EXHIBIT 10.4
STOCK PURCHASE AND REDEMPTION AGREEMENT
BY AND AMONG
▇▇▇▇ CORP.,
INDUSTRIAL EQUIPMENT RENTALS, INC.
AND
ALL OF THE SHAREHOLDERS
AND HOLDERS OF SUBORDINATED DEBENTURES
OF
INDUSTRIAL EQUIPMENT RENTALS, INC.
----------------------------
JULY 14, 1997
----------------------------
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ARTICLE I - SALE AND PURCHASE OF SHARES; REDEMPTION OF PREFERRED STOCK
AND PURCHASE AND CANCELLATION OF SUBORDINATED DEBENTURES......... 1
1.01 Sale and Purchase of Company Common Stock........................ 1
1.02 Tender and Redemption of Redemption Shares....................... 3
1.03 Surrender, Payment and Cancellation of Subordinated Debentures... 3
1.04 Payments at Closing.............................................. 4
1.05 Common Stock Purchase Price Adjustment........................... 5
1.06 Sellers' Representative.......................................... 6
1.07 Waivers and Consents............................................. 7
1.08 Timing........................................................... 7
ARTICLE II - CLOSING...................................................... 7
2.01 Closing.......................................................... 7
2.02 Deliveries by Sellers to the Buyer............................... 8
2.03 Deliveries by the Company........................................ 8
2.04 Deliveries by the Buyer.......................................... 9
2.05 Termination in Absence of Closing................................ 9
ARTICLE III- REPRESENTATIONS AND WARRANTIES
OF STOCKHOLDERS AND COMPANY...................................... 10
3.01 Corporate Existence and Qualification; Corporate Documents....... 10
3.02 Authority, Approval and Enforceability........................... 10
3.03 Capitalization and Ownership..................................... 10
3.04 Preemptive Rights; Registration Rights........................... 11
3.05 No Company Defaults or Consents.................................. 11
3.06 No Proceedings................................................... 12
3.07 Financial Statements............................................. 12
3.08 Liabilities and Obligations...................................... 12
3.09 Accounts Receivable.............................................. 12
3.10 Employee Matters................................................. 12
3.11 Employee Benefit Matters......................................... 13
3.12 Absence of Certain Changes....................................... 14
3.13 Commitments...................................................... 15
3.14 Insurance........................................................ 17
3.15 Patents, Trade-marks, Service Marks and Copyrights............... 17
3.16 Trade Secrets and Customer Lists................................. 18
3.17 Title to Assets; Condition of Assets............................. 18
3.18 Compliance with Laws............................................. 18
3.19 Litigation; Default.............................................. 18
3.20 Environmental Matters............................................ 19
3.21 Banks............................................................ 20
3.22 Suppliers and Customers Sales.................................... 20
3.23 Brokerage........................................................ 20
3.24 Disclosure; Due Diligence........................................ 20
3.25 Ownership Interests of Interested Persons........................ 20
3.26 Investments in Competitors....................................... 21
3.27 Certain Payments................................................. 21
3.28 Government Inquiries............................................. 21
3.29 Other Transactions............................................... 21
3.30 Tax Matters...................................................... 21
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ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF EACH SELLER................ 23
4.01 Title to the Shares.............................................. 23
4.02 Authority to Execute and Perform Agreement....................... 23
4.03 No Sellers Defaults or Consents.................................. 23
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF THE BUYER................... 24
5.01 Corporate Existence and Qualification............................ 24
5.02 Authority, Approval and Enforceability........................... 24
5.03 No Default or Consents........................................... 24
5.04 No Proceedings................................................... 24
5.05 Brokerage........................................................ 25
5.06 Representations and Warranties on Closing Date................... 25
ARTICLE VI - OBLIGATIONS PRIOR TO CLOSING................................. 25
6.01 Buyer's Access to Information and Assets......................... 25
6.02 Company's Conduct of Business and Operations..................... 25
6.03 General Restrictions............................................. 26
6.04 Notice Regarding Changes......................................... 27
6.05 Preferential Purchase Rights..................................... 27
6.06 Consents and Best Efforts........................................ 27
6.07 Termination of Insurance Policies................................ 27
6.08 Casualty Loss.................................................... 28
6.09 Employee Matters................................................. 28
6.10 No Solicitation.................................................. 28
6.11 Employment Agreements............................................ 28
6.12 Consulting Agreement............................................. 28
ARTICLE VII - CONDITIONS TO SELLERS' AND BUYER'S OBLIGATIONS.............. 29
7.01 Conditions to Obligations of All Parties......................... 29
7.02 Conditions to Obligations of Sellers............................. 29
7.03 Conditions to Obligations of the Buyer........................... 30
ARTICLE VIII - SURVIVAL; RELEASE OF ESCROW FUND........................... 31
8.01 Survival of Representations and Warranties of the Company and
the Stockholders................................................. 31
ARTICLE IX - INDEMNIFICATION.............................................. 32
9.01 Obligation of the Sellers to Indemnify........................... 32
9.02 Obligation of the Buyer to Indemnify............................. 32
9.03 Notice and Opportunity to Defend................................. 32
9.04 Limitations on Indemnification................................... 33
9.05 Set-Off Rights................................................... 34
ARTICLE X- POST-CLOSING OBLIGATIONS....................................... 35
10.01 Further Assurances............................................... 35
10.02 Publicity........................................................ 35
10.03 Access to Records................................................ 35
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ARTICLE XI - MISCELLANEOUS................................................ 35
11.01 Brokers.......................................................... 35
11.02 Costs and Expenses............................................... 35
11.03 Notices.......................................................... 36
11.04 Governing Law.................................................... 36
11.05 Representations and Warranties................................... 37
11.06 Entire Agreement, Amendments and Waivers......................... 37
11.07 Binding Effect and Assignment.................................... 37
11.08 Remedies......................................................... 37
11.09 Exhibits and Schedules........................................... 37
11.10 Multiple Counterparts............................................ 37
11.11 References....................................................... 37
11.12 Survival......................................................... 38
11.13 Attorneys' Fees.................................................. 38
ARTICLE XII - DEFINITIONS................................................. 39
12.01 Affiliate........................................................ 39
12.02 Collateral Agreements............................................ 39
12.03 Company Assets................................................... 39
12.04 Damages.......................................................... 39
12.05 Environmental Law................................................ 39
12.06 Governmental Authorities......................................... 40
12.07 Hazardous Substances............................................. 40
12.08 Knowledge........................................................ 40
12.9 Legal Requirements............................................... 40
12.10 Permits.......................................................... 40
12.11 Properties....................................................... 40
12.12 Proportionate Share.............................................. 40
12.13 Regulations...................................................... 40
12.14 Used............................................................. 40
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LIST OF SCHEDULES
Schedule 3.01(a)......Certificate of Incorporation and By-laws of the
Company
Schedule 3.03(a)......Options, Warrants, Subscription Rights, Agreement
Relating to Company Capital Stock, and Accrued and
Unpaid Dividends
Schedule 3.03(b)......Capital Stock of the Subsidiary
Schedule 3.04.........Preemptive Rights
Schedule 3.05.........Company Defaults or Consents
Schedule 3.06.........Proceedings
Schedule 3.07.........Financial Statements
Schedule 3.08.........Liabilities and Obligations
Schedule 3.09.........Accounts Receivable
Schedule 3.10(a)......Compensation Plans
Schedule 3.10(b)......Compensation Plans
Schedule 3.10(c)......Employment Agreements
Schedule 3.10(f)......Compliance with Employment Laws
Schedule 3.10(h)......Continuation of Employment
Schedule 3.11.........Employee Benefit Plans
Schedule 3.12.........Absence of Certain Changes
Schedule 3.13.........Commitments
Schedule 3.15(a)......Proprietary Rights
Schedule 3.16.........Trade Secrets
Schedule 3.17(a)......Real Property Owned
Schedule 3.17(b)......Title to Company Assets
Schedule 3.17(c)......Real Property Leases
Schedule 3.19.........Litigation and Defaults
Schedule 3.20(a)......PCBs, TCE, PCE or Asbestos Containing Materials
Schedule 3.20(b)......Underground Storage Tanks
Schedule 3.20(c)......Releases of Hazardous Substances
Schedule 3.20(d)......Notices of Potential Liability
Schedule 3.20(e)......Hazardous Substances
Schedule 3.20(f)......Disposal and Recycling of Hazardous Substances
Schedule 3.21.........Banks, Accounts and Authorized Signatories
Schedule 3.22.........Suppliers and Customers
Schedule 3.23.........Brokers
Schedule 3.25.........Ownership Interests of Interested Persons
Schedule 3.27.........Certain Payments
Schedule 3.28.........Government Inquiries
Schedule 3.30.........Tax Matters
Schedule 4.03.........Sellers Defaults or Consents
Schedule 5.03.........Buyer Defaults or Consents
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LIST OF EXHIBITS
Exhibit A-1 - Common Stockholders
Exhibit A-2 - Preferred Stockholders
Exhibit A-3 - Debenture Holders
Exhibit B - Escrow Agreement
Exhibit C - Employment Agreement between the Company and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Exhibit D - Employment Agreement between the Company and ▇▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇
Exhibit E - Employment Agreement between the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Exhibit F - Employment Agreement between the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇
Exhibit G - Non-Competition Agreement between the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Exhibit H - Opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Exhibit I - Opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
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STOCK PURCHASE AND REDEMPTION AGREEMENT
This STOCK PURCHASE AND REDEMPTION AGREEMENT (the "Agreement")
is made and entered into as of July 14, 1997, by and among (i) ▇▇▇▇ CORP., a
Delaware corporation (the "Buyer"), (ii) INDUSTRIAL EQUIPMENT RENTALS, INC., a
Delaware corporation (the "Company"), (iii) each of the holders listed on
EXHIBIT A-1 hereto (the "Common Stockholders") of Common Stock, par value $0.01
per share ("Company Common Stock"), of the Company, (iv) each of the holders
listed on EXHIBIT A-2 hereto ("Preferred Stockholders and together with the
Common Stockholders, the "Stockholders") of (A) Junior Preferred Stock, par
value $100 per share ("Junior Preferred Stock"), of the Company, (B) Series A
Convertible Preferred Stock, par value $20 per share ("Series A Preferred
Stock"), of the Company and (C) Series B Preferred Stock, par value $3.70 per
share ("Series B Preferred Stock" and, together with the Series A Preferred
Stock and the Junior Preferred Stock, the "Redemption Shares"), of the Company,
and (v) each of the holders listed on EXHIBIT A-3 hereto (the "Debenture
Holders") of (A) the Company's 9% Subordinated Debentures (the "9% Debentures")
and (B) the Company's 12% Subordinated Debentures (the "12% Debentures" and,
together with the 9% Debentures, the "Subordinated Debentures") (the persons and
entities referred to in clauses (iii)-(v) above are hereinafter individually
referred to as a "Seller" and collectively as the "Sellers").
PRELIMINARY STATEMENT:
A. The Buyer desires to purchase all of the issued and outstanding
shares of Company Common Stock, and the Common Stockholders desire to sell such
Company Common Stock to the Buyer, upon the terms and subject to the conditions
set forth herein.
B. Contemporaneously with the consummation of the purchase and sale of
the Company Common Stock, (i) the Preferred Stockholders desire to tender to the
Company for redemption, and the Company desires to redeem, all of the issued and
outstanding Redemption Shares held by the Preferred Stockholders, and (ii) the
Debenture Holders desire to surrender to the Company for payment and
cancellation, and the Company desires to pay and cancel, all of the Subordinated
Debentures held by the Debenture Holders.
C. Capitalized terms used herein which have not been defined prior to
such use shall have the respective meanings given such terms in Article XII
hereof.
AGREEMENT
In consideration of the premises and the respective mutual agreements,
covenants, representations and warranties herein contained, the parties hereto
agree as follows:
ARTICLE I
SALE AND PURCHASE OF SHARES; REDEMPTION OF PREFERRED STOCK AND PURCHASE
AND CANCELLATION OF SUBORDINATED DEBENTURES
SECTION 1.01. SALE AND PURCHASE OF COMPANY COMMON STOCK.
(a) On the terms and subject to the conditions of this
Agreement, at the Closing referred to in Section 2.01 hereof, each Common
Stockholder shall sell, transfer, convey and deliver to the Buyer, and the Buyer
shall purchase, acquire and accept from each Common Stockholder, the number of
shares of Company Common Stock set forth opposite the name of each such Common
Stockholder on
EXHIBIT A-1 hereto under the heading "Number of Shares of Company Common Stock
Purchased", constituting all of the issued and outstanding shares of Company
Common Stock. The sale and purchase of the Company Common Stock pursuant to this
Agreement is sometimes hereinafter referred to as the "Stock Purchase."
(b) To effect the transfers contemplated by Section 1.01(a),
at the Closing, each Common Stockholder shall deliver, or cause to be delivered,
to the Sellers' Representative (as defined and provided for in Section 1.07
hereof), for redelivery to the Buyer, stock certificates representing the
Company Common Stock being sold by such Common Stockholder hereunder, together
with stock powers duly executed in blank or otherwise in proper form acceptable
to the Buyer for transfer to the Buyer on the books of the Company, against
payment therefor in accordance with Sections 1.04(a)(i) and 1.04(a)(ii) hereof.
(c) Upon the terms and subject to the conditions of this
Agreement, the aggregate purchase price (the "Stock Purchase Price") for (i) the
Company Common Stock being purchased by the Buyer from the Common Stockholders
hereunder and (ii) the Series B Preferred Stock being redeemed by the Company
pursuant to Section 1.02 (which Series B Preferred Stock will be treated as if
converted into Company Common Stock immediately prior to the Closing), shall be
an amount equal to:
(i) $51,676,693 (representing $63,950,000 less
(x) the Series A / Junior Preferred Stock
Redemption Price referred to in Section
1.02(d) below and (y) the Subordinated
Debenture Purchase Price referred to in
Section 1.03(c) below, PLUS
(ii) the excess, if any, of (x) the Company's
Working Capital (as defined below) as of the
Closing Date referred to in Section 2.01
hereof OVER (y) $5,119,624;
LESS the sum of:
(iii) the excess, if any, of (x) $5,119,624 OVER
(y) the Company's Working Capital as of the
Closing Date, PLUS
(iv) the Net Debt (as defined below) of the
Company as of the Closing Date.
That portion of the Stock Purchase Price (i) to be paid by the Buyer to the
Common Stockholders as set forth on EXHIBIT A-1 is referred to herein as the
"Common Stock Purchase Price" and (ii) to be paid by the Company to the holders
of shares of Series B Preferred Stock (the "Series B Stockholders") as set forth
on EXHIBIT A-1 is referred to herein as the "Series B Redemption Price." The net
amount of the adjustments required by Section 1.01(c) (ii), (iii) and (iv) is
hereinafter referred to as the "Preliminary Stock Purchase Price Adjustment.")
The Stock Purchase Price is subject to further adjustment as provided in Section
1.05.
As used in this Agreement, the Company's (i) "Working Capital" shall be
an amount equal to the excess, if any, of (A) total current assets minus cash,
over (B) the total current liabilities minus the sum of aggregate current
indebtedness and total accrued interest due and unpaid on indebtedness of the
Company and (ii) "Net Debt" shall be an amount equal to the sum of (A) the
outstanding amount of any of the interest bearing liabilities together with
accrued interest payable thereon and any prepayment penalties as of the Closing
Date (excluding therefrom the Redemption Shares and the Subordinated
Debentures), minus (B) cash in excess of $600,000, in each case as determined by
reference to the Company's Closing Date Unaudited Balance Sheet (as defined in
subparagraph (d) below).
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(d) The Common Stockholders shall cause to be prepared and
delivered to the Buyer at Closing (i) an unaudited consolidated balance sheet
for the Company forecasted as of the Closing Date (the "Closing Date Unaudited
Balance Sheet"), (ii) a calculation of the Preliminary Stock Purchase Price
Adjustment and (iii) a certificate executed by the Company's Controller to the
effect that the Closing Date Unaudited Balance Sheet has been prepared from the
books and records of the Company using those assumptions which the Company
believes are reasonable in light of the circumstances in which they were made.
SECTION 1.02 TENDER AND REDEMPTION OF REDEMPTION SHARES.
