STOCK PURCHASE AGREEMENT
Dated as of June 9, 1998, by and among
United Rentals, Inc.
Power Rental Co.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
and
I.S. Properties, L.P.
TABLE OF CONTENTS
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1. PURCHASE OF CORPORATION'S STOCK 2
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1.1 SHARES TO BE PURCHASED 2
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1.2 CLOSING PAYMENT 2
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1.3 ADJUSTMENTS TO PURCHASE PRICE 2
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1.4 HOLD BACK 4
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1.5 ADDITIONAL PURCHASE PRICE 7
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1.6 EXCLUDED ASSETS 7
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2. CLOSING TIME AND PLACE 7
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3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS 7
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3.1 ORGANIZATION, STANDING AND QUALIFICATION 8
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3.2 CAPITALIZATION 8
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3.3 ALL STOCK BEING ACQUIRED 8
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3.4 AUTHORITY FOR AGREEMENT 8
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3.5 NO BREACH OR DEFAULT 8
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3.6 SUBSIDIARIES 9
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3.7 FINANCIAL STATEMENTS 9
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3.8 LIABILITIES 9
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3.9 RENTAL ASSET LISTING 10
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3.10 PERMITS AND LICENSES 11
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3.11 CERTAIN RECEIVABLES 12
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3.12 FIXED ASSETS AND REAL PROPERTY 13
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3.13 ACQUISITION/DISPOSAL OF ASSETS 14
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3.14 CONTRACTS AND AGREEMENTS; ADVERSE RESTRICTIONS 14
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3.15 INSURANCE 14
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3.16 PERSONNEL 15
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3.17 BENEFIT PLANS AND UNION CONTRACTS 15
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3.18 TAXES 16
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3.19 COPIES COMPLETE; REQUIRED CONSENTS 17
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3.20 PRODUCT QUALITY, WARRANTY CLAIMS, PRODUCT LIABILITY 17
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3.21 NO CHANGE WITH RESPECT TO CORPORATION 18
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3.22 EFFECTIVE DATE DEBT; WORKING CAPITAL; EFFECTIVE DATE LIABILITIES 19
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3.23 BANK ACCOUNTS 19
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3.24 COMPLIANCE WITH LAWS 20
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3.25 POWERS OF ATTORNEY 20
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3.26 UNDERGROUND STORAGE TANKS 20
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3.27 PATENTS, TRADEMARKS, TRADE NAMES, ETC. 21
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3.28 ASSETS, ETC., NECESSARY TO BUSINESS 21
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3.29 CONDEMNATION 22
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3.30 MANUFACTURERS, SUPPLIERS AND CUSTOMERS 22
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3.31 ABSENCE OF CERTAIN BUSINESS PRACTICES 22
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3.32 RELATED PARTY TRANSACTIONS 22
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3.33 DISCLOSURE SCHEDULES 22
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3.34 NO MISLEADING STATEMENTS 23
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3.35 ACCURATE AND COMPLETE RECORDS 23
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3.36 KNOWLEDGE 23
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3.37 BROKERS; FINDERS 23
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4. REPRESENTATIONS AND WARRANTIES OF UNITED 25
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4.1 EXISTENCE AND GOOD STANDING 25
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4.2 NO BREACH OF DEFAULT 25
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4.3 AUTHORIZATION OF AGREEMENT 25
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4.4 NO MISLEADING STATEMENTS 26
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4.5 BROKERS; FINDERS 26
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4.6 DISCLOSURE SCHEDULES 26
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5. CLOSING DELIVERIES 26
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5.1 UNITED DELIVERIES 26
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5.2 SHAREHOLDERS DELIVERIES 27
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6. ADDITIONAL COVENANTS OF UNITED, THE CORPORATION AND THE SHAREHOLDERS 29
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6.1 FURTHER ASSURANCES AND ADDITIONAL CONVEYANCES 29
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6.2 RELEASE OF GUARANTIES 29
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6.3 CONFIDENTIALITY 29
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6.4 BROKERS AND FINDERS FEES 30
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6.5 TAXES 30
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6.6 SHORT YEAR TAX RETURNS 30
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6.7 GENERAL RELEASE BY SHAREHOLDERS 31
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6.8 SHAREHOLDERS' REPRESENTATIVE 31
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6.9 ACCRUED BONUS, PROFIT SHARING AND VACATION 32
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6.10 REPAYMENT OF EFFECTIVE DATE DEBT AND PAYMENT OF PREPAYMENT PENALTIES 32
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6.11 CONDUCT OF BUSINESS AFTER CLOSING 33
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7. INDEMNIFICATION 33
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7.1 INDEMNITY BY THE SHAREHOLDERS 33
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7.2 LIMITATIONS ON SHAREHOLDERS' INDEMNITIES 34
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7.4 LIMITATIONS ON UNITED'S INDEMNITIES 36
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7.5 NOTICE OF INDEMNITY CLAIM 36
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7.6 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS 37
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7.7 NO EXHAUSTION OF REMEDIES OR SUBROGATION; RIGHT OF SET OFF 38
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8. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS AND UNITED 38
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8.1 RESTRICTIVE COVENANTS OF THE SHAREHOLDERS 38
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8.2 RESTRICTIVE COVENANT OF UNITED 40
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8.3 RIGHTS AND REMEDIES UPON BREACH 40
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9. GENERAL 41
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9.1 ASSIGNMENT 41
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9.2 COUNTERPARTS 42
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9.3 NOTICES 42
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9.4 ATTORNEYS' FEES 42
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9.5 APPLICABLE LAW AND VENUE 43
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9.6 PAYMENT OF FEES AND EXPENSES 43
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9.7 INCORPORATION BY REFERENCE 43
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9.8 CAPTIONS 43
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9.9 NUMBER AND GENDER OF WORDS 43
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9.10 ENTIRE AGREEMENT 43
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9.11 WAIVER 43
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9.12 CONSTRUCTION 43
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10. ARBITRATION AND DISPUTE RESOLUTION 44
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11. GLOSSARY 44
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STOCK PURCHASE AGREEMENT
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STOCK PURCHASE AGREEMENT, dated as of June 9, 1998, is entered into by and
among United Rentals, Inc., a Delaware corporation ("UNITED"), Power Rental Co.,
an Oregon corporation doing business as "Power Rents" (the "CORPORATION"), and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇") and I.S. Properties, L.P., a Washington limited
partnership ("I.S. PROPERTIES," and collectively with ▇▇▇▇▇, the
"SHAREHOLDERS").
WHEREAS, the Corporation is engaged in the equipment rental, sales and
service business at eighteen (18) locations in the States of Idaho, Oregon and
Washington;
WHEREAS, concurrent with the Closing (as defined in Section 2), the
Corporation shall redeem from the Shareholders a portion of the Corporation's
issued and outstanding capital stock (the "REDEEMED STOCK") and in exchange
therefor the Corporation shall pay to the Shareholders the Excluded Assets (as
defined in Section 1.6);
WHEREAS, the Shareholders own, and intend to sell to United pursuant to
this Agreement, all of the issued and outstanding capital stock of the
Corporation (the "CORPORATION'S STOCK") other than the Redeemed Stock;
WHEREAS, United wishes to acquire from the Shareholders all of the
Corporation's Stock;
WHEREAS, concurrent with the execution of this Agreement, the Corporation
will enter into leases (the "LEASES") with (i) I.S. Properties, of which ▇▇▇▇▇
is the general partner, for the locations used by the Corporation at Tigard,
Hillsboro and Gresham, Oregon, and (ii) Four S. Properties Limited Partnership
("FOUR S," and together with I.S. Properties, the "LANDLORD"), of which ▇▇▇▇▇ is
the sole member of the limited liability company which is the general partner,
for the locations used by the Corporation at Salem and Redmond, Oregon and
Spokane, Washington;
WHEREAS, concurrent with Closing, the Corporation will enter into the
Purchase Option Assignment Agreement (the "PURCHASE OPTION ASSIGNMENT
AGREEMENT") with the Shareholders or any of their designated Affiliates pursuant
to which (i) the Corporation will assign to the Shareholders or their designated
Affiliates any existing purchase options related to existing leases with third-
party lessors (i.e., lessors other than the Landlord) to which the Corporation
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is a party and (ii) the Shareholders or their designated Affiliates covenant
that, upon exercising any such purchase option, they shall, upon the
Corporation's request, enter into a new lease in the form attached hereto as
Exhibit 5.1(i);
WHEREAS, concurrent with the execution of this Agreement, United or one of
its subsidiaries will enter into a Agreement Regarding Development Proposals
with the Shareholders relating to future sites in the states of Oregon, Idaho
and Washington to be developed by United (the "DEVELOPMENT AGREEMENT"); and
WHEREAS, (i) concurrent with the execution of this Agreement, United will
enter into the ▇▇▇▇▇ Employment Agreement (as defined in Section 5.1(d)) with
▇▇▇▇▇ and (ii) United shall cause the Corporation to enter into (A) the ▇▇▇▇▇
Employment Agreement (as defined in Section 5.1(e)) with ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
("▇▇▇▇▇"), (B) the ▇▇▇▇▇ Employment Agreement (as defined in Section 5.1(f))
with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇") and (C) the ▇▇▇▇▇ Employment Agreement (as
defined in Section 5.1(g)) with ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇").
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto, each intending to be bound hereby, agree as
follows:
1. PURCHASE OF CORPORATION'S STOCK
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1.1 SHARES TO BE PURCHASED. At the Closing (i) the Corporation shall redeem
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the Redeemed Stock indicated on Schedule 3.2 and in exchange therefor the
Corporation shall pay to the Shareholders the Excluded Assets and (ii) the
Shareholders shall sell and deliver to United all of the remaining issued and
outstanding shares of the Corporation's Stock, being the number of shares of the
Corporation set forth on Schedule 3.2 opposite each Shareholder's name. At the
Closing, United shall purchase the Corporation's Stock and in exchange therefor
shall deliver to the Shareholders at the Closing or thereafter as provided by
this Agreement cash and United Stock (as defined in Section 1.2) equal to (i)
the purchase price described in Section 1.2, subject to (a) adjustment as
provided in Section 1.3 and (b) adjustment to the Hold Back (as defined in
Section 1.4) as provided in Section 1.4, and (ii) payment of additional
contingent purchase price, if any, as provided in Section 1.5 (collectively, the
"PURCHASE PRICE").
1.2 CLOSING PAYMENT. The portion of the Purchase Price payable on the Closing
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Date is eighty-nine million dollars ($89,000,000) less the Hold Back, subject to
adjustment as provided in Section 1.3. The portion of the Purchase Price
payable on the Closing Date, as so adjusted, less the Hold Back shall be paid as
follows: (a) at the Closing, United shall deliver to the Shareholders, in such
denominations as they shall specify to United four (4) business days prior to
the Closing Date, an aggregate of 317,045 shares of United Common Stock, $0.01
par value (the "UNITED STOCK"), and (b) seventy-nine million dollars
($79,000,000.00), as so adjusted in accordance with Section 1.3 and less the
Hold Back, shall be paid in cash at the Closing by wire transfer to the accounts
of the Shareholders as set forth on Schedule 3.2.
1.3 ADJUSTMENTS TO PURCHASE PRICE. The Purchase Price shall be adjusted as
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follows:
1. The estimated Effective Date Debt shall be subtracted from the
Purchase Price on the Closing Date and the actual Effective Date Debt shall
be calculated as part of the Liabilities Adjustment pursuant to Section
1.4(c) hereof. The "EFFECTIVE DATE DEBT" is set forth on Schedule 1.3(a)
and shall include: (i) the amount of the aggregate debt (excluding
Effective Date Liabilities (as defined in Section 1.3(c))) of the
Corporation outstanding on the Effective Date to be repaid by United at or
immediately after the Closing Date; (ii) to the extent not included in
clause (i) of this Section 1.3(a),
any debt or other payment obligation incurred pursuant to "floor planning"
arrangements entered into with vendors of equipment held for sale by the
Corporation; and (iii) the aggregate amount of the present value of all
capitalized equipment lease obligations (determined in accordance with
generally accepted accounting principles) of the Corporation to the extent
not included in clause (i) of this Section 1.3(a). The aggregate amount of
prepayment penalties incurred or to be incurred by United or the
Corporation in connection with the repayment of debt described in clause
(i) of the definition of Effective Date Debt (the "PREPAYMENT PENALTIES")
in excess of $125,000 shall be included in Effective Date Debt. Schedule
1.3(a) includes wire transfer instructions for creditors whose Effective
Date Debt United has designated for payment, and attached to Schedule
1.3(a) are pay-off letters or instructions from such creditors in the form
provided by United's bank.
1. The amount by which the estimated Effective Date Working Capital is
greater or less than the March 31 Working Capital shall be added to or
subtracted from the Purchase Price, as the case may be, on the Closing Date
and the actual Effective Date Working Capital shall be calculated as part
of the Working Capital Adjustment pursuant to Section 1.4(d) hereof. The
"MARCH 31 WORKING CAPITAL" shall be determined by subtracting the March 31
Current Liabilities from the March 31 Current Assets. The "MARCH 31 CURRENT
ASSETS" consist of the amount of the aggregate current assets (excluding
any such current assets included in Excluded Assets (as defined in Section
1.6)) of the Corporation as of March 31, 1998, including prepaid expenses
the benefit of which survives the Closing. The "MARCH 31 CURRENT
LIABILITIES" consist of the amount of the aggregate current liabilities
(excluding any liabilities included in Effective Date Debt and all accrued
bonus and profit-sharing obligations incurred in the ordinary course of
business consistent with past practice) and trade payables of the
Corporation as of March 31, 1998. The "EFFECTIVE DATE WORKING CAPITAL"
consists of the same items included in the March 31 Working Capital as of
the Effective Date, except $300,000 in previously expensed merchandise and
inventory shall be excluded from aggregate Effective Date Current
Liabilities. The March 31 Working Capital and the estimated Effective Date
Working Capital are set forth on Schedule 1.3(b). For purposes of valuing
the accounts receivable of the Corporation in determining March 31 Current
Assets and Effective Date Current Assets, such accounts receivable will be
valued at their face value less an allowance of $170,000 for
uncollectibility (the accounts receivable as so reduced, the "MARCH 31
ACCOUNTS RECEIVABLE" or "EFFECTIVE DATE ACCOUNTS RECEIVABLE," as the case
may be).
1. The estimated Effective Date Liabilities shall be subtracted
from the Purchase Price on the Closing Date and the actual Effective Date
Liabilities shall be calculated as part of the Liabilities Adjustment
pursuant to Section 1.4(c) hereof. The "EFFECTIVE DATE LIABILITIES" shall
consist of all of the liabilities of the Corporation as of the Effective
Date other than the following: (i) the Effective Date Debt; (ii) deferred
income tax liabilities, and (iii) accrued bonus and profit sharing
obligations incurred in the ordinary course of business consistent with
past practices. The aggregate amount of estimated Effective Date
Liabilities is set forth on Schedule 1.3(c).
1. The estimated aggregate invoice value of new rental equipment (which
has been capitalized), which Equipment was not included in the Rental Asset
Listing described in Section 1.4(b) because it was acquired by the
Corporation after the date of the Rental Asset Listing, and other capital
assets which were acquired after November 1, 1997, which Equipment and
other capital assets have not been disposed of prior to the Effective Date,
shall be added to the Purchase Price. The estimated aggregate invoice value
of new rental equipment (which has been capitalized), which Equipment was
not included in the Rental Asset Listing described in Section 1.4(b)
because it was acquired by the Corporation after the date of the Rental
Asset Listing, and other capital assets which were acquired after November
1, 1997, which Equipment and other capital assets have been disposed of
prior to the Effective Date, shall not be added to the Purchase Price and
any proceeds received from the disposition of such Equipment or other
capital assets shall not be subtracted from the Purchase Price. Fifty
percent (50%) of the net sale proceeds of any rental equipment which was
included on the Rental Asset listing and other capital assets and which has
been disposed of after the date of the Rental Asset Listing shall be
subtracted from the Purchase Price. All such equipment and other capital
assets acquired or disposed of as described in this Section 1.3(d) is
listed on Schedule 1.3(d).
