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EXHIBIT 10.8
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ASSET PURCHASE AGREEMENT
AMONG
RENTX INDUSTRIES, INC.,
RIFLE RENTALS, INC.,
RENTAL COUNTRY U.S.A., INC.,
G.R.M. COMPANY, INC.,
ROCKY MOUNTAIN RENTALS, INC.,
XXXX X. XXXXXX
AND
XXXXXXXXX XXXXXX
AS OF AUGUST 2, 1996
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TABLE OF CONTENTS
Page
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1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Purchase and Sale. . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1. Basic Transaction . . . . . . . . . . . . . . . . . . . . . . 10
2.2. Assumption of Certain Liabilities . . . . . . . . . . . . . . 10
2.3. Purchase Price; Payment . . . . . . . . . . . . . . . . . . . 10
2.4. Sales Taxes, Etc. . . . . . . . . . . . . . . . . . . . . . . 12
2.5. Closing; Effective Date . . . . . . . . . . . . . . . . . . . 12
2.6. Deliveries at the Closing . . . . . . . . . . . . . . . . . . 13
3. Representations and Warranties. . . . . . . . . . . . . . . . . . . . 13
3.1. Representations and Warranties of the Sellers and the
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2. Representations and Warranties of the Buyer . . . . . . . . . 29
3.3. Survival of Representations . . . . . . . . . . . . . . . . . 30
3.4. Representations as to Knowledge . . . . . . . . . . . . . . . 30
4. Pre-Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . . 30
4.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.2. Operation of Business . . . . . . . . . . . . . . . . . . . . 30
4.3. Preservation of Business . . . . . . . . . . . . . . . . . . . 31
4.4. Full Access . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.5. Notice of Developments . . . . . . . . . . . . . . . . . . . . 31
4.6. Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.7. Confirmatory Conveyance . . . . . . . . . . . . . . . . . . . 32
4.8. Announcements . . . . . . . . . . . . . . . . . . . . . . . . 32
5. Post-Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . 32
5.1. Further Assurances . . . . . . . . . . . . . . . . . . . . . . 32
5.2. Transition . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.3. Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.4. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 33
5.5. Post-Closing Announcements . . . . . . . . . . . . . . . . . . 33
5.6. Financial Statements . . . . . . . . . . . . . . . . . . . . . 33
5.7. Satisfaction of Liabilities . . . . . . . . . . . . . . . . . 33
5.8. Collection of Receivables . . . . . . . . . . . . . . . . . . 34
5.9. Use of Certain Assets . . . . . . . . . . . . . . . . . . . . 34
6. Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . . 36
6.1. Conditions to Obligation of the Buyer . . . . . . . . . . . . 36
6.2. Conditions to Obligations of the Sellers and the Shareholders 38
(i)
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7. Remedies for Breaches of This Agreement . . . . . . . . . . . . . . . 39
7.1. Indemnification Provisions for Benefit of the Buyer . . . . . 39
7.2. Indemnification Provisions for Benefit of the Sellers and
the Shareholders . . . . . . . . . . . . . . . . . . . . . . . 40
7.3. Matters Involving Third Parties . . . . . . . . . . . . . . . 41
7.4. Right of Offset. . . . . . . . . . . . . . . . . . . . . . . . 42
7.5. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . 42
8. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.1. Termination of Agreement . . . . . . . . . . . . . . . . . . . 42
8.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . 43
8.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 43
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.1. No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . 43
9.2. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 43
9.3. Succession and Assignment . . . . . . . . . . . . . . . . . . 43
9.4. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.5. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.7. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 44
9.8. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . 44
9.9. Severability . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.10. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.11. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.12. Construction . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.13. Incorporation of Exhibits . . . . . . . . . . . . . . . . . . 45
9.14. Sellers' and Shareholders' Agent. . . . . . . . . . . . . . . 45
(ii)
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Exhibits:
Exhibit 1.1(a)
Exhibit 1.1(b)
Exhibit 1.1(c)
Exhibit 1.1(d)
Exhibit 1.1(e)
Exhibit 1.1(f)
Exhibit 1.1(g)
Exhibit 1.1(h)
Exhibit 1.1(i)
Exhibit 1.1(j)
Exhibit 3.1(e)
Exhibit 3.1(f)(i)
Exhibit 3.1(f)(ii)
Exhibit 3.1(h)
Exhibit 3.1(i)
Exhibit 3.1(j)
Exhibit 3.1(k)
Exhibit 3.1(l)
Exhibit 3.1(p)
Exhibit 3.1(r)
Exhibit 3.1(s)
Exhibit 3.1(t)
Exhibit 3.1(v)
Exhibit 3.1(x)
Exhibit 3.1(y)
Exhibit 3.1(ab)
Exhibit 4.2(a)
Exhibit 4.2(b)
Exhibit 6.1(i)
Exhibit 6.2(e)
(iii)
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This Asset Purchase Agreement is entered into as of August 2,
1996 among RentX Industries, Inc., a Delaware corporation (the "Buyer"), Rifle
Rentals, Inc., a Colorado corporation ("Rifle"), Rental Country U.S.A., Inc., a
Colorado corporation ("Country"), G.R.M. Company, Inc., a Colorado corporation
("GRM"), Rocky Mountain Rentals, Inc., a Colorado corporation ("Rocky") (Rifle,
Country, GRM and Rocky may be referred to individually as "Seller" and
collectively, as "Sellers") and Xxxx X. Xxxxxx and Xxxxxxxxx Xxxxxx
(individually, a "Shareholder" and collectively, the "Shareholders").
Recitals
The Shareholders own all of the issued and outstanding capital
stock of the Sellers. The Sellers desire to sell, and the Buyer desires to
purchase, substantially all of each Seller's assets as provided in this
Agreement. The parties intend that the Buyer's acquisition of Rifle's assets
will occur after the Buyer acquires the other Sellers' assets and only upon the
Buyer's exercise of its option to acquire Rifle's assets.
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.
1.1. Defined Terms. The following terms used in this Agreement
shall have the meanings designated below:
Acquired Assets means all right, title and interest of
each Seller in and to all of the tangible and intangible assets of such Seller
except the Excluded Assets, but including, without limitation, all of each
Seller's (a) tangible personal property (such as machinery, equipment,
inventories, supplies, manufactured and purchased parts, furniture,
automobiles, trucks, tractors, trailers and tools), (b) all real property
leaseholds, all Seller Improvements, Fixtures and Fittings and, as to Rifle,
the Glenwood Improvements, Fixtures and Fittings, except the Excluded Real
Property, (c) the tradename E-Z Way Rentals (and all derivations thereof),
other Intellectual Property and goodwill, licenses and sublicenses granted and
obtained with respect thereto and rights thereunder, remedies against
infringements thereof, and rights to protection of interests therein, (d)
agreements, contracts, instruments, security interests, guaranties and other
similar arrangements, and rights thereunder, except those representing Employee
Benefit Plans or Benefit Arrangements or other Liabilities that are not Assumed
Liabilities, (e) accounts receivable, notes receivable and other receivables,
(f) cash in an amount equal to $400 per store of such Seller, which shall be
left in the cash register of each of such Seller's stores on the Premises as of
the Closing (a total of $2,000 with respect to the five stores of all Sellers),
(g) claims, deposits, payments, refunds, causes of action, choses in action,
rights of recovery, rights of set-off and rights of recoupment (including any
such item relating to the payment of Taxes), (h) franchises, approvals,
Permits, licenses, Orders in favor of such Seller, registrations, certificates,
variances, and similar rights and items obtained from Governmental Authorities,
and rights thereunder, (i) specific ownership tax and fee payments made by the
Seller prior to the Closing in respect the vehicles and mobile equipment
included in the Acquired Assets, and (j) books, records, ledgers, files,
documents, correspondence, lists, drawings, specifications, creative materials,
advertising and promotional materials, studies, reports, and other printed or
written materials and computer records and data, except the Excluded Accounting
Records; provided, however, that the Sellers shall deliver copies of the
Excluded Accounting Records to the Buyer at the Closing.
Adverse Consequences means all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, penalties, fines,
costs, amounts paid in settlement, Liabilities, obligations, Taxes, liens,
losses, damages, costs, expenses and fees (including court costs and fees and
expenses of counsel and other experts), plus interest at a rate equal to the
prime rate quoted by Norwest Bank Colorado, N.A. from time to time plus two
percentage points accrued from
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the date any Adverse Consequence becomes a liability of the party suffering the
Adverse Consequence as determined in accordance with GAAP.
Affiliated Group means any affiliated group within the
meaning of Code Section 1504 or any similar group defined under a similar
provision of state, local or foreign law.
Assignment and Assumption Agreement means the Assignment
and Assumption Agreement between the First Sellers and the Buyer or Rifle and
the Buyer in the form of Exhibit 1.1(a) to be entered into at the First Closing
or the Second Closing, as applicable, pursuant to which each Seller will assign
to the Buyer, and the Buyer will assume, the obligations of such Seller arising
after the applicable Closing Date under certain contracts specified by the
Buyer, which at the Closing will be identified on Schedule 1 thereto.
Assumed Liabilities means the obligations of each Seller
arising after the Closing Date under those contracts which are identified on
Schedule 1 to the appropriate Assignment and Assumption Agreements. Assumed
Liabilities will not include any other Liability.
Benefit Arrangement means any employment, severance or
other similar contract, arrangement or policy and each plan or agreement
(whether written or oral) providing through insurance coverage or through any
self-insured arrangements, workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
deferred compensation, profit sharing, bonuses, stock options, stock
appreciation rights or other forms of incentive compensation, reduced interest
or interest free loans, mortgages, relocation assistance or post-retirement
insurance, compensation or other benefits (including, without limitation, any
contracts, arrangements or understandings relating to this Agreement) that (a)
is not an Employee Benefit Plan, (b) is entered into, maintained or contributed
to by any Seller and (c) benefits any employee or former employee of any Seller
or any relative thereof.
Business means the business of each Seller represented by
the Acquired Assets of such Seller and any business conducted by such Seller at
any time within 36 months prior to the Closing.
Closing has the meaning given it in Section 2.5.
Closing Accounts Receivable means all accounts and notes
receivable of any Seller which arose from the ordinary course of its business
(including, without limitation, Current Rental Equipment Receivables) and are
in existence as of the applicable Closing Date and included in the Acquired
Assets, as set forth on such Seller's Closing Balance Sheet.
Closing Balance Sheet means the balance sheet of each
Seller as of the applicable Closing Date prepared in accordance with GAAP and
audited, at the Buyer's expense, by the Buyer's certified public accounting
firm.
Closing Date has the meaning given it in Section 2.5.
Closing Inventory means each Seller's current inventory of
goods and equipment held for rent, lease or sale in the ordinary course of
their business which are in existence as of the applicable Closing Date and
included in the Acquired Assets, as set forth on such Seller's Closing Balance
Sheet.
Code means the Internal Revenue Code of 1986, as amended.
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Confidential Information means any information concerning
the subject Person or the subject Person's business, products, financial
condition, prospects and affairs that is not already generally available to the
public.
Consigned Equipment means the equipment consigned to any
Seller by Xxxxxx Equipment Co., which equipment is set forth on Exhibit 1.1(b).
Current Rental Equipment has the meaning set forth in
Section 4.2.
Current Rental Equipment Decreases has the meaning set
forth in Section 4.2.
Current Rental Equipment Receivable means any note or
account receivable of any Seller which arose or arises as consideration for the
sale by a Seller of any Current Rental Equipment pursuant to Section 4.2.
Employee Benefit Plan means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan) or (d) Employee Welfare Benefit Plan.
Employee Pension Benefit Plan has the meaning set forth in
ERISA Section 3(2).
Employee Welfare Benefit Plan has the meaning set forth in
ERISA Section 3(1).
Encumbrance means any mortgage, pledge, conditional sale
agreement, charge, claim, interest of another Person, lien, security interest,
title defect or other encumbrance.
Environmental Obligations means all federal, state and
local laws, regulations, rules, orders, permits, licenses, approvals,
ordinances, judgments, injunctions, directives, and common law relating to land
use, public health, safety, welfare or the environment or to the impact of
business and activities upon land use, public health, safety, welfare or the
environment, including, but not limited to, all requirements of the following
federal statutes and regulations promulgated pursuant thereto, as amended from
time to time: the Clean Air Act; the Clean Water Act; the Resource
Conservation and Recovery Act; the Safe Drinking Water Act; the Federal
Insecticide, Fungicide and Rodenticide Act; the National Environmental Policy
Act; the Comprehensive Environmental Response, Compensation, and Liability Act;
OSHA; the Emergency Planning and Community Right-to-Know Act; the Toxic
Substances Control Act; and any state or local law counterpart or supplement to
such Acts.
