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EXHIBIT 10.19
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PURCHASE AGREEMENT
AMONG
RENTX INDUSTRIES, INC.,
A-1 RENT ALL OF ▇▇▇▇▇▇▇▇, INC.
AND THE
SHAREHOLDERS
OF
A-1 RENT ALL OF ▇▇▇▇▇▇▇▇, INC.
AS OF JULY 23, 1997
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TABLE OF CONTENTS
Page
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1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Purchase and Sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1. Basic Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2. Assumption of Certain Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3. Purchase Price; Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.4. Sales Taxes, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5. Closing; Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.6. Deliveries at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1. Representations and Warranties of the Seller and the Shareholders . . . . . . . . . . . . . . . . . . 3
3.2. Representations and Warranties of the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3. Survival of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4. Representations as to Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4. Pre-Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.2. Operation and Preservation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.3. Acquisitions and Dispositions of Rental Equipment . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.4. Full Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.5. Notice of Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.6. Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.7. Conveyance of Shareholder Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.8. Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.9. Bulk Sales Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5. Post-Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.1. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.2. Transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.3. Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.4. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.5. Post-Closing Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.6. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.7. Satisfaction of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.8. Certain Post-Closing Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.9. Repurchase of Unpaid Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6. Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1. Conditions to Obligation of the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.2. Conditions to Obligation of the Seller and the Shareholders . . . . . . . . . . . . . . . . . . . . 17
(i)
3
7. Remedies for Breaches of This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.1. Indemnification Provisions for Benefit of the Buyer . . . . . . . . . . . . . . . . . . . . . . . . 18
7.2. Indemnification Provisions for Benefit of the Seller and the Shareholders . . . . . . . . . . . . . 19
7.3. Matters Involving Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.4. Right of Offset. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.5. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.1. Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.1. No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.2. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.3. Succession and Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.4. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.5. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.7. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.8. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.9. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.10. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.11. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.12. Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.13. Incorporation of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.14. Seller's and Shareholders' Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(ii)
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Exhibits:
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Exhibit 1.1(a) Exhibit 3.1(h)(ii)
Exhibit 1.1(b) Exhibit 3.1(i)(i)
Exhibit 1.1(c) Exhibit 3.1(i)(ii)
Exhibit 1.1(d) Exhibit 3.1(k)
Exhibit 1.1(e) Exhibit 3.1(l)
Exhibit 1.1(f) Exhibit 3.1(m)
Exhibit 1.1(g) Exhibit 3.1(o)(i)
Exhibit 1.1(h) Exhibit 3.1(o)(ii)
Exhibit 1.1(i) Exhibit 3.1(q)
Exhibit 3.1(c) Exhibit 3.1(r)(ii)
Exhibit 3.1(d)(i)(A) Exhibit 3.1(r)(iii)
Exhibit 3.1 (d)(i)(B) Exhibit 4.3
Exhibit 3.1(d)(ii) Exhibit 5.8
Exhibit 3.1(d)(iii) Exhibit 6.1(j)
Exhibit 3.1(e)(i) Exhibit 6.2(e)
Exhibit 3.1(e)(ii) Exhibit 7.1(b)
Exhibit 3.1(f)
Exhibit 3.1(g)(i)(A)
Exhibit 3.1(g)(i)(B)
Exhibit 3.1(g)(ii)
Exhibit 3.1(h)(i)
(iii)
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This Purchase Agreement is entered into as of July 23, 1997
among RentX Industries, Inc., a Delaware corporation (the "Buyer"), A-1 Rent
All of Marshall, Inc., a Texas corporation (the "Seller"), and ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, A. ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (individually, a
"Shareholder" and collectively, the "Shareholders").
Recitals
The Shareholders own all of the issued and outstanding capital
stock of the Seller. The Seller desires to sell, and the Buyer desires to
purchase, substantially all of the Seller's assets 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 are acknowledged,
the parties agree as follows:
1. Definitions. The terms defined in Exhibit 1.1(a) shall have the
meanings designated therein.
2. Purchase and Sale.
2.1. Basic Transaction. Subject to the terms and conditions set
forth in this Agreement, the Buyer agrees to purchase from the Seller, and the
Seller agrees to sell to the Buyer, all the Acquired Assets free and clear of
any Encumbrance or Tax, for the consideration specified in Section 2.3. The
Buyer will have no obligation under this Agreement to purchase less than all of
the Acquired Assets.
2.2. Assumption of Certain Liabilities. Subject to the terms and
conditions set forth in this Agreement, the Buyer agrees to assume and become
responsible at the Closing for all of the Assumed Liabilities. The Buyer will
not assume or have any responsibility with respect to any other Liability not
expressly included within the definition of Assumed Liabilities.
2.3. Purchase Price; Payment.
(a) The purchase price for the Acquired Assets is
$425,500, increased or decreased as appropriate for the Net Rental Equipment
Adjustment. At the Closing, the Buyer will, by wire transfer or other delivery
of immediately available funds, (i) (A) pay to the Seller (subject to Section
2.3(b)) $383,000, subject to increase or decrease as applicable for the Net
Rental Equipment Adjustment, less $1,629.23 representing the estimated
Pre-Closing Personal Property Tax Amount, and (B) deposit $42,500 into the
Escrow Account and (ii) assume the Assumed Liabilities (and the amounts paid
and deposited to and in respect of the Seller and the Assumed Liabilities will
constitute the full purchase price for the Acquired Assets). The amount
deposited in the Escrow Account will belong to the Seller, subject to the
Seller's indemnification obligations set forth in this Agreement, and will be
held, invested, administered and disbursed according to Section 7.1(b) hereof
and the Escrow Agreement.
(b) At the Closing, the Buyer will deposit into a
demand deposit account in the names of the Buyer and the Shareholders' Agent,
from the amount otherwise payable to the Seller pursuant to Section
2.3(a)(i)(A), an amount equal to the Reserve Amount, and such funds shall
initially constitute the Liabilities Reserve. The funds on deposit in the
Liabilities Reserve will belong to the Seller, subject to the provisions
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of this Section 2.3(b). Following the Closing, the Liabilities Reserve will be
applied to the payment of Reserved Seller Liabilities, by disbursements from
that account upon the joint signatures of a representative of the Buyer and the
Shareholders' Agent, as the Reserved Seller Liabilities are ascertained. To
the extent that the Buyer receives a ▇▇▇▇ or invoice representing, or is
otherwise aware of, any Reserved Seller Liabilities, the Shareholders' Agent
shall sign checks drawn on the Liabilities Reserve to satisfy such Reserved
Seller Liabilities promptly upon the request of Buyer. Reserved Seller
Liabilities representing accrued vacation and other accrued employee benefits
with respect to those persons who are employees of the Seller as of immediately
prior to the Closing Date and who become employees of the Buyer effective as of
the Closing will be satisfied by payment of the amount thereof to the Buyer as
the Buyer provides such benefits or makes cash payments in lieu thereof to
employees. The Shareholders' Agent will take all actions necessary to cause
the Liabilities Reserve to be applied to satisfy Reserved Seller Liabilities
and, if the Liabilities Reserve has been exhausted, the Seller and the
Shareholders will provide additional funds as required to satisfy Reserved
Seller Liabilities. Nothing in this Agreement will be deemed to limit the
joint and several obligations of the Seller and the Shareholders to pay the
Reserved Seller Liabilities in full. After all Reserved Seller Liabilities
have been satisfied, any excess Liabilities Reserve on deposit in the account
created pursuant to this Section 2.3(b) will be paid to the Seller. Any
disputes concerning the Liabilities Reserve will be settled by arbitration as
provided in this Agreement.
(c) As soon as practicable after the Closing, but
effective as of the Closing, the parties will prepare and initial a "Price
Allocation Schedule", allocating for Tax reporting purposes the total
consideration for the Acquired Assets among the various categories of Acquired
Assets in the following order and amounts: (i) to cash and cash equivalents,
the $500 amount on the Closing Balance Sheet; (ii) to Closing Accounts
Receivable, the amount on the Closing Balance Sheet; (iii) to Closing
Inventory, the amount on the Closing Balance Sheet; (iv) to equipment and
leasehold improvements, the greater of the appraised fair market value (if the
Buyer in its sole discretion obtains an appraisal before or after the Closing)
or the current book value thereof as reflected on the Closing Balance Sheet;
(v) to prepaid expenses, the unamortized balance on the Closing Balance Sheet;
(vi) to any other assets, other than goodwill, the amount on the Closing
Balance Sheet; and (vii) the entire remaining balance of the consideration
shall be allocated to the goodwill of the Seller's business or, at the Buyer's
sole discretion, to the other intangible assets which are included in the
Acquired Assets. The parties acknowledge that such allocations for Tax
reporting purposes were determined pursuant to arm's length bargaining
regarding the fair market values of the Acquired Assets in accordance with the
provisions of Code Section 1060. The parties agree to be bound by the
allocations set forth in the Price Allocation Schedule for all federal, state
and local Tax reporting purposes, including for purposes of determining any
income, gain, loss, depreciation or other deductions in respect of such assets.
The parties further agree to prepare and file all Tax Returns (including Form
8594 under the Code) in a manner consistent with such allocations.
2.4. Sales Taxes, Etc. The Seller will pay all sales, use,
transfer, licensing and other Taxes, fees and charges payable in respect of or
as a result of the sale and transfer of the Acquired Assets (including those
relating to vehicles, trailers and mobile equipment) to the Buyer pursuant to
this Agreement.