1. The Purchase Price shall be reduced by $150,000 which is the
estimated cost that the Corporation will incur after the Effective Date to
repair to rental ready condition the Equipment listed on the Rental Asset
Listing and Schedule 1.3(d) which require repair or to repair the Equipment
which is rented as of the Effective Date and will require repair upon
return to the Corporation.
1. The unamortized cost of tenant improvements as of the Effective Date
made by the Corporation at any Facility (as defined in Section 3.10(b))
leased by the Corporation from a party who is not a Shareholder or
Affiliate of a Shareholder shall be added to the Purchase Price. All such
unamortized costs are listed on Schedule 1.3(f).
1.4 HOLD BACK. The Shareholders and United hereby acknowledge and agree that
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the adjustments to the Purchase Price on the Closing Date described in Sections
1.3(a), 1.3(b) and 1.3(c) are based on financial statements of the Corporation
as of the Effective Date which include adjustments that would normally arise
during a year-end review of such financial statements (but such financial
statements do not include footnotes) and the Shareholders and United hereby
agree that the Adjustments to the Hold Back (as defined in Section 1.4(a)) shall
be based on financial statements which shall include adjustments that would
normally arise during a year-end review of such financial statements, but such
financial statements shall not be required to includes footnotes.
a) United shall hold back five million dollars ($5,000,000) from the
cash portion of the Purchase Price (the "HOLD BACK"), which amount shall be
deposited by United with Northwestern Trust and Investors Advisory Company
(the "ESCROW AGENT") to be held pursuant to an Escrow Agreement (the
"ESCROW AGREEMENT") for later distribution pending the determination of the
amount of the Equipment Adjustment, Liabilities Adjustment and Working
Capital Adjustment pursuant to
Sections 1.4(b), 1.4(c) and 1.4(d), respectively. United and the
Shareholders' Representative (as defined in Section 6.8(a)) will use
reasonable efforts to complete the Equipment Adjustment, the Liabilities
Adjustment and the Working Capital Adjustment within one hundred and twenty
(120) days after the Closing Date. If there is no disagreement between
United and the Shareholders' Representative regarding the Equipment
Adjustment, the Liabilities Adjustment and the Working Capital Adjustment,
United and the Shareholders' Representative will adjust the Hold Back by
the amount of such Adjustments and will instruct the Escrow Agent to
release the Hold Back, as adjusted, to the Shareholders one hundred and
thirty (130) days after the Closing Date. In the event of any disagreement
between United and the Shareholders' Representative regarding the dollar
amount of any such adjustment, United and the Shareholders' Representative
shall nevertheless adjust the Hold Back by the amount of such Adjustments
not in dispute and will instruct the Escrow Agent to release to the
Shareholders any portion of the Hold Back, as adjusted, that is not in
dispute. Promptly upon resolution of any such disagreement in accordance
with the terms hereof, United and the Shareholders' Representative shall
adjust the remaining portion of the Hold Back and shall instruct the Escrow
Agent to release to the Shareholders any remaining portion of the Hold
Back, as adjusted, to which the Shareholders are entitled. Notwithstanding
the foregoing, United and the Shareholders hereby agree that (i) if the
Purchase Price is increased as a result of the adjustments pursuant to
Sections 1.4(b), 1.4(c) and 1.4(d), then United shall pay to the
Shareholders the amount of such increase and (ii) if the Purchase Price is
reduced, as a result of the adjustments pursuant to Sections 1.4(b), 1.4(c)
and 1.4(d), by an amount which is greater than the Hold Back, then the
Shareholders shall pay to United an amount equal to (x) the aggregate
amount of the adjustments pursuant to Sections 1.4(b), 1.4(c) and 1.4(d)
minus (y) the Hold Back.
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a) Schedule 1.4(b) (the "RENTAL ASSET LISTING") sets forth the asset
description, make, model, original cost and net book value of substantially
all capitalized equipment held by the Corporation for rent to customers as
of November 1, 1997. As used herein, the term "EQUIPMENT" means all of the
equipment listed on the Rental Asset Listing and Schedule 1.3(d). Within
one hundred and twenty (120) days following the Closing Date, United and
the Shareholders' Representative jointly shall complete a physical
inventory of each item of Equipment on the Rental Asset Listing and
Schedule 1.3(d), including by visiting renters' locations as necessary to
inspect such Equipment. The Purchase Price shall be reduced (the "EQUIPMENT
ADJUSTMENT") for each item of Equipment listed on the Rental Asset Listing
which has been sold but not included on Schedule 1.3(d) or is missing. The
reduction in the Purchase Price shall be an aggregate amount equal to (i)
the fair market value (as determined by United and the Shareholders'
Representative) of all missing Equipment, and (ii) the net proceeds to the
Corporation received from the sale of Equipment (i.e. gross proceeds from
the sale of Equipment minus any selling expenses) sold between the date of
the Rental Asset Listing and the Effective Date. In the event of a Purchase
Price reduction due to an Equipment Adjustment, United shall be entitled to
retain a portion of the Hold Back equal to such reduction. Any disputes as
to the physical count or fair market value of any item of Equipment will,
if possible, be resolved by representatives of United and
the Shareholders' Representative while the physical inventory of such
Equipment is being taken. Any such disputes not so resolved will be
resolved by arbitration in accordance with Section 10.
a) The Purchase Price shall be increased or reduced (the "LIABILITIES
ADJUSTMENT") on a dollar-for-dollar basis to the extent the actual
Effective Date Debt and Effective Date Liabilities are less than or greater
than, as the case may be, the amount set forth on Schedule 1.3(a) and
Schedule 1.3(c), respectively. Actual Effective Date Debt and Effective
Date Liabilities shall be determined by United and the Shareholder's
representative within one hundred and twenty (120) days following the
Closing Date. Any disputes as to the actual Effective Date Debt and
Effective Date Liabilities will, if possible, be resolved by United and the
Shareholders' Representative. Any disputes regarding the foregoing not so
resolved will be resolved by arbitration in accordance with Section 10.
a) The adjustment made to the Purchase Price wired on the Closing Date
pursuant to Section 1.3(b) is based on Schedule 1.3(b) as delivered at the
Closing, which the parties understand includes only an estimate of the
Effective Date Working Capital. Within one hundred and twenty (120) days
after the Closing Date, United and the Shareholders' Representative will
determine the actual Effective Date Working Capital and the Purchase Price
shall be adjusted on a dollar-for-dollar basis by the amount, if any, by
which the actual Effective Date Working Capital determined pursuant to this
Section 1.4(d) is greater or less than the amount of the estimated
Effective Date Working Capital set forth on Schedule 1.3(b). The Purchase
Price shall be reduced one hundred and twenty (120) days after the Closing
Date by the amount, if any, by which the value of the Effective Date
Accounts Receivable collected within one hundred and twenty (120) days
after the Closing Date is less than the value of the Effective Date
Accounts Receivable included in the Effective Date Current Assets. United
will cause the Corporation to use reasonable efforts to collect all such
Effective Date Accounts Receivable within one hundred and twenty (120) days
after the Closing Date. Payments received within one hundred and twenty
(120) days after the Closing Date on accounts receivable for customers who
generate accounts receivable before and after the Closing Date shall be
credited to the oldest receivables first until the payments have been fully
credited. The Effective Date Accounts Receivable not collected within one
hundred and twenty (120) days after the Closing Date shall be transferred
to the Shareholders' Representative, who shall hold and attempt to collect
such Effective Date Accounts Receivable for the benefit of the
Shareholders. The Corporation shall have no right to receive any of such
collections and shall have no obligation to assist the Shareholders
Representative or the Shareholders in the collection of such Effective Date
Accounts Receivable. The adjustments pursuant to this Section 1.4(d) are
herein called the "WORKING CAPITAL ADJUSTMENT." If the Purchase Price
increases as a result of the Working Capital Adjustment, United will pay
any additional amount due to the Shareholders as provided in Section
1.4(a); if the Purchase Price declines, United may deduct the amount by
which the Purchase Price declines from the Hold Back as provided in Section
1.4(a). To the extent the parties disagree on the amount of any Working
Capital Adjustment, United and the Shareholders' Representative will
attempt
to resolve such dispute and, if they are unable to do so, such dispute
shall be decided by arbitration in accordance with Section 10.
1.5 ADDITIONAL PURCHASE PRICE. As additional contingent Purchase Price, United
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shall pay the Shareholders an amount equal to three percent (3%) of Trailing
Twelve Months Revenue in the Target Market for each of the three successive
twelve month periods commencing on the first day of the calendar month after the
month in which the Closing Date occurs, but in no event shall United be
obligated to pay the Shareholders an amount more than ten million dollars
($10,000,000) in the aggregate pursuant to this Section 1.5. Each payment
pursuant to this Section 1.5 shall be made within ninety (90) days after the end
of the twelve month period to which such payment relates, and shall be made to
the Shareholders in the proportions set forth on Schedule 3.2. "TARGET MARKET"
means the States of Oregon, Washington and Idaho. "TRAILING TWELVE MONTHS
REVENUE" means the revenue of United and its subsidiaries determined in
accordance with generally accepted accounting principles, in the Target Market
during the applicable twelve month period, derived from the rental of equipment,
sale of inventory, and sale of rental equipment in the ordinary course of
business similar to that presently conducted by Corporation determined, to the
extent reasonably practicable, in the same manner as net revenues of the
Corporation were determined in the Financial Statements (as defined in Section
3.7); provided, however, that revenue generated from activities outside the
ordinary course of business similar to that presently conducted by the
Corporation (including divestitures or sales by United or its subsidiaries of
(i) non-core assets not reasonably related to United's or its subsidiaries'
business, (ii) real property and (iii) shares of stock of a business, or all or
substantially all of the assets of a business) shall not be included in the
"Trailing Twelve Months Revenue."
1.6 EXCLUDED ASSETS. The Assets of the Corporation listed on Schedule 1.6 (the
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"EXCLUDED ASSETS") shall be distributed to the Shareholders or an Affiliate of
the Shareholders concurrent to the Closing in exchange for the Redeemed Stock,
and United shall acquire no interest in or claim to any of the Excluded Assets.
1. CLOSING TIME AND PLACE
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The closing of the transactions contemplated herein (the "CLOSING") shall take
place simultaneous with the execution of this Agreement (the "CLOSING DATE").
The Closing shall take place at the Law Offices of Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. At the
Closing, United and the Shareholders delivered to each other the documents,
instruments and other items described in Section 5 of this Agreement. For all
purposes, the Closing shall be deemed effective as of 12:01 a.m. on June 1, 1998
(the "EFFECTIVE DATE").
1. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
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The Shareholders, jointly and severally, (i) represent and warrant that each of
the following representations and warranties is true as of the Closing Date with
respect to the Shareholders and the Corporation, as the case may be, except as
otherwise specifically provided in certain
representations and warranties, and (ii) agree that such representations and
warranties shall survive the Closing.
3.1 ORGANIZATION, STANDING AND QUALIFICATION. The Corporation is duly
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organized, validly existing and in good standing under the laws of the State of
Oregon. The Corporation has full corporate power and authority to own and lease
its properties and to carry on its business as now conducted. The Corporation
is duly qualified to transact business as a foreign corporation in the States of
Idaho and Washington and is not required to be qualified or licensed to conduct
business as a foreign corporation in any other jurisdiction.
3.2 CAPITALIZATION. Schedule 3.2 sets forth, as of the Closing Date, the
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authorized and outstanding capital stock of the Corporation, the name, addresses
and social security numbers or taxpayer identification numbers of the record and
beneficial owners thereof, and the number of shares so owned, and wire transfer
instructions for each Shareholder relating to the bank account to which each
such Shareholder's pro rata share of the Purchase Price should be sent. On the
Closing Date, all of the issued and outstanding shares of the capital stock of
the Corporation were owned of record and beneficially by the Shareholders, as
set forth in Schedule 3.2, and were free and clear of all liens, security
interests, encumbrances and claims of every kind. Each share of the capital
stock of the Corporation is duly and validly authorized and issued, fully paid
and nonassessable, and was not issued in violation of any preemptive rights of
any past or present shareholder of the Corporation. No option, warrant, call,
conversion right or commitment of any kind (including any of the foregoing
created in connection with any indebtedness of the Corporation) exists which
obligates the Corporation to issue any of its authorized but unissued capital
stock or other equity interest, or which obligates any Shareholder to transfer
any Corporation's Stock to any person.
3.3 ALL STOCK BEING ACQUIRED. The Corporation's Stock being acquired by United
------------------------
hereunder and the Redeemed Stock constitutes all of the outstanding capital
stock of the Corporation.
3.4 AUTHORITY FOR AGREEMENT. The Corporation and each of the Shareholders have
-----------------------
full right, power and authority to enter into this Agreement and to perform its,
his or her obligations hereunder and the Corporation has the full right, power
and authority to redeem the Redeemed Stock. The execution and delivery of this
Agreement and the redemption of the Redeemed Stock by the Corporation have been
duly authorized by its Board of Directors. This Agreement has been duly and
validly executed and delivered by the Corporation and the Shareholders and,
subject to the due authorization, execution and delivery by United, constitutes
the legal, valid and binding obligation of the Corporation and the Shareholders
enforceable against the Corporation and the Shareholders in accordance with its
terms.
3.5 NO BREACH OR DEFAULT. Except as disclosed on Schedule 3.5, the execution
--------------------
and delivery by the Corporation and the Shareholders of this Agreement, the
redemption of the Redeemed Stock, and the consummation by the Shareholders of
the transactions contemplated hereby, do not and will not:
1. result in the breach of any of the material terms or conditions of,
or constitute a default under, or allow for the acceleration or termination
of, in any manner release any party from any material obligation under,
require any consent under, or will result in any lien, claim, or
encumbrance on the Corporation's Stock or the assets of the Corporation
under, any mortgage, lease, note, bond, indenture, or material contract,
agreement, license or other instrument or obligation of any kind or nature
to which the Corporation or any of the Shareholders is a party, or by which
the Corporation, the Shareholders or any of its, his or her assets, is or
may be bound or affected; or
1. violate any law or any order, writ, injunction or decree of any
court, administrative agency or governmental authority, or require the
approval, consent or permission of any governmental or regulatory
authority; or
1. violate the Articles of Incorporation or Bylaws of the Corporation.
3.6 SUBSIDIARIES. Schedule 3.6 lists as of the Closing Date any and all
------------
subsidiaries of the Corporation and any securities of any other corporation or
any securities or other interest in any other business entity owned by the
Corporation or any of its subsidiaries.
3.7 FINANCIAL STATEMENTS. The Corporation has delivered to United, as
--------------------
Schedule 3.7, copies of the following financial statements ("FINANCIAL
STATEMENTS"): financial statements for the fiscal year ended July 31, 1996 and
1997, reviewed by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.C., Certified Public Accountants, and
unaudited interim Financial Statements for the Corporation for the period ended
March 31, 1998 (the "BALANCE SHEET DATE"). The Financial Statements are true
and correct and fairly present (i) the financial position of the Corporation as
of the respective dates of the balance sheets included in said statements, and
(ii) the results of operations for the respective periods indicated. The
Financial Statements have been prepared in accordance with generally accepted
accounting principles, applied consistently with prior periods, except that the
unaudited interim Financial Statements for the Corporation as of the Balance
Sheet Date includes estimated adjustments that would normally arise during a
year-end review of such Financial Statements, but do not include footnotes.
3.8 LIABILITIES. Schedules 3.8(a), (b), (c) and (d), are accurate lists and
-----------
descriptions of all liabilities of the Corporation required to be described
below in the format set forth below.
