PURCHASE AGREEMENT by and among ESSEX CRANE RENTAL CORP., ESSEX HOLDINGS LLC, KCP SERVICES LLC (as Seller Representative), THE MEMBERS OF ESSEX HOLDINGS LLC and HYDE PARK ACQUISITION CORP. Dated as of March 6, 2008
EXECUTION
VERSION
by
and among
ESSEX
CRANE RENTAL CORP.,
ESSEX
HOLDINGS LLC,
KCP
SERVICES LLC (as Seller Representative),
THE
MEMBERS OF ESSEX HOLDINGS LLC
and
Dated
as of March 6, 2008
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TABLE
OF CONTENTS
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Page
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ARTICLE
I
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DEFINITIONS
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1
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ARTICLE
II
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SALE
AND PURCHASE
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10
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ARTICLE
III
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CLOSING
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14
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ARTICLE
IV
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REPRESENTATIONS
AND WARRANTIES RELATING TO THE COMPANY
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14
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ARTICLE
V
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REPRESENTATIONS
AND WARRANTIES OF HOLDINGS
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29
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ARTICLE
VI
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REPRESENTATIONS
AND WARRANTIES RELATING TO THE PURCHASER
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31
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ARTICLE
VII
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COVENANTS
AND AGREEMENTS
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33
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ARTICLE
VIII
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CONDITIONS
PRECEDENT TO OBLIGATIONS OF PURCHASER
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40
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ARTICLE
IX
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CONDITIONS
PRECEDENT TO OBLIGATIONS OF THE MEMBERS
|
42
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ARTICLE
X
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TERMINATION
OF AGREEMENT
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43
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ARTICLE
XI
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INDEMNIFICATION
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45
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ARTICLE
XII
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TAX
MATTERS
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49
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ARTICLE
XIII
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MISCELLANEOUS
AND GENERAL
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50
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SCHEDULES:
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Schedule
1-A
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Interests/Retained
Interest Value
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Schedule
1-B
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Change
of Control Payments
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|
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Schedule
1-C
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Exceptions
to GAAP
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Schedule
1-D
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Permitted
Liens
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Schedule
4.8
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Equipment
Sales
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Schedule
6.6
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Financing
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Schedule
7.1
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Interim
Operations of the Company
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Schedule
8.2
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Consents
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Schedule
8.4
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Director
Resignations
|
i
EXHIBITS:
|
Exhibit
A
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Working
Capital Calculations
|
|
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Exhibit
B
|
Lock
Up Agreement
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|
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Exhibit
C
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Escrow
Agreement
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Exhibit
D
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Compliance
Agreement
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Exhibit
E
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Employment
Agreement(s)
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|
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Exhibit
F
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New
LLC Agreement
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Exhibit
G
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Registration
Rights Agreement
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Exhibit
H
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Release
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|
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Exhibit
I
|
New
Credit Agreement
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ii
THIS
PURCHASE AGREEMENT (this “Agreement”)
is made
and entered into as of March 6, 2008, by and among, Essex Crane Rental Corp.,
a
Delaware corporation (the “Company”),
Essex
Holdings LLC, a Delaware limited liability company (“Holdings”),
the
members of Holdings (as hereinafter defined) listed on the signature page to
this Agreement (the “Members”),
KCP
Services, LLC, as Seller Representative (the “Seller
Representative”)
and
Hyde Park Acquisition Corp., a Delaware corporation (the “Purchaser”).
RECITALS
A. Holdings
owns all of the issued and outstanding shares of capital stock of the
Company.
B. The
Members own all of the issued and outstanding membership interests of Holdings
in the ownership percentages listed opposite such Member’s name as further set
forth on Schedule
1-A
(the
“Interests”).
C. The
Members desire to sell to the Purchaser, and the Purchaser desires to purchase
from the Members, the Purchased Interests (as defined below), subject to the
terms and conditions set forth in this Agreement.
NOW,
THEREFORE, in consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth herein, and subject to the terms
and conditions set forth herein, the parties hereby agree as
follows:
ARTICLE
I
DEFINITIONS
For
purposes of this Agreement:
“Accounting
Fees”
has the
meaning set forth in Section
7.8(f).
“Accounts
Receivable”
means:
(i) all trade accounts receivable and other rights to payment from customers
of
the Company and the full benefit of all security for such accounts or rights
to
payment, including all trade accounts receivable representing amounts receivable
in respect of goods shipped or products sold or services rendered to customers
of the Company; (ii) all other accounts or notes receivable of the Company
and
the full benefit of all security for such accounts or notes; and (iii) any
Action, remedy or other right related to any of the foregoing
“Action”
or
“Actions”
means
any lawsuit, proceeding, order, condemnation, administrative enforcement
proceeding, audit, hearing or arbitration proceeding, at law or in equity,
or by
or before any Governmental Authority.
“Affiliate”
means
with respect to any Person, any Person that directly or indirectly, controls,
is
controlled by or is under common control with such Person.
“Agreement”
has the
meaning set forth in the preamble.
“Applicable
Rate”
means
the prime rate of interest reported from time to time in The
Wall Street Journal.
“Auditor”
has the
meaning set forth in Section
2.3(b).
“Audited
Financial Statements”
has the
meaning set forth in Section
4.1(a).
“Balance
Sheet Date”
has the
meaning set forth in Section
4.1(a).
“Blue
Sky Laws”
means
the securities laws of the states and territories of the United States of
America.
“Bonus
Amounts”
means
any and all cash bonuses to employees of the Company accrued through the Closing
Date (including any cash bonuses payable to the Company’s employees in
connection with the transactions contemplated by this Agreement, but excluding
Change of Control Payments).
“Business
Combination”
shall
mean, with respect to any Person, any merger, consolidation or combination
to
which such Person is a party, any sale, dividend, split or other disposition
or
acquisition of capital stock or other ownership interests of such Person, or
any
sale, dividend or other disposition or acquisition of all or substantially
all
of its assets and properties of such Person.
“Business
Day”
means
any day other than a Saturday, Sunday or a day on which banks in the State
of
New York are authorized or obligated by Law or executive order to
close.
“Ceiling
Amount”
has the
meaning set forth in Section
9.5(a).
“Change
of Control Payments” means
those liabilities set forth on Schedule
1-B,
which
are to be paid by the Purchaser at the Closing pursuant to Section
2.2(c)(i)
hereof.
“Claim”
has the
meaning set forth in Section
11.7(a).
“Claims
Notice”
has the
meaning set forth in Section
11.8(a).
“Claim
Response”
has the
meaning set forth in Section
11.8(a).
“Closing”
has the
meaning set forth in Article
III.
“Closing
Balance Sheet”
means an
unaudited balance sheet of the Company as of the Closing Date prepared by the
Company pursuant to Section
2.3
hereof,
prepared in accordance with the methodology set forth in Exhibit
A
attached
hereto.
“Closing
Date”
has the
meaning set forth in Article
III.
“Closing
Form 8-K”
has the
meaning set forth in Section
7.10.
“COBRA”
has the
meaning set forth in Section
4.7(g).
“Code”
means
the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder.
“Commission”
has
the
meaning set forth in Section
7.8(a).
“Company”
has the
meaning set forth in the preamble.
-2-
“Company
Business”
has the
meaning set forth in Section
7.14(a).
“Company
Intellectual Property”
means
any Intellectual Property owned by the Company, whether solely or jointly with
any other Person.
“Compliance
Agreement” means
that certain Compliance Agreement, in the form attached hereto as Exhibit
D,
and
executed by the Parties simultaneously with the execution of this
Agreement.
“Confidentiality
Agreement”
means
the confidentiality agreement, dated August 29, 2007 between Xxxxxxxx Xxxxx
Xxxxxx & Xxxxx Capital, Inc. and Purchaser.
“Contracts”
means
all contracts, leases, licenses, and other agreements (including any amendments
and other modifications thereto), whether written or oral, to which the Company
is a party that are in effect on the date of this Agreement.
“Controlled
Group” means
the
Company and any trade or business, whether or not incorporated, which is treated
together with the Company as a single employer under Section 4001(b)(1) of
ERISA
or Sections 414(b), (c), (m) or (o) of the Code.
“Employee
Plans”
has the
meaning set forth in Section
4.7.
“Employment
Agreements”
has the
meaning set forth in Section
7.15.
“Environment”
shall
mean soil, surface waters, ground waters, land, stream, sediments, surface
or
subsurface strata and ambient air.
“Environmental
Condition”
shall
mean any condition with respect to the Environment on or off any Facility caused
by a release of Hazardous Substances or violation of Environmental Laws, whether
or not yet discovered, which reasonably could be expected to or does result
in
any obligation or liability of the Company arising under any Environmental
Laws.
“Environmental
Laws” shall
mean all Laws relating to the pollution of or protection of the Environment,
from contamination by, or relating to injury to, or the protection of, real
or
personal property or human health or the Environment, including, but not limited
to all such principles under which claims may be alleged for any type of injury
or damage relating to contamination from a Hazardous Substance, without
limitation, all Laws pertaining to reporting, licensing, permitting,
investigation, disclosure, inventorying, remediation or removal of, emissions,
discharges, releases or threatened releases of Hazardous Substances, chemical
substances, pesticides, petroleum or petroleum products, pollutants,
contaminants or hazardous or toxic substances, materials or wastes, into the
Environment, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Substances,
pollutants, contaminants or hazardous or toxic substances, materials or wastes,
including, without limitation, the Oil and Pollution Act of 1990, the
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)
of 1980, the Resource Conservation and Recovery Act of 1976, the Emergency
Planning and Community Right to Know Act of 1986, the Federal Water Pollution
Control Act, the Toxic Substances Control Act, the Safe Drinking Water Act,
the
Clean Air Act of 1990 and the Occupational Safety and Health Act., the Safe
Drinking Water Act, the Clean Air Act of 1990 and the Occupational Safety and
Health Act.
“ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended, and the rules
and regulations promulgated thereunder.
-3-
“Escrow
Agent”
means
Key Bank, N.A.
“Escrow
Agreement”
has the
meaning set forth in Section
2.2(e).
“Escrow
Amount”
means
$7,000,000 plus the Escrowed Interests.
“Escrowed
Interests”
means
the Retained Interests held by Kirtland or the shares of Purchaser Stock issued
to Kirtland in exchange therefor.
“Escrow
Fund”
has the
meaning set forth in Section
2.2(d).
“Estimated
Closing Balance Sheet”
means an
estimated unaudited balance sheet of the Company as of the Closing Date prepared
by the Company in the same manner as the Closing Balance Sheet of the
Company.
“Estimated
Working Capital”
means an
amount equal to an estimation of the Working Capital of the Company as reflected
on the Estimated Closing Balance Sheet of the Company.
“Excess
Consideration”
has the
meaning set forth in Section
2.3(c).
“Excess
Payment”
has the
meaning set forth in Section
2.3(a).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Facility”
shall
mean any facility that is now or has heretofore been owned, leased or operated
by the Company.
“Fundamental
Representations means
the
representations
and warranties in Section
4.2
(Taxes),
Section
4.15
(No
Brokers), Section
4.17(b)
(Organization and Standing; Capital Structure), Sections
5.1
(Organization and Standing; Authorization); Section
5.2
(Capitalization and Title) and Section
5.4
(No
Brokers).
“Funded
Indebtedness” means
the
total amount of the Company’s and Holdings’ Indebtedness outstanding as of the
Closing Date, including, without limitation, Indebtedness arising in connection
with the Recapitalization and Indebtedness arising under those Contracts and
instruments identified on the Seller Disclosure Schedule pursuant to
Section
4.8(a)(vi),
but
excluding the Wachovia Swap Agreements to the extent such agreements are not
terminated pursuant to Section
2.3(e).
“GAAP”
means
generally accepted accounting principles in the United States of
America.
“Governmental
Authority” shall
mean any (i) federal, state, local, provincial, territorial, municipal, foreign,
or other government, (ii) governmental or quasi-governmental authority of any
nature or (iii) other body (including privately constituted arbitral tribunals)
exercising any statutory, administrative, judicial, arbitrative, legislative,
police, regulatory, or taxing authority or power.
“Hazardous
Substance” shall
mean any substance whether solid, liquid or gaseous in nature:
(i) the
presence of which requires notification, investigation, or remediation under
any
Environmental Law;
(ii) which
is
defined as “toxic”, a “hazardous waste”, “hazardous material” or “hazardous
substance” or “pollutant” or “contaminant” under any Environmental
Laws;
-4-
(iii) which
is
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous and is regulated under any Environmental Law;
(iv) which
contains gasoline, diesel fuel or other petroleum hydrocarbons or volatile
organic compounds; or
(v) which
contains polychlorinated byphenyls (PCBs) or asbestos or urea formaldehyde
foam
insulation.
“Holdings”
has the
meaning set forth in the preamble.
“HSR
Approval” means
all
waiting period requirements shall have expired or been terminated under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
“HSR
Filing”
has the
meaning set forth in Section
7.4.
“Indebtedness”
means,
with respect to any Person at any date, without duplication: (i) all obligations
of such Person for borrowed money or in respect of loans or advances, (ii)
all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments or debt securities, (iii) all obligations of such Person
secured by a Lien (other than a Permitted Lien), (iv) all guarantees of such
Person in connection with any of the foregoing, and (v) all accrued interest,
prepayment premiums or penalties related to any of the foregoing, but excluding
all obligations arising under the New Credit Agreement.
“Indemnifying
Party”
means
any Person required to provide indemnification under this
Agreement.
“Indemnitee”
means
any Person entitled to indemnification under this Agreement.
“Insurance
Policies”
has the
meaning set forth in Section
4.11.
“Intellectual
Property”
means
any and all patents and patent applications; trademarks, service marks, trade
names, brand names, trade dress, slogans, logos and Internet domain names and
their associated goodwill; inventions, discoveries, formulae, designs, models,
industrial designs, know-how, confidential information, proprietary information
and trade secrets, whether or not patented or patentable; copyrights, writings
and other copyrightable works and works in progress, databases, website content
and software; all other intellectual property rights and foreign equivalents
or
counterpart rights and forms of protection of a similar or analogous nature
or
having similar effect in any jurisdiction throughout the world; all
registrations and applications for registration of any of the foregoing; and
any
renewals, extensions, continuations, divisionals, reexaminations or reissues
or
equivalent or counterpart of any of the foregoing in any jurisdiction throughout
the world.
“Interests”
has the
meaning set forth in the recitals.
“Interim
Financial Statements”
has the
meaning set forth in Section
4.1(a).
“Inventory”
means
the
consumable inventory of the Company, whenever located, including, without
limitation, all spare parts and all other materials and supplies to be used
in
or consumed by the Company in the Ordinary Course of Business.
“IRS”
means
the United States Internal Revenue Service.
-5-
“Kirtland”
means
Kirtland Capital Partners III LP and Kirtland Capital Company III
LLC.
“Knowledge”
means
(a) in the case of the Members or Holdings, the actual knowledge of each Member,
(b) in the case of the Company, the actual knowledge of Xxxxxx X. Xxxxx, Xxxxxxx
X. X’Xxxxxx, Xxxxxx X. Xxxxx and Xxxxxxx X. Xxxxx and the knowledge that would
be expected to have been obtained by each of them upon due inquiry and
reasonable investigation and (c) in the case of the Purchaser, the actual
knowledge of Xxxxxxxx X. Xxxx and Xxxxxx Xxxx.
“Law”
means
any law, statute, code, ordinance, regulation, order or rule of any Governmental
Authority.
“Leased
Property”
means
the real property leased, subleased or otherwise occupied by the Company, other
than any Temporary Storage Property, and all buildings and other structures,
facilities or improvements currently located thereon.
“Leases”
means
all agreements (including all amendments, extensions, renewals, guaranties
and
other agreements with respect thereto) to which the Company is leasing and/or
occupying the Leased Property.
“Liens”
means
any pledge, hypothecation, lien, preference, priority, security interest,
mortgage, lien (statutory or otherwise), option, pledge, security agreement,
easement, covenant, restriction or other similar encumbrance of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement and any lease having substantially the same effect as any of the
foregoing) including liens or other rights with respect to cash collateral
or
other security deposit arrangements.
“Losses”
means
any and all losses,
liabilities, claims, damages, penalties, interest, fines, judgments, awards,
settlements, taxes, costs, fees (including, but not limited to, reasonable
investigation fees but excluding (other than with respect to Losses arising
from
third party claims) consequential, punitive, indirect, exemplary damages or
any
damages measured by lost profits or a multiple of earnings), expenses
(including, but not limited to, attorneys’ fees) and disbursements, in each
case, calculated net of any applicable reserves on the Closing Balance
Sheet.
“Management
Members”
means
Xxxxxx X. Xxxxx, Xxxxxx X. Xxxxx, Xxxxxxx X. Xxxxx, and Xxxxxxx X.
X’Xxxxxx.
“Material
Adverse Effect”
means,
with respect to the Company and Holdings, taken as a whole, on the one hand,
or
the Purchaser, on the other hand, as applicable, any change, occurrence or
development that has a material adverse effect on the business, assets,
liabilities, results of operations or financial condition of such party and
its
subsidiaries, if any, taken as a whole, but excluding any effect (a) resulting
from general economic conditions (whether as a result of acts of terrorism,
war
(whether or not declared), armed conflicts or otherwise), (b) affecting
companies in the industry in which it conducts its business generally, or (c)
resulting from the announcement of this Agreement or the transactions
contemplated hereby.
“Material
Contracts”
has the
meaning set forth in Section
4.8(a).
“Members”
has the
meaning set forth in the preamble.
“Most
Recent Balance Sheet”
has the
meaning set forth in Section
4.1(a).
“Multiemployer
Plan”
has the
meaning set forth in Section
4.7(a).
-6-
“New
Credit Agreement”
means
the Second Amended and Restated Loan and Security Agreement attached as
Exhibit
I.
“New
LLC Agreement”
means
the limited liability company agreement of Holdings attached as Exhibit
F.
“Order”
means
any order, judgment, ruling, injunction, assessment, award, decree or writ
issued by any Governmental Authority.
“Ordinary
Course of Business”
means
the ordinary course of business consistent with past custom and practice
including with regard to nature, frequency and magnitude.
“OTC
BB”
has the
meaning set forth in Section
7.8(e).
“Owned Real
Property”
has the
meaning set forth in Section
4.4(a).
“Parties”
means
the parties to this Agreement.
“Permits”
means
any license, permit, authorization, certificate of authority, certificate of
occupancy, bond, approval, accreditation, franchise, registration, qualification
or similar document or authority that has been issued or granted by any
Governmental Authority.
“Permitted
Liens”
means
(a) Liens for taxes, assessments and other charges of Governmental Authorities
not yet due and payable or being contested in good faith by appropriate
proceedings for which collection or enforcement against the property is stayed
and for which appropriate reserves have been established on the Most Recent
Balance Sheet in accordance with GAAP, (b) mechanics,’ workmen’s, repairmen’s,
warehousemen’s, carriers’ or other like Liens arising or incurred in the
Ordinary Course of Business if the underlying obligations are not delinquent,
(c) with respect to the Leased Property and Owned Real Property only (provided
that there is no material impairment on the value and/or operations of the
Company): (i) any conditions that are shown by a current, accurate survey,
(ii)
easements, encroachments, certain restrictions, rights of way and any other
title matters of record which do not materially impair the value, occupancy
or
use of the Leased or Owned Real Property for the purposes for which it is
currently used in connection with the business being conducted thereon, and
(iii) zoning, building use and other similar restrictions which are not violated
by or which create a material non-conformity of the current use and operation
of
the Leased or Owned Real Property, and (d) Liens identified on Schedule
1-D.