2.5. Closing; Closing Date. The closing of the transactions
contemplated by this Agreement (the "Closing") is anticipated to take place on
July 23, 1997 (but in any event on or before July 31, 1997), commencing at 8:00
a.m. local time in Denver, Colorado, at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
L.L.C., and all transactions contemplated by this Agreement will be effective
at 12:00 a.m. local time in Marshall, Texas on the day of the Closing (such
effective time being the "Closing Date").
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2.6. Deliveries at the Closing. At the Closing, (a) the Seller and
the Shareholders will deliver, or cause to be delivered, to the Buyer the
certificates, instruments and documents referred to in Section 6.1, (b) the
Buyer will deliver to the Seller and the Shareholders the certificates,
instruments and documents referred to in Section 6.2, (c) the Seller will
deliver to the Buyer instruments transferring to the Buyer title to the
Acquired Assets free and clear of any Encumbrances or Taxes and (d) the Buyer
will pay and deposit the purchase price in accordance with Section 2.3.
3. Representations and Warranties.
3.1. Representations and Warranties of the Seller and the
Shareholders. The Seller and the Shareholders jointly and severally represent
and warrant to the Buyer that the statements contained in this Section 3.1 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were then substituted for the date of this Agreement throughout this
Section 3.1).
(a) Organization, Good Standing, Authority, Etc. The
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the State of Texas, and is not required to be qualified or
authorized to do business as a foreign corporation in any jurisdiction. The
Seller has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
This Agreement and the Other Seller Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly and unanimously
approved by the board of directors and shareholders of the Seller, and this
Agreement has been duly executed and delivered by the Seller. The Seller has
full corporate power and authority to execute, deliver and perform this
Agreement and the Other Seller Agreements to which the Seller is a party, each
Shareholder and each relative or affiliate of the Seller or of a Shareholder
who is party to any Other Seller Agreement has full and absolute right, power,
authority and legal capacity to execute, deliver and perform this Agreement and
all Other Seller Agreements to which such Shareholder, relative or affiliate is
a party, and this Agreement constitutes, and the Other Seller Agreements will
when executed and delivered constitute, the legal, valid and binding
obligations of, and shall be enforceable in accordance with their respective
terms against, the Seller and each such Shareholder, relative or affiliate who
is a party thereto.
(b) Ownership. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ own, beneficially and of record, free and clear of any Encumbrance or
Tax, 900 and 100 shares, respectively, of the common stock, $1.00 par value, of
the Seller, and such shares constitute all outstanding shares of the capital
stock of the Seller. No other Person has any right to acquire any equity
interest in the Seller.
(c) No Violation. The execution, delivery and
performance of this Agreement and the Other Seller Agreements and the
consummation of the transactions contemplated hereby and thereby will not (i)
violate any Legal Requirement to which the Seller, any Shareholder, or any
relative or affiliate of the Seller or of any Shareholder who is a party to any
Other Seller Agreement is subject or any provision of the articles of
incorporation or bylaws of the Seller or of any such affiliate, or (ii)
violate, with or without the giving of notice or the lapse of time or both, or
conflict with or result in the breach or termination of any provision of, or
constitute a default under, or give any Person the right to accelerate any
obligation under, or result in the creation of any Encumbrance upon any
properties, assets or business of the Seller, of any Shareholder, or of any
such relative or affiliate pursuant to, any indenture, mortgage, deed of trust,
lien, lease, license, Permit, agreement, instrument or other arrangement to
which the Seller, any Shareholder or any such
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relative or affiliate is a party or by which the Seller, any Shareholder, or
any such relative or affiliate or any of their respective assets and properties
is bound or subject. Except for notices that will be given and consents that
will be obtained by the Seller and the Shareholders prior to the Closing (which
are set forth in Exhibit 3.1(c)), neither the Seller, any Shareholder, nor any
such relative or affiliate need give any notice to, make any filing with or
obtain any authorization, consent or approval of any Governmental Authority or
other Person in order for the parties to consummate the transactions
contemplated by this Agreement and the Other Seller Agreements.
(d) Financial Statements. The unaudited balance sheets
of the Seller as of December 31, 1994, December 31, 1995, and December 31,
1996, and the related statements of income, shareholders' equity and cash flows
for the fiscal years then ended, the unaudited balance sheet of the Seller as
of January 31, 1997 (the latter being referred to as the "Latest Balance
Sheet"), and the related statements of income, shareholders' equity and cash
flows for the one-month period then ended, have been prepared in accordance
with good accounting practices and on a consistent basis, are in accordance
with the books and records of the Seller (which books and records are complete
and correct), are accurate (except as set forth on Exhibit 3.1(d)(i)(A)) and
fairly present the financial position and results of operations of the Seller
as of such dates and for each of the periods indicated, to the best knowledge
of the Seller and the Shareholders do not list book values for the assets that
are in excess of their fair market values, and, except as set forth on Exhibit
3.1(d)(i)(B), make adequate provision for all Liabilities to which the Seller
is subject. Copies of the financial statements described in the first sentence
in this Section are attached as Exhibit 3.1(d)(ii). The expenses itemized on
Exhibit 3.1(d)(iii) and reflected in the Seller's financial performance for the
12-month period ended December 31, 1996 will not be realized on an on-going
basis, and information sufficient to determine such financial performance for
such 12-month period has been provided by the Seller to the Buyer prior to the
date of this Agreement.
(e) Absence of Certain Leases, Changes or Events. The
Seller is not, except as set forth on Exhibit 3.1(e)(i), a party to or
otherwise bound by any contract or agreement that has a term of three or more
months pursuant to which the Seller is obligated to furnish any equipment,
products or services, and no such contract or agreement has been prepaid with
respect to any period after the Closing Date. Since January 31, 1997, the
Seller has not (i) incurred any debt, indebtedness or other Liability, except
current Liabilities incurred in the ordinary course of business; (ii) delayed
or postponed the payment of accounts payable or other Liabilities or
accelerated the collection of any receivable beyond stated, normal terms; (iii)
except as set forth on Exhibit 3.1(e)(ii) sold (except as set forth on Exhibit
4.3 with respect to the period between February 1, 1997 and the date of this
Agreement and as permitted by Section 4.3 with respect to the period after the
date of this Agreement and before the Closing Date) or otherwise transferred
any of its equipment or other assets or properties; (iv) cancelled,
compromised, settled, released, waived, written-off (except as set forth on
Exhibit 3.1(e)(ii)) or expensed any account or note receivable, right, debt or
claim involving more than $2,000 in the aggregate; (v) changed in any
significant manner the way in which it conducts its business; (vi) made or
granted any individual wage or salary increase in excess of 10% or $1.00 per
hour, any general wage or salary increase, or any additional benefits of any
kind or nature; (vii) except as otherwise expressly permitted by this Section
3.1(e), (A) except as set forth on Exhibit 3.1(e)(ii), entered into any
contracts or agreements, or made any commitments, involving more than $2,000
individually or in the aggregate or (B) accelerated, terminated, delayed,
modified or cancelled any agreement, contract, lease or license (or series of
related agreements, contracts, leases and licenses) involving more than $2,000
individually or in the aggregate; (viii) suffered any adverse fact or change,
including, without limitation, to or in its business, assets, financial
condition, prospects or customer relationships; (ix) except as set forth on
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Exhibit 3.1(e)(ii), made any payment or transfer to or for the benefit of any
shareholder, officer or director or any relative or affiliate thereof or
permitted any Person, including, without limitation, any shareholder, officer,
director or employee or any relative or affiliate thereof, to withdraw assets
from the Seller (other than cash of the Seller distributed to its shareholders
as set forth on Exhibit 3.1(e)(ii) and other than the payment to the
Shareholders of the proportionate monthly amount of their respective normal
annualized salaries due and payable during such period); (x) failed to make
purchases of new or used equipment necessary to maintain its rental/lease
inventory at the level which is reasonably necessary to maintain the revenue
base experienced by the Seller during the 12 months preceding such date; (xi)
decreased its lease rate with respect to any equipment by 10% or more from the
applicable lease rate in effect on January 31, 1997 or rented or leased any
equipment or sold or otherwise transferred any inventory, equipment or services
at below-normal rental (except as set forth on Exhibit 3.1(e)(ii)) or lease
rates or margins; (xii) suffered any other significant occurrence, event,
incident, action, failure to act or transaction outside the ordinary course of
business; or (xiii) agreed to incur, take, enter into, make or permit any of
the matters described in clauses (i) through (xii).
(f) Tax Matters. Neither the Seller nor any of its
shareholders has ever filed (i) an election pursuant to Section 1362 of the
Code that the Seller be taxed as an "S" corporation, except as set forth on
Exhibit 3.1(f), or (ii) a consent pursuant to Section 341(f) of the Code
relating to collapsible corporations. The Seller and the Shareholders will pay
all Taxes attributable to the Seller's business and activities, including all
Taxes attributable to the transactions contemplated by this Agreement, on or
before the due date. There are no Encumbrances on any of the assets of the
Seller that arose in connection with any failure (or alleged failure) to pay
any Tax. Exhibit 3.1(f) lists all federal, state and local income Tax Returns
filed with respect to the Seller for taxable periods ended on or after January
1, 1991, indicates those Tax Returns that have been audited and indicates those
Tax Returns that currently are the subject of audit. The Seller has delivered
to the Buyer correct and complete copies of all federal, state and local income
Tax Returns and examination reports of, and statements of deficiencies assessed
against or agreed to by, the Seller since January 1, 1991.