1. Schedule 3.8(a) lists, as of the Effective Date, all indebtedness
for money borrowed and all other fixed and uncontested liabilities of any
kind, character and description (excluding all trade payables and real and
personal property leasehold interests included in Schedule 3.8(d)) not
included in Effective Date Debt and Effective Date Liabilities, whether
reflected or not reflected on the Financial Statements and whether accrued
or absolute, and states as to each such liability the amount of such
liability and to whom payable.
1. Schedule 3.8(b) lists, as of the Closing Date, all claims, suits
and proceedings which are pending against the Corporation, all contingent
liabilities and, to
the knowledge of the Corporation and the Shareholders, all claims, suits
and proceedings threatened or anticipated against the Corporation which are
not covered by insurance or are in excess of $25,000 (whether covered by
insurance or not). Schedule 3.8(b) includes a summary description of each
such liability, including, without limitation, (A) the name of each court,
agency, bureau, board or body before which any such claim, suit or
proceeding is pending, (B) the date such claim, suit or proceeding was
instituted, (C) the parties to such claim, suit or proceeding, (D) a brief
description of the factual basis alleged to underlie such claim, suit or
proceeding, including the date or dates of all material occurrences, and
(E) the amount claimed and other relief sought, together with copies of all
material documents, reports and other records relating thereto to the
extent that they are in the Corporation's or the Shareholders' possession
or control.
1. Schedule 3.8(c) lists, as of the Effective Date and to the extent
not otherwise included in Schedule 3.8(a) or securing Effective Date Debt,
all liens, claims and encumbrances secured by or otherwise affecting any
asset of the Corporation (including any Corporate Property (as defined in
Section 3.12(b)), including a description of the nature of such lien, claim
or encumbrance, the amount secured if it secures a liability, the nature of
the obligation secured, and the party holding such lien, claim or
encumbrance.
1. Schedule 3.8(d) has attached to it copies of leases (other than the
Leases) for all real and personal property leasehold interests (other than
personal property leasehold interests (i) included in Effective Date Debt
or (ii) for which the remaining required lease payments are less than
$25,000 over the remaining life of the lease, provided that the aggregate
remaining lease payments under all such leases does not exceed $250,000) to
which the Corporation is a party as lessor or lessee or, to the knowledge
of the Corporation or the Shareholders, affecting or relating to any
Corporate Property (as of the Effective Date and to the extent not
otherwise included in the Financial Statements or Schedules 3.8(a) and
(c)), and, to the extent a lease is not attached to Schedule 3.8(d) or if
the applicable lease attached to Schedule 3.8(d) does not include the
information set forth in this Section 3.8(d), Schedule 3.8(d) includes a
description of the nature and principal terms of such leasehold interest,
including, without limitation, the identity of the other party thereto, the
term of such leasehold interest (including renewal options), the base rent
and any additional rent owing thereunder (including any adjustments
thereto), security deposits, rights of first offer or first refusal,
purchase options, and restrictions on transfer.
Except as described on Schedules 3.8(a), (b), (c) and (d), neither the
Corporation nor the Shareholders has made any payment or committed to make any
payment since the Balance Sheet Date on or with respect to any of the
liabilities or obligations listed on Schedule 3.8(a), (b), (c) and (d) except,
in the case of liabilities and obligations listed on Schedule 3.8(a), (c) and
(d), periodic payments required to be made under the terms of the agreements or
instruments governing such obligations or liabilities or made in the ordinary
course of business. Between the Balance Sheet Date and the Closing Date, trade
payables have been incurred only in the ordinary course of business consistent
with comparable prior periods.
3.9 RENTAL ASSET LISTING. The Rental Asset Listing and Schedule 1.3(d)
--------------------
collectively list substantially all of the Equipment owned by the Corporation as
of the Effective Date for lease or rent to customers, other than Equipment
disposed of since the date of such Schedules. Neither the Rental Asset Listing
nor Schedule 1.3(a) includes any Hunter Lift models 2035 and 2135, and the
Corporation does not own any of such model lifts. Except as described on
Schedule 3.9, all of the Corporation's rental equipment (whether listed on the
Rental Asset Listing and Schedule 1.3(d) or not) (i) have been maintained in the
ordinary course of business, (ii) are in operable condition, normal wear and
tear excepted, and (iii) are in material compliance with all applicable laws,
rules and regulations. All of the Corporation's rental equipment (whether listed
on the Rental Asset Listing and Schedule 1.3(d) or not) are substantially free
of known defects that would cause them to fail.
3.10 PERMITS AND LICENSES.
--------------------
1. Schedule 3.10(a) is a full and complete list of all material
permits, licenses, titles, fuel permits, zoning and land use approvals and
authorizations, including, without limitation, any conditional or special
use approvals or zoning variances, occupancy permits, and any other similar
documents constituting a material authorization or entitlement or otherwise
material to the operation of the business of the Corporation (collectively
the "GOVERNMENTAL PERMITS") owned by, issued to, held by or otherwise
benefiting the Corporation or the Shareholders as of the Effective Date.
The Corporation has all motor vehicle titles and current registrations. Any
material conditions to the Governmental Permits and, if applicable, the
expiration dates thereof, are also described in Schedule 3.10(a). Schedule
3.10(a) also sets forth the name of any governmental agency from whom the
Shareholders, the Corporation or United must obtain consent (the "REQUIRED
GOVERNMENTAL CONSENTS") in order to effect a direct or indirect transfer of
the Governmental Permits required as a result of the consummation of the
transactions contemplated by this Agreement. All such consents have been
obtained. Except as set forth on Schedule 3.10(a), all of the Governmental
Permits enumerated and listed on Schedule 3.10(a) and all of the
Corporation's motor vehicle titles and registrations are adequate for the
operation of the business of the Corporation and of each Corporate Property
as presently operated and are valid and in full force and effect. All of
said Governmental Permits and agreements and all of the Corporation's motor
vehicle titles and registrations have been duly obtained and are in full
force and effect, and there are no proceedings pending or, to the knowledge
of the Shareholders, threatened which may result in the revocation,
cancellation, suspension or adverse modification of any of the same. None
of the Shareholders has any knowledge of any reason why all such
Governmental Permits and agreements and all of the Corporation's motor
vehicle titles and registrations will not remain in effect after
consummation of the transactions contemplated hereby.
1. Schedule 3.10(b) lists, as of the Effective Date, the address of
each facility owned, leased (including lease term, lease rate, landlord
name), operated or otherwise used by the Corporation, the ownership, lease,
operation or use of which is being transferred to, assumed by or otherwise
acquired directly or indirectly by United
pursuant to this Agreement (each, a "FACILITY" and collectively, the
"FACILITIES"). Except as otherwise disclosed on Schedule 3.10(b):
a) Each Facility is fully licensed, permitted and authorized to
carry on its current business under all applicable federal, state and
local statutes, orders, approvals, zoning or land use requirements,
rules and regulations, and no Facility or the current use thereof
constitutes a non-conforming use or is otherwise subject to any
restrictions regarding the operation, renovation or reconstruction
thereof.
a) All activities and operations at each Facility are being and
have been conducted in compliance in all material respects with the
requirements, criteria, standards and conditions set forth in all
applicable federal, state and local statutes, orders, approvals,
permits, zoning or land use requirements and restrictions, variances,
licenses, rules and regulations.
a) Each Facility is located on real property leased by the
Corporation ("FACILITY PROPERTY") and is legally described on the
applicable lease agreement attached to Schedule 3.8(d) or the
applicable Lease relating to such Facility Property, which accurately
depict the respective Facility Property.
a) There are no circumstances, conditions or reasons which are
likely to be the basis for revocation or suspension of any Facility's
site assessments, permits, licenses, consents, authorizations, zoning
or land use permits, variances or approvals relating to such Facility
and leased to the Corporation, and to the knowledge of the
Shareholders there are no circumstances, conditions or reasons which
are likely to be the basis for revocation or suspension of any site
assessment, permits, licenses, consents, authorizations, zoning or
land use permits, variances or approvals relating to any Facility.
3.11 CERTAIN RECEIVABLES.
-------------------
1. Schedule 3.11(a) is an accurate list as of the Effective Date of
the accounts and notes receivable of the Corporation from, and advances to,
employees, former employees, officers, directors, the Shareholders and
Affiliates of the foregoing which have not been repaid. For purposes of
this Agreement, the term "AFFILIATE" means, with respect to any person, any
person that directly or indirectly through one or more intermediaries
controls or has an ownership interest in, or is controlled or owned in
whole or in part by, or is under common control or ownership in whole or in
part with such person, and in the case of the Corporation includes
directors and officers, in the case of individuals includes the
individual's spouse, father, mother, grandfather, grandmother, brothers,
sisters, children and grandchildren and in the case of a trust includes the
grantors, trustees and beneficiaries of the trust.
1. Schedule 3.11(b) is a list of the top twenty (20) customers in
terms of total revenues for the Corporation during the fiscal year ended
July 31, 1997, and the amount of rental revenue generated by each such
customer.
1. Attached to Schedule 3.11(c) is a copy of the Corporation's
standard price list for the months of January, February and March 1998.
Schedule 3.11(c) sets forth the name of each customer listed on Schedule
3.11(b) whose actual rental charges for Equipment rented from the
Corporation during such period were ten percent (10%) greater or less than
the applicable standard price for such Equipment, the item of Equipment and
the aggregate amount by which rental charges to such customer for such
period were greater or less than would have been charged had such Equipment
been charged at the standard price.
3.12 FIXED ASSETS AND REAL PROPERTY.
------------------------------
1. Schedule 3.12(a) lists, as of the Effective Date, substantially all
the fixed assets (other than real estate and Equipment included in the
Rental Asset Listing or on Schedule 1.3(d)) of the Corporation, including,
without limitation, identification of each vehicle by description, the
service date, invoice value, estimated useful life, and accumulated
depreciation for each such asset. Except as described on Schedule 3.12(a),
all of the Corporation's vehicles, machinery and equipment necessary for
the operation of its business are in operable condition, normal wear and
tear excepted, and are in material compliance with all applicable laws,
rules and regulations. All such vehicles and equipment are substantially
free of known defects that would cause them to fail. All leases of fixed
assets are in full force and effect and binding upon the parties thereto;
neither the Corporation nor any other party to such leases is in breach of
any of the material provisions thereof.
1. The Corporation owns no real property. Each parcel of real property
leased by the Corporation (including the parcels of real property subject
to the Leases) as of the Effective Date (the "CORPORATE PROPERTY") is
listed on Schedule 3.8(d). All leases listed on Schedule 3.8(d) are in full
force and effect and binding on the parties thereto; neither the
Corporation nor any other party to any such lease is in breach of any of
the material provisions thereof; and the Corporation has not assigned any
such lease or sublet all or any part of the Corporate Property which is the
subject of any such lease. Except as described on Schedule 3.12(b), there
are no material physical or mechanical defects in any Facility located on
any Corporate Property and each such Facility is in good condition and
repair, normal wear and tear excepted.
1. The Corporation has good, valid and marketable title to all
Corporate Properties, Equipment, Facilities, assets listed on Schedule
3.12(a), intellectual property listed on Schedule 3.27, Governmental
Permits and other personal property actually used or necessary for the
conduct of its business, free of any encumbrance or charge of any kind
except: (i) liens for current taxes not yet due; (ii) minor imperfections
of title and encumbrances, if any, that are not substantial in amount, do
not materially reduce the value or impair the use of the property subject
thereto, do not
materially impair the value of the Corporation, and have arisen only in the
ordinary course of business and consistent with past practice; (iii) the
liens identified in the Financial Statements or on Schedule 3.8(c) and (iv)
liens which are in the process of being terminated and relate to
obligations which are no longer outstanding as of the Effective Date
(collectively, the "PERMITTED LIENS"). Except as described on Schedule
3.12(b) there are no leases, occupancy agreements, options, rights of first
refusal or any other agreements or arrangements, either oral or written,
that create or confer in any person or entity the right to acquire, occupy
or possess, now or in the future, any Facility, any Corporate Property, or
any portion thereof, or create in or confer on any person or entity any
right, title or interest therein or in any portion thereof.
3.13 ACQUISITION/DISPOSAL OF ASSETS. Except as indicated on Schedule 1.3(d) or
------------------------------
Schedule 3.13, since the date of the Rental Asset Listing, the Corporation has
not acquired or sold or otherwise disposed of any Equipment outside the ordinary
course of business or any other properties or non-rental assets which either
have a value in excess of $25,000 in the aggregate or are material to the
operation of the Corporation's business as presently conducted, without the
prior written consent of United.
3.14 CONTRACTS AND AGREEMENTS; ADVERSE RESTRICTIONS.
----------------------------------------------
1. Schedule 3.14(a) lists, as of the Effective Date, and includes
copies of, all material contracts and agreements (other than standard
rental agreements with customers, leases included with Schedule 3.8(d),
documents included with Schedule 3.8(d) and agreements and documents
related to Excluded Assets) to which the Corporation is a party or by which
it or any of its property is bound (including, but not limited to, joint
venture or partnership agreements, contracts with any labor organizations,
promissory notes, loan agreements, bonds, mortgages, deeds of trust, liens,
pledges, conditional sales contracts or other security agreements). Except
as disclosed on Schedule 3.14(a), all such contracts and agreements
included in Schedule 3.14(a) are in full force and effect and binding upon
the parties thereto. Except as described or cross referenced on Schedule
3.14(a), neither the Corporation nor, to the Shareholders' knowledge, any
other parties to such contracts and agreements is in breach thereof, and
none of the parties has threatened to breach any of the material provisions
thereof or notified the Corporation or the Shareholders of a default
thereunder, or exercised any options thereunder.
1. Except as set forth on Schedule 3.14(b), there is no outstanding
judgment, order, writ, injunction or decree against the Corporation, the
result of which could materially adversely affect the Corporation or its
business or any of the Corporate Properties, nor has the Corporation been
notified that any such judgment, order, writ, injunction or decree has been
requested.
3.15 INSURANCE. Schedule 3.15 is a complete list and includes copies, as of the
---------
Effective Date, of all insurance policies in effect on the Effective Date or,
with respect to "occurrence" policies that were in effect, carried by the
Corporation in respect of the Facilities, the
Corporate Properties or any other property used by the Corporation specifying,
for each policy, the name of the insurer, the type of risks insured, the
deductible and limits of coverage, and the annual premium therefor or, if the
annual premium varies each year based on various factors, the amount of the most
recent annual premium paid by the Corporation. During the last five years, there
has been no lapse in any material insurance coverage of the Corporation. For
each insurer providing coverage for any of the contingent or other liabilities
listed on Schedule 3.8(b), except to the extent otherwise set forth in Schedule
3.8(b), each such insurer, if required, has been properly and timely notified of
such liability, no reservation of rights letters have been received by the
Corporation and the insurer has assumed defense of each suit or legal
proceeding.
3.16 PERSONNEL. Schedule 3.16 is a complete list, as of May 22, 1998, of all
---------
officers, directors and employees (by type or classification) of the Corporation
and their respective rates of compensation, including (i) the portions thereof
attributable to bonuses, (ii) any other salary, bonus, stock option, equity
participation, or other compensation arrangement made with or promised to any of
them, and (iii) copies of all employment agreements with non-union officers,
directors and employees. Schedule 3.16 also clearly indicates each driver of
the Corporation's motor vehicles who is required to have a commercial,
chauffeur's, or other special class of drivers license in order to operate
commercial or heavy vehicles used in the Corporation's business.
3.17 BENEFIT PLANS AND UNION CONTRACTS.
---------------------------------
1. Schedule 3.17(a) is a complete list as of the Effective Date, and
includes complete copies (or, in the case of oral arrangements,
descriptions), of all employee benefit plans and agreements (written or
oral) currently maintained or contributed to by the Corporation, including
employment agreements and any other agreements containing "golden
parachute" provisions, retirement plans, welfare benefit plans and deferred
compensation agreements, together with copies of such plans, agreements and
any trusts related thereto, and classifications of employees covered
thereby as of the Effective Date but Schedule 3.17(a) does not include any
employee benefit agreement or other benefit arrangement described in this
Section 3.17(a) which is included as an Excluded Asset. Except for the
employee benefit plans described on Schedule 3.17(a) or included as an
Excluded Asset, the Corporation has no other pension, retirement, welfare,
profit sharing, deferred compensation, stock option, employee stock
purchase or other employee benefit plans or arrangements with any party.
