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EXHIBIT 10.7
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STOCK PURCHASE AGREEMENT
AMONG
RENTX INDUSTRIES, INC.
AND THE
SHAREHOLDERS
OF
A TO Z RENTALS AND SALES, INC.
DATED AS OF MAY 29, 1996
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TABLE OF CONTENTS
Page
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1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 3
1.1. Defined Terms . . . . . . . . . . . . . . . . . . 3
2. Purchase and Sale. . . . . . . . . . . . . . . . . . . . . . 11
2.1. Basic Transaction . . . . . . . . . . . . . . . . . 11
2.2. Purchase Price; Payment . . . . . . . . . . . . . . 11
2.3. Sales Taxes, Etc. . . . . . . . . . . . . . . . . . 12
2.4. Closing; Effective Date . . . . . . . . . . . . . . 12
2.5. Deliveries at the Closing . . . . . . . . . . . . . 12
3. Representations and Warranties. . . . . . . . . . . . . . . 12
3.1. Representations and Warranties of the Shareholders . 12
3.2. Representations and Warranties of the Buyer . . . . 30
3.3. Survival of Representations . . . . . . . . . . . . 31
3.4. Representations as to Knowledge . . . . . . . . . . 31
4. Pre-Closing Covenants . . . . . . . . . . . . . . . . . . . 31
4.1. General . . . . . . . . . . . . . . . . . . . . . . 31
4.2. Operation of Business . . . . . . . . . . . . . . . 32
4.3. Preservation of Business . . . . . . . . . . . . . . 32
4.4. Full Access . . . . . . . . . . . . . . . . . . . . 32
4.5. Notice of Developments . . . . . . . . . . . . . . . 32
4.6. Exclusivity . . . . . . . . . . . . . . . . . . . . 33
4.7. Announcements . . . . . . . . . . . . . . . . . . . 33
4.8. Confirmatory Conveyance . . . . . . . . . . . . . . 33
4.9. Closing Date Liabilities and Distribution. . . . . . 33
5. Post-Closing Covenants . . . . . . . . . . . . . . . . . . . 34
5.1. Further Assurances . . . . . . . . . . . . . . . . . 34
5.2. Transition . . . . . . . . . . . . . . . . . . . . . 34
5.3. Cooperation . . . . . . . . . . . . . . . . . . . . 34
5.4. Confidentiality . . . . . . . . . . . . . . . . . . 34
5.5. Post-Closing Announcements . . . . . . . . . . . . . 34
5.6. Financial Statements . . . . . . . . . . . . . . . . 34
5.7. Termination of Obligations . . . . . . . . . . . . . 35
6. Conditions to Closing . . . . . . . . . . . . . . . . . . . 35
6.1. Conditions to Obligation of the Buyer . . . . . . . 35
6.2. Conditions to Obligation of the Shareholders . . . . 37
(i)
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7. Remedies for Breaches of This Agreement . . . . . . . . . . 38
7.1. Indemnification Provisions for Benefit of the Buyer
and the Company . . . . . . . . . . . . . . . . . . 38
7.2. Indemnification Provisions for Benefit of the
Shareholders . . . . . . . . . . . . . . . . . . . . 40
7.3. Matters Involving Third Parties . . . . . . . . . . 41
7.4. Right of Offset. . . . . . . . . . . . . . . . . . . 42
7.5. Other Remedies . . . . . . . . . . . . . . . . . . . 42
8. Termination . . . . . . . . . . . . . . . . . . . . . . . . 42
8.1. Termination of Agreement . . . . . . . . . . . . . . 42
8.2. Effect of Termination . . . . . . . . . . . . . . . 42
8.3. Confidentiality . . . . . . . . . . . . . . . . . . 43
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 43
9.1. No Third-Party Beneficiaries . . . . . . . . . . . . 43
9.2. Entire Agreement . . . . . . . . . . . . . . . . . . 43
9.3. Succession and Assignment . . . . . . . . . . . . . 43
9.4. Counterparts . . . . . . . . . . . . . . . . . . . . 43
9.5. Headings . . . . . . . . . . . . . . . . . . . . . . 43
9.6. Notices . . . . . . . . . . . . . . . . . . . . . . 43
9.7. Governing Law . . . . . . . . . . . . . . . . . . . 44
9.8. Amendments and Waivers . . . . . . . . . . . . . . . 44
9.9. Severability . . . . . . . . . . . . . . . . . . . . 44
9.10. Expenses . . . . . . . . . . . . . . . . . . . . . . 44
9.11. Arbitration . . . . . . . . . . . . . . . . . . . . 45
9.12. Construction . . . . . . . . . . . . . . . . . . . . 45
9.13. Incorporation of Exhibits . . . . . . . . . . . . . 45
9.14. Shareholders' Agent. . . . . . . . . . . . . . . . . 45
Exhibits:
Exhibit 1.1(a) Exhibit 3.1(b) Exhibit 3.1(r)
Exhibit 1.1(b) Exhibit 3.1(c) Exhibit 3.1(s)
[EXHIBIT 1.1(C) Exhibit 3.1(e) Exhibit 3.1(t)
INTENTIONALLY OMITTED] Exhibit 3.1(f) Exhibit 3.1(v)
Exhibit 1.1(d) Exhibit 3.1(g) Exhibit 3.1(x)
Exhibit 1.1(e) Exhibit 3.1(h) Exhibit 3.1(y)
Exhibit 1.1(f) Exhibit 3.1(j) Exhibit 3.1(z)
Exhibit 1.1(g) Exhibit 3.1(k) Exhibit 3.1(aa)
Exhibit 1.1(h) Exhibit 3.1(k)(ii) Exhibit 3.1(ab)
Exhibit 1.1(i) Exhibit 3.1(k)(iii) Exhibit 3.1(ac)
Exhibit 1.1(j) Exhibit 3.1(l) Exhibit 4.2
Exhibit 2.2 Exhibit 3.1(m) Exhibit 6.1(i)
Exhibit 3.1(a) Exhibit 3.1(p) Exhibit 6.2(f)
Exhibit 3.1(q)(ii)
(ii)
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This Stock Purchase Agreement (this "Agreement") is entered
into as of May 29, 1996 among RentX Industries, Inc., a Delaware corporation
(the "Buyer"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, husband and wife (each,
an "Individual Shareholder" and collectively, the "Individual Shareholders"),
and ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ Charitable Remainder Unitrust, ▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇▇ Charitable Remainder Annuity Trust, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Charitable Trust,
▇▇▇▇▇ ▇▇▇▇▇▇▇ Charitable Trust, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Charitable Remainder Unitrust,
▇▇▇▇▇ ▇▇▇▇▇▇▇ Charitable Remainder Unitrust and ▇▇▇▇ ▇▇▇▇▇ Charitable Remainder
Unitrust (each, a "Trust Shareholder" and collectively, the "Trust
Shareholders").
Recitals
The Shareholders own, in the aggregate, all of the issued and
outstanding capital stock of A to Z Rentals and Sales, Inc., a Washington
corporation (the "Company"). The Shareholders desire to sell, and the Buyer
desires to purchase, all of such capital stock as provided in this Agreement.
Agreement
NOW, THEREFORE, in consideration of the premises, the mutual
representations, warranties and covenants set forth herein and other good and
valuable consideration, the receipt and sufficiency of which is acknowledged,
the parties agree as follows:
1. Definitions.
1.1. Defined Terms. The following terms used in this
Agreement shall have the meanings designated below:
Adverse Consequences means all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, penalties, fines,
costs, amounts paid in settlement, Liabilities, obligations, Taxes, liens,
losses, damages, costs, expenses and fees (including court costs and fees and
expenses of counsel and other experts), plus interest at a rate equal to the
prime rate quoted from time to time by Norwest Bank Colorado, N.A. plus two
percentage points accrued from the date any Adverse Consequence becomes a
liability of a party as determined in accordance with GAAP.
Affiliate means, with respect to any Person, (a) any
Person in which such Person directly or indirectly holds an equity or profits
interest, (b) any Person controlling, controlled by or under common control
with such Person or (c) any Person to whom such Person provides or has provided
financial assistance. As used in this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities or voting interests, by contract or otherwise.
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Affiliated Group means any affiliated group within
the meaning of Code Section 1504 or any similar group defined under a similar
provision of state, local or foreign law.
Assets means all right, title and interest of the
Company in and to all of the tangible and intangible assets of the Company
except the Excluded Assets, but including, without limitation, all of its (a)
tangible personal property (such as machinery, equipment, inventories,
supplies, manufactured and purchased parts, furniture, automobiles (if any),
trucks, tractors, trailers and tools), (b) all real property (other than the
Excluded Real Property), leaseholds, improvements, fixtures, fittings,
easements, rights-of-way and appurtenances, including, without limitation, the
Company Improvements, Fixtures and Fittings, (c) Intellectual Property and
goodwill, corporate names and tradenames, licenses and sublicenses granted and
obtained with respect thereto and rights thereunder, remedies against
infringements thereof, and rights to protection of interests therein, (d)
agreements, contracts, instruments, security interests, guaranties, other
similar arrangements, and rights thereunder, (e) accounts, notes and other
receivables, (f) securities, (g) $1,600 in cash ($400 of which will be left in
the cash register of each of the Company's four stores on the Premises as of
the Closing), (h) claims, deposits, payments, refunds, causes of action, choses
in action, rights of recovery, rights of set-off and rights of recoupment
(including any such item relating to the payment of Taxes), (i) franchises,
approvals, Permits, licenses, orders, registrations, certificates, variances,
and similar rights obtained from governments and governmental agencies and (j)
books, records, ledgers, files, documents, correspondence, lists, drawings,
specifications, creative materials, advertising and promotional materials,
studies, reports, and other printed or written materials.
Benefit Arrangement means any employment, severance
or other similar contract, arrangement or policy and each plan or agreement
(written or oral) providing through insurance coverage or through any self-
insured arrangement, workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits, deferred
compensation, profit sharing, bonuses, stock options, stock appreciation rights
or other forms of incentive compensation, reduced interest or interest free
loans, mortgages, relocation assistance or post-retirement insurance,
compensation or other benefits (including, without limitation any contracts,
arrangements, or understandings relating to the sale of the Company) that (a)
is not an Employee Benefit Plan, (b) is entered into, maintained or contributed
to by the Company, and (c) benefits any employee or former employee of the
Company or any relative thereof.
Business means all business conducted by the Company
at any time within 36 months prior to the Closing.
Closing has the meaning given it in Section 2.4.
Closing Balance Sheet means the balance sheet of the
Company as of the Closing Date, after giving effect to the transactions
required by Section 4.8, prepared in
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accordance with GAAP and audited by the Buyer's certified public accounting
firm at the Buyer's expense.
Closing Date has the meaning given it in Section 2.4.
Closing Date Distribution has the meaning given it in
Section 4.9.
Closing Date Liabilities has the meaning given it in
Section 4.9.
Closing Date Trade Payables means trade payables of
the Company incurred in the ordinary course of business on or prior to the
Closing Date, which are in existence as of the Closing Date but are not then
due and payable in accordance with their normal stated terms consistent with
past practice (but without deferral, extension, modification, delay or
postponement), but excluding in all cases any trade payables of the Company to
any Shareholder or Affiliate or relative thereof, as set forth on the Closing
Balance Sheet.
Code means the Internal Revenue Code of 1986, as
amended.
Company Improvements, Fixtures and Fittings has the
meaning set forth in the definition of Excluded Real Property.
Company Transaction Expenses has the meaning set forth
in Section 9.10.
Confidential Information means any information
concerning the subject Person or the subject Person's business, products,
financial condition, prospects and affairs that is not already generally
available to the public.
Current Rental Equipment has the meaning set forth in
Section 4.2.
Current Rental Equipment Decreases has the meaning
set forth in Section 4.2.
Current Rental Equipment Receivable means any note or
account receivable of the Company which arose or arises as consideration for
the sale by the Company of any Current Rental Equipment as set forth on Exhibit
4.2.
▇▇▇▇▇▇▇ Lease has the meaning set forth in the
definition of Premises Leases.
Employee Benefit Plan means any (a) nonqualified
deferred compensation or retirement plan or arrangement which is an Employee
Pension Benefit Plan, (b) qualified defined contribution retirement plan or
arrangement which is an Employee Pension Benefit Plan, (c) qualified defined
benefit retirement plan or arrangement which is an Employee
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Pension Benefit Plan (including any Multiemployer Plan) or (d) Employee Welfare
Benefit Plan.
Employee Pension Benefit Plan has the meaning set
forth in ERISA Section 3(2).
Employee Welfare Benefit Plan has the meaning set
forth in ERISA Section 3(1).
Employment Agreements means the Employment and
Noncompetition Agreements between the Buyer and each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ in the forms of Exhibits 1.1(a) and 1.1(b) to be entered
into at the Closing.
Encumbrance means any mortgage, pledge, conditional
sale agreement, charge, claim, interest of another, lien, security interest,
title defect or other encumbrance.
Environmental Liability means any Liability or
Adverse Consequence directly or indirectly arising from, resulting from,
relating to or caused by (a) any condition, circumstance or activity
previously, now or hereafter existing on, in or under or previously, now or
hereafter affecting any of the Premises or any other real property or
facilities previously owned, occupied, used or operated by the Company or any
predecessor at any time, regardless of the source or cause thereof, (b) the
use, presence, generation, handling, remediation, storage, treatment, removal,
transportation, release or disposal of any Hazardous Material by the Company or
any predecessor at any time, (c) the failure by the Company, any predecessor or
any lessor to comply with any Environmental Obligation, (d) the requirements of
any Governmental Authority or other Person that any studying, testing,
monitoring, reporting or remediation of environmental conditions be undertaken,
(e) any action, proceeding or claim of a Governmental Authority or any other
Person asserted in connection with any of the foregoing and (f) any impairment
following the Closing Date to the value or use of the Premises or of the
Business arising from, resulting from, relating to or caused by any of the
foregoing.
Environmental Obligations means all federal, state
and local laws, regulations, rules, orders, permits, licenses, approvals,
ordinances, judgments, injunctions, directives, and common law relating to land
use, public health, safety, welfare or the environment or to the impact of
business and activities upon public health, safety, welfare, land use or the
environment, including, but not limited to, all requirements of the following
federal statutes, as amended, and regulations promulgated pursuant thereto as
in effect from time to time: the Clean Air Act; the Clean Water Act; the
Resource Conservation and Recovery Act; the Safe Drinking Water Act; the
Federal Insecticide, Fungicide and Rodenticide Act; the National Environmental
Policy Act; the Comprehensive Environmental Response, Compensation, and
Liability Act; OSHA; the Emergency Planning and Community Right-to-Know Act;
the Toxic Substances Control Act; and any state or local law counterpart or
supplement to such Acts.
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ERISA means the Employee Retirement Income Security
Act of 1974, as amended, and any regulations, rules or orders promulgated
thereunder.
ERISA Controlled Group means any Persons which
together are treated as a single employer under Section 4001(b)(i) of ERISA or
Sections 4014(b), (c), (m) or (o) of the Code.
Excluded Assets means (a) all cash of the Company on
hand as of the Closing Date (other than the $1,600 described in clause (g) of
the definition of Assets) and (b) the Excluded Real Property.
Excluded Real Property means the land and buildings
comprising the Premises (and the easements, rights of way and appurtenances
thereto), and the improvements and fixtures located thereon or attached thereto
which are identified on Exhibit 1.1(d) (such improvements and fixtures
identified on Exhibit 1.1(d) are referred to collectively as the "Individual
Shareholders Improvements and Fixtures"); provided, however, that all
improvements, fixtures and fittings located thereon or attached thereto which
are not the Individual Shareholders Improvements and Fixtures shall be owned by
the Company as of the Closing Date and shall be the subject of the confirmatory
conveyance to the Company prior to the Closing Date as required by Section 4.8
(the improvements, fixtures and fittings which are to be so owned by the
Company as of the Closing Date are referred to collectively as the "Company
Improvements, Fixtures and Fittings").