“Person”
means
any individual, sole proprietorship, partnership, corporation, limited liability
company, joint venture, unincorporated society or association, trust or other
legal entity or Governmental Authority.
“Pre-Closing
Periods”
means
all taxable periods of the Company ending on or before the Closing
Date.
“Pre-Closing
Straddle Period”
means
the portion of any Straddle Period that begins before the Closing Date and
ends
on the Closing Date.
-7-
“Pre-Closing
Taxes” means
all
Taxes of Holdings or the Company for all Pre-Closing Periods and attributable
to
all Pre-Closing Straddle Periods. The portion of any Tax attributable to the
Pre-Closing Straddle Period shall (a) in the case of any Taxes other than sales
or use taxes, value-added taxes, employment taxes, withholding taxes, and any
Tax based on or measured by income, receipts or profits earned during a Straddle
Period, be deemed to be the amount of such Tax for the entire Straddle Period
multiplied by a fraction, the numerator of which is the number of days in the
Pre-Closing Straddle Period and denominator of which is the number of days
in
the Straddle Period, and (b) in the case of any sales or use taxes, value-added
taxes, employment taxes, withholding taxes, and any Tax based on or measured
by
income, receipts or profits earned during a Straddle Period, be deemed equal
to
the amount that would be payable if the Straddle Period ended on and included
the Closing Date. To the extent that any Tax for a Straddle Period is based
on
the greater of a Tax on net income, on the one hand, and a Tax measured by
net
worth or some other basis not otherwise measured by income, on the other hand,
the portion of such Tax related to the Pre-Closing Straddle Period will be
deemed to be (i) if the amount of such Tax for the Straddle Period is measured
by net worth or such other basis, the amount of such Tax for the entire Straddle
Period multiplied by a fraction, the numerator of which is the number of days
in
the Pre-Closing Straddle Period, and the denominator of which is the number
of
days in the Straddle Period or (ii) if the amount of such Tax for the Straddle
Period is measured by net income, the amount of such Tax determined as though
the Straddle Period ended on the Closing Date.
“Proxy
Statement”
has the
meaning set forth in Section
7.8(a).
“Purchased
Interests”
means
all Interests other than the Retained Interests.
“Purchaser”
has the
meaning set forth in the preamble.
“Purchaser
Claims”
has the
meaning set forth in Section
11.3(d).
“Purchaser
Stock”
means
shares of the common stock, par value $0.0001 per share, of the Purchaser.
“Purchaser
Indemnitees”
has the
meaning set forth in Section
11.3(a).
“Purchaser
Stockholder Approval”
has the
meaning set forth in Section
7.8(a).
“Recapitalization”
has the
meaning set forth in Section
7.1(a).
“Registration
Rights Agreement”
means
the Registration Rights Agreement attached as Exhibit
G.
“Rental
EBITDA”
for any
fiscal year means the excess of (i) gross revenue, excluding revenue from sales
of Rental Equipment, for such fiscal year, over (ii) the sum of (x) total
operating expenses for such fiscal year and (y) total selling, general &
administrative expenses for such fiscal year, calculated without giving effect
to any non-cash obsolescence reserve charges established for the spare parts
inventory which previously have not been recorded on the Audited Financial
Statements.
“Rental
Equipment”
means
cranes and serialized attachments and other components owned by the Company
and
rented to customers by the Company in the Ordinary Course of
Business.
“Reported
Rental EBITDA”
means:
(i) $13,967,000 for fiscal year 2005, (ii) $25,883,000 for fiscal year 2006,
and
(iii) $32,261,000 for fiscal year 2007.
“Response
Period”
has the
meaning set forth in Section
11.8(a).
“Responsible
Party”
has the
meaning set forth in Section
11.8(d).
-8-
“Retained
Interest”
means
that number of Interests retained by the Members and classified as Class A
Units
in the New LLC Agreement in the amounts set forth on Schedule
I-A
thereto.
“Retained
Interest Value”
means
the value of a Member’s Retained Interest as set forth on Schedule
1-A
opposite
such Members name.
“Schedules”
means
the Schedules attached to this Agreement.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Seller
Disclosure Schedules”
means
those certain disclosure schedules separately delivered to Purchaser by Sellers
on the date hereof.
“Seller
Indemnitees”
has the
meaning set forth in Section
11.2.
“Seller
Representative”
has the
meaning set forth in the preamble.
“Settlement
Date”
has the
meaning set forth in Section
2.3(d).
“Shortfall
Consideration”
has the
meaning set forth in Section
2.3(c).
“Shortfall
Reduction”
has the
meaning set forth in Section
2.3(a).
“Signing
form 8-K”
has the
meaning set forth in Section
7.10.
“Special
Meeting”
has the
meaning set forth in Section
7.8(a).
“Straddle
Period”
means
any taxable period that includes but does not end on the Closing
Date.
“Survival
Period”
has the
meaning set forth in Section
11.1.
“Tax”
or
“Taxes”
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 Sec.59A), customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, 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
Matter” has
the
meaning set forth in Section
12.5.
“Tax
Returns” 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.
“Taxing
Authority”
means
any Governmental Authority responsible for the administration or imposition
of
any Tax.
“Temporary
Storage Property”
means
real property used by the Company pursuant to an oral license or oral lease,
for
which the maximum monthly fee paid by the Company for use of such real property
does not exceed $500.00 per month per crane, and for which the Company can
terminate the lease at anytime without liability other than (i) rent due for
the
month immediately prior to such termination date or the month immediately
following such termination date, or (ii) liability under law for any damage
done by the Company to such property.
-9-
“Termination
Date”
has the
meaning set forth in Section
10.1(b).
“Threshold
Amount”
has the
meaning set forth in Section
11.5(a).
“Total
Purchase Price”
has the
meaning set forth in Section
2.2(a).
“Transaction
Expenses”
means
all costs, fees and expenses (including legal, accounting, consulting, advisory
and brokerage fees and expenses) incurred by the Company or Holdings in
connection with the negotiation and preparation of this Agreement and the
transactions contemplated hereby and thereby, including without limitation
the
fees and expenses of professionals retained by Company or Holdings, in each
case, to the extent incurred and unpaid prior to the Closing Date , in each
case
in the amount set forth in a pay off instruction letter delivered pursuant
to
Section
2.2(c).
“Transfer
Taxes”
has the
meaning set forth in Section
13.3.
“Wachovia
Swap Agreements” means
that certain ISDA Master Agreement, by and between Wachovia Bank, N.A. and
the
Company, dated as of July 6, 2005, and the related Rate Cap and Rate Floor
Transaction Confirmation, dated as of March 2, 2007, as amended on September
19,
2007
“WARN”
shall
mean the Worker Adjustment and Retraining Notification Act of 1988, as
amended.
“Working
Capital”
means
the amount of the excess of (i) the total of the Company’s current assets as of
the Closing Date over (ii) the total of the Company’s current liabilities as of
the Closing Date, in each case calculated (x) in accordance with GAAP (except
for the modifications set forth on Schedule 1 hereto) and (y) with respect
to
those current assets and current liabilities specified on Exhibit
A
attached
hereto, as provided in Exhibit
A.
“Working
Capital Determination Date”
has the
meaning set forth in Section
2.3(b).
“Working
Capital Target”
has the
meaning set forth in Section
2.3(a).
ARTICLE
II
SALE
AND PURCHASE
Section
2.1 Sale
and Purchase of the Interests.
Upon the terms and subject to the conditions set forth in this Agreement and
on
the basis of the representations, warranties, covenants and agreements contained
herein, at the Closing: (a) each Member shall sell, convey, assign and transfer
to the Purchaser the Purchased Interests, free and clear of all Liens, (b)
the
Purchaser shall purchase and acquire such Purchased Interests and shall pay
and
deliver the Total Purchase Price for such Purchased Interests and (c) the
Parties shall take the other actions required of them as described in this
Agreement.
Section
2.2 Purchase
Price.
(a) The
purchase price for the Purchased Interests shall be the aggregate sum of
$210,000,000 minus the aggregate Retained Interest Value (the “Total
Purchase Price”).
The
Total Purchase Price shall be paid in accordance with Section
2.2(c)
and
shall be subject to adjustment as set forth in Sections
2.2(b) and 2.3.
-10-
(b) Within
a
reasonable time prior to the Closing, Holdings shall prepare and deliver to
the
Purchaser a statement, in form and substance reasonably satisfactory to the
Purchaser, that sets forth Rental Equipment sales and Rental Equipment purchases
that have been or will be made by the Company after January 1, 2008 through
the
Closing Date. The Company shall effect all such sales and purchases on terms
that require full settlement in cash prior to the Closing Date. In the event
that the dollar volume of Rental Equipment sales exceeds the dollar volume
of
Rental Equipment purchases made by the Company during such time period
(“Excess
Crane Sales”),
then
the Total Purchase Price payable to the Seller Representative, for the benefit
of the Members, on the Closing Date will be decreased by the amount of such
Excess Crane Sales. In the event that the dollar volume of Rental Equipment
purchases exceeds the dollar volume of Rental Equipment sales made by the
Company during such time period (“Excess
Crane Purchases”),
then
the Total Purchase Price payable to the Seller Representative, for the benefit
of the Members, on the Closing Date will be increased by the amount of such
Excess Crane Purchases.
(c) At
the
Closing, the Purchaser shall pay the Total Purchase Price, as adjusted pursuant
to Section
2.2(b),
plus
(x) an amount equal to the Accounting Fees actually paid by the Company on
or
prior to the Closing, and (y) the amount due under the second proviso contained
in Section
13.2,
minus
(i) the Transaction Expenses, (ii) the Funded Indebtedness,
(iii) the Change of Control Payments, (iv) the cash portion of the
Escrow Amount, (v) 50% of all filing fees actually paid by Purchaser in
connection with the HSR Filing or under any other applicable antitrust
regulation, (vi) the Bonus Amounts, and (vii) if applicable, the amount
necessary to fund the escrow fund contemplated by the Compliance Agreement,
by
wire transfer of immediately available funds to such account or accounts as
the
Seller Representative specifies to the Purchaser in writing at least two
business days prior to the Closing Date. Prior to the Closing, the Seller
Representative shall provide to the Purchaser payoff instruction letters, in
form and substance reasonably acceptable to the Purchaser, with respect to
the
Transaction Expenses, the Funded Indebtedness, the Change of Control Payments,
the Accounting Fees actually paid by the Company on or prior to the Closing,
the
amounts due under the second proviso contained in Section
13.2,
and the
Bonus Amounts. The Transaction Expenses, the Funded Indebtedness and the Change
of Control Payments shall be paid by the Purchaser at the Closing in accordance
with such payoff instruction letters. When due and payable in the Ordinary
Course of Business, the Purchaser shall pay or cause to be paid to the Persons
entitled thereto (and as reduced by applicable withholding Taxes) the Bonus
Amounts.
(d) At
the
Closing, the Purchaser shall deposit the cash portion of the Escrow Amount,
and
Kirtland shall deposit the Escrowed Interests, into escrow (the “Escrow
Fund”)
with
the Escrow Agent. The Escrow Amount shall be distributed in accordance with
the
terms and conditions of the Escrow Agreement attached as Exhibit
C
hereto
(the “Escrow
Agreement”).
(e) Within
a
reasonable time prior to the Closing, Seller Representative shall notify
Purchaser whether or not the Wachovia Swap Agreements will be terminated by
the
Company on or prior to the Closing Date. In the event the Wachovia Swap
Agreements are terminated prior to Closing for any reason, all unpaid
obligations of the Company to Wachovia under the Wachovia Swap Agreements
associated with such termination will be included in the definition of Funded
Indebtedness under this Agreement. In the event the Wachovia Swap Agreements
remain in effect on and after the Closing Date and for as long as such Wachovia
Swap Agreements remain in effect, the Seller Representative shall pay to
Purchaser, within 10 days after the end of each calendar quarter following
the
Closing Date, an amount equal to the aggregate amount of the obligations of
the
Company to Wachovia under the Wachovia Swap Agreements settled in cash for
such
calendar quarter, and, to secure Seller Representative’s obligations under this
Section 2.2(e), the Seller Representative shall, at the Closing, deposit a
portion of the Total Purchase Price into an escrow account equal to the
estimated liability of the Company to Wachovia associated with the termination
of the Wachovia Swap Agreements assuming such termination occurred at the
Closing as determined by the Purchaser and the Seller Representative after
consultation with Wachovia Bank. Such escrow account shall be held by a bank
or
other financial institution mutually acceptable to Purchaser and Seller
Representative and shall be held for such period and on such terms as Purchaser
and Seller Representative may agree (it being understood that (i) the term
of
such escrow shall not extend beyond the termination of the Wachovia Swap
Agreements, (ii) Seller Representative shall be permitted to use a portion
of
the escrow funds to purchase one or more hedging instruments to limit downside
risk associated with the Wachovia Swap Agreements and (iii) Seller
Representative shall be entitled to quarterly payments from such escrow equal
to
all interest income earned by such escrow during each quarter). In the event
the
Company receives payment from Wachovia on account of the Wachovia Swap
Agreements, the Company shall remit such payment to Seller Representative within
10 days upon receipt thereof. At the request of Seller Representative, Purchaser
shall terminate the Wachovia Swap Agreements. Upon such termination by Purchaser
or upon a termination of the Wachovia Swap Agreements for any other reason
after
the Closing, Seller Representative shall pay to Purchaser all obligations of
the
Company to Wachovia under the Wachovia Swap Agreements associated with such
termination. Purchaser may not affirmatively elect to terminate the Wachovia
SWAP Agreements without the prior written consent of the Seller Representative,
unless Purchaser agrees to bear all unpaid obligations of the Company to
Wachovia under the Wachovia Swap Agreements associated with such
termination.
-11-
Section
2.3 Working
Capital Adjustment.
(a) On
the
date three (3) Business Days prior to the Closing Date, Holdings shall prepare
and deliver to the Purchaser the Estimated Closing Balance Sheet of the Company,
the calculation of the Bonus Amounts, and a statement calculating the Estimated
Working Capital of the Company, determined as set forth in Exhibit
A.
The
“Working
Capital Target” means
$4,500,000. In the event that the Estimated Working Capital of the Company
exceeds the Working Capital Target, the Total Purchase Price payable on the
Closing Date will be increased by the amount of such excess (the “Excess
Payment”).
In the
event that the Estimated Working Capital of the Company is less than the Working
Capital Target, the Total Purchase Price payable on the Closing Date will be
decreased by the amount of such shortfall (the “Shortfall
Reduction”).
The
Total Purchase Price will be subject to further adjustment upon final,
post-Closing determination of the Working Capital of the Company, as provided
in
Section
2.3(b)
below.
(b) As
soon
as reasonably practicable following the Closing Date, and in any event within
thirty (30) days thereafter, the Purchaser shall prepare and deliver to the
Seller Representative the Closing Balance Sheet of the Company and a statement
calculating the Working Capital of the Company. The Seller Representative and
its independent certified public accountants may review the Closing Balance
Sheet of the Company and the calculation regarding Working Capital of the
Company and may make inquiry of the representatives of the Purchaser’s
accountants, the Purchaser and the Company, who shall reasonably cooperate
with
the Seller Representative (including, without limitation, by providing the
Seller Representative and/or its agents access to financial accounts and
underlying source documents related to the preparation of the Closing Balance
Sheet and calculation of Working Capital). The calculation regarding the Working
Capital of the Company shall be binding and conclusive upon, and deemed accepted
by, the Members unless the Seller Representative shall have notified the
Purchaser in writing within thirty (30) days after receipt of the Closing
Balance Sheet of the Company of any objections thereto. The Seller
Representative may send a written notice to Purchaser at an earlier date if
it
is in agreement with the Purchaser’s final closing Working Capital amount and
the Working Capital amount shall be deemed finally determined on receipt of
that
written notice by the Purchaser. At the request of either the Seller
Representative or the Purchaser, any dispute between the parties relating to
the
calculation of Working Capital of the Company that cannot be resolved by them
within thirty (30) days after receipt of notice of any objections to such
calculation pursuant to this Section
2.3(b)
shall be
referred to KPMG International (the “Auditor”)
for
decision, which decision shall be final and binding on both parties. The Auditor
shall address only those items in dispute and may not assign a value greater
than the greatest value for such item claimed by either party or smaller than
the smallest value for such item claimed by either party. The parties agree
that
they will request that the Auditor render its decision within thirty (30) days
after referral of the dispute to the Auditor for decision pursuant hereto.
The
fees and expenses of the Auditor shall be allocated to the parties as determined
by the Auditor based upon the relative success (in terms of percentages) of
each
party’s claims. For example, if the Auditor’s final decision reflects a 60-40
compromise of the parties’ claims, the Auditor would allocate expenses 40% to
the party whose claim was determined to be 60% successful and 60% to the party
whose claim was determined to be 40% successful. The date on which the Working
Capital of the Company is finally determined in accordance with this
Section
2.3(b)
is
hereinafter referred to as the “Working
Capital Determination Date.”
-12-
(c) If
the
Working Capital of the Company as finally determined pursuant to Section
2.3(b)
exceeds
the Estimated Working Capital, then the Total Purchase Price will be increased
by the amount of such excess (the “Excess
Consideration”).
If the
Working Capital of the Company as finally determined pursuant to Section
2.3(b)
is less
than the Estimated Working Capital, then the Total Purchase Price will be
decreased by the amount of such shortfall (the “Shortfall
Consideration”).
The
Total Purchase Price adjustment required hereby is referred to as the
“Adjustment.”
(d) Promptly,
and in any event no later than the fifth Business Day after the Working Capital
Determination Date (the “Settlement
Date”):
(i) In
the
event of a determination of Excess Consideration pursuant to Section
2.3(c),
then
(A) the Purchaser will pay to the Seller Representative, for the benefit of
the
Members, the Excess Consideration, together with interest thereon at a rate
per
annum equal to the Applicable Rate, calculated on the basis of the actual number
of days elapsed over 360, from the Settlement Date to the date of payment,
by
wire transfer of immediately available funds, and (B) the Purchaser and Seller
Representative shall execute and deliver a joint written authorization letter
to
the Escrow Agent authorizing the Escrow Agent to promptly release to the Seller
Representative, on behalf of the Members, the amount contemplated by Section
3(f) of the Escrow Agreement.
(ii) In
the
event of a determination of Shortfall Consideration pursuant to Section
2.3(c),
then
the Purchaser and Seller Representative shall execute and deliver a joint
written authorization letter to the Escrow Agent authorizing the Escrow Agent
to
promptly release (A) to Purchaser from the Escrow Fund the amount of such
Shortfall Consideration, together with interest thereon at a rate per annum
equal to the Applicable Rate, calculated on the basis of the actual number
of
days elapsed over 360, from the Settlement Date to the date of payment, and
thereafter, (B) to the Seller Representative, on behalf of the Members, the
amount contemplated by Section 3(f) of the Escrow Agreement.
