a legal, valid and binding
obligation of each Seller enforceable against each Seller in accordance with its
terms. Following their execution and delivery by Sellers or the Seller
Stockholder, as applicable, and Buyer, each of the New Leases will be a legal,
valid and binding obligation of such Seller or the Seller Stockholder, as
applicable, enforceable against them in accordance with its terms.
4.3 No Changes to the Assets. Since the Interim Balance Sheet Date:
------------------------
4.3.1 there has been no actual or threatened adverse change in the
financial condition or results of operation, the Business or the Assets or any
event, condition or state of facts, in either case that is, or would result in a
Material Adverse Change in the Assets or the Business or the prospects for the
Business, including without limitation the loss of any material customers;
4.3.2 there has not been any sale or other disposition, except in the
ordinary course of either Seller's business, of any of the Assets, or any
Encumbrance placed on the Assets;
4.3.3 Each Seller has operated the Business in the ordinary course
consistent with such Seller's past practice so as to preserve the Business
intact, to keep available to the Business the services of each Seller's
employees, and to preserve the Business and the goodwill of each Seller's
suppliers, customers, distributors and others having business relations with it;
and
4.3.4 Except as set forth on Exhibits 2.5.1.1 (a) and (b) and 2.5.1.2
(a) and (b), Sellers have not purchased, or entered into any agreement to
purchase any item, other than in the ordinary course of business consistent with
past practices, having a cost in excess of $2,000, without the consent of Buyer.
4.4 Assets. Sellers have and will transfer good and marketable fee simple
------
title to the Assets, with the exception of the assets for which leases are being
assumed, and upon the consummation of the transactions contemplated hereby,
Buyer will acquire good title to all of the Assets, free and clear of any
Encumbrances, except for any Encumbrance that Buyer, in its sole discretion,
specifically accepts in writing (in which case the Purchase Price will be
subject to adjustment as set forth in Section 2.5.5). The Assets reflected in
the Interim Balance Sheet and all of the Assets acquired after such date are or
will be valued at the lower of actual cost or market less an adequate and proper
depreciation charge. The Assets include without limitation all assets necessary
for the conduct of the Business as presently conducted.
4.5 Facilities. Each of Central and EL will deliver to Buyer, prior to
----------
Closing, an accurate copy of its respective existing leases and policies of
title insurance as to the Real Property. Each of Central and EL enjoys
peaceful and undisturbed possession of the leased Real Property. Other than the
leases provided, there are no leases, subleases, licenses, occupancy agreements,
options, rights, concessions or other agreements or arrangements, written or
oral, granting to any person the right to purchase, use or occupy the Facilities
or any portion thereof, except as set forth in Schedule 4.5. The Facilities are
supplied with utilities and other services necessary for the operation of the
Business.
4.5.1 Improvements, Fixtures and Equipment. The Facilities and the
------------------------------------
improvements thereon, including without limitation all Equipment (including all
fixtures) and other tangible assets owned, leased
13
or used by Central or EL at the Facilities are (i) adequately insured as of the
Closing Date, (ii) structurally sound with no known material defects, (iii) in
good operating condition and repair, subject to ordinary wear and tear, (iv) not
in need of maintenance or repair except for ordinary routine maintenance and
repair, the cost of which would not be material, (v) sufficient for the
operation of the Business as presently conducted, and (vi) to the best of
Central's and EL's knowledge, as applicable, in conformity, in all material
respects, with all applicable laws, ordinances, orders, regulations and other
requirements relating thereto currently in effect. None of the improvements is
subject to any commitment or other arrangement for their sale or use by any
Affiliate of Sellers or third parties, except as set forth in Schedule 4.5.1.
4.5.2 Conformity. All Facilities have received all required approvals
----------
of governmental authorities (including without limitation Permits and a
certificate of occupancy or other similar certificate permitting lawful
occupancy of the Facilities) required in connection with the operation thereof.
To the best of Central's and EL's knowledge, as applicable, the Facilities are
(and have been) operated and maintained in accordance with applicable laws,
rules, regulations and state, county, municipal or other local ordinances, and
conform to all other conditions necessary for the lawful conduct of the Business
as currently conducted at each such Facility.
4.6 Contracts and Commitments.
-------------------------
4.6.1 Contracts. Schedule 4.6 sets forth a complete and accurate list
---------
of all Contracts of the following categories:
4.6.1.1 Contracts not made in the ordinary course of either
Seller's conduct of the Business;
4.6.1.2 Employment contracts and severance agreements;
4.6.1.3 Distribution, franchise, license, sales or commission
contracts related to the Assets or the Business;
4.6.1.4 Contracts involving expenditures or liabilities, actual or
potential, in excess of $1,000 or otherwise material to the Business or the
Assets, and not cancelable (without liability) within 30 calendar days;
4.6.1.5 Contracts or commitments relating to commission
arrangements with others;
4.6.1.6 Promissory notes, loans, agreements, evidences of
indebtedness, letters of credit, guarantees, or other instruments relating to an
obligation to pay money, whether EL or Central shall be the borrower, lender or
guarantor thereunder or whereby any Assets are pledged (excluding credit
provided by EL or Central in the ordinary course of the Business to its
customers);
4.6.1.7 Leases of personal property not cancelable (without
liability) within 30 calendar days; and
14
4.6.1.8 Contracts containing covenants limiting the freedom of EL
or Central or any officer, director or shareholder of EL or Central to engage in
any line of business or compete with any person.
For purposes of this Agreement, the "Assumed Contracts" are the Contracts listed
as such on Schedule 4.6.1. EL and Central have delivered or will deliver, prior
to the Closing Date, to Buyer true, correct and complete copies of all of the
Contracts listed on Schedule 4.6, including all amendments and supplements
thereto, whether or not such Contracts are Assumed Contracts.
4.6.2 Absence of Breaches or Defaults. All of the Contracts are valid
-------------------------------
and in full force and effect. Each of EL and Central, as applicable, has duly
performed all of its obligations under the Contracts to the extent those
obligations to perform have accrued, and no violation of, or default or breach
under any Contracts by EL or Central or any other party has occurred and neither
Sellers nor any other party has repudiated any provisions thereof.
4.7 Permits and Consents. Sellers have all Permits required to conduct the
--------------------
Business, except where the failure to obtain such Permits would not have a
Material Adverse Effect on the Assets or the Business. All Permits of Sellers
related to the Business are valid and in full force and effect and are listed on
Schedule 4.7. Except as disclosed on Schedule 4.7, no notice to, declaration,
filing or registration with, or authorization, or consent or approval of, or
Permit from, any governmental or regulatory body or authority (including without
limitation the U.S. Small Business Administration), or any other person or
entity, is required to be made or obtained by Sellers or the Seller Stockholder
in connection with the execution, delivery or performance of this Agreement or
the New Leases and the consummation of the transactions contemplated hereby and
thereby. Schedule 4.7 sets forth all consents required for the assignment by
Central to Buyer of the Assumed Contracts. All of the Assumed Contracts will be
enforceable by Buyer after the Closing to the same extent as if the transactions
contemplated by this Agreement had not been consummated. Each of Central and EL
and the Seller Stockholder have legal authority to enter into the New Leases to
which it or they will be parties and to convey to Buyer the leasehold interests
created thereby, and no consent of the lessor under the Existing Lease, of any
lender, or of any other person or entity is required for the execution by
Sellers or the Seller Stockholder of the New Leases.
4.8 No Conflict or Violation. After giving effect to consents and lien
------------------------
releases described in Schedule 4.7 that have been obtained from third parties or
will be so obtained prior to the Closing Date, neither the execution and
delivery of this Agreement or the New Leases by Central and EL or the Seller
Stockholder, as applicable, nor the consummation of the transactions
contemplated hereby or thereby, nor compliance by Central and EL or the Seller
Stockholder with any of the provisions hereof or thereof, will (a) violate or
conflict with any provision of the Articles of Incorporation or Bylaws of
Central and EL, (b) violate, conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any Encumbrance
upon any of the Assets under, any of the terms, conditions or provisions of any
Contract, Permit, agreement, or other instrument or obligation (i) to which
Central and EL or the Seller Stockholder are parties or (ii) by which the Assets
are bound, violate any statute, rule, regulation, ordinance, code, order,
judgment, ruling, writ, injunction, decree or award or (d) impose any
Encumbrance, restriction or charge on the Assets, the Facilities or the
Business. Any breach caused by the assignment or other transfer to Buyer of
vehicle leases which constitute Assumed Contracts and other Assumed Contracts
which by their
15
terms are cancellable without penalty on no more than thirty (30) days notice
(collectively, the "Non-Consented Assumed Contracts") will not be a breach of
said representations and warranties of this Section 4.8.
4.9 Financial Statements. Central has heretofore delivered to Buyer the
--------------------
Financial Statements. The Financial Statements (a) are in accordance with the
underlying books and records of Central, (b) have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods covered thereby (except as otherwise described in Schedule 4.9) and
(c) fairly and accurately present the assets, liabilities (including all
reserves) and financial position of the Business as of the respective dates
thereof and the results of operations and changes in cash flows for the periods
then ended (subject, in the case of the Interim Financial Statements, to normal
year-end adjustments). At the respective dates of the Financial Statements,
there were no liabilities of Central, which, in accordance with generally
accepted accounting principles, should have been shown or reflected in the
Financial Statements or the notes thereto, which are not shown or reflected in
the Financial Statements or the notes thereto.
4.10 Books and Records. Sellers have made and kept (and given Buyer access
-----------------
to) Books and Records and accounts, which, in reasonable detail, accurately and
fairly reflect the activities of Sellers; provided however, that only with
----------------
regard to the Books and Records and accounts of EL, Buyer shall have access to
said documents which pertain only to the assets of EL listed in Exhibits
2.5.1.1(a) and 2.5.1.2(a) hereto. The minute books of Sellers, which will be
delivered to Buyer prior to the Closing Date, accurately and adequately reflect
all action previously taken by the shareholders, board of directors and
committees of the board of directors of Sellers. The copies of the stock book
records of Sellers, which will be delivered to Buyer prior to the Closing Date,
are true, correct and complete, and accurately reflect all transactions effected
in Sellers' stock through and including the date hereof.