GAAP means generally accepted accounting principles as
in effect from time to time in the United States.
Governmental Authority means (a) the United States of
America, (b) any state, commonwealth, territory or possession of the United
States of America and any political subdivision thereof (including counties,
municipalities and the like), (c) any foreign (as to the United States of
America) sovereign entity and any political subdivision thereof or (d) any
agency, authority or instrumentality of any of the foregoing, including,
without limitation, any court, tribunal, department, bureau, commission or
board.
Hazardous Materials means any material, chemical,
compound, mixture, substance or waste which is regulated by any Governmental
Authority having jurisdiction over any premises, including but not limited to
(a) any oil or petroleum compounds, flammable substances, explosives,
radioactive materials, or any other materials or pollutants which pose a hazard
to the premises or to persons in or about the premises or which cause the
premises to be in violation of any Legal Requirement, (b) asbestos,
asbestos-containing material or presumed asbestos-containing material of any
kind or character, (c) polychlorinated biphenyls, (d) any materials or
substances designated as "hazardous substances" pursuant to Section 311 of the
Clean Water Act, 33 U.S.C. Section 1251 et seq., (e) "economic poison," as
defined in the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
Section 135 et seq., (f) "chemical substance," "new chemical substance," or
"hazardous chemical substance or mixture" pursuant
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to Sections 3, 6 and 7 of the Toxic Substances Control Act, 15 U.S.C. Section
2601 et seq., (g) "hazardous substances" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. Section 9601 et seq., and (h) "hazardous waste" pursuant to Section
1004 of the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et
seq.
Individual Shareholders Improvements and Fixtures has
the meaning set forth in the definition of Excluded Real Property.
Intellectual Property means (a) all inventions
(whether patentable or unpatentable and whether or not reduced to practice),
all improvements thereto, and all patents, patent applications and patent
disclosures, together with all reissuances, continuations, continuations-in-
part, revisions, extensions and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names and corporate names, together
with all translations, adaptations, derivations and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith, (c) all copyrightable
works, all copyrights and all applications, registrations and renewals in
connection therewith, (d) all mask works and all applications, registrations
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including data and related documentation), (g) all
other proprietary rights and (h) all copies and tangible and intangible
embodiments thereof (in whatever form or medium).
Interim Period Receivables has the meaning given it in
Section 3.1(n).
Inventory means tangible personal property owned,
leased or otherwise held by the Company for rental, lease, sale or use in the
ordinary course of business.
Latest Balance Sheet has the meaning given it in
Section 3.1(f).
Leases means all leases pursuant to which the Company
is the lessee of any property.
Legal Requirement means any constitution, statute,
ordinance, code, law, rule, regulation, order or other requirement, standard or
procedure enacted, adopted or applied by any Governmental Authority, including
judicial decisions applying common law or interpreting any other Legal
Requirement.
Liability means any liability or obligation (whether
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued,
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whether liquidated or unliquidated, and whether due or to become due),
including any liability for Taxes.
Multiemployer Plan has the meaning set forth in ERISA
Section 3(37).
New Rental Equipment has the meaning set forth in
Section 4.2.
New Rental Equipment Increases has the meaning set
forth in Section 4.2.
1996 Unpaid Personal Property Taxes means the amount
of those personal property taxes set forth on Exhibit 1.1(e) assessed against
the Company in 1995 by any Governmental Authority of the State of Washington in
respect of 1996 but which are not due and payable in whole or in part until
October, 1996 (it being understood that the Company has timely paid the amount
of such personal property taxes which were due and payable in April, 1996).
1997 Personal Property Taxes means those personal
property taxes assessed against the Company in 1996 by any Governmental
Authority of the State of Washington in respect of 1997 but which are not due
and payable in whole or in part until 1997.
Noncompetition Agreement means the Noncompetition
Agreement among the Buyer, on the one hand, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and the Trust Shareholders, on the other hand, in the form of Exhibit
1.1(f) to be entered into at the Closing.
Orders means all applicable judgments, injunctions,
orders, decrees, notices of violation or other requirements of any Governmental
Authority or arbitrator having jurisdiction in the matter, including a
bankruptcy court or trustee.
OSHA means the Occupational Safety and Health Act of
1970, as amended, and any regulations, rules or orders promulgated thereunder.
Other Buyer Agreements means the Employment
Agreements, the Noncompetition Agreement, the Premises Leases (except for the
Premises Lease under which ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is lessor) and the other documents
and instruments to be executed and delivered by the Buyer pursuant to this
Agreement.
Other Seller Agreements means the Employment
Agreements, the Noncompetition Agreement, the Premises Leases (except for the
Premises Lease under which ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is lessor), the stock powers and the
other documents and instruments to be executed and delivered by any Individual
Shareholder, any relative thereof, or any Trust Shareholder pursuant to this
Agreement.
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Permits means all permits, licenses, consents,
franchises, authorizations, approvals, privileges, waivers, exemptions,
exclusionary or inclusionary orders and other concessions, whether governmental
or private, including, without limitation, all environmental, public health or
safety permits required in connection with the Company's business.
Person means an individual, partnership, corporation,
association, joint stock company, trust, joint venture, limited liability
company, unincorporated organization or Governmental Authority.
Premises means the real property, buildings and
improvements thereon constituting the business premises of the Company, located
as described on Exhibit 1.1(g).
Premises Leases means (a) the Shareholder Leases and
(b) the lease agreement between the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as lessor, and
any consent required thereunder to the transactions described herein or by the
Buyer in connection with such lease (which shall be obtained by the
Shareholders) (the "▇▇▇▇▇▇▇ Lease"), under which the Buyer will lease the
Premises following the Closing.
Post-Closing ▇▇▇▇▇▇▇ Lease Obligations means those
obligations of the Buyer under the ▇▇▇▇▇▇▇ Lease with respect to the period
after the Closing Date; provided, however, that Post-Closing ▇▇▇▇▇▇▇ Lease
Obligations shall not include any Liability of the Company under or in
connection with the ▇▇▇▇▇▇▇ Lease with respect to the period prior to the
Closing Date (regardless of whether discovered, asserted or arising before or
after the Closing Date).
Right means any right, property interest, concession,
patent, trademark, trade name, copyright or other proprietary right of another.
S Corporation Termination Date means the effective
date as of which the Company's "S" corporation election was terminated as a
result of the Trust Shareholders becoming shareholders of the Company.
Securities Act means the Securities Act of 1933, as
amended, and any regulations, rules and orders promulgated thereunder.
Shareholder Leases means the lease agreements among
the Buyer as lessee and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, husband and
wife, as lessors in the forms of Exhibits 1.1(h), (i) and (j) to be entered
into at the Closing.
Shareholders means the Individual Shareholders and the
Trust Shareholders.
Shareholders' Agent means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (or the
substituted agent described in Section 9.14) acting pursuant to Section 9.14.
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Shares means all of the issued and outstanding
capital stock of the Company.
Specified Agreements has the meaning set forth in
Section 3.1(e)(ii).
Subsidiary means any corporation with respect to
which a specified Person (or a Subsidiary thereof) owns a majority of the
common stock or has the power to vote or direct the voting of sufficient
securities to elect a majority of the directors.
Survival Period means the applicable periods after
the Closing Date during which representations and warranties survive pursuant
to Section 3.3.
Tax means any federal, state, local or foreign
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, documentary, personal property, sales, use, transfer, registration,
value added, alternative or add-on minimum, estimated or other tax of any kind
whatsoever, including any interest, penalty or addition thereto, whether
disputed or not.
Tax Return means any return, declaration, report,
claim for refund or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
Trust Agreement means, as to each Trust Shareholder,
the agreement creating such Trust Shareholder.
2. Purchase and Sale.
2.1. Basic Transaction. Subject to the terms and
conditions set forth in this Agreement, the Buyer agrees to purchase from the
Shareholders, and the Shareholders agree to sell to the Buyer, all the Shares
free and clear of any Encumbrance, for the consideration specified in Section
2.2. The Buyer shall have no obligation under this Agreement to purchase, nor
shall the Shareholders have any obligation under this Agreement to sell, less
than all of the Shares.
2.2. Purchase Price; Payment. The purchase price for the
Shares shall consist of $5.7 million, (i) plus the amount set forth on Exhibit
2.2 in respect of certain prepaid and other expenses paid by the Company prior
to the Closing which relate to the period after the Closing Date, (ii) plus New
Rental Equipment Increases for New Rental Equipment which is both purchased by
the Company prior to the Closing and paid for in full by the Company prior to
the Closing, as set forth on Exhibit 4.2 as of the date hereof and as of the
Closing, (iii) minus Current Rental Equipment Decreases for Current Rental
Equipment which is sold by the Company prior to the Closing , as set forth on
Exhibit 4.2 as of the date hereof and as of the
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Closing; provided, however, the purchase price shall not be reduced in respect
of the amount of any Current Rental Equipment Decrease which will, immediately
following the Closing Date, be represented by a Current Rental Equipment
Receivable. The purchase price shall be delivered by the Buyer to the
Shareholders by wire transfer or other delivery of immediately available funds
in the following percentages:
% of
No. of Shares Purchase
Shareholder Sold at Closing Price
----------- --------------- -----
▇▇▇▇▇▇ ▇. and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 17,199 28.1951
▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇
Charitable Remainder Unitrust 17,520 28.7213
▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇
Charitable Remainder Annuity Trust 4,030 6.6066
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Charitable Trust 8,235 13.5000
▇▇▇▇▇ ▇▇▇▇▇▇▇ Charitable Trust 8,235 13.5000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Charitable
Remainder Unitrust 1,971 3.2311
▇▇▇▇▇ ▇▇▇▇▇▇▇ Charitable
Remainder Unitrust 1,971 3.2311
▇▇▇▇ ▇▇▇▇▇ Charitable
Remainder Unitrust 1,839 3.0148
2.3. Sales Taxes, Etc. The Shareholders shall be
responsible for and shall pay any and all sales, transfer recording, stamp and
other Taxes, fees or charges payable in respect of the sale of the Shares to
the Buyer pursuant to this Agreement.
2.4. Closing; Effective Date. The closing of the
transactions contemplated by this Agreement (the "Closing") is anticipated to
take place by mail and facsimile delivery on May 29, 1996 commencing at 8:00
a.m. Spokane, Washington time, at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C, and
all transactions contemplated by this Agreement shall (except as provided in
Section 4.9(b)) be effective at 11:59 p.m. local time in Spokane, Washington on
the day immediately preceding the Closing (such effective time being the
"Closing Date").
2.5. Deliveries at the Closing. At the Closing, (a) the
Shareholders will deliver, or cause to be delivered, to the Buyer the
certificates, instruments and documents referred to in Section 6.1, (b) the
Buyer will deliver, or cause to be delivered, to the Shareholders the
certificates, instruments and documents referred to in Section 6.2, (c) the
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Shareholders will deliver to the Buyer stock certificates representing all the
Shares, endorsed in blank or accompanied by duly executed assignment documents,
free and clear of any Encumbrance, and (d) the Buyer will pay the purchase
price in accordance with Section 2.2.
3. Representations and Warranties.
3.1. Representations and Warranties of the Shareholders.
The Shareholders jointly and severally represent and warrant to the Buyer that
the statements contained in this Section 3.1 are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were then substituted for
the date of this Agreement throughout this Section 3.1).
(a) Ownership and Certain Shareholder Matters.
The Individual Shareholders own, beneficially and of record, free and clear of
any Encumbrance or Tax, the number of shares of the Company's common stock,
$1.00 par value, set forth opposite the Individual Shareholders' names in
Section 2.2(a). Each Trust Shareholder holds legal and record title, in trust
for the benefit of the beneficiaries of such Trust Shareholder, free and clear
of any Encumbrance or Tax, the number of shares of the Company's common stock,
$1.00 par value, set forth opposite such Trust Shareholder's name in Section
2.2(a). The Shares referred to in the preceding two sentences of this Section
3.1(a) collectively constitute all of the Shares. Neither the Shares nor any
Shareholder is subject to any voting trust, voting agreement, proxy, or other
agreement, other than the Trust Agreements, or understanding with respect to
the voting of the Shares. Except as set forth on Exhibit 3.1(a), all of which
shall be terminated by the Shareholders at the Closing, there are no existing
rights of first refusal, buy-sell arrangements, options, warrants, rights,
calls, or other commitments or restrictions of any character relating to any of
the Shares, except those restrictions on transfer imposed by the Securities Act
and applicable state securities and trust laws. No Shareholder is under any
impairment and no trustee (other than the trustees of the Trust Shareholders)
or guardian of the property or of the person or other legal or personal
representative has been appointed with respect to the financial or business
affairs of any Shareholder. Each Shareholder, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ has full and absolute right, power, authority and legal capacity to
execute, deliver and perform this Agreement and all Other Seller Agreements to
which such Shareholder or Person is a party, and this Agreement constitutes,
and such Other Seller Agreements will when executed and delivered constitute,
the legal, valid and binding obligations of, and be enforceable in accordance
with their respective terms against, such Shareholder, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as the case may be. The execution, delivery and
performance of this Agreement and the Other Seller Agreements to which any
Shareholder, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ is a party, and the
consummation of the transactions contemplated hereby and thereby, will not (i)
violate any Legal Requirement or Order to which any Shareholder, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ is subject, or (ii) violate, with or without the
giving of notice or the lapse of time or both, or conflict with or result in
the breach or termination of any provision of, or constitute a default under,
or give any Person the right to accelerate any obligation under, or result in
the creation of any Encumbrance upon any properties or assets of any
Shareholder, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ pursuant to, any
indenture, mortgage, deed of trust, lien, lease, agreement, instrument or other
arrangement to which the Shareholder is a party or by which the Shareholder,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or any of the Shareholder's, ▇▇▇▇▇▇ ▇.
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▇▇▇▇▇▇▇'▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇'▇ assets are bound or subject. Except for
those notices that will be given and consents that will be obtained by the
Shareholders prior to the Closing (which are set forth on Exhibit 3.1(a)),
neither any Shareholder nor ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ need give
any notice to, make any filing with or obtain any authorization, consent or
approval of any Governmental Authority or other Person in order to consummate
the transactions contemplated hereby.
(b) Organization, Good Standing, Power, Etc. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Washington, which is the only jurisdiction in
which the nature of the business conducted by it or the properties owned,
leased or operated by it make such qualification necessary. The Company has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. The copies of
the articles of incorporation (certified by the Secretary of State of
Washington) and the bylaws of the Company, both as amended to date, which have
been delivered to the Buyer by the Shareholders and are attached as Exhibit
3.1(b), are complete and correct, and the Company is not in default under or in
violation of any provision of its articles of incorporation or bylaws. The
minute books (containing all records of meetings of or actions by the
shareholders, the board of directors, and any committees of the board of
directors) and the stock certificate books and the stock record books of the
Company, copies of which have been delivered to the Buyer by the Shareholders,
are correct and complete.
(c) Capitalization, Etc. The authorized capital
stock of the Company consists of 100,000 shares of common stock, $1.00 par
value, of which 61,000 shares are issued and outstanding. All of the issued
and outstanding shares of the Company's capital stock have been duly authorized
and validly issued, and are fully paid and nonassessable, with, to the best
knowledge of the Company and the Shareholders, no personal Liability attaching
to the ownership thereof. There are no authorized or outstanding stock or
securities convertible into or exchangeable for, or any authorized or
outstanding option, warrant or other right to subscribe for or to purchase, or
convert any obligation into, any unissued shares of its capital stock, and the
Company has not agreed to issue securities so convertible or exchangeable or
any such option, warrant or other right. There are no authorized or
outstanding stock appreciation, phantom stock, profit participation (except as
set forth on Exhibit 3.1(c)) or similar rights with respect to the Company.