(e)
Within a
reasonable time prior to the Closing, Seller Representative shall notify
Purchaser whether or not the Wachovia Swap Agreements will be terminated by
the
Company on or prior to the Closing Date. In the event the Wachovia Swap
Agreements are terminated prior to Closing for any reason, all unpaid
obligations of the Company to Wachovia under the Wachovia Swap Agreements
associated with such termination will be included in the definition of Funded
Indebtedness under this Agreement. In the event the Wachovia Swap Agreements
remain in effect on and after the Closing Date and for as long as such Wachovia
Swap Agreements remain in effect, the Seller Representative shall pay to
Purchaser, within 10 days after the end of each calendar quarter following
the
Closing Date, an amount equal to the aggregate amount of the obligations of
the
Company to Wachovia under the Wachovia Swap Agreements for such calendar
quarter, and, to secure Seller Representative’s obligations under this Section
2.2(e), the Seller Representative shall, at the Closing, deposit a portion
of
the Total Purchase Price into an escrow account equal to the estimated liability
of the Company to Wachovia associated with the termination of the Wachovia
Swap
Agreements assuming such termination occurred at the Closing as determined
by
the Purchaser and the Seller Representative after consultation with Wachovia
Bank. Such escrow account shall be held by a bank or other financial institution
mutually acceptable to Purchaser and Seller Representative and shall be held
for
such period and on such terms as Purchaser and Seller Representative may agree
(it being understood that (i) the term of such escrow shall not extend beyond
the termination of the Wachovia Swap Agreements, (ii) Seller Representative
shall be permitted to use a portion of the escrow funds to purchase one or
more
hedging instruments to limit downside risk associated with the Wachovia Swap
Agreements and (iii) Seller Representative shall be entitled to quarterly
payments from such escrow equal to all interest income earned by such escrow
during each quarter). In the event the Company receives payment from Wachovia
on
account of the Wachovia Swap Agreements, the Company shall remit such payment
to
Seller Representative within 10 days upon receipt thereof. At the request of
Seller Representative, Purchaser shall terminate the Wachovia Swap Agreements.
Upon such termination by Purchaser or upon a termination of the Wachovia Swap
Agreements for any other reason after the Closing, Seller Representative shall
pay to Purchaser all obligations of the Company to Wachovia under the Wachovia
Swap Agreements associated with such termination. Purchaser may not
affirmatively elect to terminate the Wachovia SWAP Agreements without the prior
written consent of the Seller Representative, unless Purchaser agrees to bear
all unpaid obligations of the Company to Wachovia under the Wachovia Swap
Agreements associated with such termination.
-13-
ARTICLE
III
CLOSING
The
closing of the transactions contemplated by this Agreement (the “Closing”)
will
take place at the offices of Xxxxx Day, located at 000 Xxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxx 00000, not later than two Business Days following the
satisfaction or, where permitted, waiver of each of the conditions set forth
in
Articles
VIII
and
IX
(save
for those conditions that are to be satisfied on the Closing Date), or on such
other date mutually agreeable to the parties (the “Closing
Date”).
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES RELATING TO THE COMPANY
As
a
material inducement to Purchaser to enter into this Agreement and consummate
the
transactions contemplated hereby, the Company represents and warrants to
Purchaser that:
Section
4.1 Financial
Statements.
(a) Copies
of
the following financial statements are attached hereto as Schedule
4.1(a):
the
audited balance sheet of the Company as of December 31, 2006, and the related
audited statement of operations, shareholders’ equity, and cash flows for the
year then ended, together with the notes thereto (the “Audited
Financial Statements”),
and
the unaudited balance sheet of the Company (the “Most
Recent Balance Sheet”)
as of
December 31, 2007 (the “Balance
Sheet Date”),
and
the related unaudited statements of operations for the 12-month period then
ended (the “Interim
Financial Statements”
and
together with the Audited Financial Statements, the “Financial
Statements”).
-14-
(b) Each
of
the Financial Statements (including in all cases the notes thereto, if any)
has
been prepared from the books and records of the Company, in accordance with
GAAP, except for modifications set forth on Schedule
1,
consistently applied throughout the periods covered thereby, and fairly presents
in all material respects the financial condition, results of operations, and,
in
the case of the Audited Financial Statements, shareholders’ equity, and cash
flows of the Company, as of the dates and for the periods indicated (subject
to
normal year-end adjustments and the absence of footnote disclosures with respect
to the Interim Financial Statement).
(c) The
Company has no liabilities or obligations, whether absolute, accrued, asserted
or unasserted, that are of a type required to be reflected on a balance sheet
prepared in accordance with GAAP (except for the modifications set forth on
Schedule
1)
other
than liabilities or obligations (i) appearing on the Most Recent Balance Sheet,
(ii) incurred in the Ordinary Course of Business after December 31, 2007, (iii)
disclosed on the Seller Disclosure Schedule or incurred in connection with
the
transactions contemplated hereby, or (iv) that would not reasonably be expected
to have a Material Adverse Effect on the Company and Holdings.
Section
4.2 Taxes.
Except as set forth on the Seller Disclosure Schedule:
(a) Each
of
the Company and Holdings has: (i) duly and timely filed, or caused to be filed,
in accordance with applicable Law all Tax Returns, each of which is true,
correct and complete, (ii) duly and timely paid in full, or caused to be paid
in
full, all Taxes due and payable on or prior to the Closing Date, and (iii)
properly accrued in accordance with GAAP on its books and records a provision
for the payment of all Taxes that are due, are claimed to be due, or may or
will
become due with respect to any Tax Periods (or the portion there of) ending
on
or prior to the Closing Date.
(b) Neither
the Company nor Holdings has agreed to any extension or waiver of the statute
of
limitations applicable to any Tax Return, or agreed to any extension of time
with respect to a Tax assessment or deficiency, which extension or waiver has
not yet expired. There is no power of attorney in effect with respect or
relating to any Tax or Tax Return relating to Holdings or the
Company.
(c) Neither
the Company nor Holdings is or has ever been a party to any Tax allocation
or
sharing agreement or arrangement. Neither the Company nor Holdings has ever
filed any Tax Return or determined any Tax, on a consolidated, combined, unitary
or other similar basis (including, but not limited to, a consolidated federal
income Tax return).
(d) There
are
no Liens for unpaid Taxes on any asset of the Company or Holdings, except Liens
for current Taxes not yet due and payable.
(e) Neither
the Company nor Holdings has received any written notice of assessment or
proposed assessment in connection with any Tax Return. There are no audits,
examinations, claims or Actions currently pending, asserted in writing, or
threatened in writing with respect to any Tax or Tax Return.
(f) The
Company has not been a member of an affiliated group of corporations within
the
meaning of Code Section 1504.
(g) The
Company and Holdings have withheld and paid to the appropriate Taxing Authority
all Taxes required to have been withheld and paid in connection with any amounts
paid or owing to any employee or other Person.
-15-
(h) The
Company and Holdings have not requested any extension of time within which
to
file any Tax Return, which Tax Return has not since been filed.
(i) Holdings
is and has always been a partnership for federal income tax purposes and has
not
made any election under Treasury Regulation Sec. 301.7701-3 to be treated as
an
association taxable as a corporation.
(j) The
Company and Holdings have reported any assessment, deficiency, adjustment or
other similar item relating to any Tax or Tax Return to all Taxing Authorities
in accordance with applicable Law.
(k) No
jurisdiction where no Tax Return has been filed for the Company or Holding
or no
Tax has been paid for Holdings or the Company has made or threatened to make
a
claim, with respect to Holdings or the Company, for the payment of any Tax
or
the filing of any Tax Return.
(l) Neither
the Company nor Holdings is a party to any agreement with any Taxing Authority
(including, but not limited to, any closing agreement within the meaning of
Code
Section 7121 or any analogous provision of applicable law). No private letter
or
other ruling or determination from any Taxing Authority relating to the Company
or Holdings has ever been requested or received.
(m) Neither
the Company nor Holdings is or will be required to include any item of income
in, or exclude any item of deduction from, federal taxable income for any Tax
period (or portion thereof) beginning after the Closing Date, as a result of
a
change in method of accounting for a Pre-Closing Period, any installment sale
or
open transaction made on or prior to the Closing Date.
(n) Neither
the Company nor Holdings is or has ever been a beneficiary or otherwise
participated in any reportable transaction within the meaning of Treasury
Regulation Section 1.6011-4(b)(1).
(o) No
“ownership change” (as defined in Code Section 382) has occurred with respect to
the Company with respect to any net operating losses of the
Company.
Section
4.3 Title
to Properties.
(a) Except
as
set forth on the Seller Disclosure Schedule, the Company has good and valid
title to, or a valid leasehold interest or license in, all of the properties
and
assets, tangible or intangible, used in the conduct of its business as presently
conducted or reflected in the Interim Financial Statements or acquired after
the
date thereof, free and clear of all Liens except for Permitted Liens, excluding
properties and assets sold or disposed of by the Company in the Ordinary Course
of Business since the date of the Interim Financial Statements.
(b) None
of
the Members or any Affiliate thereof (other than the Company) own any assets
primarily used in or necessary to conduct the business of the Company.
(c) All
of
the tangible personal property of the Company (including all Rental Equipment
but excluding all Inventory) is, taken as a whole, in good working order and
condition, reasonable wear and tear excepted and is suitable for the use to
which they are being put. All of the leased personal property of the Company
is
in the condition reasonably required of such property by the terms of the lease
applicable thereto during the relevant term of the lease. Except as set forth
on
the Seller Disclosure Schedule, none of such tangible personal property is
in
need of maintenance or repairs, except for routine maintenance and repairs
of
such personal tangible property that arises in the Ordinary Course of
Business.
-16-
(d) The
Seller Disclosure Schedule sets forth a complete list of all cranes and
serialized attachments owned by the Company and rented to customers by the
Company in the Ordinary Course of Business, showing model and serial
numbers.
(e) The
Seller Disclosure Schedule sets forth a complete list of all Rental Equipment
purchases and Rental Equipment sales by the Company since January 1,
2007.
(f) The
property and assets owned and leased by the Company include all material rights,
assets and property necessary for the conduct of the business of the Company
after Closing, substantially in the same manner as it was conducted prior to
the
Closing.
Section
4.4 Real
Property.
(a) The
Seller Disclosure Schedule contains a true and correct list of all real property
and interests in real property owned in fee by the Company (the “Owned
Real Property”).
With
respect to the Owned Real Property:
(i) The
Company has good and marketable title to and a fee interest in the Owned Real
Property free and clear of all Liens, other than Permitted Liens;
(ii) There
are
no outstanding options or rights of first refusal to purchase, acquire, sell,
assign or dispose of the Owned Real Property, or any portion or interest of
the
Owned Real Property and the Company is not a party to any agreement or option
to
purchase any real property or interest therein;
(iii) The
Company has not received written notice of actual or threatened special
assessments or reassessments of the Owned Real Property;
(iv) The
Company has not received notice of any pending condemnation proceeding or
eminent domain proceeding and, to the Company’s Knowledge, there is no such
proceeding threatened against any of the Owned Real Property;
(v) The
Company does not currently lease or otherwise permit any Person other than
the
Company the right to use or occupy such Owned Real Property or any portion
thereof;
(vi) The
Company has not sold, leased, or otherwise encumbered any development rights
and/or air rights related to the Owned Real Property; and
(vii) The
Company has not received, nor does it have Knowledge of, any written notice
or
request from any insurance company or Board of Fire Underwriters (or
organization exercising functions similar thereto) or from any mortgagee
requesting the performance of any improvement or alteration in respect of the
Owned Real Property.
(b) The
Seller Disclosure Schedule contains a true and complete list of the Leased
Property. With respect to the Leased Property:
-17-
(i) True
and
complete copies of each Lease have been delivered to the Purchaser and all
Leases are in writing, duly executed, and is a legal, valid and binding
agreement, enforceable in accordance with its terms, of the Company and, to
the
Knowledge of the Company, of each other Person that is a party thereto, subject
to applicable bankruptcy, insolvency reorganization, moratorium, liquidation,
fraudulent conveyance and similar laws and principles of equity affecting
creditor’s rights and remedies generally, and all such Leases are in full force
and effect and have not been amended, modified or supplemented except as has
been provided to Purchaser;
(ii) There
are
no disputes under any of the Leases in relation to the state of repair of the
premises demised or otherwise. Except as provided in the Seller Disclosure
Schedule, (i) each Lease has not been assigned or encumbered by the Company,
and
(ii) there are no letters or other documents signed by the Company under each
Lease waiving or releasing any of the tenant’s material rights;
(iii) Except
as
set forth on the Seller Disclosure Schedule, consummation of the transactions
contemplated by this Agreement does not require the consent of any other party
to such Lease, will not result in a breach of or default under such Lease,
or
otherwise cause such Lease to cease to be legal, valid, binding, enforceable
and
in full force and effect on identical terms following the Closing;
(iv) The
Company does not currently sublease or otherwise permit any Person other than
the Company the right to use or occupy such Leased Property or any portion
thereof;
(v) There
is
no uncured material default by the Company or, to the Company’s Knowledge, any
other party with regard to a Lease for any of the Leased Property;
and
(vi) The
Company has not received any written notice that any portion of any of the
security deposits under the Leases has been applied or retained by the lessor
or
licensor or sublessor thereunder. The Company has not, in the last five years,
with respect to any Lease, (i) made, asserted or has any defense, set off or
counterclaim or (ii) claimed or is entitled to “free” rent, rent concessions,
rebates or rent abatements. The Company has not exercised any option granted
to
it under any such Lease to (A) cancel or terminate such Lease or lessen the
term
thereof, (B) renew or extend the term thereof or (C) take additional space.
There are no written or oral promises, understandings or commitments between
the
Company and each other Person that is a party to such Lease other than those
contained in such Lease.
(c) With
respect to the Owned Real Properties and the Leased Property (collectively,
the
“Company
Properties”):
(i) There
is no Action pending or, to the Company’s Knowledge, threatened for the taking
or condemnation of all or any portion of the Owned Real Properties, or, to
the
Company’s Knowledge, any Leased Property;
(ii) To
the Company’s Knowledge, there are no outstanding work orders, deficiency
notices, action request notices or other notifications of non-compliance or
contravention of the premises or any part thereof; and
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(iii) There
is no brokerage commission or finder’s fee due from the Company and unpaid with
regard to any of the Company Properties, or which will become due at any time
from the Company in the future with regard to any Company Property pursuant
to
any existing agreement with a broker.
Section
4.5 Compliance
with Laws. The
Company:
(a) except
as
set forth in the Seller Disclosure Schedule, has complied and is, in all
material respects, in compliance with all Laws and Orders relating to or
applicable to its business, the maintenance and operation of its properties
and
assets, or employees conducting its business; and
(b) has
received no written
or, to its Knowledge, oral, notification
or communication from any Governmental Authority, and no claims have been filed
(or, to the Company’s Knowledge, threatened to be filed) by any Governmental
Authority, (i) asserting that the Company is not in compliance with any Law
or
(ii) threatening to revoke any Permit owned or held by the Company, nor, to
the
Company’s Knowledge, is any Action or investigation pending with respect to the
foregoing. No written notice (or, to the Company’s Knowledge, no threat) of
cancellation, of default or of any dispute concerning any Permit, or of any
event, condition or state of facts described in the preceding clause, has been
received by the Company.
Section
4.6 Permits.
The Seller Disclosure Schedule contains a complete list of all material
Permits issued to the Company that are currently used by the Company, which
comprise all of the material Permits which are required for the current conduct
of its business and the lease, ownership and use of its assets. The Company
is,
in all material respects, in compliance with all such Permits, all of which
Permits are in full force and effect, and will be in full force and effect
and
available for use by the Company immediately after the Closing.
Section
4.7 Employee
Benefit Plans.
(a) The
Seller Disclosure Schedule sets forth a correct and complete list of each
“employee benefit plan” (within the meaning of Section 3(3) of ERISA but
excluding any plan that is a “multiemployer plan,” as defined in Section 3(37)
of ERISA (“Multiemployer
Plan”))
and
each other director and employee plan, program, agreement or arrangement,
vacation or sick pay policy, fringe benefit plan, compensation, change of
control, severance or employment plan, arrangement or agreement, stock bonus,
stock purchase, stock option, restricted stock, stock appreciation right or
other equity-based plan, program or arrangement, and bonus or other incentive
compensation or salary continuation plan or policy contributed to, sponsored
or
maintained by or with respect to which the Company has any liability (contingent
or otherwise) as of the date hereof for the benefit of any current, former
or
retired employee, officer, consultant, independent contractor or director of
the
Company (such plans, programs, policies, agreements and arrangements,
collectively, being the “Employee
Plans”).
The
Company has delivered or made available to Purchaser complete and correct copies
of the current plan documents and summary plan descriptions, the most recent
determination letter received from the IRS, the three (3) most recent annual
reports (Form 5500, with all applicable attachments), the three most recent
financial statements and actuarial reports, as applicable, and all current
trust
agreements, insurance contracts, and other funding arrangements that implement
each Employee Plan.
(b) Each
Employee Plan has been maintained, operated, and administered in compliance
with
its terms and any related documents or agreements (including any applicable
collective bargaining agreement) and in compliance with all applicable Laws,
in
each case in all material respects. There are no Actions pending (other than
routine claims for benefits) or, to the Company’s Knowledge, threatened against
such Employee Plan, the Company or against any fiduciary of such Employee
Plan.
-19-
(c) No
event
has occurred and no condition exists that could reasonably be expected to
subject the Company, either directly or, except as would not reasonably be
expected to cause a Material Adverse Effect, by reason of their affiliation
with
any member of their “Controlled Group” (defined as any organization which is a
member of a controlled group of organizations within the meaning of Code
Sections 414(b),(c), (m) or (o)) to any tax, fine, lien, or penalty imposed
by
ERISA, the Code or other applicable laws, rules and regulations. The Company
has
not incurred any liability under Title IV of ERISA, either directly or through
any member of its Controlled Group. There are no audits or proceedings pending
or to the Knowledge of the Company or any member of the Company’s Controlled
Group, threatened by the Internal Revenue Service, the Department of Labor,
or
any similar governmental entity with respect to any Employee Plan. The Company
has acted in good faith and has operated each Employee Plan that is subject
to
Code Section 409A in material compliance with Code Section 409A, and the Company
has no obligation to any Person to provide any “gross-up” or similar payment to
any Person in the event any such Employee Plan fails to comply with Code Section
409A.
(d) There
have been no prohibited transactions or breaches of any of the duties imposed
on
“fiduciaries” (within the meaning of Section 3(21) of ERISA) by ERISA with
respect to the Employee Plans that could result in any material liability or
excise tax under ERISA or the Code being imposed on the Company.