4.11 Litigation. Except as set forth on Schedule 4.11, there is no action,
----------
order, writ, injunction, judgment or decree outstanding or any claim, suit,
litigation, proceeding, labor dispute, arbitral action, governmental audit or
investigation (collectively, "Actions") pending, or to the best of Central's and
EL's knowledge, as applicable, threatened or anticipated (a) against, related to
or affecting Sellers, the Business or the Assets or (b) seeking to delay, limit
or enjoin the transactions contemplated by this Agreement. Sellers are not in
default with respect to or subject to any judgment, order, writ, injunction or
decree of any court or governmental agency, and there are no unsatisfied
judgments against Sellers, the Business or the Assets.
4.12 Labor Matters. Except as stated in Schedule 4.12, neither Seller is a
-------------
party to a labor agreement with respect to its employees with any labor
organization, union, group or association and there are no employee unions (nor
any other similar labor or employee organizations) under local statutes, custom
or practice. Sellers have not experienced any attempt by organized labor or its
representatives to make Seller conform to demands of organized labor relating to
its employees or to enter into a binding agreement with organized labor that
would cover the employees of Sellers.
4.13 Compliance with Law. Except as otherwise limited herein, Sellers, the
-------------------
conduct of the Business and the operation of the Facilities have not violated
and are in compliance with all laws, statutes, ordinances, regulations, rules
and orders of any foreign, federal, state or local government and any other
governmental department or agency, and any judgment, decision, decree or order
of any court or governmental agency, department or authority, including without
limitation Environmental Laws, relating to the Assets, Facilities
16
or Business or operations of Sellers, except where the violation or failure to
comply, individually or in the aggregate, would not have a Material Adverse
Effect on the Facilities, the Assets or the Business. Except as otherwise
limited herein, Sellers and the conduct of the Business and the operation of the
Facilities are in conformity with all energy, public utility, zoning, building
and health codes, regulations and ordinances, OSHA and Environmental Laws and
all other foreign, federal, state, and local governmental and regulatory
requirements, except where any nonconformity would not have a Material Adverse
Effect on the Facilities, the Assets or the Business. Sellers have not received
any notice to the effect that, or otherwise been advised that, it is not in
compliance with any such statutes, regulations, rules, judgments, decrees,
orders, ordinances or other laws, and Sellers have no reason to anticipate that
any existing circumstances are likely to result in violations of any of the
foregoing, which non-compliance or violation could, in any one case or in the
aggregate, have a Material Adverse Effect on the Facilities, the Assets or the
Business.
4.14 No Brokers. Neither Sellers nor any of their respective officers,
----------
directors, employees, shareholders or Affiliates has employed or made any
agreement with any broker, finder or similar agent or any person or firm which
will result in an obligation to pay any finder's fee, brokerage fees or
commission or similar payment in connection with the transactions contemplated
hereby.
4.15 No Other Agreements to Sell the Assets. Neither Sellers nor any of
--------------------------------------
their respective officers, directors, shareholders or Affiliates have any
commitment or legal obligation, absolute or contingent, to any other person or
firm other than the Buyer to sell, assign, transfer or effect a sale of any of
the Assets (other than inventory in the ordinary course of business), to sell or
effect a sale of a majority of the capital stock of Sellers or to effect any
merger, consolidation, liquidation, dissolution or other reorganization of
Sellers.
4.16 Proprietary Rights.
------------------
4.16.1 Proprietary Rights. Schedule 4.16 lists all of Central's
------------------
federal, state and foreign registrations of trademarks, service marks and other
marks, trade names or other trade rights, and all pending applications for any
such registrations, all other trademarks and other marks, trade names and other
trade rights or in which Central has any interest whatsoever, and all other
trade secrets and other proprietary rights, whether or not registered, created
or used by or on behalf of Central, in each case relating to the Business
(collectively, "Proprietary Rights"). The Proprietary Rights listed in Schedule
4.16 are all those used by Central in connection with the Business.
4.16.2 Royalties and Licenses. No person has a right to receive a
----------------------
royalty or similar payment in respect of any Proprietary Rights. Central has no
licenses granted, sold or otherwise transferred by or to it or other agreements
to which it is a party, relating in whole or in part to any of the Proprietary
Rights.
4.16.3 Ownership and Protection of Proprietary Rights. Central owns
----------------------------------------------
and has the sole right to use each of the Proprietary Rights. None of the
Proprietary Rights is involved in any pending or threatened litigation. Central
has not received any notice of invalidity or infringement of any rights of
others with respect to such Proprietary Rights. Central has taken all
reasonable and prudent steps to protect the Proprietary Rights from infringement
by any other firm, corporation, association or person. Central's use of the
Proprietary Rights is not infringing upon or otherwise violating the rights of
any third party in or to such Proprietary Rights, nor has such infringement been
alleged by any third party. All of the Proprietary Rights are valid and
enforceable rights of Seller, will be quit-claimed to Buyer and will not cease
to be valid
17
and in full force and effect by reason of the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated by this Agreement.
4.17 Tax Matters.
-----------
4.17.1 Filing of Tax Returns. Sellers have timely filed with the
---------------------
appropriate taxing authorities all returns in respect of Taxes required to be
filed through the date hereof and will timely file any such returns required to
be filed on or prior to the Closing Date.
4.17.2 Payment of Taxes. All Taxes, in respect of periods beginning
----------------
before the Closing Date, have been timely paid, or will be timely paid, or an
adequate reserve has been established therefor, as set forth in Schedule 4.17 or
the Financial Statements, and Sellers do not have any material liability for
Taxes in excess of the amounts so paid or reserves so established.
4.17.3 Lien. There are no liens for Taxes (other than as could be
----
asserted for current Taxes not yet due and payable) on the Assets.
4.17.4 No Withholding. The transaction contemplated herein is not
--------------
subject to the tax withholding provisions of Section 3406 of the Code, or of
Subchapter A of Chapter 3 of the Code or of any other provision of law.
4.17.5 Tax-Exempt Use Property. None of the Assets is a "tax-exempt
-----------------------
use property" within the meaning of Section 168(h) of the Code.
4.18 Accounts Receivable. The accounts receivable reflected in the Interim
-------------------
Balance Sheet, and all accounts receivable arising since the Interim Balance
Sheet Date, represent bona fide claims of Central against debtors for sales,
services performed or other charges arising on or before the date hereof, and
all the goods delivered and services performed which gave rise to said accounts
were delivered or performed in accordance with the applicable orders, Contracts
or customer requirements.
4.19 Inventory. All the Inventory is located at the Facilities. The values
---------
at which the Inventory is shown on the Interim Balance Sheet have been
determined in accordance with generally accepted accounting principles, each
consistently applied throughout the periods covered by the Financial Statements,
with adequate provisions or adjustments for excess Inventory, slow-moving
Inventory and Inventory obsolescence and shrinkage. Schedule 4.19 sets forth a
complete and accurate list of all Inventory as of the date hereof, subject to
adjustment on and after the Closing Date in accordance with Section 2.4.2.
4.20 Employees. Schedule 4.20 (i) contains a list of all employees of
---------
Central, and their wage rates or salaries, as of the date of this Agreement,
(ii) sets forth the dates of employment for such employees, and (iii) contains a
list of each contract, plan, arrangement, policy, program or commitment, whether
oral or written, providing for insurance coverage (including without limitation
any self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
life, health, disability or accident benefits or for deferred compensation,
pension, profit-sharing, bonuses, stock options, stock appreciation rights,
stock purchases or other forms of incentive compensation or post-retirement
insurance, compensation or benefits (collectively, "Employee Plans"). Central
has paid all benefits due to its employees at any time under its Employee Plans,
including without
18
limitation all severance, accrued vacation, health care continuation coverage
and other benefits to which its employees may be entitled as a result of the
transactions contemplated hereby.
4.21 Compliance With Environmental Laws.
----------------------------------
4.21.1 Definitions. The following terms, when used in this Section
-----------
4.21, shall have the following meanings. Unless the context otherwise requires,
any of these terms may be used in the singular or the plural depending on the
reference.
4.21.1.1 "Sellers". For purposes of this Section 4.21 only,
-------
the term "Sellers" shall include (i) all Affiliates of Sellers, including
without limitation the Seller Stockholder, (ii) all partnerships, joint ventures
and other entities or organizations in which Sellers were at any time or are a
partner, joint venturer, member or participant and (iii) all predecessor or
former corporations, partnerships, joint ventures, organizations, businesses or
other entities, whether in existence as of the date hereof or at any time prior
to the date hereof, the assets or obligations of which have been acquired or
assumed by Sellers or to which Sellers have succeeded.
4.21.1.2 "Release" shall mean and include any spilling,
-------
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
migrating, leaching, dumping or disposing into the environment or the workplace
of any Hazardous Substance, and otherwise as defined in any Environmental Law.
4.21.1.3 "Hazardous Substance" shall mean any quantity of
-------------------
asbestos in any form, urea formaldehyde, PCBs, radon gas, crude oil or any
fraction thereof, all forms of natural gas, petroleum products or by-products,
any radioactive substance, any toxic, infectious, reactive, corrosive, ignitible
or flammable chemical or chemical compound and any other hazardous substance,
material or waste (as defined in or for purposes of any Environmental Law),
whether solid, liquid or gas.