Environmental Study has the meaning set forth in Section
3.1(x).
ERISA means the Employee Retirement Income Security Act of
1974, as amended, and any regulations, rules or orders promulgated thereunder.
ERISA Controlled Group means any Persons which together
are treated as a single employer under Section 4001(b)(i) of ERISA or Sections
4014(b), (c), (m) or (o) of the Code.
Escrow Account means the escrow account to be established
and maintained by the Escrow Agent pursuant to the Escrow Agreement.
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Escrow Agent means Norwest Bank Colorado, N.A.
Escrow Agreement means the Escrow Agreement among the
Buyer, the Sellers, the Shareholders, the Shareholders' Agent and the Escrow
Agent in the form of Exhibit 1.1(c) to be entered into at the First Closing, as
amended at the Second Closing upon execution of an amendment to the Escrow
Agreement among the Buyer, the Sellers, the Shareholders, the Shareholders'
Agent and the Escrow Agent reflecting the matters contemplated by the second
sentence of Section 2.3(a) and by Section 2.7(b) if the Second Closing occurs.
Escrow Period means with respect to the First Indemnity
Deposit and the Non-Indemnity Deposit, the period commencing on the First
Closing and ending on the first anniversary of the First Closing with respect
to the Second Indemnity Deposit, the period commencing on the Second Closing
and ending on the first anniversary of the Second Closing and, with respect to
the Lease Extension Deposit, the period commencing on the First Closing and
ending on July 1, 1998.
Excluded Accounting Records means those accounting records
of the Sellers, including the general ledger, pertaining solely to tax returns
of any Seller or Shareholder.
Excluded Assets means (a) all cash of any Seller on hand
as of the Closing Date, other than the $400 per store of such Seller as
described in clause (f) of the definition of Assets, (b) the Excluded Real
Property, (c) the corporate charter, taxpayer and other identification numbers,
seals, minute books, stock transfer books and other documents relating solely
to the organization, maintenance and existence of any Seller as a corporation,
(d) any rights of any Seller under this Agreement or the Other Seller
Agreements, (e) agreements, contracts, plans or similar arrangements
representing Employee Benefit Plans or Benefit Arrangements, (f) the 1997 Ford
F-250 pickup owned by Country and used by Xxxx X. Xxxxxx, (g) the Excluded
Accounting Records, (h) the amount of any Tax refunds received after the
Closing Date which are refunded in respect of the period prior to the Closing
Date and (i) the $12,000 bond posted by Country with the Colorado State Board
of Land Commissioners with respect to the Vail, Colorado Premises.
Excluded Business has the meaning set forth in Section
5.8(c).
Excluded Real Property means (a) the land and buildings
owned by any Seller or Shareholder (and the easements, rights of way and
appurtenances thereto), and the improvements, fixtures and fittings located
thereon or attached thereto relating solely to the Excluded Business and (b)
the lease agreements existing between any Seller and any Shareholder pursuant
to which any Seller leases from any Shareholder any Premises owned by such
Shareholder.
First Closing has the meaning set forth in Section 2.5.
First Indemnity Deposit has the meaning set forth in
Section 2.3(a).
First Sellers means Country, GRM and Rocky.
First Sellers Acquired Assets means the Acquired Assets of
each of the First Sellers.
GAAP means generally accepted accounting principles as in
effect from time to time in the United States.
Glenwood Improvements, Fixtures and Fittings means all
improvements, fixtures and fittings owned by any Seller which are located on or
attached to the Premises occupied by Rifle in Glenwood Springs, Colorado, which
improvements, fixtures and fittings are set forth on Exhibit 1.1(d).
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Governmental Authority means (a) the United States of
America, (b) any state, commonwealth, territory or possession of the United
States of America and any political subdivision thereof (including counties,
municipalities and the like) or (c) any agency, authority or instrumentality of
any of the foregoing, including, without limitation, any court, tribunal,
department, bureau, commission or board.
Hazardous Materials means any material, chemical,
compound, mixture, substance or waste which is regulated by any Governmental
Authority having jurisdiction over any property, including but not limited to
(a) any oil or petroleum compounds, flammable substances, explosives,
radioactive materials, or any other materials or pollutants which pose a hazard
to any property or to persons in or about any property or cause any property to
be in violation of any Legal Requirement, (b) asbestos, asbestos-containing
material or presumed asbestos-containing material of any kind or character, (c)
polychlorinated biphenyls, (d) any materials or substances designated as
"hazardous substances" pursuant to Section 311 of the Clean Water Act, 33
U.S.C. Section 1251 et seq., (e) "economic poison," as defined in the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section 135 et seq., (f)
"chemical substance," "new chemical substance," or "hazardous chemical
substance or mixture" pursuant to Sections 3, 6 and 7 of the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq., (g) "hazardous substances"
pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., and (h)
"hazardous waste" pursuant to Section 1004 of the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq.
Intellectual Property means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications and patent
disclosures, together with all reissuances, continuations, continuations-in-
part, revisions, extensions and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names and corporate names, together
with all translations, adaptations, derivations and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith, (c) all copyrightable
works, all copyrights and all applications, registrations and renewals in
connection therewith, (d) all mask works and all applications, registrations
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including data and related documentation), (g) all
other proprietary rights and (h) all copies and tangible and intangible
embodiments thereof (in whatever form or medium).
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Latest Balance Sheet has the meaning given it in Section
3.1(f).
Lease Extension Deposit has the meaning given it in
Section 2.3(a).
Legal Requirement means any constitution, statute,
ordinance, code, law, rule, regulation, order or other requirement, standard or
procedure enacted, adopted or applied by any Governmental Authority, including
judicial decisions applying common law or interpreting any other Legal
Requirement.
Liabilities Reserve means funds on deposit at any time in
the demand deposit account established on the Closing Date in the name of the
Buyer and the Shareholders' Agent in an amount equal to the Reserve Amount
deposited therein at or after the Closing less the aggregate amount of such
funds used after the Closing to satisfy Reserved Seller Liabilities.
Liability means any liability or obligation (whether known
or unknown, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due), including any liability for Taxes.
Multiemployer Plan has the meaning set forth in ERISA
Section 3(37).
New Rental Equipment has the meaning set forth in Section
4.2.
New Rental Equipment Increases has the meaning set forth
in Section 4.2.
Noncompetition Agreement means the Noncompetition
Agreement among the Buyer, each Seller and each Shareholder, in the form of
Exhibit 1.1(e) to be entered into at the Closing.
Non-Indemnity Deposit has the meaning set forth in Section
2.3(a).
Option means the Buyer's option to purchase the Rifle
Acquired Assets as set forth in Section 9.15.
Orders means all applicable judgments, injunctions,
orders, decrees, notices of violation or other requirements of any Governmental
Authority or arbitrator having jurisdiction in the matter, including a
bankruptcy court or trustee.
OSHA means the Occupational Safety and Health Act of 1970,
as amended, and any regulations, rules or orders promulgated thereunder.
Other Buyer Agreements means the Assignment and Assumption
Agreement, the Escrow Agreement, the Noncompetition Agreement, the Shareholder
Leases and the other documents and instruments to be executed and delivered by
the Buyer pursuant to this Agreement.
Other Seller Agreements means the Assignment and
Assumption Agreement, the Escrow Agreement, the Noncompetition Agreement, the
Premises Leases, the bills of sale and other documents and instruments to be
executed and delivered by any Seller or Shareholder or relative or affiliate
thereof pursuant to this Agreement.
Permits means all permits, licenses, consents, franchises,
authorizations, approvals, privileges, waivers, exemptions, exclusionary or
inclusionary orders and other concessions, whether governmental
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or private, including, without limitation, all environmental, public health or
safety permits required in connection with any Seller's Business.
Person means an individual, partnership, corporation,
association, joint stock company, trust, joint venture, limited liability
company, unincorporated organization or Governmental Authority.
Premises means the real property, buildings and
improvements thereon constituting the business premises of Rifle located at
00000 Xxxxxx 0 & 00, Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000; the business premises of
Country located at 00000 Xxxxxxxx 0 & 00, Xxxx, Xxxxxxxx 00000 and 000
Xxxxxxxx, Xxxxx, Xxxxxxxx 00000; the business premises of GRM located at 000
Xxxxx, Xxxxxxxxxxxx, Xxxxxxxx 00000; and the business premises of Rocky located
at 0000 X. Xxxxxxx Xxx, Xxxxx, Xxxxxxxx 00000.
Premises Leases means (a) the Shareholder Leases and (b)
the Shareholder Subleases, under which the Buyer will lease the Premises
following the Closing.
Price Allocation Schedule has the meaning given it in
Section 2.3(c).
Reserve Amount means an amount equal to Reserved Seller
Liabilities as of the applicable Closing Date, as estimated in good faith by
the Shareholders' Agent and the Buyer on the day before the applicable Closing
occurs.
Reserved Seller Liabilities means all Liabilities of any
and all Sellers (including Liabilities which at the time of calculation are
accrued but not yet payable) as of the applicable Closing Date relating to the
Business (other than the Excluded Business), except the Assumed Liabilities;
provided, however, that Reserved Seller Liabilities shall not include any
Liabilities of Rifle unless and until the Second Closing occurs.
Rifle Acquired Assets means the Acquired Assets of Rifle
including without limitation those listed on Exhibit 3.1(l) as Rifle Acquired
Assets.
Right means any right, property interest, concession,
patent, trademark, trade name, copyright, know-how or other proprietary right
of another Person.
Second Closing has the meaning given it in Section 2.5.
Seller Improvements, Fixtures and Fittings means all
improvements, fixtures or fittings which are (a) located on or attached to any
of the Premises and (b) owned by any Seller or any Shareholder; provided,
however, that any such improvements, fixtures or fittings which are owned by
any Shareholder prior to the Closing Date shall be conveyed to the applicable
Seller pursuant to Section 4.7. The Buyer shall not remove any item of Seller
Improvements, Fixtures and Fittings from any Premises leased by the Buyer from
any Shareholder unless such item can be removed from such Premises without
materially damaging or materially altering the building or Premises from which
it is removed or unless such damage or alternation is reasonably repaired or
replaced by the Buyer.
Shareholder Leases means the lease agreements between the
Buyer and the Shareholders relating to the Eagle, Colorado Premises, the
Silverthorne, Colorado Premises and the Craig, Colorado Premises in the forms
of Exhibits 1.1(f), (g) and (h), respectively, to be entered into at the
Closing.
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Shareholder Subleases means the sublease agreements
between the Buyer and the Shareholders relating to the Vail, Colorado Premises
and the Glenwood Springs, Colorado Premises in the forms of Exhibits 1.1(i) and
1.1(j), respectively, to be entered into at the Closing.
Shareholders has the meaning given it in the preamble to
this Agreement.
Shareholders' Agent means Xxxx X. Xxxxxx (or the
substituted agent described in Section 9.14) acting as agent for the Sellers
and the Shareholders pursuant to Section 9.14.
Subsidiary means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the common stock
or has the power to vote or direct the voting of sufficient securities to elect
a majority of the directors.
Survival Period means the applicable periods after the
Closing Date during which representations and warranties survive pursuant to
Section 3.3.
Tax means any federal, state, local or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, documentary, personal property, sales, use, transfer, registration,
value added, alternative or add-on minimum, estimated or other tax of any kind
whatsoever, including any interest, penalty or addition thereto, whether
disputed or not.
Tax Return means any return, declaration, report, claim
for refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
Vail Land Lease has the meaning given it in Section
2.7(a).
Vail Sublease has the meaning given it in Section 5.12.
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 each Seller, and
each Seller agrees to sell to the Buyer, all the Acquired Assets free and clear
of any Encumbrance, 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 of all Sellers.
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 for all of the Assumed Liabilities at the Closing. The
Buyer will not assume or have any responsibility with respect to any other
Liability not included within the definition of Assumed Liabilities.