(g) Assets and Properties.
(i) As of the date of this Agreement, the Seller
owns all of the Acquired Assets (other than certain items of Shareholder
Property), free and clear of all Encumbrances (except for those Encumbrances
which the Seller shall cause to be terminated as of the Closing). As of the
Closing, all of the Acquired Assets (including all of the Shareholder Property)
will be owned by the Seller, free and clear of all Encumbrances, and the Seller
will have good and marketable title to all the Acquired Assets. The Acquired
Assets consist of (A) the tangible and intangible assets of the Seller
(exclusive of the Excluded Assets) in existence as of January 31, 1997 (except
as set forth on Exhibit 3.1(e)(ii) with respect to cash of the Seller which
was 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(e)) or Section 4.3), increased by New Rental Equipment
acquired from and after February 1, 1997 and decreased by Current Rental
Equipment sold or otherwise transferred on or after February 1, 1997 as set
forth on Exhibit 4.3 and (B) all tangible and intangible assets, including,
without limitation, all improvements, fixtures and fittings, owned by any
Shareholder or relative or affiliate thereof or of the Seller which have been
used in its business at any time on or after February 1, 1997 (the "Shareholder
Property"), including, without limitation, the tangible and intangible assets
set forth on Exhibit 3.1(g)(i)(A) owned by any Shareholder or relative or
affiliate thereof. Between February 1, 1997 and the day before the date of
this Agreement, the Seller has purchased the New Rental
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Equipment and has sold, for cash or a Current Rental Equipment Receivable only,
the Current Rental Equipment described on Exhibit 4.3, but has not otherwise
sold, traded, transferred or otherwise disposed of any Current Rental
Equipment. In the case of Acquired Assets consisting of a leasehold interest
in equipment held by the Seller as rental inventory ("Leased Rental
Equipment"), the Seller has a valid leasehold interest in the Leased Rental
Equipment and the lessor thereof is not a relative or affiliate of the Seller
or any Shareholder. In the case of Acquired Assets consisting of Seller's
interest under an arrangement with the owner of equipment who makes such
equipment available for rental by Seller under a split rental or similar
arrangement ("Consigned Equipment"), such arrangement is in full force and
effect and the owner of the Consigned Equipment is not a relative or affiliate
of the Seller or any Shareholder. The Acquired Assets, the Leased Rental
Equipment and the Consigned Equipment are all of the tangible and intangible
assets (other than the Excluded Assets and the Premises) used by the Seller in,
or necessary for the conduct of, its business. The Acquired Assets, the
Leased Rental Equipment and the Consigned Equipment encompass all equipment
used by the Seller to generate the income reflected in the financial statements
attached as Exhibit 3.1(d)(ii). The total cost to the Seller to lease the
Leased Rental Equipment during the fiscal year ended December 31, 1996 and the
1-month period ended January 31, 1997 did not exceed $-0- and $-0-,
respectively. The total cost to the Seller to use the Consigned Equipment as
part of its rental inventory during the fiscal year ended December 31, 1996 and
the 1-month period ended January 31, 1997 did not exceed $-0- and $-0-,
respectively. Check all arrangements under which Seller leases or uses
equipment and treat items leased under capital lease as owned equipment.
Exhibit 3.1(g)(i)(B) lists all Leased Rental Equipment and all Consigned
Equipment as of the date of this Agreement. Except for items rented or leased
to customers, all of the tangible Acquired Assets, the Leased Rental Equipment
and the Consigned Equipment are located on the Premises.
(ii) The Premises constitute all of the real
property, buildings and improvements used by the Seller in its business. The
Premises are supplied with utilities and other services necessary for the
operation thereof. Except as set forth on Exhibit 3.1(g)(ii), to the best
knowledge of the Seller and the Shareholders, the Premises are free from
defects, have been maintained in accordance with normal industry practice, are
in good operating condition and repair and are suitable for the purposes for
which they presently are used. To the best knowledge of the Seller and the
Shareholders, the Premises have received all approvals of Governmental
Authorities (including Permits) required in connection with the occupation and
operation thereof and have been occupied, operated and maintained in accordance
with applicable Legal Requirements. The Seller has not received notice of
violation of any Legal Requirement or Permit relating to its operations or its
owned or leased properties.
(iii) No party to any lease with respect to any
Premises has repudiated any provision thereof, and there are no disputes, oral
agreements or forbearance programs in effect as to any such lease.
(h) Lists of Properties, Contracts and Other Data.
Attached as Exhibit 3.1(h)(ii) is a correct and complete list setting forth the
items identified on Exhibit 3.1(h)(i). True and complete copies of the items
referred to in Exhibit 3.1(h)(ii) have been delivered to the Buyer. All items
referred to in Exhibit 3.1(h)(ii) are valid, in full force and effect,
enforceable in accordance with their respective terms for the period stated
therein, and no party has repudiated any provision thereof and no action or
claim is pending or threatened to revoke, modify, terminate or render invalid
any of such items. Neither the Seller nor any other party thereto is in breach
or default in performance of any of its respective obligations under, and no
event exists which, with the giving of notice or lapse of time or both, would
constitute a breach, default or event of default on the part of a party to, any
of the foregoing that is continuing unremedied.
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11
(i) Litigation; Compliance with Applicable Laws and
Rights.
(i) There is no outstanding Order against, nor,
except as set forth on Exhibit 3.1(i)(i), is there any litigation, proceeding,
arbitration or investigation by any Governmental Authority or other Person
pending or threatened against, the Seller, its properties or its business or
relating to the transactions contemplated by this Agreement, nor is the Seller
or any Shareholder aware of any basis for any such action.
(ii) To the best knowledge of the Seller and the
Shareholders, except as set forth on Exhibit 3.1(i)(ii), neither the Seller nor
the Seller's assets (including its Premises, facilities, machinery and
equipment) are in violation of any applicable Legal Requirement or Right. The
Seller has not received notice from any Governmental Authority or other Person
of any violation or alleged violation of any Legal Requirement or Right, and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand or notice has been filed or commenced or is pending or threatened
against the Seller alleging any such violation.
(j) Accounts Receivable. The accounts receivable of
the Seller reflected on its Latest Balance Sheet, and all accounts receivable
arising prior to the Closing Date (including, without limitation, any Current
Rental Equipment Receivables in existence as of the Closing Date), arose and
will arise from bona fide transactions by the Seller in the ordinary course of
business, are valid receivables of the Seller and the Shareholders with trade
customers subject to no setoffs or counterclaims, and 90% of the aggregate
amount thereof is current and collectible.
(k) Product Quality, Warranty and Liability. Except as
disclosed on Exhibit 3.1(i)(i), all products and services sold, rented, leased,
provided or delivered by the Seller to customers on or prior to the Closing
Date conform to applicable contractual commitments, express and implied
warranties, product and service specifications and quality standards, and the
Seller has no Liability and there is no basis for any Liability for replacement
or repair thereof or other damages in connection therewith. No product or
service sold, rented, leased, provided or delivered by the Seller to customers
on or prior to the Closing is subject to any guaranty, warranty or other
indemnity beyond the applicable standard terms and conditions of sale, rent or
lease. The Seller has no Liability and there is no basis for any Liability
arising out of any injury to a Person or property as a result of the ownership,
possession, provision or use of any product or service sold, rented, leased,
provided or delivered by the Seller on or prior to the Closing Date. All
product or service liability claims that have been asserted against the Seller
since January 1, 1992, whether covered by insurance or not and whether
litigation has resulted or not, other than those listed and summarized on
Exhibit 3.1(i)(i), are listed and summarized on Exhibit 3.1(k).
(l) Insurance. The Seller has policies of insurance
(i) covering risk of loss on the Acquired Assets, Leased Rental Equipment and
Consigned Equipment, (ii) covering products and services liability and
liability for fire, property damage, and personal injury, all, to the best
knowledge of the Seller and the Shareholders, with responsible and financially
sound insurance carriers in adequate amounts and in compliance with
governmental requirements and in accordance with good industry practice. All
such insurance policies are valid, in full force and effect and enforceable in
accordance with their respective terms and no party has repudiated any
provision thereof. All such policies will remain in full force and effect
until the Closing Date. Neither the Seller nor any other party to any such
policy is in breach or default (including with respect to the payment of
premiums or the giving of notices) in the performance of any of their
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12
respective obligations thereunder, and no event exists which, with the giving
of notice or the lapse of time or both, would constitute a breach, default or
event of default, or permit termination, modification or acceleration under any
such policy. There are no claims, actions, proceedings or suits arising out of
or based upon any of such policies nor, to the best knowledge of the Seller and
the Shareholders, does any basis for any such claim, action, suit or proceeding
exist. All premiums have been paid on such policies as of the date of this
Agreement and will be paid on such policies through the Closing Date. The
Seller has been covered during the five years prior to the date of this
Agreement by insurance in scope and amount customary and reasonable for the
businesses in which it has engaged during the aforementioned period. All
claims made during such five-year period with respect to any insurance coverage
of the Seller, other than those described on Exhibit 3.1(k), are set forth on
Exhibit 3.1(l).