There are no voting trusts, voting agreements, proxies or other agreements or
understandings with respect to any capital stock of the Company, other than the
Trust Agreements.
(d) No Subsidiaries. The Company has no
Subsidiaries and no interest in any other corporation, partnership, limited
partnership, limited liability company, association or joint venture.
(e) No Violation of Agreements, Etc. (i) The
execution, delivery and performance of this Agreement and the Other Seller
Agreements and the consummation of the transactions contemplated hereby and
thereby will not (A) violate any Legal Requirement or Order to which the
Company is subject or any provision of the articles of incorporation or bylaws
of the Company or (B) violate, with or without the giving of notice or the
lapse of time or both, or conflict with or result in the breach or termination
of any provision of, or constitute
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a default under, or give any Person the right to accelerate any obligation
under, or result in the creation of any Encumbrance upon any properties, assets
or business of the Company pursuant to, any indenture, mortgage, deed of trust,
lien, lease, license, agreement, instrument or other arrangement to which the
Company is a party or by which the Company or any of its assets and properties
is bound or subject. Except for notices and consents which are set forth in
Part I of Exhibit 3.1(e), the Company does not need to give any notice to, make
any filing with or obtain any authorization, consent or approval of any
Governmental Authority or other Person in order for the parties to consummate
the transactions contemplated by this Agreement. Notwithstanding anything to
the contrary contained in this Agreement, the Shareholders shall not be
required to give any such notice or obtain any such consent other than those
set forth in Part II of Exhibit 3.1(e).
(ii) The merger immediately following the
Closing of the Company into the Buyer will not violate, with or without the
giving of notice or the lapse of time or both, or conflict with or result in
the breach or termination of any provision of, or constitute a default under,
or give any Person the right to accelerate any obligation under, or result in
the creation of any Encumbrance upon any properties, assets or business of the
Buyer or the Company pursuant to, any indenture, mortgage, deed of trust, lien,
lease, license, agreement, instrument or other arrangement to which the Company
is a party immediately prior to the transfer of the Shares to the Buyer
pursuant to this Agreement or by which the Company or any of its assets and
properties is bound or subject immediately prior to the transfer of the Shares
to the Buyer pursuant to this Agreement (collectively, the "Specified
Agreements"). Except for those notices and consents which are set forth in
Part III of Exhibit 3.1(e), the Company, in connection with such merger, does
not need to give any notice to or obtain any consent from any Person in
connection with any Specified Agreement. Notwithstanding anything to the
contrary contained in this Agreement, the Shareholders shall not be required to
give any such notice or obtain any such consent other than those set forth in
Part IV of Exhibit 3.1(e).
(f) Financial Statements. The statement of
assets, liability and equity of the Company as of December 31, 1993, December
31, 1994 and December 31, 1995 (the latter being referred to as the "Latest
Balance Sheet") and the related statement of revenues and expenses for the
fiscal years then ended, have been prepared in accordance with GAAP, except as
set forth on Exhibit 3.1(f), on a basis consistent with those of prior years,
are accurate and fairly present the financial position and results of
operations of the Company as of said dates and for each of the periods
indicated. Copies of the financial statements described in this Section 3.1(f)
are attached as Exhibit 3.1(f). To the best knowledge of the Company and the
Shareholders, said balance sheets make full and adequate provision for all
Liabilities of the Company.
(g) Absence of Liabilities. As of the Closing
Date and the Closing, to the best knowledge of the Company and the
Shareholders, the Company will have no Liability (and there is no basis for the
assertion of any Liability) arising out of any transactions entered into prior
to Closing, any action or inaction prior to Closing or any state of facts
existing prior to Closing, or otherwise, except for those Environmental
Liabilities identified on Exhibit 3.1(g) (which Environmental Liabilities
shall, after the Closing Date, be the obligation and responsibility of the
Shareholders rather than the Company) and the Closing Date Trade
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Payables, the 1996 Unpaid Personal Property Taxes, the 1997 Personal Property
Taxes and Post-Closing ▇▇▇▇▇▇▇ Lease Obligations (which Closing Date Trade
Payables, 1996 Unpaid Personal Property Taxes, 1997 Personal Property Taxes and
Post-Closing ▇▇▇▇▇▇▇ Lease Obligations shall, after the Closing, be the
obligation and responsibility of the Company). All Closing Date Liabilities
shall have been paid by the Company on or prior to the Closing Date.
(h) Absence of Certain Changes or Events. Since
October 1, 1995, the Company has not (i) incurred any debt, indebtedness or, to
the best knowledge of the Company and the Shareholders, other Liability, except
current Liabilities incurred in the ordinary course of business and those
Environmental Liabilities identified on Exhibit 3.1(g) (which Environmental
Liabilities shall, after the Closing Date, be the obligation and responsibility
of the Shareholders rather than the Company); (ii) delayed or postponed the
payment of (A) accounts payable or (B), to the best knowledge of the Company
and the Shareholders, any other Liability; (iii) accelerated the collection of
any receivable (except as set forth on Exhibit 3.1(h)); (iv) subjected any of
its assets or properties to any Encumbrance; (v) settled, compromised or
written off any receivable (except as set forth on Exhibit 3.1(h)); (vi)
leased, except in the ordinary course of business, or sold or otherwise
transferred (except as otherwise expressly permitted by this Section 3.1(h) or
as set forth on Exhibit 3.1(h) with respect to distributions of certain
securities, real estate and cash of the Company to its shareholders) any of its
assets or properties; (vii) canceled, compromised, settled, released or waived
any right, debt or claim (except as set forth on Exhibit 3.1(h)); (viii)
changed in any manner the way in which it conducts business (except as set
forth on Exhibit 3.1(h)); (ix) transferred or granted any rights under any
leases (except to customers in the ordinary course of business), licenses or
agreements or with respect to any Intellectual Property; (x) made or granted
any individual wage or salary increase in excess of 10% or any general wage or
salary increase (except as set forth on Exhibit 3.1(h) with respect to certain
officers of the Company), entered into any employment, consulting or agency
contract with any shareholder, officer, director, employee or consultant or any
relative or Affiliate thereof, changed or increased the rates of compensation
payable through bonus, pension, contract or other commitment to any
shareholder, officer, director, employee or consultant or any relative or
Affiliate thereof for any period before or after the date set forth above
(except as set forth on Exhibit 3.1(h) with respect to certain officers of the
Company) or made any other change in employment terms for any shareholder,
officer, director, employee or consultant or any Affiliate thereof; (xi)
adopted, amended, modified or terminated any bonus, profit-sharing, incentive,
severance or other plan, contract or commitment for the benefit of any of its
shareholders, officers, directors, employees or any relative or Affiliate
thereof (or taken any such action with respect to any other Employee Benefit
Plan or Benefit Arrangement); (xii) except as otherwise expressly permitted by
this Section 3.1(h), entered into, or agreed to enter into, any contracts or
agreements, or made any commitments, involving more than $15,000 in the
aggregate; (xiii) suffered any material adverse fact or change, including,
without limitation, to or in its business, financial condition, prospects,
customer relationships or properties (except as set forth on Exhibit 3.1(h)
with respect to distributions of certain securities, real estate and cash of
the Company to its shareholders); (xiv) entered into any contract or commitment
to make capital expenditures in excess of $15,000 in the aggregate; (xv)
declared, set aside or paid any dividend or made any distribution to its
shareholders (whether in cash or in kind) (except as set forth on Exhibit
3.1(h) with respect to distributions of certain securities, real estate and
cash of the Company to its shareholders) or purchased, redeemed or otherwise
acquired any shares of its capital stock
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or any other securities, other than the payment of the Closing Date
Distribution; (xvi) made any loan to any Person, including, without limitation,
any shareholder, officer or director or to any relative or Affiliate thereof or
entered into any transaction (including, without limitation, any agreement or
other arrangement providing for employment of, furnishing of services by,
rental of real or personal property from, or otherwise requirement payment to)
with any shareholder, officer or director or any relative or Affiliate thereof;
(xvii) permitted any Person, including, without limitation, any shareholder,
officer, director or employee or any relative or affiliate thereof, to withdraw
assets from the Company (except as set forth on Exhibit 3.1(h) with respect to
distributions of certain securities, real estate and cash of the Company to its
shareholders); (xviii) made any payment or transfer to or for the benefit of
any shareholder, officer or director or any relative or Affiliate thereof
(except as set forth on Exhibit 3.1(h) with respect to distributions of certain
securities, real estate and cash of the Company to its shareholders), or agreed
to take any such action, other than the payment to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ of the proportionate monthly amount of their respective normal
annualized salaries of $124,000 and $124,000 due and payable during such period
(the aggregate normal annual salaries of such Persons is $248,000); (xix) made
or pledged to make any charitable or other contribution; (xx) accelerated,
terminated, modified or canceled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases and licenses) involving more
than $15,000 individually or in the aggregate to which the Company is a party
or by which it is bound; (xxi) changed its method of depreciation; (xxii)
rented or leased any equipment or sold or otherwise transferred any Inventory
or services at below-normal rates or margins; (xxiii) suffered any other
material occurrence, event, incident, action, failure to act or transaction
outside the ordinary course of business (except as set forth on Exhibit 3.1(h)
with respect to distributions of certain securities, real estate and cash of
the Company to its shareholders); or (xxiv) agreed to incur, take, make or
permit any of the matters described in clauses (i) through (xxiii).
(i) No Royalty Payments. The Company is not the
licensee of any Intellectual Property requiring the payment of any royalty or
licensing fee.
(j) Tax Matters.
(i) There has been duly and timely filed in
proper form by or on behalf of the Company, or a filing extension from
the appropriate Governmental Authorities has been obtained with
respect to, all Tax Returns required to be filed by applicable Legal
Requirement on or prior to the date of this Agreement. All
assessments, Taxes, fees or other charges imposed on the Company, any
of its properties or any of its prior or present shareholders
(pursuant to the Company's "S" corporation election) in respect of the
periods covered by such Tax Returns have been paid, or adequate
reserves have been provided for (however, no representation is made
with respect to reserves by shareholders) with respect to the payment
of all Taxes (whether or not disputed) payable in respect of periods
through the date of this Agreement and all prior periods, and, to the
best knowledge of the Company and the Shareholders, all Tax
Liabilities arising out of transactions entered into or states of fact
existing prior to the date of this Agreement. There is no unpaid
interest, penalty or addition to any Tax due or claimed to be due from
the Company (or any of its prior or present shareholders pursuant to
the Company's "S" corporation election), or any Tax
17
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deficiency, determination or assessment outstanding against the
Company (or any of its prior or present shareholders pursuant to the
Company's "S" corporation election). No audit of any Tax Returns of
the Company is pending or, to the best knowledge of the Company and
the Shareholders, has been threatened, and the Company has not given
any waiver of any statute of limitations relating to the assessment or
payment of Taxes, which waiver has not yet expired. All Tax Returns,
or extensions thereof required to be filed, and all Taxes required to
be paid, prior to the Closing by or on behalf of the Company, of any
nature whatsoever, shall have been so filed or paid prior to the
Closing. Following the Closing, the Shareholders (but not the
Company) will pay all Taxes attributable to the Company or its
business and activities through the Closing Date, including all Taxes
attributable to the transactions contemplated by this Agreement (other
than those Taxes, if any, of the Company or the Buyer attributable to
the merger immediately following the Closing of the Company into the
Buyer), such payment to be made on or before the due date of such Tax
Returns.
(ii) The Company has filed all Tax
Returns that it was required to file. All such Tax Returns were
correct and complete in all respects. All Taxes owed by the Company
(whether or not shown on any Tax Return) have been paid. The Company
is not currently the beneficiary of any extension of time within which
to file any Tax Return. No claim has ever been made by an authority
in a jurisdiction where the Company does not file Tax Returns that it
is or may be subject to taxation by that jurisdiction. There are no
Encumbrances on any of the assets of the Company that arose in
connection with any failure (or alleged failure) to pay any Tax.
(iii) The Company has withheld and paid
all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor,
creditor, shareholder or other third party.
(iv) To the best knowledge of the Company
and the Shareholders, there is no basis for any authority to assess
any additional Taxes for any period for which Tax Returns have been
filed. There is no dispute or claim concerning any Tax Liability of
the Company either (A) claimed or raised by any authority in writing
or (B) as to which any of the Company or the Shareholders have
knowledge based upon personal contact with any agent of such
authority. Exhibit 3.1(j) lists all federal, state, local and foreign
income Tax Returns filed with respect to the Company for taxable
periods ended on or after January 1,1988, indicates those Tax Returns
that have been audited and indicates those Tax Returns that currently
are the subject of audit. The Shareholders have delivered to Buyer
correct and complete copies of all federal income Tax Returns,
examination reports, and statements of deficiencies filed or assessed
against or agreed to by the Company since January 1, 1988.
(v) The Company has not waived any
statute of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency.
(vi) The Company has not filed a consent
under Code Section 341(f) concerning collapsible corporations. The
Company has not made any
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payments, is not obligated to make any payments and is not a party to
any agreement that under certain circumstances could obligate it to
make any payments that will not be deductible under Code Section 280G.
The Company has not been a United States real property holding
corporation within the meaning of Code Section 897(c)(2) during the
applicable period specified in Code Section 897(c)(1)(A)(ii). The
Company has disclosed on its federal income Tax Returns all positions
taken therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Code Section 6662. The
Company is not a party to any Tax allocation or sharing agreement.
The Company (A) has not been a member of an Affiliated Group filing a
consolidated federal income Tax Return (other than a group the common
parent of which was the Company) and (B), to the best knowledge of the
Company and the Shareholders, has no Liability for the Taxes of any
Person (other than the Company) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local, or foreign law),
as a transferee or successor, by contract or otherwise. To the best
knowledge of the Company and the Shareholders, the total adjusted
basis of the Company's Assets exceeds the sum of the Company's
Liabilities plus the amount of Liabilities to which the Company's
Assets are subject.
(vii) Exhibit 3.1(j) sets forth the
following information with respect to the Company as of the most
recent practicable date (as well as on an estimated pro forma basis as
of the Closing giving effect to the consummation of the transactions
contemplated hereby): (A) the basis of the Company in its assets; and
(B) the amount of any net operating loss, net capital loss, unused
investment or other credit, unused foreign tax credit or excess
charitable contribution allocable to the Company.
(k) Assets and Properties.
(i) The Assets are owned by the Company,
free and clear of all Encumbrances other than statutory liens imposed
by Washington law in respect of the 1996 Unpaid Personal Property
Taxes and the 1997 Personal Property Taxes. The Assets consist of the
assets of the Company in existence as of October 1, 1995 (except as
set forth on Exhibit 3.1(k) with respect to certain securities, real
estate and cash of the Company which were distributed to its
shareholders and except for such changes in Inventory and in accounts
receivable in the ordinary course of business as are not in violation
of Section 3.1(h) or 4.2), increased by New Rental Equipment purchased
from October 1, 1995 to the day immediately preceding the date of this
Agreement (as set forth on Exhibit 4.2 as of the date hereof),
increased by New Rental Equipment purchased on or after the date of
this Agreement but on or before the Closing Date in compliance with
Section 4.2 (as shall be set forth on Exhibit 4.2 pursuant to the last
sentence of Section 4.2), decreased by Current Rental Equipment sold
in compliance with this Agreement from October 1, 1995 to the day
immediately preceding the date of this Agreement (as set forth on
Exhibit 4.2 as of the date hereof), and decreased by Current Rental
Equipment sold in compliance with this Agreement on or after the date
of this Agreement but on or before the Closing Date in compliance with
Section 4.2 (as shall be set forth on Exhibit 4.2 pursuant to the last
sentence of Section 4.2). From October 1, 1995 to the day immediately
preceding the date of this Agreement, the
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Company has purchased the New Rental Equipment and has sold, for cash
or a Current Rental Equipment Receivable only, the Current Rental
Equipment described on Exhibit 4.2 as of the date of this Agreement,
but has not otherwise sold, traded, transferred or otherwise disposed
of any Current Rental Equipment. The Company has not, between the
date of this Agreement and the Closing, purchased any New Rental
Equipment or sold, traded, transferred or otherwise disposed of any
Current Rental Equipment except in accordance with Section 4.2. The
Assets are all of the assets (other than the Premises, the Individual
Shareholders Improvements and Fixtures and cash) used by the Company
in its business. Except for items rented to customers, all of the
Company's tangible personal property is located on the Premises. The
Company has good and marketable title to, or valid leasehold interests
in, all of the Assets. The Company does not own any real property
interest other than the Company Improvements, Fixtures and Fittings
and its leasehold interests in the Premises.