(a) On the terms and subject to the conditions of this
Agreement, at the Closing, contemporaneously with the Stock Purchase
contemplated by Section 1.01 and the payment and cancellation of Subordinated
Debentures contemplated by Section 1.03, each Preferred Stockholder shall tender
to the Company for redemption, and the Company shall redeem, the number and
series of Redemption Shares set forth opposite the name of such Preferred
Stockholder on EXHIBIT A-2 hereof under the headings "Number of Shares of Junior
Preferred Stock Redeemed," "Number of Shares of Series A Preferred Stock
Redeemed," and "Number of Shares of Series B Preferred Stock Redeemed",
constituting all of the issued and outstanding Redemption Shares.
(b) To effect the transfers contemplated by Section 1.02(a),
at the Closing, each Preferred Stockholder shall deliver, or cause to be
delivered, to the Company, stock certificates representing the Redemption Shares
being sold by such Preferred Stockholder hereunder, together with stock powers
duly executed in blank or otherwise in proper form acceptable to the Company for
transfer to the Company and cancellation on the books of the Company, against
payment therefor in accordance with Section 1.04(b)(i) hereof.
(c) The purchase price for the shares of Series B Preferred
Stock being redeemed by the Company from the Series B Stockholders shall be the
Series B Redemption Price set forth in Section 1.01(c).
(d) The purchase price for the shares of Series A Preferred
Stock and Junior Preferred Stock being redeemed by the Company from the
Preferred Stockholders shall be an aggregate of $4,063,818 (the "Series A /
Junior Preferred Stock Redemption Price").
(e) Upon such redemption by the Company as provided in this
Section 1.02 (the "Redemption"), all rights of each Preferred Stockholder with
respect to such shares of Junior Preferred Stock, Series A Preferred Stock and
Series B Preferred Stock to be so redeemed shall forthwith terminate and such
shares of Junior Preferred Stock, Series A Preferred Stock and Series B
Preferred Stock of the Company shall be retired and shall cease to exist.
SECTION 1.03 SURRENDER, PAYMENT AND CANCELLATION OF SUBORDINATED
DEBENTURES.
(a) On the terms and subject to the conditions of this
Agreement, at the Closing, contemporaneously with the Stock Purchase
contemplated by Section 1.01 and the Redemption contemplated by Section 1.02,
each Debenture Holder shall tender to the Company for payment and cancellation,
and the Company shall pay and cancel, the Subordinated Debentures set forth
opposite the name of each such Debenture Holder on EXHIBIT A-3 hereto under the
headings "9% Subordinated Debentures Canceled," and "12% Subordinated Debentures
Canceled." Such tender shall be effected by the delivery of the original 9%
Debentures, 12% Debentures or other debt instrument evidencing the indebtedness
of the Company to each such Debenture Holder under such instruments.
(b) To effect the transfers contemplated by Section 1.03(a),
at the Closing, each Debenture Holder shall deliver, or cause to be delivered,
to the Company, certificates representing the original Subordinated Debentures
being repaid by the Company hereunder, or otherwise in proper form
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acceptable to the Company for transfer to the Company and cancellation on the
books of the Company, against payment therefor in accordance with Section
1.04(b)(ii) hereof.
(c) The purchase price for the Subordinated Debentures being
purchased by the Company from the Debenture Holders shall be an aggregate of
$8,209,489 (the "Subordinated Debenture Purchase Price"), representing the
aggregate principal amount of, and all accrued and unpaid interest on, the
Subordinated Debentures as of the Closing Date.
(d) Upon payment for and cancellation of the Subordinated
Debentures as provided in this Section 1.03, all rights of each Debenture Holder
with respect to the Subordinated Debentures so to be canceled shall forthwith
terminate and such Subordinated Debentures shall cease to exist.
SECTION 1.04 PAYMENTS AT CLOSING. At the Closing, the following
payments shall be made by the Buyer and the Company as indicated below:
(a) PAYMENTS BY THE BUYER:
(i) the Buyer shall deliver to the Common
Stockholders to be allocated among the Common Stockholders as set forth on
EXHIBIT A-1 an aggregate amount equal to the Common Stock Purchase Price
(subject to adjustment under Sections 1.05 hereof) less that portion of the
Escrow Fund (as defined below) allocated to the Common Stockholders as set forth
in EXHIBIT A-1;
(ii) the Buyer and the Sellers' Representative shall
appoint an Escrow Agent and the Buyer shall deliver to the Escrow Agent an
aggregate amount of $3,500,000 (the "Escrow Fund") to be held in escrow in
accordance with the terms of an Escrow Agreement in the form of EXHIBIT B (the
"Escrow Agreement") among the Buyer, the Escrow Agent and each of the Common
Stockholders and Series B Stockholders; and
(iii) the Buyer shall deliver to the Company, as a
contribution to capital, an aggregate amount equal to (A) the Series B
Redemption Price less that portion of the Escrow Fund allocated to the Series B
Stockholders as set forth in EXHIBIT A-2, plus (B) the Series A / Junior
Preferred Stock Redemption Price plus (C) the Debenture Purchase Price.
(b) PAYMENTS BY THE COMPANY:
(i) The Company shall deliver to the Series B
Stockholders an aggregate amount equal to the Series B Redemption Price less
that portion of the Escrow Fund allocated to the Series B Stockholders as set
forth in EXHIBIT A-1;
(ii) The Company shall deliver to the Series A and
Junior Preferred Stockholders an aggregate amount of $4,063,818, representing
the Series A / Junior Preferred Stock Purchase Price, to be allocated among the
Series A and Junior Preferred Stockholders as set forth on EXHIBIT A-2; and
(iii) The Company shall deliver to the Debenture
Holders an aggregate amount of $8,209,489, to be allocated among the Debenture
Holders as set forth on EXHIBIT A-3.
(c) All payments required to be made pursuant to this Section
1.04 shall be made by wire transfer of immediately available funds to accounts
designated in writing by the Sellers, the Escrow Agent, the Company and the
Sellers' Representative, as the case may be.
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SECTION 1.05 STOCK PURCHASE PRICE ADJUSTMENT.
(a) No later than September 30, 1997, the Company shall, at
its expense, cause to be prepared and delivered to the Buyer, the Common
Stockholders and the Series B Stockholders (i) an audited consolidated balance
sheet for the Company dated as of the Closing Date (the "Closing Date Audited
Balance Sheet") prepared by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, the Company's independent
certified public accountants ("Sellers' Accountants"), in accordance with
generally accepted accounting principles ("GAAP") applied on a basis consistent
with those applied in the preparation of the Closing Date Unaudited Balance
Sheet and (ii) a calculation of the amount (the "Final Stock Purchase Price
Adjustment") by which the Preliminary Stock Purchase Price Adjustment exceeds or
is less than the Stock Purchase Price adjustments calculated on the basis of the
Closing Date Audited Balance Sheet.
(b) The following clauses (i) through (ii) set forth the
procedures for resolving disputes among the parties with respect to the
determination of the Final Stock Purchase Price Adjustment:
(i) Within thirty (30) days after delivery to the
Buyer of the calculation of the Final Stock Purchase Price Adjustment, the Buyer
may deliver to the Common Stockholders and Series B Stockholders a written
report (the "Buyer's Report") prepared by Deloitte & Touche L.L.P. (the "Buyer's
Accountants") advising the Common Stockholders and Series B Stockholders either
that the Buyer's Accountants (A) agree with the calculation of the Final Stock
Purchase Price Adjustment, or (B) believe that one or more adjustments are
required. The costs and expenses of the services of the Buyer's Accountants
shall be borne by the Buyer and the costs and expenses of the services of the
Sellers' Accountants (other than the costs and expenses of preparing the Closing
Date Audited Balance Sheet, which shall be borne by the Company as a
post-Closing expense) shall be borne by the Common Stockholders and Series B
Stockholders. If Sellers' Accountants shall concur with the adjustments proposed
by the Buyer's Accountants, or if the Common Stockholders and Series B
Stockholders shall not object thereto in a writing delivered to the Buyer within
thirty (30) days after the Common Stockholders' and Series B Stockholders
receipt of the Buyer's Report, the calculation of the Final Stock Purchase Price
Adjustment (as so adjusted as provided in the Buyer's Report) shall become final
and shall not be subject to further review, challenge or adjustment absent
fraud. If the Buyer does not submit the Buyer's Report within the 30-day period
provided herein, then the Final Stock Purchase Price Adjustment (as determined
by Sellers' Accountants) shall become final and shall not be subject to further
review, challenge or adjustment absent fraud.
(ii) In the event that the Buyer submits the Buyer's
Report and the Buyer's Accountants and Sellers' Accountants are unable to
resolve the disagreements set forth in such report within thirty (30) days after
the date of the Buyer's Report, then such disagreements shall be referred to a
recognized firm of independent certified public accountants experienced in
auditing heavy equipment rental companies and selected by mutual agreement of
Sellers' Accountants and the Buyer's Accountants (the "Settlement Accountants'),
and the determination of the Settlement Accountants shall be final and shall not
be subject to further review, challenge or adjustment absent fraud. In the event
that Sellers' Accountants and Buyer's Accountants cannot agree on the selection
of Settlement Accountants, the Settlement Accountants shall be selected by
lottery from among recognized firms of independent certified public accountants,
with preference being given to the "Big Six" accounting firms (other than
Buyer's Accountants or Sellers' Accountants), until one such firm is willing to
compute the Settlement Accountants' Final Adjustment. The Settlement Accountants
shall use their best efforts to reach a determination not more than forty-five
(45) days after such referral. The costs and expenses of the services of the
Settlement Accountants shall be paid by the Common Stockholders and Series B
Stockholders if (x) the difference between the Final Adjustment determined by
the Settlement Accountants (the "Settlement Accountants' Final Adjustment") and
the Final Adjustment set forth on the Sellers' Report is greater than (y) the
difference between the Settlement Accountants' Final Adjustment and the Final
Adjustment set forth on the Buyer's Report; otherwise, such costs and expenses
of the Settlement Accountants shall be paid by the Buyer.
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(c) Promptly after the final determination of the Final Stock
Purchase Price Adjustment or the Settlement Accountants' Final Adjustment, as
applicable, the amount thereof shall be (i) paid by the Buyer to the Sellers'
Representative to be allocated among the Common Stockholders and Series B
Stockholders in accordance their respective Proportionate Share in the event the
Stock Purchase Price determined pursuant to Section 1.01(c) using the Closing
Date Unaudited Balance Sheet (the "Preliminary Stock Purchase Price") is less
than the Stock Purchase Price determined pursuant to this Section 1.05 using the
Closing Date Audited Balance Sheet (the "Final Stock Purchase Price"), or (ii)
paid from the Escrow Fund to the Buyer in the event the Final Stock Purchase
Price determined pursuant to Section 1.01(c) is less than the Preliminary Stock
Purchase Price, provided however, if the amount of the Final Stock Adjustment or
Settlement Accountants' Final Adjustment exceeds the Escrow Amount or the
portion thereof remaining at the time payment pursuant to this Section 1.05(c)
is required to be made, the balance of the Final Adjustment or Settlement
Accountants' Final Adjustment, as the case may be, shall be paid to the Buyer by
each Common Stockholder and Series B Stockholder in accordance with its, his or
her Proportionate Share.
SECTION 1.06 SELLERS' REPRESENTATIVE.
(a) As used in this Agreement, the "Sellers' Representative"
shall mean ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or any person appointed as a successor Sellers'
Representative pursuant to Section 1.06(b) hereof.
(b) During the period ending upon the date when all
obligations under this Agreement have been discharged (including all
indemnification obligations hereunder and all obligations under the Escrow
Agreement), the Sellers who, immediately prior to the Effective Time, held
Company Common Stock representing an aggregate number of shares of Company
Common Stock which exceeded 50% of the amount of such Company Common Stock
outstanding immediately prior to the Effective Time (a "Majority"), may, from
time to time upon written notice to the Sellers' Representative and Buyer,
remove the Sellers' Representative or appoint a new Sellers' Representative to
fill any vacancy created by the death, incapacitation, resignation or removal of
the Sellers' Representative. Furthermore, if the Sellers' Representative dies,
becomes incapacitated, resigns or is removed by a Majority, the Majority shall
appoint a successor Sellers' Representative to fill the vacancy so created. If
the Majority is required to but has not appointed a successor Sellers'
Representative within 20 business days from a request by Buyer to appoint a
successor Sellers' Representative, the Buyer shall have the right to appoint a
Sellers' Representative to fill any vacancy so created, and shall advise all
those who were holders of Company Common Stock immediately prior to the
Effective Time of such appointment by written notice. A copy of any appointment
by the Majority of any successor Sellers' Representative shall be provided to
Buyer promptly after it shall have been effected.
(c) The Sellers' Representative shall be authorized, upon
approval by a Majority, to take any action and to make and deliver any
certificate, notice, consent or instrument required or permitted to be made or
delivered under this Agreement or under the documents referred to in this
Agreement (an "Instrument") which the Sellers' Representative determines to be
necessary, appropriate or desirable, and, in connection therewith, to hire or
retain, at the sole expense of the Common Stockholders, such counsel, investment
bankers, accountants, representatives and other professional advisors as he
determines in his sole and absolute discretion to be necessary, advisable or
appropriate in order to carry out and perform his rights and obligations
hereunder. The Stockholders hereby grant each of the Sellers' Representatives
the right and power to execute the Escrow Agreement on their behalf with such
changes or amendments thereto as the Sellers' Representative, or either of them,
shall determine to be necessary or desirable in their sole and absolute
discretion. Any party receiving an Instrument from the Sellers' Representative
shall have the right to rely in good faith upon such Instrument, and to act in
accordance with the Instrument without independent investigation.
6
(d) Buyer shall have no liability to any Common Stockholder or
otherwise arising out of the acts or omissions of the Sellers' Representative or
any disputes among the Common Stockholders or with the Sellers' Representative.
Buyer may rely entirely on its dealings with, and notices to and from, the
Shareholder Representatives to satisfy any obligations it might have under this
Agreement, any agreement referred to herein or otherwise to the Common
Stockholder.
(e) The Common Stockholders shall indemnify, defend and hold
harmless the Sellers' Representative from and against any and all claims,
demands, actions, suits, causes of action, damages, costs and expenses
(including, without limitation, attorneys' fees) (collectively, "Claims") which
are hereafter made, sustained or brought against the Sellers' Representative by
any person arising out of the acts or omissions of the Sellers' Representative
or any disputes among the Common Stockholders, unless such Claims allegedly
occurred as a result of the willful misconduct or negligence by the Sellers'
Representative.
SECTION 1.07 WAIVERS AND CONSENTS.
(a) Each Seller is a signatory to one or more of the following
documents: Industrial Equipment Rentals, Inc. Stockholders Agreement, dated as
of July 17, 1995 (the "Stockholders Agreement"), that certain Securities
Purchase Agreement by and among Industrial Equipment Rentals, Inc. and
NationsBanc Capital Corporation and Equus II, Inc. and Premier Venture Capital
Corporation, dated as of July 17, 1995 (the "1995 Agreement"), and The
Industrial Equipment Rentals, Inc. Purchase Agreement, dated as of June 18, 1993
(the "1993 Agreement").
(b) Each Seller consents to the transactions described in this
Agreement and waives, as of the Closing, any rights it may have pursuant to the
Stockholders Agreement, the 1995 Agreement and the 12% Debentures issued
thereunder, and the 1993 Agreement and the 9% Debentures issued thereunder,
including, without limitation, rights pursuant to Sections 2 and 3 of the
Stockholders Agreement, Section 5.2(d) of the 1993 Agreement, Section 4.5 of the
1995 Agreement and Section 11(d) of the 9% Debentures.
SECTION 1.08 TIMING. The Closing of each of the purchase and redemption
transactions contemplated by this Agreement is conditioned upon the closing of
all of the other purchase and redemption transactions contemplated by this
Agreement. However, for purposes of the Closing, Buyer's purchase of the Common
Stock shall be deemed to have occurred immediately prior to its contribution of
cash for payment by the Company of the purchase of the Preferred Stock and the
Subordinated Debentures, which contribution shall be deemed to have occurred
immediately prior to the purchase of such Preferred Stock and Subordinated
Debentures.