(m) Pension and Employee Benefit Matters. The Buyer
will not suffer any Liability or Adverse Consequence from the Seller's
administration or termination of any of its Employee Benefit Plans or from any
failure of any pre-Closing or post-Closing distribution of benefits to
employees of the Seller to be made by the Seller in compliance with all
applicable Legal Requirements. The Buyer will have no obligation to employ any
employee of the Seller or to continue any Employee Benefit Plan, and will have
no Liability under any plan or arrangement maintained by the Seller for the
benefit of any employee. The Seller will remain liable for all costs of
employee compensation, including benefits and Taxes relating to employment and
employees attributable to periods through the Closing Date, whether reported by
the Closing Date or thereafter, and all group health plan continuation coverage
to which any employee, former employee or dependent is entitled because of a
qualifying event (as defined in Section 4980B(f)(3) of the Code) occurring
through the Closing Date or as a result of termination of employment with the
Seller because of the transactions contemplated by this Agreement and any
benefit or excise tax liability or penalty or other costs arising from any
failure by the Seller to provide group health plan continuation coverage.
Except as set forth on Exhibit 3.1(m), neither the Seller nor any Affiliated
Group which includes the Seller (if any) maintains, administers or contributes
to, has maintained, administered or contributed to, or has any Liability to
contribute to, any Employee Benefit Plan. Exhibit 3.1(m) lists each Employee
Benefit Plan that is, or at any time during the past six years was, maintained,
administered, contributed to or required to be contributed to by the Seller or
any Affiliated Group (if any) which includes or has included the Seller, and
the date of termination of each such Employee Benefit Plan (if any) which has
been terminated. Any Employee Benefit Plan disclosed on Exhibit 3.1(m) that is
an "employee pension benefit plan" as defined in ERISA Section 3(2), has (i)
been determined to be qualified by the Internal Revenue Service, (ii) been
maintained since its effective date by all members of the Affiliated Group and
(iii) been maintained and administered in accordance with all applicable Legal
Requirements. The Seller has no Liability (and there is no basis for the
assertion of any Liability) as a result of the Seller's or any such Affiliated
Group's maintenance, administration or termination of, or contribution to, any
Employee Benefit Plan. Neither the Seller nor any member of any Affiliated
Group (if any) which includes or has included the Seller has ever been required
to contribute to any Multiemployer Plan (as defined in ERISA Section 3(37)) nor
has the Seller incurred any Liability under Title IV of ERISA.
(n) Employees and Labor. The Seller has not received
any notice, nor, to the best knowledge of the Seller and the Shareholders, is
there any reason to believe that any executive or key employee of the Seller or
any group of employees of the Seller has any plans to terminate his, her or its
employment with the Seller. 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 Seller prior to the Closing Date and, if such person
becomes an
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13
employee of the Buyer, to the affairs of the Buyer after the Closing Date. The
Seller will not be required to give any notice under the Worker Adjustment and
Retraining Notification Act, as amended, or any similar Legal Requirement as a
result of this Agreement, the Other Seller Agreements or the transactions
contemplated hereby or thereby. The Seller does not have any labor relations
problems or disputes, nor has the Seller experienced any strikes, grievances,
claims of unfair labor practices or other collective bargaining disputes. The
Seller is not a party to or bound by any collective bargaining agreement, there
is no union or collective bargaining unit at the Seller's facilities, and no
union organization effort has been threatened, initiated or is in progress with
respect to any employees of the Seller.
(o) Customer Relationships. Exhibit 3.1(o)(i) lists
each customer that individually or with its affiliates was, based upon the
Seller's sales, rental or lease revenues during the fiscal year ended December
31, 1996 and the one-month period ended January 31, 1997, one of the Seller's
five largest customers during either such fiscal year or such one-month period
(the "Principal Customers"). The Seller has good commercial working
relationships with its Principal Customers and since December 31, 1996, no
Principal Customer has cancelled or otherwise terminated its relationship with
the Seller, materially decreased or limited its purchases, rentals or leases
from the Seller, or threatened to take any such action. The Seller and the
Shareholders have no basis to anticipate any problems with the Seller's
customer or business relationships. To the best knowledge of the Seller and
the Shareholders, no Principal Customer has any plans to reduce its purchases,
rentals or leases from the Seller below levels prevailing since December 31,
1996, and the one-month period ended January 31, 1997, and the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby will not adversely affect the relationship of the Seller
with any Principal Customer prior to the Closing Date or of the Buyer with any
Principal Customer after the Closing Date.
(p) Resale Inventory. The resale inventory of the
Seller consists of goods which, in the aggregate, are merchantable, are fit
for the purposes for which they were procured and are held by the Seller, are
usable in the ordinary course of the Seller's business and are not obsolete.
(q) Condition, Adequacy and Type of Equipment. Except
as set forth on Exhibit 3.1(q), the rental/lease inventory of the Seller
consists of machinery, equipment and other tangible personal property which are
merchantable, are fit and suitable for the purpose for which they were procured
and are held by the Seller, useable in the ordinary course of the Seller's
business and are not obsolete. Except as set forth on Exhibit 3.1(q), all of
the machinery, equipment and other tangible personal property included in the
Acquired Assets (including that held for rental, lease or sale), the Leased
Rental Equipment and the Consigned Equipment has been well maintained and is in
good repair and good operating condition. Except as set forth on Exhibit
3.1(q), none of the machinery, equipment or other tangible personal property
included in the Acquired Assets (including that held for rental, lease or
sale), the Leased Rental Equipment and the Consigned Equipment is damaged or
defective, the Seller has not experienced material problems or deficiencies
with respect to such machinery, equipment and other tangible personal property,
and, to the best knowledge of the Seller and the Shareholders, there is no
basis to anticipate any such problems or deficiencies.
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14
(r) Environmental Matters.
(i) To the best knowledge of the Seller and the
Shareholders, the Seller is conducting and at all times has conducted its
business and operations, and has occupied, used and operated the Premises and
all other real property and facilities presently or previously owned, occupied,
used or operated by the Seller, in compliance with all Environmental
Obligations and so as not to give rise to Liability under any Environmental
Obligations or to any impact on the Seller's business or activities. The
Seller and the Shareholders do not have any knowledge of pending or proposed
changes to any Environmental Obligations which would require any changes in any
of the Seller's Premises, facilities, equipment, operations or procedures or
affect the Seller's business or its cost of conducting its business as now
conducted or as conducted immediately prior to the Closing Date.
(ii) To the best knowledge of the Seller and the
Shareholders, no conditions, circumstances or activities have existed or
currently exist, and neither the Seller nor any Shareholder has engaged in any
acts or omissions, with respect to the Premises or any other real properties,
facilities or business presently or previously owned, occupied, used or
operated by the Seller or any predecessor (including, without limitation,
off-site disposal or treatment of Hazardous Materials) which could give rise to
any Liability pursuant to any Environmental Obligation. Exhibit 3.1(r)(ii)
identifies all real properties and facilities, including the addresses thereof,
which have been owned, occupied, used or operated by the Seller or its
predecessors at any time on or prior to the date of this Agreement. There are
no outstanding, pending or threatened Orders against the Seller or any
Shareholder, nor are there any current, pending or threatened investigations of
any kind against the Seller or any Shareholder, concerning any Environmental
Obligations. There are no actions, suits or administrative, arbitral or other
proceedings alleged, claimed, threatened, pending against or affecting the
Seller or any Shareholder at law or in equity with respect to any Environmental
Obligations, and neither the Seller nor any Shareholder has knowledge of any
existing grounds on which any such action, suit or proceedings might be
commenced.
(iii) Any chemicals and chemical compounds and
mixtures which are included among the assets of the Seller are integral to and
required for the conduct of the Seller's business, have not been and are not
intended to be discarded or abandoned, and are not waste or waste materials.
Except as set forth in the environmental studies attached as Exhibit
3.1(r)(iii) (collectively, the "Environmental Study"), the Seller has not
generated, handled, used, transported or disposed of Hazardous Materials. All
waste materials which are generated as part of the business of the Seller are
handled, stored, treated and disposed of in accordance with applicable Legal
Requirements and Environmental Obligations.
(iv) Except as set forth in the Environmental
Study, no underground or above ground storage tanks are or have been located on
the Premises or any other real properties or any facilities presently or
previously owned, occupied, used or operated by the Seller or any predecessor.
Except as set forth in the Environmental Study, neither any of the Premises nor
any other real properties or facilities presently or previously owned,
occupied, used or operated by the Seller or any predecessor has been used at
any time as a gasoline service station or any facility for storing, pumping,
dispensing or producing gasoline or any other petroleum products (other than
such storage, pumping and dispensing of fuels and lubricants as is incidental
to the Seller's equipment rental/leasing business) or Hazardous Materials. No
building or other structure on any of the Premises contains asbestos-containing
materials. Except as set forth in the Environmental Study, there are not nor
have there been any incinerators, septic tanks, ▇▇▇▇▇ fields, cesspools
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15
or ▇▇▇▇▇ (including without limitation dry, drinking, industrial, agricultural
and monitoring ▇▇▇▇▇) on any of the Premises.