4.21.2 Compliance With Environmental Laws. Except as set forth on
----------------------------------
Schedule 4.20, the Facilities have been owned, leased, operated and maintained
in compliance with all federal, state, local or foreign laws, statutes,
ordinances, regulations, rules, judgments, orders, notice requirements, court
decisions, agency guidelines or principles of law, restrictions or licenses,
which (i) regulate or relate to the protection or clean-up of the environment,
the use, treatment, storage, transportation, handling or disposal of hazardous,
toxic or otherwise dangerous substances, wastes or materials (whether gas,
liquid or solid), the preservation or protection of waterways, groundwater,
drinking water, air, wildlife, plants or other natural resources, or the health
and safety of persons or property, including without limitation protection of
the health and safety of employees or (ii) impose liability with respect to any
of the foregoing, including without limitation the Federal Water Pollution
Control Act (33 U.S.C. (S) 1251 et seq.), Resource Conservation & Recovery Act
-- ---
(42 U.S.C. (S) 6901 et seq.) ("RCRA"), Safe Drinking Water Act (21 U.S.C. (S)
-- ---
349, 42 U.S.C. (S)(S) 201, 300f), Toxic Substances Control Act (15 U.S.C. (S)
2601 et seq.), Clean Air Act (42 U.S.C. (S) 7401 et seq.), the Comprehensive
-- --- -- ---
Environmental Response, Compensation, and Liability Act (42 U.S.C. (S) 9601 et
--
seq.) ("CERCLA"), or any other similar federal, state or local law of similar
---
effect, each as amended (collectively, "Environmental Laws").
19
4.21.3 Facilities. The Facilities are, and at all times have been,
----------
owned, leased and operated in compliance with all Environmental Laws and in a
manner that will not give rise to any liability under any Environmental Laws.
4.21.4 Permits. Sellers have, and at all times has had, all Permits
-------
required under any Environmental Law and the Facilities are, and at all times
have been, in compliance with all such Permits.
4.21.5 Permits Required. The consummation of any of the transactions
----------------
contemplated by this Agreement will not require an application for issuance,
renewal, transfer or extension of, or any other administrative action regarding,
any Permit required under any Environmental Law.
4.21.6 Notice of Violation. Sellers have not received any notice at
-------------------
any time that it or the Facilities is or were claimed to be in violation of the
provisions of any Environmental Law or in non-compliance with the conditions of
any Permit, and there is no pending or threatened lawsuit, governmental or other
legal action to that effect.
4.21.7 Pending Actions. There is not now pending or threatened, nor
---------------
any basis for, nor has there ever been, any Action against Sellers, nor any
basis for any Action, under any Environmental Law or otherwise with respect to
any Release or handling of any Hazardous Substance.
4.21.8 Judgments. There are no consent decrees, judgments, judicial
---------
or administrative orders or agreements with, or liens by, any governmental
authority or quasi-governmental entity relating to any Environmental Law which
regulate, obligate, bind or in any way affect Sellers or the Facilities.
4.21.9 Hazardous Substances. There is not and has not been any
--------------------
Hazardous Substance used, generated, treated, stored, transported, disposed of,
handled or otherwise existing on, under, about or from any Facility, except for
quantities of any such Hazardous Substances stored or otherwise held on, under
or about any such Facility in full compliance with all Environmental Laws and
necessary for the operation of the Business.
4.21.10 Handling of Hazardous Substances. Sellers have at all times
--------------------------------
used, generated, treated, stored, transported, disposed of or otherwise handled
its Hazardous Substances in compliance with all Environmental Laws and in a
manner that will not result in liability of Sellers or Buyer under any
Environmental Law. Schedule 4.21 sets forth a complete list of all contractors
and other third parties who at any time have hauled, handled, stored,
transported or disposed of any Hazardous Substance (i) on behalf of Sellers or
the Business, or (ii) generated by Sellers or the Business, together with a
complete list of all dumpsites and other off-site locations at which such
Hazardous Substances have been disposed of.
4.21.10.1 Environmental Conditions. There are no present or past
------------------------
Environmental Conditions (as defined below) in any way relating to the Business
or Facilities. "Environmental Conditions" means the introduction into the soil,
groundwater or environment of the Facilities (through leak, spill, release,
discharge, escape, emission, dumping, disposal or otherwise) of any pollution,
including without limitation any contaminant, irritant or pollutant or Hazardous
Substance (whether or not upon the property of the Business and whether or not
such pollution constituted at the time thereof a violation of any Environmental
Law) as a result of which either Seller or, after the Closing, Buyer has or may
become liable
20
to any person or federal, state, or local government or agency or
by reason of which any of the Assets may suffer or be subjected to any lien.
4.21.11 CERCLA or RCRA. No current or past use, generation, treatment,
--------------
transportation, storage, disposal or handling practice of Sellers with respect
to any Hazardous Substance has or will result in any liability under the CERCLA
or RCRA or any state or local law of similar effect.
4.21.12 Storage Tank or Pipeline. Except as set forth on Schedule 4.21,
------------------------
there is not now and has not been at any time in the past any underground or
above-ground storage tank or pipeline at any Facility where the installation,
use, maintenance, repair, testing, closure or removal of such tank or pipeline
was not in compliance with all Environmental Laws and there has been no Release
from or rupture of any such tank or pipeline, including without limitation any
Release from or in connection with the filling or emptying of such tank.
4.21.13 Environmental Audits or Assessments. True, complete and correct
-----------------------------------
copies of the written reports, and all parts thereof, including any drafts of
such reports if such drafts are in the possession or control of Sellers, of all
environmental audits or assessments which have been conducted at any Facility
within the past five years, either by Sellers or any attorney, environmental
consultant or engineer engaged for such purpose, have been delivered to Buyer
and a list of all such reports, audits and assessments and any other similar
report, audit or assessment of which Seller has knowledge is included on
Schedule 4.21.
4.21.14 Indemnification Agreements. Sellers are not a party, whether as
--------------------------
a direct signatory or as successor, assign or third party beneficiary, or
otherwise bound, to any lease or other Contract under which Sellers are
obligated by or entitled to the benefits of, directly or indirectly, any
representation, warranty, indemnification, covenant, restriction or other
undertaking concerning Environmental Conditions.
4.21.15 Releases or Waivers. Sellers have not released any other person
-------------------
from any claim under any Environmental Law or waived any rights concerning any
Environmental Condition.
4.21.16 Notices, Warnings and Records. Sellers have given all notices
-----------------------------
and warnings, made all reports, and has kept and maintained all records required
by and in compliance with all Environmental Laws.
4.22 Liabilities. Neither Seller has any liabilities or obligations
-----------
(absolute, accrued, contingent or otherwise) except (i) liabilities which are
reflected on the Interim Balance Sheet or which are not required under generally
accepted accounting principles to be reflected on the Interim Balance Sheet,
(ii) liabilities incurred in the ordinary course of the Business and consistent
with past practice since the Interim Balance Sheet Date, (iii) liabilities
arising under Contracts identified in Schedule 4.6 to which either Seller is a
party and (iv) liabilities unknown and unasserted as of the Closing Date.
4.23 Securities Law Matters.
----------------------
4.23.1 Each Seller confirms that it is acquiring the RSC Common Stock
for its own account as principal, for investment purposes only, and not with a
view to, or for, resale or distribution thereof, and no other person has or will
have a direct or indirect beneficial interest in such RSC Common Stock;
21
4.23.2 Each Seller understands that the offering and sale of the RSC
Common Stock is intended to be a transaction by an issuer not involving any
public offering exempt from registration under the Securities Act of 1933, as
amended (the "Securities Act"), by virtue of Section 4(2) of the Securities Act
and the rules and regulations of the Securities and Exchange Commission (the
"Commission") thereunder;
4.23.3 Each Seller represents that it is an "accredited investor" as
such term is defined in Rule 501 under the Securities Act;
4.23.4 Each Seller understands and acknowledges that there are
substantial risks of loss of investment involved in an investment in the RSC
Common Stock, and that the investment in the RSC Common Stock is an illiquid
investment subject to transfer restrictions, and Sellers represent and warrant
that they have the financial ability to bear the economic risk of such
investment;
4.23.5 Each Seller has such knowledge and experience in financial and
business matters, including investments of the type represented by the RSC
Common Stock, as to be capable of evaluating the merits of investment in
therein;
4.23.6 Each Seller has been furnished with a copy of the recent periodic
reports filed by RSC with the Commission and any documents that may have been
made available otherwise or upon its request, have carefully read and understand
such materials and have evaluated the risks of an acquisition of the RSC Common
Stock;
4.23.7 Each Seller has been given the opportunity to ask questions of,
and receive answers from, representatives of RSC in order for it to evaluate the
merits and risks of investment in the RSC Common Stock; and
4.23.8 No Seller has been furnished with or has relied upon any oral or
written representation, warranty or information in connection with the offering
of the RSC Common Stock except for that set forth in this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Sellers as follows, which
representations and warranties are, as of the date hereof, and will be, as of
the Closing Date, true and correct:
5.1 Organization of Buyer. Buyer is a corporation duly organized, validly
---------------------
existing and in good standing under the laws of the State of Mississippi.
5.2 Authorization. Buyer has all requisite corporate power and authority,
-------------
and has taken all corporate action necessary, to execute and deliver this
Agreement and the New Leases, to consummate the transactions contemplated hereby
and thereby and to perform its obligations hereunder and thereunder and RSC has
authorized the issuance of the RSC Common Stock. This Agreement has been duly
executed and delivered by Buyer and is (and following their execution and
delivery by Buyer and Sellers or the Seller Stockholder,
22
as applicable, each of the New Leases and Ancillary Agreements will be) a legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms. The RSC Common Stock, when issued, will be duly authorized,
validly issued, fully paid and non-assessable.
5.3 No Conflict or Violation. Neither the execution, delivery or performance
------------------------
of this Agreement or the New Leases nor the consummation of the transactions
contemplated hereby or thereby, nor compliance by Buyer with any of the
provisions hereof or thereof, will (a) violate or conflict with any provision of
the Certificate of Incorporation or Bylaws of Buyer, or (b) violate any statute,
rule, regulation, ordinance, code, order, judgment, ruling, writ, injunction,
decree or award binding upon Buyer.