2.3. Purchase Price; Payment.
(a) At the First Closing, the Buyer will (i), by wire
transfer or other delivery of immediately available funds, (A) deposit $260,000
(the "Non-Indemnity Deposit") and $200,000 (the "Lease Extension Deposit") into
the Escrow Account, (B) pay $1,815,800 to Country and deposit $325,000 into the
Escrow Account, (C) pay $271,650 to GRM and deposit $38,750 into the Escrow
Account, and (D) pay $66,025 to Rocky and deposit $9,375 into the Escrow
Account, and (ii) assume the Assumed Liabilities of the First Sellers
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(and the amounts paid and deposited to and in respect of each First Seller and
the Assumed Liabilities assumed from each First Seller will constitute the full
purchase price for the Acquired Assets purchased from each First Seller). At
the Second Closing, the Buyer will (i), by wire transfer or other delivery of
immediately available funds, pay $188,525 to Rifle and deposit $26,875 (the
"Second Indemnity Deposit") into the Escrow Account and (ii) assume the Assumed
Liabilities of Rifle (and the amounts paid and deposited to and in respect of
Rifle and the Assumed Liabilities assumed from Rifle will constitute the full
purchase price for the Rifle Acquired Assets). The amount deposited pursuant
to clauses (i) (B), (C) and (D) above is referred to as the "First Indemnity
Deposit." The First Indemnity Deposit and the Second Indemnity Deposit (if
made) will belong to each Seller with respect to which such deposit (or portion
thereof) is made, will be 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. The
Non-Indemnity Deposit and the Lease Extension Deposit will be held, invested,
administered and disbursed according to Section 2.7 hereof and the Escrow
Agreement. Notwithstanding the foregoing, the cash purchase price to be paid
to each Seller at the Closing will be (i) reduced by Current Rental Equipment
Decreases as set forth on Exhibits 4.2(a) and (b) for Current Rental Equipment
which is sold by a Seller between the date hereof and the Closing pursuant to
Section 4.2 or was sold or otherwise transferred by a Seller between March 1,
1996 and the day preceding the date of this Agreement; provided, however, the
purchase price will not be reduced in respect of the amount of any Current
Rental Equipment Decrease which will be represented, immediately following the
Closing Date, by a Current Rental Equipment Receivable, (ii) increased by New
Rental Equipment Increases for New Rental Equipment which is both purchased by
the Seller prior to the Closing pursuant to Section 4.2 and paid for in full by
such Seller prior to the Closing as set forth on Exhibits 4.2(a) and (b) and
(iii) reduced by such Seller's portion of the Reserve Amount.
(b) At the First Closing, the Buyer will deposit into a
demand deposit account in the name of the Buyer and the Shareholders' Agent an
amount equal to the Reserve Amount pertaining to the First Sellers' Business,
and such funds shall initially constitute the Liabilities Reserve for the First
Sellers. At the Second Closing, the Buyer will deposit into a demand deposit
account in the name of the Buyer and the Shareholders' Agent an amount equal to
the Reserve Amount pertaining to Rifle's Business, and such funds shall
initially constitute the Liabilities Reserve for Rifle. The funds on deposit
in the Liabilities Reserve will belong to the Sellers, subject to the
provisions 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 by the Buyer or the Shareholders' Agent, as the
Reserved Seller Liabilities become due and payable. To the extent that the
Buyer receives a xxxx or invoice representing, or is otherwise aware of, any
Reserved Seller Liabilities, the Buyer may cause funds to be disbursed from the
Reserve Amount to satisfy such Reserved Seller Liabilities. Reserved Seller
Liabilities representing accrued vacation and other accrued employee benefits
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 Sellers 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 Sellers 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 Sellers. 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 the total consideration for the Acquired Assets
acquired from a Seller among the various categories of Acquired Assets as
described below. In preparing the Price Allocation Schedule, the parties will
allocate the total consideration for the Acquired Assets acquired from a Seller
among the Acquired Assets in the following manner:
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(i) to Closing Accounts Receivable of such
Seller, the amount thereof shown on the Closing Balance Sheet of such
Seller;
(ii) to Closing Inventory of such Seller, the
amount thereof shown on the Closing Balance Sheet of such Seller;
(iii) to equipment and leasehold improvements of
such Seller, the current book value thereof as reflected on the Closing
Balance Sheet of such Seller;
(iv) to prepaid expenses of such Seller, the
unamortized balance thereof shown on the Closing Balance Sheet of such
Seller;
(v) to any other assets of such Seller, other
than goodwill, the amount thereof shown on the Closing Balance Sheet of
such Seller; and
(vi) the entire remaining balance of the
consideration shall be allocated to the goodwill of the Business of such
Seller or, at the Buyer's sole discretion, to the other intangible
assets of such Seller which are included in the Acquired Assets of such
Seller.
The parties acknowledge that such allocations 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 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 and not to take any position contrary to such allocations in any
administrative or judicial proceeding.
2.4. Sales Taxes, Etc. Each Seller will pay all sales, use,
transfer and other Taxes, fees and charges payable in respect of the sale and
transfer of its Acquired Assets to the Buyer pursuant to this Agreement (except
for licensing fees payable upon transfer to the Buyer of title to the vehicles
and mobile equipment included in the Acquired Assets, which licensing fees
shall be paid by the Buyer).
2.5. Closing; Effective Date. The closing of the Buyer's
acquisition of the First Sellers Acquired Assets and the related transactions
contemplated by this Agreement (the "First Closing") shall take place promptly
following satisfaction of the conditions relating to the First Sellers or the
First Sellers Acquired Assets set forth in Section 6, on a date to be agreed
upon by the parties. The closing of the Buyer's acquisition of the Rifle
Acquired Assets and the related transactions contemplated by this Agreement
(the "Second Closing") shall take place promptly following the Buyer's exercise
of the Option and satisfaction of the conditions relating to Rifle or the Rifle
Acquired Assets set forth in Section 6, on a date to be agreed upon by the
parties. The term "Closing" as used in this Agreement shall refer to the First
Closing or the Second Closing or both, as appropriate, based on the Seller or
Sellers who will participate in the Closing at issue. Any Closing will
commence at 8:00 a.m. local time in Denver, Colorado, at the offices of Xxxxxxx
& Xxxxxx L.L.C., and all transactions contemplated by this Agreement with
respect to a given Closing will be effective at 11:59 p.m. Colorado time on the
day immediately preceding such Closing (such effective time being the "Closing
Date").
2.6. Deliveries at the Closing. At the Closing, (a) each
Seller and Shareholder 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 Sellers and the Shareholders the certificates,
instruments and documents referred to in Section 6.2, (c) each Seller will
deliver to the Buyer instruments transferring to the Buyer title to the
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Acquired Assets of such Seller free and clear of any Encumbrances and (d) the
Buyer will pay, deposit and withhold the purchase price in accordance with
Section 2.3.
2.7. Administration of the Non-Indemnity Deposit and the Lease
Extension Deposit.
(a) Upon extension or renewal of Country's lease with
the State of Colorado for the land on which Country's Vail, Colorado store is
located (the "Vail Land Lease") by Country for a term of no less than 10 years
and on other terms reasonably satisfactory to the Buyer, the Lease Extension
Deposit, plus any accrued interest thereon, will be paid to Country. If no
such extension or renewal has been effected at the end of the Escrow Period
relating to the Lease Extension Deposit, the Lease Extension Deposit, plus any
accrued interest thereon, will be paid to Buyer.
(b) On the Second Closing Date, the Non-Indemnity
Deposit (less $133.58 multiplied by the number of days from and including the
First Closing Date through the Second Closing Date), plus any accrued interest
on such amount, will be paid to Country and the difference between the Non-
Indemnity Deposit and the amount paid to Country will be paid to the Buyer. If
the Buyer does not exercise the Option, upon the earlier of the Buyer's notice
to the Shareholders' Agent of the Buyer's decision not to exercise the Option
or April 1, 1997 the Non-Indemnity Deposit, plus any accrued interest thereon,
will be paid to the Buyer.
(c) The Buyer and the Shareholders' Agent will jointly
give instructions to the Escrow Agent to carry out the intent of this Section
2.7. Any disputes concerning the Non-Indemnity Deposit or the Lease Extension
Deposit will be settled by arbitration as provided in this Agreement.
3. Representations and Warranties.
3.1. Representations and Warranties of the Sellers and the
Shareholders. The Sellers 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 applicable Closing Date (as though made then and as though
the applicable Closing Date were then substituted for the date of this
Agreement throughout this Section 3.1; provided, however, that as of the Second
Closing the representations and warranties of the First Sellers will be limited
to (a) their joint and several representations and warranties of all matters
with respect to Rifle set forth in Section 3.1, including without limitation,
those relating to the Rifle Acquired Assets and Rifle's Business, operations
and Liabilities set forth in Section 3.1 (including without limitation, those
set forth in Sections 3.1(a), (b), (c) and (e)) and (b) their joint and several
representations and warranties for all matters with respect to the First
Sellers and the Shareholders set forth in Sections 3.1(a), (b), (c) and (e).
(a) Certain Shareholder Matters. Each Shareholder 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 is a party, and this Agreement constitutes, and such Other
Seller Agreements will when executed and delivered constitute, the legal, valid
and binding obligations of, and be enforceable in accordance with their
respective terms against, such Shareholder. The execution, delivery and
performance of this Agreement and the Other Seller Agreements to which a
Shareholder is a party, and the consummation of the transactions contemplated
hereby and thereby, will not (i) violate any Legal Requirement or Order to
which a Shareholder is subject, or (ii) violate, with or without the giving of
notice or the lapse of time or both, or conflict with or result in the breach
or termination of any provision of, or constitute a default under, or give any
Person the right to accelerate any obligation under, or result in the creation
of any Encumbrance upon any properties or assets of a Shareholder pursuant to,
any indenture, mortgage, deed of trust, lien, lease, agreement, instrument or
other arrangement to which a Shareholder is a party or by which a Shareholder
or any of the Shareholder's assets is bound or subject. No Shareholder need
give any notice to, make any filing with
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or obtain any authorization, consent or approval of any Governmental Authority
or other Person in order to consummate the transactions contemplated hereby.
(b) Organization, Good Standing, Power, Etc. Each
Seller is a corporation validly existing and in good standing under the laws of
the State of Colorado, which is the only jurisdiction in which the nature of
the Business conducted by such Seller or the properties owned, leased or
operated by such Seller make such qualification necessary. Each 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 each Seller, and this Agreement has been
duly executed and delivered by the Sellers. Each Seller has full corporate
power and authority to execute, deliver and perform this Agreement and the
Other Seller Agreements, and this Agreement constitutes, and the Other Seller
Agreements will when executed and delivered constitute, the legal, valid and
binding obligations of each Seller, and shall be enforceable in accordance with
their respective terms against the Sellers.
(c) Capitalization, Etc. The authorized capital stock
of Rifle consists of 50,000 shares of common stock, no par value; the
authorized capital stock of Country consists of 50,000 shares of common stock,
no par value; the authorized capital stock of GRM consists of 50,000 shares of
common stock, no par value; and the authorized capital stock of Rocky consists
of 50,000 shares of common stock, no par value. Xxxx X. Xxxxxx owns,
beneficially and of record, free and clear of any Encumbrance or Tax, 29,000
shares of the common stock of Rifle, no par value, which constitute all
outstanding shares of the capital stock of Rifle. Xxxx X. Xxxxxx owns,
beneficially and of record, free and clear of any Encumbrance or Tax, 5,000
shares of the common stock of Country, no par value, which constitute all
outstanding shares of the capital stock of Country. The Shareholders own,
beneficially and of record, free and clear of any Encumbrance or Tax, 50 and 50
shares, respectively, of the common stock of GRM, no par value, which
constitute all outstanding shares of the capital stock of GRM. Xxxx X. Xxxxxx
owns, beneficially and of record, free and clear of any Encumbrance or Tax,
24,000 shares of the common stock of Rocky, no par value, which constitute all
outstanding shares of the capital stock of Rocky. There are no existing rights
of first refusal, buy-sell arrangements, options, warrants, rights, calls or
other commitments or restrictions of any character relating to any Seller's
stock. No Seller has any authorized or outstanding securities convertible into
or exchangeable for, or any authorized or outstanding options, warrants or
other rights to subscribe for or to purchase, or convert any obligations into,
any unissued shares of its capital stock, and no Seller has agreed to issue
securities so convertible or exchangeable or any such options, warrants or
other rights. There are no authorized or outstanding stock appreciation,
phantom stock, profit participation or similar rights with respect to any
Seller. There are no voting trusts, voting agreements, proxies or other
agreements or understandings with respect to any capital stock of any Seller.
(d) No Subsidiaries or Affiliates. No Seller has any
Subsidiaries or interests in any other corporation, partnership, limited
partnership, limited liability company, association or joint venture.