(e) Each
Employee Plan intended to be qualified under Section 401(a) of the Code and
each
trust created thereunder is so qualified and is in receipt of a favorable
opinion letter issued by the IRS to the prototype or volume submitter sponsor
for such Employee Plan, and nothing has occurred since the receipt of such
opinion letter that could reasonably be expected to give the IRS grounds to
revoke such opinion letter.
(f) Except
as
set forth on the Seller Disclosure Schedule, the
Company has no liability with respect to or obligation to contribute to any
Multiemployer Plan and the Company has not incurred any withdrawal liability
with respect to any Multiemployer Plan. No Multiemployer Plan to which the
Company or any member of its Controlled Group contributes is in reorganization
or insolvent (as those terms are defined in ERISA Sections 4241 and
4245.
(g) Except
as
set forth on the Seller Disclosure Schedule with respect to Multiemployer Plans,
neither the Company nor any member of its Controlled Group has any obligation
to
contribute to any “defined benefit plan” as defined in Section 3(35) of ERISA or
any other pension plan subject to the funding requirements of Section 412 of
the
Code or Section 302 of ERISA or subject to Title IV of ERISA.
(h) No
Employee Plan provides benefits, including, without limitation, death or medical
benefits, beyond termination of service or retirement other than (i) coverage
mandated by law, (ii) death or retirement benefits under any Employee Plan
that
is intended to be qualified under Section 401(a) of the Code or (iii) deferred
compensation benefits fully reflected on the books of the Company.
(i) Except
as
set forth on the Seller Disclosure Schedule, the consummation of the transaction
contemplated by this Agreement will not, either alone or in connection with
the
occurrence of any other event, (i) entitle any current or former employee or
officer of the Company to severance pay, retention pay, unemployment
compensation or any other payment, (ii) accelerate the time of payment or
vesting under the Employee Plan, or (iii) increase the amount of compensation
due any such employee or officer.
-20-
(j) Neither
the Company or Holdings is a party to any contract, agreement or other
arrangement that as a result of any transactions contemplated by this Agreement
(whether alone or in connection with any other event) will result or could
result in any amount (including, but not limited to, the Change of Control
Payments) that is not deductible under Code Section 280G or any similar
provision of applicable law.
Section
4.8 Material
Contracts.
(a) Except
as
set forth on the Seller Disclosure Schedule, the Company is not a party to
or
bound by any written or oral:
(i) partnership
or joint venture Contract;
(ii) Contract
limiting the right of the Company to engage in or compete with any Person in
any
business or in any geographical area, or otherwise restricting the Company
from
carrying on its business or activities, as the case may be, in its usual and
customary manner in any jurisdiction, including, without limitation, restricting
the Company from hiring or soliciting any Person;
(iii) management,
consulting, severance or similar Contract, or employment Contract;
(iv) collective
bargaining agreement;
(v) Contract
under which the Company has advanced or loaned any other Person, other than
advances to employees in the Ordinary Course of Business;
(vi) agreement
or indenture relating to borrowed money or other Indebtedness or the mortgaging,
pledging or otherwise placing a Lien on any asset or group of assets of the
Company;
(vii) guaranty,
performance bond or similar agreement, or any Contract of support, surety,
indemnification or assumption or any similar commitment with respect to the
obligations, liabilities (whether accrued, absolute, contingent or otherwise)
or
Indebtedness of any other Person;
(viii) lease
or
agreement under which the Company is lessee of or holds or operates any personal
property owned by any other party, except for any lease of personal property
under which the aggregate annual rental payments do not exceed
$25,000;
(ix) other
than Contracts related to Rental Equipment, lease or agreement under which
the
Company is lessor of or permits any third party to hold or operate any personal
property owned or controlled by the Company and which entitles the Company
to
receive more than $500,000 per annum;
(x) other
than Contracts related to Rental Equipment, Contract or group of related
contracts with the same party or group of affiliated parties the performance
of
which involves consideration in the aggregate in excess of $50,000, other than
purchase and sales orders incurred in the Ordinary Course of
Business;
-21-
(xi) Contract
expressly granting a license or covenant not to xxx under any Intellectual
Property (whether by or to the Company), except for license agreements for
the
off-the-shelf and other software generally commercially available;
(xii) warranty
agreement with respect to its services rendered or its products sold or leased
other than purchase and sales orders incurred in the Ordinary Course of
Business;
(xiii) agreement
under which it has granted any Person any registration rights (including demand
or piggyback registration rights);
(xiv) sales,
distribution, supply or franchise agreement, which involves consideration in
the
aggregate in excess of $25,000;
(xv) other
than Contracts related to Rental Equipment, agreement with a term of more than
six months which is not terminable by the Company upon less than thirty (30)
days’ notice without penalty and involves a consideration in excess of $25,000
annually;
(xvi) settlement,
conciliation or similar agreement with obligations to be satisfied by the
Company after the execution date of this Agreement in excess of the related
accruals on the Balance Sheet related to such Contracts;
(xvii) Contract
regarding voting, transfer or other arrangements related to the Company’s
capital stock or warrants, options or other rights to acquire the Company’s
capital stock;
(xviii) Contracts
to sell
or otherwise dispose of any Rental Equipment other than those set forth on
Schedule 4.3(e);
(xix) any
letters of credit, any currency exchange, commodities or other hedging
arrangement or capitalized leases which will not be satisfied at or prior to
Closing;
(xx) any
Contract that (a) limits or contains restrictions on the ability of the Company
to declare or pay dividends on, or to make any other distribution in respect
of
or to issue or purchase, redeem or otherwise acquire its capital stock, or
to
incur Indebtedness, or to incur or suffer any Lien, to purchase or sell any
of
assets or properties, to change the lines of business in which it participates
or engages or to engage in any Business Combination, or (b) require the Company
to maintain specified financial ratios or levels of net worth or other indicia
of financial condition;
(xxi) Contract
to buy or sell spare parts for the Rental Equipment or other assets outside
the
Ordinary Course of Business; or
(xxii) other
than Contracts related to Rental Equipment, any other Contract that requires
the
Company to make payments equal to, or which entitles the Company to receive,
more than $250,000 per annum. All of the contracts and agreements referred
to in
Section
4.8(a)(i)
through
(xx)
above
are the “Material
Contracts.”
-22-
(b) Except
as
set forth in the Seller Disclosure Schedule, each of (i) the Material Contracts,
and (ii) the Contracts related to Rental Equipment with each of the Major
Customers is in full force and effect and is a legal, valid and binding contract
or agreement of the Company, except as limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating
to
or affecting the enforcement of creditors’ rights, and there is no default or
breach by the Company or, to the Company’s Knowledge, any other party in the
timely performance of any obligation to be performed or paid thereunder or
any
other material provision thereof. Purchaser’s counsel has been supplied with a
true and correct copy of each of the written Material Contracts and an accurate
description of each of the oral Material Contracts, together with all
amendments, waivers or other changes thereto.
Section
4.9 Legal
Proceedings. Except
as
set forth in the Seller Disclosure Schedule, there are no Actions pending or,
to
the Company’s Knowledge, threatened against or affecting the Company or
affecting any property or assets used by the Company, or pending or contemplated
by the Company against any Person, at Law or in equity. The Company is not
subject to any Order.
Section
4.10 Intellectual
Property.
(a) The
Seller Disclosure Schedule sets forth, with the application number and
application date or registration/issue number and registration/issue date,
title
or xxxx, country or other jurisdiction and owner(s), as applicable, a complete
and correct list of each active registration for any patent, trademark or
service xxxx, copyright, Internet domain name, trade name, brand name, logo
or
application for any of the foregoing owned, whether solely or jointly with
another, by the Company, along with all material unregistered trademarks,
service marks and trade names. Any and all renewal and maintenance fees,
annuities or other fees payable to any Governmental Authority to maintain the
such Intellectual Property as active and due before Closing have been paid
in
full. All of the foregoing Intellectual Property is valid, subsisting and
enforceable in accordance with applicable Law.
(b) The
Company has good and valid title to the Company Intellectual Property free
and
clear of all Liens, except Permitted Liens. No Person is expressly licensed
under any of the Company Intellectual Property other than pursuant to a Material
Contract listed on the Seller Disclosure Schedule (and licenses that arise
as a
matter of law by implication as a result of sales of products and services
by
the Company). Except as set forth on the Seller Disclosure Schedule, to the
Company’s Knowledge, none of the Company Intellectual Property is being
infringed, misappropriated or otherwise violated by any Person.
(c) The
Company Intellectual Property is not the subject of any Action, and to the
Company’s Knowledge, no Action is threatened against the Company involving the
Company Intellectual Property, except for office actions by the applicable
Governmental Authorities in the normal course of prosecution efforts to register
the Company Intellectual Property listed on the Seller Disclosure Schedule.
(d) The
Company owns, is licensed or otherwise has the right to use, all Intellectual
Property as is necessary for the operation of the business of the Company as
presently conducted.
(e) Except
as
set forth on the Seller Disclosure Schedule, the Company has not infringed,
misappropriated, violated or made unauthorized use of the Intellectual Property
rights of any other Person, and the Company Intellectual Property does not
infringe, misappropriate, violate or otherwise conflict with any Intellectual
Property right of any other Person. The Company has not received any written
notice within the six-year period prior to the date of this Agreement alleging
any of the foregoing and to the Company’s Knowledge, no such allegation is
threatened to be made by any Person. Notwithstanding any possible interpretation
of any other representation in this Article
IV,
only
this Section
4.10(e)
shall be
construed to be a representation with respect to the Company’s infringement,
misappropriation, violation, or other conflict with the Intellectual Property
right of any other Person.
-23-
Section
4.11 Insurance.
The Seller Disclosure Schedule contains a complete description of all insurance
policies (including “self-insurance”
programs) currently maintained by the Company (the “Insurance
Policies”).
Except
as set forth on the Seller Disclosure Schedule, the Insurance Policies are
in
full force and effect, the Company is not in default in any material respect
under any Insurance Policy, and no claim for coverage under any Insurance Policy
has been denied during the past two (2) years. Except as set forth on the Seller
Disclosure Schedule, the Company has not received any written notice of
cancellation or intent to cancel with respect to the Insurance Policies. Except
as set forth on the Seller Disclosure Schedule, the Company does not have any
self-insurance or co-insurance programs. The Company has notified such insurers
of any claim which could potentially exceed the applicable insurance policy
deductible amount arising since January 1, 2002 known to it which it believes
is
covered by any such insurance policy and has provided Purchaser with a copy
of
such claim. All such claims have been filed on a timely basis with insurers
and
pursued by cooperating with and responding to insurers’ requests for
documentation and/or information. Neither the Company nor any Member is a party
to any Contract of any kind pursuant to which the Company or any Seller receives
payments from an insurer or an insurance producer for purchasing insurance
for
the Company. Except as set forth in the Seller Disclosure Schedule, there are
no
pending claims under insurance covering the Company for which the Company is
or
may be obligated to pay a deductible.
Section
4.12 Labor
and Employment Matters.
The Company has provided Purchaser with a schedule that contains a complete
and
correct list of all employees of the Company whose annual compensation is
greater than $75,000, together with the employees’ titles, current wages,
salaries, hourly or daily rate of pay, bonus entitlement, date of hire, and
primary work location. Except as set forth on the Seller Disclosure Schedule,
(i) none of the employees of the Company is represented by a labor union or
organization, no labor union or organization is certified or recognized as
a
representative of any such employee and the Company is not a party to or bound
by any collective bargaining agreement or other labor Contract; (ii) no labor
organization or group of employees has filed any representation petition or
made
any written demand to the Company for recognition; (iii) no organizing or
decertification efforts are underway, or to the Company’s Knowledge, threatened
by any labor organization or group of employees with respect to the Company’s
employees, and no such activities have occurred since January 1, 2004; (iv)
no
labor strike, work stoppage, slowdown or other material labor dispute has
occurred since January 1, 2004, and none is underway or, to the Company’s
Knowledge, threatened; (v) there is no employment-related Action (including,
without limitation any Action with respect to discrimination, harassment, wage
payment, overtime and hours of work, workplace safety or any other
employment-related issues) currently pending or, to the Company’s Knowledge,
threatened, in any forum, relating to an alleged violation or breach by the
Company (or any of its officers or directors) of any Law or Contract, (vi)
there
are no pending investigations or abatement orders and no citations issued within
the past 3 years by the Occupational Safety and Health Administration or any
other Governmental Authority relating to the Company, (vii) except for amounts
outstanding in accordance with normal payroll practices, the Company has paid
in
full to all Employees, or accrued on its books, all wages, salaries,
commissions, bonuses, benefits and other compensation due to such employees
or
otherwise arising under any policy, practice, agreement, plan, program, statute
or other applicable Law; (xiii) the Company is not closing, and since January
1,
2004 has not closed, any Facility, effectuated any layoffs of employees or
implemented any early retirement, separation or window program affecting
Employees, nor has the Company planned or announced any such action or program
for the future; and (ix) the Company is in compliance with its obligations
pursuant to WARN, and all other notification obligations arising under Law.
Other than the Change of Control Payments, since December 31, 2006 the
Company has not made or granted any bonus or any wage or salary increase to
any
employee or group of employees other than bonuses or increases made in the
Ordinary Course of Business (except to any such employee whose annual salary
is
less than $50,000 or as required by pre-existing contracts described on
Schedule
4.8),
or
made or granted any increase in any Employee Plan or amended or terminated
any
Employee Plan or adopted any new Employee Plan or arrangement or entered into,
amended or terminated any collective bargaining agreement or other employment
agreement.
-24-
Section
4.13 Environmental
Matters.
Except as set forth on the Seller Disclosure Schedule:
(a) The
Company is, and for the past five years has been, in material compliance with
all Environmental Laws applicable to its business operations or to its use
of
Facilities;
(b) There
are
no Environmental Conditions present at, on, or under, any Facility as a result
of activities of the Company or any of their employees or agents, or as a result
of activities of any other Person for which the Company is legally responsible
for, in each case in amounts exceeding the levels permitted by applicable
Environmental Law and under circumstances that would reasonably be expected
to
result in liability under or relating to Environmental Law. Except as set forth
on the Seller Disclosure Schedule, (i) no underground storage tanks owned or
operated by the Company are or have been located at any Facility or any
currently or formerly Owned Property or Leased Property and any underground
storage tanks identified on the Seller Disclosure Schedule are and have been
maintained, monitored and upgraded in compliance with all Environmental Laws
and
(ii) the Company possesses and has possessed all required permits, licenses,
certifications and approvals required under Environmental Laws relating to
the
Facilities;
(c) The
Company has not disposed of, arranged for the disposal of, released, threatened
to release, or transported any Hazardous Substances in violation of any
applicable Environmental Law or in a manner that would reasonably be expected
to
result in liability to the Company under or relating to Environmental
Law;
(d) The
Company has not been charged with or convicted of an offense for non-compliance
with any Environmental Laws;
(e) The
Company has not specifically contractually assumed any liability or obligation
under or relating to Environmental Laws or Hazardous Substances;
(f) The
Company has not (i) received any written notice, demand letter, complaint,
claim, suit or order alleging or relating to any violation or liability under
any Environmental Law; or (ii) been subject to or, to the Company’s Knowledge,
threatened with, any Action by any Governmental Authority or any other Person
(including, without limitation, the current or prior owner or operator of any
of
the Facilities, Owned Properties or Leased Properties) with respect to any
Environmental Law; and
(g) The
Company has provided to Purchaser copies of all environmental site assessment
reports, compliance audits, and other material environmental documents which
are
in its possession related to its Owned Real Property, Leased Property, and
business operations.
(h) No
representations or warranties in this Agreement other than in this Section
4.13
will be
deemed to relate to Environmental Laws, Hazardous Substances, or other
environmental matters.
Section
4.14 Conduct
of Business in Ordinary Course.
Except for the transactions contemplated hereby or as set forth on the Seller
Disclosure Schedule, since the Balance Sheet Date (a) the Company has conducted
its business and operations in the Ordinary Course of Business including the
management, sale and purchase of the Company’s inventory including spare parts,
and (b) no fact, event, circumstance (either individually or taken together)
has
occurred which has had or would reasonably be expected to have a Material
Adverse Effect on the Company. Without limiting the generality of the foregoing,
except as set forth on the Seller Disclosure Schedule, since the Balance Sheet
Date with respect to the Company, there has not been any:
-25-
(a) incurrence
of any Indebtedness or issuance of any long-term debt securities or assumption,
guarantee, or endorsement of the obligations of any Person, except for
Indebtedness incurred in the Ordinary Course of Business under the lines of
credit as in effect on the date hereof, or making of any Indebtedness or advance
to any Person (other than business-related advances to employees in the ordinary
course of business, consistent with past practice and in an amount not in excess
of $5,000 per employee or $25,000 in the aggregate);
(b) (i)
acquisition, sale, license, abandonment, failure to maintain or otherwise
disposition of, any material property or assets (other than Rental Equipment),
tangible or intangible (other than in the Ordinary Course of Business), (ii)
mortgage or encumbrance of any property or assets, other than Permitted Liens,
or (iii) cancellation of any Indebtedness owed to or claims held by the
Company (other than in the Ordinary Course of Business);
(c) change
in any method of accounting applied in the preparation of the Financial
Statements, other than a change which is required by reason of a concurrent
change in Law or GAAP;
(d) settlement
or compromise of any Action if the amount of such settlement will not be paid
in
full prior to the Closing or which settlement or compromise would reasonably
be
expected to have a continuing adverse impact on the business of the Company
after the Closing;
(e) Tax
election or change in a Tax election or the filing for any change of any method
of accounting with any relevant Taxing Authority, except as required by any
change in Law;
(f) (A)
except as required by Law or by any Employee Plans, or existing contractual
arrangements as in effect on the Balance Sheet Date, adoption of or amendment
to
any Employee Plan or other plan, program or arrangement for the benefit of
its
employees, consultants or directors, or (B) grant of any material increase
(other than increases required under any Contract entered into before the
Balance Sheet Date and annual or periodic increases in the ordinary course
of
business, consistent with past practice) in the compensation of its employees,
officers or directors (including any such increase pursuant to any bonus, profit
sharing or other compensation or incentive plan, program or
commitment);
(g) material
change, termination or modification in any Material Contract;
(h) transfer,
issuance or sale of any equity securities or rights to purchase any equity
securities, or any security convertible into or exchangeable for equity
securities, of Holdings or the Company or split, combination or subdivision
of
the capital stock or other equity securities of Holdings or the Company; or
-26-
(i) declaration,
distribution or the setting aside for distribution of any property (excluding
cash), or directly or indirectly, the redemption, purchase or other acquisition
of any shares of capital stock;
(j) any
extraordinary loss, damage or destruction, whether or not covered by
insurance;
(k) write
off as uncollectible, any Accounts Receivable or any portion thereof in amounts
exceeding $25,000 in each instance, or $100,000 in the aggregate;
(l) making
of any forward purchase commitment in excess of the requirements of the Company
for normal operating purposes or at prices higher than the current market
prices; or
(m) agreement,
whether in writing or otherwise, to take any action described in this
Section
4.14.
Section
4.15 No
Brokers.