(s) Intellectual Property. The Seller owns or has the
legal right to use and to transfer to the Buyer each item of Intellectual
Property required to be identified on Exhibit 3.1(h)(ii). The continued
operation of the business of the Seller as currently conducted will not
interfere with, infringe upon, misappropriate or conflict with any Intellectual
Property rights of another Person. To the best knowledge of the Seller and the
Shareholders, no other Person has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property
rights of the Seller or any Intellectual Property included in the Shareholder
Property. Neither the Seller nor any owner of any Intellectual Property
included in the Shareholder Property has granted any license, sublicense or
permission with respect to any Intellectual Property owned or used in the
Seller's business.
(t) Disclosure. To the best knowledge of the Seller
and the Shareholders, none of the documents or information provided to the
Buyer by the Seller, any Shareholder or any agent or employee thereof in the
course of the Buyer's due diligence investigation and the negotiation of this
Agreement and Section 3.1 of this Agreement and the disclosure Exhibits
referred to therein, including the financial statements referred to above in
Section 3.1, contain any untrue statement of any material fact or omit to state
a material fact necessary in order to make the statements contained herein or
therein not misleading. To the best knowledge of the Seller and the
Shareholders, there is no fact which materially adversely affects the business,
prospects, condition, affairs or operations of the Seller 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. Without limiting the generality of the foregoing, the mere listing (or
inclusion of a copy) of a document or other item shall not be deemed adequate
to disclose an exception to a representation or warranty made herein (unless
the representation or warranty has to do with the existence of the document or
other item itself). The Seller and the Shareholders acknowledge and agree that
the fact that they have made disclosures pursuant to Section 3.1 or otherwise
of matters, or did not have knowledge of matters, which result in Adverse
Consequences to the Buyer shall not relieve the Seller and the Shareholders of
their obligation pursuant to Article 7 to indemnify and hold the Buyer harmless
from all Adverse Consequences.
3.2. Representations and Warranties of the Buyer. The Buyer
represents and warrants to the Seller and the Shareholders that the statements
contained in this Section 3.2 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3.2).
(a) Organization, Good Standing, Power, Etc. The Buyer
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware. This Agreement and the Other Buyer
Agreements and the transactions contemplated hereby and thereby have been duly
approved by all requisite corporate action. The Buyer has full corporate power
and authority to execute, deliver and perform this Agreement and the Other
Buyer Agreements, and this Agreement constitutes, and the Other Buyer
Agreements will when executed and delivered constitute, the legal, valid and
binding obligations of the Buyer, and shall be enforceable in accordance with
their respective terms against the Buyer.
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16
(b) No Violation of Agreements, Etc. The execution,
delivery and performance of this Agreement and the Other Buyer Agreements, and
the consummation of the transactions contemplated hereby and thereby will not
(i) violate any Legal Requirement to which the Buyer is subject or any
provision of the certificate of incorporation or bylaws of the Buyer or (ii)
violate, with or without the giving of notice or the lapse of time or both, or
conflict with or result in the breach or termination of any provision of, or
constitute a default under, or give any Person the right to accelerate any
obligation under, or result in the creation of any Encumbrance upon any
properties, assets or business of the Buyer pursuant to, any indenture,
mortgage, deed of trust, lien, lease, license, agreement, instrument or other
arrangement to which the Buyer is a party or which the Buyer or any of its
assets and properties is bound or subject. Except for notices and consents
that will be given or obtained by the Buyer prior to the Closing, the Buyer
does not need to give any notice to, make any filing with or obtain any
authorization, consent or approval of any Governmental Authority or other
Person in order for the parties to consummate the transactions contemplated by
this Agreement.
3.3. Survival of Representations. The representations and
warranties contained in Sections 3.1 and 3.2 and the Liabilities of the parties
with respect thereto shall survive any investigation thereof by the parties and
shall survive the Closing for four years, except that the Liabilities of the
Seller and the Shareholders with respect to the representations and warranties
set forth in Section 3.1(t) shall survive the Closing for the period ending on
the expiration of the applicable statute of limitations, and the Liabilities of
the Seller and the Shareholders with respect to representations and warranties
set forth in Sections 3.1(a), 3.1(b), 3.1(c), 3.1(f), 3.1(g), 3.1(m), 3.1(r),
and 3.1(s), and the Liabilities of the Buyer with respect to the
representations and warranties set forth in Sections 3.2(a) and 3.2(b), shall
survive without termination.
3.4. Representations as to Knowledge. The representations and
warranties contained in Article 3 hereof will in each and every case where an
exercise of discretion or a statement to the "best knowledge," "best of
knowledge" or "knowledge" is required on behalf of any party to this Agreement
be deemed to require that such exercise of discretion or statement be in good
faith after reasonable investigation, with due diligence, to the best efforts
of such party and be exercised always in a reasonable manner and within
reasonable times.
4. Pre-Closing Covenants. The parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
4.1. General. Each of the parties will use its best efforts to
take all actions necessary, proper or advisable in order to consummate and make
effective the transactions contemplated by this Agreement (including the
satisfaction, but not the waiver, of the closing conditions set forth in
Section 6) and the other agreements contemplated hereby. Without limiting the
foregoing, the Shareholders will, and will cause the Seller to, give any
notices, make any filings and obtain any consents, authorizations or approvals
needed to consummate the transactions contemplated by this Agreement.
4.2. Operation and Preservation of Business. The Seller will not,
and the Shareholders will not cause or permit the Seller to, engage in any
practice, take any action or enter into any transaction outside its ordinary
course of business; provided, however, that in no event will any action be
taken or fail to be taken or any transaction be entered into which would result
in a breach of any representation, warranty or covenant of the Seller or any
Shareholder. The Seller will, and the Shareholders will cause the Seller to,
keep its business and properties, including its current operations, physical
facilities, working conditions, and relationships with customers, suppliers,
lessors, licensors and employees, intact and, in connection therewith,
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17
to continue to purchase new or used equipment necessary to maintain its
rental/lease inventory at the level specified in Section 3.1(e)(x).
4.3. Acquisitions and Dispositions of Rental Equipment. From
February 1, 1997 through the Closing Date, the Seller may purchase for cash new
or used rental or lease equipment for use in the growth and expansion of its
business ("New Rental Equipment;" provided, however, that the term New Rental
Equipment shall not include any new or used rental or lease equipment acquired
to maintain its business or replace equipment used during the twelve-month
period ending January 31, 1997) or may sell (but only for cash or a Current
Rental Equipment Receivable) rental or lease equipment owned by the Seller on
or after February 1, 1997 ("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 Date, 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 2.3(a)
shall be increased in respect of such New Rental Equipment purchases ("New
Rental Equipment Increases") and the amount by which the purchase price payable
pursuant to Section 2.3(a) shall be decreased in respect of such Current Rental
Equipment sales ("Current Rental Equipment Decreases"). Exhibit 4.3 sets forth
(a) New Rental Equipment Increases with respect to New Rental Equipment
purchased between February 1, 1997 and the date of this Agreement and (b)
Current Rental Equipment Decreases with respect to Current Rental Equipment
sold or otherwise transferred between February 1, 1997 and the date of this
Agreement, as agreed by the Shareholders' Agent and an officer of the Buyer.
If any New Rental Equipment purchases or Current Rental Equipment sales or
other transfers occur after the date hereof and before the Closing Date,
Exhibit 4.3 shall be amended to reflect any agreed upon New Rental Equipment
Increases and Current Rental Equipment Decreases relating thereto.
4.4. Full Access. The Seller will permit the Buyer and its agents
to have full access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of the Seller, to all premises,
properties, personnel, books, records (including Tax records), contracts and
documents of or pertaining to the Seller.
4.5. Notice of Developments. The Seller will give prompt written
notice to the Buyer of any material development which occurs after the date of
this Agreement and affects the business, assets, Liabilities, financial
condition, operations, results of operations, future prospects,
representations, warranties, covenants or disclosure Exhibits of the Seller.
No such written notice, however, will be deemed to amend or supplement any
disclosure Exhibit or to prevent or cure any misrepresentation, breach of
warranty or breach of covenant.
4.6. Exclusivity. Until this Agreement is terminated in accordance
with its terms, neither the Seller nor any Shareholder will, and the
Shareholders will not cause or permit the Seller to, (a) solicit, initiate or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of any capital stock or other voting securities, or any portion
of the assets of, the Seller (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. Until this Agreement is terminated
in accordance with its terms, no Shareholder will vote shares of the Seller's
stock in favor of any such transaction. Until this Agreement is terminated in
accordance with its terms, the Seller and Shareholders will
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notify the Buyer immediately if the Person makes any proposal, offer, inquiry
or contact with respect to any of the foregoing.
4.7. Conveyance of Shareholder Property. Prior to the Closing
Date, the Shareholders shall convey, and shall cause each relative or affiliate
of the Seller or of any Shareholder to convey, to the Seller, free and clear of
any Encumbrance or Tax, all of each Shareholder's and each such relative's or
affiliate's right, title and interest to the Shareholder Property.
4.8. 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.
4.9. Bulk Sales Laws. In reliance upon its indemnification rights
set forth in Section 7, the Buyer waives compliance by the Seller with the bulk
transfer law and any other similar law of any applicable jurisdiction in
respect to the transactions contemplated by this Agreement.
5. Post-Closing Covenants. The parties agree as follows with respect to
the period following the Closing.
5.1. Further Assurances. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
party reasonably may request, all at the sole cost and expense of the
requesting party (unless the requesting party is entitled to indemnification
therefor under Section 7).