(e) No Violation of Agreements, Etc. 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 or Order to which any Seller is subject or
any provision of the articles of incorporation or bylaws of any Seller 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 any Seller pursuant to, any indenture,
mortgage, deed of trust, lien, lease, license, agreement, instrument or other
arrangement to which any Seller is a party or by which any Seller or any of its
assets and properties is bound or subject. Except for notices that will be
given and consents that will be obtained by the Sellers prior to the Closing
(which are set forth in Exhibit 3.1(e)), the Sellers need not give any notice
to, make any filing with or obtain any authorization, consent or approval of
any
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Governmental Authority or other Person in order for the parties to consummate
the transactions contemplated by this Agreement and the Other Seller
Agreements.
(f) Financial Statements. The balance sheets of each
Seller as of December 31, 1993, December 31, 1994, December 31, 1995, the
related statements of income, shareholders' equity for the fiscal years then
ended, and the unaudited balance sheet of each Seller as of February 29, 1996,
(the latter being referred to with respect to each Seller as the "Latest
Balance Sheet"), and the related statement of income, shareholders' equity for
the two-month period then ended have been prepared in accordance with good
accounting practices and on a basis consistent with those of prior years, but
do not comply with GAAP, are in accordance with the books and records of each
Seller (which books and records are complete and correct), and are accurate and
fairly present the financial position and results of operations of such Seller
as of such dates and for each of the periods indicated. Exhibit 3.1(f)(i)
describes, to the best knowledge of the Sellers and the Shareholders, how such
financial statements vary from GAAP as GAAP relates to method of accounting,
method of depreciation and policy of accruing vacation. Copies of the
financial statements described in this Section 3.1(f) are attached as Exhibit
3.1(f)(ii). Such balance sheets make full and adequate provision for all
Liabilities of such Seller as of their respective dates.
(g) Absence of Undisclosed Liabilities. All
Liabilities of each Seller have been paid when due or, if not yet due, have
been accrued properly. No Seller has any Liability (and there is no basis for
the assertion of any Liability), arising out of any transactions entered into
at or prior to the date of this Agreement, any action or inaction at or prior
to the date of this Agreement, any state of facts existing at or prior to the
date of this Agreement, or otherwise, except (i) Liabilities reflected on the
Latest Balance Sheet and (ii) current Liabilities which have arisen after the
date of the Latest Balance Sheet in the ordinary course of business. All
Liabilities of the Sellers due on or prior to the Closing Date shall have been
paid by the Sellers prior to the Closing.
(h) Absence of Certain Changes or Events. Except as
set forth on Exhibit 3.1(h), since January 1, 1996, no Seller has (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) subjected any of its assets or
properties to any Encumbrance; (iv) rented or leased, except in the ordinary
course of business, or sold (except as permitted by Section 4.2) or otherwise
transferred any of its equipment or other assets or properties; (v) cancelled,
compromised, settled, released, waived, written-off or expensed any account or
note receivable, right, debt or claim involving more than $10,000 in the
aggregate; (vi) changed in any manner the way in which it conducts Business;
(vii) transferred or granted any rights under any leases (except to customers
in the ordinary course of business), licenses or agreements or with respect to
any Intellectual Property; (viii) made or granted any individual wage or salary
increase in excess of 10% or $1.00 per hour or any general wage or salary
increase, entered into any employment, consulting or agency contract with any
shareholder, officer, director, employee or consultant or any relative or
affiliate thereof, changed or increased the rates of compensation payable
through bonus, pension, contract or other commitment to any shareholder,
officer, director, employee or consultant or any relative or affiliate thereof
for any period before or after the date set forth above or made any other
change in employment terms for any shareholder, officer, director, employee or
consultant or any relative or affiliate thereof; (ix) adopted, amended,
modified or terminated any bonus, profit-sharing incentive, severance or other
plan, contract or commitment for the benefit of any of its shareholders,
officers, directors, employees or any relative or affiliate thereof (or taken
any such action with respect to any other Employee Benefit Plan or Benefit
Arrangement); (x) except as otherwise expressly permitted by this Section
3.1(h), entered into, or agreed to enter into, any contracts or agreements, or
made any commitments, involving more than $10,000 in the aggregate; (xi)
suffered any adverse fact or change, including, without limitation, to or in
its Business, financial condition, prospects, customer relationships or
properties; (xii) entered into any contract or commitment to make capital
expenditures in excess of $10,000 in the aggregate (except as permitted by
Section 4.2); (xiii) declared, set aside
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or paid any dividend or made any distribution to its shareholders (whether in
cash or in kind) or purchased, redeemed or otherwise acquired any shares of its
capital stock or any other securities; (xiv) made any loan to, or given any
guarantee to or for the benefit of, any Person, including, without limitation,
any shareholder, officer or director or to any relative or affiliate thereof or
entered into any transaction (including, without limitation, any agreement or
other arrangement providing for employment of, furnishing of services by,
renting of real or personal property from, or otherwise requiring payment to)
with any shareholder, officer or director or any relative or affiliate thereof;
(xv) permitted any Person, including, without limitation, any shareholder,
officer, director or employee or any relative or affiliate thereof, to withdraw
assets from a Seller (other than cash, as set forth on Exhibit 3.1(h),
withdrawn upon prior notice to the Buyer); (xvi) made any payment or transfer
to or for the benefit of any shareholder, officer or director or any relative
or affiliate thereof, or agreed to take any such action, other than (A) the
payment to Xxxx X. Xxxxxx and Xxxxxxxxx Xxxxxx of the proportionate monthly
amount of their respective normal annualized salaries of $160,000 and $30,000
due and payable during such period and (B) the payment to officers and
directors of normal reimbursable out-of-pocket expenses incurred in the
ordinary course of business consistent with past practice; (xvii) made or
pledged to make any charitable or other contribution involving more than $2,500
in the aggregate; (xviii) accelerated, terminated, modified or cancelled any
agreement, contract, lease, or license (or series of related agreements,
contracts, leases and licenses) involving more than $10,000 individually or in
the aggregate to which a Seller is a party or by which it is bound; (xix)
changed its method of depreciation (except for bonus depreciation as set forth
on Exhibit 3.1(h)); (xx) rented or leased any equipment or sold or otherwise
transferred any inventory, equipment or services at below-normal rental or
lease rates or margins; (xxi) suffered any other material occurrence, event,
incident, action, failure to act or transaction outside the ordinary course of
business; or (xxii) agreed to incur, take, make or permit any of the matters
described in clauses (i) through (xxi).
(i) Permits. Each Seller owns or holds all Permits
necessary to permit it to own, lease and operate its properties and to conduct
its Business. Each of such Permits is listed on Exhibit 3.1(i). All of such
Permits are currently in full force and effect, no action or claim is pending
or threatened to revoke, modify or terminate any Permit or render any Permit
invalid, and all of the Permits are transferable to the Buyer at the Closing
without any action by any Person.
(j) Tax Matters. Exhibit 3.1(j) specifies each Seller
that is an "S" corporation and each Seller that is a "C" corporation. Neither
any Seller nor any of its shareholders has ever filed (i) an election pursuant
to Section 1362 of the Code, that such Seller be taxed as an "S" corporation,
except as set forth on Exhibit 3.1(j), or (ii) a consent pursuant to Section
341(f) of the Code relating to collapsible corporations. There has been duly
and timely filed in proper form by or on behalf of each Seller, or a filing
extension from the appropriate Governmental Authorities has been obtained with
respect to, all Tax Returns required to be filed by applicable Legal
Requirement on or prior to the date of this Agreement. All assessments, Taxes,
fees or other charges imposed on any Seller, any of its properties or any of
its shareholders (pursuant to any Seller's "S" corporation election) in respect
of the periods covered by such Tax Returns have been paid or adequate reserves
have been provided for with respect to the payment of all Taxes (whether or not
disputed) payable in respect of periods through the date of this Agreement and
all prior periods and all Tax Liabilities arising out of transactions entered
into or states of fact existing prior to the date of this Agreement. To the
best knowledge of the Sellers and the Shareholders, all such Tax Returns were
correct and complete in all respects. There is no unpaid interest, penalty or
addition to any Tax due or claimed to be due from any Seller or any of its
shareholders (pursuant to any Seller's "S" corporation election), or any Tax
deficiency, determination or assessment outstanding against any Seller or any
of its shareholders (pursuant to any Seller's "S" corporation election). No
Seller or Shareholder has knowledge or has received notice of an audit of any
Tax Return of any Seller or, to the best knowledge of the Sellers and the
Shareholders, no audit has been threatened, and no Seller has waived any
statute of limitations relating to the assessment or payment of Taxes, which
waiver has not yet expired. All Tax Returns, or extensions thereof required to
be filed, and all Taxes required to be paid, prior to the Closing by or on
behalf of any Seller and by the Shareholders with respect to any Seller, of any
nature whatsoever, shall have been so filed or paid
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prior to the Closing. No Seller is currently the beneficiary of any extension
of time within which to file any Tax Return. The Sellers and Shareholders will
pay all Taxes attributable to each respective Seller's business and activities
through the Closing Date, including all Taxes attributable to the transactions
contemplated by this Agreement, on or before the due date of such Tax Returns.
There are no Encumbrances on any of the assets of any Seller that arose in
connection with any failure (or alleged failure) to pay any Tax. There is no
dispute or claim concerning any Tax Liability of any Seller either (i) claimed
or raised by any authority in writing or (ii) as to which any of any Seller or
any Shareholder has knowledge based upon personal contact with any agent of
such authority. Exhibit 3.1(j) lists all federal, state, local and foreign
income Tax Returns filed with respect to each Seller for taxable periods ended
on or after January 1, 1989, indicates those Tax Returns that have been audited
and indicates those Tax Returns that currently are the subject of audit. The
Sellers have delivered to the Buyer correct and complete copies of all federal
income Tax Returns, examination reports, and statements of deficiencies
assessed against or agreed to by any Seller since January 1, 1989.
(k) Assets and Properties.
(i) As of the Closing, the Acquired Assets of
each Seller will be owned by such Seller, free and clear of all
Encumbrances. The Acquired Assets of each Seller consist of the
tangible and intangible assets of such Seller (exclusive of the Excluded
Assets) in existence as of January 1, 1996 (except as set forth on
Exhibit 3.1(h) with respect to cash of such 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(h) or 4.2), increased by New Rental Equipment
acquired from and after the date of this Agreement in compliance with
Section 4.2, decreased by Current Rental Equipment disposed of from and
after the date of this Agreement in compliance with Section 4.2, and
decreased by Current Rental Equipment sold or otherwise transferred on
or after March 1, 1996 but before the date of this Agreement. Between
March 1, 1996 and the day before the date of this Agreement, each Seller
has purchased the New Rental Equipment and has sold, for cash or a
Current Rental Equipment Receivable only, the Current Rental Equipment
described in Exhibit 4.2(b), but has not otherwise sold, traded,
transferred or otherwise disposed of any Current Rental Equipment. The
Acquired Assets of each Seller are all of the tangible and intangible
assets (other than the Excluded Assets and the Consigned Equipment) used
by the Seller in its business. Except for items rented or leased to
customers, all of the tangible Acquired Assets of each Seller are
located on the Premises occupied by such Seller or by another Seller.
Each Seller has good and marketable title to, or valid leasehold
interests in, all of its Acquired Assets.
(ii) Each Seller leases all buildings as part of
the Premises, and either owns or leases all machinery, equipment and
other assets (except for the Consigned Equipment) necessary for the
conduct of its business as presently conducted. Except as set forth on
Exhibit 3.1(k), the Premises are free from defects, have been maintained
in accordance with normal industry practice, are in good operating
condition and repair, are suitable for the purposes for which they
presently are used and, to the best knowledge of the Sellers and the
Shareholders, comply in all respects with the Americans with
Disabilities Act. No Seller has received notice of violation of any
Legal Requirement, Order or Permit relating to its operations or its
owned or leased properties.