Except for Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Capital, Inc., no broker, finder or
similar agent has been employed by or on behalf of the Company, and no Person
with which the Company has had any dealings or communications of any kind,
is or
will be entitled to any brokerage commission, finder’s fee or any similar
compensation in connection with, either directly or indirectly, this Agreement
or the transactions contemplated hereby.
Section
4.16 Customers
and Suppliers,
(a) The
Seller Disclosure Schedule contains a complete list of the fifteen (15) largest
customers of the Company (on a consolidated basis) (by volume of sales to such
customers) for each of the two (2) most recent fiscal years (“Major
Customers”).
Except
as set forth on the Seller Disclosure Schedule, since December 31, 2006, none
of
the Major Customers has notified the Company, orally or in writing, that such
Major Customer intends to decrease materially or terminate its relationship
with
the Company.
(b) Since
December 31, 2006, none of the Company’s material suppliers has terminated, or
threatened, orally or in writing, to terminate, its relationship with the
Company.
(c) The
Company has not received any written notice regarding the insolvency of any
of
the Major Customers.
Section
4.17 Organization
and Standing; Capital Structure,
(a) The
Company is duly organized, validly existing and in good standing under the
laws
of the State of Delaware. The Company is an entity duly qualified to do
business, and is in good standing, in each jurisdiction listed in the Seller
Disclosure Schedule, which jurisdictions constitute all of the jurisdictions
in
which the character of the properties owned or leased by it or in which the
conduct of its business requires it to be so qualified, except where failure
to
be so qualified or in good standing would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Company has the
corporate power and authority to own, use or lease and operate its properties
and assets and to carry on its business in the manner that it was conducted
immediately prior to the date of this Agreement. The copies of the Company’s
articles or incorporation and by-laws which have been furnished to Purchaser
reflect all amendments made thereto at any time prior to the date of this
Agreement and are correct and complete. The minute books (containing the records
of meeting of the stockholders, the board of directors), the stock certificate
books and the stock records books of the Company furnished to Purchaser are
correct and complete in all material respects. The Company is not in default
under, or in violation of, any provision of its articles of incorporation or
by-laws.
-27-
(b) The
entire authorized capital stock of the Company consists of one hundred (100)
shares of common stock, par value $0.01 per share, of which one hundred (100)
shares are issued and outstanding. Holdings is the record owner of, and has
good
and marketable title to, all of such outstanding shares of common stock, free
and clear of all Liens. All of the issued and outstanding shares of the
Company’s capital stock have been duly authorized, are validly issued, fully
paid, and nonassessable and are not subject to, nor were they issued in
violation of, any preemptive rights or rights of first refusal. The Company
has
no outstanding stock or securities convertible or exchangeable for any shares
of
its capital stock or containing any profit participation features, nor any
rights or options to subscribe for or to purchase its capital stock or any
stock
or securities convertible into or exchangeable for its capital stock or any
stock appreciation rights or phantom stock plan. The Company is not subject
to
any option or obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital stock or any warrants, options
or
other rights to acquire its capital stock. The Company has not violated any
federal or state securities laws in connection with the offer, sale or issuance
of its capital stock. There are no agreements with the Members, Holdings or
the
Company with respect to the voting or transfer of the either of the Company’s
capital stock or with respect to any other aspect of the Company’s
affairs.
(c) This
Agreement, and the other transaction documents contemplated hereby, has been
(or
will be) duly executed and delivered by the Company pursuant to all necessary
authorization and is (or will be) the legal, valid and binding obligation of
the
Company, enforceable against the Company in accordance with their respective
terms, except as limited by bankruptcy, insolvency, reorganization, moratorium
and similar laws of general application relating to or affecting the enforcement
of creditors’ rights.
Section
4.18 No
Conflict; Required Filings and Consents.
(a) Neither
the execution and delivery of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated herein, nor
compliance by the Company with any of the provisions hereof, will (i) conflict
with or result in a breach of any provisions of the certificate of
incorporation, bylaws or similar organizational document of the Company, if
applicable, or (ii) violate any Order or Law applicable to the Company or any
of
its properties or assets.
(b) The
execution and delivery of this Agreement by the Company does not, and the
performance of this Agreement by the Company will not, require any consent,
approval or authorization of, or filing with or notification to, any
Governmental Authority or any other Person.
(c) Neither
the execution and delivery of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated herein, nor
compliance by the Company with any of the provisions hereof, will, except as
set
forth on Schedule
4.18
and
except for the HSR Approval, conflict with, constitute or result in the breach
of any term, condition or provision of, or constitute a default under, or give
rise to any right of termination, cancellation or acceleration with respect
to,
create in any party the right to accelerate, terminate, modify or cancel or
require any notice under any agreement, Contract, lease, license, instrument
or
other arrangement to which the Company is a party or by which the properties
or
assets of the Company are bound.
-28-
Section
4.19 Accounts
Receivable.
All Accounts
Receivable of the Company reflected in the Financial Statements and all Accounts
Receivable that have arisen since December 31, 2006 (except Accounts Receivable
that have been collected since such date) are valid and enforceable claims
and
constitute bona fide Accounts Receivable resulting from the sale of goods and
services in the Ordinary Course of Business. In the case of Accounts Receivable
arising from Rental Equipment sales, such Accounts Receivable are fully
collectable within 60 days of invoice. The Company has not received any written
notice from third parties regarding claims asserting a valid defense, offsets,
returns, allowances or credits of any kind related to the Accounts Receivable,
except returns or credits which are in the Ordinary Course of
Business.
Section
4.20 Affiliate
Transactions.
Except as disclosed on the Seller Disclosure Schedule, no Member or any
director, officer or Affiliate of the Company or a Member (or any family member
of (i) any Member who is an individual or (ii) any director or officer of the
Company or a Member) is a party to any transaction with the Company, including
any Contract or arrangement providing for the furnishing of services (other
than
in their capacity as officer or director) to or by, providing for rental of
real
property or other assets or rights or privileges to or from, or otherwise
requiring payments to or from the Company or any Affiliate thereof.
Section
4.21 Inventory.
The Company has good and marketable title to the Inventory free and clear of
all
Liens, other than Permitted Liens. The Inventory is, in the aggregate, in good
condition, is suitable and usable for the purposes for which it is intended,
and
in a quantity and of a type consistent with the historical purchase and use
of
spare parts for the Company’s repair and maintenance operations.
Section
4.22 Subsidiaries.
The Company does not have any subsidiaries, and does not directly or indirectly,
own any capital stock of or other equity interests in any Person.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF HOLDINGS
As
a
material inducement to Purchaser to enter into this Agreement and consummate
the
transactions contemplated hereby each of the Members represent and warrant
to
Purchaser that:
Section
5.1 Organization
and Standing; Authorization.
(a) Holdings
is duly organized, validly existing and in good standing under the laws of
the
jurisdiction in which it was organized. Holdings is an entity duly qualified
to
do business, and is in good standing, in each jurisdiction listed in the Seller
Disclosure Schedules, which jurisdictions constitute all of the jurisdictions
in
which the character of the properties owned or leased by it or in which the
conduct of its business requires it to be so qualified, except where the failure
to be so qualified or to be in good standing would not, individually or in
the
aggregate, reasonably be expected to have a Material Adverse Effect on Holdings.
Holdings has the limited liability company power and authority to own, use
or
lease and operate its properties and assets and to carry on its business in
the
manner that is was conducted immediately prior to the date of this
Agreement.
(b) This
Agreement has been duly executed and delivered by each Member and Holdings
pursuant to all necessary authorization and is the legal, valid and binding
obligation of each Member and Holdings, enforceable against such Member and
Holdings in accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws of general application
relating to or affecting the enforcement of creditors’ rights.
-29-
(c) Holdings
is a holding company that does not have (nor has it ever had) any assets,
operations or business other than as the sole shareholder of the Company, and
does not have (nor has it ever had) any Indebtedness, liabilities or obligations
of any kind, whether absolute, accrued, asserted or unasserted. Holdings has
no
employees and is not a party to any Contracts of any nature.
Section
5.2 Capitalization
and Title,
(a) All
of
the outstanding Interests of Holdings are owned by the Members in the amounts
listed on Schedule 1-A. All of the Interests have been duly authorized and
validly issued and are fully paid and nonassessable and are not subject to,
nor
were they issued in violation of, any preemptive rights or rights of first
refusal. Except as set forth on the Seller Disclosure Schedule, Holdings has
no
outstanding membership interests, units or securities convertible or
exchangeable for any Interests or containing any profit participation features,
nor any rights or options to subscribe for or to purchase its Interests or
any
securities convertible into or exchangeable for its Interests or any equity
appreciation rights or phantom equity plan. Except as set forth on the Seller
Disclosure Schedule, Holdings is not subject to any option or obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
Interests or any warrants, options or other rights to acquire its Interests.
Holdings has not violated any federal or state securities laws in connection
with the offer, sale or issuance of its Interests. Except as set forth on the
Seller Disclosure Schedule, there are no agreements with the Members, Holdings
or the Company with respect to the voting or transfer of the either of the
Holdings’ Interests or with respect to any other aspect of Holdings’
affairs.
(b) The
Members (i) are the record and beneficial owners of the Interests; (ii) have
full power, right and authority, and any approval required by Law, to make
and
enter into this Agreement and to sell, assign, transfer and deliver the
Interests to the Purchaser; and (iii) have good and valid title to the
Interests, free and clear of all Liens. Upon the consummation of the
transactions contemplated by this Agreement in accordance with the terms hereof,
at the Closing, the Purchaser will acquire good and valid title to the
Interests, free and clear of all Liens, other than created at the Closing by
the
Purchaser in connection with any financing it receives in connection with the
transactions contemplated herein.
Section
5.3 No
Conflict; Required Filings and Consents.
(a) Neither
the execution and delivery of this Agreement by each of the Members and
Holdings, nor the consummation by each of the Members and Holdings of the
transactions contemplated herein, nor compliance by each of the Members and
Holdings with any of the provisions hereof, will (i) conflict with or result
in
a breach of any provisions of the certificate of formation, operating agreement
or similar organizational document of each of the Members and Holdings, if
applicable, or (ii) violate any Order or Law applicable to each of the Members
and Holdings or any of their properties or assets.
(b) The
execution and delivery of this Agreement by each of the Members and Holdings
does not, and the performance of this Agreement by each of the Members and
Holdings will not, require any consent, approval or authorization of, or filing
with or notification to, any Governmental Authority.
(c) Neither
the execution and delivery of this Agreement by each of the Members and
Holdings, nor the consummation by each of the Members and Holdings of the
transactions contemplated herein, nor compliance by each of the Members with
any
of the provisions hereof, will, except as set forth on the Seller Disclosure
Schedule and except for the HSR Approval, conflict with, constitute or result
in
the breach of any term, condition or provision of, or constitute a default
under, or give rise to any right of termination, cancellation or acceleration
with respect to, create in any party the right to accelerate, terminate, modify
or cancel or require any notice or consent under any Contract to which any
of
the Members or Holdings are a party or by which the properties or assets of
Holdings are bound.
-30-
Section
5.4 No
Brokers.
Except
for Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Capital, Inc., no broker, finder or
similar agent has been employed by or on behalf of Holdings or any of the
Members, and no Person with which Holdings or any of the Members have had any
dealings or communications of any kind, is or will be entitled to any brokerage
commission, finder’s fee or any similar compensation in connection with, either
directly or indirectly, this Agreement or the transactions contemplated
hereby.
Section
5.5 Legal
Proceedings.
There
are no Actions pending or, to the Knowledge of each Member, threatened against
such Member or Holdings that, if adversely decided, would adversely affect
such
Member’s or Holdings’ performance under this Agreement or the consummation of
the transactions contemplated hereby.
Section
5.6 Certificate
of Organization and Limited Liability Company Agreement.
The
Members have heretofore delivered to the Purchaser a complete and correct copy
of the certificate of organization and the limited liability company agreement
of Holdings, each as amended to date. Holdings’ certificate of organization and
limited liability company agreement are in full force and effect. Holdings
is
not in violation of any of the provisions of its certificate of organization
and
limited liability company agreement or other organizational document. The minute
books (containing the records of meeting of the unitholders, the board of
managers), the unit certificate books and the unit records books of Holdings
furnished to Purchaser are correct and complete in all material
respects.
ARTICLE
VI
REPRESENTATIONS
AND WARRANTIES RELATING TO THE PURCHASER
As
a
material inducement to the Members to enter into this Agreement and consummate
the transactions contemplated hereby, Purchaser represents and warrants to
the
Members that:
Section
6.1 Organization
and Standing.
The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of Delaware. The Purchaser is duly qualified to do business
and
in good standing in each jurisdiction in which the character of the properties
owned or leased by it or in which the conduct of its business requires it to
be
so qualified, except where the failure to be so qualified or to be in good
standing would not have a Material Adverse Effect on the Purchaser.
Section
6.2 Authorization,
Validity and Effect.
The
Purchaser has the requisite corporate power and authority to execute and deliver
this Agreement and all agreements and documents contemplated hereby to be
executed and delivered by it, and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and such other
agreements and documents and the consummation of the transactions contemplated
herein and therein, have been duly and validly authorized by all necessary
corporate action on the part of the Purchaser. This Agreement has been duly
and
validly executed and delivered by the Purchaser and constitutes the legal,
valid
and binding obligation of the Purchaser, enforceable against the Purchaser
in
accordance with its terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating
to
or affecting the enforcement of creditors’ rights.
-31-
Section
6.3 No
Conflict; Required Filings and Consents.
(a) Neither
the execution and delivery of this Agreement by the Purchaser, nor the
consummation by the Purchaser of the transactions contemplated herein, nor
compliance by the Purchaser with any of the provisions hereof, will, except
for
the HSR Approval and subject to obtaining Shareholder Approval, (i) conflict
with or result in a breach of any provisions of the certificate of incorporation
or by-laws of the Purchaser, (ii) constitute or result in the breach of any
term, condition or provision of, or constitute a default under, or give rise
to
any right of termination, cancellation or acceleration with respect to, or
result in the creation or imposition of any Lien upon, any property or assets
of
the Purchaser or, pursuant to any note, bond, mortgage, indenture, license,
agreement, lease or other instrument or obligation to which it is a party or
by
which it or any of its properties or assets may be subject, and that would,
in
any such event, have a Material Adverse Effect on the Purchaser, or (iii)
violate any Order or Law applicable to the Purchaser or any of its properties
or
assets.
(b) The
execution and delivery of this Agreement by the Purchaser does not, and the
performance of this Agreement by the Purchaser will not, except for the HSR
Approval and filings required under the Securities Act, the Exchange Act, Blue
Sky Laws, and the rules and regulations thereunder, require any consent,
approval or authorization of, or filing with or notification to, any
Governmental Authority.
Section
6.4 No
Brokers.
Except
for Macquarie Capital (USA) Inc., no broker, finder or similar agent has been
employed by or on behalf of the Purchaser, and no Person with which the
Purchaser has had any dealings or communications of any kind is entitled to
any
brokerage commission, finder’s fee or any similar compensation in connection
with this Agreement or the transactions contemplated hereby.
Section
6.5 Legal
Proceedings.
There
are no Actions pending or, to the knowledge of the Purchaser, threatened against
the Purchaser that, if adversely decided, would adversely affect the Purchaser’s
performance under this Agreement or the consummation of the transactions
contemplated hereby.
Section
6.6 Financing.
As of
the date hereof, the Purchaser has invested in a trust account administered
by
Continental Stock Transfer & Trust Company not less than $100,000,000 which,
immediately prior to the Closing, will be available to the Purchaser for payment
of the Total Purchase Price and Purchaser’s transaction expenses and working
capital. Attached as Exhibit
I
is a
true, correct, and complete copy of the New Credit Agreement pursuant to which
the lenders identified therein have agreed to make available to the Company
loan
commitments totaling $170,000,000 on the terms and subject to the conditions
set
forth therein.
Section
6.7 No
Reliance.
The
consummation of the transactions contemplated hereunder by Purchaser is not
done
in reliance upon any warranty or representation by, or information from, the
Members, Holdings, the Company or the Seller Representative of any sort, oral
or
written, except the warranties and representations specifically set forth in
this Agreement and in any certificate or agreement required to be delivered
hereunder. Such transactions are instead done entirely on the basis of
Purchaser’s own investigation, analysis, judgment and assessment of the present
and potential value and earning power of the Company as well as those
representations and warranties specifically set forth in this Agreement and
in
any certificate or agreement required to be delivered hereunder.
-32-
ARTICLE
VII
COVENANTS
AND AGREEMENTS
Section
7.1 Interim
Operations of the Company.
Prior
to the Closing Date or the earlier termination of this Agreement, except as
set
forth on Schedule
7.1
or as
expressly contemplated by this Agreement, unless Purchaser has previously
consented in writing thereto, neither Holdings nor the Company
shall:
(a) incur
any
Indebtedness or issue any long-term debt securities or assume, guarantee or
endorse such obligations of any other Person, except for (i) Indebtedness
incurred in the Ordinary Course of Business under the lines of credit as in
effect on the date hereof and (ii) Indebtedness of not more than $20,000,000
incurred under the lines of credit as in effect on the date hereof solely for
the purpose of payment of a cash dividend in like amount from the Company to
Holdings and from Holdings to the Members (the “Recapitalization”),
or
make any loan or advance to any Person (other than business-related advances
to
employees in the Ordinary Course of Business and in an amount not in excess
of
$5,000 per employee or $25,000 in the aggregate);
(b) (i)
acquire, sell, license, abandon, fail to maintain or otherwise dispose of,
any
material property or assets (other than Rental Equipment), tangible or
intangible (other than in the Ordinary Course of Business), (ii) mortgage or
encumber any property or assets, other than Permitted Liens, or
(iii) cancel any Indebtedness owed to or claims held by the Company (other
than in the Ordinary Course of Business);
(c) engage
in
any transactions with, or enter into any Contracts with, any Affiliates of
the
Company or any Member, or any of their members, officers or directors, except
pursuant to a Contract in effect on the date hereof and disclosed pursuant
to
Section
4.20;
(d) make
any
material change to its accounting (including Tax accounting) methods, principles
or practices, except as may be required by GAAP;
(e) make
any
amendment to its certificate of incorporation or bylaws (or equivalent
organizational documents);
(f) declare,
distribute or set aside for distribution of any property (excluding cash),
or
directly or indirectly, redeem, purchase or otherwise acquire of any shares
of
capital stock;
(g) repurchase
any equity securities, or, other than in connection with the Recapitalization,
effect any recapitalization, reclassification or like change in the
capitalization of Holdings or the Company;
(h) except
as required by Law or by any Employee Plans, or existing contractual
arrangements as in effect on the Balance Sheet Date, adopt or amend any Employee
Plan or other plan, program or arrangement for the benefit of its employees,
consultants or directors, or (B) grant any material increase (other than
increases required under any Contract entered into before the Balance Sheet
Date
and annual or periodic increases in the Ordinary Course of Business, consistent
with past practice) in the compensation of its employees, officers or directors
(including any such increase pursuant to any bonus, profit sharing or other
compensation or incentive plan, program or commitment);
-33-
(i) enter
into, amend or terminate any labor or collective bargaining Contract of the
Company, or otherwise make any commitment or incur any liability to any labor
organizations;
(j) enter
into or agree to enter into any merger or consolidation with any Person, or
acquire the equity securities or all or substantially all of the assets of,
or
otherwise make any investment in, any other Person;
(k) enter
into, terminate or modify any Material Contract, other than in the Ordinary
Course of Business;
(l) make
any
forward purchase commitment in excess of the requirements of the Company for
normal operating purposes or at prices higher than the current market
prices;
(m) settle
or
compromise any Action if the amount of such settlement will not be paid in
full
prior to the Closing or which settlement or compromise would reasonably be
expected to have a continuing adverse impact on the business of the Company
after the Closing;
(n) make
any
Tax election or change in a Tax election or the filing for any change of any
method of accounting with any relevant Taxing Authority, except as required
by
any change in Law;
(o) implement
any layoff of employees that would implicate the WARN Act;
(p) transfer,
issue or sell any equity securities or rights to purchase any equity securities
of Holdings or the Company or split, combine or subdivide the capital stock
or
other equity securities of Holdings or the Company; or
(q) agree,
whether in writing or otherwise, to take any action described in this
Section
7.1.