5.4 Consents and Approvals. No notice to, declaration, filing or
----------------------
registration with, or authorization, consent or approval of, or permit from, any
governmental or regulatory body or authority, or any other person or entity, is
required to be made or obtained by Buyer in connection with the execution,
delivery and performance of this Agreement or the New Leases and the
consummation of the transactions contemplated hereby or thereby, except (a) as
may be required by Buyer to operate the Business after the Closing, (b) as has
been obtained on or prior to the date hereof or (c) as set forth in Schedule
4.7.
5.5 No Brokers. Neither Buyer, nor any of its respective officers,
----------
directors, employees, shareholders or Affiliates has employed or made any
agreement with any broker, finder or similar agent or any person or firm which
will result in an obligation to pay any finder's fee, brokerage fees or
commission or similar payment in connection with the transactions contemplated
hereby.
ARTICLE VI
COVENANTS OF SELLERS AND BUYER
------------------------------
Buyer, Sellers and the Seller Stockholder each covenant with the others
as follows:
6.1 Further Assurances. Upon the terms and subject to the conditions
------------------
contained herein, each of the parties hereto agrees, both before and after the
Closing, (i) to use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, (ii) to execute any documents, instruments or conveyances of any kind
which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder, and (iii) to cooperate with each other in
connection with the foregoing, including using their respective best efforts (A)
to obtain all necessary waivers, consents and approvals from other parties to
the Contracts to be assumed by Buyer; provided, however, that Buyer shall not be
required to make any payments, commence litigation or agree to modifications of
the terms thereof in order to obtain any such waivers, consents or approvals,
(B) to obtain all necessary Permits as are required to be obtained under any
federal, state, local or foreign law or regulations, (C) to effect all necessary
registrations and filings, including without limitation submissions of
information requested by governmental authorities, and (D) to fulfill all
conditions to this Agreement.
6.2 No Solicitation. From the date hereof through the Closing or the earlier
---------------
termination of this Agreement, each Seller and the Seller Stockholder shall not,
and shall cause their Representatives (including without limitation investment
bankers, attorneys and accountants) not to, directly or indirectly, enter into,
23
solicit, initiate or continue any discussions or negotiations with, or encourage
or respond to any inquiries or proposals by, or participate in any negotiations
with, or provide any information to, or otherwise cooperate in any other way
with, any corporation, partnership, person or other entity or group, other than
Buyer and its Representatives concerning any sale of all or a portion of the
Assets or the Business, or of any shares of capital stock of Sellers, or any
merger, consolidation, liquidation, dissolution or similar transaction involving
Sellers (each such transaction collectively being referred to herein as a
"Proposed Acquisition Transaction"). Sellers and the Seller Stockholder shall
not, directly or indirectly, through any Representative or otherwise, solicit,
initiate or encourage the submission of any proposal or offer from any person or
entity relating to any Proposed Acquisition Transaction or participate in any
negotiations regarding, or furnish to any other person any information with
respect to the other party for the purposes of, or otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person to seek or effect a Proposed Acquisition
Transaction. Sellers and the Seller Stockholder each hereby represents that it
is not now engaged in discussions or negotiations with any party (other than
Buyer) with respect to any of the foregoing. Sellers shall promptly notify
Buyer (orally and in writing) of any offer, inquiry or contact with any person
with respect to a Proposed Acquisition Transaction, including the terms thereof
and the identity of the prospective purchaser or soliciting party.
6.3 Disclosure Schedule. Within five (5) days from the date hereof, Sellers
-------------------
shall provide to Buyer the Disclosure Schedule, subject to Section 8.3
hereunder.
6.4 Notification of Certain Matters. From the date hereof through the
-------------------------------
Closing, Sellers shall give prompt notice to Buyer of (a) the occurrence, or
failure to occur, of any event which occurrence or failure would be likely to
cause any representation or warranty contained in this Agreement or in any
exhibit or schedule hereto to be untrue or inaccurate in any material respect
and (b) any failure of Sellers, or any of their respective Affiliates,
shareholders or Representatives, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement or any exhibit or schedule hereto; provided, however, that such
disclosure shall not be deemed to cure any breach of a representation, warranty,
covenant or agreement or to satisfy any condition.
6.5 Access to Information. From the date hereof through the Closing, Sellers
---------------------
shall, and shall cause their Representatives to, afford the Representatives of
Buyer and its Affiliates complete access at all reasonable times to the Assets
and the Facilities for the purpose of inspecting and conducting appropriate
tests upon the same, and to the officers, employees, agents, attorneys,
accountants, properties, Books and Records and Contracts of Sellers, and shall
furnish Buyer and its Representatives all financial, operating and other data
and information as Buyer or its Affiliates, through their respective
Representatives, may reasonably request, including but not limited to data
relating to operating procedures, workers' compensation history, legal, tax and
environmental, zoning and other legal compliance provided, however, that such
diligence activities of Buyer shall not materially disrupt Sellers' Business.
6.6 Conduct of Business. From the date hereof through the Closing, Sellers
-------------------
shall, except as contemplated by this Agreement or as consented to by Buyer in
writing, operate the Business in the ordinary course of the Business and
substantially in accordance with past practice and will not take any action
inconsistent with this Agreement or with the consummation of the Closing.
Without limiting the generality of the foregoing, Sellers shall not, except as
specifically contemplated by this Agreement:
24
6.6.1 enter into, extend, materially modify, terminate, renew, or fail
to renew any Contract, including any contract pursuant to which either Seller
has rented Equipment, except in the ordinary course of the Business and
substantially in accordance with past practice;
6.6.2 sell, assign, transfer, convey, lease, mortgage, pledge or
otherwise dispose of or encumber any of the Assets, or any interests therein,
except in the ordinary course of the Business; or
6.6.3 fail to pay its accounts payable and any debts owed or
obligations due by it, or pay or discharge when due any liabilities, in the
ordinary course of the Business.
6.7 Employee Matters. Buyer shall offer to employ all employees of Central
----------------
who pass a physical examination and drug and alcohol abuse screening by a
licensed laboratory chosen by Buyer, and who otherwise meet Buyer's customary
criteria for employment, and Central shall reasonably cooperate with Buyer in
retaining all such employees (the "Retained Employees"). Buyer agrees to give
Retained Employees credit for their time of employment with Central with respect
to their seniority as an employee of Buyer. Central shall be and remain solely
responsible for the payment of all benefits due to its employees at any time
under its Employee Plans, including without limitation all severance, accrued
vacation, health care continuation coverage and other benefits to which its
employees may be entitled as a result of the transactions contemplated hereby,
whether or not such employees are hired by Buyer. All Retained Employees will
be at-will employees of Buyer and may be terminated by Buyer in its sole
discretion, subject to the requirements of applicable laws governing employers
and employees, and will receive substantially the same total compensation and
benefits as they did when employed by Central.
6.8 Environmental Assessments and Remediation.
-----------------------------------------
6.8.1 Buyer has retained Dames & ▇▇▇▇▇ (the "Consultant") to perform
Phase I environmental site assessments with respect to each of the Facilities.
Upon its availability, Buyer will deliver the final report of such assessments
to Sellers. In the event any such assessment recommends the performance of
additional investigation (including, without limitation, Phase II environmental
site assessments), such additional investigation shall, if requested by Buyer,
be undertaken promptly and delivered to each of Sellers and Buyer. The
environmental assessments and investigations undertaken pursuant to this Section
6.8.1 are collectively referred to herein as the "Environmental Assessments."
Buyer shall be solely responsible for the cost of the Environmental Assessments.
6.8.2 In the event any of the Environmental Assessments reveals any
remediation work or other actions which must be completed in order to bring the
Facilities into compliance with applicable Environmental Laws or to eliminate
any potential environmental liability, the Consultant shall be directed to
prepare and to deliver to each of Sellers and Buyer a written proposal setting
forth in reasonable detail the scope of required remediation and an estimate of
the cost of completing such remediation. For the purposes of Section 6.8,
"required remediation" shall mean any action necessary to (i) comply with any
governmental order, (ii) comply with any Environmental Law effective at the
Closing or (iii) eliminate a potential environmental liability (collectively the
"Remediation Standard"), as applicable to the Facilities or the operation
thereof by Sellers as of the Closing Date. For the purposes of Section 6.8 and
with respect to any underground storage tanks at the Facility, "necessary
remediation" also shall include obtaining a closure letter from the governing
state agency confirming that the state agency has approved closure of the
25
underground storage tanks and will not take any further action related to any
liability associated with any underground storage tank at the Facilities.
6.8.3 Promptly upon completion of the Consultant's proposal referred to
in Section 6.8.2, Sellers shall engage a reliable environmental engineering firm
reasonably acceptable to Buyer and authorized by any applicable federal, state,
or local law, policy, or regulation to perform any required remediation. Sellers
shall use their best efforts to cause such required remediation to be completed
on or before the Closing Date, and Sellers shall bear all costs of such required
remediation; provided that the completion of all such required remediation shall
be a condition to Buyer's obligations to consummate the transactions
contemplated by this Agreement. Buyer may, in its sole discretion, authorize
Sellers to defer any portion of the required remediation which Sellers and their
contractors are unable to complete prior to Closing, in which case Sellers shall
cause the portion of the required remediation so deferred to be completed as
promptly as practicable, but in no event later than 60 days following Closing,
at Sellers' sole expense. Buyer may monitor the performance of the required
remediation and application of the Remediation Standard, and at its election may
cause the Consultant to review the performance of the required remediation. If
Buyer directs the Consultant to undertake such review, the required remediation
shall be deemed completed only upon certification of its completion by the
Consultant. If, however, there is a dispute as to the performance of the
required remediation or the application of the Remediation Standard, any such
dispute shall be settled by a mutually agreed-upon environmental expert not
otherwise involved in the required remediation, whose determination shall be
final and binding on the parties.