ARTICLE II
CLOSING
SECTION 2.01 CLOSING. Subject to the satisfaction of the conditions
stated in Article VII of this Agreement, the closing of the transactions
contemplated hereby (the "Closing") shall be held at 10:00 a.m., Miami time, on
July 31, 1997 or, if the conditions set forth in Sections 7.01 through 7.03 have
not been satisfied or waived on such date, no later than seven (7) days after
all such conditions shall have been satisfied or waived, at the offices of ▇▇▇▇▇
& ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (or, at the
request of the Buyer, at the offices of legal counsel to the lender providing
financing in connection with the transactions contemplated hereby), unless
another date or place is agreed to in writing by the parties hereto. The date
upon which the Closing occurs is hereinafter referred to as the "Closing Date."
The Closing shall be deemed completed as of 11:59 p.m. Miami time on the night
of the Closing Date, and all transactions described in Article I hereof shall be
deemed to have occurred concurrently.
7
SECTION 2.02 DELIVERIES BY SELLERS TO THE BUYER. At or prior to the
Closing, the Sellers shall deliver to the Buyer (or to the Sellers'
Representative for re-delivery to the Buyer):
(i) certificates representing all of the
outstanding shares of the Company Common
Stock, duly endorsed in blank for transfer,
or with appropriate stock powers in blank
attached;
(ii) certificates representing all of the
outstanding shares of Junior Preferred
Stock, Series A Preferred Stock and Series B
Preferred Stock, duly endorsed in blank with
all signatures guaranteed and all requisite
stock transfer taxes paid and stamps
affixed;
(iii) the original 9% Debentures and 12%
Debentures;
(iv) the resignations of all members of the board
directors of the Company and the Subsidiary
as set forth in Section 7.03(l);
(v) the stock books, stock ledgers, minute books
and corporate seals of the Company and the
Subsidiary;
(vi) a certificate executed by the Company to the
effect that the conditions set forth in
Sections 7.03(d) through 7.03(g), have been
satisfied;
(vii) the opinion of counsel set forth in Section
7.03(h);
(viii) the executed Escrow Agreement as set forth
in Section 7.03(i);
(ix) the executed Employment Agreements as set
forth in Section 6.11 and 7.03(j);
(x) the executed Non-Competition Agreement as
set forth in Section 6.12 and 7.03(k); and
(xi) evidence of the consents required pursuant
to Section 7.03(n).
SECTION 2.03 DELIVERIES BY THE COMPANY.
(a) At or prior to Closing, the Company shall deliver by
wire transfer in immediately available funds:
(i) to the Preferred Stockholders, the payment
described in Section 1.04(b)(i) as being
required to be paid by the Company at
Closing; and
(ii) to the Debenture Holders, the payment
described in Section 1.04(b)(ii) as being
required to be paid by the Company.
(b) At or prior to the Closing, the Company shall deliver
to the Buyer:
(i) evidence of the redemption and cancellation
of the Redemption Shares; and
(ii) evidence of the cancellation and payment of
the Subordinated Debentures.
8
SECTION 2.04 DELIVERIES BY THE BUYER.
(a) At or prior to the Closing, the Buyer shall deliver to the
Sellers' Representative:
(i) by wire transfer in immediately available
funds to the Common Stockholders, the
payment described in Section 1.04(a)(i) as
being required to be paid by the Buyer at
Closing;
(ii) a certified copy of all necessary corporate
action on the Buyer's behalf approving its
execution, delivery and performance of this
Agreement pursuant to Section 7.02(a);
(iii) a certificate executed by an authorized
officer of the Buyer on behalf of the Buyer
to the effect that the conditions set forth
in Sections 7.02(b) and 7.02(c) have been
satisfied;
(iv) the opinion of counsel set forth in Section
7.02(d); and
(v) the executed Escrow Agreement as set forth
in Section 7.02(e).
(b) At or prior to the Closing, the Buyer shall deliver the
Escrow Fund to the Escrow Agent, by cashiers or other official bank check(s) or
by bank or wire transfer in immediately available funds.
(c) At or prior to Closing, the Buyer shall deliver to the
Company, as a capital contribution, the sum of (i) the Preferred Stock Payment
plus (ii) the Subordinated Debenture Payment, by cashier's or other official
bank check(s) or by bank or wire transfer in immediately available funds.
SECTION 2.05 TERMINATION IN ABSENCE OF CLOSING.
(a) Subject to the provisions of Section 2.03(b), if by the
close of business on August 31, 1997, the Closing has not occurred then any
party hereto may thereafter terminate this Agreement by written notice to such
effect, to the other parties hereto, without liability of or to any party to
this Agreement or any shareholder, director, officer, employee or
representatives of such party unless the reason for Closing having not occurred
is (i) such party's willful breach of the provisions of this Agreement, or (ii)
if all of the conditions to such party's obligations set forth in Article VII
have been satisfied or waived in writing by the date scheduled for the Closing
pursuant to Section 2.01, the failure of such party to perform its obligations
under this Article II on such date; provided, however, that the provisions of
Sections 9 and 10 of that certain letter of intent (the "Letter of Intent")
dated May 30, 1997 between the Buyer, and the Company and the Subsidiary shall
survive any such termination; and provided further, however, that any
termination pursuant to this Section 2.05 shall not relieve any party hereto who
was responsible for Closing having not occurred as described in clauses (i) or
(ii) above of any liability for (x) such party's willful breach of the
provisions of this Agreement, or (y) if all of the conditions to such party's
obligations set forth in Article VII have been satisfied or waived in writing by
the date scheduled for the Closing pursuant to Section 2.01, the failure of such
party to perform its obligations under this Article II on such date.
(b) Any Schedule referred to in this Agreement that was not
furnished to the Buyer (including copies of all instruments, if any, referred to
therein) at least five days prior to the date of this Agreement is noted on the
face thereof as being a "Section 2.05(b) Schedule." Notwithstanding any other
provision of this Agreement, the Buyer shall have the right to terminate this
Agreement without liability to any party by so notifying the Sellers at any time
within seven days after the date of this Agreement if, in the Buyer's sole
discretion, any Section 2.05(b) Schedule (or any instrument referred to therein)
contains
9
or refers to any matter that, or may cause or lead to any result that, in the
Buyer's sole discretion and judgment, is adverse to the Buyer in any way,
provided, however, that the provisions of Sections 9 and 10 of the Letter of
Intent shall survive any such termination.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Buyer that:
SECTION 3.01 CORPORATE EXISTENCE AND QUALIFICATION: CORPORATE
DOCUMENTS.
(a) Each of the Company and ▇▇▇▇▇▇▇ Rental Services, Inc., a
wholly-owned subsidiary of the Company (the "Subsidiary"), is a corporation duly
organized, validly existing and in good standing under the laws of Delaware, and
is not required to be qualified to do business as a foreign corporation in any
other jurisdiction where the failure to so qualify would have a material adverse
effect on the Company and the Subsidiary, taken as a whole. The Company and the
Subsidiary have all required corporate power and authority to own their
respective properties and to carry on their respective businesses as presently
conducted. The Company has all required corporate power and authority to execute
and deliver this Agreement and the documents, instruments and agreements
contemplated hereby. The Certificate of Incorporation and By-laws of the Company
and the Subsidiary, copies of which are attached as Schedule 3.01(a), are
complete and reflect all amendments thereto through the date hereof.
(b) The stock and minute books of the Company and the
Subsidiary that have been made available to the Buyer for review contain a
complete and accurate record of all stockholders of the Company and Subsidiary,
respectively, and all material actions of the stockholders and directors (and
any committees thereof) of the Company and the Subsidiary, respectively.
(c) Except for the Subsidiary, the Company does not have any
subsidiaries, participate in any partnership or joint venture, or own any
outstanding capital stock of any other corporation.
SECTION 3.02 AUTHORITY, APPROVAL AND ENFORCEABILITY. This Agreement has
been duly executed and delivered by the Company, and the Company has all
requisite power and legal authority to execute and deliver this Agreement and
all Collateral Agreements executed and delivered or to be executed and delivered
in connection with the transactions provided for hereby, to consummate the
transactions contemplated hereby and by the Collateral Agreements, and to
perform its obligations hereunder and under the Collateral Agreements. This
Agreement and each Collateral Agreement to which any of the Company is a party
constitutes, or upon execution and delivery will constitute, the legal, valid
and binding obligation of the Company, enforceable in accordance with its terms,
except as such enforceability may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, and except as the availability of
equity remedies may be limited by the application of general principles of
equity (regardless of whether such equitable principles are applied in a
proceeding at law or in equity).
SECTION 3.03 CAPITALIZATION AND OWNERSHIP.
(a) As of the date of this Agreement, the entire authorized
capital stock of the Company consists of 2,000,000 shares of Company Common
Stock and 900,000 shares of Preferred Stock, of which 19,000 shares have been
designated as Junior Preferred Stock, 107,500 shares have been designated as
Series A Preferred Stock and 495,000 shares have been designated as Series B
Preferred Stock. The issued and outstanding shares of Company Common Stock,
Junior Preferred Stock,
10
Series A Preferred Stock and Series B Preferred Stock are owned of record and,
to the knowledge of the Company, beneficially, by the Stockholders shown on
EXHIBITS A-1 through A-3 hereof. All of the presently outstanding shares of
capital stock of the Company have been validly authorized and issued and are
fully paid and nonassessable. Except as provided in Schedule 3.03(a), the
Company has not issued any other shares of its capital stock and there are no
outstanding options, warrants, subscriptions or other rights or obligations to
purchase or acquire any of such shares, nor any outstanding securities
convertible into or exchangeable for such shares. Except as disclosed on
Schedule 3.03(a) or as contemplated under this Agreement, there are no
agreements to which the Company is a party or has knowledge regarding the
issuance, registration, voting or transfer of its outstanding shares of its
capital stock. Except as set forth on Schedule 3.03(a), no dividends are accrued
but unpaid on any capital stock of the Company.
(b) The authorized and issued capital stock of the Subsidiary
and the names and ownership interest of each holder of such capital stock is as
set forth in Schedule 3.03(b). Except as set forth on Schedule 3.03(b), there
are no outstanding shares of capital stock of the Subsidiary and there are no
options, warrants, subscriptions or other rights or obligations to purchase or
acquire any of such shares of capital stock, nor any outstanding securities
convertible into or exchangeable for such shares. There is no agreement pending
or contemplated to which the Subsidiary is a party regarding the issuance,
registration, voting or transfer of any shares of capital stock of the
Subsidiary.
SECTION 3.04 PREEMPTIVE RIGHTS; REGISTRATION RIGHTS. Except as set
forth in Schedule 3.04, there are no preemptive rights affecting the issuance or
sale of the Company's capital stock. Immediately following the Closing, the
Company will not be under any contractual obligation to register (in compliance
with the filing requirements and being deemed effective under any applicable
federal or state securities laws and the rules and regulations promulgated
thereunder) any of its presently outstanding securities or any of its securities
which may hereafter be issued.
SECTION 3.05 NO COMPANY DEFAULTS OR CONSENTS. Except as otherwise set
forth in Schedule 3.05 attached hereto, neither the execution and delivery of
this Agreement nor the carrying out of the transactions contemplated hereby
will:
(i) violate or conflict with any of the terms,
conditions or provisions of the certificate of incorporation or bylaws of the
Company or the Subsidiary;
(ii) violate any Legal Requirements applicable to the
Company or the Subsidiary;
(iii) violate, conflict with, result in a breach of,
constitute a default under (whether with or without notice or the lapse of time
or both), or accelerate or permit the acceleration of the performance required
by, or give any other party the right to terminate, any Contract or Permit
applicable to the Company or the Subsidiary;
(iv) result in the creation of any lien, charge or
other encumbrance on the shares of capital stock or any Property of the Company
or the Subsidiary; or
(v) require any of the Sellers, the Company or the
Subsidiary to obtain or make any waiver, consent, action, approval or
authorization of, or registration, declaration, notice or filing with, any
private non-governmental third party or any Governmental Authority. Any and all
consents required to be obtained by the Company and the Subsidiary as set forth
in Schedule 3.05 shall be obtained and copies thereof delivered to the Buyer
upon execution of this Agreement;
except in the case of each of clauses (ii)-(v) for any such conflicts,
violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, result in a material adverse effect on the
Company.
11
SECTION 3.06 NO PROCEEDINGS. Except as set forth on Schedule 3.06, no
suit, action or other proceeding is pending or, to the Knowledge of the Company,
threatened before any Governmental Authority seeking to restrain any of the
Stockholders or prohibit their entry into this Agreement or prohibit the
Closing, or seeking damages against the Company or the Subsidiary, or their
respective Properties, as a result of the consummation of this Agreement.
SECTION 3.07 FINANCIAL STATEMENTS. Attached as Schedule 3.07 are true
and correct copies of the Company's and Subsidiary's unaudited balance sheets at
April 30, 1997 (the "Interim Balance Sheet") and the related statements of
income, stockholders' equity and cash flow for the nine months ended April 30,
1997 (the "Interim Financial Statements"), as well as the Company's and
Subsidiary's balance sheet and statements of income, stockholders' equity and
cash flow as of and for the fiscal year ended July 31, 1996 (the "Audited 1996
Financial Statements"). The foregoing financial statements (collectively the
"Financial Statements") (i) have been prepared from the books and records of the
Company and Subsidiary, (ii) present fairly the financial condition of the
Company and Subsidiary and its results of operations as at and for the
respective periods then ended, and (iii) have been prepared in accordance with
generally accepted accounting principles applied consistently throughout the
periods indicated (except for the omission of footnotes in the Interim Financial
Statements).
SECTION 3.08 LIABILITIES AND OBLIGATIONS. Except as set forth in
Schedule 3.08, the Financial Statements reflect all liabilities of the Company
and the Subsidiary as determined in accordance with generally accepted
accounting principles arising out of transactions effected or events occurring
on or prior to the date of the Interim Balance Sheet, except for liabilities not
exceeding $10,000 in the aggregate. All reserves shown in the Financial
Statements are appropriate and reasonable to provide for losses thereby
contemplated. Except as set forth in the Financial Statements, neither the
Company nor the Subsidiary is liable upon or with respect to, or obligated in
any other way to provide funds in respect of or to guarantee or assume in any
manner, any debt, obligation or dividend of any person, corporation,
association, partnership, joint venture, trust or other entity.
SECTION 3.09 ACCOUNTS RECEIVABLE. Except as otherwise set forth in
Schedule 3.09, the accounts receivable reflected on the Interim Balance Sheet
and all accounts receivable arising between April 30, 1997 and the date hereof,
arose from bona fide transactions in the ordinary course of business, and the
goods and services involved have been sold, delivered and performed to the
account of the obligors, and no further filings (with Governmental Authorities,
insurers or others) are required to be made, no further goods are required to be
provided and no further services are required to be rendered in order to
complete the sales and fully render the services and to entitle the Company or
the Subsidiary to collect the accounts receivable in full. Except as set forth
in Schedule 3.09, no such account has been assigned or pledged to any other
person, firm or corporation, and, except only to the extent fully reserved
against as set forth in the Interim Balance Sheet, no defense or setoff to any
such account has been asserted by the account obligor.
SECTION 3.10 EMPLOYEE MATTERS.
(a) Schedule 3.10(a) contains a complete and accurate list of
the names, titles and compensation of all executive officers of the Company and
the Subsidiary, regardless of compensation levels, and other employees who are
currently compensated at a rate in excess of $100,000 per year (including any
reasonably anticipated bonus) or who earned in excess of $100,000 during the
Company's fiscal year ended July 31, 1996 (collectively, the "Key Employees").
In addition, Schedule 3.10(a) contains a complete and accurate description of
(i) all increases in compensation of the Key Employees of the Company and the
Subsidiary during the fiscal years of the Company and the Subsidiary ending July
31, 1996 and July 31, 1995, respectively, and (ii) any promised increases in
compensation of the Key Employees of the Company and the Subsidiary that have
not yet been effected.
(b) Schedule 3.10(b) contains a complete and accurate list of
all Compensation Plans sponsored by the Company or the Subsidiary or to which
the Company or the Subsidiary
12
contributes on behalf of its employees, other than Employee Benefit Plans listed
in Schedule 3.11. As used herein, "Compensation Plans" shall mean and include,
without limitation, plans, arrangements or practices that provide for severance
pay, deferred compensation, incentive, bonus or performance awards, and stock
ownership or stock options.
(c) Schedule 3.10(c) contains a complete and accurate list of
all Employment Agreements. As used herein "Employment Agreements" shall mean and
include, without limitation, employee leasing agreements, employee services
agreements and noncompetition agreements.