Section
7.2 Interim
Affirmative Covenants of the Company.
Prior
to the Closing Date or the earlier termination of this Agreement, except as
expressly contemplated by this Agreement, unless Purchaser has previously
consented in writing thereto, each of Holdings and the Company shall (a) operate
its business in the Ordinary Course of Business consistent with past practices;
(b) use commercially reasonable efforts to preserve substantially intact its
business organization, maintain its rights and franchises, retain the services
of its respective principal officers and key employees and maintain its
relationship with its respective principal customers, suppliers and independent
contractors; (c) use its commercially reasonable efforts to maintain and keep
its properties and assets in as good repair and condition as at present,
ordinary wear and tear excepted, and (d) keep in full force and effect insurance
comparable in amount and scope of coverage to that currently maintained by
it.
Section
7.3 Reasonable
Access; Confidentiality.
(a) From
the
date hereof until the Closing Date or the earlier termination of this Agreement,
and subject to applicable Law, Holdings and the Company shall give the Purchaser
and its representatives, upon reasonable notice to the Company, reasonable
access, during normal business hours, to the customers, suppliers, assets,
properties, books, records, agreements and employees of the Company and permit
Purchaser to make such inspections and copies as it may reasonably require
and
to furnish Purchaser during such period with all such information relating
to
the Company as Purchaser may from time to time reasonably request.
-34-
(b) Prior
to
the Closing, any information provided to or obtained by Purchaser pursuant
to
paragraph (a) above will be subject to the Confidentiality Agreement, and must
be held by Purchaser in accordance with and be subject to the terms of the
Confidentiality Agreement.
(c) Prior
to
the Closing, Purchaser agrees to be bound by and comply with the provisions
set
forth in the Confidentiality Agreement as if such provisions were set forth
herein, and such provisions are hereby incorporated herein by
reference.
Section
7.4 HSR.
Holdings and Purchaser shall, as promptly as practicable, but in no event later
than five Business Days following the execution and delivery of this Agreement,
submit all filings required of each of them by the HSR Act (the “HSR
Filing”)
to the
United States Department of Justice, as appropriate and thereafter provide
any
supplemental information requested in connection therewith pursuant to the
HSR
Act and make any similar filing within, to the extent reasonably practicable,
a
similar time frame with any other Governmental Authority for which such filing
is required. Any such notification and report form and supplemental information
will be in substantial compliance with the requirements of the HSR Act or other
applicable antitrust regulation. Holdings and Purchaser shall furnish to the
other such reasonably necessary information and reasonable assistance as the
other may request in connection with its preparation of any filing or submission
which is necessary under the HSR Act or other applicable antitrust regulation.
Holdings and Purchaser shall request early termination of the applicable waiting
period under the HSR Act and any other applicable antitrust regulation. Each
of
Holdings and Purchaser will promptly inform the other party of any material
communication received by such party from any Governmental Authority in respect
of the HSR Filing. Each of the parties will (a) use its respective commercially
reasonable efforts to comply as expeditiously as possible with all requests
of
any Governmental Authority for additional information and documents, including
information or documents requested under the HSR Act or other applicable
antitrust regulation; and (b) not (i) extend any waiting period under the HSR
Act or any applicable antitrust regulation or (ii) enter into any agreement
with
any Governmental Authority not to consummate the transactions contemplated
by
this Agreement, except, in each case, with the prior consent of the other
parties. Subject to Section
2.2(c),
all
filing fees payable in connection with the HSR Filing or under any other
applicable antitrust regulation shall be borne by the Purchaser.
Section
7.5 Records.
With
respect to the financial books and records and minute books of Holdings and
the
Company relating to matters on or prior to the Closing Date from and after
the
Closing and for a period of five (5) years after the Closing Date, the Company
(a) shall not cause or permit their destruction or disposal without first
offering to surrender them to the Seller Representative, and (b) where there
is
a legitimate purpose, including an audit of a Member by the IRS or any other
Taxing Authority, shall allow the Seller Representative reasonable access to
such books and records during regular business hours.
Section
7.6 Responsibility
to Update Disclosure.
From
the date hereof through the Closing Date or the earlier termination of this
Agreement, each party shall promptly give written notice to the other parties
of
any event, condition or circumstances occurring from the date hereof through
the
Closing Date, which would cause any representation or warranty of the notifying
party contained herein to become misleading, inaccurate or false or which would
constitute a violation or breach of this Agreement or cause any Closing
condition not to be satisfied (a “Supplemental
Disclosure”).
Provided that all Supplemental Disclosures by the Company, Holdings and/or
the
Members, in the aggregate, have not had, and would not reasonably be expected
to
have, a Material Adverse Effect on the Company and Holdings any Supplemental
Disclosure will be deemed accepted by Purchaser for all purposes under the
Agreement, and Purchaser will not be permitted to terminate this Agreement
as a
result thereof. Any Supplemental Disclosure (individually or in the aggregate)
that has had, or would be reasonably expected to have, a Material Adverse Effect
on the Company and Holdings will not be deemed accepted by Purchaser, and
Purchaser will be permitted to terminate this Agreement pursuant to Section
10.1(e).
-35-
Section
7.7 Commercially
Reasonable Efforts; Cooperation.
Upon
the terms and subject to the conditions set forth in this Agreement, each of
the
parties agrees to use commercially reasonable efforts to take, or cause to
be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable
to
consummate and make effective, in the most expeditious manner practicable,
the
transactions contemplated by and the purposes of this Agreement and to obtain
satisfaction or waiver of the conditions precedent to the consummation of the
transactions contemplated hereby, including (a) obtaining all of the necessary
actions or nonactions, waivers, consents and approvals from Governmental
Authorities and the making of all filings and the taking of all steps as may
be
reasonably necessary to obtain an approval or waiver from, or to avoid an Action
or proceeding by, any Governmental Authority, (b) obtaining the necessary
Consents from third parties and giving all required notices to third parties,
and (c) the execution and delivery of any additional instruments necessary
to
consummate the transactions contemplated by, and to fully carry out the purposes
of, this Agreement.
Section
7.8 Proxy
Statement; Special Meeting.
(a) As
soon
as is reasonably practicable after the date of this Agreement, the Purchaser
shall prepare and file with the Securities and Exchange Commission (“Commission”)
under
the Exchange Act proxy materials for the purpose of soliciting proxies from
holders of Purchaser Stock to vote in favor of (i) the approval of the
transactions contemplated by this Agreement (the “Purchaser
Stockholder Approval”),
(ii)
the change of the name of the Purchaser to a name selected by the Purchaser,
(iii) an amendment to remove the preamble and sections A through D, inclusive,
of Article Sixth from the Purchaser’s Certificate of Incorporation from and
after the Closing and to redesignate section E of Article Sixth as Article
Sixth, and (v) the adoption of an Incentive Stock Option Plan or other equity
incentive plan at a meeting of holders of Purchaser Stock to be called and
held
for such purpose (the “Special
Meeting”).
Such
proxy materials shall be in the form of a proxy statement to be used for the
purpose of soliciting such proxies from holders of Purchaser Stock for the
matters to be acted upon at the Special Meeting (the “Proxy
Statement”).
The
Company shall use its reasonable efforts to furnish to the Purchaser all
information concerning the Company as the Purchaser may reasonably request
in
connection with the preparation of the Proxy Statement. The Company and its
counsel shall be given an opportunity to review and comment on such proxy
materials, including amendments thereto, prior to their filing with the
Commission and the Purchaser will not file any documents containing information
that the Company has reasonably determined is incorrect or misleading and
notified the Purchaser in writing thereof. The Purchaser, with the assistance
of
the Company, shall promptly respond to any Commission comments on such proxy
materials and shall otherwise use reasonable best efforts to cause the
definitive Proxy Statement to be approved by the Commission for distribution
to
the Purchaser’s stockholders as promptly as practicable.
(b) As
soon
as practicable following the approval by the Commission of the distribution
of
the definitive Proxy Statement, the Purchaser shall distribute the Proxy
Statement to the holders of Purchaser Stock and, pursuant thereto, shall call
the Special Meeting in accordance with the applicable law and in no event more
than 60 days following approval by the Commission of the Proxy Statement and,
subject to the other provisions of this Agreement, solicit proxies from such
holders to vote in favor of the approval of the transactions contemplated by
this Agreement and the other matters presented for approval or adoption at
the
Special Meeting.
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(c) The
Purchaser shall comply with all applicable provisions of and rules under the
federal and state (if applicable) securities laws and all applicable provisions
of the DGCL in the preparation, filing and distribution of the Proxy Statement,
the solicitation of proxies thereunder, and the calling and holding of the
Special Meeting. Without limiting the foregoing, the Purchaser shall ensure
that
the Proxy Statement does not, as of the date on which the Proxy Statement is
first distributed to the stockholders of the Purchaser, and as of the date
of
the Special Meeting, contain any untrue statement of a material fact or omit
to
state a material fact necessary in order to make the statements made, in light
of the circumstances under which they were made, not misleading (provided that
the Purchaser shall not be responsible for the accuracy or completeness of
any
information relating to the Company or any other information furnished by the
Company for inclusion in the Proxy Statement). The Company represents and
warrants that the information relating to the Company supplied by the Company
for inclusion in the Proxy Statement will not, as of the date on which the
Proxy
Statement is first distributed to the stockholders of the Purchaser or at the
time of the Special Meeting, contain any statement which, at such time and
in
light of the circumstances under which it is made, is false or misleading with
respect to any material fact, or omits to state any material fact required
to be
stated therein or necessary in order to make the statement therein not false
or
misleading.
(d) The
Purchaser, acting through its board of directors, shall include in the Proxy
Statement the recommendation of its board of directors that the holders of
Purchaser Stock vote in favor of the approval of the transactions contemplated
by this Agreement, and, subject to applicable Law and the exercise of its
fiduciary duties, shall not withdraw or modify its recommendation. The Purchaser
shall otherwise use its reasonable best efforts to obtain the Purchaser
Stockholder Approval and the Management Members shall reasonably cooperate
with
the Purchaser, including attending and participating in presentation to holders
of Purchaser Stock in advance of the Special Meeting.
(e) The
Company also shall cooperate with the Purchaser and use its reasonable efforts
to provide all information reasonably requested by the Purchaser in connection
with any application or other filing made to maintain or secure listing for
trading or quotation of the Purchaser’s securities on the American Stock
Exchange, Nasdaq or the Over-the-Counter Bulletin Board (“OTC
BB”)
following the Closing.
(f) Notwithstanding
anything to the contrary contained in this Agreement, Purchaser shall bear
and
pay (i) all costs and expenses incurred in connection with (A) the
preparation, filing and mailing of the Proxy Statement, including any amendments
or supplements thereto, (B) the preparation, filing and mailing of any
other securities filings or correspondence in connection with the transactions
contemplated by this Agreement, including, without limitation, any filings
made
to secure listing for trading of Purchaser’s securities on the American Stock
Exchange, Nasdaq, or the OTC BB, (C) calling, giving notice of, convening
and holding stockholder meetings for the purpose of seeking Purchaser
Stockholder Approval, and (D) the preparation, filing and mailing of any
other documents or materials required solely as a direct result of the
acquisition of Holdings by a public company, and (ii) all reasonable third
party fees and disbursements incurred by the Company (other than accounting
fees
associated with preparation of financial statements to be included in the Proxy
Statement) in connection with the Company’s cooperation, assistance, and review
of the foregoing documentation, including, without limitation, reasonable
attorney’s fees and expenses. Subject to Section
2.2(c),
the
Company shall bear and pay all costs and expenses incurred in connection with
the preparation, delivery and review of the financial statements of the Company
and Holdings to be included in the Proxy Statement (“Accounting
Fees”).
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Section
7.9 Public
Disclosure.
From
the date of this Agreement until Closing or termination of this Agreement,
the
parties shall cooperate in good faith to jointly prepare all press releases
and
public announcements pertaining to this Agreement and the transactions governed
by it, and no party shall issue or otherwise make any public announcement or
communication pertaining to this Agreement or the transaction without the prior
consent of the Purchaser (in the case of the Company, Holdings and the Members)
or the Seller Representative (in the case of the Purchaser), except as required
by any legal requirement or by the rules and regulations of, or pursuant to
any
agreement of a stock exchange or trading system. Each party will not
unreasonably delay, withhold or condition approval from the others with respect
to any press release or public announcement. If any party determines with the
advice of counsel that it is required to make this Agreement and the terms
of
the transaction public or otherwise issue a press release or make public
disclosure with respect thereto, it shall, at a reasonable time before making
any public disclosure, consult with the other party regarding such disclosure,
seek such confidential treatment for such terms or portions of this Agreement
or
the transaction as may be reasonably requested by the other party and disclose
only such information as is legally compelled to be disclosed.
Section
7.10 Other
Actions.
As
promptly as practicable after execution of this Agreement (and in no event
later
than four business days thereafter), the Purchaser will prepare and file a
Current Report on Form 8-K pursuant to the Exchange Act to report the execution
of this Agreement (“Signing
Form 8-K”).
At
least five (5) days prior to Closing, the Purchaser shall prepare a draft Form
8-K announcing the Closing, together with, or incorporating by reference, the
financial statements prepared by the Company and such other information that
may
be required to be disclosed with respect to the transactions contemplated by
this Agreement in any report or form to be filed with the Commission
(“Closing
Form 8-K”).
The
Company will be given the opportunity to review and comment upon the Signing
Form 8-K and Closing Form 8-K prior to filing. Any language included in such
Current Reports that reflects the Company’s comments, as well as any text as to
which the Company has not commented upon being given a reasonable opportunity
to
comment, shall be deemed to have been approved by the Company and may henceforth
be used by the Purchaser in other filings made by it with the Commission and
in
other documents distributed by the Purchaser in connection with the transactions
contemplated by this Agreement without further review or consent of the Seller
Representative or the Company. In connection with the preparation of the Signing
Form 8-K and the Closing Form 8-K, or any other statement, filing, notice or
application made by or on behalf of the Purchaser and/or the Company to any
third party and/or any Governmental Authority in connection with the
transactions contemplated by this Agreement, and for such other reasonable
purposes, the Company and the Purchaser each shall, upon request by the other,
furnish the other with all information concerning themselves, their respective
directors, officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with the transactions contemplated by
this
Agreement. Each party warrants and represents to the other party that all such
information shall be true and correct in all material respects and will not
contain any untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
Section
7.11 No
Securities Transactions.
None of
the Company, Holdings or any Member or any of their respective affiliates,
directly or indirectly, shall engage in any transactions involving any
securities of the Purchaser prior to the Closing. The Company shall use its
commercially reasonable efforts to require each of its officers, directors,
employees, agents and representatives to comply with the foregoing
requirement.
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Section
7.12 No
Claim Against Trust Fund.
The
Company, Holdings and each Member acknowledges that they have read the
Purchaser’s final prospectus dated March 5, 2007 and understand that the
Purchaser has established the Trust Fund for the benefit of the Purchaser’s
public stockholders. The Company, Holdings and each Member further acknowledges
that, if the transactions contemplated by this Agreement, or, upon termination
of this Agreement, another business combination, are not consummated by March
5,
2009, the Purchaser will be obligated to return to its stockholders the amounts
being held in the Trust Fund. Accordingly, the Company, Holdings and each
Member, for themselves and their subsidiaries, affiliated entities, directors,
officers, employees, stockholders, representatives, advisors and all other
associates and affiliates, hereby waive all rights, title, interest or claim
of
any kind against the Purchaser to collect from the Trust Fund any monies that
may be owed to them by the Purchaser for any reason whatsoever, and will not
seek recourse against the Trust Fund at any time for any reason whatsoever.
This
paragraph will survive this Agreement and will not expire and will not be
altered in any way without the express written consent of the Purchaser and
the
Seller Representative.
Section
7.13 Financing.
Purchaser shall use its commercially reasonable efforts and do all things
reasonably necessary, proper, and advisable to arrange debt financing in an
amount sufficient to supplement the amount available in the Trust Fund so that
there is a sufficient amount of cash to pay the Total Purchase Price as set
forth in Section
2.2
and to
consummate the transactions contemplated by this Agreement after deducting
amounts to be paid to (i) those stockholders who both vote against the
transactions contemplated hereby and elect to have their shares of Purchaser
converted into a cash payment in accordance with Purchaser’s organizational
documents, and (ii) the underwriters of the securities issued by Purchaser
in its initial public offering as deferred underwriting discount. Holdings,
the
Company and the Members shall, at Purchaser’s expense, cooperate in good faith
with the Purchaser in connection with such financing, and shall take such
actions and deliver such documents and other materials as may reasonably be
requested by the Purchaser with respect thereto.
Section
7.14 Non-compete;
Non-solicit.
(a) For
a
period of three years after the Closing Date, neither Kirtland nor any of its
Affiliates shall, anywhere in the United States of America and Canada, directly
or indirectly, individually or as an employee, partner, officer, director or
shareholder or in any other capacity whatsoever of or for any Person other
than
the Purchaser or the Company or their respective Subsidiaries or Affiliates
own,
manage, operate, sell, control or participate in the ownership, management,
operation, sales or control of or be connected in any manner, including as
an
employee, advisor or consultant or similar role, with any business engaged
in
the sale of new or used lattice boom crawler cranes, or the leasing or rental
of
mobile cranes (including, without limitation, lattice boom crawler cranes,
truck
mounted cranes, all terrain cranes and/or rough terrain cranes) and stationary
tower cranes (the “Company
Business”). Notwithstanding
the foregoing, nothing herein shall prohibit any Member or its Affiliates from
being a passive owner of not more than 5% of the outstanding equity of any
class
of an entity which is publicly traded.