Except as disclosed on Schedule 3.17(a), all employee benefit plans listed
on Schedule 3.17(a) or included as an Excluded Asset are fully funded and
in substantial compliance with all applicable federal, state and local
statutes, ordinances and regulations. All such plans that are intended to
qualify under Section 401(a) of the Internal Revenue Code have been
determined by the Internal Revenue Service to be so qualified, and copies
of such determination letters are included as part of Schedule 3.17(a).
Except as disclosed on Schedule 3.17(a), all reports and other documents
required to be filed with any governmental agency or distributed to plan
participants or beneficiaries (including, but not limited to, actuarial
reports, audits or tax returns) have been timely filed or distributed, and
copies thereof are included as part of Schedule 3.17(a). All employee
benefit plans listed on such Schedule or included as an Excluded Asset have
been
operated in accordance with the terms and provisions of the plan documents
and all related documents and policies. The Corporation has not incurred
any liability for excise tax or penalty due to the Internal Revenue Service
or U.S. Department of Labor nor any liability to the Pension Benefit
Guaranty Corporation for any employee benefit plan, nor has the
Corporation, nor party-in-interest or disqualified person, engaged in any
transaction or other activity which would give rise to such liability. The
Corporation has not participated in or made contributions to any "multi-
employer plan" as defined in the Employee Retirement Income Security Act of
1974 ("ERISA"), nor would the Corporation or any affiliate be subject to
any withdrawal liability with respect to such a plan if any such employer
withdrew from such a plan immediately prior to the Effective Date. No
employee pension benefit plan is under funded on a termination basis as of
the date of this Agreement.
1. Schedule 3.17(b) is a complete list, as of the Effective Date, and
includes complete copies of all union contracts and agreements between the
Corporation and any collective bargaining group. The Corporation is in
compliance in all material respects with all applicable federal and state
laws respecting employment and employment practices, terms and conditions
of employment, wages and hours, and nondiscrimination in employment, and is
not engaged in any unfair labor practice. There is no charge pending or, to
the Shareholders' knowledge, threatened, against the Corporation before any
court or agency and alleging unlawful discrimination in employment
practices and there is no charge of or proceeding with regard to any unfair
labor practice against it pending before the National Labor Relations
Board. There is no labor strike, dispute, slow down or stoppage as of the
Closing Date, existing or threatened against the Corporation; no union
organizational activity exists respecting employees of the Corporation not
currently subject to a collective bargaining agreement; the union contracts
or other agreements delivered as part of Schedule 3.17(b) constitute all
agreements with the unions or other collective bargaining groups, and there
are no other arrangements or established practices relating to the
employees covered by any collective bargaining agreement; and Schedule
3.17(b) will contain as of the date it is delivered a list of all
arbitration or grievance proceedings that have occurred since the Balance
Sheet Date. No one has petitioned within the last five years, and no one is
now petitioning, for union representation of any employees of the
Corporation. The Corporation has not experienced any labor strike, slow-
down, work stoppage, labor difficulty or other job action during the last
five years.
1. No payment made to any employee, officer, director or independent
contractor of the Corporation (the "RECIPIENT") pursuant to any employment
contract, severance agreement or other arrangement (the "GOLDEN PARACHUTE
PAYMENT") will be nondeductible by the Corporation because of the
application of Sections 280G and 4999 of the Internal Revenue Code of 1986,
as amended (the "CODE") to the Golden Parachute Payment, nor will a
Corporation be required to compensate any Recipient because of the
imposition of an excise tax (including any interest or penalties related
thereto) on the Recipient by reason of Sections 280G and 4999 of the Code.
3.18 TAXES.
-----
1. The Corporation has timely filed all requisite federal, state,
local and other tax and information returns due for all fiscal periods
ended on or before the Effective Date. All such returns are accurate and
complete. Except as set forth on Schedule 3.18, there are no open years,
examinations in progress, extensions of any statute of limitations or
claims against the Corporation relating to federal, state, local or other
taxes (including penalties and interest) for any period or periods prior to
and including the Effective Date and no notice of any claim for taxes has
been received. Copies of (i) any tax examinations and (ii) extensions of
statutory limitations are attached as part of Schedule 3.18. Copies of all
federal and state income tax returns for the past three fiscal years of the
Corporation have been made available to United. Copies of all federal,
state, local and other tax and information returns for all prior years of
the Corporation's existence are among the records of the Corporation which
will accrue to United at the Closing. Except as set forth on Schedule 3.18,
the Corporation has not been contacted by any federal, state or local
taxing authority regarding a prospective examination.
1. Except as set forth on Schedule 3.18 (which schedule also includes
the amount due with respect to the Corporation), the Corporation has duly
paid all taxes and other related charges required to be paid prior to the
Effective Date. The reserves for taxes contained in the Financial
Statements of the Corporation are adequate to cover its tax liability as of
the Effective Date.
1. The Corporation has withheld all required amounts from its
employees for all pay periods in full and complete compliance with the
withholding provisions of applicable federal, state and local laws. All
required federal, state and local and other returns with respect to income
tax withholding, social security, and unemployment taxes have been duly
filed by the Corporation for all periods for which returns are due, and the
amounts shown on all such returns to be due and payable have been paid in
full.
3.19 COPIES COMPLETE; REQUIRED CONSENTS. Except as disclosed on Schedule 3.19,
----------------------------------
the copies of the Articles of Incorporation and Bylaws of the Corporation, both
as amended to the Closing Date, and the copies of all standard form rental
agreements, leases, instruments, agreements, licenses, permits, certificates or
other documents that have been delivered to United in connection with the
transactions contemplated hereby are complete and accurate as of the Effective
Date and are true and correct copies of the originals thereof. None of such
leases, instruments, agreements, licenses, permits, site assessments,
certificates or other documents requires notice to, or consent or approval of,
any governmental agency or other third party to any of the transactions
contemplated hereby, except the Required Governmental Consents and such consents
and approvals as are listed on Schedule 3.19, all of which have been given or
obtained prior to the Closing.
3.20 PRODUCT QUALITY, WARRANTY CLAIMS, PRODUCT LIABILITY. All products and
---------------------------------------------------
services sold, rented, leased, provided or delivered by the Corporation to
customers on or prior to the Effective Date conform in all material respects to
applicable contractual commitments, express and implied warranties, product and
service specifications and quality standards, and the
Shareholders have no knowledge of any liability (and there is no known basis for
any present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against the Corporation giving rise to any liability)
for replacement or repair thereof or in connection therewith, except as may be
incurred in the ordinary course of business. No product or service sold, leased,
rented, provided or delivered by the Corporation to customers on or prior to the
Closing Date is subject to any guaranty, warranty or other indemnity beyond the
applicable standard terms and conditions of sale, rent or lease. Except as set
forth on Schedule 3.20, the Corporation has no liability (and there is no known
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against the Corporation which
might give rise to any liability) arising out of any injury to a person or
property as a result of the ownership, possession, provision or use of any
Equipment, product or service sold, rented, leased, provided or delivered by the
Corporation on or prior to the Closing Date. All product liability claims that
have been asserted against the Corporation since January 1, 1992, whether
covered by insurance or not and whether litigation has resulted or not, are
listed and summarized on Schedule 3.20.
3.21 NO CHANGE WITH RESPECT TO CORPORATION. Except as set forth on
-------------------------------------
Schedule 3.21, since the Balance Sheet Date, the business of the Corporation has
been conducted only in the ordinary course and there has been no change in the
condition (financial or otherwise) of the assets, liabilities or operations of
the Corporation other than changes in the ordinary course of business, none of
which either singly or in the aggregate has been materially adverse.
Specifically, and without limiting the generality of the foregoing, except as
set forth on Schedule 3.21, with respect to the Corporation, since the Balance
Sheet Date, there has not been:
1. any change in its financial condition, assets, liabilities
(contingent or otherwise), income, operations or business which would have
a material adverse effect on the financial condition, assets, liabilities
(contingent or otherwise), income, operations or business of the
Corporation, taken as a whole;
1. any damage, destruction or loss (whether or not covered by
insurance) adversely affecting any material portion of its properties or
business;
1. any change in or agreement to change (i) its shareholders, (ii)
ownership of its authorized capital or outstanding securities, or (iii) its
securities;
1. any declaration or payment of, or any agreement to declare or pay,
any dividend or distribution in respect of its capital stock or any direct
or indirect redemption, purchase or other acquisition of any of its capital
stock other than the redemption of the Redeemed Stock;
1. any increase or bonus or promised increase or bonus in the
compensation payable or to become payable by it, in excess of usual and
customary practices, to any of its directors, officers, employees or
agents, or any accrual or arrangement for or payment of any bonus or other
special compensation to any employee or any severance or termination pay
paid to any of its present or former officers or other key employees;
1. any labor dispute or any other event or condition of any character
with respect to the Corporation's employees, materially adversely affecting
its business or future prospects;
1. any sale or transfer, or any agreement to sell or transfer, any of
its material assets, property or rights to any other person, including,
without limitation, the Shareholders and their Affiliates, other than in
the ordinary course of business;
1. any cancellation, or agreement to cancel, any material indebtedness
or other material obligation owing to it, including, without limitation,
any indebtedness or obligation of any of the Shareholders or any Affiliate
thereof;
2. any plan, agreement or arrangement granting any preferential rights
to purchase or acquire any interest in any of its assets, property or
rights or requiring consent of any party to the transfer and assignment of
any such assets, property or rights;
1. any purchase or acquisition of, or any agreement, plan or
arrangement to purchase or acquire, any of its property, rights or assets
outside the ordinary course of its business;
1. any waiver of any of its material rights or claims;
1. any new or any amendment or termination of any existing material
contract, agreement, license, permit or other right to which it is a party;
1. any decline in the stockholders equity of the Corporation to an
amount less than the stockholders equity of the Corporation as of the
Balance Sheet Date;
1. any increase in the amount of indebtedness owed by the Shareholders
or their Affiliates to any person other than the Corporation and secured by
one or more Corporate Properties;
1. any increase in the amount of aggregate indebtedness owed by the
Shareholders or their Affiliates to the Corporation; or
1. any other transaction outside the ordinary course of its business.
3.22 EFFECTIVE DATE DEBT; WORKING CAPITAL; EFFECTIVE DATE LIABILITIES. Schedule
----------------------------------------------------------------
1.3(a) sets forth the estimated Effective Date Debt of the Corporation.
Schedule 1.3(b) accurately sets forth the March 31 Working Capital of the
Corporation and sets forth the estimated Effective Date Working Capital of the
Corporation. Schedule 1.3(c) sets forth the estimated Effective Date
Liabilities of the Corporation.
3.23 BANK ACCOUNTS.
-------------
1. Schedule 3.23(a) is a complete and accurate list, as of the
Effective Date, of:
a) the name of each bank in which the Corporation has accounts or
safe deposit boxes;
a) the name(s) in which the accounts or boxes are held;
a) the type of account; and
a) the name of each person authorized to draw thereon or have
access thereto.
1. Schedule 3.23(b) is a complete and accurate list, as of May 22,
1998, of:
a) each credit card or other charge account issued to the
Corporation; and
a) the name of each person to whom such credit cards or other
charge accounts have been issued.
3.24 COMPLIANCE WITH LAWS. Except as disclosed on Schedule 3.24, the
--------------------
Corporation has complied in all material respects with, and the Corporation is
presently in material compliance with, federal, state and local laws,
ordinances, codes, rules, regulations, Governmental Permits, orders, judgments,
awards, decrees, consent judgments, consent orders and requirements applicable
to it (collectively "LAWS"), including, but not limited to, the Americans with
Disabilities Act, the Federal Occupational Safety and Health Act, and Laws
relating to the public health, safety or protection of the environment
(collectively, "ENVIRONMENTAL LAWS"). Except as disclosed on Schedule 3.24,
there has been no assertion by any party that the Corporation is in violation of
any Laws resulting in a fine in excess of $500 provided that the aggregate
amount of all such fines does not exceed $25,000 and the imposition of such
fines does not have a material adverse effect on the Corporation. Specifically
and without limiting the generality of the foregoing, except as disclosed on
Schedule 3.24: except as permitted under Environmental Laws, the Corporation
has not processed, handled, transferred, generated, treated, stored or disposed
of any Hazardous Material (as defined below), no Hazardous Material, other than
that allowed under Environmental Laws has been disposed of, or otherwise
released on any Corporate Property, and no Corporate Property has ever been
subject to or received any notice of any private, administrative or judicial
action, or notice of any intended private, administrative or judicial action
relating to the presence or alleged presence of Hazardous Material in, under,
upon or emanating from any Corporate Property or any real property now or
previously owned or leased by the Corporation. As used in this Agreement,
"HAZARDOUS MATERIAL" shall mean the substances defined as "HAZARDOUS WASTE" in
40 CFR 261, substances defined in any comparable Idaho, Oregon or Washington
statute or regulation and any substance the presence of which requires
remediation pursuant to any Environmental Laws.
i)
3.25 POWERS OF ATTORNEY. Except with respect to certain items of Closing Date
------------------
Debt, the Corporation has not granted any power of attorney (except routine
powers of attorney relating to representation before governmental agencies) or
entered into any agency or similar agreement whereby a third party may bind or
commit the Corporation in any manner.
3.26 UNDERGROUND STORAGE TANKS. Except as set forth on Schedule 3.26, no
-------------------------
underground storage tanks containing petroleum products or wastes or other
hazardous substances regulated by 40 CFR 280 or Environmental Laws are currently
or have been located on any Corporate Property. Except as set forth on Schedule
3.26, the Corporation has never owned or leased any real property not included
in the Corporate Property having any underground storage tanks containing
petroleum products or wastes or other hazardous substances regulated by 40 CFR
280. As to each such underground storage tank ("UST") identified on Schedule
3.26, the Corporation has provided to United, on Schedule 3.26:
1. the location of the UST if known, information and material,
including any available drawings and photographs, showing the location if
available, and whether the Corporation currently leases the property on
which the UST is located (and if the Corporation does not currently own or
lease such property, the dates on which it did and the current owner or
lessee of such property);
1. the date of installation and specific use or uses of the UST if
known;
1. copies of tank and piping tightness tests and cathodic protection
tests and similar studies or reports for each UST if available;
1. a copy of each notice to or from a governmental body or agency
relating to the UST;
1. other material records, if any, with regard to the UST, including,
without limitation, repair records, financial assurance compliance records
and records of ownership; and
1. to the extent known and not otherwise set forth pursuant to the
above, a summary description of instances, past or present, in which, to
the Corporation's or the Shareholders's knowledge, the UST failed to meet
applicable standards and regulations for tightness or otherwise and the
extent of such failure, and any other operational or environmental problems
with regard to the UST, including, without limitation, spills, including
spills in connection with delivery of materials to the UST, releases from
the UST and soil contamination.
Except to the extent set forth on Schedule 3.26, the Corporation has complied
with Environmental Laws regarding the installation, use, testing, monitoring,
operation and closure of any UST described on Schedule 3.26.
3.27 PATENTS, TRADEMARKS, TRADE NAMES, ETC. Schedule 3.27 lists all patents,
--------------------------------------
tradenames, fictitious business names, trademarks, service marks, and copyrights
owned by the Corporation or which it is licensed to use (other than licenses to
use software for personal computer operating systems that were provided when the
computer was purchased and licenses to use software for personal computers that
are granted to retail purchasers of such software). No patents, trade secrets,
know-how, intellectual property, trademarks, trade names, assumed names,
copyrights, or designations used by the Corporation in its business infringe on
any patents, trademarks, or copyrights, or any other rights of any person. None
of the Shareholders knows or has any reason to believe that there are any claims
of third parties to the use of any such names or any similar name, or knows of
or has any reason to believe that there exists any basis for any such claim or
claims.