(iii) All leases are valid and in full force and
effect in accordance with their respective terms and, except as set
forth on Exhibit 3.1(k), there are not, under any of such leases, any
existing defaults or events of default or events which, with notice or
lapse of time or both, would constitute a default. No party to any
lease has repudiated any provision thereof, and there are no disputes,
oral agreements or forbearance programs in effect as to such leases. To
the best knowledge of the Sellers 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
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occupied, operated and maintained in accordance with applicable Legal
Requirements. The Premises are supplied with utilities and other
services necessary for the operation of said facilities. To the best
knowledge of the Sellers and the Shareholders, the owner of the Premises
occupied by Rifle in Glenwood Springs, Colorado, has good and marketable
title to the underlying real property, free and clear of any
Encumbrance, easement, covenant or other restriction, except for
installments of special assessments not yet delinquent and recorded
easements, covenants and other restrictions which do not impair the
current use, occupancy or value, or the marketability of title, of the
property subject thereto. No Seller subleases any personal property
except for temporary subleases of rental equipment (for rental by such
Seller) in an aggregate amount which is not material to such Seller, its
business or its financial results.
(l) Lists of Properties, Contracts and Other Data.
Each Seller has delivered to the Buyer a correct and complete list, attached
hereto as Exhibit 3.1(l), setting forth the following:
(i) all items of equipment, machinery and other
tangible personal property included in the Acquired Assets of such
Seller (including that which, as of the date of this Agreement, has no
book value), and the original cost, depreciation and current book value
of all such items of equipment, machinery and other tangible personal
property which are included in the Latest Balance Sheet of such Seller;
(ii) all rights, licenses, leases, assignments,
indemnifications and other agreements to which each Seller is a party
which relate to the Acquired Assets or the Assumed Liabilities of such
Seller, including, without limitation, any intangible assets or
Intellectual Property;
(iii) all guaranty, warranty and indemnity
agreements which relate to the Acquired Assets or the Assumed
Liabilities of such Seller with respect to products or services sold,
rented, leased, provided or delivered by such Seller;
(iv) all contracts or agreements for the
purchase, sale, rental or lease of materials, supplies, products or
other personal property or for the furnishing or receipt of services
which relate to the Acquired Assets or the Assumed Liabilities of such
Seller;
(v) all contracts or agreements concerning any
partnership or joint venture which relate to the Acquired Assets or the
Assumed Liabilities of such Seller;
(vi) all claims, deposits, causes of action,
choses in action, rights of recovery, rights of setoff and rights of
recoupment which relate to the Acquired Assets or the Assumed
Liabilities of such Seller;
(vii) all franchises, approvals, Permits (other
than those set forth on Exhibit 3.1(i)), licenses, orders,
registrations, certificates, variances and similar rights which relate
to the Acquired Assets or the Assumed Liabilities of such Seller;
(viii) all contracts or agreements concerning
confidentiality or prohibiting such Seller from freely engaging in its
business as now conducted or proposed to be conducted or from competing
anywhere in the world;
(ix) all other contracts, agreements,
instruments, guarantees and commitments (including mortgages, deeds of
trust, indentures, loan agreements and credit agreements) which relate
to the Acquired Assets or the Assumed Liabilities of such Seller to
which it is a party or by which it or its assets are bound;
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(x) the names and annual rates of compensation
as of January 1, 1996 (which rates have remained the same through the
date hereof and the Closing) of all officers and directors of each
Seller, all other management employees, and each other employee whose
annual rate of compensation is at least $20,000;
(xi) the names of all retired employees, if any,
of such Seller who are receiving or are entitled to receive any payments
which are not fully covered by any Employee Pension Benefit Plan
qualified under Code Section 401(a) of any Seller, their ages and their
current annual funded and unfunded benefits;
(xii) the name of each bank or other financial
institution or entity in which such Seller has an account or safe
deposit box (with the identifying account number or symbol) and the
names of all persons authorized to draw thereon or to have access
thereto; and
(xiii) all outstanding notes or accounts
receivable relating to accounts with such Seller, or advances by such
Seller, to such shareholder, officer, director, employee or consultant
or relative or affiliate thereof, as of the date of this Agreement.
True and complete copies of the documents referred to in such list have been
delivered to the Buyer. All such rights, licenses, leases, registrations,
applications, contracts, agreements and commitments and other items referred to
in such list are valid, in full force and effect, enforceable in accordance
with their respective terms for the period stated therein, no party has
repudiated any provision thereof and no breach or default will result from the
execution, delivery and performance of this Agreement or the Other Seller
Agreements, or the transactions contemplated hereby or thereby. No Seller nor
any other party thereto is in breach or default in performance of any of its
respective obligations thereunder, and no event exists which, with the giving
of notice or lapse of time or both, would constitute a breach, default or event
of default on the part of a party to any of the foregoing that is continuing
unremedied.
(m) Litigation, Etc. There is no outstanding Order
against, nor is there any litigation, proceeding, arbitration or investigation
by any Governmental Authority or other Person pending or threatened against,
any Seller, its properties or Business or relating to the transactions
contemplated by this Agreement, nor to the best knowledge of the Sellers and
the Shareholders is there any basis for any such action.
(n) Notes and Accounts Receivable. The notes
receivable, if any, and accounts receivable of each Seller reflected on its
Latest Balance Sheet, and all notes and accounts receivable arising prior to
the Closing Date (including, without limitation, any Current Equipment
Receivables in existence as of the Closing Date), arose and will arise from
bona fide transactions by each Seller in the ordinary course of business, are
valid receivables with trade customers subject to no setoffs or counterclaims,
are current (except that some or all of the $25,000 amount referred to in the
first sentence of Section 5.8 may not be current) and collectible.
(o) Product Quality, Warranty Claims. To the best
knowledge of the Sellers and the Shareholders, all products and services sold,
rented, leased, provided or delivered by each 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 no Seller has any Liability (and there is no basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand against a Seller giving rise to any Liability) for replacement
or repair thereof or other damages in connection therewith. No product or
service sold, rented, leased, provided or delivered by any Seller to customers
on or prior to the Closing Date is subject to any guaranty, warranty or other
indemnity beyond the applicable standard terms and conditions of sale, rent or
lease.
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(p) Product Liability. To the best knowledge of the
Sellers and the Shareholders, no Seller has any Liability (and there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against any Seller which
might give rise to any Liability) arising out of any injury to a Person or
property as a result of the ownership, possession, provision or use of any
product or service manufactured, sold, rented, leased, provided or delivered by
any Seller on or prior to the Closing Date. All product or service liability
claims that have been asserted against any Seller since January 1, 1991,
whether covered by insurance or not and whether litigation has resulted or not,
are listed and summarized on Exhibit 3.1(p).
(q) Inventory. The inventory of each Seller consists
of goods which, in the aggregate, are merchantable, is fit for the purposes
for which it was procured and is held by such Seller, is usable in the ordinary
course of business and is good and not overvalued. The inventory value
reflected on the Latest Balance Sheet of each Seller fairly represents (i) with
respect to inventory held for resale, the resale value of such inventory, and
(ii) with respect to inventory held for rental, the original cost thereof less
such depreciation as is set forth on the Latest Balance Sheet.
(r) Insurance. Each Seller has policies of insurance
(i) covering risk of loss on its Acquired Assets, (ii) covering products and
services liability and liability for fire, property damage, personal injury and
workers' compensation coverage and (iii) for business interruption, all 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 midnight on the Closing Date. No 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 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 Sellers and the Shareholders, does any basis for any such
claim, action, suit or proceeding exist. Descriptions, including current
premium amounts and the date and amount of the most recent premium increase for
each, of the policies of insurance are set forth on Exhibit 3.1(r). All
premiums have been paid on such policies as of the date of this Agreement and
will be paid on such policies through the Closing Date, and no Seller has
received notice of any increase in any such premium except as set forth on
Exhibit 3.1(r). Each 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 any Seller, other than those described on Exhibit 3.1(p),
are set forth on Exhibit 3.1(r). No Seller engages in any self-insurance
activities.
(s) Compliance with Applicable Laws and Rights. To the
best knowledge of the Sellers and the Shareholders, except as set forth on
Exhibit 3.1(s), no Seller is in violation of any applicable Legal Requirement,
Order or Right. No Seller has received notice from any Governmental Authority
or other Person of any violation or alleged violation of any Legal Requirement,
Order 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 any Seller alleging any such violation. To the
best knowledge of the Sellers and the Shareholders, except as set forth on
Exhibit 3.1(s), each Seller's properties, including its facilities, machinery
and equipment, conform with applicable Legal Requirements and Orders,
including, without limitation, environmental laws, zoning laws and building
codes, and are in compliance with OSHA and the Americans with Disabilities Act.
Neither any Seller nor any Shareholder has any knowledge of any pending or
proposed OSHA regulations or amendments to OSHA regulations (including toxic
chemical regulations) which would require any change in any Seller's
facilities, equipment, operations or procedures or affect any Seller's Business
or the costs of conducting
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its Business as now conducted. No Seller has made any payments for political
contributions, or any bribes, kickback payments or other illegal contributions.
(t) Pension and Employee Benefit Matters.
(i) The Buyer will not suffer any Liability or
Adverse Consequence from any Seller's administration or termination of
any of its Employee Benefit Plans or Benefit Arrangements or from any
failure of any post-Closing distribution of benefits to employees of the
Seller to be made by the Seller in compliance with all applicable Legal
Requirements. In accordance with applicable Legal Requirements, such
employees who become employees of the Buyer will be permitted to roll
over any qualified Employment Pension Plan distributions from the
Seller's plans to any qualified Employee Pension Plan the Buyer may
maintain or establish.
(ii) The Buyer will have no obligation to employ
any employee of any Seller or to continue any Employee Benefit Plan or
Benefit Arrangement, and will have no obligation or Liability under any
such plan or arrangement maintained by any Seller. Each Seller will
remain liable for all costs of employee compensation, including (A) all
employee benefits and claims under any Employee Benefit Plan or Benefit
Arrangement, (B) Taxes relating to employment and employees attributable
to periods through the Closing Date, whether reported by the Closing
Date or thereafter, and (C) 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 any 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 a Seller to provide group health
plan continuation coverage.
(iii) No Seller has incurred any Liability under
Title IV of ERISA arising in connection with any termination or partial
termination of any Employee Pension Benefit Plan or any withdrawal from
any Multiemployer Plan. None of the assets of any Seller is the subject
of a lien arising under Section 302(f) of ERISA or Section 412(n) of the
Code; no Seller has been required to post any security under Section 307
of ERISA or Section 401(a)(29) of the Code; and no fact or event exists
that could reasonably be expected to give rise to any such lien or
requirement to post any such security.
(iv) Except as set forth on Exhibit 3.1(t),
neither any Seller nor any ERISA Controlled Group which includes any
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(t) lists each
Employee Benefit Plan that is, or at any time during the past six years
was, maintained, administered,
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contributed to or required to be contributed to by any Seller or any
ERISA Controlled Group (if any) which includes or has included any
Seller, and the date of termination of each such Employee Benefit Plan
(if any) which has been terminated. No Seller has any Liability (nor is
there any basis for the assertion of any Liability) as a result of any
Seller's or any such ERISA Controlled Group's maintenance,
administration or termination of, or contribution to, any Employee
Benefit Plan. Neither any Seller nor any member of any ERISA Controlled
Group (if any) which includes or has included any Seller has ever been
required to contribute to any Multiemployer Plan.
(u) Employees and Labor. No Seller has 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 any Seller or any
group of employees of any Seller has any plans to terminate his, her or its
employment with any 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 Sellers prior to the Closing Date and, if such
person becomes an employee of the Buyer, to the affairs of the Buyer after the
Closing Date. To the best knowledge of the Sellers and the Shareholders, each
Seller has complied with all Legal Requirements relating to the employment of
labor, including provisions thereof relating to wages, hours, equal
opportunity, collective bargaining and the payment of social security and other
Taxes. No Seller will be required to give any notice under any plant closing
or similar law as a result of this Agreement, the Other Seller Agreements or
the transactions contemplated hereby or thereby. No Seller has any labor
relations problems or disputes, nor has any Seller experienced any strikes,
grievances, claims of unfair labor practices or other collective bargaining
disputes. No Seller is a party to or bound by any collective bargaining
agreement, there is no union or collective bargaining unit at any Seller's
facilities, and no union organization effort has been threatened, initiated or
is in progress with respect to any employees of any Seller. No Seller is
indebted to any shareholder, officer, director, employee or consultant or any
relative or affiliate thereof, whether by loan, advance or otherwise, other
than for salaries accrued but not yet payable and reimbursable out-of-pocket
expenses incurred in the ordinary course of business and not yet payable, nor
is any shareholder, officer, director, employee or consultant or any relative
or affiliate thereof so indebted to any Seller.