(b) In
addition to, and not in limitation of, the non-competition covenants set forth
above in this Section
7.14,
Kirtland agrees that, for a period of three years after the Closing Date, it
will not, and shall cause its Affiliates not to, either for itself or for any
other Person, directly or indirectly solicit, induce or attempt to induce any
of
the individuals listed on Schedule 7.14(b) to terminate his her employment
or
his services with the Purchaser, the Company or any Subsidiary or Affiliate
thereof or to take employment with another party; provided, however, the
foregoing restriction will not prohibit contact between such Person and Kirtland
or an Affiliate of Kirtland that results from (A) such Person’s response to a
general solicitation or advertisement that is not specifically directed or
targeted to such Person, or (B) such Person’s own initiative at any time after
his or her employment has been terminated by Purchaser or its Affiliate; or
(ii)
solicit business away from, or attempt to sell, license or provide products
or
services of a similar nature as the Company Business, to any customer of the
Purchaser, the Company or their respective Subsidiaries and
Affiliates.
(c) Each
Member acknowledges that (i) the scope and period of restrictions to which
the
restrictions imposed in this Section applies are fair and reasonable and are
reasonably required for the protection of the Purchaser, the Company and their
respective Subsidiaries and Affiliates, (ii) this Agreement accurately describes
the business to which the restrictions are intended to apply and (iii) the
obligations and restrictions provided for herein are an integral part of the
consideration motivating the Purchaser to enter into this Agreement,
to
consummate
the
transactions contemplated hereby and
to
pay the Total Purchase Price.
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(d) It
is the
intent of the Parties that the provisions of this Section will be enforced
to
the fullest extent permissible under applicable law. If any particular provision
or portion of this Section is adjudicated to be invalid or unenforceable, the
Agreement will be deemed amended to revise that provision or portion to the
minimum extent necessary to render it enforceable. Such amendment will apply
only with respect to the operation of this paragraph in the particular
jurisdiction in which such adjudication was made.
Section
7.15 New
LLC Agreement.
At the
Closing, the Members and the Purchaser shall execute the New LLC
Agreement.
Section
7.16 Employment
Agreements.
At the
Closing, the Company and each of the Management Members shall execute an
employment agreement in the form of Exhibit
E
(such
employment agreements, collectively, the “Employment
Agreements.”),
and
each Management Member shall have terminated his respective prior respective
employment agreement or arrangement with the Company.
Section
7.17 Registration
Rights Agreement.
At the
Closing, the Purchaser and each of the Members shall execute the Registration
Rights Agreement.
Section
7.18 Company
Standstill.
From
and after the date hereof through the Closing Date, unless and until this
Agreement shall have been terminated in accordance with its terms, each of
the
Company, Holdings and the Members hereby agrees and shall cause their respective
directors, officers, Affiliates, employees, attorneys, accountants,
representatives, consultants and other agents (collectively, “Representatives”)
to agree: (i) to immediately cease any existing discussions or negotiations
with
any Person conducted heretofore, directly or indirectly, with respect to any
Business Combination involving or with respect to the Company or Holdings;
(ii)
not to directly or indirectly solicit, initiate, encourage or facilitate the
submission of proposals or offers from any Person other than Purchaser relating
to any Business Combination involving or with respect to the Company or
Holdings, or (iii) directly or indirectly participate in any discussions or
negotiations regarding, or furnish any information to any Person other than
Purchaser or its Representatives in connection with, any proposed or actual
Business Combination by any Person other than Purchaser. The Company shall
immediately notify Purchaser regarding any contact with any other Person
regarding any proposed Business Combination.
Section
7.19 Written
Notice of Events.
Purchaser shall promptly notify Holdings, in writing, if at any time (i) the
Purchaser believes that any condition to the obligations of the Purchaser set
forth in Article
VIII
will not
be satisfied or (ii) Purchaser or any Affiliate thereof executes or otherwise
becomes party to a letter of intent or other similar documentation regarding
any
proposed Business Combination. The Company, Holdings and the Members hereby
agree to hold in confidence, and to not make any disclosure of, any information
in any notice delivered by Purchaser pursuant to this Section
7.19.
ARTICLE
VIII
CONDITIONS
PRECEDENT TO OBLIGATIONS OF PURCHASER
The
obligations of Purchaser under this Agreement are, at its option, subject to
satisfaction of the following conditions at or prior to the Closing
Date:
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Section
8.1 Representations
True.
The
representations and warranties contained in Articles
IV and V
of this
Agreement that are subject to materiality qualifications shall be true and
correct in all respects in accordance with their terms (including the
materiality qualifications) on the Closing Date as though made on the Closing
Date (or on the date when made in the case at any representation or warranty
which specifically relates to an earlier date). All other representations and
warranties shall be true, complete and accurate in all material respects on
the
Closing Date as though made on the Closing Date (or on the date when made in
the
case at any representation or warranty which specifically relates to an earlier
date).
Section
8.2 All
Consents Obtained.
All
approvals or consents set forth on Schedule
8.2
shall
have been obtained.
Section
8.3 Performance
and Obligations.
Each
Member shall have duly performed in all material respects all obligations,
covenants and agreements undertaken by each Member in this Agreement and have
complied in all material respects with all terms and conditions applicable
to
each Member under this Agreement to be performed and complied with on or before
the Closing Date.
Section
8.4 Receipt
of Documents by the Purchaser.
The
Purchaser has received:
(a) A
certificate of the Secretary of Holdings, certifying as to the (i) certificate
of organization of Holdings, (ii) the limited liability company agreement of
Holdings; and (iii) the incumbency and signatures of the officers of
Holdings;
(b) A
certificate of the Secretary of the Company certifying as to (i) the certificate
of incorporation of the Company; (ii)
bylaws
of
the Company and (iii) the incumbency and signatures of the officers of the
Company;
(c) The
certificate of organization of Holdings and certificate of incorporation of
the
Company certified as of the most recent practicable date by the Secretary of
State of the State of Delaware;
(d) Certificates
of good standing of the Company and Holdings as of the most recent practicable
date from the Secretary of State of the State of Delaware;
(e) Written
resignations of the directors of the Company and Holdings set forth on
Schedule
8.4;
(f) The
Escrow Agreement duly executed by the Seller Representative;
(g) The
New
LLC Agreement duly executed by the Members;
(h) A
release
in the form of Exhibit
H
duly
executed by each of the Members;
(i) A
duly executed certificate that complies with the requirements of Section 1445
of
the Code; and
(j) A
Lock-Up Agreement in the form of Exhibit
B
duly
executed by each of the Management Members.
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Section
8.5 Termination
of Advisory Service Agreement.
The
Amended and Restated Advisory Service Agreement, dated as of November 30, 2005,
among Holdings, the Company and Kirtland Partners Ltd. shall have been
terminated in all respects, and Holdings and the Company shall have fully
satisfied or discharged all of their respective obligations and liabilities
thereunder.
Section
8.6 Purchaser
Stockholder Approval.
Purchaser Stockholder
Approval shall have been obtained by the requisite vote under the laws of the
State of Delaware and the Purchaser’s certificate of incorporation.
Section
8.7 Purchaser
Stock.
Holders
constituting, in aggregate, less than twenty
percent (20%) of the shares of Purchaser Stock issued in the Purchaser’s initial
public offering of securities and outstanding immediately before the Closing
shall have exercised their rights to convert their shares into a pro rata share
of the Trust Fund in accordance with the Purchaser’s certificate of
incorporation.
Section
8.8 No
Litigation.
No
suit, action, or other proceeding is threatened or pending before any court
or
Governmental Authority in which it will be or it is sought to restrain or
prohibit or to obtain material damages or relief in connection with this
Agreement or the consummation of this Agreement.
Section
8.9 Material
Adverse
Effect.
No
Material Adverse Effect with respect to the Company and Holdings, taken as
a
whole, shall have occurred since the date of this Agreement.
ARTICLE
IX
CONDITIONS
PRECEDENT TO OBLIGATIONS OF THE MEMBERS
The
obligations of the Members under this Agreement are, at the option of the Seller
Representative, subject to satisfaction of the following conditions at or prior
to the Closing Date:
Section
9.1 Representations
True.
The
representations and warranties contained in Article
VI
of this
Agreement that are subject to materiality qualifications shall be true and
correct in all respects in
accordance with their terms (including the materiality qualifications)
on
the
Closing Date as though made on the Closing Date (or on the date when made in
the
case at any representation or warranty which specifically relates to an earlier
date). All other representations and warranties shall be true, complete and
accurate in all material respects on the Closing Date as though made on the
Closing Date (or on the date when made in the case at any representation or
warranty which specifically relates to an earlier date).
Section
9.2 Performance
of Obligations.
The
Purchaser shall have duly performed in all material respects all obligations,
covenants and agreements undertaken by the Purchaser in this Agreement and
have
complied in all material respects with all terms and conditions applicable
to
the Purchaser under this Agreement to be performed and complied with on or
before the Closing Date.
Section
9.3 Receipt
of Documents by the Seller Representative.
The
Seller Representative has received:
(a) The
Total
Purchase Price paid in accordance with Sections
2.2
and
2.3;
(b) The
certificate of incorporation of the Purchaser certified as of the most recent
practicable date by the Secretary of State of Delaware;
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(c) A
certificate of the Secretary of State of Delaware as to the good standing as
of
the most recent practicable date of the Purchaser in such
jurisdiction;
(d) A
certificate of the Secretary of the Purchaser certifying as to (i) the
certificate of incorporation of the Purchaser; (ii) bylaws of the Purchaser
and
(iii) the incumbency and signatures of the officers of the Purchaser;
(e) Certified
resolutions of the board of directors (or other body having similar authority)
of the Purchaser approving this Agreement and authorizing the transactions
contemplated by this Agreement, along with a certificate executed on behalf
of
the Purchaser by its Secretary certifying to the Seller Representative that
such
copies are true, correct and complete copies of such resolutions, and that
such
resolutions were duly adopted and have not been amended or
rescinded;
(f) The
Escrow Agreement duly executed by the Purchaser; and
(g) The
Registration
Rights
Agreement duly executed by the Purchaser; and
(h) The
New
LLC Agreement duly executed by the Purchaser.
Section
9.4 No
Litigation.
No
suit, action, or other proceeding is threatened or pending before any court
or
Governmental Authority in which it will be or it is sought to obtain material
damages from the Purchaser in connection with this Agreement or interfere with
the consummation of this Agreement.
ARTICLE
X
TERMINATION
OF AGREEMENT
Section
10.1 Termination.
Notwithstanding any other provision of this Agreement, this Agreement may be
terminated at any time prior to the Closing:
(a) by
the
mutual written consent of Purchaser and Holdings;
(b) by
Purchaser or Holdings, upon written notice to the other party, if the
transactions contemplated by this Agreement have not been consummated on or
prior to the later of (x) November 30, 2008 and (y) the date that is 260 days
after delivery to Purchaser of the financial statements of the Company and
Holdings to be included in the Proxy Statement (the “Termination
Date”);
provided,
however,
(i)
that the right to terminate this Agreement pursuant to this Section
10.1(b)
is not
available to Purchaser if Purchaser’s breach of any provision of this Agreement
results in or causes the failure of the transactions contemplated by this
Agreement to be consummated by such time, and (ii) that the right to terminate
this Agreement pursuant to this Section
10.1(b)
is not
available to Holdings if Holdings’, any Member’s and/or the Company’s breach of
any provision of this Agreement results in or causes the failure of the
transactions contemplated by this Agreement to be consummated by such
time;
(c) by
Purchaser or Holdings, upon written notice to the other party, if a Governmental
Authority of competent jurisdiction has issued an Order or any other action
permanently enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement, and such Order has become final
and
non-appealable;
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(d) by
Holdings, if Purchaser (i) has breached or failed to perform any of its
covenants or other agreements contained in this Agreement to be complied with
by
it or (ii) there exists a breach of any representation or warranty of Purchaser
contained in this Agreement, which in the case of both (i) and (ii) above,
has
prevented or is reasonably likely to prevent the satisfaction of any condition
to the obligations of the Members at the Closing and such breach or failure
to
perform is not cured within ten (10) days after receipt of written notice
thereof or is incapable of being cured on or prior to the Termination
Date;
(e) by
Purchaser, (w) if Holdings, the Company or any Member (i) has breached or failed
to perform any of their covenants or other agreements contained in this
Agreement to be complied with by them or (ii) there exists a breach of any
representation or warranty of Holdings, the Company or the Members contained
in
this Agreement, which in the case of both (i) and (ii) above, has prevented
or
is reasonably likely to prevent the satisfaction of any condition to the
obligations of the Purchaser at the Closing and such breach or failure to
perform is not cured within ten (10) days after receipt of written notice
thereof or is incapable of being cured on or prior to the Termination Date,
(x)
in the event a Material Adverse Effect with respect to the Company and Holdings
shall have occurred since the date of this Agreement, (y) if the testing
required pursuant to the final “Investigation Work Plan” (as defined in, and as
adopted pursuant to Section 4 of, the Compliance Agreement) shall not have
been
completed in accordance with the Compliance Agreement prior to September 1,
2008, or (z) if Rental EBITDA for any of the fiscal years ended December 31,
2005, 2006 or 2007, based on the GAAP audited consolidated financial statements
of Holdings for such fiscal years to be included in the Proxy Statement, is
less
than ninety-five (95%) percent of Reported Rental EBITDA for the applicable
fiscal year;
(f) by
either
the Purchaser or Holdings if, at the Special Meeting (including any adjournments
thereof), this Agreement and the transactions contemplated thereby shall fail
to
be approved and adopted by the affirmative vote of the holders of Purchaser
Stock required under the Purchaser’s certificate of incorporation, or the
holders constituting, in aggregate, 20% or more of the number of shares of
Purchaser Stock issued in the Purchaser’s initial public offering and
outstanding as of the date of the record date of the Special Meeting exercise
their rights to convert the shares of Purchaser Stock held by them into cash
in
accordance with the Purchaser’s certificate of incorporation;
(g) by
the
Purchaser, upon written notice to Holdings, if at any time the Purchaser
reasonably believes that any condition to the obligations of the Purchaser
set
forth in Article
VIII
will not
be satisfied, other than for the reasons set forth in Section
10.1(e)
above;
or
(h) by
Holdings, upon written notice to Purchaser, at any time following receipt by
Holdings of a notice contemplated by Section
7.19(i);
or
(i) by
Holdings if, other than as a result of the occurrence of a Material Adverse
Effect with respect to the Company and Holdings, (i) the Board of Directors
of
the Purchaser fails to include a recommendation that the Purchaser stockholders
approve the transactions contemplated by this Agreement in the Proxy Statement
or (ii) the Board of Directors of the Purchaser withdraws or modifies, in any
manner materially adverse to the Company, Holdings or the Members, the
Purchaser’s Board of Directors recommendation that the Purchaser stockholders
approve the transactions contemplated by this Agreement.
Section
10.2 Termination Fee.
If,
subsequent to a termination of this Agreement by Purchaser pursuant to
Section
10.1(g)
or by
Holdings pursuant to Section
10.1(d),
Section
10.1(h)
or
Section
10.1(i),
the
Purchaser or any Affiliate thereof consummates a “Business Combination” (as
defined in the Purchaser’s certificate of incorporation), the Purchaser shall
pay to the Company a termination fee in the amount of $4,000,000 (the
“Termination
Fee”)
in full
satisfaction of any and all claims which the Company, Holdings and any Member
may have against the Purchaser or its respective officers, directors,
shareholders or Affiliates as a result of or arising out of the termination
of
this Agreement.
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Section
10.3 Effect
of Termination.
In the
event of termination of this Agreement pursuant to Section
10.1,
this
Agreement will become void and have no effect, without any liability or
obligation on the part of any of the parties hereto, other than the provisions
of Sections
7.3(b)
and
7.3(c),
Section
10.2
and
10.3
and
Article
XIII
will
survive any termination of this Agreement; provided,
however,
that
nothing herein will relieve any party from any liability for any breach by
such
party of its covenants or agreements set forth in this Agreement.
ARTICLE
XI
INDEMNIFICATION
Section
11.1 Survival.
The
representations, warranties, covenants and agreements contained in this
Agreement will survive the Closing Date, provided that the representations
and
warranties will survive only until the later of (a) the date which is thirty
(30) days following completion of the Purchaser’s consolidated audited financial
statements for the fiscal year in which the Closing Date occurs (provided,
that
such date shall not occur later than six (6) months following the end of such
fiscal year), and (b) the one year anniversary of the Closing Date (the
“Survival
Period”),
at
which
point such representations and warranties and any claim for reimbursement out
of
the Escrow Fund will terminate, except for any then-pending Claims made
by
such
termination date in accordance with Section
11.7.
Section
11.2 Indemnification
by the Purchaser and the Company.
(a) Subject
to Sections
11.1,
11.5, 11.6
and
11.7 of
this
Agreement, from and after the Closing, the Purchaser and the Company, jointly
and severally, will indemnify and hold harmless the Members and their respective
successors and permitted assigns, and their officers, employees, directors,
managers, members, partners, heirs and personal representatives (collectively,
the “Seller
Indemnitees”)
from
and against, and will pay to the Seller Indemnitees the amount of, any and
all
Losses incurred by any of the Seller Indemnitees based upon (i) any breach
of or
inaccuracy in the representations and warranties of the Purchaser contained
in
this Agreement or any agreements or documents executed and delivered by the
Purchaser in connection herewith, and (ii) any breach of the covenants or
agreements of the Purchaser contained in this Agreement or any agreements or
documents executed and delivered by the Purchaser.
(b) Except
as
otherwise provided herein, any indemnification of the Seller Indemnitees
pursuant to this Section
11.2 shall
be
effected by wire transfer of immediately available funds from Purchaser or
the
Company to an account(s) designated by the applicable Seller Indemnitee, within
ten (10) days after the final determination thereof.
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Section
11.3 Reimbursement
from the Escrow Funds and Indemnification by the
Members.
(a) Subject
to Sections
11.1,
11.4,
11.5,
11.6 and 11.7 of
this
Agreement, from and after the Closing, the Purchaser and the Company and their
respective successors and permitted assigns, and the officers, employees,
directors, managers, members, partners and shareholders (collectively, the
“Purchaser
Indemnitees”)
shall
be entitled to indemnification and reimbursement from the Escrow Fund for the
amount of any and all Losses incurred by any of the Purchaser Indemnitees based
upon (i) any breach of or inaccuracy in the representations and warranties
of
the Members, the Company or Holdings contained in this Agreement or any
agreements or documents executed and delivered by the Members, the Company
or
Holdings in connection herewith, (ii) any breach of the covenants or agreements
of the Members contained in this Agreement or any agreements or documents
executed and delivered by the Members, the Company or Holdings in connection
herewith (other than for breaches of the covenants and agreements set forth
in
Section
7.14
and for
the covenants and agreements contained in the Employment Agreements), (iii)
any
Indebtedness of the Company or Holdings in existence immediately prior to the
Closing (other than Funded Indebtedness in the amount(s) specified in the payoff
instruction letter delivered to the Purchaser in accordance with Section
2.2(c),
(iv)
any Pre-Closing Taxes of Holdings or the Company notwithstanding any Tax-related
disclosures appearing on the Seller Disclosure Schedules, (v) any Losses
incurred by the Company or the Purchaser after the Closing in connection with
the completion of the final “Remediation Work Plan” (as defined in, and as
adopted pursuant to Section 5 of, the Compliance Agreement) to the extent in
excess of the amount of any funds placed into escrow pursuant to Section 6
of
the Compliance Agreement and (iv) any payments to any Person which would have
the effect of reducing the amount of the Company’s liability set forth in the
line item entitled “Accounts Payable Other - State Tax Refund” as set forth on
the Closing Balance Sheet.