(d) The Company has provided the Buyer with a complete and
accurate list of all significant written employee policies and procedures.
(e) To the Knowledge of the Company, no unwritten material
amendments have been made, whether by oral communication, pattern of conduct or
otherwise, with respect to any Compensation Plans, Employment Agreements or
employee policies and procedures.
(f) Except as set forth in Schedule 3.10(f), the Company and
the Subsidiary (i) have been and are in material compliance with all laws,
rules, regulations and ordinances respecting employment and employment
practices, terms and conditions of employment and wages and hours, and (ii) are
not liable in any material amount for any arrears of wages or penalties for
failure to comply with any of the foregoing. Neither the Company nor the
Subsidiary has engaged in any unfair labor practice or discriminated on the
basis of race, color, religion, sex, national origin, age or handicap in its
employment conditions or practices. To the Knowledge of the Company, there are
no (i) material unfair labor practice charges or complaints or racial, color,
religious, sex, national origin, race or handicap discrimination charges or
complaints pending or threatened against the Company or the Subsidiary before
the National Labor Relations Board or any similar state or foreign commission or
agency or (ii) existing or threatened material labor strikes, disputes,
grievances, controversies or other labor troubles affecting the Company or the
Subsidiary.
(g) Neither the Company nor the Subsidiary have ever been a
party to any agreement with any union, labor organization or collective
bargaining unit. No employees of the Company or the Subsidiary are represented
by any union, labor organization or collective bargaining unit. To the Knowledge
of the Company, the employees of the Company and the Subsidiary have not
threatened to organize or join a union, labor organization or collective
bargaining unit.
(h) Except as disclosed on Schedule 3.10(h), no member of
executive management of the Company or the Subsidiary has indicated his or her
desire or intent to terminate employment with the Company or the Subsidiary, and
neither the Company nor the Subsidiary has any present intent of terminating any
member of management.
SECTION 3.11 EMPLOYEE BENEFIT MATTERS.
(a) Schedule 3.11 contains a complete and accurate list of all
Employee Benefit Plans sponsored by the Company or the Subsidiary or to which
the Company or the Subsidiary contributes on behalf of its employees and all
Employee Benefit Plans previously sponsored or contributed to on behalf of its
employees within the three years preceding the date hereof. No unwritten
amendment exists with respect to any Employee Benefit Plan. For purposes of this
Agreement an "Employee Benefit Plan" means each employee benefit plan, as such
term is defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA").
(b) Each Employee Benefit Plan has been administered and
maintained in compliance with all laws, rules and regulations, except for such
noncompliance that would not have a material adverse effect on the Company. No
Employee Benefit Plan is currently the subject of an audit, investigation,
enforcement action or other similar proceeding conducted by any state or federal
agency.
13
No prohibited transactions (within the meaning of Section 4975 of the Internal
Revenue Code of 1986, as amended, and the regulations promulgated thereunder
(the "Code")) have occurred with respect to any Employee Benefit Plan. No
pending or, to the Knowledge of the Company, threatened, claims, suits or other
proceedings exist with respect to any Employee Benefit Plan other than normal
benefit claims filed by participants or beneficiaries.
(c) The Company has received a favorable determination letter
or ruling from the Internal Revenue Service for each Employee Benefit Plan
intended to be qualified within the meaning of Section 401 (a) of the Code
and/or tax exempt within the meaning of Section 501(a) of the Code, which letter
or ruling is current and covers all required amendments to each such Employee
Benefit Plan through the Closing Date. No proceedings exist or, to the Knowledge
of the Company, have been threatened that could result in the revocation of any
such favorable determination letter or ruling.
(d) No accumulated funding deficiency (within the meaning of
Section 412 of the Code), whether waived or unwaived, exists with respect to any
Employee Benefit Plan or any plan sponsored by any member of a "controlled
group" (as defined in Section 414(b) of the Code ("Controlled Group"). With
respect to each Employee Benefit Plan subject to Title IV of ERISA, the assets
of each such plan are at least equal in value to the present value of accrued
benefits determined on an ongoing basis as of the date hereof. With respect to
each Employee Benefit Plan described in Section 501(c)(9) of the Code, the
assets of each such plan are at least equal in value to the present value of
accrued benefits as of the date hereof. Neither the Company nor the Subsidiary
or any member of a Controlled Group has any liability to pay excise taxes with
respect to any Employee Benefit Plan under applicable provisions of the Code or
ERISA. Neither the Company nor the Subsidiary nor any member of a Controlled
Group is or ever has been obligated to contribute to a multiemployer plan within
the meaning of Section 3(37) of ERISA.
(e) No reportable event (within the meaning of Section 4043 of
ERISA) for which the notice requirement has not been waived has occurred with
respect to any Employee Benefit Plan subject to the requirements of Title IV of
ERISA.
(f) Neither the Company nor the Subsidiary has any obligation
or commitment to provide medical, dental or life insurance benefits to or on
behalf of any of its employees who may retire or any of its former employees who
have retired from employment with the Company or the Subsidiary.
SECTION 3.12 ABSENCE OF CERTAIN CHANGES. Except as set forth in
Schedule 3.12, from the date of the Interim Balance Sheet to the date of this
Agreement, neither the Company nor the Subsidiary has:
(a) suffered any material adverse change, whether or not
caused by any deliberate act or omission of the Company, the Subsidiary or any
stockholder of the Company, in its condition (financial or otherwise),
operations, assets, liabilities, business or prospects;
(b) contracted for the purchase of any capital assets having a
cost in excess of $50,000 or paid any capital expenditures in excess of $50,000,
except in the ordinary course of business consistent with past practices;
(c) incurred any indebtedness for borrowed money or issued or
sold any debt securities, except in the ordinary course of business;
(d) incurred or discharged any liabilities or obligations
except in the ordinary course of business;
(e) paid any amount on any indebtedness prior to the due date,
forgiven or canceled any debts or claims or released or waived any rights or
claims, except in the ordinary course of business;
14
(f) mortgaged, pledged or subjected to any security interest,
lien, lease or other charge or encumbrance any of its Properties or Company
Assets, except in the ordinary course of business;
(g) suffered any damage or destruction to or loss of any
Company Assets (whether or not covered by insurance) that has materially
adversely affected, or could materially adversely affect, its business;
(h) acquired or disposed of any Company Assets except in the
ordinary course of business;
(i) written up or written down the carrying value of any of
the Company Assets, except in the ordinary course of business;
(j) changed any accounting principles methods or practices
followed or changed the costing system or depreciation methods of accounting for
the Company Assets;
(k) waived any material rights or forgiven any material
claims;
(l) lost, terminated or experienced any change in the
relationship with any employee, customer, joint venture partner or supplier,
which termination or change has materially and adversely affected, or could
reasonably be expected to materially and adversely affect, its business or
Company Assets;
(m) increased the compensation of any director or officer;
(n) increased the compensation of any employee except in the
ordinary course of business;
(o) made any payments to or loaned any money to any person or
entity except in the ordinary course of business;
(p) formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(q) redeemed, purchased or otherwise acquired, or sold,
granted or otherwise disposed of, directly or indirectly, any of its capital
stock or securities or any rights to acquire such capital stock or securities,
or agreed to change the terms and conditions of any such rights or, except
pursuant to the terms of existing preferred stock of the Company, paid any
dividends or made any distribution to the holders of the Company's capital
stock;
(r) entered into any material agreement with any person or
group, or modified or amended in any material respect the terms of any material
existing agreement except in the ordinary course of business;
(s) entered into, adopted or amended any Employee Benefit
Plan; or
(t) entered into any agreement (written or oral) to do any of
the foregoing, except in the ordinary course of business consistent with past
practice.
SECTION 3.13 COMMITMENTS. Except the material contracts, agreements,
commitments and other arrangements, whether oral or written, to which the
Company or the Subsidiary is a party (the "Contracts") set forth in Schedule
3.13, neither the Company nor the Subsidiary has entered into, nor is
15
the capital stock, the assets or the business of the Company or the Subsidiary
bound by, whether or not in writing, any
(i) partnership or joint venture agreement;
(ii) deed of trust or other security agreement,
except in the ordinary course of business
(iii) guaranty or suretyship, indemnification or
contribution agreement or performance bond;
(iv) employment, consulting or compensation agreement
or arrangement, including the election or retention in office of any director or
officer;
(v) labor or collective bargaining agreement;
(vi) debt instrument, loan agreement or other
obligation relating to indebtedness for borrowed money or money lent or to be
lent to another, except in the ordinary course of business;
(vii) deed or other document evidencing an interest
in or contract to purchase or sell real property;
(viii) agreement with dealers or sales or commission
agents, investment bankers, financial advisors, business brokers, public
relations or advertising agencies, accountants or attorneys, except with respect
to confidentiality agreements;
(ix) lease of real or personal property, whether as
lessor, lessee, sublessor or sublessee, except in the ordinary course of
business and excluding the real estate leases set forth on Schedule 3.18(c);
(x) agreement between the Company and any Affiliate;
(xi) agreement relating to any material matter or
transaction in which an interest is held by a person or entity that is an
affiliate of the Company;
(xii) any agreement for the acquisition of services,
supplies, equipment or other personal property and involving more than $50,000
in the aggregate, except in the ordinary course of business;
(xiii) powers of attorney;
(xiv) contracts containing noncompetition covenants;
(xv) any other contract or arrangement that involves
either an unperformed commitment in excess of $50,000 or that terminates more
than thirty (30) days after the date hereof, except in the ordinary course of
business;
(xvi) agreement relating to any material matter or
transaction in which an interest is held by any person or entity referred to in
Section 3.27;
(xvii) agreement providing for the purchase from a
supplier of all or substantially all of the requirements of the Company or the
Subsidiary of a particular product where such product accounts for more than 10%
of the Company's or the Subsidiary's gross inventory; or
16
(xviii) any other agreement or commitment not made in
the ordinary course of business that is material to the business or financial
condition of the Company or the Subsidiary.
True, correct and complete copies of the written Contracts, and true, correct
and complete written descriptions of the oral Contracts, have heretofore been
delivered or made available to the Buyer. There are no existing material
defaults, material events of default or events, occurrences, acts or omissions
that, with the giving of notice or lapse of time or both, would constitute
material defaults by the Company or the Subsidiary, and no material penalties
have been incurred nor are amendments pending, with respect to the Contracts.
The Contracts are in full force and effect and are valid and enforceable
obligations of the Company or the Subsidiary, except as such enforceability may
be limited by any applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights generally,
and except as the availability of equity remedies may be limited by the
application of general principles of equity (regardless of whether such
equitable principles are applied in a proceeding at law or in equity). Neither
the Company nor the Subsidiary has received notice of any material default with
respect to any Contracts. For the purposes of this Section 3.13(a), the term
"material" shall mean a condition the existence or breach of which could result
in damage or loss to the Company valued in excess of $50,000 individually or
$150,000 in the aggregate.
(b) Except as contemplated hereby, neither the Company nor the
Subsidiary has received notice of any plan or intention of any other party to
any Contract to exercise any right to cancel or terminate any Contract. Neither
the Company nor the Subsidiary currently contemplates, or has reason to believe
any person or entity currently contemplates, any amendment or change to any
Contract. None of the customers, joint venture partners or suppliers of the
Company or the Subsidiary has refused, or communicated that it will or may
refuse, to purchase or supply goods or services, as the case may be, or has
communicated that it will or may substantially reduce the amounts of goods or
services that it is willing to purchase from, or sell to, the Company or the
Subsidiary.
SECTION 3.14 INSURANCE. The Company has previously delivered or made
available to the Buyer all insurance policies of the Company. All of such
policies are valid and enforceable against the Company, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, and except as the availability of equity remedies
may be limited by the application of general principles of equity (regardless of
whether such equitable principles are applied in a proceeding at law or in
equity).
SECTION 3.15 PATENTS, TRADE-MARKS, SERVICE MARKS AND COPYRIGHTS.
(a) The Company and the Subsidiary owns all patents,
trade-marks, service marks and copyrights (collectively "Proprietary Rights"),
if any, necessary to conduct its business, or possesses adequate licenses or
other rights, if any, therefor, without conflict with the rights of others. Set
forth in Schedule 3.15(a) is a true and correct description of all Proprietary
Rights.
(b) The Company has the sole and exclusive right to use the
Proprietary Rights without infringing or violating the rights of any third
parties. Use of the Proprietary Rights does not require the consent of any other
person and the Proprietary Rights are freely transferable. No claim has been
asserted by any person to the ownership of or right to use any Proprietary Right
or challenging or questioning the validity or effectiveness of any license or
agreement constituting a part of any Proprietary Right. Each of the Proprietary
Rights is valid and subsisting, has not been canceled, abandoned or otherwise
terminated and, if applicable, has been duly issued or filed.
(c) The Company has no knowledge of any claim that, or inquiry
as to whether, any product, activity or operation of the Company or the
Subsidiary infringes upon or involves, or has resulted in the infringement of,
any proprietary rights of any other person, corporation or other entity; and no
proceedings have been instituted, are pending or, to the knowledge of the
Company, are threatened that
17
challenge the rights of the Company or the Subsidiary with respect thereto. The
Company has not given and is not bound by any agreement of indemnification for
any Proprietary Right as to any property manufactured, used or sold by it.
SECTION 3.16 TRADE SECRETS AND CUSTOMER LISTS. Either the Company or
the Subsidiary has the right to use, free and clear of any claims or rights of
others except claims or rights specifically set forth in Schedule 3.17 all trade
secrets, customer lists and proprietary information required for the marketing
of all merchandise and services presently sold or marketed by the Company or the
Subsidiary. Neither the Company nor the Subsidiary is using or in any way making
use of any confidential information or trade secrets of any third party,
including without limitation any past or present employee of the Company or the
Subsidiary.
SECTION 3.17 TITLE TO ASSETS; CONDITION OF ASSETS.
(a) A description of all interests in real property owned by
the Company and Subsidiary is set forth in Schedule 3.17(a).
(b) Except as disclosed on Schedule 3.17(b), the Company and
the Subsidiary have good and marketable title to their respective Company
Assets, including, without limitation, those reflected on the Interim Balance
Sheet (other than those since disposed of in the ordinary course of business),
free and clear of all security interests, liens, charges and other encumbrances,
except for (i) liens for taxes not yet due and payable or being contested in
good faith in appropriate proceedings, and (ii) encumbrances that are incidental
to the conduct of their respective businesses or ownership of property, not
incurred in connection with the borrowing of money or the obtaining of credit,
and which do not in the aggregate materially detract from the value of the
assets affected or materially impair their use by the Company or the Subsidiary,
as the case may be. All facilities, machinery, equipment, fixtures, vehicles and
other properties owned, leased or used by the Company or the Subsidiary are in
good operating condition and repair (it being understood that a certain portion
of the rental fleet is constantly being repaired), normal wear and tear
excepted, are adequate and sufficient for the Company's and the Subsidiary's
respective businesses and conform in all material respects with all applicable
ordinances, regulations and laws relating to their use and operation.
(c) A listing of all real property leases, their terms and
total lease payments is attached hereto as Schedule 3.17(c). The Company and the
Subsidiary enjoy peaceful and undisturbed possession under all real property
leases under which the Company and the Subsidiary are operating, and all such
leases are valid and subsisting and none of them is in default, except for those
defaults that do not have a material adverse effect on the Company's or the
Subsidiary's results of operations, business, assets or financial condition.
SECTION 3.18 COMPLIANCE WITH LAWS. The Company and the Subsidiary have
all material franchises, Permits, licenses and other rights and privileges
necessary to permit them to own their respective properties and to conduct their
respective businesses as presently conducted. The business and operations of the
Company and the Subsidiary have been and are being conducted in accordance in
all material respects with all applicable laws, rules and regulations, and
neither the Company nor the Subsidiary is in violation of any judgment, law or
regulation except where any such violation would not have a material adverse
effect on the Company's or the Subsidiary's results of operations, business,
assets or financial condition.