5.2. Transition. Each of the Shareholders will assist with the
transition of the Seller's business to the Buyer during the first six months
following the Closing at no cost to the Buyer. Neither the Seller nor any
Shareholder will take any action at any time that is designed or intended to
have the effect of discouraging any customer, supplier, lessor, licensor or
other business associate of the Seller from establishing or continuing a
business relationship with the Buyer after the Closing.
5.3. Cooperation. In the event and for so long as any party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection with
(a) any transaction contemplated by this Agreement or (b) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act or transaction on or prior to the Closing Date
involving any of the Acquired Assets or the Seller's business, each of the
other parties will cooperate with such party and its counsel in the contest or
defense, make available their personnel, and provide such testimony and access
to their books and records as shall be reasonably necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting or
defending party (unless the contesting or defending party is entitled to
indemnification therefor under Section 7).
5.4. Confidentiality. The Seller and the Shareholders will treat
and hold as confidential all Confidential Information concerning the Buyer, the
Seller's business or the Acquired Assets, refrain from using any such
Confidential Information and deliver promptly to the Buyer or destroy, at the
request and option of the Buyer, all of such Confidential Information in its or
their possession.
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19
5.5. Post-Closing Announcements. Following the Closing, neither
the Seller nor any Shareholder will issue any press release or make any public
announcement relating to the subject matter of this Agreement without the prior
written approval of the Buyer.
5.6. Financial Statements. The Seller and the Shareholders will,
upon request of the Buyer, cooperate with the Buyer 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. Satisfaction of Liabilities. The Seller and the Shareholders
will pay and perform, as and when due, all Liabilities (other than the Assumed
Liabilities) relating to the Seller, the business of the Seller and the
Acquired Assets, including without limitation, all Taxes attributable to the
transactions contemplated by this Agreement and all accrued vacation and other
accrued employee benefits; provided, however, that accrued vacation and other
accrued employee benefits with respect to those persons who are employees of
the Seller as of immediately prior to the Closing Date and who become employees
of the Buyer effective as of the Closing will be satisfied as set forth in
Section 2.3(b). In addition, the Seller and the Shareholders will pay to the
Buyer an amount equal to the portion of the personal property taxes on the
Acquired Assets of the Seller attributable to the period from January 1, 1997
to the Closing Date (the "Pre-Closing Personal Property Tax Amount"). The
Pre-Closing Personal Property Tax Amount payable by the Shareholders and the
Seller will be determined by prorating personal property taxes on the Acquired
Assets of the Seller for 1997 in proportion to the number of days in the year
prior to the Closing Date compared to the number of days in the year remaining
after the date on which the Closing occurs. If the actual Pre-Closing Personal
Property Tax Amount exceeds the estimated Pre-Closing Personal Property Tax
Amount used for purposes of Section 2.3(a), the Seller and the Shareholders
shall pay such excess amount to the Buyer within five days after their receipt
of notice from the Buyer stating the amount payable by them and a copy of the
invoices from Governmental Authorities relating thereto. If the estimated
Pre-Closing Personal Property Tax Amount used for purposes of Section 2.3(a)
exceeds the actual Pre-Closing Personal Property Tax Amount, the Buyer shall
pay such excess amount to the Seller within five days of receipt of the
invoices from Governmental Authorities relating thereto. Further, the Seller
and the Shareholders, at their expense, promptly will take or cause to be taken
any action necessary to remedy any failure of the Premises or the acquired
business to comply at the Closing Date with any Legal Requirement, upon receipt
of notice from the Buyer at any time. The Buyer will pay and perform, as and
when due (except to the extent the validity thereof or the liability therefor
is being contested by the Buyer), the Assumed Liabilities.
5.8. Certain Post-Closing Environmental Matters. The Seller and
the Shareholders shall, within the time specified in Exhibit 5.8, take or cause
to be taken, in compliance with applicable Environmental Obligations, the
actions specified in Exhibit 5.8. The Seller and the Shareholders shall take
such actions at their expense. Nothing in this Section 5.8 shall relieve the
Seller or any Shareholder from any obligation or Liability under Section 7 of
this Agreement, obligate the Buyer to take any action or impose any Liability
on the Buyer.
5.9. Repurchase of Unpaid Receivables. The Seller and the
Shareholders jointly and severally guarantee that 90% of the aggregate amount
of the Closing Accounts Receivable will be fully paid to the Buyer in
accordance with their terms at their recorded amounts not later than 120 days
from the Closing Date. Upon demand by the Buyer at any time after 120 days
from the Closing Date, the Seller and the Shareholders shall jointly and
severally pay to the Buyer the full amount of any unpaid Closing Accounts
Receivables which are the subject of such demand. Upon such payment to the
Buyer, the Closing Accounts Receivable
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20
which are so paid for by the Seller and the Shareholders shall, without further
action of any party, become the property of the Seller.
6. Conditions to Closing.
6.1. Conditions to Obligation of the Buyer. The obligation of the
Buyer to consummate the purchase of the Acquired Assets and the consummation of
the other transactions contemplated by this Agreement is subject to
satisfaction of the following conditions:
(a) the Seller's and each Shareholder's representations
and warranties shall be correct and complete at and as of the Closing Date and
the Closing and any written notices delivered to the Buyer pursuant to Section
4.5 and the subject matter thereof shall be satisfactory to the Buyer;
(b) the Seller and the Shareholders shall have
performed and complied with all of their covenants hereunder through the
Closing;
(c) the Seller and the Shareholders shall have given
all notices and procured all of the third- party consents, authorizations and
approvals required to consummate the transactions contemplated by this
Agreement, all in form and substance reasonably satisfactory to the Buyer;
(d) no action, suit or proceeding shall be pending or
threatened before any Governmental Authority or any other Person wherein an
unfavorable Order would (i) prevent consummation of any of the transactions
contemplated by this Agreement, (ii) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation or (iii) affect
adversely the right of the Buyer to own the Acquired Assets or to conduct the
acquired business, and no such Order shall be in effect;
(e) there shall have been no adverse change in the
Acquired Assets or the Seller's business between the date of execution of this
Agreement and the Closing;
(f) the Seller shall have delivered to the Buyer (i) a
certificate to the effect that each of the conditions specified above in
Sections 6.1(a) through (e) is satisfied in all respects, (ii) a certificate as
to the adoption of resolutions by the board of directors and shareholders of
the Seller authorizing the execution, delivery and performance of this
Agreement and the Other Seller Agreements and the consummation of the
transactions contemplated hereby and thereby and (iii) a good standing
certificate, dated within 10 days of the Closing, from the Secretary of State
of the State of the Seller's jurisdiction of incorporation and each other state
in which the Seller is qualified or authorized to do business as a foreign
corporation;
(g) the Buyer shall have completed its due diligence
with respect to the Seller, the Seller's business and the Acquired Assets with
results satisfactory to the Buyer;
(h) the Other Seller Agreements and documentation
necessary to accomplish the conveyance of the specific ownership tax and fee
payments made by the Seller prior to the Closing in respect of vehicles and
mobile equipment included in the Acquired Assets shall have been executed and
delivered by the Seller and the Shareholders, as applicable;
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21
(i) the Premises Lease shall have been executed and
delivered by the parties thereto and the owners of the real property underlying
the Premises Lease, and each Person having an Encumbrance on such property,
shall have executed and delivered estoppel, nondisturbance and landlord waiver
agreements relating thereto satisfactory to the Buyer;
(j) the Buyer shall have received from counsel to the
Seller and the Shareholders an opinion in form and substance as set forth in
Exhibit 6.1(j) addressed to the Buyer and its debt and equity financing sources
and dated as of the Closing;
(k) financing necessary for the consummation of the
transactions contemplated hereby and the operation of the acquired business
shall be available to the Buyer on terms and conditions satisfactory to the
Buyer;
(l) a "Phase I" environmental study of each of the
properties comprising the Premises, and such additional environmental testing
as the Buyer shall request, shall have been completed at the Seller's expense
and supplied to the Buyer, and the contents and results thereof shall be
satisfactory to the Buyer;
(m) the Seller shall have delivered to the Buyer
possession and control of the Acquired Assets;
(n) the Seller and the Shareholders shall have executed
and delivered to the Buyer (i) appropriate documentation to transfer to the
Buyer record ownership of the trade name "A-1 Rent All" and "A-1's Party
Rental" and all other registered Intellectual Property and applications
therefor and (ii) an amendment to the Seller's articles of incorporation for
the purpose of changing its name to a name that does not include the term "A-1
Rent All" or any derivation thereof;
(o) the Buyer and A-1 Rent All, Inc., shall have
closed, simultaneously with the Closing hereunder, the purchase by the Buyer of
the assets of A-1 Rent All, Inc., contemplated by the Purchase Agreement of
approximately even date herewith among the Buyer, A-1 Rent All, Inc. Charitable
Remainder Unitrust, A-1 Rent All, Inc. and the Shareholders (as defined
therein); and
(p) the Seller and the Shareholders shall have
delivered, or caused the Seller to deliver, to the Buyer such other
instruments, certificates and documents as are reasonably requested by the
Buyer in order to consummate the transactions contemplated by this Agreement,
all in form and substance reasonably satisfactory to the Buyer.
The Buyer may waive any condition specified in this Section 6.1 at or prior to
the Closing.