3.28 ASSETS, ETC., NECESSARY TO BUSINESS. The Corporation owns or leases all
-----------------------------------
properties and assets (including, but not limited to, all rental equipment
(whether listed on the Rental Asset Listing and Schedule 1.3(d) or not)), real,
personal, and mixed, tangible and intangible, and, except as disclosed on
Schedules 3.5, 3.10(a), 3.10(b), 3.14(a) and 3.19, is a party to all
Governmental Permits and other agreements necessary to permit it to carry on its
business as presently conducted.
3.29 CONDEMNATION. Except as set forth on Schedule 3.29, no Corporate Property
------------
owned or leased by the Corporation is the subject of, or would be affected by,
any pending condemnation or eminent domain proceedings, and, to the knowledge of
the Corporation and the Shareholders, no such proceedings are threatened.
3.30 MANUFACTURERS, SUPPLIERS AND CUSTOMERS. The relations between the
--------------------------------------
Corporation and its customers are good. Except with respect to Stihl
Manufacturing referred to in Schedule 3.5, none of the Shareholders has
knowledge of any fact (other than general economic and industry conditions)
which indicates that any of the manufacturers or suppliers supplying products,
components or materials to the Corporation intends to cease providing such items
to the Corporation which would have a material adverse effect on the business of
the Corporation, nor do any of the Shareholders have knowledge of any fact
(other than general economic and industry conditions) which indicates that any
of the material customers (including all customers set forth on Schedule
3.11(b)) of the Corporation intends to terminate, limit or reduce its business
relations with the Corporation.
3.31 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Corporation nor any of
-------------------------------------
the Shareholders has directly or indirectly within the past five years given or
agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other person who is or may be in a position to help or
hinder the business of the Corporation in connection with any actual or proposed
transaction which (a) might subject the Corporation to any damage or penalty in
any civil, criminal or governmental litigation or proceeding, (b) if not given
in the past, might have had a material adverse effect on the financial
condition, business or results of operations of the Corporation, or (c) if not
continued in the future, might (i) have a material adverse effect on the
financial condition, business or operations of the Corporation or (ii) which
might subject the Corporation to suit or penalty in any private or governmental
litigation or proceeding.
3.32 RELATED PARTY TRANSACTIONS. Except as disclosed in the Financial
--------------------------
Statements, none of the Shareholders nor their respective Affiliates owns any
direct or indirect interest of any kind in, or controls or is a director,
officer, employee, shareholder or partner of, or consultant to or lender to or
borrower from or has the right to participate in the profits of, any person
which is a competitor, supplier, customer, landlord, tenant, creditor or debtor
of the Corporation. Schedule 3.32 describes each material transaction (which is
not disclosed in the Financial Statements) with each such party from August 1,
1994, through the Effective Date, including the identity of the parties thereto,
the amount paid or received by the Corporation, if any payment was made or
received, and the estimated difference, if any, between the amount paid or
received and the amount that would have been paid or received in an arms-length
transaction with an unrelated party.
3.33 DISCLOSURE SCHEDULES. Any matter disclosed on any Schedule to this
--------------------
Agreement shall be deemed to have been disclosed on every other Schedule that
refers to such Schedule by cross reference so long as the nature of the matter
disclosed is obvious from a fair reading of the Schedule on which the matter is
disclosed.
3.34 NO MISLEADING STATEMENTS. The representations and warranties of the
------------------------
Corporation and the Shareholders contained in this Agreement, the Exhibits and
Schedules hereto and all other documents and information furnished to United and
its representatives pursuant hereto are complete and accurate in all material
respects and do not include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made not misleading.
3.35 ACCURATE AND COMPLETE RECORDS. The corporate minute books, stock ledgers,
-----------------------------
books, ledgers, financial records and other records of the Corporation:
1. have been made available to United and its agents at the
Corporation's offices or at the offices of United's attorneys or the
Corporation's attorneys;
1. have been, in all material respects, maintained in accordance with
all applicable laws, rules and regulations; and
1. are accurate and complete, reflect all material corporate
transactions required to be authorized by the Boards of Directors and/or
shareholders of the Corporation and do not contain or reflect any material
discrepancies.
3.36 KNOWLEDGE. Wherever reference is made in this Agreement to the "KNOWLEDGE"
---------
of the Shareholders, such term means the actual knowledge of any of the
Shareholders or any knowledge which should have been obtained by any of the
Shareholders after due inquiry of the person at the Corporation with the primary
responsibility for such matter.
3.37 BROKERS; FINDERS. Except as set forth on Schedule 3.37, no person has
----------------
acted directly or indirectly as a broker, finder or financial advisor for the
Corporation or the Shareholders in connection with the transactions contemplated
by this Agreement and no person is entitled to any broker's, finder's, financial
advisory or similar fee or payment in respect thereof based in
any way on any agreement, arrangement or understanding made by or on behalf of
the Corporation or the Shareholders.
3.38 INVESTMENT REPRESENTATIONS. The Shareholders further represent that:
--------------------------
1. Each of the Shareholders is an "accredited investor" as defined in
Rule 501(a) under the Securities Act of 1933, as amended (the "ACT"). Each
of the Shareholders has such knowledge and experience in financial and
business matters, either alone or with the Shareholders' professional
advisors, that he is capable of evaluating the merits and risks of the
investment in United Stock.
1. Each is a resident of the State of Washington.
1. Each of the Shareholders has received copies of the following
documents of United: (i) Prospectus (the "PROSPECTUS") dated March 5, 1998,
filed with the Securities and Exchange Commission ("SEC"); (ii) Form 10-K
request filed with the SEC for 1997; (iii) Form 10-K request filed with the
SEC for the first quarter of 1998; (iv) proxy statement filed with the SEC
for the 1998 annual meeting of the stockholders; and (v) all Form 8-K
reports filed with the SEC since January 1, 1998.
1. Each of the Shareholders has been furnished with a list of each
exhibit to the reports described in paragraph (c) above and each has been
offered a copy of all such exhibits as requested by the Shareholder.
1. Each of the Shareholders has had the opportunity to ask questions
and receive answers concerning the terms and conditions of the transactions
contemplated by this Agreement and to obtain additional information that
United possesses or can obtain without unreasonable effort or expense that
is necessary to verify the accuracy of the information provided.
1. Each of the Shareholders is acquiring United Stock pursuant to this
Agreement for its own account, not as a nominee or agent. No one else has
any interest, beneficial or otherwise, in any of such United Stock.
1. Each of the Shareholders is able to bear the economic risk of such
an investment in the United Stock, is aware that it must be prepared to
hold such United Stock for an indefinite period and is aware that the
United Stock has not been registered under the Act, or any other securities
law, on the ground, among others, that no unregistered distribution or
public offering of United Stock is to be effected and the United Stock is
being issued by United without any public offering within the meaning of
section 4(2) of the Act.
1. Without in any way limiting the representations herein each of the
Shareholders further agrees that the Shareholders shall not encumber,
pledge, hypothecate, sell, transfer, assign or otherwise dispose of, or
receive any consideration for, any shares of United Stock or any interest
in them, unless and until prior to any
proposed encumbrance, pledge, hypothecation, sale, transfer, assignment or
other disposition, (i) a registration statement on Form S-3 (or any other
form appropriate for the purpose or replacing such form) under the Act with
respect to the shares proposed to be transferred or otherwise disposed of
shall be then effective (ii)(a) he shall have furnished United with a
detailed statement of the circumstances of the proposed disposition, and
(b) he shall have furnished United with an opinion of counsel (obtained at
the Shareholder's expense) in form and substance satisfactory to United to
the effect that such disposition will not require registration of any such
shares under the Act or qualification of any such shares under any other
securities law; or (iii) Rule 144 is available with respect to such
transaction. The Shareholders acknowledge that United is not presently
eligible to use Form S-3 for its registration statements.
1. Each of the Shareholders understands and agrees that each
certificate representing the United Stock will bear a legend on the face
thereof (or on the reverse thereof with a reference to such legend on the
face thereof) which legend restricts the sale, transfer or other
disposition of United Stock otherwise than in accordance with this Section
3.38, provided, however, that United shall, on the request of any of the
Shareholders, cause such legends to be removed from the certificates
evidencing the United Stock if the Shareholder has held such stock for the
period contemplated by Rule 144(k) under the Act and if the Shareholder is
not then and has not been during the three months preceding such request an
affiliate of United (as defined in Rule 144 under the Act).
1. Each of the Shareholders understands and agrees that the United
Stock will be "restricted securities" as that term is defined in Rule 144
under the Act and, accordingly, that it must be held indefinitely unless it
is subsequently registered under the Act or an exemption from such
registration is available.
1. REPRESENTATIONS AND WARRANTIES OF UNITED
----------------------------------------
United represents and warrants to the Shareholders that each of the following
representations and warranties is true as of the date of this Agreement and will
be true as of the Closing Date, and agrees that such representations and
warranties shall survive the Closing:
4.1 EXISTENCE AND GOOD STANDING. United is a Corporation duly organized,
---------------------------
validly existing and in good standing under the laws of the State of Delaware.
United has full corporate power and authority to own and lease its properties
and to carry on its business as now conducted. United is not required to be
qualified or licensed to conduct business as a foreign corporation in any
jurisdiction where the failure to be so qualified would have a material adverse
effect on its financial condition.
4.2 NO BREACH OF DEFAULT. The execution and delivery by United of this
--------------------
Agreement, and the consummation by United of the transactions contemplated
hereby, do not:
1. result in the material breach of any of the terms or conditions of,
or constitute a default under, or allow for the acceleration or termination
of, in any manner release any party from any obligation under, require any
consent under, or result in any lien, claim, or encumbrance on United's
assets under any mortgage, lease, note, bond, indenture, or contract,
agreement, license or other instrument or obligation of any kind or nature
to which United is a party, or by which United, or any of its assets, is or
may be bound or affected; or
1. violate any law or any order, writ, injunction or decree of any
court, administrative agency or governmental authority, known to United, or
require the approval, consent or permission of any governmental or
regulatory authority; or
1. violate the Certificate of Incorporation or Bylaws of United.
4.3 AUTHORIZATION OF AGREEMENT. This Agreement has been duly authorized,
--------------------------
executed and delivered by United and, subject to the due authorization,
execution and delivery by the Corporation and the Shareholders, constitutes a
legal, valid and binding obligation of United. United has full corporate power,
legal right and corporate authority to enter into and perform its
obligations under this Agreement and to carry on its business as presently
conducted. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby and the fulfillment of and compliance with
the terms and conditions hereof do not and will not, after the giving of notice,
or the lapse of time or otherwise: (a) violate any provisions of any judicial or
administrative order, award, judgment or decree applicable to United; (b)
conflict with any of the provisions of the Certificate of Incorporation or
Bylaws of United; or (c) conflict with, result in a breach of or constitute a
default under any material agreement or instrument to which United is a party or
by which it is bound.
4.4 NO MISLEADING STATEMENTS. The representations and warranties of United
------------------------
contained in this Agreement, the Exhibits and Schedules hereto and all other
documents and information furnished to the Shareholders pursuant hereto are
materially complete and accurate, and do not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made and to be made not misleading as of the Closing Date.
4.5 BROKERS; FINDERS. No person has acted directly or indirectly as a broker,
----------------
finder or financial advisor for United in connection with the transactions
contemplated by this Agreement and no person is entitled to any broker's,
finder's, financial advisory or similar fee or payment in respect thereof based
in any way on any agreement, arrangement or understanding made by or on behalf
of United.
4.6 DISCLOSURE SCHEDULES. Any matter disclosed by United on any Schedule to
--------------------
this Agreement shall be deemed to have been disclosed on every other Schedule
that refers to such Schedule by cross reference so long as the nature disclosed
is obvious from a fair reading of the Schedule on which the matter is disclosed.
1. CLOSING DELIVERIES
------------------
At the Closing, the respective parties shall make the deliveries indicated:
5.1 UNITED DELIVERIES.
-----------------
1. United shall deliver to the Shareholders the cash portion of the
Purchase Price required to be delivered on the Closing Date pursuant to
Section 1.2.
1. United shall deliver to the Shareholders reasonable satisfactory
evidence that it has requested its transfer agent to issue to the
Shareholders certificates evidencing the shares of the United Stock
required to be delivered to the Shareholders pursuant to Section 1.2.
a) United shall execute and deliver the Escrow Agreement and deliver
the Hold Back to the Escrow Agent.
1. United shall enter into an Employment Agreement with ▇▇▇▇▇ (the
"▇▇▇▇▇ EMPLOYMENT AGREEMENT").
1. The Corporation shall enter into an Employment Agreement with ▇▇▇▇▇
(the "▇▇▇▇▇ EMPLOYMENT AGREEMENT").
1. The Corporation shall enter into an Employment Agreement with ▇▇▇▇▇
(the "▇▇▇▇▇ EMPLOYMENT AGREEMENT").
1. United shall enter into an Employment Agreement with ▇▇▇▇▇ (the
"▇▇▇▇▇ EMPLOYMENT AGREEMENT").
1. United shall enter into a Registration Rights Agreement with the
Shareholders (the "REGISTRATION RIGHTS AGREEMENT").
1. The Corporation shall execute and deliver the Leases in the form
attached hereto as Exhibit 5.1(i).
1. United shall execute and deliver the Development Agreement.
1. The Corporation shall execute and deliver the Purchase Option
Assignment Agreement.
1. United shall execute and deliver a Guaranty for each of the ▇▇▇▇▇
Employment Agreement, the ▇▇▇▇▇ Employment Agreement and the Leases.
1. United shall cause to be delivered to the Shareholders an opinion
of counsel for United, dated as of the Closing Date.
5.2 SHAREHOLDERS DELIVERIES.
-----------------------
1. The Shareholders shall deliver to United the certificates
representing the outstanding Corporation's Stock, free and clear of all
liens, security interests, claims and encumbrances, accompanied by stock
powers duly executed in blank.
1. The Shareholders shall cause to be delivered to United an opinion
of counsel for the Shareholders, dated as of the Closing Date.
1. The Shareholders shall deliver evidence reasonably satisfactory to
United that all material third party consents to the transactions
contemplated hereby, including without limitation all Required Governmental
Consents and all required consents of the landlords under all real estate
leases to which the Corporation is a party, were obtained (and all estoppel
certificates have been requested) and the Shareholders shall deliver
estoppel certificates received as of the Closing Date from the landlords
under all real estate leases to which the Corporation is a party confirming
the terms thereof and the rental amount owing thereunder, certifying that
such lease is in full force and effect, that the Corporation is not in
default under any of the terms or conditions thereof, that there have been
no amendments or modifications to any such lease (or specifying the same),
and otherwise containing such statements and certifications as the
Corporation may require.
1. The Corporation shall deliver to United evidence satisfactory to
United showing that all written employment contracts and all oral
employment contracts other than those that are terminable "at will" without
payment of severance (other than normal severance benefits approved by
United) or other benefits with non-union employees of the Corporation
(including, without limitation, stock options or other rights to obtain
equity in the Corporation) have been terminated, effective on or before the
Closing Date.
1. The Shareholders shall cause each officer and director of the
Corporation to deliver a resignation as an officer and/or director of the
Corporation together with a general release releasing the Corporation from
all obligations (other than obligations arising after the Closing Date
under this Agreement) under any indemnification agreements, the charter
documents of the Corporation, or otherwise, arising out of or relating to
this Agreement or the consummation of the transactions contemplated thereby
to the extent such indemnification obligations are not covered by insurance
which was in effect at the time the event giving rise to such
indemnification obligation occurred.
1. The Shareholders shall execute and deliver the Escrow Agreement.
1. ▇▇▇▇▇ shall execute and deliver the ▇▇▇▇▇ Employment Agreement.