SECTION 3.19 LITIGATION: DEFAULT. Except as otherwise set forth in
Schedule 3.19, there are no claims, actions, suits, investigations or
proceedings against the Company or the Subsidiary pending or, to the Knowledge
of the Company, threatened in any court or before or by any Governmental
Authority, or before any arbitrator, that could reasonably be expected to have a
material adverse effect (whether covered by insurance or not) on the business,
operations, prospects, Properties, securities or financial condition of the
Company or the Subsidiary. Except as otherwise set forth in Schedule 3.19,
neither the
18
Company nor the Subsidiary is in default under, and no condition exists (whether
covered by insurance or not) that with or without notice or lapse of time or
both would (i) constitute a default under, or breach or violation of, any Legal
Requirement, Permit or Contract applicable to the Company or the Subsidiary, or
(ii) accelerate or permit the acceleration of the performance required under, or
give any other party the right to terminate, any Contract applicable to the
Company or the Subsidiary, other than defaults, breaches, violations or
accelerations that would not have a material adverse effect on the business,
operations, prospects, Properties, securities or financial condition of the
Company or the Subsidiary.
SECTION 3.20 ENVIRONMENTAL MATTERS.
(a) Except as listed in Schedule 3.20(a), there are no PCBs,
TCE, PCE, or asbestos containing materials generated, used, treated, stored,
maintained, disposed of, or otherwise deposited in, or located on any premises
at which the Company's or the Subsidiary's business (the "Business") is or was,
or at which the business or, to the Knowledge of the Company, its predecessors
was, located.
(b) Except as described in Schedule 3.20(b), there are and
were no underground storage tanks used, stored, maintained, located on any
premises at which Business of the Company is or was, or, to knowledge of the
Company, at which the business of its predecessors was, located. With respect to
underground storage tanks, Schedule 3.21(b) sets forth the size, location,
construction, installation date, use and testing history of all underground
storage tanks (whether or not excluded from regulation under Environmental Law),
including all underground storage tanks in use, out of service, closed,
abandoned, decommissioned, or sold to a third party.
(c) Except as listed in Schedule 3.20(c), there has been no
"release" as defined in 42 U.S.C. 9601(22) or, to the best knowledge of the
Company, threat of a "release" of any Hazardous Substance on, from or under any
premises from which (i) the Company's operations have been or are being
conducted related to the Business. or (ii) to the Knowledge of the Company, the
operations of any predecessor of the Company.
(d) Except as listed in Schedule 3.20(d), the Company the
Subsidiary and their respective predecessors have not received written notice
alleging any potential liability with respect to the contamination,
investigation, or cleanup of any site at which Hazardous Substances have been or
have alleged to have been generated, treated, stored, discharged, emitted or
disposed of and there are no past or present events, facts, conditions or
circumstances which may interfere with or prevent compliance by the Company or
the Subsidiary with Environmental Law, or with any order, decree, judgment,
injunction, notice or demand issued, entered, promulgated or approved
thereunder, or which may give rise to any liability under applicable law
including, without limitation, any Environmental Law, or otherwise form the
basis of any claim, action, demand, suit, proceeding, hearing, notice of
violation, study or investigation, based on or related to the manufacture,
process, distribution, use, treatment, storage, disposal, transport or handling,
or the emission, discharge, release or threatened release into the environment
of Hazardous Substances by the Company, the Subsidiary or, to the Knowledge of
the Company, predecessor, as a result of any act or omission of the Company or
predecessors related to the Business.
(e) Schedule 3.20(e) contains a true, correct and complete
listing of all Hazardous Substances used by the Company, the Subsidiary in the
conduct of the operation of the Business since January 1, 1980, and a list of
the methods used by the Company, the Subsidiary and their respective
predecessors (including, without limitation, a list of past and present disposal
or recycling sites, waste haulers, and manifest numbers) to dispose of or
recycle Hazardous Substances generated by Company's, the Subsidiary's and their
respective predecessor's operations and activities.
(f) Except as disclosed in Schedule 3.20(f), all of the
Company's and, to the Knowledge of the Company, its predecessor's, Hazardous
Substances disposal and recycling practices related to the Business have been
accomplished in accordance with all applicable Environmental Law.
19
The Company's representation(s) with respect to this Section 3.20 shall
not be interpreted to imply that the Buyer has constructive knowledge regarding
any aspect of the Business with respect to environmental matters nor to limit
the scope of any of the Company's or any Stockholders' representations under
this Agreement. No such due diligence examination or related activities of, or
on behalf of, the Buyer however, shall constitute a waiver or relinquishment by
the Buyer of its right to rely upon the Company's or any Stockholders'
representations, warranties, covenants and agreements as made herein or pursuant
hereto, and no such disclosure shall constitute an assumption by the Buyer of an
conditions or liabilities, and such disclosure shall not relieve the Company or
any Stockholder of its duties and obligations hereunder.
SECTION 3.21 BANKS. Schedule 3.21 sets forth (i) the name of each bank,
trust company or other financial institution and stock or other broker with
which the Company and the Subsidiary has an account, credit line or safe deposit
box or vault, (ii) the names of all persons authorized to draw thereon or to
have access to any safe deposit box or vault, (iii) the purpose of each such
account, safe deposit box or vault, and (iv) the names of all persons authorized
by proxies, powers of attorney or other like instrument to act on behalf of the
Company or the Subsidiary in matters concerning any of its business or affairs.
Except as otherwise set forth in Schedule 3.21, no such proxies, powers of
attorney or other like instruments are irrevocable.
SECTION 3.22 SUPPLIERS AND CUSTOMERS SALES. Schedule 3.22 sets forth
all the Company's and the Subsidiary's material suppliers during the twelve
month period ended July 31, 1996 and the nine month period ended April 30, 1997,
together with the dollar amount of goods purchased by the Company or the
Subsidiary from each such supplier during the twelve month period ended July 31,
1996 and the nine month period ended May 31, 1997, as well as each of the
principal customers of the Company or the Subsidiary during the twelve month
period ended July 31, 1996 and the ten month period ended April 30, 1997. Except
as otherwise set forth in Schedule 3.22, since December 31, 1996, there has been
no material adverse change in the business relationship of the Company with any
supplier or customer named in Schedule 3.22. No customer or supplier named in
Schedule 3.22 has terminated or materially altered, or notified the Company of
any intention to terminate or materially alter, its relationship with the
Company, and the Company has no reason to believe that any such customer or
supplier will terminate or materially alter its relationship with the Company or
to materially decrease its services or supplies to the Company or the Subsidiary
or its direct or indirect usage of the services or products of the Company or
the Subsidiary. For purposes of Sections 3.22 and 3.25, "material suppliers"
refers to suppliers from whom Company purchased five percent (5%) or more of the
total amount of the goods purchased by the Company during the twelve month
period ended July 31, 1996 and the ten month period ended April 30, 1997, and
"principal customers" refers to customers who accounted for 5% or more of the
Company's total revenues during the twelve month period ended July 31, 1996 and
the ten month period ended April 30, 1997.
SECTION 3.23 BROKERAGE. Except as set forth in Schedule 3.23, there are
no claims for brokerage commissions, finder's fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by the Company or the Subsidiary.
SECTION 3.24 DISCLOSURE; DUE DILIGENCE. This Agreement and the Exhibits
and Schedules hereto, when taken as a whole with other documents and
certificates furnished by the Company and the Subsidiary to the Buyer or its
counsel, do not contain any untrue statement of material fact or omit any
material fact necessary in order to make the statements therein not misleading;
provided, however, certain materials provided to the Buyer contain projections
and estimates of future events, and such projections and estimates have been
based upon certain assumptions that management of the Company and the Subsidiary
made in good faith and believed are reasonable at the time such materials were
prepared.
SECTION 3.25 OWNERSHIP INTERESTS OF INTERESTED PERSONS. Except as set
forth in Schedule 3.25, no director or executive officer of the Company or the
Subsidiary or their respective spouses or children, owns directly or indirectly,
on an individual or joint basis, any material interest in, or serves as an
officer or
20
director of, any principal customer or material supplier which has a business
relationship with the Company or the Subsidiary or any organization that has a
material contract or arrangement with the Company or the Subsidiary.
SECTION 3.26 INVESTMENTS IN COMPETITORS. No director or executive
officer of the Company owns directly or indirectly any material interests or has
any investment equal to 5% or more of the outstanding voting securities in any
corporation, business or other person that is a direct competitor of the Company
or the Subsidiary.
SECTION 3.27 CERTAIN PAYMENTS. To the Knowledge of the Stockholders,
neither the Company, the Subsidiary nor any director, officer or employee of the
Company or the Subsidiary, has paid or caused to be paid, directly or
indirectly, in connection with the business of the Company or the Subsidiary:
(a) to any government or agency thereof or any agent of any supplier or customer
any bribe, kick-back or other similar payment; or (b) except as set forth in
Schedule 3.27, any material contribution to any political party or candidate
(other than from personal funds of directors, officers or employees not
reimbursed by their respective employers or as otherwise permitted by applicable
law).
SECTION 3.28 GOVERNMENT INQUIRIES. Except as set forth on Schedule
3.28, there have been no material inspection reports, questionnaires, inquiries,
demands or requests for information received by the Company or the Subsidiary
from, or any material statement, report or other document filed by the Company
or the Subsidiary with, the federal government or any federal administrative
agency (including but not limited to, the Commission, Justice Department,
Internal Revenue Service, Department of Labor, Occupational Safety and Health
Administration, Federal Trade Commission, National Labor Relations Board, and
Interstate Commerce Commission), any state securities administrator or any local
or state taxing authority.
SECTION 3.29 OTHER TRANSACTIONS. Neither the Company nor the Subsidiary
has entered into any agreements or arrangements and there are no pending offers
or discussions concerning or providing for the merger or consolidation of the
Company or the Subsidiary or all or any substantial portion of its assets, the
sale by the Company or the Subsidiary or any material stockholder of the Company
or the Subsidiary of any securities of the Company or the Subsidiary or any
similar transaction affecting the Company or the Subsidiary or its
securityholders.
SECTION 3.30 TAX MATTERS.
(a) Except as set forth in Schedule 3.30 hereto, the each of
the Company and the Subsidiary:
(i) has filed all federal income Tax Returns, and all
other material Tax Returns which it is required to file under applicable laws
and regulations;
(ii) all such Tax Returns are true and accurate in
all material respects;
(iii) has paid all Taxes due and owing by it (whether
or not such Taxes are required to be shown on a Tax Return) and has withheld and
paid over to the appropriate taxing authority all Taxes which it is required to
withhold from amounts paid or owing to any employee, stockholder, creditor or
other third party, except where the amounts of such unpaid Taxes or the amounts
that have not been withheld and paid over do not, in the aggregate, exceed
$25,000;
(iv) the accrual for Taxes on the Closing Date
Unaudited Balance Sheet (excluding any amount recorded which is attributable to
timing differences between book and Tax income) would be adequate to pay all
material Tax liabilities of the Company and the Subsidiary if its respective
current tax year were treated as ending on the date of the Closing Date
Unaudited Balance Sheet;
21
(v) the federal income Tax Returns of the Company and
the Subsidiary have been filed through July 31, 1996, and, as of the date
hereof, none of such Tax Returns has been audited.
(b) To the Knowledge of the Company and the Subsidiary, no
claim has been made by a taxing authority in a jurisdiction where the Company or
the Subsidiary does not file tax returns that the Company or the Subsidiary is
or may be subject to taxation by that jurisdiction.
(c) To the Knowledge of the Company and the Subsidiary;
(i) there are no foreign, federal, state or local tax
audits or administrative or judicial proceedings pending or being conducted with
respect to the Company or the Subsidiary;
(ii) no information related to Tax matters has been
requested by any foreign, federal, state or local taxing authority and no
written notice indicating an intent to open an audit or other review has been
received by the Company or the Subsidiary from any foreign, federal, state or
local taxing authority; and
(iii) there are no material unresolved claims
concerning the Company's or the Subsidiary Tax liability.
(d) No waivers of statutes of limitation have been given or
requested with respect to the Company in connection with any Tax Returns
covering the Company or the Subsidiary, except where such waiver would not have
a material adverse effect on the Company and the Subsidiary taken as a whole.
(e) Neither the Company nor the Subsidiary has executed or
entered into a closing agreement pursuant to IRC Section 7121 or any predecessor
provision thereof or any similar provision of state, local or foreign law; nor
has the Company or the Subsidiary agreed to or is required to make any
adjustments pursuant to IRC Section 481(a) or any similar provision of state,
local or foreign law by reason of a change in accounting method initiated by the
Company or the Subsidiary. Neither the Company nor the Subsidiary has any
knowledge that the IRS has proposed any such adjustment or change in accounting
method, or has any knowledge with respect to any application pending with any
taxing authority requesting permission for any changes in accounting methods
that relate to the business or operations of the Company or the Subsidiary.
(f) The Company has not made an election under IRC Section
341(f).
(g) The Company is not liable for the Taxes of another person.
(h) The Company is not a party to any tax sharing agreement.
(I) The Company has not made any payments nor is it obligated
to make payments nor is it a party to an agreement that could obligate it to
make any payments that would not be deductible under IRC ss. 280G.
22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EACH SELLER
Each Stockholder (with respect to Sections 4.01, 4.02 and 4.03) and
each Debenture Holder (with respect to Sections 4.02 and 4.03) represents and
warrants to the Buyer as follows:
SECTION 4.01 TITLE TO THE SHARES. As of the Closing Date, such
Stockholder shall own beneficially and of record, free and clear of any lien,
option or other encumbrance, or shall own of record and have full power and
authority to convey free and clear of any liens or other encumbrances, the
shares of Company Common Stock and Redemption Shares set forth opposite such
Stockholders' name on EXHIBITS A-1 and A-2 hereof respectively, and, upon
delivery of and payment for such shares as herein provided, such Stockholder
will convey to the Buyer (in the case of the Company Common Stock) and the
Company (in the case of the Redemption Shares) good and valid title thereto,
free and clear of any lien or other encumbrance.
SECTION 4.02 AUTHORITY TO EXECUTE AND PERFORM AGREEMENT. Such Seller
has the full legal right and power and all authority and approval required to
enter into, execute and deliver this Agreement and to perform fully such
Sellers' obligations hereunder. This Agreement has been duly executed and
delivered by such Seller and is a valid and binding obligation of such Seller
enforceable in accordance with its terms, except as such enforceability may be
limited by any applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally, and
except as the availability of equity remedies may be limited by the application
of general principles of equity (regardless of whether such equitable principles
are applied in a proceeding at law or in equity). The execution and delivery by
such Seller of this Agreement and the performance by such Seller of this
Agreement in accordance with its terms and conditions will not (i) require the
approval or consent of any foreign, federal, state, county, local or other
governmental or regulatory body or the approval or consent of any other person;
(ii) conflict with or result in any breach or violation of any of the terms and
conditions of, or constitute (or with notice or lapse of time or both
constitute) a default under, any statute, regulation, order, judgment or decree
applicable to such Seller or to the shares of Company Common Stock, Redemption
Shares or Subordinated Notes held by such Seller, or any instrument, contract or
other agreement to which such Seller is a party or by or to which such Seller is
or the shares of Company Common Stock, held by such Seller are bound or subject;
or (iii) result in the creation of any lien or other encumbrance on the
Redemption Shares or Subordinated Notes, as the case may be, held by such
Seller.
SECTION 4.03 NO SELLERS DEFAULTS OR CONSENTS. Except as otherwise set
forth in Schedule 4.03 hereto, the execution and delivery of this Agreement and
the Collateral Agreements by each Seller and the performance by each Seller who
is a party thereto of his, her or its obligations hereunder and thereunder will
not violate any provision of law or any judgment, award or decree or any
indenture, agreement or other instrument to which such Seller is a party, or by
which such Seller or any properties or assets of such Seller is bound or
affected, or conflict with, result in a breach of or constitute (with due notice
or lapse of time or both) a default under, any such indenture, agreement or
other instrument, or result in the creation or imposition of any lien, charge,
security interest or encumbrance of any nature whatsoever upon any of the
properties or assets of such Seller. Any and all consents required to be
obtained such Seller as set forth in Schedule 4.03 shall be obtained and copies
thereof delivered to the Buyer upon execution of this Agreement.
23
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers that:
SECTION 5.01 CORPORATE EXISTENCE AND QUALIFICATION. The Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware; has the corporate power to own, manage, lease and hold
its Properties and to carry on its business as and where such Properties are
presently located and such business is presently conducted; and is duly
qualified to do business and is in good standing as a foreign corporation in
each of the jurisdictions where the character of its Properties or the nature of
its business requires it to be so qualified.