6.8.4 Notwithstanding the foregoing, if Sellers believe the "necessary
remediation" is uneconomic, Sellers may elect instead (i) to obtain a lease on,
and relocate the applicable portion of Sellers' business to, a comparable site
reasonably acceptable to Buyer on substantially comparable economic terms to the
site being eliminated, all at Sellers' sole expense or (ii) if the remediation
costs exceed $200,000 in aggregate, Buyer may agree to waive clause (i) above in
this Section 6.8.4 or, if Buyer does not waive clause (i) under such
circumstances, Sellers may terminate this Agreement.
6.9 Use of Name and Telephone Numbers. From and after Closing, Sellers will
---------------------------------
relinquish to Buyer Sellers' right to use the name "Central States Equipment" or
variations thereof in its operation of the Business. Upon Closing, Central
shall assign to Buyer all of the telephone and facsimile numbers currently used
in the Business.
6.10 Registration Rights. In the event that, at any time prior to the first
-------------------
anniversary of the Closing Date, RSC files a registration statement under the
Securities Act covering shares of RSC Common Stock, other than a registration
statement on Form S-4 or Form S-8, or a registration statement filed pursuant to
"demand" or similar contractual registration rights of any other stockholders of
RSC, then Sellers shall have the right to include in such registration statement
(on a "piggyback" basis) any or all of their shares of RSC Common Stock, and to
receive the benefit of any representations, indemnities, opinions or comfort
letters given by RSC (or its counsel or underwriters) to any underwriter in
connection with such registration, subject to the obligations of the
stockholders of the Sellers to (i) cooperate with Buyer in preparing each such
registration and executing all such agreements as any representative of the
underwriters may deem reasonably necessary in favor of the underwriters, (ii)
promptly supply Buyer with all information, documents, representations and
agreements as the underwriters or Buyer may deem reasonably necessary in
connection with such registration and (iii) agree in writing not to sell or
transfer any shares of the capital stock of Buyer not included in such
registration during the period beginning ten (10) days prior to the filing
26
and ending ninety (90) days after the effective date of such registration
without the underwriters' or the Company's consent; provided, however, that if
-----------------
the managing underwriter or underwriters in the registered offering advise RSC
that the inclusion in the offering of shares of RSC Common Stock owned by
Sellers would have a material adverse effect on the marketability or price of
the offering, then the number of shares of RSC Common Stock to be included by
Sellers shall be reduced on a pro rata basis in proportion to the number of
shares of RSC Common Stock requested to be included by each Seller and by any
other stockholder of the Company.
ARTICLE VII
CONDITIONS TO SELLERS' OBLIGATIONS
----------------------------------
The obligations of Sellers to consummate the transactions provided for
hereby are subject, in the discretion of Sellers, to the satisfaction, on or
prior to the Closing Date, of each of the following conditions, any of which may
be waived by Sellers:
7.1 Representations, Warranties and Covenants. All representations and
-----------------------------------------
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects at and as of the date of this Agreement and at and as of the
Closing Date, except as and to the extent that the facts and conditions upon
which such representations and warranties are based are expressly required or
permitted to be changed by the terms hereof, and Buyer shall have performed and
satisfied all agreements and covenants required hereby to be performed by it
prior to or on the Closing Date.
7.2 No Proceedings, Litigation or Laws. No Action by any governmental
----------------------------------
authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby and
which could reasonably be expected to materially damage Sellers if the
transactions contemplated hereunder are consummated.
7.3 Assumption Document. Buyer shall have executed the Assumption Document.
-------------------
7.4 New Leases. Sellers or the Seller Stockholder (as applicable) as lessor,
----------
and Buyer as lessee, will have entered into, prior to the Closing Date, leases
(the "New Leases") with respect to the Facilities, in the final form mutually
satisfactory to Buyer and Sellers.
7.5 Plan of Remediation. To the extent that any environmental remediation
-------------------
required pursuant to Section 6.8 has not been completed prior to Closing,
Sellers shall approve of and proceed with any plan of remediation.
7.6 RSC Common Stock. There shall have been no cessation of trading of
----------------
RSC's Common Stock on NASDAQ or a national securities exchange.
7.7 Opinion of Counsel. Buyer and RSC shall have delivered to Sellers an
------------------
opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to Buyer and RSC, dated as of the Closing
Date, to the effect that the RSC Common Stock has been duly authorized, validly
issued, fully paid and non-assessable.
27
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
---------------------------------
The obligations of Buyer to consummate the transactions provided for
hereby are subject, in the discretion of Buyer, to the satisfaction, on or prior
to the Closing Date, of each of the following conditions, any of which may be
waived by Buyer:
8.1 Representations, Warranties and Covenants. All representations and
-----------------------------------------
warranties of Sellers contained in this Agreement shall be true and correct in
all material respects at and as of the date of this Agreement and at and as of
the Closing Date, except as and to the extent that the facts and conditions upon
which such representations and warranties are based are expressly required or
permitted to be changed by the terms hereof, and Sellers shall have performed
and satisfied all agreements and covenants required hereby to be performed by it
prior to or on the Closing Date.
8.2 Consents. All Permits and waivers necessary to the consummation of the
--------
transactions contemplated hereby and for the operation of the Business by Buyer
(including, without limitation, (a) all required third party consents to the
assignment of the Assumed Contracts to be assumed by Buyer and (b) all required
approvals of Buyer's lenders) shall have been obtained.
8.3 Disclosure Schedule. Pursuant to Section 6.3 hereof, Buyer shall have
-------------------
the right to approve, in its sole discretion, any portion of the Disclosure
Schedule not delivered prior to the execution of this Agreement.
8.4 Assumption Agreement. In connection with collective bargaining agreement
--------------------
by and between Sellers and Teamsters Local Union 541 (the "Union"), dated
December 2, 1996 through December 15, 1999, an Assumption Agreement shall have
been executed by and between Buyer and the Union, which contains provisions (i)
allowing Buyer to change benefits providers so long as benefits remain
substantially the same, (ii) allowing Buyer not to offer employment to Union
members who do not pass the physical examination, drug and alcohol abuse
screening and otherwise fail to meet the criteria set forth in Section 6.7
hereof, and (iii) making other agreements reasonably requested by Buyer.
8.5 No Proceedings or Litigation. No Action by any governmental authority or
----------------------------
other person shall have been instituted or threatened which questions the
validity or legality of the transactions contemplated hereby and which could
reasonably be expected to damage Buyer materially if the transactions
contemplated hereby are consummated, including without limitation any Material
Adverse Effect on the right or ability of Buyer to own, operate, possess or
transfer the Assets after the Closing. There shall not be any statute, rule or
regulation that makes the purchase and sale of the Business or the Assets
contemplated hereby illegal or otherwise prohibited.
8.6 Opinion of Counsel. Sellers shall have delivered to Buyer an opinion of
------------------
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to Sellers and the Seller Stockholder, dated
as of the Closing Date, in form and substance reasonably satisfactory to Buyer,
to the effect that:
8.6.1 Incorporation. Sellers have been duly incorporated and are
-------------
validly existing and in good standing under the laws of the State of Kansas;
28
8.6.2 Corporate Power and Authority. Sellers have the necessary
-----------------------------
corporate power and authority to enter into this Agreement and the Ancillary
Agreements to which they are a party and to consummate the transactions
contemplated hereby and thereby and to own, lease and operate the Assets and its
other properties and to conduct the Business as presently conducted;
8.6.3 Corporate Action. The execution, delivery and performance of
----------------
this Agreement, the Ancillary Agreements and the New Leases to which Sellers are
a party have been duly authorized by all necessary corporate action of Sellers,
and this Agreement and the New Leases have been duly executed and delivered by
Sellers or the Seller Stockholder, as applicable; the approval of this Agreement
by the stockholders of Sellers have been duly obtained in accordance with the
provisions of Sellers' Articles of Incorporation and Bylaws and applicable law;
8.6.4 Obligation of Sellers or Seller Stockholder. This Agreement,
-------------------------------------------
each Ancillary Agreement and each New Lease constitutes a legally valid and
binding obligation of Sellers or the Seller Stockholder, as applicable,
enforceable against Sellers or the Seller Stockholder in accordance with their
terms, except as limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally or by
equitable principles (whether considered in an action at law or in equity), (ii)
limitations imposed by federal or applicable state law or equitable principles
upon the availability of specific performance, injunctive relief or other
equitable remedies, or (iii) other customary limitations reasonably satisfactory
to Buyer's counsel;
8.6.5 No Breach. Neither the execution and delivery of this Agreement,
---------
the Ancillary Agreements or the New Leases by Sellers or the Seller Stockholder,
as applicable, nor the consummation of the transactions contemplated hereby or
thereby will (i) violate or conflict with any provision of the Articles of
Incorporation or Bylaws of Sellers, (ii) breach, or cause a default under, any
term or provision of any material contract listed on a schedule to such opinion
to which contract Sellers or the Seller Stockholder are a party or by which the
Assets are bound, or (iii) violate any judgment, decree, injunction, writ or
order applicable to Sellers or the Seller Stockholder;
8.6.6 No Permits Required. No Permit of, or filing with, any
-------------------
governmental authority or, to the best knowledge of such counsel, any other
person, is required for the execution and delivery of this Agreement, the
Ancillary Agreements or the New Leases by Sellers or the Seller Stockholder, as
applicable, or the consummation by Sellers or the Seller Stockholder of the
transactions contemplated hereby or thereby, except as set forth in this
Agreement or the schedules or exhibits hereto;
8.6.7 No Actions Pending. Except as set forth in this Agreement or the
------------------
schedules hereto, to the best knowledge of such counsel, no Action is pending or
threatened (i) against Sellers or the Assets or the Business, (ii) against any
of the officers or directors of Sellers as such, (iii) in which Sellers are a
plaintiff, or (iv) which questions the validity or legality of the transactions
contemplated hereby;
8.6.8 No Violation of Law. Neither the execution and delivery of this
-------------------
Agreement, the Ancillary Agreements or the New Leases by Sellers or the Seller
Stockholder, as applicable, nor the consummation of the transactions
contemplated hereby or thereby will violate or result in a failure to comply
with any statute, law, ordinance, regulation, rule or order of any federal,
state or local government or any other governmental department or agency, or any
judgment, decree or order of any court, applicable to
29
Sellers, the Seller Stockholder or the Business; and, to the best knowledge of
such counsel, Sellers have all licenses, franchises and other authority required
to conduct the Business as it is now being conducted;
8.6.9 Transfer and Assignment. The documents to be delivered by
-----------------------
Sellers at the Closing to effect the transfer and assignment to Buyer of all
right, title and interest in and to the Assets are effective to do so, subject
to (i) the effects of bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to creditors' rights generally and equitable
principles (whether considered in an action at law or in equity), (ii)
limitations imposed by federal or state law or equitable principles upon the
availability of specific performance, injunctive relief or other equitable
remedies, or (iii) other customary limitations reasonably satisfactory to
Buyer's counsel;
8.6.10 Other Opinions. Such other opinions as any lender to Buyer may
--------------
reasonably request.