(ii) The Company leases all buildings as
part of the Premises, and either owns or leases all machinery,
equipment and other assets, necessary for the conduct of its business
as presently conducted. Except as set forth in Exhibit 3.1(k)(ii), to
the best knowledge of the Company and the Shareholders, each such
building and the Premises comply in all respects with the Americans
with Disabilities Act, are free from defects, have been maintained in
accordance with normal industry practice, are in good operating
condition and repair and are suitable for the purposes for which they
presently are used. Except as set forth on Exhibit 3.1(k)(ii), the
Company has not received notice of violation of any Legal Requirement,
Order or Permit relating to its operations or its owned or leased
properties.
(iii) All Leases are valid and in full
force and effect in accordance with their respective terms and there
is not, under any of such Leases, any existing default or event of
default or event which, with notice or lapse of time or both, would
constitute a default. No party to any Lease has repudiated any
provision thereof, and, except as set forth on Exhibit 3.1(k)(iii),
there are no disputes, oral agreements or forbearance programs in
effect as to such Lease. To the best knowledge of the Company and the
Shareholders, the Premises have received all approvals of Governmental
Authorities (including Permits) required in connection with the
occupation and operation thereof, and, except for those Environmental
Liabilities identified on Exhibit 3.1(g) (which Environmental
Liabilities shall, after the Closing Date, be the obligation and
responsibility of the Shareholders rather than the Company), have been
occupied, operated and maintained in accordance with applicable Legal
Requirements. The Premises are supplied with utilities and other
services necessary for the operation thereof. To the best knowledge
of the Company and the Shareholders, the owners of the Premises have
good and marketable title to the underlying real property, free and
clear of any Encumbrance, easement, covenant or other restriction,
except for the leasehold interest of the Company, installments of
special assessments not yet delinquent and recorded easements,
covenants and other restrictions which do not impair the current use,
occupancy or value, or the marketability of title, of the property
subject thereto. The Company does not sublease any real or personal
property.
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(l) Lists of Properties, Contracts and Other
Data. The Shareholders have delivered to the Buyer a correct and complete
list, attached hereto as Exhibit 3.1(l), certified by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as
representative of the Shareholders, to be correct and complete, setting forth
the following:
(i) all items of equipment and machinery
owned, leased or used by the Company, including all items of
equipment, machinery and other tangible personal property which as of
the date of this Agreement has no book value, and the original cost,
depreciation and current book value of all items of equipment,
machinery and other tangible personal property owned by the Company
which are included in the Latest Balance Sheet;
(ii) all rights, licenses and Leases to
which the Company is a party;
(iii) all assignments, licenses,
indemnifications or other agreements with respect to any form of
intangible property owned, leased or used by the Company, including,
without limitation, any Intellectual Property;
(iv) all guaranty, warranty and indemnity
agreements to which the Company is a party or by which it or its
assets is bound, including, without limitation, those with respect to
products or services sold, rented, leased, provided or delivered by
the Company;
(v) (A) the forms of rental and lease
agreements used by the Company in its business, and (B) all contracts
or agreements for the purchase, sale, rental or lease of materials,
supplies, products or other personal property or for the furnishing or
receipt of services which (1) are with any shareholder, officer or
director of the Company or any relative or Affiliate of any of such
Persons or of the Company, (2) have been prepaid prior to the Closing
Date for a period of more than two months after the Closing Date, or
(3) involve any rental/purchase option or lease/purchase option or
similar arrangement;
(vi) all claims, deposits, causes of
action, choses in action, rights of recovery, rights of setoff and
rights of recoupment of the Company;
(vii) all franchises, approvals, Permits,
licenses, orders, registrations, certificates, variances and similar
rights of the Company;
(viii) all contracts or agreements
concerning confidentiality or prohibiting the Company from freely
engaging in its business as now conducted or proposed to be conducted
or from competing anywhere in the world;
(ix) all other contracts, agreements,
instruments, guarantees and commitments (including mortgages, deeds of
trust, indentures, loan agreements and credit agreements and including
a description of any oral contracts) to which the Company is a party
or by which it or its assets is bound;
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(x) the names and annual rates of
compensation as of October 1, 1995 (which rates have, except as set
forth on Exhibit 3.1(l) with respect to certain officers of the
Company, remained the same through the date hereof and the Closing),
of all present officers and directors of the Company, all other
management employees, and each other employee whose annual rate of
compensation is at least $30,000;
(xi) the names of all retired employees,
if any, of the Company who are receiving or are entitled to receive
any payments which are not fully covered by any Employee Pension
Benefit Plan of the Company which is qualified under Code Section
401(a), their ages and the annual funded and unfunded benefits;
(xii) the name of each bank or other
financial institution or entity in which the Company has an account or
safe deposit box (with the identifying account number or symbol) and
the names of all persons authorized to draw thereon or to have access
thereto; and
(xiii) all outstanding notes or accounts
receivable relating to accounts with the Company, or advances by the
Company to any shareholder, officer, director, employee or consultant
or relative or Affiliate thereof, as of the date of this Agreement.
True and complete copies of the documents referred to in such list have been
delivered to the Buyer. All such rights, licenses, leases, registrations,
applications, contracts, agreements and commitments and other items referred to
in such list are valid, in full force and effect, enforceable in accordance
with their respective terms for the period stated therein, no party has
repudiated any provision thereof and no breach or default will result from the
execution, delivery and performance of this Agreement, the Other Seller
Agreements, or the transactions contemplated hereby or thereby. Neither the
Company nor, to the best knowledge of the Company and the Shareholders, any
other party thereto is in breach or default in performance of any of their
respective obligations thereunder except as set forth on Exhibit 3.1(l), and no
event exists which, with the giving of notice or lapse of time or both, would
constitute a breach, default or event of default on the part of a party to any
of the foregoing that is continuing unremedied.
(m) Litigation, Etc. There is no outstanding
Order against, nor to the best knowledge of the Company and the Shareholders,
except as set forth on Exhibits 3.1(m), 3.1(x), 3.1(y), 3.1(z) and 3.1(aa), is
there any litigation, proceeding, arbitration or investigation by any
Governmental Authority or other Person pending or threatened against, the
Company, its properties or business or relating to the transactions
contemplated by this Agreement, nor to the best knowledge of the Company and
the Shareholders, except as set forth on Exhibits 3.1(m), 3.1(x), 3.1(y),
3.1(z) and 3.1(aa), is there any basis for any such action.
(n) Notes and Accounts Receivable. The notes
receivable, if any, and accounts receivable of the Company reflected on the
Latest Balance Sheet, and all notes and accounts receivable arising on or prior
to the Closing Date (including, without limitation, any Current Rental
Equipment Receivables), arose and will arise from bona fide transactions by the
Company in the ordinary course of business, are valid receivables with trade
customers or
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others subject to no setoffs or counterclaims. The Current Rental Equipment
Receivables in existence as of the Closing Date, regardless of whether they
arose before or after the S Corporation Termination Date, will be fully
collected at their face amounts in accordance with their terms but in any event
within 90 days of the Closing Date. The notes receivable, if any, and the
accounts receivable of the Company which arose or arise from sales, leases or
other transactions (but in each case no such sale, lease or other transaction
shall be in violation of Section 3.1(h) or 4.2) made after the S Corporation
Termination Date but on or prior to the Closing Date, other than of Current
Rental Equipment (collectively, the "Interim Period Receivables"), will be
collected at their full face amounts in accordance with their terms but in any
event within 90 days of the Closing Date. The notes receivable, if any, and
the accounts receivable of the Company, other than the Current Rental Equipment
Receivables and the Interim Period Receivables, existing on the Closing Date
(collectively, the "Other Closing Receivables") will be collected as follows:
(i) 80% of the aggregate amount of the Other Closing Receivables which are, as
of the Closing Date, within 30 days of their date of invoice, will be collected
within 240 days of the Closing Date; (ii) 60% of the Other Closing Receivables
which are, as of the Closing Date, within 31 to 60 days of their date of
invoice, will be collected within 240 days of the Closing Date; and (iii) 40%
of the Other Closing Receivables which are, as of the Closing Date, within 61
to 90 days from their date of invoice, will be collected within 240 days of the
Closing Date. No representation or warranty is made with respect to Other
Closing Receivables which are, as of the Closing Date, more than 90 days past
their date of invoice.
(o) Product Quality, Warranty Claims. All
products and services sold, rented, leased, provided or delivered by the
Company to customers on or prior to the Closing Date conform or will conform to
applicable contractual commitments, express and implied warranties, product and
service specifications and quality standards, and, to the best knowledge of the
Company and the Shareholders, the Company has no Liability (and there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against the Company giving
rise to any Liability) for replacement or repair thereof or other damages in
connection therewith. No product or service sold, leased, rented, provided or
delivered by the Company 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.
(p) Product Liability. To the best knowledge of
the Company and the Shareholders, except as set forth on Exhibit 3.1(p), the
Company has no Liability (and there is no basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim or
demand against the Company 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 product or service sold, rented, leased, provided or
delivered by the Company on or prior to the Closing Date. All product
liability claims that have been asserted against the Company since January 1,
1991, whether covered by insurance or not and whether litigation has resulted
or not, are listed and summarized on Exhibit 3.1(p).
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(q) Inventory.
(i) The Inventory of the Company which
is held for rental or lease consists of goods which are merchantable,
is fit for the purpose for which it was procured and is held by the
Company and is usable in the ordinary course of business. To the best
knowledge of the Company and the Shareholders, none of such Inventory
is obsolete (and for purposes hereof, an item of such Inventory is not
considered obsolete if it is rented or leased by customers on a basis
consistent with prior periods), damaged or defective (and for purposes
hereof, an item of such Inventory is not considered damaged or
defective if it is an item which has suffered damage in the course of
its use by the customer and has been repaired, or is reparable and is
in the process of being repaired, by the Company for use in the
Company's rental and leasing business). The value of such Inventory
reflected on the Latest Balance Sheet fairly represents the value of
such Inventory calculated on a basis consistent with past practice and
GAAP. From October 1, 1995 through the Closing Date, the Company has
repaired and will repair damaged items of Inventory which are held for
rental or lease on a basis consistent with pre-October 1, 1995
practice.
(ii) The Inventory of the Company which
is held for resale consists of goods which are merchantable and good
and salable in the ordinary course of the Company's business. Exhibit
3.1(q)(ii) sets forth all items of the type to be held for resale
which, as of the day immediately preceding the date of this Agreement,
have been ordered but not yet delivered to the Company. From October
1, 1995 through the Closing Date, the Company has restocked and will
restock the Inventory held for resale in the ordinary course of
business on a basis consistent with pre-October 1, 1995 practice.
(r) Insurance. The Company has policies of
insurance (i) covering risk of loss on the Assets and (ii) covering commercial
and products liability and liability for fire, property damage, personal injury
and workers' compensation coverage, all, to the best knowledge of the Company
and the Shareholders, with responsible and financially sound insurance
carriers in adequate amounts and in compliance with any governmental
requirements and in accordance with good industry practice. All such insurance
policies are valid, in full force and effect and enforceable in accordance with
their respective terms and no party has repudiated any provision thereof. All
such policies will remain in full force and effect until the Closing Date.
Neither the Company nor any other party to any such policy is in breach or
default (including with respect to the payment of premiums or the giving of
notices) in the performance of any of their respective obligations thereunder,
and no event exists which, with the giving of notice or the lapse of time or
both, would constitute such a breach, default or event of default, or permit
termination, modification or acceleration under any such policy. There are no
claims (except as set forth on Exhibit 3.1(r)), actions, proceedings or suits
arising out of or based upon any of such policies nor, to the best knowledge of
the Company and the Shareholders, does any basis for any such claim, action,
suit or proceeding exist. Descriptions, including current premium amounts and
date and amount of the last premium increases, of the policies of insurance are
set forth on Exhibit 3.1(r). All premiums have been paid on such policies as
of the date of this Agreement and will be paid on such policies through the
Closing Date, and the Company has not received notice of any increase in any
such premium except
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as set forth on Exhibit 3.1(r). The Company has been covered during the five
years prior to the date of this Agreement by insurance in scope and amount
customary and reasonable for the businesses in which it has engaged during the
aforementioned period. All claims made during such five-year period with
respect to any insurance coverage of the Company, other than those described in
Exhibit 3.1(p), are set forth in Exhibit 3.1(r). The Company does not engage
in any self-insurance activities, other than to the extent of any deductibles.
(s) Compliance with Applicable Laws and Rights.
Except as set forth on Exhibits 3.1(s), 3.1(x), 3.1(y), 3.1(z) and 3.1(aa), to
the best knowledge of the Company and the Shareholders, the Company is not in
violation of any applicable Legal Requirements, Orders or Rights. Except as
set forth on Exhibits 3.1(s), 3.1(x), 3.1(y), 3.1(z) and 3.1(aa), the Company
has not received notice from any Governmental Authority or other Person of any
violation or alleged violation of any Legal Requirement, Order or Right, the
subject matter of which has not been resolved to the satisfaction of the Person
giving the notice, and, to the best knowledge of the Company and the
Shareholders, no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand or notice has been filed or commenced or is pending or
threatened against the Company alleging any such violation. Except as set
forth on Exhibits 3.1(s), 3.1(x), 3.1(y), 3.1(z) and 3.1(aa), to the best
knowledge of the Company and the Shareholders, the Company's property,
including the Premises and its machinery and equipment, conforms with
applicable Legal Requirements and Orders, including, without limitation,
environmental and zoning laws and building codes, and is in compliance with
OSHA and the Americans with Disabilities Act. Neither the Company nor any
Shareholder has any knowledge of any pending or proposed OSHA regulations or
amendments to OSHA regulations (including toxic chemical regulations) which
would require any change in any of the Premises or the Company's equipment,
operations or procedures or affect the Company's business or its costs of
conducting its business as now conducted. The Company has never made any
payments for political contributions, or any bribes, kickback payments or other
illegal contributions.
(t) Pension and Employee Benefit Matters.
(i) Neither the Company nor any ERISA
Controlled Group which includes the Company (if any) maintains,
administers or contributes to, or has any obligation to contribute to,
any Employee Benefit Plan. Exhibit 3.1(t) lists each Employee Benefit
Plan that was previously maintained, administered, contributed to or
required to be contributed to by the Company or any ERISA Controlled
Group (if any) which includes or has included the Company, and the
date of termination of each such Employee Benefit Plan. To the best
knowledge of the Company and the Shareholders, the Company has no
Liability (nor is there any basis for the assertion of any Liability)
as a result of the Company's or any such ERISA Controlled Group's
maintenance, administration or termination of, or contribution to, any
Employee Benefit Plan. Neither the Company nor any member of any
ERISA Controlled Group (if any) which includes or has included the
Company has ever been required to contribute to any Multiemployer
Plan.
(ii) Exhibit 3.1(t) lists each Benefit
Arrangement. Copies and descriptions (including descriptions of the
number and employment classifications of
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employees covered by each such Benefit Arrangement) have been
delivered by the Shareholders to the Buyer and attached hereto as part
of Exhibit 3.1(t). Each Benefit Arrangement has been maintained and
administered in substantial compliance with its terms and with the
requirements prescribed by any and all Legal Requirements that are
applicable to each such Benefit Arrangement.