SECTION 5.02 AUTHORITY, APPROVAL AND ENFORCEABILITY. This Agreement has
been duly executed and delivered by the Buyer and the Buyer has all requisite
corporate power and legal capacity to execute and deliver this Agreement and all
Collateral Agreements executed and delivered or to be executed and delivered by
the Buyer in connection with the transactions provided for hereby, to consummate
the transactions contemplated hereby and by the Collateral Agreements, and to
perform its obligations hereunder and under the Collateral Agreements. The
execution and delivery of this Agreement and the Collateral Agreements and the
performance of the transactions contemplated hereby and thereby have been duly
and validly authorized and approved by all corporate action necessary on behalf
of the Buyer. This Agreement and each Collateral Agreement to which the Buyer is
a party constitutes, or upon execution and delivery will constitute, the legal,
valid and binding obligation of the Buyer, enforceable in accordance with its
terms, except as such enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally, and except as the
availability of equity remedies may be limited by the application of general
principles of equity (regardless of whether such equitable principles are
applied in a proceeding at law or in equity).
SECTION 5.03 NO DEFAULT OR CONSENTS. Except as otherwise set forth in
Schedule 5.03, neither the execution and delivery of this Agreement nor the
carrying out of the transactions contemplated hereby will:
(i) violate or conflict with any of the terms,
conditions or provisions of the Buyer's articles of incorporation or bylaws;
(ii) violate any Legal Requirements applicable to the
Buyer;
(iii) violate, conflict with, result in a breach of,
constitute a default under (whether with or without notice or the lapse of time
or both), or accelerate or permit the acceleration of the performance required
by, or give any other party the right to terminate, any contract or Permit
applicable to the Buyer;
(iv) result in the creation of any lien, charge or
other encumbrance on the shares of capital stock or any Property of the Buyer;
or
(v) require the Buyer to obtain or make any waiver,
consent, action, approval or authorization of, or registration, declaration,
notice or filing with, any private nongovernmental third party or any
Governmental Authority.
SECTION 5.04 NO PROCEEDINGS. No suit, action or other proceeding is
pending or, to the Buyer's knowledge, threatened before any Governmental
Authority seeking to restrain the Buyer or prohibit its entry into this
Agreement or prohibit the Closing, or seeking Damages against the Buyer or its
Properties as a result of the consummation of this Agreement.
24
SECTION 5.05 BROKERAGE. There are no claims for brokerage commissions,
finder's fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by the
Company.
SECTION 5.06 REPRESENTATIONS AND WARRANTIES ON CLOSING DATE. The
representations and warranties contained in this Article V shall be true in all
material respects on and as of the Closing Date with the same force and effect
as though such representations and warranties had been made on and as of the
Closing Date.
ARTICLE VI
OBLIGATIONS PRIOR TO CLOSING
From the date of this Agreement through the Closing:
SECTION 6.01 BUYER'S ACCESS TO INFORMATION AND ASSETS. The Company and
the Subsidiary shall permit the Buyer and its authorized employees, agents,
accountants, legal counsel and other representatives, at Buyer's own expense, to
have access to the books, records, employees, counsel, accountants, and other
representatives of the Company and the Subsidiary at all times reasonably
requested by the Buyer for the purpose of conducting an investigation of each of
the Company's and the Subsidiary's financial condition, corporate status,
operations, business and Properties. The Company and the Subsidiary shall make
available to the Buyer for examination and reproduction, at Buyer's own expense,
all documents and data of every kind and character relating to the Company and
the Subsidiary in possession or control of, or subject to reasonable access by,
the Sellers, the Company or the Subsidiary, including, without limitation, all
files, records, data and information relating to the Company Assets (whether
stored in paper, magnetic or other storage media) and all agreements,
instruments, contracts, assignments, certificates, orders, and amendments
thereto. Also, the Company shall allow the Buyer, at Buyer's own expense, access
to, and the right to inspect, the Company Assets, except to the extent that such
Company Assets are operated by a third-party operator, in which case the Company
shall use its best efforts to cause the operator of such Company Assets to allow
the Buyer access to, and the right to inspect, such Company Assets.
SECTION 6.02 COMPANY'S CONDUCT OF BUSINESS AND OPERATIONS. Company
shall keep the Buyer advised as to all material operations and proposed material
operations relating to the Company, the Subsidiary or the Company Assets. The
Company and the Subsidiary shall (a) conduct their respective business in the
ordinary course, (b) use their reasonable efforts to keep available to the
Company or the Subsidiary, as the case may be, the services of present
employees, (c) maintain and operate Company Assets in a good and workmanlike
manner, (d) pay or cause to be paid all costs and expenses (including but not
limited to insurance premiums) incurred in connection therewith in a timely
manner, (e) use reasonable efforts to keep all Contracts listed or required to
be listed on Schedule 3.13 in full force and effect, (f) comply with all of the
covenants contained in all such material Contracts, (g) maintain in force until
the Closing Date insurance policies (subject to the provisions of Section 6.07)
equivalent to those in effect on the date hereof, and (h) comply in all material
respects with all applicable Legal Requirements. Except as otherwise
contemplated in this Agreement, the Company and the Subsidiary shall use their
best efforts to preserve the present relationships of the Company and the
Subsidiary with persons having significant business relations therewith.
SECTION 6.03 GENERAL RESTRICTIONS. Except as otherwise expressly
permitted in this Agreement, without the prior written consent of the Buyer,
neither the Company nor the Subsidiary will:
(i) (x) declare, set aside or pay any dividends on,
or make any other distribution (whether in cash, stock or property) in
respect of, any of its capital stock, (y) split,
25
combine or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in view of or in
substitution for shares of its capital stock, or (z) purchase, redeem
or otherwise acquire any shares of capital stock of the Company or the
Subsidiary or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock, any other voting securities
or any securities convertible into, or any rights, warrants or options
to acquire, any such shares, voting securities or convertible
securities;
(iii) amend its Certificates of Incorporation or
By-laws;
(iv) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business of any corporation,
partnership, joint venture, association or other business organization
or division thereof or (y) any assets that are material, individually
or in the aggregate, to the Company or the Subsidiary, except purchases
of assets in the ordinary course of business consistent with past
practice;
(v) sell, lease, license, mortgage or otherwise
encumber or otherwise dispose of, or agree to sell, transfer, lease,
mortgage, encumber or otherwise dispose of, any Properties except (i)
in the ordinary course of business consistent with past practice, or
(ii) pursuant to any Contract;
(vi) (y) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any
debt securities or warrants or other rights to acquire any debt
securities of the Company or the Subsidiary, guarantee any debt
securities of another person, enter into any "keep well" or other
agreements to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of the
foregoing, except for borrowings incurred in the ordinary course of
business consistent with past practice, or (z) make any loans, advances
or capital contributions to, or investments in, any other person;
(vii) make or agree to make any new capital
expenditure or expenditures which, in the aggregate, are in excess of
$50,000 (other than those required pursuant to currently outstanding
Contracts or in the ordinary course of business consistent with past
practice);
(viii) make any material tax election or settle or
compromise any material tax liability;
(ix) pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement
or satisfaction, in the ordinary course of business consistent with
past practice or in the accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the Financial
Statements (or the notes thereto) or incurred in the ordinary course of
business consistent with past practice, or waive any material benefits
of, or agree to modify in any material respect, any confidentiality,
standstill or similar agreements to which the Company or the Subsidiary
is a party;
(x) except in the ordinary course of business
consistent with past practice, modify, amend or terminate any Contract;
(xi) except in the ordinary course of business
consistent with past practice, enter into any contracts, agreements,
arrangements or understandings relating to the rental,
26
distribution, sale or marketing by third parties of the Company's or
the Subsidiary's rental equipment, inventory or other products;
(xii) except as required to comply with applicable
law (A) adopt, enter into, terminate or amend any Benefit Plan or other
arrangement for the benefit or welfare of any director, officer or
current or former employee, (B) increase in any manner the compensation
or fringe benefits of, or pay any bonus to, any director, officer or
employee (except for normal increases or bonuses in the ordinary course
of business consistent with past practice), (c) pay any benefit not
provided for under any Benefit Plan, (D) grant any awards under any
bonus, incentive, performance or other compensation plan or arrangement
or Benefit Plan (including the grant of stock options, stock
appreciation rights, stock based or stock related awards, performance
units or restricted stock, or the removal of existing restrictions in
any Benefit Plans or agreement or awards made thereunder) or (E) take
any action to fund or in any other way secure the payment of
compensation or benefits under any employee plan, agreement, contract
or arrangement or Benefit Plan;
(xiii) make any change in any method of accounting or
accounting practice or policy other than those required by generally
accepted accounting principles; or
(xiv) authorize any of, or commit or agree to take
any of, the foregoing actions.
SECTION 6.04 NOTICE REGARDING CHANGES. The Sellers shall promptly
inform the Buyer in writing of any change in facts and circumstances that could
render any of the representations and warranties made herein by the Sellers
inaccurate or misleading if such representations and warranties had been made
upon the occurrence of the fact or circumstance in question. The Buyer shall
promptly inform the Sellers in writing of any change in facts and circumstances
that could render any of the representations and warranties made herein by it
inaccurate or misleading if such representations and warranties had been made
upon the occurrence of the fact or circumstance in question.
SECTION 6.05 PREFERENTIAL PURCHASE RIGHTS. To the extent there are any
parties entitled or who may become entitled to exercise preferential purchase or
consent rights with respect to the transactions contemplated hereby, the Sellers
shall promptly obtain the agreement in writing of such parties to waive or not
exercise such rights, which request shall be in form and substance reasonably
satisfactory to and approved by the Buyer.
SECTION 6.06 CONSENTS AND BEST EFFORTS. Each of the parties hereto
shall use all commercially reasonable good faith efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations, and consult and fully
cooperate with and provide reasonable assistance to each other party and their
respective representatives in order to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable
hereafter, including without limitation, (i) using all commercially reasonable
good faith efforts to make all filings, applications, notifications, reports,
submissions and registrations with, and to obtain all consents, approvals,
authorizations or permits of, governmental entities or other persons or entities
as are necessary for the consummation of the transactions contemplated by this
Agreement (including, without limitation, pursuant to the HSR Act and other
applicable laws and regulations), and (ii) taking such actions and doing such
things as any other party hereto may reasonably request in order to cause any of
the conditions to such other party's obligation to consummate the transactions
contemplated hereby as specified in Article VII of this Agreement to be fully
satisfied.
SECTION 6.07 TERMINATION OF INSURANCE POLICIES. The Sellers shall take
(or cause the Company and the Subsidiary to take) all actions necessary or
appropriate to cause any and all insurance coverage currently carried by or for
the benefit of the Company and the Subsidiary to remain in full force and
effect; provided, however, that the Sellers shall cooperate with the Buyer to
cause termination as of the Closing Date of the insurance coverage identified in
writing for this purpose by the Buyer to the Company at least
27
___ days prior to the Closing, and the Sellers shall take (or cause the Company
and the Subsidiary to take) all actions necessary to discharge any and all
liabilities or obligations of the Company or the Subsidiary arising with respect
to any such coverage that is to be terminated hereunder.
SECTION 6.08 CASUALTY LOSS. If, between the date of this Agreement and
the Closing, any of the Properties of the Company or the Subsidiary shall be
destroyed or damaged in whole or in part by fire, earthquake, flood, other
casualty or any other cause, then the Sellers shall, at the Buyer's election,
(i) cause the Company or the Subsidiary to cause such Properties to be repaired
or replaced prior to the Closing with Property of substantially the same
condition and function, (ii) cause the Company or the Subsidiary to deposit in a
separate account an amount sufficient to cause such Property to be so repaired
or replaced, or (iii) enter into contractual arrangements with the Company or
the Subsidiary satisfactory to the Buyer so that the Company or the Subsidiary
will have at the Closing the same economic value as if such casualty had not
occurred.
SECTION 6.09 EMPLOYEE MATTERS. The Sellers shall take (or cause the
Company or the Subsidiary to take) all actions necessary or appropriate to cause
each Plan or Benefit Program or Agreement in effect on the date of this
Agreement to remain in full force and effect until the Closing Date; provided,
however, that, to the extent requested in writing by the Buyer at least ten (10)
days prior to the Closing Date, the Sellers shall cause the Company or the
Subsidiary to cease to sponsor, maintain or contribute to any Plan or Benefit
Program or Agreement specified by the Buyer in such written request, and shall
further assume all past, present and future obligations and liabilities of the
Company and the Subsidiary (including contingent liabilities) with respect to
each such Plan or Benefit Program or Agreement effective as of the last business
day prior to the Closing Date.
SECTION 6.10 NO SOLICITATION. The Sellers and the Company and its
officers, directors, employees, representatives and agents shall immediately
cease any discussions or negotiations with any parties that may be ongoing with
respect to a Third Party Acquisition Proposal (as defined below). Neither the
Company nor any of the Sellers shall, nor shall they permit any of their
Affiliates to, nor shall they authorize or permit any of their officers,
directors or employees or any investment banker, attorney or other advisor or
representatives retained by them or any of their Affiliates to, (i) solicit,
initiate or knowingly encourage the submission of, any Third Party Acquisition
Proposal, or (ii) participate in any discussions or negotiations regarding, or
furnish to any person any non-public information with respect to, or take any
other action knowingly to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Third Party
Acquisition Proposal. For purposes of this Agreement, "Third Party Acquisition
Proposal" means any inquiry, proposal or offer from any person relating to any
direct or indirect acquisition or purchase of all or a portion or more of the
consolidated assets of the Company and the Subsidiary or all or a portion any
class of equity securities of the Company or the Subsidiary or any offer to
acquire or purchase that if consummated would result in any person beneficially
owning all or a portion of any class of equity securities of the Company or the
Subsidiary, or any merger, consolidation, business combination, sale of assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or the Subsidiary, other than the transactions contemplated by this
Agreement, or any other transaction the consummation of which could reasonably
be expected to impede, interfere with, prevent or materially delay, or dilute
materially the benefits to the Buyer of the transactions contemplated hereby.
SECTION 6.11 EMPLOYMENT AGREEMENTS. On or before Closing, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇ shall have
entered into employment agreements in the form of EXHIBITS C, D, E and F
respectively (collectively, the "Employment Agreements"), to take effect on and
after the Closing Date.
SECTION 6.12 CONSULTING AGREEMENT. On or before Closing, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ shall have entered into a two-year non-competition agreement in the
EXHIBIT G (the "Non-Competition Agreement").
28
ARTICLE VII
CONDITIONS TO SELLERS' AND BUYER'S OBLIGATIONS
SECTION 7.01 CONDITIONS TO OBLIGATIONS OF ALL PARTIES. The respective
obligations of each party to carry out the transactions contemplated by this
Agreement are subject to the satisfaction or waiver on or prior to the Closing
Date of the following conditions:
(a) All filings with all Governmental Authorities required to
be made in connection with the transactions contemplated hereby shall have been
made, and all orders, permits, waivers, authorizations, exemptions, and
approvals of such entities required to be in effect on the date of the Closing
in connection with the transactions contemplated hereby including, without
limitation, approvals by the Department of Justice and the Federal Trade
Commission under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇
"▇▇▇ ▇▇▇"), shall have been issued, all such orders, permits, waivers,
authorizations. exemptions or approvals shall be in full force and effect on the
date of the Closing; provided, however, that no provision of this Agreement
shall be construed as requiring any party to accept, in connection with
obtaining any other requisite approval, clearance or assurance of
non-opposition, avoiding any challenge, or negotiating settlement, any condition
that would materially change or restrict the manner in which the Company or the
Buyer conducts or proposes to conduct its business.
(b) None of the parties hereto shall be subject to any
statute, rule, regulation, decree, ruling, injunction or other order issued by
any Governmental Entity of competent jurisdiction (collectively, an
"Injunction") which prohibits, restrains, enjoins or restricts the consummation
of the transactions contemplated by this Agreement.
SECTION 7.02 CONDITIONS TO OBLIGATIONS OF SELLERS. The obligations of
the Sellers to carry out the transactions contemplated by this Agreement are
subject, at the option of Sellers, to the satisfaction, or waiver by Sellers, of
the following conditions:
(a) The Buyer shall have furnished Sellers with a certified
copy of all necessary corporate action on its behalf approving its execution,
delivery and performance of this Agreement.