(v) Supplier and Customer Relationships. Exhibit
3.1(v) lists each customer that, to the best knowledge of the Sellers and the
Shareholders, individually or with its affiliates was, based upon each Seller's
sales, rental or lease revenues during the fiscal year ending December 31, 1995
and the three-month period ending March 31, 1996, one of such Seller's ten
largest customers in such year or such three-month period (collectively, as to
a Seller, the "Principal Customers"). Exhibit 3.1(v) lists each supplier that
individually or with its affiliates was, based upon each Seller's purchases of
inventory or supplies during the fiscal years ending December 31, 1993, 1994
and 1995 and the three-month period ending March 31, 1996, one of such Seller's
two largest suppliers in each such year or such three-month period
(collectively, as to a Seller, the "Principal Suppliers"). Each Seller has
good commercial
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working relationships with its Principal Customers and Principal Suppliers and
since June 30, 1995, no Principal Customer or Principal Supplier of a Seller
has cancelled or otherwise terminated its relationship with such Seller,
materially decreased or limited its purchases, rentals or leases or inventory
or supplies supplied to any Seller, or threatened to take any such action. To
the best knowledge of the Sellers and the Shareholders, the Sellers and the
Shareholders have no basis to anticipate any problems with any Seller's
business or customer relationships. To the best knowledge of the Sellers and
the Shareholders, no Principal Customer or Principal Supplier has any plans to
reduce its purchases, rentals or leases below levels prevailing in recent
periods, and the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby will not adversely affect the
relationship of any Seller with any Principal Customer or Principal Supplier
prior to the Closing Date or of the Buyer with any Principal Customer or
Principal Supplier after the Closing Date.
(w) Condition, Adequacy and Type of Equipment. All of
the machinery, equipment and other tangible personal property included in the
Acquired Assets (including that held for rental, lease or sale) has been well
maintained, is in good repair and good operating condition (subject to the last
sentence of this Section 3.1(w)), and is suitable for the purposes for which it
is presently used. The existing machinery, equipment and other tangible
personal property of each Seller is sufficient for the conduct of such Seller's
Business as now conducted. None of the machinery, equipment or other tangible
personal property included in the Acquired Assets (including that held for
rental, lease or sale) is damaged or defective (subject to the last sentence of
this Section 3.1(w)), no Seller has experienced material problems or
deficiencies with respect to its machinery, equipment and other tangible
personal property (subject to the last sentence of this Section 3.1(w)), and,
to the best knowledge of the Sellers and the Shareholders, there is no basis to
anticipate any such problems or deficiencies (subject to the last sentence of
this Section 3.1(w)). In the normal course of business certain items which are
held for rental or lease suffer damage in the course of use by a Seller's
customer, and such items have been repaired, or are reparable and are in the
process of being repaired, by the Seller for use in the Seller's rental and
leasing business; provided, that each Seller shall continue through the Closing
Date to repair such items on a basis consistent with past practice and the
aggregate cost to the Buyer after the Closing Date to repair all such items
which are in need of repair or are in the process of being repaired as of the
Closing Date will not exceed that which, consistent with past practice of the
Seller, is normally experienced by the Seller at any given time.
(x) Environmental Obligations. Except as set forth in
the environmental studies attached as Exhibit 3.1(x) (collectively, the
"Environmental Study"), to the best knowledge of the Sellers and the
Shareholders, each 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 previously owned, used, occupied or
operated by such 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 such Seller's business or activities. Except as set forth in the
Environmental Study, to the best knowledge of the Sellers
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and the Shareholders, there is no basis to believe or suspect that any Seller's
business has been conducted or is being conducted in violation of any
Environmental Obligations, and the Sellers and the Shareholders do not have any
knowledge of pending or proposed changes to any Environmental Obligations which
would require any changes in any Seller's facilities, equipment, operations or
procedures or affect any Seller's business or its cost of conducting its
business as now conducted.
(y) Compliance, Disclosure of Environmental Conditions.
Except as set forth in the Environmental Study, to the best knowledge of the
Sellers and the Shareholders, no conditions, circumstances or activities have
existed or currently exist, and no Seller or Shareholder has engaged in any
acts or omissions, with respect to the Premises, any other real properties or
facilities previously owned, occupied, used or operated by any Seller or any
predecessor, or any Seller's business, properties or facilities which could
result in any Liability, including any recovery by any Governmental Authority
or other Person of any remedial or removal costs, response costs, natural
resource damages or other costs, expenses or damages arising from or relating
to any release or threatened release of any Hazardous Material or alleged
injury or threat of injury or harm to public health, safety or the environment.
Except as set forth in the Environmental Study, to the best knowledge of the
Sellers and the Shareholders, no conditions, circumstances or activities have
existed or currently exist, and no Seller or Shareholder has engaged in any
acts or omissions, with respect to the Premises, any other real properties or
facilities previously owned, occupied, used or operated by any Seller or any
predecessor, or any Seller's business, properties or facilities which could
subject any Seller or the Buyer to any administrative, civil or criminal
liability, injunctive relief, penalty or obligation, whether under common law,
equitable theory, or pursuant to Environmental Obligations, or which in the
future could result in or in the past may have resulted in actual or threatened
damage, harm, or impairment of, or a threat to, public health, safety, welfare
or the environment. Exhibit 3.1(y) identifies all real properties and
facilities, including the addresses thereof, which have been owned, occupied,
used or operated by any Seller or its predecessors at any time on or prior to
the date of this Agreement.
(z) No Outstanding Orders or Actions. To the best
knowledge of the Sellers and the Shareholders, there are no outstanding Orders
against any Seller or any Shareholder, nor are there any pending or threatened
investigations of any kind against any Seller or any Shareholder, concerning
any environmental, public health, safety, welfare or land use matters or other
Environmental Obligations, including, but not limited to, the emission,
discharge or release of hazardous or toxic substances or wastes, pollutants, or
contaminants into the environment or work place, or the handling, storage,
treatment, disposal or transportation of hazardous or toxic substances or
wastes, pollutants or contaminants. To the best knowledge of the Sellers and
the Shareholders, there are no actions, suits or administrative, arbitral or
other proceedings alleged, claimed, threatened, pending against or affecting
any Seller or any Shareholder at law or in equity with respect to any
environmental, public health, safety, welfare or land use matters or other
Environmental Obligations, and the Sellers and the Shareholders
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have no knowledge of any existing grounds on which any such action, suit or
proceedings might be commenced.
(aa) No Waste Disposal. Except as set forth in the
Environmental Study, to the best knowledge of the Sellers and the Shareholders,
any chemicals and chemical compounds and mixtures which are included among the
assets of each Seller are integral to and required for the conduct of the
Seller's business, have not been processed, have not been and are not intended
to be discarded, and are not waste or waste materials. Except as set forth in
the Environmental Study, to the best knowledge of the Sellers and the
Shareholders, no Seller has generated, used, transported or disposed of
Hazardous Materials. Except as set forth in the Environmental Study, to the
best knowledge of the Sellers and the Shareholders, all waste materials which
are generated as part of the business of any Seller are handled, stored,
treated and disposed of in accordance with applicable Legal Requirements and
Environmental Obligations.
(ab) Intellectual Property.
(i) Exhibit 3.1(ab) lists each item of
Intellectual Property owned by any Seller or any Shareholder or which
are used by any Seller in the Business and, in each case where a Seller
is not the owner, the owner of the Intellectual Property. Each Seller
owns or has the legal right to use each such item of Intellectual
Property, and none of such Intellectual Property is subject to any
Encumbrance. Each item of Intellectual Property described on Exhibit
3.1(ab) will be owned or available for use by the Buyer on identical
terms and conditions after the Closing. Each Seller has taken all
necessary and desirable action to maintain and protect each item of
Intellectual Property that it owns or uses.
(ii) No Seller has interfered with, infringed
upon, misappropriated or otherwise come into conflict with any
Intellectual Property rights of any other Person, and none of the
Sellers or the Shareholders has ever received any charge, complaint,
claim, demand, or notice alleging any such interference, infringement,
misappropriation or violation (including any claim that a Seller must
license or refrain from using any Intellectual Property rights of any
other Person). The continued operation of the Business of each 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 Sellers and the
Shareholders, no other Person has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual
Property rights of any Seller.
(iii) No Seller has granted any license,
sublicense or permission with respect to any Intellectual Property owned
or used in the Business. With respect to each item of Intellectual
Property required to be identified in Exhibit 3.1(ab), no action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand
is
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pending or is threatened which challenges the legality, validity,
enforceability, use or ownership of the item and no Seller has agreed to
indemnify any Person for or against any interference, infringement,
misappropriation or other conflict with respect to the item.
(iv) No Seller is obligated to pay any royalty or
license or sublicense fee with respect to any Intellectual Property.
With respect to each item of Intellectual Property required to be
identified in Exhibit 3.1(ab) which is not owned by a Seller: (A) the
license, sublicense, agreement or permission under which a Seller has
the right to use the item is legal, valid, binding, enforceable and in
full force and effect and (B) no party to the license, sublicense,
agreement or permission is in breach or default, and no event has
occurred which, with notice or lapse of time or both, would constitute a
breach, default or repudiation or permit termination, modification or
acceleration thereunder.
(ac) Guaranties. No Seller is a guarantor of or, to the
best knowledge of the Sellers and the Shareholders, otherwise liable for any
Liability (including indebtedness) of any other Person with respect to the
Acquired Assets or the Business.
(ad) Powers of Attorney. There are no outstanding
powers of attorney executed on behalf of any Seller.
(ae) Brokers' Fees. No Seller nor any Shareholder has
any Liability to pay any fees or commissions to any broker, finder or agent
with respect to the transactions contemplated by this Agreement.
(af) Disclosure. The documents and information provided
to the Buyer by any 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, considered together, do not contain any untrue statement of any
material fact and do not, to the best knowledge of the Sellers and the
Shareholders, omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading. There is no fact which
materially adversely affects the Business, prospects, condition, affairs or
operations of any Seller or any of its properties or assets which have 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 reasonable 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
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or warranty has to do with the existence of the document or other item itself).
The Sellers 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 Sellers and the Shareholders of their obligation to
indemnify and hold the Buyer harmless from all Adverse Consequences pursuant to
Article 7.
3.2. Representations and Warranties of the Buyer. The Buyer
represents and warrants to the Sellers 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.
(b) No Violation of Agreements, Etc. The execution,
delivery and performance of this Agreement and the Other Buyer Agreements, and
the consummation of the transactions contemplated hereby and thereby will not
(i) violate any Legal Requirement or Order to which the Buyer is subject or any
provision of the certificate of incorporation or bylaws of the Buyer or (ii)
violate, with or without the giving of notice or the lapse of time or both, or
conflict with or result in the breach or termination of any provision of, or
constitute a default under, or give any Person the right to accelerate any
obligation under, or result in the creation of any Encumbrance upon any
properties, assets or business of the Buyer pursuant to, any indenture,
mortgage, deed of trust, lien, lease, license, agreement, instrument or other
arrangement to which the Buyer is a party or which the Buyer or any of its
assets and properties is bound or subject. Except for notices and consents
that will be given or obtained by the Buyer prior to the Closing, the Buyer
does not need to give any notice to, make any filing with or obtain any
authorization, consent or approval of any Governmental Authority or other
Person in order for the parties to consummate the transactions contemplated by
this Agreement.
3.3. Survival of Representations. The representations and
warranties contained in Sections 3.1 and 3.2 and the Liabilities of the parties
with respect thereto shall survive any investigation thereof by the parties and
shall survive the Closing for four years, except that (a) the Liabilities of
the Sellers and the Shareholders with respect to (i) the representations and
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warranties set forth in Sections 3.1(j), 3.1(t), 3.1(x), 3.1(y), 3.1(z),
3.1(aa), and 3.1(af), shall survive until the expiration of all applicable
statutes of limitation and (ii) the representations and warranties set forth in
Sections 3.1(a), 3.1(b), 3.1(e), 3.1(k) and 3.1(ab) shall survive without
termination and (b) the Liabilities of the Buyer with respect to the
representations and warranties set forth in Section 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 and in accordance with the following sentence. For purposes of Section
3.1, the terms "best knowledge," "best of knowledge" or "knowledge" of all or
any Sellers and/or Shareholders, mean (a), when such statement is set forth in
the second sentence of Section 3.1(k)(ii), the third sentence of Section
3.1(k)(iii), the first, third or fourth sentences of Section 3.1(s) (except as
such sentences relate to any Order or Right), the third sentence of Section
3.1(u), the first or second sentences of Section 3.1(x), the first or second
sentences of Section 3.1(y) or the last sentence of Section 3.1(aa), the actual
knowledge of Xxxx X. Xxxxxx and Xxxxxxxxx Xxxxxx without any duty of inquiry or
investigation, and (b), when such statement relates to other matters
(including, without limitation, those set forth in Sections 3.1(p), (r), (u) or
(v)), the actual knowledge of Xxxx X. Xxxxxx and Xxxxxxxxx Xxxxxx after
reasonable investigation and reasonable good faith inquiry (in each case
consistent with good management practices) of Xxxxx Xxxxxxxxxx, Xxxxx Xxxxxx,
Xxxx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxx Xxxxxxxx and Xxxxxx Xxxxxxx.