In rendering such opinions, such counsel may rely as to factual matters
upon certificates and assurances of public officials and officers of Sellers.
In addition, such opinions may be subject to such additional qualifications and
exceptions as are reasonably acceptable to counsel to Buyer.
8.7 Certificates. Sellers shall furnish Buyer with such certificates of its
------------
officers and others to evidence compliance with the conditions set forth in this
Article VIII as may be reasonably requested by Buyer.
8.8 New Leases. EL, Central, lessor, as applicable and Buyer, as lessee,
----------
will have entered into, prior to the Closing Date, the New Leases with respect
to the Facilities in the final form mutually satisfactory to Buyer and Sellers.
8.9 Employment and Noncompetition Agreements. Buyer and ▇▇▇▇ ▇▇▇▇▇▇ will
----------------------------------------
have entered into, prior to the Closing Date, an Employment and Noncompetition
Agreement in the final form mutually satisfactory to Buyer and Sellers.
8.10 Conveyancing Documents; Release of Encumbrances. Sellers will have
-----------------------------------------------
executed and delivered prior to the Closing Date each of documents described in
Section 3.2 hereof so as to effect the transfer and assignment to Buyer of all
right, title and interest in and to the Assets and Sellers shall have filed
(where necessary) and delivered to Buyer all documents necessary to release the
Assets from all Encumbrances (except for Encumbrances specifically accepted by
Buyer under Section 4.4), which documents shall be in a form reasonably
satisfactory to Buyer's counsel.
8.11 Material Changes. Since the Interim Balance Sheet Date, there shall not
----------------
have been any Material Adverse Change with respect to the Business or the
Assets.
8.12 Corporate Documents. Buyer will have received from Sellers, prior to
-------------------
the Closing Date, resolutions adopted by their respective boards of directors
and shareholders approving this Agreement, the Ancillary Agreements and the New
Leases to which they will be a party, and the transactions contemplated hereby
and thereby. Buyer's board of directors shall have approved this Agreement and
the transactions and agreements contemplated hereby.
30
8.13 Due Diligence Review. Buyer and its Representatives shall have
--------------------
conducted a due diligence review of Sellers' Books and Records, Financial
Statements, and other records and accounts of the Business, and in the sole
discretion of Buyer, Buyer shall be satisfied on the basis of such review that
there has been no breach of the representations and warranties or the
pre-closing covenants of Sellers made pursuant to this Agreement. Such review
shall have no effect whatsoever on the liability of Sellers to Buyer under this
Agreement or otherwise for breach of any representations, warranties, or
covenants of Seller or hereunder.
8.14 Permits. Buyer shall have obtained or been granted the right to use all
-------
Permits necessary to its operation of the Business.
8.15 Completion of Environmental Remediation. Sellers or their agents shall
---------------------------------------
have completed any "required remediation" or shall have approved any plan of
remediation within the meaning of Section 6.8, subject to the procedures set
forth in Section 6.8 with respect to the certification of such completion and
the resolution of any disputes relating thereto.
8.16 Financing. Buyer shall have obtained by May 30, 1997 all lender
---------
approvals and financing to pay the cash portion of the purchase price.
ARTICLE IX
RISK OF LOSS; CONSENTS TO ASSIGNMENT
------------------------------------
9.1 Risk of Loss. From the date hereof through the Closing, all risk of loss
------------
or damage to the property included in the Assets shall be borne by Sellers, and
thereafter shall be borne by Buyer. If any portion of the Assets is destroyed
or damaged by fire or any other cause on or prior to the Closing, other than
use, wear or loss in the ordinary course of the Business, Sellers shall give
written notice to Buyer as soon as practicable after discovery of such damage or
destruction, the amount of insurance, if any, covering such Assets and the
amount, if any, which Sellers are otherwise entitled to receive as a
consequence. Prior to the Closing, Buyer shall have the option, which shall be
exercised by written notice to Sellers within ten (10) calendar days after
receipt of Sellers' notice or if there is not ten (10) calendar days prior to
the Closing, as soon as practicable prior to the Closing, of (a) accepting such
Assets in their destroyed or damaged condition in which event Buyer shall be
entitled to the proceeds of any insurance or other proceeds payable with respect
to such loss and to such indemnification for any uninsured portion of such loss
pursuant to Section 10.3, and the full Purchase Price shall be paid for such
Assets, (b) excluding such Assets from this Agreement, in which event the
Purchase Price shall be reduced by the amount allocated to such Assets, as
mutually agreed between the parties or (c) terminating this Agreement in
accordance with Section 11.1. If Buyer accepts such Assets, then after the
Closing, any insurance or other proceeds shall belong, and shall be assigned to,
Buyer without any reduction in the Purchase Price; otherwise, such insurance
proceeds shall belong to Sellers.
9.2 Consents to Assignment. Anything in this Agreement to the contrary
----------------------
notwithstanding, this Agreement shall not constitute an agreement to assign any
Contract, lease, license, sales order, purchase order or any claim or right or
any benefit arising thereunder or resulting therefrom if an attempted assignment
thereof, without the consent of a third party thereto, would constitute a breach
thereof or in any way adversely affect the rights of Buyer thereunder. If such
consent is not obtained, or if an attempted assignment thereof would be
ineffective or would affect the rights thereunder so that Buyer would not
31
receive all such rights, Sellers will cooperate with Buyer, in all reasonable
respects, to provide to Buyer the benefits under any such Contract, lease,
license, sales order, purchase order, claim or right including without
limitation enforcement for the benefit of Buyer of any and all rights of Seller
against a third party thereto arising out of the breach or cancellation by such
third party or otherwise.
ARTICLE X
ACTIONS BY SELLERS AND BUYER
----------------------------
AFTER THE CLOSING
-----------------
10.1 Books and Records; Payment of Liabilities.
-----------------------------------------
10.1.1 Books and Records. Each party agrees that it will cooperate
-----------------
with and make available to the other party, during normal business hours, all
Books and Records, information and employees (without substantial disruption of
employment) retained and remaining in existence after the Closing which are
necessary or useful in connection with any tax inquiry, audit, investigation or
dispute, any litigation or investigation or any other matter requiring any such
Books and Records, information or employees for any reasonable business purpose.
10.1.2 Cooperation and Records Retention. Sellers and Buyer shall
---------------------------------
(I) each provide the other with such assistance as may reasonably be requested
by any of them in connection with the preparation of any return, audit, or other
examination by any taxing authority or judicial or administrative proceedings
relating to liability for Taxes, (ii) each retain and provide the other with any
records or other information that may be relevant to such return, audit or
examination, proceeding or determination, and (iii) each provide the other with
any final determination of any such audit or examination, proceeding, or
determination that affects any amount required to be shown on any tax return of
the other for any period. Without limiting the generality of the foregoing,
Buyer and Sellers shall each retain, until the applicable statutes of
limitations (including any extensions) have expired, copies of all tax returns,
supporting work schedules, and other records or information that may be relevant
to such returns for all tax periods or portions thereof ending on or before the
Closing Date and shall not destroy or otherwise dispose of any such records
without first providing the other party with a reasonable opportunity to review
and copy the same.
10.1.3 Payment of Liabilities. Following the Closing Date, Sellers
----------------------
shall pay promptly when due all of the debts and liabilities of Sellers relating
to the Business, other than Assumed Liabilities, including without limitation
any accounts payable not assumed by Buyer and any liability of Sellers for
Taxes; provided, however, this covenant shall not apply to that portion (or all)
of any debt that Sellers are disputing in good faith and gives prompt notice to
Buyer of such dispute.
10.2 Survival of Representations, Etc. All statements contained in any
---------------------------------
certificate, schedule, exhibit, instrument or conveyance delivered by or on
behalf of the parties pursuant to this Agreement or in connection with the
transactions contemplated hereby shall be deemed to be representations and
warranties by the parties hereunder. The representations, warranties, covenants
and agreements of Sellers and Buyer contained herein shall survive the
consummation of the transactions contemplated hereby and the Closing Date,
without regard to any investigation made by any of the parties hereto. Except as
provided in this sentence, all such representations and warranties and all
claims and causes of action with respect thereto
32
(other than the provisions of Sections 4.17, 4.21 and this Section 10.2, and all
claims and causes of action with respect thereto) shall terminate upon
expiration of two years after the Closing Date. The representations and
warranties in Sections 4.17 shall survive until the expiration of the applicable
statute of limitations (with extensions) with respect to the matters addressed
in such section. The representations and warranties in Section 4.21 shall
survive upon expiration of four years after the Closing Date. The termination of
the representations and warranties provided herein shall not affect the rights
of a party in respect of any Claim made by such party in a writing received by
the other party prior to the expiration of the applicable survival period
provided herein.