(b) All representations and warranties of the Buyer contained
in this Agreement qualified by materiality shall be true and correct in all
respects at Closing and all other representations and warranties of the Buyer
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing, as if such representations and warranties were made at
and as of the Closing, except for changes contemplated by the terms of this
Agreement 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 thereof, and the Buyer shall have performed
and satisfied in all material respects all covenants and agreements required by
this Agreement to be performed and satisfied by the Buyer at or prior to the
Closing; provided, however, that no Seller shall not be entitled to refuse to
consummate the transaction in reliance upon its own breach or failure to
perform.
(c) As of the Closing Date, no suit, action or other
proceeding (excluding any such matter initiated by or on behalf of the Sellers
or the Company) shall be pending or threatened before any Governmental Authority
seeking to restrain Sellers or prohibit the Closing or seeking Damages against
Sellers or the Company as a result of the consummation of this Agreement.
(d) Sellers shall have received the opinion of ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel to the Buyer, dated as of the Closing Date, in form and
substance reasonably satisfactory to the Sellers, as to the matters set forth on
EXHIBIT H. In rendering such opinion, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ may rely as to factual
matters on certificates of officers and directors of the Buyer and on
certificates of governmental officials, and as to legal matters on opinions of
other counsel reasonably acceptable to Sellers.
29
(e) The Buyer shall have executed and delivered to Sellers and
the Company the Escrow Agreement.
SECTION 7.03 CONDITIONS TO OBLIGATIONS OF THE BUYER. The obligations of
the Buyer to carry out the transactions contemplated by this Agreement are
subject, at the option of the Buyer, to the satisfaction, or waiver by the
Buyer, of the following conditions:
(a) All of the Company Common Stock shall have been tendered
to Buyer.
(b) All Redemption Shares shall have been tendered to the
Company for redemption and shall have been redeemed and canceled by the Company.
(c) All of the Subordinated Debentures shall have been
tendered to the Company and shall have been paid and canceled by the Company.
(d) All representations and warranties of Sellers and the
Company contained in this Agreement qualified by materiality shall be true and
correct in all respects at Closing and all other representations and warranties
of the Sellers and the Company contained in this Agreement shall be true and
correct in all material respects at and as of the Closing as if such
representations and warranties were made at and as of the Closing, except for
changes contemplated by the terms of this Agreement 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 thereof,
and the Sellers and the Company shall have performed and satisfied in all
material respects all agreements and covenants required by this Agreement to be
performed and satisfied by Sellers and the Company at or prior to the Closing;
provided, however, that the Buyer shall not be entitled to refuse to consummate
the transaction in reliance upon its own breach or failure to perform.
(e) As of the Closing Date, no suit, action or other
proceeding (excluding any such matter initiated by or on behalf of the Buyer)
shall be pending or threatened before any court or governmental agency seeking
to restrain the Buyer or prohibit the Closing or seeking Damages against the
Buyer, the Company or the Subsidiary or their respective Properties as a result
of the consummation of this Agreement.
(f) All notices required to be given in connection with the
transactions contemplated by this Agreement shall have been duly and timely
given, and there shall not be any preferential purchase rights or consent
requirements with respect to the transactions contemplated by this Agreement
that have not expired or been waived.
(g) Except for matters disclosed in Schedules 3.08, 3.09 or
3.12 hereto, since the date of the Interim Balance Sheet and up to and including
the Closing there shall not have been:
(i) any change in the business, operations, prospects
or financial condition of the Company or the Subsidiary that had or would
reasonably be likely to have a material adverse effect on the business,
operations, prospects, Properties, securities or financial condition of the
Company or the Subsidiary; and
(ii) any damage, destruction or loss to the Company
or the Subsidiary (whether or not covered by insurance) that had or would
reasonably be likely to have a material adverse effect on the business,
operations, prospects, Properties, securities or financial condition of the
Company or the Subsidiary.
(h) The Buyer shall have received the opinion of ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, counsel to the Company and the Sellers, dated as of the Closing Date,
in form and substance reasonably satisfactory to the Buyer, as to the matters
set forth on EXHIBIT I. In rendering such opinion, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ may rely
30
as to factual matters on certificates of officers, directors and shareholders of
the Company and on certificates of governmental officials, and as to legal
matters on opinions of other counsel reasonably acceptable to the Buyer.
(i) Sellers and Company shall have executed and delivered to
the Buyer the Escrow Agreement.
(j) The Buyer shall have received the executed Employment
Agreements.
(k) The Buyer shall have received the executed Non-Competition
Agreement.
(l) The Buyer shall have received the resignation of all of
the members of the board of directors of the Company and the Subsidiary
effective as of the Closing Date.
(m) All proceedings to be taken by Sellers and the Company in
connection with the transactions contemplated hereby and all documents incident
thereto shall be satisfactory in form and substance to the Buyer and its
counsel, and the Buyer and said counsel shall have received all such counterpart
originals or certified or other copies of such documents as it or they may
reasonably request.
(n) The Buyer shall have received written evidence, in form
and substance satisfactory to it, of the termination or subordination,
concurrent with the Closing, of those liens that encumber any of the assets or
other properties of the Company or the Subsidiary in favor of Atlas Copco.
(o) The Buyer shall have received written evidence, in form
and substance satisfactory to the Buyer, of the consent to the transactions
contemplated by this Agreement of all governmental, quasi-governmental and
private third parties (including, without limitation, persons or other entities
leasing real or personal property to the Company), except where the failure to
have obtained any such consent would not have an adverse effect on the Company
following the Closing.
ARTICLE VIII
SURVIVAL; RELEASE OF ESCROW FUND
SECTION 8.01. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE STOCKHOLDERS. Notwithstanding any right of the Buyer fully to
investigate the affairs of the Company and notwithstanding any knowledge of
facts determined or determinable by the Buyer pursuant to such investigation or
right of investigation, the Buyer has the right to rely fully upon the
representations, warranties, covenants and agreements of the Company and the
Stockholders contained in this Agreement, or in any certificate delivered
pursuant to any of the foregoing; provided, that the Buyer shall not be entitled
to rely on any representation or warranty made by the Company or the
Stockholders herein to the extent that the Buyer has actual knowledge, and the
Company or the Stockholders (or any of them) are not aware, that such
representation or warranty is untrue or incorrect in any material respect. All
such representations, warranties, covenants and agreements shall survive the
execution and delivery of this Agreement and the Closing hereunder, and, except
as otherwise specifically provided in this Agreement and, except for all
representations and warranties of the Sellers contained in Article IV, shall
thereafter terminate and expire (i) on December 31, 1997, with respect to any
General Claim (as herein defined) based upon, arising out of or otherwise in
respect of any fact, circumstance, action or proceeding of which the party
asserting such claim shall not have given notice on or prior to December 31,
1997 to the party against which such General Claim is asserted, at which time an
amount equal to $500,000 less the
31
amount of any Losses (as defined in Section 9.01) for General Claims shall be
released from the Escrow Fund to the Stockholders, (ii) on December 31, 1998,
with respect to any Tax Claim (as herein defined) based upon, arising out of or
otherwise in respect of any fact, circumstance, action or proceeding of which
the party asserting such claim shall not have given notice on or prior to
December 31, 1998 to the Stockholders, at which time the remainder of the Escrow
Fund shall be released to the Stockholders, and (iii) on July 31, 1998, with
respect to any Environmental Claim (as herein defined) based upon, arising out
of or otherwise in respect of any fact, circumstance, action or proceeding of
which the Buyer shall not have given notice on or prior to July 31, 1998 to the
Stockholders, at which time an amount equal to $2,500,000 less the amount of any
Losses for Environmental Claims shall be released from the Escrow Fund to the
Stockholders. As used in this Agreement, the following terms have the following
meanings:
(i) "GENERAL CLAIM" means any claim (other than a Tax
Claim or an Environmental Claim) based upon, arising out of or otherwise in
respect of any inaccuracy in or any breach of any representation, warranty,
covenant or agreement of the Company or the Stockholders or of any Stockholder
contained in this Agreement.
(ii) "TAX CLAIM" means any claim based upon, arising
out of or otherwise in respect of any inaccuracy in or any breach of any
representation or warranty of the Company or the Stockholders contained in
Section 3.30 of this Agreement related to Taxes.
(iii) "ENVIRONMENTAL CLAIM" means any claim based
upon, arising out of or otherwise in respect of any inaccuracy in or breach of
any representation or warranty of the Company or the Stockholders contained in
Section 3.20 of this Agreement related to Environmental Laws.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01 OBLIGATION OF THE SELLERS TO INDEMNIFY.
(i) Subject to the limitations contained in Article
VIII and Article IX hereof, the holders of Common Stock and Series B Preferred
Stock, jointly and severally, agree to indemnify, defend and hold harmless the
Buyer (and its directors, officers, affiliates, successors and assigns) from and
against all losses, liabilities, damages, deficiencies, costs or expenses
(including interest, penalties and reasonable attorneys' fees and disbursements,
but offset by any proceeds from insurance and taking into account any tax
savings to the Buyer or the Company resulting from such losses, liabilities,
damages, deficiencies, costs or expenses) ("Losses") based upon, arising out of
or otherwise in respect of any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of the Company or the holders of
Common Stock and Series B Preferred Stock contained in this Agreement (other
than in Article IV).
(ii) Each Seller agrees to indemnify, defend and hold
harmless the Buyer (and its directors, officers, affiliates, successors and
assigns) from and against any Losses based upon, arising out of or otherwise in
respect of any inaccuracy in any representation or warranty of such Seller
contained in Article IV or in any document or other papers delivered pursuant to
Article IV.
SECTION 9.02 OBLIGATION OF THE BUYER TO INDEMNIFY. The Buyer agrees to
indemnify, defend and hold harmless the Company and the Sellers from and against
any Losses based upon, arising out of or otherwise in respect of any inaccuracy
in or any breach of any representation, warranty, covenant or agreement of the
Buyer contained in this Agreement.
SECTION 9.03 NOTICE AND OPPORTUNITY TO DEFEND.
32
(a) NOTICE OF ASSERTED LIABILITY. Promptly after receipt by
any party hereto (the "Indemnitee") of notice of any demand, claim or
circumstances which, with the lapse of time, would or might give rise to a claim
or the commencement (or threatened commencement) of any action, proceeding or
investigation (an "Asserted Liability") that may result in a Loss, the
Indemnitee shall give notice thereof (the "Claims Notice") to any other party
(or parties) obligated to provide indemnification pursuant to Section 9.01 or
9.02 (the "Indemnifying Party"). The Claims Notice shall describe the Asserted
Liability in reasonable detail, and shall indicate the amount (estimated, if
necessary and to the extent feasible) of the Loss that has been or may be
suffered by the Indemnitee.
(b) OPPORTUNITY TO DEFEND. The Indemnifying Party may elect to
compromise or defend, at its own expense and by its own counsel, any Asserted
Liability. If the Indemnifying Party elects to compromise or defend such
Asserted Liability, it shall within thirty (30) days (or sooner, if the nature
of the Asserted Liability so requires) notify the Indemnitee of its intent to do
so, and the Indemnitee shall cooperate, at the expense of the Indemnifying
Party, in the compromise of, or defense against, such Asserted Liability. If the
Indemnifying Party elects not to compromise or defend the Asserted Liability,
fails to notify the Indemnitee of its election as herein provided or contests
its obligation to indemnify under this Agreement, the Indemnitee may pay,
compromise or defend such Asserted Liability. Notwithstanding the foregoing,
neither the Indemnifying Party nor the Indemnitee may settle or compromise any
claim over the objection of the other, provided, however, that consent to
settlement or compromise shall not be unreasonably withheld. In any event, the
Indemnitee and the Indemnifying Party may participate, at their own expense, in
the defense of such Asserted Liability. If the Indemnifying Party chooses to
defend the claim, the Indemnitee shall make available to the Indemnifying Party
any books, records or other documents within its control that are necessary or
appropriate for such defense.
(c) DISPUTES WITH CUSTOMERS, DISTRIBUTORS, SALES AGENTS OR
SUPPLIERS. Anything in Section 9.03(b) to the contrary notwithstanding, in the
case of any Asserted Liability by any supplier, distributor, sales agent or
customer of the Company with respect to the business conducted by the Company
prior to the Closing in connection with which the Buyer may make a claim against
the Sellers for indemnification pursuant to Section 9.01, the Buyer shall give a
Claims Notice with respect thereto but, unless the Buyer and the Indemnifying
Party otherwise agree, the Buyer shall have the exclusive right at its option to
defend, at its own expense, any such matter, subject to the duty of the Buyer to
consult with the Indemnifying Party and its attorneys in connection with such
defense and provided that no such matter shall be compromised or settled by the
Buyer without the prior consent of the Indemnifying Party, which consent shall
not be unreasonably withheld. The Indemnifying Party shall have the right to
recommend in good faith to the Buyer proposals to compromise or settle claims
brought by a supplier, distributor or customer, and the Buyer agrees to present
such proposed compromises or settlements to such supplier, distributor or
customer. All amounts required to be paid in connection with any such Asserted
Liability pursuant to the determination of any court, governmental or regulatory
body or arbitrator, and all amounts required to be paid in connection with any
such compromise or settlement consented to by the Indemnifying Party, shall be
borne and paid by the Indemnifying Party. The parties agree to cooperate fully
with one another in the defense, compromise or settlement of any Asserted
Liability.
SECTION 9.04 LIMITATIONS ON INDEMNIFICATION. The indemnification
provided for in Section 9.01 shall be subject to the following limitations:
(i) The Sellers shall not be obligated to pay any
amounts for indemnification under this Article IX arising out of any Losses
based upon, arising out of or otherwise in respect of any inaccuracy or breach
disclosed in writing to the Buyer and specifically waived in writing by the
Buyer prior to the Closing; and
(ii) The Stockholders shall not be obligated to pay
any amounts for indemnification under this Article IX, except those based upon,
arising out of or otherwise in respect of Sections 3.23, 11.01 and 11.02 and
Article IV hereof (the "Basket Exclusions"), until the aggregate indemnification
payments, exclusive of the Basket Exclusions, equals $250,000 (the "Basket
Amount"),
33
whereupon the Sellers shall be obligated to pay any such indemnification
payments and any subsequent indemnification payments in full. It is expressly
understood that the Basket Amount shall serve as a "trigger" for the
indemnification and not as a "deductible" (for example, if the indemnity claims
for which the Stockholders would, but for the provisions of this subparagraph
(ii), be liable aggregate $300,000, the Stockholders would then be liable for
the full $300,000 and not just $50,000). This Section 9.04(ii) will not apply to
any breach of any representations and warranties of which any Stockholder had
actual Knowledge at any time prior to the date on which such representation and
warranty is made or any intentional breach by any Stockholder of any covenant or
obligation, and the Stockholders will be jointly and severally liable for all
damages with respect to such breaches.
(iii) No Seller shall be obligated to pay any amount
for indemnification under this Article IX in excess of the gross proceeds
received by such Seller from the sale of Company Common Stock, Redemption Shares
and/or Subordinated Notes, as the case may be.
(iv) The Sellers shall be obligated to pay the Basket
Exclusions without regard to the individual or aggregate amounts thereof and
without regard to whether the aggregate amount of all other indemnification
payments shall have exceeded, in the aggregate, the Basket Amounts.
(v) Notwithstanding anything to the contrary in this
Agreement, except with respect to the Basket Exclusions, the Stockholders shall
have no obligation to indemnify the Buyer for any misrepresentation or breach of
warranty under this Agreement for any amount of Losses in excess of $3,500,000
in the aggregate.
(vi) After the Closing, the indemnification rights
set forth in this Article IX shall be the Buyer's sole and exclusive remedy
against any of the Sellers for any breach of any representation, warranty or
covenant of the Company or the Sellers contained in this Agreement.
Notwithstanding the foregoing, nothing herein shall prevent the Buyers from
bringing an action based upon allegations of fraud in connection with this
Agreement. In the event such action is brought, the prevailing party's
attorneys' fees and costs shall be paid by the nonprevailing party.
SECTION 9.05 SET-OFF RIGHTS.
(a) Each Stockholder specifically agrees that, subject to
paragraphs (b) and (c) of this Section 9.05 (i) any claims for indemnification
by the Buyer against the Stockholders (or any of them) hereunder may be
satisfied against the Escrow Fund pursuant to the Escrow Agreement, and (ii)
that, to the extent that there remain unsatisfied indemnification claims after
the deductions and set-offs described above, the Buyer shall have full recourse
against each of the Stockholders (including their assets of whatsoever kind or
nature) for payment of such indemnification claims, subject to Section 9.04(v)
hereof.