6.2. Conditions to Obligation of the Seller and the Shareholders.
The obligation of the Seller and the Shareholders to consummate the sale of the
Acquired Assets is subject to satisfaction of the following conditions:
(a) the Buyer's representations and warranties shall be
correct and complete at and as of the Closing Date and the Closing;
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(b) the Buyer shall have performed and complied with
all of its covenants hereunder through the Closing Date;
(c) the Buyer shall have delivered to the Seller a
certificate to the effect that each of the conditions specified above in
Sections 6.2(a) and (b) is satisfied in all respects;
(d) the Other Buyer Agreements shall have been executed
and delivered by the Buyer;
(e) the Seller and the Shareholders shall have received
from counsel to the Buyer an opinion in form and substance as set forth in
Exhibit 6.2(e), addressed to the Seller and the Shareholders and dated as of
the Closing; and
(f) the Buyer shall have paid and deposited the
purchase price for the Acquired Assets pursuant to Section 2.3.
The Shareholders' Agent may waive any condition specified in this Section 6.2
at or prior to the Closing.
7. Remedies for Breaches of This Agreement.
7.1. Indemnification Provisions for Benefit of the Buyer.
(a) If the Seller or any Shareholder breaches (or if
any Person other than the Buyer alleges facts that, if true, would mean the
Seller or any Shareholder has breached) any of the representations or
warranties of the Seller or any Shareholder contained herein and the Buyer
gives notice thereof to the Shareholders' Agent within the Survival Period, or
if the Seller or any Shareholder breaches (or if any Person other than the
Buyer alleges facts that, if true, would mean the Seller or any Shareholder has
breached) any covenants of the Seller or any Shareholder contained herein or
any representations, warranties or covenants of the Seller or any Shareholder
contained in any Other Seller Agreement and the Buyer gives notice thereof to
the Shareholders' Agent, then the Seller and the Shareholders agree to jointly
and severally indemnify and hold harmless the Buyer from and against any
Adverse Consequences the Buyer may suffer resulting from, arising out of,
relating to or caused by any of the foregoing regardless of whether the Adverse
Consequences are suffered during or after the Survival Period. In determining
whether there has been a breach of any representation or warranty contained in
Section 3.1 and in determining for purposes of the preceding sentence the
amount of Adverse Consequences suffered by the Buyer, such representations and
warranties shall not be qualified (other than by (A) the reference to
"knowledge" set forth in the last sentence of Section 3.1(o) and (B) the
references to "material" set forth in Section 3.1(t)) by "material,"
"materiality," "in all material respects," "best knowledge," "best of
knowledge" or "knowledge" or words of similar import, or by any phrase using
any such terms or words. The Seller and the Shareholders also agree to jointly
and severally indemnify and hold harmless the Buyer from and against any
Adverse Consequences the Buyer may suffer which result from, arise out of,
relate to or are caused by (i) any Liability of the Seller or any Shareholder
not included in the Assumed Liabilities (including, without limitation, those
concerning Hazardous Materials or the failure of the Seller, any Shareholder or
any predecessor to comply with any Environmental Obligation or other Legal
Requirement), (ii) any act or omission of the Seller, any Shareholder or any
predecessor with respect to, or any event or circumstance related to, the
Seller's, any Shareholder's or any predecessor's ownership, occupation, use or
operation of any of the Acquired Assets, the Excluded Assets, the Premises or
any other assets or properties or the conduct of its or their business,
regardless, in the case of (i) or (ii),
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of (A) whether or not such Liability, act, omission, event, circumstance or
matter was known or disclosed to the Buyer, was disclosed on any Exhibit hereto
or is a matter with respect to which the Seller or any Shareholder did or did
not have knowledge, (B) when such Liability, act, omission, event, circumstance
or matter occurred, existed, occurs or exists and (C) whether a claim with
respect thereto was asserted before or is asserted after the Closing Date, and
(iii) any Liability resulting from any failure of the parties to comply with
any applicable bulk sales or transfer Legal Requirement in connection with the
transactions contemplated by this Agreement. If any dispute arises concerning
whether any indemnification is owing which cannot be resolved by negotiation
among the parties within 30 days of notice of claim for indemnification from
the party claiming indemnification to the party against whom such claim is
asserted, the dispute will be resolved by arbitration pursuant to this
Agreement.
(b) Amounts needed to cover any indemnification claims
resolved in favor of the Buyer against the Seller or any Shareholder during the
Escrow Period will be paid to the Buyer first out of the funds escrowed
pursuant to the Escrow Agreement, along with interest from the date of the
Closing at the rate applicable to the escrowed funds. The Seller and the
Shareholders will have joint and several Liability for any additional amounts
needed to cover such claims, which amounts will be paid directly to the Buyer.
At the end of the Escrow Period amounts that may be needed to cover pending
indemnification claims made by the Buyer (such amounts to be determined in good
faith by the Buyer based upon the reasonable exercise of its business judgment)
will be retained in the Escrow Account until such claims are resolved, and any
excess on deposit therein, including any accrued interest, will be paid to the
Seller. Nothing in this Section 7.1(b) will be construed to limit the Buyer's
right to indemnification to amounts on deposit in the Escrow Account. The
Buyer and the Shareholders' Agent shall jointly give instructions to the Escrow
Agent to carry out the intent of this Section 7.1(b). Any disputes concerning
the escrowed funds will be settled by arbitration as provided in this
Agreement. The Buyer, on the one hand, and the Seller and the Shareholders
jointly and severally, on the other hand, shall each be responsible for
one-half of the Annual Administration Fee (as defined in Exhibit 7.1(b)),
provided, however, that the Seller and the Shareholders shall not be
responsible for more than $750 of such Annual Administration Fee, and the Buyer
shall be responsible for all of the Transaction Charges described on Exhibit
7.1(b), which are payable to the Escrow Agent pursuant to paragraph a. of
Article 2 of the Escrow Agreement. Except as otherwise determined pursuant to
Section 9.11 of this Agreement, the Buyer, on the one hand, and the
Shareholders jointly and severally, on the other hand, shall each be
responsible for one-half of any amounts payable pursuant to paragraph b. of
such Article 2.
7.2. Indemnification Provisions for Benefit of the Seller and the
Shareholders. If the Buyer breaches (or if any Person other than the Seller or
a Shareholder alleges facts that, if true, would mean the Buyer has breached)
any of its representations or warranties contained herein and the Shareholders'
Agent gives notice of a claim for indemnification against the Buyer within the
Survival Period, or if the Buyer breaches (or if any Person other than the
Seller or a Shareholder alleges facts that, if true, would mean the Buyer has
breached) any of its covenants contained herein or any of its representations,
warranties or covenants contained in any Other Buyer Agreement and the
Shareholders' Agent gives notice thereof to the Buyer, then the Buyer agrees to
indemnify and hold harmless the Seller and the Shareholders from and against
any Adverse Consequences the Seller and the Shareholders may suffer which
result from, arise out of, relate to, or are caused by the breach or alleged
breach, regardless of whether the Adverse Consequences are suffered during or
after the Survival Period. In determining whether there has been a breach of
any representation or warranty contained in Section 3.2 and in determining the
amount of Adverse Consequences suffered by the Seller and the Shareholders for
purposes of this Section, such representations and warranties shall not be
qualified by "material," "materiality," "in all material respects," "best
knowledge," "best of
- 19 -
24
knowledge" or "knowledge" or words of similar import, or by any phrase using
any such terms or words. If any dispute arises concerning whether any
indemnification is owing which cannot be resolved by negotiation among the
parties within 30 days of notice of claim for indemnification from the party
claiming indemnification to the party against whom such claim is asserted, the
dispute will be resolved by arbitration pursuant to this Agreement.
7.3. Matters Involving Third Parties.
(a) If any Person not a party to this Agreement
(including, without limitation, any Governmental Authority) notifies any party
(the "Indemnified Party") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any other party (the
"Indemnifying Party"), then the Indemnified Party will notify each Indemnifying
Party thereof in writing within 15 days after receiving such notice. No delay
on the part of the Indemnified Party in notifying any Indemnifying Party will
relieve the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right, at its
sole cost and expense, to defend the Indemnified Party against the Third Party
Claim with counsel of its choice satisfactory to the Indemnified Party so long
as (i) the Indemnifying Party notifies the Indemnified Party in writing within
10 days after the Indemnified Party has given notice of the Third Party Claim
that the Indemnifying Party will indemnify the Indemnified Party from and
against the entirety of any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to or caused by the Third Party
Claim, (ii) the Indemnifying Party provides the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party that the Indemnifying Party will
have the financial resources to defend against the Third Party Claim and
fulfill its indemnification obligations hereunder, (iii) the Third Party Claim
involves only money damages and does not seek an injunction or other equitable
relief, (iv) settlement of, or an adverse judgment with respect to, the Third
Party Claim is not, in the good faith judgment of the Indemnified Party, likely
to establish a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and (v) the
Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently. If the Indemnifying Party does not assume control of the defense
or settlement of any Third Party Claim in the manner described above, it will
be bound by the results obtained by the Indemnified Party with respect to the
Third Party Claim.
(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
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connection therewith), (ii) the Indemnifying Parties will reimburse the
Indemnified Party promptly and periodically for the costs of defending against
the Third Party Claim (including reasonable attorneys' fees and expenses), and
(iii) the Indemnifying Parties will remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting from, arising out of,
relating to or caused by the Third Party Claim to the fullest extent provided
in this Section 7.