(iii) Except as set forth in any Benefit
Arrangement identified in Exhibit 3.1(t) and except as provided by
Legal Requirement or any collective bargaining agreement or any
employment contract identified on Exhibit 3.1(t), the employment of
all persons presently employed or retained by the Company is
terminable at will.
(iv) To the best knowledge of the Company
and the Shareholders, the Company has not incurred any Liability under
Title IV of ERISA arising in connection with the termination of any
plan covered or previously covered by Title IV of ERISA or the
withdrawal from any multiemployer or multiple employer plan.
(v) To the best knowledge of the Company
and the Shareholders, there have been no prohibited transactions with
respect to any Employee Benefit Plan. To the best knowledge of the
Company and the Shareholders, no "fiduciary" (as defined in Section
3(21) of ERISA) has any Liability for breach of fiduciary duty or any
other failure to act or comply in connection with the administration
or investment of the assets of any Employee Benefit Plan.
(vi) The Company does not maintain and
has never maintained nor contributes, or ever has contributed, or ever
has been required to contribute, to any Employee Benefit Plan
providing post-retirement health, disability or life insurance
benefits for current or former employees, their spouses or their
dependents. Except as provided by applicable federal and state
statutory requirements, no condition exists that would prevent the
Company from amending or terminating any Benefit Arrangement providing
health or medical benefits in respect of any active or retired
employees of the Company, or relatives thereof.
(vii) Each Benefit Arrangement has been
maintained and administered in compliance with its terms and with the
requirements prescribed by any and all Legal Requirements, including
but not limited to ERISA and the Code, that are applicable to such
Plans. To the best knowledge of the Company and the Shareholders,
nothing done or omitted to be done and no transaction or holding of
any asset under or in connection with any Benefit Arrangement has or
could make the Company or any officer or director of the Company
subject to any Liability under Title I of ERISA, any penalty under
Section 502 of ERISA or any Liability for any Tax under Section 4972
or Section 4975 through 4980B, inclusive, of the Code.
(viii) There is no contract, agreement,
plan or arrangement covering any employee or former employee of the
Company that, individually or
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collectively, could give rise to the payment of any amount that would
not be deductible pursuant to the terms of Section 280G or 162(a)(l)
of the Code.
(ix) The Company has made, before the
date of this Agreement, all required contributions and premium
payments under each Benefit Arrangement for all completed fiscal years
including contributions that may not by law have otherwise been
required to be made until the due date for filing the Tax Return for
any completed fiscal year.
(x) There has not been with respect to
the Company's active or retired employees, nor will be, as of the
Closing Date, any amendment to, written interpretation or announcement
(whether or not written) by the Company relating to, or change in
employee participation or coverage under, any Benefit Arrangement that
would increase the expense of maintaining or funding benefits under
such Benefit Arrangement above the level of the expense incurred in
respect thereof for the fiscal year ended on December 31, 1995.
(u) Employees and Labor. The Company has not
received any notice, nor, to the best knowledge of the Company and the
Shareholders, is there any reason to believe that any executive or key employee
of the Company other than ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, or any group
of employees of the Company has any plans to terminate his, her or its
employment with the Company. To the best knowledge of the Company and the
Shareholders, no executive or key employee is subject to any agreement,
obligation, Order or other legal hindrance that impedes or might impede such
executive or key employee from devoting his or her full business time to the
affairs of the Company prior to the Closing Date and, if such person becomes an
employee of the Buyer, to the affairs of the Buyer after the Closing Date. The
Company has complied with all Legal Requirements relating to the employment of
labor, including provisions thereof relating to wages, hours, equal
opportunity, collective bargaining and the payment of social security and other
Taxes. The Company will not be required to give any notice under any plant
closing or similar law as a result of this Agreement, the Other Seller
Agreements or the transactions contemplated hereby or thereby. The Company
does not have any labor relations problems or disputes, nor has it experienced
any strikes, grievances, claims of unfair labor practices or other collective
bargaining disputes. The Company is not a party to or bound by any collective
bargaining agreement, there is no union or collective bargaining unit at the
Company's facilities, and no union organization effort has been threatened,
initiated or is in progress with respect to any employees of the Company. The
Company is not indebted to any shareholder, officer, director, employee or
consultant or any relative or Affiliate thereof, whether by loan, advance or
otherwise, other than for salaries accrued but not yet payable and reimbursable
out-of-pocket expenses incurred in the ordinary course of business and not yet
payable, nor is any shareholder, officer, director, employee or consultant or
any relative or Affiliate thereof so indebted to the Company.
(v) Supplier and Customer Relationships. Exhibit
3.1(v) lists each customer that individually or with its Affiliates was, based
upon the Company's sales, rental or lease revenues during the fiscal years
ending December 31, 1994 and 1995 and the period from June 30, 1995 to March
31, 1996, one of the Company's ten largest customers in each such year or such
nine-month period (collectively, the "Principal Customers"). Exhibit 3.1(v)
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lists each supplier that individually or with its Affiliates was, based upon
the Company's purchases of supplies during the fiscal year ending December 31,
1995 and the period from June 30, 1995 to March 31, 1996, one of the Company's
ten largest suppliers in such year or such nine-month period (collectively, the
"Principal Suppliers"). The Company has good commercial working relationships
with its customers and suppliers and since June 30, 1995 no Principal Customer
or Principal Supplier has canceled or otherwise terminated its relationship
with the Company, materially decreased or limited its purchases, rentals or
leases from the Company or its materials or products supplied to the Company,
or threatened to take any such action. To the best knowledge of the Company and
the Shareholders, no customer has any plans to reduce its purchases, rentals or
leases from the Company below levels prevailing in recent periods, and the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not adversely affect the relationship of
the Company with any of the Principal Customers or Principal Supplier prior to
the Closing Date or of the Buyer with any Principal Customer or Principal
Supplier after the Closing Date.
(w) Condition, Adequacy and Type of Equipment.
All of the machinery, equipment and tangible personal property included in the
Assets or to be included in the Assets has been well maintained, is in good
repair and good operating condition and is suitable for the purposes for which
it is presently used. The existing machinery, equipment and tangible personal
property is sufficient for the conduct of the Company's business as now
conducted. The Company has not experienced material problems or deficiencies
with respect to such machinery, equipment and tangible personal property, and,
to the best knowledge of the Company and the Shareholders, there is no basis to
anticipate any such problems or deficiencies; provided, however, that the
parties acknowledge that in the normal course of the Company's business certain
items of the Inventory which are held for rental or lease may suffer damage in
the course of its use by the customer and that such items have been repaired,
or are reparable and are in the process of being repaired, by the Company for
use in the Company's rental and leasing business. From October 1, 1995 through
the Closing Date, the Company has repaired and will repair damaged items of
Inventory which are held for rental or lease on a basis consistent with pre-
October 1, 1995 practice.
(x) Environmental Obligations. Except as
disclosed in Exhibit 3.1(x), to the best knowledge of the Company and the
Shareholders, the Company is conducting and at all times has conducted its
business and operations, and has occupied and used the Premises and all other
real property and facilities previously owned, occupied, used or operated by
the Company, in accordance with and in compliance with all Environmental
Obligations and so as not to give rise to Liability under any Environmental
Obligations or to any adverse impact on the Company's business or activities.
Except as disclosed in Exhibit 3.1(x), to the best knowledge of the Company and
the Shareholders, there is no basis to believe or suspect that the Company's
business has been conducted or is being conducted in violation of any
Environmental Obligations, and neither the Company nor the Shareholders have
any knowledge of pending or proposed changes to any Environmental Obligations
which would require any changes in any of the Premises or any of the Company's
equipment, operations or procedures or affect the Company's business or its
cost of conducting its business as now conducted.
(y) Compliance, Disclosure of Environmental
Conditions. Except as disclosed in Exhibit 3.1(y), to the best knowledge of
the Company and the Shareholders, no
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conditions, circumstances or activities have existed or currently exist with
respect to the Premises, any other real property or facilities previously
owned, occupied, used or operated by the Company or any predecessor, or the
Company's business, facilities or property which could give rise to any
Environmental Liability, including but not limited to the recovery by any
Governmental Authority or other Person of any remedial or removal costs,
response costs, natural resource damages or other costs, expenses or damages
arising from or relating to any release or threat of release of any Hazardous
Material or any alleged injury or threat of injury or harm to public health,
safety or the environment (however, notwithstanding anything to the contrary
contained in this Agreement, the representation and warranty set forth in this
sentence is given with respect to "any other real property or facilities
previously owned" based solely upon the actual knowledge of the Persons
identified in Section 3.4 without any investigation or due diligence). Except
as disclosed in Exhibit 3.1(y), to the best knowledge of the Company and the
Shareholders, no conditions, circumstances or activities have existed or
currently exist with respect to the Premises, any other real property or
facilities previously owned, occupied, used or operated by the Company or any
predecessor, or the Company's business, facilities or property which could
subject the Company or the Buyer to any administrative, civil or criminal
liability, injunctive relief, penalty or obligation, whether under common law,
equitable theory, or pursuant to Environmental Obligations, or which in the
future could result in or may have in the past resulted in actual or threatened
damage, harm, or impairment of, or a threat to, public health, safety, welfare
or the environment (however, notwithstanding anything to the contrary contained
in this Agreement, the representation and warranty set forth in this sentence
is given with respect to "any other real property or facilities previously
owned" based solely upon the actual knowledge of the Persons identified in
Section 3.4 without any investigation or due diligence). Exhibit 3.1(y)
identifies all real property and facilities, including the addresses thereof,
which have been owned, occupied, used or operated by the Company or its
predecessors at any time on or prior to the date of this Agreement.
(z) No Outstanding Orders or Actions. Except as
set forth on Exhibit 3.1(z), there are no outstanding Orders against the
Company, any Shareholder or any relative or Affiliate of any Shareholder, nor,
to the best knowledge of the Company and the Shareholders, are there any
pending or threatened investigations of any kind against the Company, any
Shareholder or any relative or Affiliate of any Shareholder, concerning any
environmental, public health, safety, welfare or land use matters or other
Environmental Obligations, including, but not limited to, the emission,
discharge or release of hazardous or toxic substances or wastes, pollutants, or
contaminants into the environment or work place, or the handling, storage,
treatment, disposal or transportation of hazardous or toxic substances or
wastes, pollutants or contaminants. Except as set forth on Exhibit 3.1(z), to
the best knowledge of the Company and the Shareholders, there are no actions,
suits or administrative, arbitral or other proceedings alleged, claimed,
threatened, pending against or affecting the Company, any Shareholder or any
relative or Affiliate of any Shareholder at law or in equity with respect to
any environmental, public health, safety or land use matters or other
Environmental Obligations, and except as disclosed in Exhibit 3.1(z) neither
the Company nor the Shareholders have any knowledge of any existing grounds on
which any such action, suit or proceedings might be commenced.
(aa) No Waste Disposal. Except as disclosed in
Exhibit 3.1(aa), to the best knowledge of the Company and the Shareholders, (i)
all chemicals and chemical
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compounds and mixtures which are included among the assets of the Company are
integral to and required for the conduct of the Company's business and (ii) all
Hazardous Materials which are or were generated as part of the business of the
Company are and have been handled, stored, treated, disposed of and transported
in accordance with applicable Legal Requirements and Environmental Obligations.
(ab) Permits. The Company owns or holds all
Permits necessary to allow it to own, lease and operate its properties and to
conduct its business. Each of such Permits is listed on Exhibit 3.1(ab). All
of the Permits are currently in full force and effect, no action or claim is
pending or threatened to revoke, modify or terminate any Permit or render any
Permit invalid, and all of the Permits are transferable to the Buyer.
(ac) Intellectual Property.
(i) Exhibit 3.1(ac) lists each item of
Intellectual Property which is owned by the Company, which is owned by
any Shareholder and is related to the Company or the Business, or
which is used by the Company in the Business and, in each case where
the Company is not the owner, the owner of the Intellectual Property.
The Company owns or has the legal right to use each such item of
Intellectual Property, and, to the best knowledge of the Company and
the Shareholders, none of such Intellectual Property is subject to any
Encumbrance. Each item of Intellectual Property described on Exhibit
3.1(ac) will be owned or available for use by the Buyer on identical
terms and conditions after the Closing. The Company has taken all
necessary and desirable action to maintain and protect each item of
Intellectual Property that it owns or uses.
(ii) To the best knowledge of the Company
and the Shareholders, the Company has not interfered with, infringed
upon, misappropriated or otherwise come into conflict with any
Intellectual Property rights of any other Person, and none of the
Company and the directors and officers (and employees with
responsibility for Intellectual Property matters) of the Company has
ever received any charge, complaint, claim, demand, or notice alleging
any such interference, infringement, misappropriation or violation
(including any claim that the Company must license or refrain from
using any Intellectual Property rights of any other Person). To the
best knowledge of the Company and the Shareholders, the continued
operation of the Business as currently conducted will not interfere
with, infringe upon, misappropriate or conflict with any Intellectual
Property rights of another Person. To the best knowledge of the
Company and the Shareholders, no other Person has interfered with,
infringed upon, misappropriated or otherwise come into conflict with
any Intellectual Property rights of the Company.
(iii) The Company has not granted any
license, sublicense or permission with respect to any Intellectual
Property owned or used in the Business. With respect to each item of
Intellectual Property required to be identified in Exhibit 3.1(ac), to
the best knowledge of the Company and the Shareholders, no action,
suit, proceeding, hearing, investigation, charge, complaint, claim or
demand is pending or is threatened which challenges the legality,
validity, enforceability, use or ownership
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of the item. The Company has never agreed to indemnify any Person for
or against any interference, infringement, misappropriation or other
conflict with respect to any such item.
(iv) The Company is not obligated to pay
any royalty or license or sublicense fee with respect any Intellectual
Property. To the best knowledge of the Company and the Shareholders,
the Company does not use any item of Intellectual Property which is
owned in whole or in part by any other Person, whether or not such use
is pursuant to any license, sublicense, agreement or permission.
(ad) Guaranties. The Company is not a guarantor
of or, to the best knowledge of the Company and the Shareholders, otherwise
liable for any Liability (including indebtedness) of any other Person.
(ae) Powers of Attorney. There are no outstanding
powers of attorney executed on behalf of the Company.
(af) Brokers' Fees. Neither the Company nor any
Shareholder has any Liability to pay any fees or commissions to any broker,
finder or agent with respect to the transactions contemplated by this
Agreement.
(ag) Disclosure. Documents and information
provided to the Buyer by the Company, any Shareholder or any agents or
employees thereof in the course of the Buyer's due diligence investigation and
the negotiation of this Agreement, Section 3.1 of this Agreement and the
disclosure Exhibits referred to therein, including the financial statements
referred to above in Section 3.1, considered together, do not contain any
untrue statement of any material fact and do not omit to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. There is no fact which materially adversely affects the business,
prospects, condition, affairs or operations of the Company or any of its
properties or assets which has not been set forth in this Agreement or such
Exhibits, including such financial statements. Nothing in the disclosure
Exhibits referred to in Section 3.1 shall be deemed adequate to disclose an
exception to a representation or warranty made herein unless the applicable
disclosure Exhibit identifies the exception with particularity and describes
the relevant facts in reasonable detail. The Shareholders acknowledge and
agree that the fact that they have made disclosures pursuant to Section 3.1 or
otherwise of matters, or did not have knowledge of matters, which result in
Adverse Consequences to the Buyer shall not relieve the Shareholders of their
obligation to indemnify and hold the Buyer harmless from all such Adverse
Consequences pursuant to Article 7.
3.2. Representations and Warranties of the Buyer. The
Buyer represents and warrants to the Shareholders that the statements contained
in this Section 3.2 are correct and complete as of the date of this Agreement
and will be correct and complete as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of this Agreement
throughout this Section 3.2).