4. Pre-Closing Covenants. The parties agree as follows with respect
to the period between the execution of this Agreement and each Closing;
provided, however, that following the First Closing the obligations of the
First Sellers and the Shareholders set forth in this Section 4 shall apply only
to matters relating to Rifle, the Rifle Acquired Assets and the Rifle Business.
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 cause the Sellers 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 of Business. The Sellers will not, and
Shareholders will not cause or permit the Sellers to, engage in any practice,
take any action or enter into any transaction outside their ordinary course of
business; provided, however, that in no event will any action be taken or any
transaction be entered into which would result in a breach of any
representation, warranty or covenant of any Seller or Shareholder. Without
limiting the
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foregoing, from the date of this Agreement through the Closing, any Seller may
purchase new or used rental or lease equipment for use in the Business ("New
Rental Equipment") or may sell (but only for cash or a Current Rental Equipment
Receivable) rental or lease equipment owned by a Seller on or after March 1,
1996 ("Current Rental Equipment"), including, without limitation, rental or
lease equipment identified on Exhibit 4.2(a) which the President of the Sellers
has, prior to the date of this Agreement, approved for sale by the Sellers but
which has not been sold as of the date of the Agreement, but may not otherwise
sell, trade, transfer or dispose of any Current Rental Equipment; provided,
however, that between the date of this Agreement and the Closing, no New Rental
Equipment shall be purchased and no Current Rental Equipment shall be sold
without the express prior written approval of an officer of the Buyer and
without the Shareholders' Agent and an officer of the Buyer expressly agreeing
on the amount by which the purchase price payable pursuant to Section 2.3 shall
be increased in respect of New Rental Equipment purchases ("New Rental
Equipment Increases") and the amount by which the purchase price payable
pursuant to Section 2.3 shall be decreased in respect of Current Rental
Equipment sales ("Current Rental Equipment Decreases"). Exhibit 4.2(b) sets
forth (a) New Rental Equipment Increases with respect to New Rental Equipment
purchased between March 1, 1996 and the date of this Agreement and (b) Current
Rental Equipment Decreases with respect to Current Rental Equipment sold or
otherwise transferred between March 1, 1996 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 occur after the
date hereof and before the Closing, Exhibit 4.2(b) shall be amended to reflect
any agreed upon New Rental Equipment Increases and Current Rental Equipment
Decreases relating thereto.
4.3. Preservation of Business. Each Seller will, and the
Shareholders will cause each Seller to, keep its Business and properties,
including its current operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers and employees,
intact.
4.4. Full Access. Each 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 such Seller, to all
premises, properties, personnel, books, records (including Tax records),
contracts and documents of or pertaining to such Seller.
4.5. Notice of Developments. The Sellers will give prompt
written notice to the Buyer of any material development which occurs after the
date of this Agreement and affects the assets, Liabilities, Business, financial
condition, operations, results of operations, future prospects,
representations, warranties, covenants or disclosure Exhibits of any 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.
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4.6. Exclusivity. No Seller nor any Shareholder will, and no
Shareholder will cause or permit any 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, any 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. No Shareholder will vote shares of
any Seller's stock in favor of any such transaction. The Sellers and
Shareholders will notify the Buyer immediately if any Person makes any
proposal, offer, inquiry or contact with respect to any of the foregoing.
4.7. Confirmatory Conveyance. Prior to the Closing Date, the
Shareholders shall convey to the applicable Seller, free and clear of any
Encumbrance or Tax, all of each Shareholder's right, title and interest to the
Seller Improvements, Fixtures and Fittings.
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.
5. Post-Closing Covenants. The parties agree as follows with
respect to the period following each 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. Xxxx X. Xxxxxx and Xxxxxxxxx Xxxxxx will
assist with the transition of the Business of each Seller to the Buyer during
the first six months following the Closing at no cost to the Buyer as set forth
in the next three sentences. The amount of time so required of Xxxx X. Xxxxxx
shall be an initial period of not greater than six consecutive weeks, at
Buyer's sole discretion, on a full-time basis, after which Xxxx X. Xxxxxx shall
be available on an as-needed basis not to exceed thirty hours per week. The
amount of time required of Xxxxxxxxx Xxxxxx shall be a period of not greater
than three consecutive weeks, at Buyer's sole discretion, on a full-time basis.
After the initial full-time period for Xxxx X. Xxxxxx, and before the
expiration of the six month period, notwithstanding the foregoing, the
assistance of Xxxx X. Xxxxxx shall be rendered at such times as reasonably
agreed to by him and the Buyer. No Seller or Shareholder will take any action
at any time that is designed or intended to have the effect of discouraging any
lessor, licensor, customer, supplier or other business associate of any Seller
from establishing a business relationship with the Buyer after the Closing.
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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 Business of any Seller, each of the
other parties will cooperate with her, him or it and her, his or its counsel in
the contest or defense, make available their personnel, and provide such
testimony and access to their books and records as shall be reasonably
necessary in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending party (unless the contesting or
defending party is entitled to indemnification therefor under Section 7).
5.4. Confidentiality. The Sellers and the Shareholders will
treat and hold as confidential all Confidential Information concerning the
Buyer or the Business or Acquired Assets of any Seller, 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.
5.5. Post-Closing Announcements. Following the Closing, no
Seller nor 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 Sellers 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 Shareholders and the
Sellers will pay and perform, as and when due, all Liabilities relating to the
Sellers, the Business of each Seller and the Acquired Assets of each Seller
other than the Assumed Liabilities. In addition, the Sellers and the
Shareholders will pay to the Buyer, promptly 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, the portion of the personal property
taxes on the Acquired Assets of each Seller attributable to the period from
January 1, 1996 to and including the date on which the Closing occurs. The
amount of such taxes payable by the Shareholders and the Sellers will be
determined by prorating personal property taxes on the Acquired Assets of each
Seller for 1996 in proportion to the number of days in the year prior to and
including the date on which the Closing occurs compared to the number of days
in the year remaining after the date on which the Closing occurs. 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. Further, the Sellers 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 Business to comply at the Closing Date with any
Legal Requirement or Order, upon receipt of notice from the Buyer at any time.
However, the Sellers and the Shareholders will be
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required to remedy such a failure involving the non-compliance of the Premises
with the Americans with Disabilities Act only if the Buyer becomes aware
thereof, or such a condition is required to be remedied, in connection with an
event occurring after the Closing (including, by way of example only, a
remodeling of any of the Premises or an investigation or inspection by a
Governmental Authority).
5.8. Collection of Receivables. The Sellers jointly and
severally guarantee that 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 after the Closing Date, except that up to $25,000 in the
aggregate of such Closing Accounts Receivable will be fully paid to the Buyer
at their recorded amounts not later than 180 days (rather than 120 days) after
the Closing Date. From the Closing until 120 days after the Closing Date (and
until 180 days after the Closing Date with respect to the $25,000 of Closing
Accounts Receivable whose payment is guaranteed within 180 days after the
Closing Date pursuant to the first sentence of this Section), the Buyer will
apply its standard accounts receivable collection procedures to the Closing
Accounts Receivable; provided, however, the Buyer will not be required to
institute suit, utilize third-party collection agencies or take other
extraordinary collection actions with respect to the Closing Accounts
Receivable; and, provided further, that any failure of any collection
activities of the Buyer or any such collection agency or other agent will not
relieve the Sellers and the Shareholders from their guarantee of the Closing
Accounts Receivable as described in the first sentence of this Section. In
order to determine whether a Closing Account Receivable has been collected for
purposes of the first sentence of this Section, the following shall apply: (a)
if the customer, at the time of payment or thereafter, specifies that a
particular payment made by such customer applies to a Closing Account
Receivable or to an account receivable generated by the Buyer after the Closing
Date (a "Customer Specification"), such Customer Specification shall control;
and (b) if no Customer Specification is made, payments received from a customer
after the Closing Date shall be applied first to the oldest account receivable
from such customer. Upon payment in full from the Sellers and the Shareholders
to the Buyer of any Closing Account Receivable guaranteed pursuant to the first
sentence of this Section, such Closing Account Receivable shall, without
further action of any part, become the property of the Sellers.
5.9. Use of Certain Assets.
(a) Until the first anniversary of the Closing, Xxxx X.
Xxxxxx may use the Buyer's rental equipment located at its Eagle, Colorado
store for his personal use at his home in Eagle, Colorado, to the extent the
rental equipment requested by Xx. Xxxxxx is not needed by the Buyer for rental
to its customers. Such use by Xx. Xxxxxx will be subject to the Buyer's
standard rental terms and conditions, except that Xx. Xxxxxx will not be
charged any rental fee or required to make any security deposit.
(b) Until the first anniversary of the Closing, the
Buyer may use Xx. Xxxxxx'x car wash located on the Eagle, Colorado Premises in
connection with the Buyer's
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rental business, to the extent such car wash is not then being used by
customers of the car wash. Such use by the Buyer will be subject to the
standard terms and conditions applicable to customers of the carwash, except
that the Buyer will not be charged any fee. Any wash stalls so used by the
Buyer will be left reasonably clean by the Buyer.
(c) Until the first anniversary of the Closing, the
Buyer will permit the Shareholders to have access to the computer system and
records included in the Acquired Assets, at reasonable times and upon
reasonable notice to the Buyer, to the extent necessary for the Shareholders to
conduct the car wash business conducted prior to the Closing by the Sellers
(the "Excluded Business") and so long as such access does not interfere with
the Buyer conducting its business. Further, during such time period, the Buyer
will maintain at its Eagle, Colorado store an "out-box" into which the Buyer
will place, for pick-up by Xx. Xxxxxx, correspondence received at such store
concerning the Excluded Business. The provisions of Section 5.4 shall apply to
any Confidential Information concerning the Buyer that is obtained by any
Shareholder in connection with the activities of any Shareholder or Seller
relating to this Section 5.8(c).
5.10. Excluded Accounting Records. Following the Closing, the
Sellers and the Shareholders will, upon reasonable notice from the Buyer and at
reasonable times, provide the Buyer with access to the original Excluded
Accounting Records. The Buyer may, at its own expense, make copies of such
documents.
5.11. Replacement Equipment Relationship. The Sellers and the
Shareholders are not being required to make any representation pursuant to
Section 3.1(v) regarding the relationship between the Sellers and Xxxxxx
Equipment Co. ("Xxxxxx") or the continuation by Xxxxxx following the Closing of
that relationship with the Buyer. However, following the Closing, Xxxx X.
Xxxxxx shall use his best efforts to secure for the Buyer relationships with
Xxxxxx or one or more other heavy equipment providers acceptable to the Buyer
pursuant to which the Buyer will be provided with equipment like that provided
by Xxxxxx to the Sellers prior to the Closing on terms no worse to the Buyer
than those enjoyed by the Sellers prior to the Closing Date and permitting the
Buyer to experience similar revenues and profit margins with respect to such
equipment as those experienced by the Sellers prior to the Closing Date as a
result of the Xxxxxx relationship.
5.12. Country Lease. The Sellers will use their best efforts to
cause, before July 1, 1998, an extension or renewal of the Vail Land Lease for
a term of no less than 10 years and on other terms reasonably satisfactory to
the Buyer. If no such extension or renewal has been so effected, at least 60
days prior to expiration of the Vail Land Lease, Country will (i) purchase or
lease another location in or near Vail, Colorado that is suitable, in the
Buyer's reasonable discretion, for operation of the Country Business then
operated by the Buyer on the land that is subject to the Vail Land Lease and
(ii) enter into a lease with the Buyer for the new location, which lease will
be in the form of the Shareholder Sublease for the Vail,
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Colorado Premises (the "Vail Sublease") and will have economic terms no less
favorable to the Buyer than those in the Vail Sublease.