10.3 Indemnifications.
----------------
10.3.1 By Sellers. Regardless of Sellers' or Seller Stockholders'
----------
knowledge of the existence of an Indemnifiable Event, as defined below, Sellers
and Seller Stockholder shall indemnify, defend, save and hold harmless Buyer,
its Affiliates and subsidiaries, and its respective Representatives, from and
against any and all claims, damages, costs, losses (including without limitation
diminution in value), Taxes, liabilities, judgments, penalties, fines,
obligations, lawsuits, deficiencies, demands and expenses (whether or not
arising out of third-party claims), including without limitation interest,
penalties, costs of mitigation, losses in connection with any Environmental Law
(including without limitation any clean-up or remedial action), lost profits and
other losses resulting from any shutdown or curtailment of operations, damages
to the environment, attorneys' fees, experts' fees and all amounts paid in
investigation, defense or settlement of any of the foregoing (herein,
"Damages"), incurred in connection with, arising out of, resulting from or
incident to (i) any breach of any representation or warranty, or the inaccuracy
of any representation or warranty, made by Sellers or Seller Stockholder in or
pursuant to this Agreement; (ii) any breach of any covenant or agreement made by
Sellers or Seller Stockholder in or pursuant to this Agreement; (iii) any
Excluded Liability; (iv) any liability imposed upon Buyer by reason of Buyer's
status as transferee of the Business or the Assets; (v) any liability arising
under any Environmental Law on account of the conduct of Sellers or prior owners
or users of the Facilities or other persons, or on account of the operation of
the Business or the Facilities, or related to any Environmental Condition
existing, in each case on or at any time prior to the Closing Date; or (vi) any
Post-Closing Environmental Liability (collectively, the "Indemnifiable Events").
Without limiting the generality of the foregoing, the indemnification provided
herein, insofar as it relates to any Environmental Law or Environmental
Condition, shall specifically cover costs incurred in connection with any
investigation of site conditions (excepting the cost of the Environmental
Assessments) or any clean-up, remedial, removal or restoration work required by
any federal, state or local governmental agency or political subdivision or by
the provisions of Section 6.8 hereof. For purposes of this Section 10.3.1,
"Post-Closing Environmental Liability" shall mean any liability imposed on Buyer
arising out of or related to events occurring on or after the Closing Date and
prior to the completion of all required remediation in accordance with Section
6.8 hereof, and resulting from any Environmental Condition described in the
Environmental Assessments, including without limitation those Environmental
Conditions described therein but not identified as being in violation of any
Environmental Law and those related to the absence of any Permits, but excluding
any liability to the extent such liability results from the negligent acts or
willful misconduct of Buyer or its Representatives. In addition to Sellers'
obligations pursuant to Sections 6.8.3 and 6.8.4 of this Agreement, and without
limiting the generality of the foregoing, Sellers shall specifically indemnify
Buyer, and Sellers shall assume and discharge all Damages arising out of the
pre-Closing activities that are associated with: (i) any Release or threatened
Release of any Hazardous Substance that occurred or was in existence on the
Facilities on or before the Closing Date; (ii) any offsite disposal, migration
or Release of any Hazardous Substance that has resulted or will result in the
future as a result of
33
activities that occurred on or before the Closing Date; and (iii) any removal,
remediation or other activities taken with respect to the soil, surface water or
groundwater. Without limiting the foregoing, Sellers shall also specifically
indemnify Buyer, and Seller shall assume and discharge all Damages arising out
of the pre-Closing operation, ownership, and use of the underground storage
tanks ("USTs") and aboveground storage tanks ("ASTs") (defined below), including
but not limited to: (i) any Release or threatened Release of any Hazardous
Substance that occurred or was in existence on the Facilities on or before the
closing date; (ii) any offsite disposal, migration or Release of any Hazardous
Substance that has resulted or will result in the future as a result of
activities that occurred on or before the closing date; and (iii) any removal,
remediation or other activities taken with respect to the soil, surface water or
groundwater.
10.3.2 By Buyer. Buyer shall indemnify and save and hold harmless
--------
Sellers, their Affiliates and Representatives from and against any and all
Damages incurred in connection with, arising out of, resulting from or incident
to (i) any breach of any representation or warranty, or the inaccuracy of any
representation or warranty, made by Buyer in or pursuant to this Agreement; (ii)
any breach of any covenant or agreement made by Buyer in or pursuant to this
Agreement; or (iii) any Assumed Liability insofar as such Assumed Liability
arises from and after the Closing.
10.3.3 Cooperation. The indemnified party shall cooperate in all
-----------
reasonable respects with the indemnifying party and such attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom; provided, however, that the indemnified party may, at its own
cost, participate in the investigation, trial and defense of such lawsuit or
action and any appeal arising therefrom. The parties shall cooperate with each
other in any notifications to insurers.
10.3.4 Defense of Claims. If a claim for Damages (a "Claim") is to be
-----------------
made by a party entitled to indemnification hereunder against the indemnifying
party, the party claiming such indemnification shall, subject to Section 10.2,
give written notice (a "Claim Notice") to the indemnifying party as soon as
practicable after the party entitled to indemnification becomes aware of any
fact, condition or event which may give rise to Damages for which
indemnification may be sought under this Section 10.3. If any lawsuit or
enforcement action is filed against any party entitled to the benefit of
indemnity hereunder, written notice thereof shall be given to the indemnifying
party as promptly as practicable (and in any event within fifteen (15) calendar
days after the service of the citation or summons). The failure of any
indemnified party to give timely notice hereunder shall not affect rights to
indemnification hereunder, except to the extent that the indemnifying party
demonstrates prejudice caused by such failure. After such notice, if the
indemnifying party shall acknowledge in writing to the indemnified party that
the indemnifying party shall be obligated under the terms of its indemnity
hereunder in connection with such lawsuit or action, then the indemnifying party
shall be entitled, if it so elects, (i) to take control of the defense and
investigation of such lawsuit or action, (ii) to employ and engage attorneys of
its own choice (which shall be reasonably acceptable to the indemnified party)
to handle and defend the same, at the indemnifying party's cost, risk and
expense unless the named parties to such action or proceeding include both the
indemnifying party and the indemnified party and the indemnified party has been
advised in writing by counsel that there may be one or more legal defenses
available to such indemnified party that are different from or additional to
those available to the indemnifying party, in which case the indemnifying party
shall engage separate counsel (reasonably acceptable to the indemnified party)
to represent the indemnified party, and (iii) to compromise or settle such
claim, which compromise or settlement shall be made only with the written
consent of the indemnified party, such consent not to be unreasonably withheld;
provided, however, if the remediation or resolution of any such Claim will occur
on or at any Facility or is reasonably expected to have a Material Adverse
Effect on
34
the indemnified party's business operations, then, notwithstanding the
foregoing, the indemnified party shall be entitled to control such remediation
or resolution, including without limitation to take control of the defense and
investigation of such lawsuit or action, to employ and engage attorneys of its
own choice to handle and defend the same, at the indemnifying party's cost, risk
and expense, and to compromise or settle such Claim. If the indemnifying party
fails to assume the defense of such claim within fifteen (15) calendar days
after receipt of the Claim Notice, the indemnified party against which such
claim has been asserted will (upon delivering notice to such effect to the
indemnifying party) have the right to undertake, at the indemnifying party's
cost and expense, the defense, compromise or settlement of such claim on behalf
of and for the account and risk of the indemnifying party. In the event the
indemnified party assumes the defense of the claim, the indemnified party will
keep the indemnifying party reasonably informed of the progress of any such
defense, compromise or settlement. The indemnifying party shall be liable for
any settlement of any action effected pursuant to and in accordance with this
Section 10.3 and for any final judgment (subject to any right of appeal), and
the indemnifying party agrees to indemnify and hold harmless an indemnified
party from and against any Damages by reason of such settlement or judgment.
10.3.5 Buyer's Right of Offset. Anything in this Agreement to the
-----------------------
contrary notwithstanding, Buyer may withhold and set off any amount as to which
Sellers are obligated to indemnify Buyer pursuant to this Section 10.3 against
(i) the portion of the Holdback Amount allocable to the resolution of Sellers'
indemnification obligations under this Section 10.3 and (ii) any other amounts
otherwise due Sellers or Seller Stockholder.
10.3.6 Limitations. Neither Buyer nor Sellers shall be liable to the
-----------
other under this Section 10.3 for any Damages until the amount otherwise due the
party being indemnified exceeds $75,000 in the aggregate, in which case such
indemnifying party will be liable to the indemnified party for all amounts above
the first $25,000 of Damages. Notwithstanding the preceding sentence, this
limitation shall not apply with respect to Damages arising out of a breach of a
representation or warranty contained in Sections 4.17 or 4.21 or the covenants
contained in Section 10.1.3. In addition, neither Buyer nor Seller shall be
liable to the other under this Section 10.3 for any Damages for an aggregate
amount in excess of $3,100,000.
10.3.7 Liability and Remedies, etc. Except as set forth below, no
----------------------------
individual Representative of any party shall be personally liable for any
Damages under the provisions contained in this Section 10.3. Nothing herein
shall relieve either party of any liability to make any payment expressly
required to be made by such party pursuant to this Agreement. The term
"Damages" as used in this Section 10.3 is not limited to matters asserted by
third parties against Seller or Buyer, but includes Damages incurred or
sustained by Sellers or Buyer in the absence of third party claims. Payments by
Buyer of amounts for which Buyer is indemnified hereunder, and payments by
Sellers of amounts for which Seller is indemnified, shall not be a condition
precedent to recovery. Sellers' obligation to indemnify Buyer, and Buyer's
obligation to indemnify Sellers, shall not limit any other rights, including
without limitation rights of contribution which either party may have under
statute or common law. Buyer and Sellers agree and acknowledge that offset
against the Holdback Amount shall not be Buyer's exclusive method of receiving
indemnification from Sellers pursuant to Section 10.3; rather, Buyer will have
all other remedies provided by law or in this Agreement. The Seller Stockholder
shall be liable with Sellers with respect to all indemnification obligations of
Sellers under this Section 10.3.