(a) Organization, Good Standing, Power, Etc. The
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State
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of Delaware. This Agreement and the Other Buyer Agreements and the
transactions contemplated hereby and thereby have been duly approved by all
requisite corporate action. The Buyer has full corporate power and authority
to execute, deliver and perform this Agreement and the Other Buyer Agreements,
and this Agreement constitutes, and the Other Buyer Agreements will when
executed and delivered constitute, the legal, valid and binding obligations of
the Buyer, and shall be enforceable in accordance with their respective terms
against the Buyer.
(b) No Violation of Agreements, Etc. The
execution, delivery and performance of this Agreement and the Other Buyer
Agreements, and the consummation of the transactions contemplated hereby and
thereby will not (i) violate any Legal Requirement or Order to which the Buyer
is subject or any provision of the certificate of incorporation or bylaws of
the Buyer or (ii) violate, with or without the giving of notice or the lapse of
time or both, or conflict with or result in the breach or termination of any
provision of, or constitute a default under, or give any Person the right to
accelerate any obligation under, or result in the creation of any Encumbrance
upon any properties, assets or business of the Buyer pursuant to, any
indenture, mortgage, deed of trust, lien, lease, license, agreement, instrument
or other arrangement to which the Buyer is a party or which the Buyer or any of
its assets and properties is bound or subject. Except for notices and consents
that will be given or obtained by the Buyer prior to the Closing, the Buyer
does not need to give any notice to, make any filing with or obtain any
authorization, consent or approval of any Governmental Authority or other
Person in order for the parties to consummate the transactions contemplated by
this Agreement.
3.3. Survival of Representations. The representations and
warranties contained in Sections 3.1 and 3.2 and the Liabilities of the parties
with respect thereto shall survive any investigation thereof by the parties and
shall survive the Closing for two years, except that the Liabilities of the
Shareholders with respect to (a) the representations and warranties set forth
in Section 3.1(j) shall survive until the expiration of all applicable statutes
of limitation and (b) the representations and warranties set forth in Sections
3.1(a), 3.1(b), 3.1(k)(i), 3.1(t), 3.1(x), 3.1(y), 3.1(z), 3.1(aa) and 3.1(ag),
and the Liabilities of the Buyer with respect to the representations and
warranties set forth in Section 3.2(a), shall survive without termination.
3.4. Representations as to Knowledge. The representations
and warranties contained in Article 3 hereof shall in each and every case where
an exercise of discretion or a statement to the "best knowledge," "best of
knowledge" or "knowledge" is required on behalf of any party to this Agreement
be deemed to require that such exercise of discretion or statement be in good
faith after reasonable investigation, with due diligence, to the best efforts
of each such party and be exercised always in a reasonable manner and within
reasonable times. For purposes of Section 3.1, the terms "Company" and
"Shareholders" shall, when used in reference to a statement made to the "best
knowledge," "best of knowledge" or "knowledge" of the Company or of the
Shareholders, include each Shareholder, each director of the Company, each
officer of the Company, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, each manager of
the Company's stores (but in the case of each such manager, only as to such
store and matters related thereto), and each other employee of the Company who
is responsible to the Company (by job description, delegation of duty or
responsibility, if any) for matters which are the subject of such statement.
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4. Pre-Closing Covenants. The parties agree as follows with
respect to the period between the execution of this Agreement and the Closing.
4.1. General. Each of the parties will use its best
efforts to take all action and to do all things necessary, proper or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions
set forth in Section 6). Without limiting the foregoing, the Shareholders will
cause the Company to give any notices, make any filings and obtain any
consents, authorizations and approvals needed to consummate the transactions
contemplated by this Agreement.
4.2. Operation of Business. The Shareholders will not
cause or permit the Company to engage in any practice, take any action or enter
into any transaction outside its ordinary course of business; provided,
however, that in no event will any action be taken or any transaction be
entered into which would result in a breach of any representations, warranties
or covenants of any Shareholder. Without limiting the foregoing, on or after
the date of this Agreement but on or before the Closing Date, the Company may
purchase new or used rental equipment for use in the Business ("New Rental
Equipment") or may sell (but only for cash or a Current Rental Equipment
Receivable) rental equipment owned by the Company on or after October 1, 1995
("Current Rental Equipment"), but may not otherwise sell, trade, transfer or
dispose of any Current Rental Equipment; provided, however, that between the
date of this Agreement and the Closing no New Rental Equipment shall be
purchased and no Current Rental Equipment shall be sold without the express
prior written approval of an officer of the Buyer and without the Shareholders'
Agent and an officer of the Buyer expressly agreeing on the amount by which the
purchase price payable pursuant to Section 2.2 shall be increased in respect of
New Rental Equipment purchases ("New Rental Equipment Increases") and the
amount by which the purchase price payable pursuant to Section 2.2 shall be
decreased in respect of Current Rental Equipment sales ("Current Rental
Equipment Decreases"). Further, between the date of this Agreement and the
Closing, no New Rental Equipment shall be ordered without the express prior
written approval of an officer of the Buyer. Exhibit 4.2 sets forth (a) New
Rental Equipment Increases, as agreed by the Shareholders' Agent and an officer
of the Buyer, with respect to New Rental Equipment purchased on or after
October 1, 1995 but on or before the day immediately preceding the date of this
Agreement, (b) Current Rental Equipment Decreases, as agreed by the
Shareholders' Agent and an officer of the Buyer, with respect to Current Rental
Equipment sold on or after October 1, 1995 but on or before the day immediately
preceding the date of this Agreement, and (c) all New Rental Equipment which,
as of the day immediately preceding the date of this Agreement, has been
ordered but not yet delivered to the Company. If any New Rental Equipment
purchases or Current Rental Equipment sales occur on or after the date hereof
but on or before the Closing Date, Exhibit 4.2 shall be amended by agreement of
the Shareholders' Agent and the Buyer to reflect any agreed-upon New Rental
Equipment Increases and Current Rental Equipment Decreases relating thereto.
4.3. Preservation of Business. The Shareholders will
cause the Company to keep its business and properties intact, including its
current operations, physical facilities, working conditions, and relationships
with lessors, licensors, suppliers, customers and employees.
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4.4. Full Access. The Shareholders will cause the Company
to permit the Buyer and its agents to have full access at all reasonable times,
and in a manner so as not to interfere with the normal business operations of
the Company, to all premises, properties, personnel, books, records (including
Tax records), contracts, and documents of or pertaining to the Company.
4.5. Notice of Developments. The Shareholders will give
prompt written notice to the Buyer of any material development which occurs
after the date of this Agreement and affects the assets, Liabilities, business,
financial condition, operations, results of operations or future prospects of
the Company or the representations, warranties, covenants or disclosure
Exhibits of the Shareholders. No such written notice, however, shall be deemed
to amend or supplement any disclosure Exhibit or to prevent or cure any
misrepresentation, breach of warranty or breach of covenant.
4.6. Exclusivity. No Shareholder will, and no Shareholder
will cause or permit the Company to, (a) solicit, initiate or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of any capital stock or other voting securities, or any portion of the assets
of, the Company (including any acquisition structured as a merger,
consolidation or share exchange) or (b) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in or facilitate in any other manner any effort or attempt by any
Person to do or seek any of the foregoing. No Shareholder will vote shares of
the Company's stock in favor of any such transaction. The Shareholders will
notify the Buyer immediately if any Person makes any proposal, offer, inquiry
or contact with respect to any of the foregoing.
4.7. Announcements. Prior to the Closing, no party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the other
parties.
4.8. Confirmatory Conveyance. Prior to the Closing Date,
the Individual Shareholders shall convey to the Company, free and clear of any
Encumbrance or Tax, all of each Individual Shareholder's right, title and
interest to the Company Improvements, Fixtures and Fittings.
4.9. Closing Date Liabilities and Distribution. (a)
Immediately prior to the Closing Date, the Shareholders shall cause the Company
to pay in full all Liabilities of the Company (including Company Transaction
Expenses as permitted pursuant to Section 9.10), other than (i) the Closing
Date Trade Payables, the 1996 Unpaid Personal Property Taxes, the 1997 Personal
Property Taxes and the Post-Closing ▇▇▇▇▇▇▇ Lease Obligations (which Closing
Date Trade Payables, 1996 Unpaid Personal Property Taxes, 1997 Personal
Property Taxes and Post-Closing ▇▇▇▇▇▇▇ Lease Obligations shall, after the
Closing, be the obligation and responsibility of the Company), (ii) any
Liabilities of the Company for which the Shareholders are responsible pursuant
to Sections 2.3 or 9.10, relating to the period ending on the Closing Date and
(iii) those Environmental Liabilities identified on Exhibit 3.1(g) (which
Environmental Liabilities shall, after the Closing Date, be the obligation and
responsibility of the Shareholders rather than the Company and are, effective
as of the Closing Date, hereby assumed by the Shareholders) (such Liabilities,
excluding (A) the Closing Date Trade Payables,
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the 1996 Unpaid Personal Property Taxes, the 1997 Personal Property Taxes and
the Post-Closing ▇▇▇▇▇▇▇ Lease Obligations, (B) any Liabilities for which the
Shareholders are responsible pursuant to Sections 2.3 and 9.10 and (C) those
Environmental Liabilities identified on Exhibit 3.1(g), are referred to as the
"Closing Date Liabilities").
(b) Immediately prior to the Closing Date, the
Shareholders shall cause the Company to distribute to the Shareholders the
Excluded Assets (the "Closing Date Distribution"). Any and all Taxes
attributable to such distribution of Excluded Assets and to any prior
distribution or dividend of assets, including, without limitation, any
recognition by the Company of taxable income or gain with respect to the
distribution or dividend of the Excluded Assets or any prior distribution or
dividend of assets, shall be paid in full by the Shareholders, and the Company
shall not have any Liability with respect thereto.
5. Post-Closing Covenants. The parties agree as follows with
respect to the period following the Closing without in any way limiting the
scope of any representation, warranty, covenant or agreement set forth in this
Agreement.
5.1. Further Assurances. In case at any time after the
Closing any further action is necessary or desirable to carry out the purposes
of this Agreement, each of the parties will take such further action (including
the execution and delivery of such further instruments and documents) as any
other party reasonably may request, all at the sole cost and expense of the
requesting party (unless the requesting party is entitled to indemnification
therefor under Section 7).
5.2. Transition. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
will provide reasonable consulting services (up to 25 hours per month for
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and up to 15 hours per month for ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as
requested by the Buyer) to the Buyer to assist in transition matters during the
first year following the Closing. No Shareholder will, and the Shareholders
will cause their Affiliates and relatives not to, take any action that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier or other business associate of the Company from continuing,
or any other Person from establishing, a business relationship with the Buyer
after the Closing.
5.3. Cooperation. In the event and for so long as any
party actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection with
(a) any transaction contemplated by this Agreement or (b) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act or transaction on or prior to the Closing Date
involving the Company, each of the other parties will cooperate with her, him
or it and her, his or its counsel in the contest or defense, make available
their personnel, and provide such testimony and access to their books and
records as shall be reasonably necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending party
(unless the contesting or defending party is entitled to indemnification
therefor under Section 7).
5.4. Confidentiality. The Shareholders will treat and
hold as confidential all Confidential Information concerning the Business,
refrain from using any such Confidential
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Information and deliver promptly to the Buyer or destroy, at the request and
option of the Buyer, all of such Confidential Information in its or their
possession.
5.5. Post-Closing Announcements. Following the Closing,
no Shareholder shall issue any press release or make any public announcement
relating to the subject matter of this Agreement without the prior written
approval of the Buyer.
5.6. Financial Statements. The Shareholders shall, upon
request of the Buyer, cooperate with the Buyer to produce such historical and
on-going financial statements and audits as the Buyer may request, all at the
sole cost and expense of the Buyer.
5.7. Termination of Obligations. Upon Closing but
effective from and after the Closing Date, neither the Buyer nor the Company
shall have any Liability to any Shareholder or any Affiliate or relative
thereof, except as otherwise provided in this Agreement, the Employment
Agreements and the Shareholder Leases. Upon Closing but effective from and
after the Closing Date, the Shareholders shall not have any Liability to the
Buyer or the Company, except as otherwise provided in this Agreement, the
Employment Agreements, the Noncompetition Agreement and the Shareholder Leases.
5.8. Medical Benefits. From and after the Closing, the
Buyer shall provide medical coverage to each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ pursuant to the medical coverage plans in effect from time to time for
employees of the Buyer (the "Medical Plans"), to the extent the terms of such
Medical Plans so permit and provided that ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ promptly reimburse the Buyer in full for the total cost incurred by the
Buyer in providing such coverage. If the employment by the Buyer of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ is terminated after the Closing, the Buyer shall,
for a period of up to ten years from the date of termination, provide medical
coverage to such terminated employee pursuant to the Medical Plans, to the
extent the terms of such Medical Plans so permit and provided that such
terminated employee promptly reimburses the Buyer in full for the total cost
incurred by the Buyer in providing such coverage. If the Medical Plans do not
permit the Buyer to provide such medical coverage to any of the above-
referenced persons, the Buyer shall not have any obligation to provide medical
coverage to such person. Further, the obligations of the Buyer pursuant to
this Section 5.8 shall not require the Buyer to "self-insure" or have any
particular medical coverage plan. The term "total cost" as used in this
Section shall include all costs and expenses incurred by the Buyer in providing
such coverage, including, without limitation, any increase in insurance
premiums and costs associated with the impact that inclusion of any of the
above-referenced persons may have on the Buyer's "risk pool" or "experience
rating."
5.9. Certain Environmental Matters. The Shareholders shall
obtain from the Washington Department of Ecology within 180 days of the Closing
a written statement providing that the contamination which has been documented
to currently exist on the property located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ may
remain in place and that no remedial actions (including but not limited to
excavation, disposal, or treatment) are required. In the event that any
remedial actions (including but not limited to excavation, disposal, or
treatment) are required regarding
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such contamination, such actions shall be subject to the Shareholders'
indemnification and other obligations set forth in Section 7 of this Agreement.
6. Conditions to Closing.
6.1. Conditions to Obligation of the Buyer. The
obligation of the Buyer to consummate the transactions contemplated by this
Agreement is subject to satisfaction of the following conditions:
(a) each Shareholder's representations and
warranties shall be correct and complete at and as of the Closing Date and the
Closing and any written notices delivered to the Buyer (the form of which shall
be reasonably satisfactory to the Buyer) pursuant to Section 4.5 and the
subject matter thereof shall be satisfactory to the Buyer;
(b) the Shareholders shall have performed and
complied with all of their covenants hereunder through the Closing;
(c) the Shareholders shall have given, or shall
have caused the Company to give, all notices and procured, or shall have caused
the Company to procure, all of the third-party consents, authorizations and
approvals required to consummate the transactions contemplated by this
Agreement, all in form and substance reasonably satisfactory to the Buyer;
(d) no action, suit or proceeding shall be
pending or threatened before any Governmental Authority or before any other
Person wherein an unfavorable Order would (i) prevent consummation of any of
the transactions contemplated by this Agreement, (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation or (iii) affect adversely the right of the Buyer to own the Shares
or of the Company to own its assets and conduct its business, and no such Order
shall be in effect;
(e) there shall have been no adverse change in
the Company or the Business since the date of execution of this Agreement;
(f) the Shareholders shall have delivered to the
Buyer a certificate to the effect that each of the conditions specified above
in Sections 6.1(a) through (e) is satisfied in all respects;
(g) the Buyer shall have satisfactorily completed
its due diligence with respect to the Company;
(h) the Other Seller Agreements and the consent
of the landlord to the assignment of the Premises Lease under which ▇▇▇▇▇▇
▇▇▇▇▇▇▇ is lessor shall have been executed and delivered by the Shareholders
and the other parties thereto (other than the Buyer);
(i) the Buyer shall have received from counsel to
the Shareholders an opinion in form and substance as set forth in Exhibit
6.1(i) addressed to the Buyer and its debt and equity financing sources and
dated as of the Closing;
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(j) the Shareholders' estimate of Closing Date
Trade Payables, which shall be delivered to the Buyer two days prior to the
Closing Date, shall be acceptable to the Buyer;
(k) the Buyer shall have received the
resignations, effective as of the Closing, of each director and officer of the
Company;
(l) stock certificates representing the Shares,
duly endorsed in blank or accompanied by stock powers duly executed in blank,
shall have been delivered by the Shareholders to the Buyer;
(m) the Shareholders shall have delivered to the
Buyer possession and control of the Company and its assets, including, without
limitation, all stock certificate books, minute books, corporate seals, and all
other corporate and financial records of the Company;
(n) financing necessary for the consummation of
the transactions contemplated hereby and the operation of the Business shall be
available to the Buyer on terms and conditions satisfactory to the Buyer;
(o) a written report of the results of
environmental studies of the Premises shall have been completed by the
Shareholders and supplied to the Buyer, and the contents of such report and the
conditions described therein shall be satisfactory to the Buyer; and
(p) the Shareholders shall have delivered, or
caused the Company to deliver, to the Buyer such other instruments,
certificates and documents as are reasonably requested by the Buyer in order to
consummate the transactions contemplated by this Agreement, all in form and
substance reasonably satisfactory to the Buyer.