(b) The Buyer shall give Stockholders not less than fifteen
(15) days' notice (the "Buyer's Notice") of its intention to deduct or set-off
any amounts pursuant to this Section 9.05, including in such notice a
description of the Buyer's indemnification claim. If none of the Stockholders
object to such deduction or set-off at least two business days prior to the date
of the proposed set-off set forth in the Buyer's Notice (the "Set-Off Date"),
then such proposed deduction or set-off shall become effective on such date and
shall not be subject to further review, challenge or adjustment absent fraud.
(c) If any of the Stockholders timely object to the set-off
proposed in the Buyer's Notice, and if the Buyer and the objecting Seller(s) are
unable to resolve such dispute on or prior to the Set-Off Date, then (i) the
proposed deduction or set-off shall be effective only as to undisputed amounts,
and (ii) any undisputed amounts shall be retained in the Escrow Account to be
held and disbursed by the Escrow Agent in accordance with the terms of the
Escrow Agreement or shall be paid in accordance with Section 1.05 hereof. In the
event that a dispute among the parties pursuant to this Section 9.05(c), the
party who is later determined to have been in error in attempting to enforce or
disputing the payment or set-off shall (i) pay the reasonable legal and
accounting fees, costs and expenses incurred by the
34
prevailing party in presenting, arguing and resolving such dispute and (ii) pay
to the party to which such payment or set-off is determined to be payable an
amount sufficient to equal a return at the rate of ten percent (10%) per annum
on the disputed amount from the date payment of such amount was originally due
through the date payment is actually made.
ARTICLE X
POST-CLOSING OBLIGATIONS
SECTION 10.01 FURTHER ASSURANCES. Following the Closing, each of the
Company, the Sellers and the Buyer shall execute and deliver such documents, and
take such other action, as shall be reasonably requested by any other party
hereto to carry out the transactions contemplated by this Agreement.
SECTION 10.02 PUBLICITY. None of the parties hereto shall issue or
make, or cause to have issued or made, any public release or announcement
concerning this Agreement or the transactions contemplated hereby, without the
advance approval in writing of the form and substance thereof by each of the
other parties, and the parties shall endeavor jointly to agree on the text of
any announcement or circular so approved or required.
SECTION 10.03 ACCESS TO RECORDS. From and after the Closing, (i) each
of the Sellers shall (A) permit the Buyer and its authorized employees, agents,
accountants, legal counsel and other representatives to have access to the
books, records, files, agreements and other information in the possession of the
Sellers or their respective Affiliates, and (B) use his best efforts to permit
the Buyer and its authorized employees, agents, accountants, legal counsel and
other representatives to have access to the employees, counsel, accountants and
other representatives of the Sellers and their respective Affiliates, in each
case, to the extent and at all times reasonably requested by the Buyer for the
purpose of investigating or defending any claim made against the Sellers, the
Company or the Subsidiary in connection with periods ending on or before the
Closing Date and (ii) the Buyer shall use its best efforts to permit the Sellers
and their respective authorized employees, agents, accountants, legal counsel
and other representatives to have access to the employees, counsel, accountants
and other representatives of the Buyer, the Company and their Affiliates, in
each case, to the extent and at all time reasonably requested by the Sellers, or
any of them, for the purpose of investigating or defending any claim made
against the Sellers in connection with Article IX.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 BROKERS. Regardless of whether the Closing shall occur,
(i) each Seller shall jointly and severally indemnify and hold harmless the
Buyer and the Company from and against any and all liability for any brokers or
finders' fees arising with respect to brokers or finders retained or engaged by
the Company or any of the Sellers in respect of the transactions contemplated by
this Agreement, including, without limitation, the fees described in Schedule
3.23 hereof, and (ii) the Buyer shall indemnify and hold harmless Sellers from
and against any and all liability for any brokers' or finders' fees arising with
respect to brokers or finders retained or engaged by the Buyer in respect of the
transactions contemplated by this Agreement.
SECTION 11.02 COSTS AND EXPENSES. Each of the parties to this Agreement
shall bear its own expenses incurred in connection with the negotiation,
preparation, execution and closing of this Agreement and the transactions
contemplated hereby; provided that the Sellers shall bear and pay any such
expenses incurred by the Company or the Subsidiary, except such expenses
incurred in connection
35
with preparing the Closing Date Audited Balance Sheet and determining the
purchase price adjustment pursuant to Section 1.05, which shall be borne by the
parties as provided in Section 1.05; and provided, further, that the Sellers
shall pay one-half of the fee for filings under the HSR Act unless the
transactions hereby are consummated on or before August 31, 1997, in which event
the Buyer shall pay such HSR Act filing fee in full.
SECTION 11.03 NOTICES. Any notice, request, instruction, correspondence
or other document to be given hereunder by any party hereto to another (herein
collectively called "Notice") shall be in writing and delivered personally or
mailed by registered or certified mail, postage prepaid and return receipt
requested, or by telecopier, as follows:
BUYER: ▇▇▇▇ Corp.
▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE COMPANY OR ANY
OF THE SELLERS: Industrial Equipment Rentals, Inc.
c/o Atticus Capital
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy No.:(▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Each of the above addresses for notice purposes may be changed by providing
appropriate notice hereunder. Notice given by personal delivery or registered
mail shall be effective upon actual receipt. Notice given by telecopier shall be
effective upon actual receipt if received during the recipient's normal business
hours, or at the beginning of the recipient's next normal business day after
receipt if not received during the recipient's normal business hours. All
Notices by telecopier shall be confirmed by the sender thereof promptly after
transmission in writing by registered mail or personal delivery. Anything to the
contrary contained herein notwithstanding, notices to any party hereto shall not
be deemed effective with respect to such party until such Notice would, but for
this sentence, be effective both as to such party and as to all other persons to
whom copies are provided above to be given.
SECTION 11.04 GOVERNING LAW. The provisions of this agreement and the
documents delivered pursuant hereto shall be governed by and construed in
accordance with the laws of the State of New York
36
(excluding any conflict of law rule or principle that would refer to the laws of
another jurisdiction). Each party hereto irrevocably submits to the jurisdiction
of the Circuit Court located in New York, New York, in any action or proceeding
arising out of or relating to this Agreement or any of the Collateral
Agreements, and each party hereby irrevocably agrees that all claims in respect
of any such action or proceeding must be brought and/or defended in such court;
provided, however, that matters which are under the exclusive jurisdiction of
the Federal courts shall be brought in the Federal District Court for the
Southern District of New York. Each party hereto consents to service of process
by any means authorized by the applicable law of the forum in any action brought
under or arising out of this Agreement or any of the Collateral Agreements, and
each party irrevocably waives, to the fullest extent each may effectively do so,
the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
SECTION 11.05 REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of each of the parties to this Agreement shall be
deemed to have been made at the date hereof and at and as of the Closing Date.
SECTION 11.06 ENTIRE AGREEMENT, AMENDMENTS AND WAIVERS. This Agreement,
together with all exhibits and schedules attached hereto, constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, and there are no warranties,
representations or other agreements between the parties in connection with the
subject matter hereof except as set forth specifically herein or contemplated
hereby. No 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 (regardless of whether similar), nor shall any such
waiver constitute a continuing waiver unless otherwise expressly provided.
SECTION 11.07 BINDING EFFECT AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns; but neither this Agreement nor any of the
rights, benefits or obligations hereunder shall be assigned, by operation of law
or otherwise, by any party hereto without the prior written consent of the other
party, provided, however, that nothing herein shall prohibit the assignment of
the Buyer's rights to any lender providing financing in connection with the
transactions contemplated hereby. Nothing in this Agreement, express or implied,
is intended to confer upon any person or entity other than the parties hereto
and their respective permitted successors and assigns, any rights, benefits or
obligations hereunder.
SECTION 11.08 REMEDIES. The rights and remedies provided by this
Agreement are cumulative, and the use of any one right or remedy by any party
hereto shall not preclude or constitute a waiver of its right to use any or all
other remedies. Such rights and remedies are given in addition to any other
rights and remedies a party may have by law, statute, or otherwise.
SECTION 11.09 EXHIBITS AND SCHEDULES. The exhibits and schedules
referred to herein are attached hereto and incorporated herein by this
reference. Disclosure of a specific item in any one schedule shall be deemed
restricted only to the Section to which such disclosure specifically relates
except where (i) there is an explicit cross-reference to another Schedule, and
(ii) the Buyer could reasonably be expected to ascertain the scope of the
modification to a representation intended by such cross-reference.
SECTION 11.10 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.
SECTION 11.11 REFERENCES. Whenever required by the context, and is used
in this Agreement, the singular number shall include the plural and pronouns and
any variations thereof shall be deemed to refer to the masculine, feminine,
neuter, singular or plural, as the identification the person may require.
37
References to monetary amounts and specific named statutes are intended to be
and shall be construed as references to United States dollars and statutes of
the United States of the stated name, respectively, unless the context otherwise
requires.
SECTION 11.12 SURVIVAL. Any provision of this Agreement which
contemplates performance or the existence of obligations after the Closing Date,
and any and all representations and warranties set forth in this Agreement,
shall not be deemed to be merged into or waived by the execution and delivery of
the instruments executed at the Closing, but shall expressly survive Closing and
shall be binding upon the party or parties obligated thereby in accordance with
the terms of this Agreement, subject to any limitations expressly set forth in
this Agreement.
SECTION 11.13 ATTORNEYS' FEES. In the event any suit or other legal
proceeding is brought for the enforcement of any of the provisions of this
Agreement, the parties hereto agree that the prevailing party or parties shall
be entitled to recover from the other party or parties upon final judgment on
the merits reasonable attorneys' fees (and sales taxes thereon, if any),
including attorneys' fees for any appeal, and costs incurred in bringing such
suit or proceeding.
38
ARTICLE XII
DEFINITIONS
Capitalized terms used in this Agreement shall have the respective
meanings ascribed to such terms in this Article XII, unless otherwise defined in
this Agreement.
SECTION 12.01 AFFILIATE. The term "Affiliate" shall mean, with respect
to any Person, any other Person controlling, controlled by or under common
control with such Person. The term "Control" as used in the preceding sentence
means, with respect to a corporation, the right to exercise, directly or
indirectly, more than fifty percent (50%) of the voting rights attributable to
the shares of the controlled corporation and, with respect to any Person other
than a corporation, the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person.
SECTION 12.02 COLLATERAL AGREEMENTS. The term "Collateral Agreements"
shall mean any or all of the following agreements, the forms of which are
attached hereto as exhibits to this Agreement as indicated in parentheses:
Exhibit B - Escrow Agreement
Exhibit C - Employment Agreement between the Company and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Exhibit D - Employment Agreement between the Company and ▇▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇
Exhibit E - Employment Agreement between the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Exhibit F - Employment Agreement between the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇
Exhibit G - Non-Competition Agreement between the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and any and all other agreements, instruments or documents required or expressly
provided under this Agreement to be executed and delivered in connection with
the transactions contemplated by this Agreement.
SECTION 12.03 COMPANY ASSETS. The term "Company Assets" shall mean,
with respect to the Company and the Subsidiary, all of the Properties,
Contracts, and Permits, that were Used by the Company or the Subsidiary as of
the Interim Balance Sheet Date and those Used by the Company or the Subsidiary
at any time after that date until the Closing Date.
SECTION 12.04 DAMAGES. The term "Damages" shall mean any and all
damages, liabilities, obligations, penalties, fines, Judgments, claims,
deficiencies, losses, costs, expenses and assessments (including without
limitation income and other taxes, interest, penalties and attorneys' and
accountants' fees and disbursements).
SECTION 12.05 ENVIRONMENTAL LAW. "Environmental Law" shall mean any
governmental statute, law, ordinance, code, rule, regulation, order or decree
relating to or imposing liability or standards of conduct as may now in effect
regarding any air emission, water discharge or use, storage, handling,
generation or disposal of any Hazardous Substances, including, without
limitation, the following, and all regulations promulgated thereunder or in
connection therewith: the Comprehensive Environmental Response, Compensation,
and Liability Act, the Clean Air Act, the Clean Water Act, the Toxic Substances
Control Act, the Resource Conservation and Recovery Act, the Used Oil Recycling
Act, the Occupational Safety and Health Act, the Federal Safe Drinking Water
Act, the Federal Water Pollution Control Act, the Oil Pollution Act, the
Emergency Planning and Community Right-to-Know Act, and all other federal,
state, tribal and local laws, rules and regulations relating to protection of
human health and the environment, reclamation of land,
39
wetlands and waterways or relating to the use, storage, emissions, discharge,
clean-up or release of Hazardous Substances on or into the work-place or the
environment (including, without limitation, ambient air, oceans, waterways,
wetlands, surface water, ground water (tributary and nontributary), land surface
or subsurface strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation or handling of
contaminants, as all of the foregoing may be amended, supplemented and
reauthorized from time to time.
SECTION 12.06 GOVERNMENTAL AUTHORITIES. The term "Governmental
Authorities" shall mean any nation or country (including but not limited to the
United States) and any commonwealth, territory or possession thereof and any
political subdivision of any of the foregoing, including but not limited to
courts, departments, commissions, boards, bureaus, agencies, ministries or other
instrumentalities.
SECTION 12.07 HAZARDOUS SUBSTANCES. "Hazardous Substances" shall mean
industrial, toxic or hazardous substances or wastes or other pollutants,
contaminants, petroleum products, asbestos, polychlorinated biphenyls ("PCBs")
or chemicals, all as defined and regulated under Environmental Law.
SECTION 12.08 KNOWLEDGE. The term "Knowledge" shall mean the actual
knowledge of a party or, in the case of the Company or the Buyer, any of their
respective directors or executive officers (and, in the case of the Company, the
directors and executive officers of the Subsidiary) with respect to the
representation being made, and such knowledge of any such persons as reasonably
should have obtained upon due investigation and inquiry into the representation
being made.
SECTION 12.09 LEGAL REQUIREMENTS. The term "Legal Requirements", when
described as being applicable to any Person, shall mean any and all laws
(statutory, judicial or otherwise), ordinances, regulations, judgments, orders,
directives, injunctions, writs, decrees or awards of, and any Contracts with,
any Governmental Authority, in each case as and to the extent applicable to such
Person or such Person's business, operations or Properties.
SECTION 12.10 PERMITS. The term "Permits" shall mean any and all
permits or orders under any Legal Requirement or otherwise granted by any
Governmental Authority.
SECTION 12.11 PROPERTIES. The term "Properties" shall mean any and all
properties and assets (real, personal or mixed, tangible or intangible).
SECTION 12.12 PROPORTIONATE SHARE. The term "Proportionate Share" shall
mean each Common Stockholder's respective percentage ownership interest in the
Company as set forth on EXHIBIT A-1.
SECTION 12.13 REGULATIONS. The term "Regulations" shall mean any and
all regulations promulgated by the Department of the Treasury pursuant to the
Code.
SECTION 12.14 USED. The term "Used" shall mean, with respect to the
Properties, Contracts or Permits of the Company or the Subsidiary, those owned,
leased, licensed or otherwise held by the Company or the Subsidiary which were
acquired for use or held for use by the Company or the Subsidiary in connection
with the Company's or the Subsidiary's business and operations, whether or not
reflected on the Company's or the Subsidiary's books of account.
EXECUTED as of the date first written above.
BUYER:
▇▇▇▇ CORPORATION
By:
--------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President
40
COMPANY:
INDUSTRIAL EQUIPMENT RENTALS, INC.
By:
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, President
SELLERS' REPRESENTATIVE:
By:
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
SELLERS:
NATIONSBANC CAPITAL CORPORATION
By: _____________________________________
Name: _______________________________
Title: ______________________________
EQUUS II INCORPORATED
By: _____________________________________
Name: _______________________________
Title: ______________________________
EQUUS CAPITAL PARTNERS, LP
By: _____________________________________
Its: _________________________________
By: _____________________________________
Name: _______________________________
Title: ______________________________
PREMIER VENTURE CAPITAL CORP.
By: _____________________________________
Name: _______________________________
Title: ______________________________
LOUISIANA FUND CORPORATION
By: _____________________________________
Name: _______________________________
41
Title: ______________________________
THE CATALYST FUND LTD.
By: _____________________________________
Name: _______________________________
Title: ______________________________
HUB ASSOCIATES, GP
By: _____________________________________
Its: _________________________________
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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