10.4 Payment of Holdback Amount. On the first anniversary of the Closing
--------------------------
Date, if Buyer has not delivered a Claim Notice to Seller, the remaining portion
of the Holdback Amount allocable to the resolution
35
of Seller's indemnification obligations under Section 10.3 shall be paid
promptly to Sellers. Subject to Section 2.4.3, if Buyer has delivered one or
more Claim Notices to Sellers on or before the first anniversary of the Closing
Date and has exercised its right of offset pursuant to Section 10.3.5, or has
not then determined the appropriate amount to be offset, Buyer shall pay to
Sellers promptly after the first anniversary of the Closing Date an amount equal
to remaining allocable portion of the Holdback Amount less any amounts offset
against it pursuant to Section 10.3.5 and an amount reasonably estimated by
Buyer to cover any unresolved claims. As promptly as practicable after the first
anniversary of the Closing Date, Buyer shall determine the amount to be retained
by it in satisfaction of any such unresolved claims and submit the balance, if
any, to Seller.
10.5 Taxes. Subject to Section 2.7, Sellers shall pay, or cause to be paid,
-----
when due all Taxes for which Sellers are or may be liable or that are or may
become payable with respect to all taxable periods ending on or prior to the
Closing Date.
10.6 Tax Clearance Certificate. Within five business days after the Closing
-------------------------
Date, Sellers shall provide to Buyer with a clearance certificate or similar
document(s) that may be required by any state taxing authority in order to
relieve Buyer of any obligation to withhold any portion of the Purchase Price.
10.7 Further Action. After the Closing, Sellers shall take all actions
--------------
reasonably necessary to effect the conveyance of the Assets to Buyer free and
clear of all Encumbrances (except for Encumbrances specifically accepted by
Buyer under Sections 2.2 and 4.4) and otherwise required by Buyer's lenders.
ARTICLE XI
MISCELLANEOUS
-------------
11. Termination.
-----------
11.1.1 Termination. This Agreement may be terminated at any time prior
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to Closing:
11.1.1.1 By mutual written consent of Buyer and Sellers;
11.1.1.2 By Buyer or Sellers if the Closing shall not have
occurred on or before May 30, 1997; provided, however, that this provision shall
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not be available to Buyer if Sellers have the right to terminate this Agreement
under Section 11.1.1.4, and this provision shall not be available to Seller if
Buyer has the right to terminate this Agreement under Section 11.1.1.3;
11.1.1.3 By Buyer if there is a material breach of any
representation or warranty set forth in Article IV hereof or any covenant or
agreement to be complied with or performed by Sellers pursuant to the terms of
this Agreement or the failure of a condition set forth in Article VIII to be
satisfied (and such condition is not waived in writing by Buyer) on or prior to
the Closing Date, or the occurrence of any event which results or would result
in the failure of a condition set forth in Article VIII to be satisfied on or
prior to the Closing Date, provided that Buyer may not terminate this Agreement
prior to the Closing if Sellers have not had an adequate opportunity to cure
such failure; or
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11.1.1.4 By Sellers if there is a material breach of any
representation or warranty set forth in Article V hereof or of any covenant or
agreement to be complied with or performed by Buyer pursuant to the terms of
this Agreement or the failure of a condition set forth in Article VII to be
satisfied (and such condition is not waived in writing by Sellers) on or prior
to the Closing Date, or the occurrence of any event which results or would
result in the failure of a condition set forth in Article VII to be satisfied on
or prior to the Closing Date; provided that Seller may not terminate this
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Agreement prior to the Closing Date if Buyer has not had an adequate opportunity
to cure such failure.
11.1.2 In the Event of Termination. In the event of termination of this
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Agreement:
11.1.2.1 Each party will redeliver all documents, work papers and
other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same; and
11.1.2.2 No party hereto shall have any liability or further
obligation to any other party to this Agreement, except as stated in Sections
11.7, 11.10, 11.1.2.1 or this Section 11.1.2.2, and except for any willful
breach of this Agreement occurring prior to the proper termination of this
Agreement. The foregoing provisions shall not limit or restrict the
availability of specific performance or other injunctive relief to the extent
that specific performance or such other relief would otherwise be available to a
party hereunder.
11.2 Assignment. Neither this Agreement nor any of the rights or obligations
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hereunder may be assigned by any party without the prior written consent of the
other parties; except that Buyer may, without such consent, assign all such
rights to any lender as collateral security and assign all such rights and
obligations to a wholly-owned subsidiary (or a partnership controlled by Buyer)
or subsidiaries of Buyer or to a successor in interest to Buyer or to any entity
to whom the Business may be sold by Buyer which shall assume all obligations and
liabilities of Buyer under this Agreement. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns, and no other person shall
have any right, benefit or obligation under this Agreement as a third party
beneficiary or otherwise.
11.3 Notices. All notices, requests, demands and other communications which
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are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given when received if personally delivered; upon
receipt of facsimile confirmation if transmitted by telecopy, electronic or
digital transmission method; the day after it is sent, if sent for next day
delivery to a domestic address by recognized overnight delivery service (e.g.,
----
Federal Express); and upon receipt, if sent by certified or registered mail,
return receipt requested. In each case notice shall be sent to:
If to Sellers or the Seller Stockholder, addressed to:
Mr. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
37
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer, addressed to:
▇▇▇▇▇▇ ▇▇▇▇▇ Equipment Company
Rental Service Corporation
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Fax (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
11.4 Choice of Law. This Agreement shall be construed, interpreted and the
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rights of the parties determined in accordance with the laws of the State of
Missouri (without reference to the choice of law provisions thereof), except
with respect to matters of law concerning the internal corporate affairs of any
corporate entity which is a party to or the subject of this Agreement, and as to
those matters the law of the jurisdiction under which the respective entity
derives its powers shall govern.
11.5 Entire Agreement; Amendments and Waivers. This Agreement, together with
----------------------------------------
all exhibits and schedules hereto, constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. No
amendment, supplement, modification or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
11.6 Multiple Counterparts. This Agreement may be executed in one or more
---------------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
38
11.7 Expenses. Except for the filing fee associated with filings required
--------
pursuant to the HSR Act, accounting fees associated with the audit of EL to be
paid by Buyer and as otherwise specified in this Agreement, each party hereto
shall pay its own legal, accounting, out-of-pocket and other expenses incident
to this Agreement and to any action taken by such party in preparation for
carrying this Agreement into effect.
11.8 Invalidity. In the event that any one or more of the provisions
----------
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
11.9 Titles. The titles, captions or headings of the Articles, Sections and
------
subsections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
11.10 Publicity; Confidentiality. Neither Buyer nor Seller shall issue any
--------------------------
press release or make any public statement regarding, or disclose to any third
party (except as required by law or legal process, and except to each party's
lenders if such lenders so require) any of the terms of, the transactions
contemplated hereby, without prior written approval of the other party, provided
that Buyer and Sellers may, if they mutually agree, issue or make an appropriate
press release or public announcement after the Closing Date. In the event that
this Agreement is terminated prior to Closing, Buyer agrees to return to Sellers
all correspondence and documents furnished by Seller or its Representatives, and
agrees not to disclose or use for its own purposes any confidential or
proprietary information of Seller that has been furnished to it by Sellers or
their Representatives.
11.11 Cumulative Remedies. All rights and remedies of either party hereto
-------------------
are cumulative of each other and of every other right or remedy such party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
11.12 Consent of Seller Stockholder. Seller Stockholder by executing this
-----------------------------
Agreement waives the notice of the meeting and the right to receive any
materials otherwise required to be furnished at a meeting consents to the
transfer of the Assets to Buyer and the execution, delivery and consummation of
this Agreement. Seller Stockholder additionally agrees to execute and deliver
such separate certificates or instruments as may be requested by Sellers or
Buyer to give effect to the waivers and consents given herein.
11.13 Arbitration. Any controversy arising after the Closing out of or
-----------
relating to this Agreement (including, without limitation, pursuant to Section
2.4 or 10.3, but excluding for purposes of this Section 11.13, the leases, and
the employment and noncompetition agreement attached as Exhibits hereto), or
relating to the breach hereof, shall be settled by arbitration conducted in
Kansas City, Missouri in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect (except as otherwise expressly
provided in this Agreement). The award rendered by the arbitrator(s) shall be
final and judgment upon the award rendered by the arbitrator(s) may be entered
upon it in any court having jurisdiction thereof. The arbitrator(s) shall
possess the powers to issue mandatory orders and restraining orders in
connection with such arbitration. The expenses of the arbitration shall be
borne by the losing party unless otherwise allocated by the arbitrator(s). The
agreement to arbitrate shall be specifically
39
enforceable under the prevailing arbitration law. During the continuance of any
arbitration proceedings, the parties shall continue to perform their respective
obligations under this Agreement.
(Signature Page Follows)
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IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be duly executed on their respective behalf, by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
▇▇▇▇▇▇ ▇▇▇▇▇ EQUIPMENT COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Its: V.P. & Secretary
----------------------------
CENTRAL STATES EQUIPMENT, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Its: President
-----------------------------
SELLER STOCKHOLDER:
/s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇ (Shareholder)
EQUIPMENT LESSORS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Its: President
-----------------------------
SELLER STOCKHOLDER:
/s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇ (Shareholder)
41