The Buyer may waive any condition specified in this Section 6.1 at or prior to
the Closing.
6.2. Conditions to Obligation of the Shareholders. The
obligation of the Shareholders to consummate the transactions contemplated by
this Agreement is subject to satisfaction of the following conditions:
(a) the Buyer's representations and warranties
shall be correct and complete at and as of the Closing Date and the Closing;
(b) the Buyer shall have performed and complied
with all of its covenants hereunder through the Closing Date;
(c) no action, suit or proceeding shall be
pending or threatened before any Governmental Authority or before any other
Person wherein an unfavorable Order would (i) prevent consummation of any of
the transactions contemplated by this Agreement or (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, and no such Order shall be in effect;
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(d) the Buyer shall have delivered to the
Shareholders a certificate to the effect that each of the conditions specified
above in Sections 6.2(a) and (b) is satisfied in all respects;
(e) the Other Buyer Agreements shall have been
executed and delivered by the Buyer;
(f) the Shareholders shall have received from
counsel to the Buyer an opinion in form and substance as set forth in Exhibit
6.2(f), addressed to the Shareholders and dated as of the Closing; and
(g) the Buyer shall have paid and deposited the
purchase price in accordance with Section 2.2.
The Shareholders' Agent may waive any condition specified in this Section 6.2
at or prior to the Closing.
7. Remedies for Breaches of This Agreement.
7.1. Indemnification Provisions for Benefit of the Buyer
and the Company.
(a) If any Shareholder breaches (or if any third
party, including any Governmental Authority, alleges facts that, if true, would
mean any Shareholder has breached) any of the Shareholder's representations or
warranties contained herein and the Buyer gives notice thereof (which notice
shall describe the breach or alleged breach in reasonable detail given the
facts then known to the Buyer) to the Shareholders' Agent within the Survival
Period, or if a Shareholder or relative or Affiliate thereof (including any
Shareholder who is a lessor under any Shareholder Lease) breaches (or if any
third party, including any Governmental Authority, alleges facts that, if true,
would mean any Shareholder or relative or Affiliate thereof has breached) any
representation of such Shareholder or relative or Affiliate thereof contained
in any Other Seller Agreement or any covenant of such Shareholder or relative
or Affiliate thereof contained herein or in the Other Seller Agreements and the
Buyer gives notice thereof (which notice shall describe the breach or alleged
breach in reasonable detail given the facts then known to the Buyer) to the
Shareholders' Agent, then the Shareholders agree to jointly and severally
indemnify the Buyer and the Company from and against any Adverse Consequences
the Buyer or the Company may suffer resulting from, arising out of, relating to
or caused by any of the foregoing regardless of whether the Adverse
Consequences are suffered during or after the Survival Period. In addition,
the Shareholders agree to jointly and severally indemnify the Buyer and the
Company from and against any Adverse Consequences the Buyer or the Company may
suffer which arise out of, result from, relate to or are caused by any of the
following, regardless of whether or not any such matter was known to the
Company or any Shareholder, is a matter with respect to which the Company or a
Shareholder did not have knowledge or was disclosed on any Exhibit hereto (i)
any act or omission of the Company, any predecessor or any Shareholder
(including any Shareholder who is a lessor under any Shareholder Lease) with
respect to, or any event or circumstance related to, the Company's, any
predecessor's or any Shareholder's ownership, occupation, use or operation of
such Person's assets or such Person's conduct of its business, which act,
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omission, event or circumstance occurred or existed prior to or at the Closing
Date, without regard to whether a claim with respect to such matter is asserted
before or after the Closing Date; (ii) any Liability of the Company with
respect to the period prior to the Closing Date, other than the Closing Date
Trade Payables, the 1996 Unpaid Personal Property Taxes and the 1997 Personal
Property Taxes; (iii) any Liability of any Shareholder or predecessor
(including any Shareholder who is a lessor under any Shareholder Lease) with
respect to the period prior to or after the Closing Date; (iv) any
Environmental Liability with respect to the period prior to or after the
Closing Date (including, without limitation, the Environmental Liabilities
identified on any Exhibit hereto), except for any Environmental Liability
arising out of the use, generation, storage, release or disposal of any
Hazardous Materials after the Closing by the Company, the Buyer, its successors
or any of their respective agents or contractors or arising out of the failure
after the Closing Date by the Company, the Buyer or any of their respective
agents or contractors to comply with applicable Environmental Obligations in
connection with such use, generation, storage, release or disposal after the
Closing by the Company, the Buyer, its successors or any of their respective
agents or contractors; or (v) any failure of the Company or any predecessor to
comply prior to the Closing Date with any Legal Requirement. If any dispute
arises concerning whether any indemnification is owing which cannot be resolved
by negotiation among the parties within a reasonable time, the dispute shall be
resolved by arbitration pursuant to this Agreement.
(b) Notwithstanding the foregoing Section 7.1(a),
the Shareholders shall have no obligation to indemnify the Buyer unless and
until the aggregate amount of Adverse Consequences suffered by the Buyer and
the Company from all matters as to which they are entitled to indemnification
under this Agreement (except those matters described in the next sentence)
totals $50,000, at which point the Shareholders jointly and severally shall be
required to indemnify the Buyer and the Company for all Adverse Consequences
suffered by either of them (including those Adverse Consequences which
initially aggregated to the $50,000 threshold). The Shareholders jointly and
severally shall indemnify the Buyer and the Company in full (without regard to
the $50,000 amount described in the preceding sentence) for all Adverse
Consequences which arise out of, result from, relate to or are caused by (i)
any failure by the Shareholders to pay the full amounts payable by them
pursuant to Sections 2.3, 4.9, 8.2 or 9.10 of this Agreement; (ii) any Current
Rental Equipment Receivable, Interim Period Receivable or Other Closing
Receivables failing to be collected by the Buyer as specified in Section
3.1(n); (iii) any breach of the representations and warranties set forth in
Sections 3.1(a), 3.1(c), 3.1(k)(i), 3.1(q)(ii), 3.1(t), 3.1(x), 3.1(y), 3.1(z)
or 3.1(aa), the last sentence of Section 3.1(j)(i), the last sentence of
Section 3.1(q)(i) or the last sentence of Section 3.1(w); (iv) any breach of
the representations and warranties set forth in Section 3.1(g) which results in
Adverse Consequences of more than $10,000 (however, once such $10,000 amount is
reached, the Shareholders shall indemnify the Buyer and the Company for all
Adverse Consequences suffered as a result of all breaches of Section 3.1(g)
(including those Adverse Consequences which initially aggregated to the $10,000
threshold)); (v) any breach of the representations and warranties set forth in
Section 3.1(h) which results in Adverse Consequences of more than $10,000
(however, once such $10,000 amount is reached, the Shareholders shall indemnify
the Buyer and the Company for all Adverse Consequences suffered as a result of
all breaches of Section 3.1(h) (including those Adverse Consequences which
initially aggregated to the $10,000 threshold)); (vi) any breach of the
representations and warranties set forth in Section 3.1(k)(ii) or (iii) which
results in Adverse Consequences of more
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than $10,000 (however, once such $10,000 amount is reached, the Shareholders
shall indemnify the Buyer and the Company for all Adverse Consequences suffered
as a result of all breaches of Section 3.1(k)(ii) or (iii) (including those
Adverse Consequences which initially aggregated to the $10,000 threshold));
(vii) any Liability of the Company (other than Environmental Liabilities) with
respect to the period prior to the Closing Date, other than Closing Date Trade
Payables, the 1996 Unpaid Personal Property Taxes and 1997 Personal Property
Taxes; (viii) any Environmental Liability with respect to the period prior to
or after the Closing Date (including, without limitation, the Environmental
Liabilities identified on any Exhibit hereto), except for any Environmental
Liability arising out of the use, generation, storage, release or disposal of
any Hazardous Materials after the Closing by the Company, the Buyer, its
successors or any of their respective agents or contractors or arising out of
the failure after the Closing Date by the Company, the Buyer or any of their
respective agents or contractors to comply with applicable Environmental
Obligations in connection with such use, generation, storage, release or
disposal after the Closing by the Company, the Buyer, its successors or any of
their respective agents or contractors; (ix) any matter disclosed on any
Exhibit relating to Section 3.1; (x) any failure of the Shares to be conveyed
by the Shareholders to the Buyer other than free and clear of any Encumbrance
or Tax; (xi) any failure of Section 9.14 not being enforceable against the
Shareholders or as a result of any breach of Section 9.14 by any Shareholder;
(xii) any breach by any Shareholder of any covenant contained in this
Agreement; (xiii) any Liability of any Shareholder; or (xiv) any breach by any
Shareholder (including any Shareholder who is a lessor under any Shareholder
Lease) or Affiliate or relative thereof of any representation, warranty or
covenant set forth in any Other Seller Agreement. In determining whether there
has been a breach of any representation or warranty contained in Section 3.1
and in determining the amount of Adverse Consequences suffered by the Buyer or
the Company for purposes of Sections 7.1(a) and 7.1(b), such representations
and warranties shall not be qualified (other than references to "material" in
Section 3.1(ag)) by "material," "materiality," "in all material respects,"
"best knowledge," "best of knowledge" or "knowledge" or words of similar
import, or by any phrase using any such terms or words.
(c) Notwithstanding anything to the contrary in
this Agreement, the maximum aggregate amount payable by the Shareholders to the
Buyer in respect of breaches of the Shareholders' representations or warranties
contained in this Agreement shall not exceed the aggregate purchase price for
the Shares paid to the Shareholders by the Buyer pursuant to Section 2.2.
7.2. Indemnification Provisions for Benefit of the
Shareholders.
(a) If the Buyer breaches (or if any third party,
including any Governmental Authority, alleges facts that, if true, would mean
the Buyer has breached) any of its representations or warranties contained
herein and the Shareholders' Agent gives notice thereof to the Buyer within the
Survival Period, or if the Buyer breaches (or if any third party, including any
Governmental Authority, alleges facts that, if true, would mean the Buyer has
breached) any of its representations or covenants contained herein or in the
Other Buyer Agreements and the Shareholders' Agent gives notice thereof (which
notice shall describe the breach or alleged breach in reasonable detail given
the facts then known to the Shareholders) to the Buyer, then the Buyer agrees
to indemnify the applicable Shareholders from and against any Adverse
Consequences such Shareholders may suffer resulting from, arising out of,
relating
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to, or caused by the breach or alleged breach, regardless of whether the
Adverse Consequences are suffered during or after the Survival Period. If any
dispute arises concerning whether any indemnification is owing which cannot be
resolved by negotiation among the parties within a reasonable time, the dispute
shall be resolved by arbitration pursuant to this Agreement.
(b) Notwithstanding the foregoing Section 7.2(a),
the Buyer shall have no obligation to indemnify the Shareholders unless and
until the aggregate amount of Adverse Consequences suffered by the Shareholders
from all matters as to which they are entitled to indemnification under this
Agreement (except those matters described in the next sentence) totals $50,000,
at which point the Buyer shall be required to indemnify the Shareholders for
all Adverse Consequences suffered by them (including those Adverse Consequences
which initially aggregated to the $50,000 threshold). The Buyer shall
indemnify the Shareholders in full (without regard to the $50,000 amount
described in the preceding sentence) for all Adverse Consequences which arise
out of, result from, relate to or are caused by (i) any failure by the Buyer to
pay the full amount payable by it pursuant to Sections 8.2 or 9.10 of this
Agreement; (ii) any breach by the Buyer of any of its representations,
warranties or covenants set forth in any Other Buyer Agreement (excluding the
Premises Lease under which ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is the lessor). In determining
whether there has been a breach of any representation or warranty contained in
Section 3.2 and in determining the amount of the Adverse Consequences suffered
by the Shareholders for purposes of Sections 7.2(a) and 7.2(b), such
representations and warranties shall not be qualified by "material,"
"materiality," "in all material respects," "best knowledge," "best of
knowledge" or "knowledge" or words of similar import, or by any phrase using
any such term or terms.
7.3. Matters Involving Third Parties.
(a) If any third party (including, without
limitation, any Governmental Authority) notifies any party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against any other party (the "Indemnifying
Party") under Section 7.1 or 7.2 above, then the Indemnified Party shall notify
(which notification shall consist of such notification as the third party
provides to the Indemnified Party) each Indemnifying Party thereof in writing
within 15 days after receiving such notice. No delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right,
at its sole cost and expense, to defend the Indemnified Party against the Third
Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party so long as (i) the Indemnifying Party notifies the
Indemnified Party in writing within 10 days after the Indemnified Party has
given notice of the Third Party Claim that the Indemnifying Party will
indemnify the Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from, arising out of,
relating to or caused by the Third Party Claim, (ii) the Indemnifying Party
provides the Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party will have the financial resources
to defend against the Third Party Claim and fulfill its indemnification
obligations hereunder, (iii) the Third Party Claim involves only money damages
and does not seek an injunction or other
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equitable relief, (iv) settlement of, or an adverse judgment with respect to,
the Third Party claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice materially adverse
to the continuing business interests of the Indemnified Party, and (v) the
Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently. If the Indemnifying Party does not elect to assume control of or
otherwise participate in the defense or settlement of any Third Party Claim, it
shall be bound by the results obtained by the Indemnified Party with respect to
the Third Party Claim.
(c) So long as the Indemnifying Party is conducting
the defense of the Third Party Claim in accordance with Section 7.3(b) above,
(i) the Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (not to be withheld unreasonably), and (iii)
the Indemnifying Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnified Party (not to be withheld unreasonably).
(d) In the event any of the conditions in Section
7.3(b) above is or becomes unsatisfied, however, (i) the Indemnified Party may
defend against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it reasonably
may deem appropriate (and the Indemnified Party need not consult with, or obtain
any consent from, any Indemnifying Party in connection therewith), (ii) the
Indemnifying Party will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim (including
reasonable attorneys' fees and expenses), and (iii) the Indemnifying Party will
remain responsible for any Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, relating to or caused by the Third Party Claim
to the fullest extent provided in this Section 7.
7.4 Right of Offset. The Buyer shall have the right to
offset any Adverse Consequences it may suffer against any amounts payable
pursuant to this Agreement or any Other Seller Agreements (other than pursuant
to the Employment Agreements) to any Shareholder or Affiliate or relative
thereof at or after the Closing. The Buyer will give notice to the
Shareholders' Agent of its intent to make such an offset, and if there is a
dispute concerning the Buyer's rights to indemnification for any such Adverse
Consequences, the Buyer will not deduct that amount from payments to be made by
the Buyer until the dispute is resolved by agreement of the parties or
arbitration.