7.4. Right of Offset. The Buyer will have the right to offset any
Adverse Consequences it may suffer against any amounts payable pursuant to this
Agreement or any Other Seller Agreement to the Seller or any Shareholder at or
after the Closing.
7.5. Other Remedies. The foregoing indemnification provisions are
in addition to, and not in derogation of, any statutory, equitable or common
law remedy any party may have.
8. Termination.
8.1. Termination of Agreement. The parties may terminate this
Agreement as provided below:
(a) the Buyer and the Shareholders' Agent may terminate
this Agreement by mutual written consent at any time prior to the Closing;
(b) the Buyer may terminate this Agreement by giving
written notice to the Shareholders' Agent at any time prior to the Closing (i)
in the event the Seller or any Shareholder has breached any representation,
warranty or covenant contained in this Agreement in any material way, the Buyer
has notified the Shareholders' Agent of the breach, and the breach has not been
cured within 10 days after the notice of breach or (ii) if the Closing has not
occurred on or before July 31, 1997 because of the failure of any condition
precedent to the Buyer's obligations to consummate the Closing (unless the
failure results primarily from the Buyer breaching any representation, warranty
or covenant contained in this Agreement in any material way); or
(c) the Shareholders' Agent may terminate this
Agreement by giving written notice to the Buyer at any time prior to the
Closing (i) if the Buyer has breached any representation, warranty or covenant
contained in this Agreement in any material way, the Shareholders' Agent has
notified the Buyer of the breach, and the breach has not been cured within 10
days after the notice of breach or (ii) if the Closing has not occurred on or
before July 31, 1997 because of the failure of any condition precedent to the
Seller's and the Shareholders' obligations to consummate the Closing (unless
the failure results primarily from the Seller or any Shareholder breaching any
representation, warranty or covenant contained in this Agreement in any
material way).
8.2. Effect of Termination. The termination of this Agreement by a
party pursuant to Section 8.1 will in no way limit any obligation or liability
of any other party based on or arising from a breach or default by such other
party with respect to any of its representations, warranties, covenants or
agreements contained in this Agreement, and the terminating party will be
entitled to seek all relief to which it is entitled under applicable law.
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26
8.3. Confidentiality. If this Agreement is terminated, each party
will treat and hold as confidential all Confidential Information concerning the
other parties which it acquired from such other parties in connection with this
Agreement and the transactions contemplated hereby.
9. Miscellaneous.
9.1. No Third-Party Beneficiaries. This Agreement will not confer
any rights or remedies upon any Person other than the parties and their
respective successors and permitted assigns.
9.2. Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the parties and
supersedes any prior understandings, agreements or representations by or among
the parties, written or oral, to the extent they relate in any way to the
subject matter hereof.
9.3. Succession and Assignment. This Agreement will be binding
upon and inure to the benefit of the parties and their respective successors
and permitted assigns. Neither the Seller nor any Shareholder may assign this
Agreement or any of their rights, interests or obligations hereunder without
the prior written approval of the Buyer. The Buyer may assign its rights and
obligations hereunder as permitted by law, including, without limitation, to
any debt or equity financing source.
9.4. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall be deemed to be one and the same instrument. The execution of a
counterpart of the signature page to this Agreement will be deemed the
execution of a counterpart of this Agreement.
9.5. Headings. The section headings contained in this Agreement
are inserted for convenience only and will not affect in any way the meaning or
interpretation of this Agreement.
9.6. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if it is
sent by registered or certified mail, return receipt requested, postage
prepaid, or by courier, telecopy or facsimile, and addressed to the intended
recipient as set forth below:
If to the Seller or
the Shareholders: Copy to:
Addressed to the ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Shareholders' Agent at: Hardy & ▇▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (___) ___-____ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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27
If to the Buyer: Copy to:
RentX Industries, Inc. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇ 633 Seventeenth Street, Suite 3000
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Notices will be deemed given three days after mailing if sent by certified
mail, when delivered if sent by courier, and upon receipt of confirmation by
person or machine if sent by telecopy or facsimile transmission. Any party may
change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
9.7. Governing Law. This Agreement will be governed by and
construed in accordance with the domestic laws of the State of Colorado without
giving effect to any choice or conflict of law provision or rule (whether of
the State of Colorado or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Colorado.
9.8. Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same is in writing and signed by the Buyer
and the Shareholders' Agent. No waiver by any party of any default,
misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, will be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence, and no waiver will be effective unless set forth in writing and
signed by the party against whom such waiver is asserted.
9.9. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
9.10. Expenses. Except as otherwise provided in Section 8.2, (a)
the Buyer shall bear its own costs and expenses (including, without limitation,
legal fees and expenses) incurred either before or after the date of this
Agreement in connection with this Agreement or the transactions contemplated
hereby and (b) the Seller and the Shareholders will bear all costs and expenses
(including, without limitation, all legal, accounting and tax related fees and
expenses, all fees, commissions, expenses and other amounts payable to any
broker, finder or agent and the costs of any environmental study and additional
environmental testing contemplated by Section 6.1) incurred by the Seller or
any Shareholder either before or after the date of this Agreement in connection
with this Agreement or the transactions contemplated hereby.
9.11. Arbitration. Any disputes arising under or in connection with
this Agreement, including, without limitation, those involving claims for
specific performance or other equitable relief, will be submitted to binding
arbitration under the Commercial Arbitration Rules of the American Arbitration
Association under the authority of federal and state arbitration statutes, and
shall not be the subject of litigation in any forum. EACH PARTY, BY SIGNING
THIS AGREEMENT, VOLUNTARILY, KNOWINGLY AND INTELLIGENTLY WAIVES ANY RIGHTS SUCH
PARTY MAY OTHERWISE HAVE TO SEEK
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REMEDIES IN COURT OR OTHER FORUMS, INCLUDING THE RIGHT TO JURY TRIAL. The
arbitration will be conducted only in Denver, Colorado, before a single
arbitrator selected by the parties or, if they are unable to agree on an
arbitrator, before a panel of three arbitrators, one selected by the Buyer, one
selected by the Shareholders' Agent and the third selected by the other two
arbitrators. The arbitrators shall have full authority to order specific
performance and award damages and other relief available under this Agreement
or applicable law, but shall have no authority to add to, detract from, change
or amend the terms of this Agreement or existing law. All arbitration
proceedings, including settlements and awards, shall be confidential. The
decision of the arbitrators will be final and binding, and judgment on the
award by the arbitrators may be entered in any court of competent jurisdiction.
THIS SUBMISSION AND AGREEMENT TO ARBITRATE WILL BE SPECIFICALLY ENFORCEABLE.
The prevailing party or parties in any such arbitration or in any action to
enforce this Agreement will be entitled to all reasonable costs and expenses,
including fees and expenses of the arbitrators and attorneys, incurred in
connection therewith.
9.12. Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement will be construed
as if drafted jointly by the parties and no presumption or burden of proof will
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. The word "including" will mean including
without limitation. The parties intend that each representation, warranty and
covenant contained herein will have independent significance. If any party
breaches any representation, warranty or covenant contained herein in any
respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which the party has not breached will not detract from or
mitigate the fact that the party is in breach of the first representation,
warranty or covenant.
9.13. Incorporation of Exhibits. The Exhibits identified in this
Agreement are incorporated herein by reference and made a part hereof.
9.14. Seller's and Shareholders' Agent. The Seller and each
Shareholder hereby authorize and appoint the Shareholders' Agent to act as its,
his or her exclusive agent and attorney-in-fact to act on behalf of each of
them with respect to all matters which are the subject of this Agreement,
including, without limitation, (a) receiving or giving all notices,
instructions, other communications, consents or agreements that may be
necessary, required or given hereunder and (b) asserting, settling,
compromising, or defending, or determining not to assert, settle, compromise or
defend, (i) any claims which the Seller or any Shareholder may assert, or have
the right to assert, against the Buyer, or (ii) any claims which the Buyer may
assert, or have the right to assert, against the Seller or any Shareholder.
The Shareholders' Agent hereby accepts such authorization and appointment.
Upon the receipt of written evidence satisfactory to the Buyer to the effect
that the Shareholders' Agent has been substituted as agent of the Seller and
the Shareholders by reason of his death, disability or resignation, the Buyer
shall be entitled to rely on such substituted agent to the same extent as they
were theretofore entitled to rely upon the Shareholders' Agent with respect to
the matters covered by this Section 9.14. Neither the Seller nor any
Shareholder shall act with respect to any of the matters which are the subject
of this Agreement except through the Shareholders' Agent. The Seller and the
Shareholders acknowledge and agree that the Buyer may deal exclusively with the
Shareholders' Agent in respect of such matters, that the enforceability of this
Section 9.14 is material to the Buyer, and that the Buyer has relied upon the
enforceability of this Section 9.14 in entering into this Agreement.
[REMAINDER OF THIS 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.
BUYER:
RENTX INDUSTRIES, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Title: President
---------------------------------
SELLER:
A-1 RENT ALL OF ▇▇▇▇▇▇▇▇, INC.
By:/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Title: President
---------------------------------
SHAREHOLDERS:
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ A. ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
A. ▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[SIGNATURE PAGE TO PURCHASE AGREEMENT.]
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