1. ▇▇▇▇▇ shall execute and deliver the ▇▇▇▇▇ Employment Agreement.
1. ▇▇▇▇▇ shall execute and deliver the ▇▇▇▇▇ Employment Agreement.
1. ▇▇▇▇▇ shall execute and deliver the ▇▇▇▇▇ Employment Agreement.
1. The Shareholders shall execute and deliver the Registration Rights
Agreement.
1. The Shareholders shall cause the Landlord to execute and deliver
the Leases.
1. The Shareholders shall execute and deliver the Development
Agreement.
1. The Shareholders shall, or the Shareholders shall cause any of
their Affiliates to, execute and deliver the Purchase Option Assignment
Agreement.
1. ADDITIONAL COVENANTS OF UNITED, THE CORPORATION AND THE SHAREHOLDERS
--------------------------------------------------------------------
6.1 FURTHER ASSURANCES AND ADDITIONAL CONVEYANCES. Following the Closing, the
---------------------------------------------
Shareholders and United shall each deliver or cause to be delivered at such
times and places as shall be reasonably agreed upon such additional instruments
as United or the Shareholders may reasonably request for the purpose of carrying
out this Agreement (including, but not limited to, instruments required to
distribute or pay to the Shareholders the Excluded Assets in exchange for the
Redeemed Stock). The Shareholders will cooperate with United and/or the
Corporation on and after the Closing Date in furnishing information, evidence,
testimony and other assistance in connection with any actions, proceedings or
disputes of any nature with respect to matters pertaining to all periods prior
to the Closing Date. The Shareholders shall, at Shareholders' expense, continue
to obtain the terminations of liens described in Section 3.13(c)(iv).
6.2 RELEASE OF GUARANTIES.
---------------------
1. United shall use reasonable efforts to obtain the termination and
release promptly after the Closing Date of the personal guaranties of the
Shareholders listed on Schedule 6.2, all of which relate to indebtedness of
the Corporation included in the financial statements as of the Effective
Date or relate to open accounts with vendors to the Corporation. United
shall indemnify the Shareholders and hold them harmless from and against
all losses, expenses or claims by third parties to enforce or collect
indebtedness owed by the Corporation as of the Effective Date which is
personally guaranteed by the Shareholders pursuant to such guaranties and
other guaranties of the Shareholders not listed on Schedule 6.2 of which
United has or obtains actual knowledge, so long as all such guaranties
relate to indebtedness of the Corporation included in the Financial
Statements as of the Balance Sheet Date or relate to open accounts with
vendors to the Corporation. The Shareholders may
notify the obligees under such guaranties that they have terminated their
obligations under such guaranties. The Shareholders shall cooperate with
United in obtaining such releases.
1. Shareholders shall use reasonable efforts to obtain the termination
and release promptly after the Closing Date of the guaranties of the
Corporation listed on Schedule 3.8(c), all of which relate to indebtedness
of the Shareholders. The Shareholders shall indemnify the Corporation and
United and hold them harmless from and against all losses, expenses or
claims by third parties to enforce or collect indebtedness owed by the
Shareholders as of the Closing Date which is guaranteed by the Corporation
pursuant to such guaranties and other guaranties of the Corporation not
listed on Schedule 3.8(c) of which Shareholders have or obtain actual
knowledge. The Corporation may notify the obligees under such guaranties
that they have terminated their obligations under such guaranties. The
Corporation shall cooperate with United in obtaining such releases.
6.3 CONFIDENTIALITY. Neither the Corporation nor the Shareholders shall
---------------
disclose or make any public announcements of the transactions contemplated by
this Agreement without the prior written consent of United, unless required to
make such disclosure or announcement by law, in which event the party making the
disclosure or announcement shall notify United at least 24 hours before such
disclosure or announcement is expected to be made.
6.4 BROKERS AND FINDERS FEES. Each party shall pay and be responsible for any
------------------------
broker's, finder's or financial advisory fee incurred by such party in
connection with the transactions contemplated by this Agreement.
6.5 TAXES. United shall reasonably cooperate with the Shareholders with
-----
respect to any matters involving the Shareholders arising out of the
Shareholders' ownership of the Corporation's Stock prior to the Closing,
including matters relating to tax returns and any tax audits, appeals, claims or
litigation with respect to such tax returns or the preparation of such tax
returns. In connection therewith, United shall make available to the
Shareholders such files, documents, books and records of the Corporation for
inspection and copying as may be reasonably requested by the Shareholders and
shall cooperate with the Shareholders with respect to retaining information and
documents which relate to such matters. Shareholders shall reimburse United for
any third-party expenses related to United's cooperation pursuant to this
Section 6.5. With respect to the current IRS audit of Corporation described on
Schedule 3.8(b), Shareholders shall keep Corporation and United informed
relative to the current status of the audit. If the audit issues are not
resolved at the audit or IRS appeals level and a statutory notice of deficiency
is issued, Corporation and United shall be entitled to participate in the
resolution of the matter at its own expense. Shareholders, Corporation and
United will notify the other parties of any potential audit or claim for
federal, state and local taxes by any authority. Shareholders shall undertake
to defend each claim or audit. If the issue cannot be resolved on a nonjudicial
basis, Corporation and United shall be entitled to participate in the resolution
of the matter at its own expense. Shareholders shall not, without United's
consent (which consent shall not be unreasonably withheld), consent to any
proposed change in its
federal, state or local tax reporting position for the Corporation with respect
to any period prior to the Effective Date (including the current IRS audit
described on Schedule 3.8(b)) which could have an impact on the taxes of the
Corporation for any period or periods on or after the Effective Date.
6.6 SHORT YEAR TAX RETURNS. After the Closing Date, the Shareholders shall
----------------------
prepare at their sole cost and expense, all short year federal, state, county,
local and foreign tax returns required by law for the period beginning with the
first day of the Corporation's fiscal year in which the Closing occurs and
ending with the Effective Date. Such return shall be prepared in a financially
responsible and conservative manner and shall be delivered to United together
with all necessary supporting schedules within 90 days following the Closing
Date for its approval (but such approval shall not relieve the Shareholders of
their responsibility for the taxes assessed under these returns). The
Shareholders shall be responsible for the payment of all taxes shown to be due
or that may come to be due on such returns or otherwise relating to the period
prior to the Effective Date. The Shareholders shall also be responsible for all
taxes arising from the conversion of the Corporation from a cash to accrual
basis, if applicable, of reporting whether or not due on such returns or on the
first return filed by United or the Corporation for the period commencing after
the Effective Date. At the time of the delivery of the returns, the
Shareholders shall contemporaneously deliver to United checks payable to the
respective taxing authorities in amounts equal to that shown as being due on the
returns to the extent the amounts were not previously reserved for taxes
included in the Effective Date Current Liabilities. United shall sign
tax returns and cause such returns to be timely filed with the appropriate
authorities. The Shareholders shall be entitled to receive all refunds shown on
said returns which relate to the period prior to the Effective Date and events
occurring prior to the Effective Date and any such refunds received by the
Corporation or United shall be remitted to the Shareholders. The Corporation
shall retain all tax refunds and other tax benefits, if any, relating to the
period on and after the Effective Date and any events occurring on and after the
Effective Date, and the Shareholders shall not have any claim or rights to such
tax refunds or tax benefits, if any.
6.7 GENERAL RELEASE BY SHAREHOLDERS. Each of the Shareholders (and, if
-------------------------------
applicable, such Shareholder in its or his capacity as an officer and/or
director of the Corporation) hereby fully releases and discharges the
Corporation and its directors, officers, agents and employees from all rights,
claims and actions, known or unknown, of any kind whatsoever, which any of such
Shareholders (and, if applicable, such Shareholder in its or his capacity as an
officer and/or director of the Corporation) now has or may hereafter have
against the Corporation and its directors, officers, agents and employees,
arising out of or relating to events arising prior to or on the Closing Date,
except (a) to the extent any such rights, claims or actions are covered by
insurance which was in effect at the time the event giving rise to such rights,
claims or actions occurred, (b) as may be described in written contracts
disclosed in Schedule 6.7 and expressly described and specifically excepted from
this release in Schedule 6.7, (c) compensation as an employee of the Corporation
for current periods expressly described and excepted from such release on
schedule 6.7, and (d) for the obligations of the Corporation arising after the
Closing Date under this Agreement. Specifically, but not by way of limitation,
each of the Shareholders (and, if applicable, such Shareholder in its or his
capacity as an officer and/or director of the Corporation) waives any right of
indemnification, contribution or other recourse
against the Corporation which he now has or may hereafter have against the
Corporation with respect to representations, warranties or covenants made in
this Agreement by the Corporation except to the extent any such right of
indemnification, contribution or other recourse is covered by insurance which
was in effect at the time the event giving rise to such right of
indemnification, contribution or other recourse occurred.
6.8 SHAREHOLDERS' REPRESENTATIVE.
----------------------------
a) In order to administer efficiently the rights and obligations of
the Shareholders under this Agreement, the Shareholders hereby designate
and appoint ▇▇▇▇▇ as the Shareholders' Representative (the "SHAREHOLDERS'
REPRESENTATIVE"), to serve as the Shareholders' agent and attorney-in-fact
for the limited purposes set forth in this Agreement.
a) Each of the Shareholders hereby appoints the Shareholders'
Representative as such Shareholder's agent, proxy and attorney-in-fact,
with full power of substitution, for all purposes set forth in this
Agreement, including, without limitation, the full power and authority on
such Shareholder's behalf (i) to consummate the transactions contemplated
by this Agreement, (ii) to disburse any funds received hereunder to the
Shareholders, (iii) to execute and deliver on behalf of each Shareholder
any amendment or waiver under this Agreement, and to agree to resolution of
all Adjustments pursuant to Section 1.4 or 10, and of all Claims (as
defined in Section 7.5(a)) hereunder, (iv) to retain legal counsel and
other professional services, at the expense of the Shareholders, in
connection with the performance by the Shareholders' Representative of this
Agreement, and (v) to do each and every act and exercise any and all rights
which such Shareholder or Shareholders are permitted or required to do or
exercise under this Agreement and the other agreements, documents and
certificates executed in connection herewith. Each of the Shareholders
agrees that such agency and proxy are coupled with an interest, are
therefore irrevocable without the consent of the Shareholders'
Representative and shall survive the death, bankruptcy or other incapacity
of any Shareholder.
a) Each of the Shareholders hereby agrees that any amendment or waiver
under this Agreement, and any action taken on behalf of the Shareholders to
enforce the rights of the Shareholders under this Agreement, and any action
taken with respect to any Adjustment or Claim (including any action taken
to object to, defend, compromise or agree to the payment of such Adjustment
or Claim), shall be effective if approved in writing by the Shareholders'
Representative and the holders of a majority of the Corporation's Stock
(including any Corporation's Stock held by the Shareholders'
Representative) immediately prior to the Closing, or, in the case of any
amendment or waiver made or given or action taken after the Closing, if so
approved by persons who were the holders of a majority of the Corporation's
Stock immediately prior to the Closing, and that each and every action so
taken shall be binding and conclusive on every Shareholder, whether or not
such Shareholder had notice of, or approved, such amendment or waiver.
a) ▇▇▇▇▇ shall serve as the Shareholders' Representative until he
resigns or is otherwise unable or unwilling to serve. In the event that a
Shareholders' Representative resigns from such position or is otherwise
unable or unwilling to serve, the remaining Shareholders shall select, by
the vote of the holders of a majority of the Corporation's Stock
immediately prior to the Closing, a successor representative to fill such
vacancy, shall provide prompt written notice to United of such change and
such substituted representative shall then be deemed to be the
Shareholders' Representative for all purposes of this Agreement.
6.9 ACCRUED BONUS, PROFIT SHARING AND VACATION. After the Closing, United
------------------------------------------
shall, or United shall cause the Corporation to, honor all accrued bonus, profit
sharing, vacation time, retirement benefits and other employee benefits of the
Corporation's employees (other than ▇▇▇▇▇) existing as of the Effective Date to
the extent included in the financial statements of the Company as of the
Effective Date. All of the Corporation's employees (other than ▇▇▇▇▇) shall be
given credit for past service to the Corporation with respect to all vacation,
profit sharing and employee benefit plans maintained by United for which past
service is relevant.
6.10 REPAYMENT OF EFFECTIVE DATE DEBT AND PAYMENT OF PREPAYMENT PENALTIES. On
--------------------------------------------------------------------
the Closing Date, United shall repay all of the Effective Date Debt and
Prepayment Penalties.
6.11 CONDUCT OF BUSINESS AFTER CLOSING. After the Closing and until expiration
---------------------------------
of the period with respect to which United is required to make payments of
additional contingent Purchase Price pursuant to Section 1.5, the Corporation
will, and United will cause the Corporation to, continue to recognize revenue in
accordance with generally accepted accounting principles, and operate in a
commercially reasonable manner consistent with general industry standards;
provided, that the Corporation may operate, and United may cause the Corporation
to operate, in any manner in the Corporation's or United's sole discretion.
1. INDEMNIFICATION
---------------
7.1 INDEMNITY BY THE SHAREHOLDERS. Each of the Shareholders, jointly and
-----------------------------
severally, but subject to the limitations set forth in Section 7.2, covenants
and agrees that he or she will indemnify and hold harmless United, the
Corporation and their respective directors, officers and agents and their
respective successors and assigns (the "UNITED INDEMNITEES"), from and after the
date of this Agreement, against any and all losses, damages, assessments, fines,
penalties, adjustments, liabilities, claims, deficiencies, costs, expenses
(including specifically, but without limitation, reasonable attorneys' fees and
expenses of investigation), expenditures, including, without limitation, any
"Environmental Site Losses" (as such term is hereinafter defined) identified by
a United Indemnitee in a Claims Notice (as defined in Section 7.5(a)), or
asserted by a United Indemnitee in litigation commenced against the Shareholders
provided that in either case any such Claims Notice shall be given or the
--------
litigation commenced prior to the expiration of the periods set forth in
Section 7.2(c) (irrespective of the date of discovery), with respect to each of
the following contingencies (all, the "SHAREHOLDER INDEMNITY EVENTS"):
1. Any misrepresentation, breach of warranty, or nonfulfillment of any
agreement or covenant (including, if applicable, the Shareholders'
obligation to make payments to United pursuant to Section 1.4(a)) on the
part of the Shareholders or the Corporation pursuant to the terms of this
Agreement or any misrepresentation in or omission from any Exhibit,
Schedule, list, certificate, or other instrument furnished or to be
furnished to United pursuant to the terms of this Agreement, regardless of
whether, in the case of a breach of a representation or a warranty, United
relied on the truth of such representation or warranty or had any knowledge
of any breach thereof.
1. "ENVIRONMENTAL SITE LOSSES," which shall mean any and all losses,
damages (including exemplary damages and penalties), liabilities, claims,
deficiencies, costs, expenses, and expenditures (including, without
limitation, expenses in connection with site evaluations, risk assessments
and feasibility studies) arising out of or required by an interim or final
judicial or administrative decree, judgment, injunction, mandate, interim
or final permit condition or restriction, cease and desist order, abatement
order, compliance order, consent order, clean-up order, exhumation order,
reclamation order or any other remedial action that is required to be
undertaken under federal, state or local law in respect of operating
activities on or affecting any Facility, any UST (whether the existence of
the UST is known or not) or any other site relating to the period such site
was owned, leased, operated or used by the Corporation prior to the Closing
Date, including, but not limited to (i) any actual or alleged violation of
any law or regulation respecting the protection of the environment, or any
other law or regulation respecting the protection of the air, water and
land occurring prior to the Closing Date and (ii) any remedies or
violations, whether by a private or public action, alleged or sought to be
assessed as a consequence, directly or indirectly, of any Release of
pollutants (including odors) or Hazardous Materials from any Facility, any
UST (whether the existence of the UST is known or not) or any other
environmental site resulting from activities thereat occurring prior to the
Closing Date, whether such Release is into the air, water (including
groundwater) or land and whether such Release occurring before, during or
after the Closing Date. The term "RELEASE" as used herein means any
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping or disposing into the ambient
environment.