5.13. Certain Environmental Matters. In regard to the
Silverthorne, Colorado Premises, the Sellers shall, within 90 days of the First
Closing, notify the Colorado Department of Public Health and the Environment
("CDPHE") that a release has occurred on such Premises and that the release has
resulted in a small area of groundwater contamination. The Sellers shall take
such further actions at their expense as are required by CDPHE or any other
Governmental Authority regarding such release and associated contamination.
Nothing in this Section 5.13 shall relieve any Seller or 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.
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 of each Seller and
the consummation of the other transactions contemplated by this Agreement is
subject to satisfaction of the following conditions:
(a) each 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 Sellers and the Shareholders shall have
performed and complied with all of their covenants hereunder through the
Closing;
(c) the Sellers and 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
Business of any Seller, and no such Order shall be in effect;
(e) there shall have been no adverse change in the
Acquired Assets or the Business of any Seller between the date of execution of
this Agreement and the Closing;
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(f) the Sellers shall have delivered to the Buyer a
certificate to the effect that each of the conditions specified above in
Sections 6.1(a) through (e) is satisfied in all respects and as to the adoption
of resolutions by the board of directors and shareholders of each 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;
(g) the Buyer shall have completed its due diligence
with respect to the Sellers, the Business of each Seller and the Acquired
Assets of each Seller 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 Sellers prior to the Closing in respect of vehicles and
mobile equipment included in the Acquired Assets shall have been executed and
delivered by the Sellers and the Shareholders, as applicable, and the
Shareholders and the owners of the real property underlying the Shareholder
Subleases shall have executed and delivered new leases or extensions/amendments
relating thereto, and estoppel, nondisturbance and landlord waiver agreements,
satisfactory to the Buyer;
(i) the Buyer shall have received from counsel to the
Sellers and the Shareholders an opinion in form and substance as set forth in
Exhibit 6.1(i) addressed to the Buyer and its debt and equity financing sources
and dated as of the Closing;
(j) financing necessary for the consummation of the
transactions contemplated hereby and the operation of the Business of each
Seller shall be available to the Buyer on terms and conditions satisfactory to
the Buyer;
(k) the Buyer shall have received from each Seller
financial statements for 1994 and 1995, audited by an accounting firm
acceptable to the Buyer at the expense of the Buyer, and such financial
statements shall be satisfactory to the Buyer;
(l) "Phase I" and "Phase II" environmental studies of
the Premises, and additional environmental testing of the Glenwood Springs,
Colorado Premises as agreed upon by the Buyer and the Shareholders' Agent,
shall have been completed at the Sellers' expense and supplied to the Buyer,
and the contents of such studies and the results of such additional testing
shall be satisfactory to the Buyer;
(m) each Seller shall have delivered to the Buyer
possession and control of the Acquired Assets of such Seller;
(n) the Sellers and the Shareholders shall have
executed and delivered to the Buyer appropriate documentation to transfer
record ownership of the trade name "E-Z Way Rental" to the Buyer;
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(o) the Sellers and the Shareholders shall have
delivered, or caused the Sellers 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; and
(p) with respect to the Second Closing, the Buyer shall
have exercised the Option.
The Buyer may waive any condition specified in this Section 6.1 at or prior to
the Closing.
6.2. Conditions to Obligations of the Sellers and the
Shareholders. The obligations of the Sellers 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;
(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 Sellers 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 Sellers and 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 Sellers and 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 any Seller or Shareholder breaches (or if any
Person other than the Buyer alleges facts that, if true, would mean any Seller
or Shareholder has breached) any
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of the representations or warranties of any Seller or Shareholder contained
herein and the Buyer gives notice thereof to the Shareholders' Agent within the
Survival Period, or if any Seller or Shareholder breaches (or if any Person
other than the Buyer alleges facts that, if true, would mean any Seller or
Shareholder has breached) any covenants of any Seller or Shareholder contained
herein or any representations, warranties or covenants of any Seller or
Shareholder contained in any Other Seller Agreement and the Buyer gives notice
thereof to the Shareholders' Agent, then the Sellers and the Shareholders agree
to jointly and severally indemnify 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 addition,
the Sellers and the Shareholders agree to jointly and severally indemnify the
Buyer from and against any Adverse Consequences the Buyer may suffer which
result from, arise out of, relate to or are caused by the consummation of the
transactions contemplated by this Agreement, whether or not such matter was
known or disclosed to the Buyer, was disclosed on any Exhibit hereto or is a
matter with respect to which any Seller or Shareholder did or did not have
knowledge, including, without limitation, (i) any act or omission of any
Seller, any Shareholder or any predecessor with respect to, or any event or
circumstance related to, any Seller's, any Shareholder's or any predecessor's
ownership, occupation, use or operation of any of the Acquired Assets, the
Excluded Assets or any other assets or properties or the conduct of its or
their business, regardless of whether such act, omission, event or circumstance
occurred or existed prior to, at or after the Closing Date or whether a claim
with respect to such matter was asserted before or is asserted after the
Closing Date, (ii) any Liability of any Seller or any Shareholder not included
in the Assumed Liabilities, (iii) the use, presence, generation, handling,
remediation, removal, transportation, release or disposal of Hazardous
Materials on, to or from any of the Premises or other real property or
facilities owned, used, occupied or operated by any Seller, any Shareholder or
any predecessor prior to the Closing Date, (iv) the failure of any Seller, any
Shareholder or any predecessor to comply with any Environmental Obligation or
other Legal Requirement or Order or the violation by any of them of any Right,
(v) any claim that the transactions contemplated by this Agreement violate the
Worker Adjustment and Retraining Notification Act, as amended, or any similar
state or local Legal Requirement or any fraudulent conveyance laws of any
jurisdiction, and any Liability resulting therefrom, and (vi) any Liability
resulting from any failure of the parties to comply with any bulk sales or
transfer law or other similar Legal Requirement of any applicable jurisdiction
in connection with the transactions contemplated by this Agreement. In
determining whether there has been a breach of any representation or warranty
contained in Section 3.1 and in determining the amount of Adverse Consequences
suffered by the Buyer for purposes of this Section, such representations and
warranties shall not be qualified (other than by (A) the reference to knowledge
set forth in the second sentence of Section 3.1(f) as it relates to Exhibit
3.1(f)(i) and (B) the references to "material" set forth in Section 3.1(af)) 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. If any dispute arises concerning whether any
indemnification is owing which cannot be resolved
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by negotiation among the parties within a reasonable time, 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 any Seller or Shareholder during the
Escrow Period will be paid to the Buyer first out of the First Indemnity
Deposit and Second Indemnity Deposit funds escrowed pursuant to the Escrow
Agreement, along with interest from the date such funds are deposited at the
rate applicable to the escrowed funds. The Sellers 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 relating to the First Indemnity Deposit, the amount of the
First Indemnity Deposit that may be needed to cover pending indemnification
claims made by the Buyer (such amounts to be determined 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 amount of the
First Indemnity Deposit on deposit therein, including any accrued interest
thereon, will be paid to the Sellers. At the end of the Escrow Period relating
to the Second Indemnity Deposit, the amount of the First Indemnity Deposit
retained in the Escrow Account pursuant to the second sentence of this Section
7.1(b) and the amount of the Second Indemnity Deposit that may be needed to
cover pending indemnification claims made by the Buyer (such amounts to be
determined 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 amount of the First Indemnity Deposit or the Second
Indemnity Deposit on deposit therein, including any accrued interest thereon,
will be paid to the Sellers. 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.
7.2. Indemnification Provisions for Benefit of the Sellers and
the Shareholders. If the Buyer breaches (or if any Person other than a Seller
or 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 a Seller
or 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 the
Sellers and the Shareholders from and against any Adverse Consequences the
Sellers 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 Buyer for purposes of this Section, such representations and
warranties shall not be qualified by "material," "materiality,"
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"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. If any dispute arises concerning whether any indemnification is
owing which cannot be resolved by negotiation among the parties within a
reasonable time, the dispute will be resolved by arbitration pursuant to this
Agreement.
7.3. Matters Involving Third Parties.
(a) If any third party (including, without limitation,
any Governmental Authority) notifies any party (the "Indemnified Party") with
respect to any matter (a "Third Party Claim") which may give rise to a claim
for indemnification against any other party (the "Indemnifying Party"), 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 elect to assume control of or
otherwise participate in the defense or settlement of any Third Party Claim, 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
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to the Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably).
(d) In the event any of the conditions in Section
7.3(b) above is or becomes unsatisfied, however, (i) the Indemnified Party may
defend against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it reasonably
may deem appropriate (and the Indemnified Party need not consult with, or
obtain any consent from, any Indemnifying Party in connection therewith), (ii)
the Indemnifying 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 any Seller, any Shareholder or
any relative or affiliate of 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 any Seller or 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 First Closing
has not occurred on or before August 31, 1996 because of the failure of any
condition precedent to the Buyer's obligations to consummate the First 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
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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 First Closing has not occurred on or before August 31, 1996 because of
the failure of any condition precedent to the Sellers' and the Shareholders'
obligations to consummate the First Closing (unless the failure results
primarily from any 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.
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. No 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.
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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 Sellers or
the Shareholders: Copy to:
Addressed to the Xxxxxxx X. Xxxxxx, Esq.
Shareholders' Agent at: Xxxx & Xxxxxx
000 Xxxxxxxx Xxxxxx 0000 Xxxxxxx Xxxxxx, Xxx. 0000
Xxxxx, Xxxxxxxx 00000-0000 Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
If to the Buyer: Copy to:
RentX Industries, Inc. Xxxxxxx & Xxxxxx L.L.C.
0000 Xxxxx Xxxxxx 000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000 Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx Attn: B. Xxxxx Xxxxxxx
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
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
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45
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
to be delivered pursuant to Section 6.1) incurred by any Seller or 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. 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 award of the
arbitrators will be final and binding and judgment on the award may be entered
by 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 to arbitrate
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,
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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. Sellers' and Shareholders' Agent. Each Seller and each
Shareholder hereby authorizes and appoints 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 Sections 2.3(b),
6, 7, 8, 9.6, 9.8 or 9.11, including, without limitation, (a) receiving or
giving all notices, instructions, other communications, consents or agreements
that may be necessary, required or given under any of such Sections and (b)
asserting, settling, compromising, or defending, or determining not to assert,
settle, compromise or defend, (i) any claims which 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 Shareholder's Agent hereby accepts such
authorization and appointment. Upon the receipt of written evidence
satisfactory to the Buyer to the effect that the Shareholder's 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 Shareholder's Agent with respect to the matters covered by this
Section 9.14. No Seller nor any Shareholder shall act with respect to any of
the matters which are the subject of Sections 2.3(b), 6, 7, 8, 9.6, 9.8 or 9.11
except through the Shareholder's Agent. The Sellers and the Shareholders
acknowledge and agree that the Buyer may deal exclusively with the
Shareholders' Agent in respect of the above-referenced matters, that the
enforceability of this Section 9.14 is material to the Buyer, and that the
Buyer has relied upon the enforceability of this Section 9.14 in entering into
this Agreement.
9.15. Option. At any time on or before March 31, 1997, the Buyer has
an option (the "Option") to purchase the Rifle Acquired Assets and to trigger
the transactions related to such acquisition as set forth in this Agreement.
The Buyer may exercise the Option by giving notice to Rifle pursuant to Section
9.6, but shall have no obligation to exercise the Option.
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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/ XXXXXXX X. XXXXX
----------------------------------
Name: Xxxxxxx X. Xxxxx
--------------------------------
Title: President
-------------------------------
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SELLERS:
RIFLE RENTALS, INC.
By: /s/ XXXX X. XXXXXX
----------------------------------
Name: Xxxx X. Xxxxxx
--------------------------------
Title: President
-------------------------------
RENTAL COUNTRY U.S.A., INC.
By: /s/ XXXX X. XXXXXX
----------------------------------
Name: Xxxx X. Xxxxxx
--------------------------------
Title: President
-------------------------------
G.R.M. COMPANY, INC.
By: /s/ XXXX X. XXXXXX
----------------------------------
Name: Xxxx X. Xxxxxx
--------------------------------
Title: President
-------------------------------
ROCKY MOUNTAIN RENTALS, INC.
By: /s/ XXXX X. XXXXXX
----------------------------------
Name: Xxxx X. Xxxxxx
--------------------------------
Title: President
-------------------------------
SHAREHOLDERS:
/s/ XXXX X. XXXXXX
-------------------------------------
Xxxx X. Xxxxxx
/s/ XXXXXXXXX XXXXXX
-------------------------------------
Xxxxxxxxx Xxxxxx
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