7.5 Other Remedies. Subject to Section 9.11, the foregoing
indemnification provisions are in addition to, and not in derogation of any
statutory, equitable or common law remedy any party may have.
8. Termination.
8.1 Termination of Agreement. The Buyer or the
Shareholders may terminate this Agreement by notice to the other at any time
prior to the Closing.
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8.2. Effect of Termination. If this Agreement is
terminated pursuant to Section 8.1, no party shall have any obligation or
Liability to any other party with respect to or as a result of such
termination, except that if this Agreement is terminated by any party and
within nine months of such termination the Company or the Shareholders close
the sale, lease, exchange, transfer or other disposition (including any
transaction structured as a merger, consolidation or share exchange) of all or
substantially all of the assets of the Company (or any successor) or all or
substantially all of the ownership interests in the Company (or any successor)
to a third party, then upon the closing of such transaction the Shareholders
will, jointly and severally, pay to the Buyer cash in an amount equal to all
out-of-pocket costs and expenses (including, without limitation, reasonable
legal fees and expenses) incurred by the Buyer prior to the termination of this
Agreement in connection with this Agreement and the transactions contemplated
hereby; provided, however, that no such amount shall be payable to the Buyer if
this Agreement is terminated by the Buyer for any reason other than (a) a
breach by the Shareholders of any of their representations, warranties or
covenants contained in this Agreement, (b) as a result of any Shareholder or
relative or Affiliate thereof failing to execute and deliver any Other Seller
Agreement to which such Shareholder or relative or Affiliate is a party or (c)
as a result of any adverse change in the Company or the Business attributable
to any Shareholder or relative or Affiliate thereof (however, any adverse
change attributable to the general economy, the economy of the Spokane,
Washington area or the rental industry generally shall not be attributable to
any Shareholder or relative or Affiliate thereof).
8.3. Confidentiality. If this Agreement is terminated,
each party will treat and hold as confidential all Confidential Information
concerning the other parties which it acquired from such other parties in
connection with this Agreement and the transactions contemplated hereby.
9. Miscellaneous.
9.1. No Third-Party Beneficiaries. This Agreement shall
not confer any rights or remedies upon any Person other than the parties and
their respective successors and permitted assigns.
9.2. Entire Agreement. This Agreement (including the
documents referred to herein) constitutes the entire agreement among the
parties and supersedes any prior understandings, agreements or representations
by or among the parties, written or oral, to the extent they relate in any way
to the subject matter hereof.
9.3. Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. No Shareholder may assign this Agreement or
any of such Shareholder's rights, interests or obligations hereunder without
the prior written approval of the Buyer. The Buyer may assign its rights or
obligations hereunder as permitted by law, including without limitation, to any
debt or equity financing source.
9.4. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
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9.5. Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.6. Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if it is
sent by registered or certified mail, return receipt requested, postage
prepaid, or by courier, telecopy or facsimile, and addressed to the intended
recipient as set forth below:
If to the Shareholders: Copy to:
Addressed to the Share- Paine, Hamblen, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
holders' Agent at: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Trust Financial Center
S. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Buyer: Copy to:
RentX Industries, Inc. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Attn: B. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Notices will be deemed given three days after mailing if sent by certified
mail, when delivered if sent by courier, and upon receipt of confirmation by
person or machine if sent by telecopy or facsimile transmission. Any party may
change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
9.7. Governing Law. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of Colorado
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Colorado or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Colorado.
9.8. Amendments and Waivers. No amendment of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by the Buyer and the Shareholders. No waiver by any party of any
default, misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence, and no
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waiver shall be effective unless set forth in writing and signed by the party
against whom such waiver is asserted.
9.9. Severability. Any term or provision of this
Agreement that is invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.
9.10. Expenses. Except as otherwise provided in Section
8.2, (a) the Buyer shall bear its own costs and expenses (including, without
limitation, all legal fees and expenses and all fees, commissions, expenses
and other amounts payable to any broker, finder or agent) incurred by the Buyer
either before or after the date of this Agreement in connection with this
Agreement or the transactions contemplated hereby and (b) the Shareholders, and
not the Company, shall bear all costs and expenses (including, without
limitation, all legal, accounting and tax-related fees and expenses, all fees,
commissions, expenses and other amounts payable to any broker, finder or agent
and the costs of the environmental study to be delivered pursuant to Section
6.1) incurred by the Shareholders or Affiliates or relatives thereof either
before or after the date of this Agreement or by the Company prior to the
Closing in connection with this Agreement or the transactions contemplated
hereby (collectively, "Company Transaction Expenses"); provided, however, that
prior to the Closing Date the Company may use any cash that would otherwise be
an Excluded Asset to pay Company Transaction Expenses.
9.11. Arbitration. Any disputes arising under this
Agreement, including, without limitation, those involving claims for specific
performance or other equitable relief, shall be submitted to binding
arbitration under the Commercial Arbitration Rules of the American Arbitration
Association under the authority of federal and state arbitration statutes, and
shall not be the subject of litigation in any forum. The arbitration shall be
conducted only in Denver, Colorado, before a single arbitrator selected by the
parties or, if they are unable to agree on an arbitrator, before a panel of
three arbitrators, one selected by the Buyer, one selected by the Shareholders
and the third selected by the other two arbitrators. The award of the
arbitrators shall be final and binding and judgment on the award may be entered
by any court of competent jurisdiction. This submission and agreement shall be
specifically enforceable. The prevailing party or parties in any such
arbitration or in any action to enforce this agreement to arbitrate shall be
entitled to all reasonable costs and expenses, including fees and expenses of
the arbitrators and attorneys, incurred in connection therewith.
Notwithstanding the foregoing provisions of this Section 9.11, in any legal
proceeding commenced by a Governmental Authority or other Person against a
party to this Agreement, that party shall have the right to bring a third party
claim for indemnification against any other party which has an obligation to
indemnify it pursuant to this Agreement.
9.12. Construction. The parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement. The word "including" shall mean
including without limitation. The parties intend that each representation,
warranty and covenant contained herein shall have independent significance. If
any party has breached any representation, warranty
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or covenant contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the party has not
breached shall not detract from or mitigate the fact that the party is in
breach of the first representation, warranty or covenant.
9.13. Incorporation of Exhibits. The Exhibits identified
in this Agreement are incorporated herein by reference and made a part hereof.
9.14. Shareholders' Agent. Each of the Shareholders hereby
authorizes and appoints ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to act as its, his or her exclusive
agent and attorney-in-fact to act on behalf of each of them following the
Closing with respect to all matters which are the subject of Sections 6, 7, 8,
9.6, 9.8 or 9.11, including, without limitation, (a) receiving or giving all
notices, instructions, other communications, consents or agreements that may be
necessary, required or given under any of such Sections and (b) asserting,
settling, compromising, or defending, or determining not to assert, settle,
compromise or defend, (i) any claims which any Shareholder may assert, or have
the right to assert, against the Buyer, or (ii) any claims which the Buyer may
assert, or have the right to assert, against any Shareholder. ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ hereby accepts such authorization and appointment. Upon the receipt of
written evidence satisfactory to the Buyer to the effect that ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
has been substituted as agent and attorney-in-fact of the Shareholders by
reason of his death, disability or resignation, the Buyer shall be entitled to
rely on such substituted agent to the same extent as it was theretofore
entitled to rely upon ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ with respect to the matters covered by
this Section 9.14. No Shareholder shall act with respect to any of the matters
which are the subject of Sections 6, 7, 8, 9.6, 9.8 or 9.11 except through the
Shareholder's Agent. The Shareholders acknowledge and agree that the Buyer may
deal exclusively with the Shareholders' Agent in respect of the above-
referenced matters, that the enforceability of this Section 9.14 is material to
the Buyer, and that the Buyer has relied upon the enforceability of this
Section 9.14 in entering into this Agreement.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
RENTX INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Title: President
-------------------------------
SHAREHOLDERS:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually and
as the Shareholders' Agent
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ Charitable
Remainder Unitrust
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee
▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ Charitable
Remainder Annuity Trust
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Charitable Trust
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Co-Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: ▇▇-▇▇▇▇▇▇▇
▇▇
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ Charitable Trust
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Co-Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Co-Trustee
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Charitable Remainder
Unitrust
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Co-Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Co-Trustee
▇▇▇▇▇ ▇▇▇▇▇▇▇ Charitable Remainder
Unitrust
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Co-Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Co-Trustee
▇▇▇▇ ▇▇▇▇▇ Charitable Remainder
Unitrust
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Co-Trustee
By: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Co-Trustee
49
51
STATE OF WASHINGTON )
) ss
County of Spokane )
I certify that I know or have satisfactory evidence that ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ is the person who appeared before me, and said person acknowledged that
he signed this instrument and acknowledged it to be his free and voluntary act
for the uses and purposes mentioned in the instrument.
Dated May 28, 1996
---------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Print Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Notary Public in and for the State of
Washington, residing at Spokane
My Commission Expires: 4-15-97
--------------
STATE OF WASHINGTON )
) ss
County of Spokane )
I certify that I know or have satisfactory evidence that ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ is the person who appeared before me, and said person acknowledged that
she signed this instrument and acknowledged it to be her free and voluntary act
for the uses and purposes mentioned in the instrument.
Dated May 28, 1996
---------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Print Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Notary Public in and for the State of
Washington, residing at Spokane
My Commission Expires: 4-15-97
--------------
50
52
STATE OF WASHINGTON )
) ss
County of Spokane )
I certify that I know or have satisfactory evidence that ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, in his capacity as Trustee of the ▇▇▇▇ AND ▇▇▇▇▇ ▇▇▇▇▇▇▇ CHARITABLE
REMAINDER UNITRUST, is the person who appeared before me, and said person
acknowledged that he signed this instrument and acknowledged it to be his free
and voluntary act for the uses and purposes mentioned in the instrument.
Dated May 28, 1996
---------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Print Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Notary Public in and for the State of
Washington, residing at Spokane
My Commission Expires: 4-15-97
--------------
STATE OF WASHINGTON )
) ss
County of Spokane )
I certify that I know or have satisfactory evidence that ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, in his capacity as Trustee of the ▇▇▇▇ AND ▇▇▇▇▇ ▇▇▇▇▇▇▇ CHARITABLE
REMAINDER ANNUITY TRUST, is the person who appeared before me, and said person
acknowledged that he signed this instrument and acknowledged it to be his free
and voluntary act for the uses and purposes mentioned in the instrument.
Dated May 28, 1996
---------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Print Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Notary Public in and for the State of
Washington, residing at Spokane
My Commission Expires: 4-15-97
--------------
51
53
STATE OF WASHINGTON )
) ss
County of Spokane )
I certify that I know or have satisfactory evidence that ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, in his capacity as Co-Trustee of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ CHARITABLE TRUST, is
the person who appeared before me, and said person acknowledged that he signed
this instrument and acknowledged it to be his free and voluntary act for the
uses and purposes mentioned in the instrument.
Dated May 28, 1996
---------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Print Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Notary Public in and for the State of
Washington, residing at Spokane
My Commission Expires: 4-15-97
--------------
STATE OF WASHINGTON )
) ss
County of Spokane )
I certify that I know or have satisfactory evidence that ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, in his capacity as Co-Trustee of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ CHARITABLE TRUST,
is the person who appeared before me, and said person acknowledged that he
signed this instrument and acknowledged it to be his free and voluntary act for
the uses and purposes mentioned in the instrument.
Dated May 28, 1996
---------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Print Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Notary Public in and for the State of
Washington, residing at Spokane
My Commission Expires: 4-15-97
--------------
52
54
STATE OF WASHINGTON )
) ss
County of Spokane )
I certify that I know or have satisfactory evidence that ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, in his capacity as Co-Trustee of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ CHARITABLE REMAINDER
UNITRUST, is the person who appeared before me, and said person acknowledged
that he signed this instrument and acknowledged it to be his free and voluntary
act for the uses and purposes mentioned in the instrument.
Dated May 28, 1996
---------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Print Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Notary Public in and for the State of
Washington, residing at Spokane
My Commission Expires: 4-15-97
--------------
STATE OF WASHINGTON )
) ss
County of Spokane )
I certify that I know or have satisfactory evidence that ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, in his capacity as Co-Trustee of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ CHARITABLE
REMAINDER UNITRUST, is the person who appeared before me, and said person
acknowledged that he signed this instrument and acknowledged it to be his free
and voluntary act for the uses and purposes mentioned in the instrument.
Dated May 28, 1996
---------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Print Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Notary Public in and for the State of
Washington, residing at Spokane
My Commission Expires: 4-15-97
--------------
53
55
STATE OF WASHINGTON )
) ss
County of Spokane )
I certify that I know or have satisfactory evidence that ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, in his capacity as Co-Trustee of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ CHARITABLE TRUST,
is the person who appeared before me, and said person acknowledged that he
signed this instrument and acknowledged it to be his free and voluntary act for
the uses and purposes mentioned in the instrument.
Dated May 28, 1996
---------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Print Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Notary Public in and for the State of
Washington, residing at Spokane
My Commission Expires: 4-15-97
--------------
STATE OF WASHINGTON )
) ss
County of Spokane )
I certify that I know or have satisfactory evidence that ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, in her capacity as Co-Trustee of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ CHARITABLE
TRUST, is the person who appeared before me, and said person acknowledged that
she signed this instrument and acknowledged it to be her free and voluntary act
for the uses and purposes mentioned in the instrument.
Dated May 28, 1996
---------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Print Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Notary Public in and for the State of
Washington, residing at Spokane
My Commission Expires: 4-15-97
--------------
54
56
STATE OF WASHINGTON )
) ss
County of Spokane )
I certify that I know or have satisfactory evidence that ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, in his capacity as Co-Trustee of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ CHARITABLE
REMAINDER UNITRUST, is the person who appeared before me, and said person
acknowledged that he signed this instrument and acknowledged it to be his free
and voluntary act for the uses and purposes mentioned in the instrument.
Dated May 28, 1996
---------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Print Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Notary Public in and for the State of
Washington, residing at Spokane
My Commission Expires: 4-15-97
--------------
STATE OF WASHINGTON )
) ss
County of Spokane )
I certify that I know or have satisfactory evidence that ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, in her capacity as Co-Trustee of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ CHARITABLE
REMAINDER UNITRUST, is the person who appeared before me, and said person
acknowledged that she signed this instrument and acknowledged it to be her free
and voluntary act for the uses and purposes mentioned in the instrument.
Dated May 28, 1996
---------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Print Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Notary Public in and for the State of
Washington, residing at Spokane
My Commission Expires: 4-15-97
--------------
55
57
STATE OF WASHINGTON )
) ss
County of Spokane )
I certify that I know or have satisfactory evidence that ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, in his capacity as Co-Trustee of the ▇▇▇▇ ▇▇▇▇▇ CHARITABLE REMAINDER
UNITRUST, is the person who appeared before me, and said person acknowledged
that he signed this instrument and acknowledged it to be his free and voluntary
act for the uses and purposes mentioned in the instrument.
Dated May 28, 1996
---------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Print Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Notary Public in and for the State of
Washington, residing at Spokane
My Commission Expires: 4-15-97
--------------
STATE OF WASHINGTON )
) ss
County of Spokane )
I certify that I know or have satisfactory evidence that ▇▇▇▇ ▇▇▇▇▇,
in her capacity as Co-Trustee of the ▇▇▇▇ ▇▇▇▇▇ CHARITABLE REMAINDER UNITRUST,
is the person who appeared before me, and said person acknowledged that she
signed this instrument and acknowledged it to be her free and voluntary act for
the uses and purposes mentioned in the instrument.
Dated May 28, 1996
---------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Print Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Notary Public in and for the State of
Washington, residing at Spokane
My Commission Expires: 4-15-97
--------------
56