1. Any liability arising from all claims, suits and proceedings which
are pending against the Corporation as of the Closing Date, all contingent
liabilities and, to the knowledge of the Corporation and the Shareholders,
all claims, suits and proceedings threatened and anticipated against the
Corporation as of the Closing Date, whether listed on Schedule 3.8(b) or
not.
1. Any liability arising from any open years, examinations in
progress, extensions of statute of limitations or claims against the
Corporation relating to federal, state, local or other taxes (including
penalties and interest) for any period or periods prior to and including
the Effective Date, whether listed on Schedule 3.18 or not.
1. All actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses (including specifically, but without limitation,
reasonable attorneys' fees and expenses of investigation) incident to any
of the foregoing.
7.2 LIMITATIONS ON SHAREHOLDERS' INDEMNITIES.
----------------------------------------
a) The obligations of the Shareholders to indemnify the United
Indemnitees as provided in Section 7.1 shall be equal to the amount by
which the cumulative amount of all such liabilities, claims, damages
deficiencies, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses, expenditures and Environmental Site Losses
with respect to any or all Shareholder Indemnity Events exceed $350,000
(the "GENERAL DEDUCTIBLE AMOUNT"); provided, that the amount of any
obligation of indemnity arising pursuant to Section 7.1(a) with respect to
any representation, warranty, agreement or covenant contained in Sections
1.4(a), 3.2 through 3.4, 3.5(b), 3.5(c), 3.18, 5.2(c) (as it relates to
estoppel certificates that have not been delivered as of the Closing Date
by landlords under real estate leases) and 6.6 hereof and pursuant to
Sections 7.1(c) and 7.1(d) shall not be subject to the General Deductible
Amount. The amount of any obligation of indemnity with respect to Section
7.1(b), Section 7.1(c), Section 7.1(d) and Section 7.1(e) (to the extent
Section 7.1(e) relates to Section 7.1(b) and Section 7.1(c)) shall be
increased by all costs incurred by the Corporation or United in connection
with their reasonable efforts to collect any amounts from insurance
companies, if any, providing insurance coverage for events giving rise to
such obligations of indemnity with respect to Section 7.1(b), Section
7.1(c) and Section 7.1(e) (to the extent Section 7.1(e) relates to Section
7.1(b) and Section 7.1(c)), and shall be reduced by the amount of any such
obligation of indemnity which is covered and paid by such insurance
coverage. The Corporation or United shall be required to use only
reasonable efforts to collect any amounts from the applicable insurance
companies, if any, providing such insurance coverage and if the Corporation
or United are unable to obtain insurance coverage payments from the
applicable insurance companies, if any, then the Shareholder's obligation
of indemnity with respect to Section 7.1(b), Section 7.1(c) and Section
7.1(e) (to the extent Section 7.1(e) relates to Section 7.1(b) and Section
7.1(c)) shall not be so reduced.
a) The maximum amount which United can recover as a result of one or
more Shareholder Indemnity Events pursuant to the provisions hereof for
Claims shall not in the aggregate exceed $40,000,000.00; provided, that the
maximum amount United can recover as a result of a Shareholder Indemnity
Event relating to a breach of the Shareholders' payment obligation under
Section 1.4(a) shall not be subject to the limitations set forth in this
Section 7.2(b) and shall not be aggregated with other Shareholder Indemnity
for purposes of this Section 7.2(b).
a) The obligations of the Shareholders under Section 7.1 shall expire,
unless a Claims Notice is given or litigation is commenced, on or prior to
the earlier of the third anniversary of the Closing Date or expiration of
the applicable statute of limitations, except that the obligations of the
Shareholders under Section 7.1 with respect to Section
3.18 and Section 6.6 shall expire on the expiration of the applicable
statute of limitations.
7.3 INDEMNITY BY UNITED. Subject to the limitations set forth in Section 7.4,
-------------------
United covenants and agrees that it will indemnify and hold harmless the
Shareholders (the "SHAREHOLDER INDEMNITEES"), from and after the date of this
Agreement, against any and all losses, damages, assessments, fines, penalties,
adjustments, liabilities, claims, deficiencies, costs, expenses (including
specifically, but without limitation, reasonable attorneys' fees and expenses of
investigation), and expenditures identified by a Shareholder Indemnitee in a
Claims Notice, or asserted by a Shareholder Indemnitee in litigation commenced
against United provided that in either case any such Claims Notice shall be
--------
given or the litigation commenced prior to the expiration of the periods set
forth in Section 7.4(c) (irrespective of the date of discovery), with respect to
each of the following contingencies (all, the "UNITED INDEMNITY EVENTS"):
1. Any misrepresentation, breach of warranty, or nonfulfillment of any
agreement or covenant (including United's obligation to make payments to
the Shareholders pursuant to Sections 1.1, 1.2, 1.4(a), 1.5 and, if
applicable, United's obligation to make additional payments to the
Shareholders pursuant to Section 1.4(a)) on the part of United pursuant to
the terms of this Agreement or any misrepresentation in or omission from
any Exhibit, Schedule, list, certificate or other instrument furnished or
to be furnished to the Shareholders pursuant to the terms of this
Agreement, regardless of whether, in the case of a breach of a
representation or a warranty, the Shareholders relied on the truth of such
representation or warranty or had any knowledge of any breach thereof.
1. All actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses (including specifically, but without limitation,
reasonable attorneys' fees and expenses of investigation) incident to any
of the foregoing.
7.4 LIMITATIONS ON UNITED'S INDEMNITIES.
-----------------------------------
a) The obligations of United to indemnify the Shareholder Indemnitees
as provided in Section 7.3 shall be equal to the amount by which the
cumulative amount of all such liabilities, claims, damages deficiencies,
actions, suits, proceedings, demands, assessments, adjustments, costs and
expenses and expenditures with respect to any or all United Indemnity
Events exceed the General Deductible Amount; provided, that the amount of
any obligation of indemnity arising pursuant to Section 7.3(a) with respect
to any representation, warranty, agreement or covenant contained in
Sections 1.1, 1.2, 1.4(a), 1.5, 4.2 and 4.3 hereof shall not be subject to
the General Deductible Amount.
a) The maximum amount which the Shareholders can recover as a result
of one or more United Indemnity Events pursuant to the provisions hereof
for Claims shall not in the aggregate exceed $40,000,000.00; provided, that
the maximum amount the Shareholders can recover as a result of a United
Indemnity Event relating to a breach of
United's payment obligations under Sections 1.1, 1.2, 1.4(a) and 1.5 shall
not be subject to the limitations set forth in this Section 7.4(b) and
shall not be aggregated with other United Indemnity Events for purposes of
this Section 7.4(b).
a) The obligations of United under Section 7.3 shall expire, unless a
Claims Notice is given or litigation is commenced, on or prior to the
earlier of third anniversary of the Closing Date or the applicable statute
of limitations.
7.5 NOTICE OF INDEMNITY CLAIM.
-------------------------
1. In the event that any claim ("CLAIM") is hereafter asserted against
or arises with respect to any United Indemnitee or Shareholder Indemnitee
(an "INDEMNITEE") as to which such Indemnitee may be entitled to
indemnification hereunder, the United Indemnitee shall notify the
Shareholders or the Shareholder Indemnitee shall notify United, as the case
may be, (collectively, the "INDEMNIFYING PARTY") in writing thereof (the
"CLAIMS NOTICE") within 10 days after (i) receipt of written notice of
commencement of any third party litigation against such Indemnitee, (ii)
receipt by such Indemnitee of written notice of any third party claim
pursuant to an invoice, notice of claim or assessment, against such
Indemnitee, or (iii) such Indemnitee becomes aware of the existence of any
other event in respect of which indemnification may be sought from the
Indemnifying Party (including, without limitation, any inaccuracy of any
representation or warranty or breach of any covenant). The Claims Notice
shall describe the Claim and the specific facts and circumstances in
reasonable detail, and shall indicate the amount, if known, or an estimate,
if possible, of the losses that have been or may be incurred or suffered by
the Indemnitee.
1. The Indemnifying Party may elect to defend any Claim for money
damages where the cumulative total of all Claims (including such Claims) do
not exceed the limit set forth in Section 7.2 at the time the Claim is
made, by the Indemnifying Party's own counsel; provided, however, the
Indemnifying Party may assume and undertake the defense of such a third
party Claim only upon written agreement by the Indemnifying Party that the
Indemnifying Party is obligated to fully indemnify the Indemnitee with
respect to such action. The Indemnitee may participate, at the Indemnitee's
own expense, in the defense of any Claim assumed by the Indemnifying Party.
Without the written approval of the Indemnitee, which approval shall not be
unreasonably withheld, the Indemnifying Party shall not agree to any
compromise of a Claim defended by the Indemnifying Party.
1. If, within 30 days of the Indemnifying Party's receipt of a Claims
Notice, the Indemnifying Party shall not have provided the written
agreement required by Section 7.5(b) and elected to defend the Claim, the
Indemnitee shall have the right to assume control of the defense and/or
compromise of such Claim, and the costs and expenses of such defense,
including reasonable attorneys' fees, shall be added to the Claim. The
Indemnifying Party shall promptly, and in any event within 30 days after
demand therefor, reimburse the Indemnitee for the costs of defending the
Claim, including attorneys' fees and expenses.
1. The party assuming the defense of any Claim shall keep the other
party reasonably informed at all times of the progress and development of
its or their defense of and compromise efforts with respect to such Claim
and shall furnish the other party with copies of all relevant pleadings,
correspondence and other papers. In addition, the parties to this Agreement
shall cooperate with each other and make available to each other and their
representatives all available relevant records or other materials required
by them for their use in defending, compromising or contesting any Claim.
The failure to timely deliver a Claims Notice or otherwise notify the
Indemnifying Party of the commencement of such actions in accordance with
this Section 7.5 shall not relieve the Indemnifying Party from the
obligation to indemnify hereunder but only to the extent that the
Indemnifying Party establishes by competent evidence that it has been
prejudiced thereby.
1. In the event both the Indemnitee and the Indemnifying Party are
named as defendants in an action or proceeding initiated by a third party,
they shall both be represented by the same counsel (on whom they shall
agree), unless such counsel, the Indemnitee, or the Indemnifying Party
shall determine that such counsel has a conflict of interest in
representing both the Indemnitee and the Indemnifying Party in the same
action or proceeding and the Indemnitee and the Indemnifying Party do not
waive such conflict to the satisfaction of such counsel.
7.6 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
------------------------------------------------------
representations and warranties of the parties contained in this Agreement and in
any certificate, Exhibit or Schedule delivered pursuant hereto, or in any other
writing delivered pursuant to the provisions of this Agreement (the
"REPRESENTATIONS AND WARRANTIES") and the liability of the party making such
Representations and Warranties for breaches thereof shall survive the
consummation of the transactions contemplated hereby.
7.7 NO EXHAUSTION OF REMEDIES OR SUBROGATION; RIGHT OF SET OFF. Each of the
----------------------------------------------------------
Shareholders waives any right to require any United Indemnitee to (i) proceed
against the Corporation; (ii) proceed against any other person; or (iii) pursue
any other remedy whatsoever in the power of any United Indemnitee. United may,
but shall not be obligated to, set off against any and all payments due the
Shareholders pursuant to the Hold Back or under any other agreement, any amount
to which any United Indemnitee is entitled to be indemnified hereunder with
respect to any Indemnity Event. Such right of set off shall be separate and
apart from any and all other rights and remedies that the Indemnities may have
against any of the Shareholders or his successors.
1. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS AND UNITED
-----------------------------------------------------------
8.1 RESTRICTIVE COVENANTS OF THE SHAREHOLDERS. As to the Corporation, the
-----------------------------------------
Shareholders and their Affiliates acknowledge that (i) United, as the purchaser
of the Corporation's Stock, is
and will be engaged in the same business as the Corporation (the "BUSINESS");
(ii) the Shareholders and their Affiliates are intimately familiar with the
Business; (iii) the Business is currently conducted in the States of Oregon,
Idaho and Washington and United intends to continue the Business in Oregon,
Idaho and Washington and intends, by acquisition or otherwise, to expand the
Business into other geographic areas of Oregon, Idaho and Washington where it is
not presently conducted; (iv) the Shareholders and their Affiliates have had
access to trade secrets of, and confidential information concerning, the
Business; (v) the agreements and covenants contained in this Section 8.1 are
essential to protect the Business and the goodwill being acquired; and (vi) the
Shareholders and their Affiliates have the means to support themselves and their
dependents other than by engaging in a business substantially similar to the
Business and the provisions of this Section 8 will not impair such ability. Each
of the Shareholders covenants and agrees as set forth in (a), (b), (c), (d) and
(e) below with respect to the Corporation:
1. NON-COMPETE. For a period commencing on the Effective Date and
terminating five years thereafter (the "RESTRICTED PERIOD"), neither the
Shareholders nor any of their Affiliates (other than ▇▇▇▇▇'▇ children)
shall, anywhere in any of the states of Oregon, Idaho and Washington (the
"RESTRICTED TERRITORY"), directly or indirectly, acting individually or as
the owner, shareholder, partner, or employee of any entity, (i) engage in
the operation of any equipment rental, sales or leasing business; (ii)
enter the employ of, or render any personal or consulting services to or
for the benefit of, or assist in or facilitate the solicitation of
customers for, or receive remuneration in the form of salary, commissions
or otherwise from, any business engaged in such activities; (iii) as owner
or lessor of real estate or personal property, rent or lease any facility,
equipment or other assets to any business engaged in the same business as
the Corporation; or (iv) receive or purchase a financial interest in, make
a loan to, or make a gift in support of, any such business in any capacity,
including, without limitation, as a sole proprietor, partner, shareholder,
officer, director, principal, agent, trustee or lender; provided, however,
that any of the Shareholders may own, directly or indirectly, solely as an
investment, securities of any business traded on any national securities
exchange or NASDAQ, provided that none of the Shareholders is a controlling
person of, or a member of a group which controls, such business and further
provided that the Shareholders do not, in the aggregate, directly or
indirectly, own 2% or more of any class of securities of such business.
1. CONFIDENTIAL INFORMATION. During the Restricted Period and
thereafter, the Shareholders and their respective Affiliates (other than
▇▇▇▇▇'▇ children) shall keep secret and retain in strictest confidence, and
shall not use for the benefit of themselves or others (including, but not
limited to, ▇▇▇▇▇'▇ children), all data and information relating to the
Business ("CONFIDENTIAL INFORMATION"), including without limitation, know-
how, trade secrets, customer lists, supplier lists, details of contracts,
pricing policies, operational methods, marketing plans or strategies,
bidding information, practices, policies or procedures, product development
techniques or plans, and technical processes; provided, however, that the
term "Confidential Information" shall not include information that (i) is
or becomes generally available to the public other
than as a result of disclosure by any of the Shareholders, or (ii) is
general knowledge in the equipment rental, sales or leasing business and
not specifically related to the Business.
1. PROPERTY OF THE BUSINESS. All memoranda, notes, lists, records and
other documents or papers (and all copies thereof) relating to the
Business, including such items stored in computer memories, on microfiche
or by any other means, made or compiled by or on behalf of the Shareholders
or the Corporation or made available to them relating to the Business, but
excluding any materials (other than the minute books of the Corporation)
maintained by any attorneys for the Corporation or the Shareholders prior
to the Closing, are and shall be the property of United and have been
delivered or will be delivered or made available to United at the Closing.
1. NON-SOLICITATION. Except for the individuals identified in Schedule
8.1(d) and which individuals will not be contacted without thirty (30)
days' prior written notice to United, without the consent of United, which
may be granted or withheld by United in its discretion, each of the
Shareholders and his or her Affiliates shall not solicit any employees of
the Corporation to leave the employ of the Corporation and join the
Shareholders or any Affiliate in any business endeavor owned or pursued by
the Shareholders.
a) NO DISPARAGEMENT. From and after the Closing Date, the Shareholders
shall not, in any way or to any person or entity or governmental or
regulatory body or agency, denigrate or derogate United or any of its
subsidiaries, or any officer, director or employee, or any product or
service or procedure of any such company whether or not such denigrating or
derogatory statements shall be true and are based on acts or omissions
which are learned by the Shareholders from and after the date hereof or on
acts or omissions which occur from and after the date hereof, or otherwise.
A statement shall be deemed denigrating or derogatory to any person or
entity if it adversely affects the regard or esteem in which such person or
entity is held by investors, lenders or licensing, rating, or regulatory
entities. Without limiting the generality of the foregoing, none of the
Shareholders shall, directly or indirectly in any way in respect of any
such company or any such directors or officers, communicate with, or take
any action which is adverse to the position of any such company with any
person, entity or governmental or regulatory body or agency who or which
has dealings or prospective dealings with any such company or jurisdiction
or prospective jurisdiction over any such company. This paragraph does not
apply to the extent that testimony is required by legal process, provided
that United has received not less than five days' prior written notice of
such proposed testimony or such lesser notice as the Shareholders shall
have received.
8.2 RESTRICTIVE COVENANT OF UNITED. United covenants and agrees that from and
------------------------------
after the Closing Date, the directors and the executive officers (as defined
under Rule 405 under the Act) of United shall not, in any way or to any person
or entity or governmental or regulatory body or agency, denigrate or derogate
the Shareholders (or any officer, general or limited partner or employee of I.S.
Properties), or any product or service or procedure of the
Shareholder whether or not such denigrating or derogatory statements shall be
true and are based on acts or omissions which are learned by United from and
after the date hereof or on acts or omissions which occur from and after the
date hereof, or otherwise. A statement shall be deemed denigrating or derogatory
to any person or entity if it adversely affects the regard or esteem in which
such person or entity is held by investors, lenders or licensing, rating, or
regulatory entities. Without limiting the generality of the foregoing, the
directors and executive officers of United shall not, directly or indirectly in
any way in respect of any Shareholder (or any officer, general or limited
partner or employee of I.S. Properties) communicate with, or take any action
which is adverse to the position of any Shareholder (or any officer, general or
limited partner or employee of I.S. Properties) with any person, entity or
governmental or regulatory body or agency who or which has dealings or
prospective dealings with any such Shareholder or jurisdiction or prospective
jurisdiction over any such Shareholder. This paragraph does not apply to the
extent that testimony is required by legal process, provided that the applicable
Shareholder has received not less than five days' prior written notice of such
proposed testimony or such lesser notice as United shall have received.
8.3 RIGHTS AND REMEDIES UPON BREACH. If any of the Shareholders or any of
-------------------------------
their Affiliates, or any of the directors or executive officers of United, as
the case may be, breaches, or threatens to commit a breach of, any of the
provisions of Section 8.1 or Section 8.2, respectively (the "RESTRICTIVE
COVENANTS"), United or the Shareholders, as the case may be, shall have the
following rights and remedies, each of which rights and remedies shall be
independent of the others and severally enforceable, and each of which is in
addition to, and not in lieu of, any other rights and remedies available to
United or the Shareholders, as the case may be, at law or in equity:
1. SPECIFIC PERFORMANCE. (i) The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to United and that
money damages would not provide an adequate remedy to United. Accordingly,
in addition to any other rights or remedies, United shall be entitled to
injunctive relief to enforce the terms of the Restrictive Covenants and to
restrain the Shareholders from any violation thereof.
(ii) The right and remedy to have the Restrictive Covenants
specifically enforced by any court of competent jurisdiction, it being
agreed that any breach or threatened breach of the Restrictive Covenants
would cause irreparable injury to the Shareholders and that money damages
would not provide an adequate remedy to the Shareholders. Accordingly, in
addition to any other rights or remedies, the Shareholders shall be
entitled to injunctive relief to enforce the terms of the Restrictive
Covenants and to restrain United from any violation thereof.
1. ACCOUNTING. The right and remedy to require the Shareholders to
account for and pay over to United all compensation, profits, monies,
accruals, increments or other benefits derived or received by the
Shareholders as the result of any transactions constituting a breach of the
Restrictive Covenants.
1. SEVERABILITY OF COVENANTS. Each of the Shareholders and United
acknowledges and agrees that the Restrictive Covenants are reasonable and
valid in geographical and temporal scope and in all other respects. If any
court determines that any of the Restrictive Covenants, or any part
thereof, is invalid or unenforceable, the remainder of the Restrictive
Covenants shall not thereby be affected and shall be given full effect,
without regard to the invalid portions.
1. BLUE-PENCILING. If any court determines that any of the Restrictive
Covenants, or any part thereof, is unenforceable because of the duration or
geographic scope of such provision, such court shall reduce the duration or
scope of such provision, as the case may be, to the extent necessary to
render it enforceable and, in its reduced form, such provision shall then
be enforced.
1. ENFORCEABILITY IN JURISDICTION. United and the Shareholders intend
to and hereby confer jurisdiction to enforce the Restrictive Covenants upon
the courts of any jurisdiction within the geographic scope of the
Restrictive Covenants. If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants unenforceable by reason of the
breadth of such scope or otherwise, it is the intention of United and the
Shareholders that such determination not bar or in any way affect United's
or the Shareholders' right to the relief provided above in the courts of
any other jurisdiction within the geographic scope of the Restrictive
Covenants as to breaches of such covenants in such other respective
jurisdictions, such covenants as they relate to each jurisdiction being,
for this purpose, severable into diverse and independent covenants.
1. GENERAL
9.1 ASSIGNMENT. This Agreement shall be binding upon and shall inure to the
----------
benefit of the parties hereto, the successors or assigns of United and the
heirs, legal representatives or assigns of the Shareholders; provided, however,
that any such assignment shall be subject to the terms of this Agreement and
shall not relieve the assignor of its, his or her responsibilities under this
Agreement.
9.2 COUNTERPARTS. This Agreement may be executed in two or more counterparts,
------------
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
9.3 NOTICES. All notices, requests, demands and other communications hereunder
-------
shall be deemed to have been duly given if in writing and either delivered
personally, sent by facsimile transmission or by air courier service, or mailed
by postage prepaid registered or certified U.S. mail, return receipt requested,
to the addresses designated below or such other addresses as may be designated
in writing by notice given hereunder, and shall be effective upon personal
delivery or facsimile transmission thereof or upon delivery by registered or
certified U.S. mail or one business day following deposit with an air courier
service:
If to the Shareholders: At the addresses set forth on Schedule 3.2.
With a copy to: D. ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
D. ▇▇▇▇ ▇▇▇▇▇▇▇▇ & Associates, P.A.
The Golden Eagle at Forest River
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to United: United Rentals, Inc.
Four ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
9.4 ATTORNEYS' FEES. In the event of any dispute or controversy between United
---------------
on the one hand and the Corporation or the Shareholders on the other hand
relating to the interpretation of this Agreement or to the transactions
contemplated hereby, the prevailing party shall be entitled to recover from the
other party reasonable attorneys' fees and expenses incurred by the prevailing
party. Such award shall include post-judgment attorney's fees and costs.
9.5 APPLICABLE LAW AND VENUE. This Agreement shall be governed by and
------------------------
construed in accordance with the laws of the State of Washington without regard
to its conflict of laws provisions. The parties hereto agree that any suit,
action or proceeding seeking to enforce the decision of the arbitrator rendered
pursuant to Section 10 hereof or any other suit action or proceeding relating to
this Agreement shall be instituted in the United States District Court or
Washington State Court in Seattle, Washington.
9.6 PAYMENT OF FEES AND EXPENSES. Whether or not the transactions herein
----------------------------
contemplated shall be consummated, each party hereto will pay its own fees,
expenses and disbursements incurred in connection herewith and all other costs
and expenses incurred in the performance
and compliance with all conditions to be performed hereunder (including, in the
case of the Shareholders, any such fees, expenses and disbursements paid or
accrued by, or charged to, the Corporation).
9.7 INCORPORATION BY REFERENCE. All Schedules and Exhibits attached hereto are
--------------------------
incorporated herein by reference as though fully set forth at each point
referred to in this Agreement.
9.8 CAPTIONS. The captions in this Agreement are for convenience only and
--------
shall not be considered a part hereof or affect the construction or
interpretation of any provisions of this Agreement.
9.9 NUMBER AND GENDER OF WORDS. Whenever the singular number is used herein,
--------------------------
the same shall include the plural where appropriate, and shall apply to all of
such number, and to each of them, jointly and severally, and words of any gender
shall include each other gender where appropriate.
9.10 ENTIRE AGREEMENT. This Agreement (including the Schedules and Exhibits
----------------
hereto) and the other documents delivered pursuant hereto constitute the entire
Agreement and understanding between the Corporation, the Shareholders and United
and supersedes any prior agreement and understanding relating to the subject
matter of this Agreement. This Agreement may be modified or amended only by a
written instrument executed by the Corporation, the Shareholders and United
acting through its officers, thereunto duly authorized by its Board of
Directors.
9.11 WAIVER. No waiver by any party hereto at any time of any breach of, or
------
compliance with, any condition or provision of this Agreement to be performed by
any other party hereto may be deemed a waiver of similar or dissimilar
provisions or conditions at the same time or at any prior or subsequent time.
9.12 CONSTRUCTION. The language in all parts of this Agreement must be in all
------------
cases construed simply according to its fair meaning and not strictly for or
against any party. Unless expressly set forth otherwise, all references herein
to a "DAY" are deemed to be a reference to a calendar day. All references to
"BUSINESS DAY" mean any day of the year other than a Saturday, Sunday or a
public or bank holiday in Connecticut or Washington. Unless expressly stated
otherwise, cross-references herein refer to provisions within this Agreement and
are not references to the overall transaction or to any other document.
1. ARBITRATION AND DISPUTE RESOLUTION. THE PARTIES WAIVE THEIR RIGHT TO
SEEK REMEDIES IN COURT, INCLUDING ANY RIGHT TO A JURY TRIAL, WITH RESPECT TO ANY
DISPUTE CONCERNING DETERMINATION OF THE ADJUSTMENTS TO THE PURCHASE PRICE AND
DETERMINATION OF THE ADDITIONAL CONTINGENT PURCHASE PRICE UNDER SECTIONS 1.3,
1.4, 1.5 AND 1.6 ONLY. The parties agree that in the event United and the
Shareholders' Representative are unable to resolve a dispute concerning
determination of the Adjustments to the Purchase Price, such dispute shall be
resolved exclusively by arbitration to be conducted only in Seattle, Washington
in accordance with the rules of the Judicial Arbitration and Mediation Service
("JAMS")
applying the laws of Washington. The parties agree that such arbitration shall
be conducted by a retired judge who is experienced in dispute resolution
regarding business acquisitions and accounting matters, that discovery shall not
be permitted except as required by the rules of JAMS, that the arbitration award
shall not include factual findings or conclusions of law, and that no punitive
damages shall be awarded. The parties understand that any party's right to
appeal or to seek modification of any ruling or award of the arbitrator is
severely limited. Any award rendered by the arbitrator shall be final and
binding, and judgment may be entered on it in any court of competent
jurisdiction as otherwise provided by law. The preceding portion of this Section
does not apply to any dispute relating to any other provision of the Agreement,
or to any other aspect of the transactions contemplated herein, and such other
disputes may be resolved by the parties by any means available, including
without limitation court action and a jury trial. The parties expressly do not
waive any right to pursue any remedy available with respect to any dispute other
than one concerning determination of the Adjustments to the Purchase Price and
determination of the additional contingent Purchase Price under Sections 1.3,
1.4, 1.5 and 1.6, and expressly do not waive the right to trial with respect any
other dispute.
1. GLOSSARY. The definitions of the terms used below can be found at the
--------
Section indicated:
Term Section
---- -------
Act Section 3.39(a)
Affiliate Section 3.11(a)
Balance Sheet Date Section 3.7
▇▇▇▇▇ Eighth Whereas
▇▇▇▇▇ Employment Agreement Section 5.1(g)
business day Section 9.12
Business Section 8.1
Claim Section 7.5(a)
Claims Notice Section 7.5(a)
Closing Section 2
Closing Date Section 2
Code Section 3.17(c)
Confidential Information Section 8.1(b)
Corporate Property Section 3.12(b)
Corporation Preamble
Corporation's Stock Third Whereas
day Section 9.12
Development Agreement Seventh Whereas
Effective Date Section 2
Effective Date Debt Section 1.3(a)
Effective Date Accounts Receivable Section 1.3(b)
Effective Date Liabilities Section 1.3(c)
Effective Date Working Capital Section 1.3(b)
Environmental Laws Section 3.24
Environmental Site Losses Section 7.1(b)
Equipment Section 1.4(b)
Equipment Adjustment Section 1.4(b)
ERISA Section 3.17(a)
Escrow Agent Section 1.4(a)
Escrow Agreement Section 1.4(a)
Excluded Assets Section 1.6
Facilities Section 3.10(b)
Facility Section 3.10(b)
Facility Property Section 3.10(b)(iii)
Financial Statements Section 3.7
Four S Fifth Whereas
General Deductible Amount Section 7.2(a)
Golden Parachute Payment Section 3.17(c)
Governmental Permits Section 3.10(a)
Hazardous Material Section 3.24
Hazardous Waste Section 3.24
Hold Back Section 1.4(a)
Indemnitee Section 7.5(a)
Indemnifying Party Section 7.5(a)
▇▇▇▇▇ Preamble
▇▇▇▇▇ Employment Agreement Section 5.1(d)
I.S. Properties Preamble
▇▇▇▇▇ Eighth Whereas
▇▇▇▇▇ Employment Agreement Section 5.1(e)
JAMS Section 10
knowledge Section 3.36
Landlord Fifth Whereas
Laws Section 3.24
Leases Fifth Whereas
Liabilities Adjustment Section 1.4(c)
Liabilities Value Section 1.4(c)
March 31 Accounts Receivable Section 1.3(b)
March 31 Current Assets Section 1.3(b)
March 31 Current Liabilities Section 1.3(b)
March 31 Working Capital Section 1.3(b)
Permitted Liens Section 3.12(c)
Prospectus Section 3.39(c)
Purchase Option Assignment Agreement Sixth Whereas
Purchase Price Section 1.1
Recipient Section 3.17(c)
Redeemed Stock Second Whereas
Registration Rights Agreement Section 5.1(h)
Release Section 7.1(b)
Rental Asset Listing Section 1.4(b)
Rental Ready Section 1.4(b)
Representations and Warranties Section 7.6
Required Governmental Consents Section 3.10(a)
Restricted Period Section 8.1(a)
Restricted Territory Section 8.1(a)
Restrictive Covenants Section 8.3
SEC Section 3.39(c)
Shareholders Preamble
Shareholder Indemnitees Section 7.3
Shareholder Indemnity Events Section 7.1
Shareholders' Representative Section 6.8(a)
▇▇▇▇▇ Eighth Whereas
▇▇▇▇▇ Employment Agreement Section 5.1(f)
Target Market Section 1.5
Trailing Twelve Months Revenue Section 1.5
United Preamble
United Indemnitees Section 7.1
United Indemnity Events Section 7.3
United Stock Section 1.2
UST Section 3.26
Working Capital Adjustment Section 1.4(d)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by persons
thereunto duly authorized as of the date first above written.
THE CORPORATION: POWER RENTS, INC.
By:
---------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President
THE SHAREHOLDERS: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
I.S. PROPERTIES, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
General Partner
UNITED: UNITED RENTALS, INC.
By:
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▇▇▇▇ ▇▇▇▇▇, Vice Chairman and
Chief Acquisition Officer