(b) Subject
to Sections
11.1,
11.4,
11.5,
11.6 and 11.7 of
this
Agreement, the breaching Member shall (based on such Member’s Pro Rata Portion
as set forth on Schedule
A)
indemnify and hold harmless the Purchaser Indemnitees from and against any
and
all Losses incurred by any of the Purchaser Indemnitees based on any breach
of
the
covenants and agreements set forth in Section
7.14.
With
regard to indemnification pursuant to this Section
11.3(b),
the
Purchaser Indemnitees shall seek indemnification solely from the breaching
Member. In no case will any Member be liable under this Section
11.3(b)
for any
Losses in excess of the proceeds received by such Member pursuant to this
Agreement.
(c) Except
as
otherwise provided herein, any indemnification and reimbursement of the
Purchaser Indemnitees pursuant to Sections
11.3(a)
or
(b)
shall be
effected by wire transfer of immediately available funds from the Escrow Agent
or the Members, as applicable, to an account(s) designated by the applicable
Purchaser Indemnitee, within ten (10) days after the final determination
thereof, pursuant to the Escrow Agreement.
Section
11.4 Dollar
Limits.
Notwithstanding anything to the contrary contained in this Article
XI
or
elsewhere in this Agreement, the Purchaser Indemnitees shall not have a right
to
indemnification and reimbursement under clause (i) of Section
11.3(a)
(other
than with respect to the Fundamental Representations) unless and until the
aggregate amount of all such Losses sustained by the Indemnitees exceeds
$1,000,000, in which case, the Purchaser Indemnities shall be entitled to
indemnification and reimbursement solely from the Escrow Funds for the amount
of
all Losses in excess of $500,000 (including Losses aggregated in reaching such
$1,000,000 threshold); provided that the total amount of such right to
indemnification and reimbursement will not exceed the Escrow
Amount.
Section
11.5 Exclusive
Remedy.
Other
than for Losses arising as a result of fraud, and other than as set forth in
the
Compliance Agreement, the parties agree that, from and after the Closing Date,
the exclusive remedies of the parties for any Losses based upon, arising out
of
or otherwise in respect of the matters set forth in this Agreement are the
indemnification and reimbursement obligations of the parties set forth in this
Agreement.
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Section
11.6 Limitations
on Indemnification.
Notwithstanding anything in this Agreement to the contrary:
(a) No
Indemnitee shall be entitled to reimbursement and indemnification pursuant
to
Sections
11.2
or
11.3
on
account of any Losses to the extent (i) any such Losses are covered by any
insurance or other third party proceeds and (ii) such Indemnitee actually
receives such proceeds; provided that an Indemnitee shall make commercially
reasonable efforts to seek recovery under any insurance policy. Notwithstanding
anything herein to the contrary, an Indemnitee may pursue recovery hereunder
prior to the resolution of any such insurance claim, and the Indemnifying Party
shall pay to the Indemnitee such amounts as it would otherwise be obligated
to
pay to such Indemnified Party without regard to this Section
11.6(a)
and
prior to such time as such Indemnitee has determined whether such Losses are
covered (or not covered) by insurance held by such Indemnitee. In the event
the
Indemnitee receives any amounts paid by such insurance in connection with Losses
for which such Indemnitee received reimbursement and indemnification from any
Indemnifying Party, the Indemnitee shall pay such amounts (up to the amount
of
Losses for which reimbursement and indemnification was actually made) to such
Indemnifying Party.
(b) Notwithstanding
anything to the contrary contained in this Agreement, there shall be no right
to
reimbursement and indemnification to the extent (and only to the extent) the
expense, loss or liability comprising the Loss (or a part thereof) with respect
to such matter has been taken into account in the final determination of the
Working Capital and/or the Working Capital Adjustment.
Section
11.7 Procedures.
(a) Notice
of Losses by an Indemnitee.
Subject
to Section
12.5
with
respect to Tax Matters, as soon as reasonably practicable after an Indemnitee
has Knowledge of any claim that it has under this Article
XI
that may
result in a Loss (a “Claim”),
the
Indemnitee shall give written notice thereof (a “Claims
Notice”)
to the
Indemnifying Party. The parties hereby agree that any notice required to be
provided to the Members shall be sent to the Seller Representative pursuant
to
Section
13.7
hereof.
A Claims Notice must describe the Claim in reasonable detail, and indicate
the
amount (estimated, as necessary and to the extent feasible) of the Loss that
has
been or may be suffered by the Indemnitee; provided if the Indemnifying Party
is
not satisfied with the detail contained in any Claims Notice it shall request
in
writing additional detail from the Indemnitee. No delay in or failure to give
a
Claims Notice by the Indemnitee to the Indemnifying Party pursuant to this
Section
11.7(a)
will
adversely affect any of the other rights or remedies that the Indemnitee has
under this Agreement, or alter or relieve the Indemnifying Party of its
obligations under this Agreement except to the extent (and then only to the
extent that) that the failure to give notice causes the Indemnifying Party
to
suffer Losses for which it is obligated to be materially greater than such
Losses would have been had the Indemnitee given the Indemnifying Party prompt
notice hereunder. The Indemnifying Party shall respond to the Indemnitee (a
“Claim
Response”)
within
ten (10) Business Days (the “Response
Period”)
after
the date that the Claims Notice is received by the Indemnifying Party. Any
Claim
Response must specify whether or not the Indemnifying Party disputes the Claim
described in the Claims Notice. If the Indemnifying Party fails to give a Claim
Response within the Response Period, the Indemnifying Party will be deemed
not
to dispute the Claim described in the related Claims Notice. If the Indemnifying
Party elects not to dispute a Claim described in a Claims Notice, whether by
failing to give a timely Claim Response or otherwise, then the amount of Losses
alleged in such Claims Notice will be conclusively deemed to be an obligation
of
the Indemnifying Party. If the Indemnifying Party delivers a Claim Response
within the Response Period indicating that it disputes one or more of the
matters identified in the Claims Notice, the Indemnifying Party and the
Indemnitee shall promptly meet and use their reasonable efforts to settle the
dispute. If the Indemnifying Party and the Indemnitee are unable to reach
agreement within thirty (30) days after the conclusion of the Response Period,
then the dispute shall be submitted by either party to arbitration in accordance
with Section
11.9.
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(b) Opportunity
to Defend Third Party Claims.
Except
as set forth in Section
12.5
with
respect to Tax Matters, in the event that any claim by a third party against
an
Indemnitee for which indemnification and reimbursement, as applicable, is sought
by an Indemnitee, the Indemnifying Party has the right, exercisable by written
notice to the Indemnitee, within ten (10) Business Days of receipt of a Claims
Notice from the Indemnitee to assume and conduct the defense of such claim
with
counsel selected by the Indemnifying Party. If the Indemnifying Party has
assumed such defense as provided in this Section
11.7(b),
the
Indemnifying Party will not be liable for any legal expenses subsequently
incurred by any Indemnitee in connection with the defense of such Claim. If
the
Indemnifying Party does not assume the defense of any third party claim in
accordance with this Section
11.7(b)
and to
the extent that such Claim is subject to indemnification and reimbursement
under
this Agreement, the Indemnitee may continue to defend such claim at the sole
cost of the Indemnifying Party (subject to the limitations set forth in this
Article
XI)
and the
Indemnifying Party may still participate in, but not control, the defense of
such third party claim at the Indemnifying Party’s sole cost and expense.
Notwithstanding the foregoing, regardless of which party controls the defense
of
a claim, such party shall have an obligation to keep the other party informed
as
to the progress and status of such claim and to provide such other party with
such information about the claim as it shall reasonably request.
(c) Settlement.
Prior
to
agreeing to any settlement of,
or the
entry of any judgment arising from, any Claim, the party controlling the defense
of such Claim shall give the other party at least ten (10) days to consent
to
such settlement or entry of judgment and shall provide the other party with
all
information as such other party shall reasonably request in order to evaluate
the settlement or entry of judgment. The party controlling the defense shall
not
agree
to any settlement of,
or
the entry of any judgment arising from, any Claim unless it receives the consent
of the other party, which consent may not be unreasonably withheld or delayed,
unless (i) the sole relief provided is monetary damages to be paid by the party
controlling the defense, and (ii) such settlement includes an unconditional
release in favor of the Indemnitee by the third-party claimant from all
liability with respect to such claim (other than liability for payment of any
amounts in connection with such settlement).
(d) Notwithstanding
the foregoing, this Section
11.7
shall
not apply to claims pursuant to Section
11.3(a)(v)
hereof,
which shall be governed exclusively by the terms of the Compliance
Agreement.
Section
11.8 Adjustments
to the Total Purchase Price.
Any
payments or indemnification and reimbursement made pursuant to this Article
XI
shall be
treated by the parties hereto as an adjustment to the Total Purchase Price,
unless otherwise required by Law.
Section
11.9 Dispute
Resolution.
Should
the Purchaser and the Members be unable to resolve any dispute under this
Article
XI,
such
dispute shall be decided by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then pertaining.
The
award(s) rendered by the arbitrators in accordance with this provision shall
be
final and judgment may be entered upon it in accordance with applicable law
in
any court having jurisdiction thereof. All arbitration proceedings or hearings
shall utilize New York law and shall be conducted in New York, New York. The
Members may join any other party in the arbitration proceedings that the Members
determine is necessary to reach a complete adjudication of any disputes arising
under this Article
XI.
The
failure of either Purchaser or the Members to comply with the provisions of
the
foregoing shall be in contravention of the parties’ express intention to
implement this alternative means of dispute resolution, shall constitute a
breach of these provisions, and the Purchaser and the Members expressly
stipulate that any court having jurisdiction over the parties shall be empowered
to immediately enjoin any proceeding commenced in contravention of this
Section
11.9
and the
party failing to comply with these provisions shall reimburse the other parties
for all costs and expenses (including legal fees) incurred in enforcing these
provisions. Notwithstanding the foregoing, this Section
11.9
shall
not apply to claims pursuant to Section
11.3(a)(v)
hereof,
which shall be governed exclusively by the terms of the Compliance
Agreement.
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ARTICLE
XII
TAX
MATTERS
Section
12.1 Cooperation
on Tax Matters.
The
Purchaser and the Seller Representative shall cooperate fully as and to the
extent reasonably requested by any of the other above-named parties, in
connection with the filing of Tax Returns pursuant to this Article
XII
and any
audit, litigation or other proceeding with respect to any Taxes. Such
cooperation shall include the retention and (upon request of any of the
above-named parties) the provision of records and information which are
reasonably relevant to any Tax, Tax Return, audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. The Purchaser agrees to cause Holdings and the Company to retain
all
books and records with respect to Tax matters pertinent to Holdings or the
Company relating to any taxable period beginning before the Closing Date until
the expiration of the statute of limitations (including any extensions thereof)
of the respective taxable periods, and to abide by all record retention
agreements entered into with Taxing Authority and to give the Seller
Representative reasonable written notice prior to transferring, destroying
or
discarding such books and records, and, if the Seller Representative so
requests, the Company or Holdings, as the case may be, shall allow the Seller
Representative to take possession of such books and records.
Section
12.2 Pre-Closing
Period Tax Returns.
The
Purchaser shall prepare, or cause to be prepared, all Pre-Closing Period Tax
Returns of Holdings and the Company which are filed after the Closing Date,
which Tax Returns shall be prepared in accordance with the past practices and
customs of Holdings and the Company, respectively, unless otherwise required
by
applicable Law. At least thirty (30) days prior to the due date for the filing
of such Tax Returns, the Purchaser shall deliver the Pre-Closing Tax Returns
to
the Seller Representative for review and comment. The Seller Representative
shall provide comments to such Pre-Closing Tax Return within fifteen (15) days
of its receipt of such Pre-Closing Tax Returns. The Purchaser shall make, or
cause to be made, all reasonable changes requested by the Seller Representative
that are consistent with the past practices and customs of Holdings or the
Company, as the case may be, to the extent allowable under applicable
Law.
Section
12.3 Straddle
Period Tax Returns.
The
Purchaser shall prepare, or cause to be prepared, all Straddle Period Tax
Returns of Holdings and the Company; provided, however, that all such Straddle
Period Tax Returns shall be prepared by treating items on such Straddle Period
Tax Returns in a manner consistent with the past practices and customs of
Holdings and the Company, respectively, with respect to such items unless
otherwise required by applicable Law. At least thirty (30) days prior to the
due
date of such Straddle Period Tax Returns, the Purchaser shall deliver such
Straddle Period Tax Returns to the Seller Representative for review and comment.
The Seller Representative shall provide comments to such Straddle Period Tax
Returns within fifteen (15) days of its receipt of such Straddle Period Tax
Returns. The Purchaser shall make, or cause to be made, all reasonable changes
requested by the Seller Representative that are consistent with the past
practices and customs of Holdings or the Company, as the case may be, to the
extent allowable by applicable Law.
Section
12.4 Intentionally
Omitted.
Section
12.5 Tax
Controversies.
The
Purchaser shall promptly notify the Seller Representative of any inquiries,
claims, assessments, audits or similar events with respect to Taxes relating
to
a Pre-Closing Period or a Straddle Period for which the Purchaser Indemnitees
may be entitled to a right of indemnification and reimbursement from the Escrow
Fund pursuant to Section
11.3
(such
inquiry, claim, assessment, audit or similar event, a “Tax
Matter”).
The
Seller Representative, at its sole expense, shall have the authority to
represent the interests of Holdings or the Company, as the case may be, and
shall have control of the defense, compromise or other resolution of any Tax
Matter with respect to a Pre-Closing Period of Holdings or the Company;
provided, however, that the Purchaser shall be entitled to participate in any
such Tax Matter at its own expense and the Seller Representative shall obtain
the prior written consent of the Purchaser prior to settling any such Tax Matter
but only to the extent such settlement may affect Holdings or the Company in
any
taxable period that ends after the Closing Date, which consent shall not be
unreasonably withheld, conditioned or delayed. The Seller Representative shall
keep the Purchaser fully and timely informed with respect to the commencement,
status and nature of such Tax Matter. With respect to Tax Matters involving
a
Straddle Period for which the Purchaser Indemnitees may be entitled to a right
of indemnification and reimbursement from the Escrow Fund pursuant to
Section
11.3,
the
Seller Representative and the Purchaser shall jointly control the defense of
such Tax Matter and neither may settle any such Tax Matter without obtaining
the
prior written consent of the other party, which consent shall not be
unreasonably withheld, delayed or conditioned.
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Section
12.6 Amendments
to Tax Returns.
None of
Holdings, the Purchaser or the Company shall amend, refile, or otherwise modify
any Tax Return for a Pre-Closing Period, or waive or extend any limitation
period with respect to such Tax Returns without the prior written consent of
the
Seller Representative, which consent shall not be unreasonably withheld, delayed
or denied. None of Holdings, the Purchaser or the Company shall amend, refile,
or otherwise modify any Tax Return for a Straddle Period (but only to the extent
that such modifications relate to the amounts allocable to the portion of the
Straddle Period ending on the Closing Date), or waive or extend any limitation
period with respect to such Straddle Period Tax Returns unless required by
applicable Law or to prevent an assessment of Tax or with the prior written
consent of the Seller Representative, which consent shall not be unreasonably
withheld, delayed, or denied.
Section
12.7 Tax
Refunds.
Any Tax
refunds that are received by Holdings, the Purchaser or the Company, and any
amounts credited against any Tax to which Holdings, the Purchaser or the Company
becomes entitled, of Taxes that relate to Tax periods or portions thereof ending
on or before the Closing Date shall be for the account of the Members and the
Purchaser shall pay over to the Seller Representative any such refund or the
amount of such credit within fifteen (15) days after receipt or entitlement
thereto.
Section
12.8 No
Code Section 338 Election.
The
Purchaser shall not make, or cause to be made, any election under Section 338
of
the Code with respect to the transactions contemplated by this
Agreement.
Section
12.9 Taxation
of Holdings After the Closing.
The
parties agree to elect to treat Holdings as a corporation for federal, state
and
local Tax purposes, effective as of the day after the Closing Date. The parties
agree to cooperate on all actions necessary to effectuate such election
(including, but not limited to, filing a “check-the-box” election on Form 8832
or any successor thereto).
ARTICLE
XIII
MISCELLANEOUS
AND GENERAL
Section
13.1 Seller
Representative.
(a) Appointment.
The
Seller Representative is hereby constituted and appointed as the true and lawful
agent, proxy and attorney in fact for and on behalf of the Members for all
purposes of this Agreement and the transactions described herein. Without
limiting the generality of the foregoing, the Seller Representative has full
power and authority, on behalf of each Member and his or its successors and
assigns, to (i) interpret the terms and provisions of this Agreement; (ii)
execute and deliver all agreements, certificates, statements, notices,
approvals, extensions, waivers, undertakings amendments and other documents
required or permitted to be given in connection with the consummation of the
transactions contemplated by this Agreement; (iii) receive service of process
in
connection with any claims under this Agreement; (iv) agree to, negotiate,
enter
into settlements and compromises of, and demand arbitration and comply with
orders of courts and awards of arbitrators with respect to such claims, and
to
take all actions necessary or appropriate in the sole judgment of the Seller
Representative for the accomplishment of the foregoing, including, without
limitation, taking all such actions as may be necessary under Article
XI
hereof,
(v) give and receive notices and communications; (vi) receive all or any portion
of the Total Purchase Price or any other amounts due to the Members hereunder;
and (vii) take all actions necessary or appropriate in the sole judgment of
the
Seller Representative on behalf of the Members in connection with this
Agreement.
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(b) Successors.
The
Seller Representative may be changed by the holders of a majority of the Members
based on their Pro Rate Share from time to time upon not less than ten (10)
days’ prior written notice to the Purchaser. The Seller Representative, or any
successor hereafter appointed, may resign at any time by written notice to
the
Purchaser and the Members. A successor Seller Representative will be named
by a
majority of the Members based on their Pro Rata Share. All power, authority,
rights and privileges conferred herein to the Seller Representative will apply
to any successor Seller Representative.
(c) Liability.
The
Seller Representative will not be liable to any Members for any act done or
omitted under this Agreement as the Seller Representative while acting in good
faith, and any act taken or omitted to be taken pursuant to the advice of
counsel will be conclusive evidence of such faith.
(d) Reliance.
From
and after the Closing Date, the Purchaser is entitled to deal exclusively with
the Seller Representative on all matters relating to this Agreement and agrees
to deal with the Seller Representative on an exclusive basis. A decision, act,
consent or instruction of the Seller Representative constitutes a decision
of
the Members. Such decision, act, consent or instruction is final, binding and
conclusive upon each Member. The Purchaser may rely conclusively upon any
decision, act, inaction, consent or instruction of the Seller Representative.
Notices or communications to or from the Seller Representative will constitute
notice to or from each of the Members.
(e) Payment.
Each
Member agrees that upon payment by or on behalf of the Purchaser to or at the
direction of the Seller Representative of any amount pursuant to the terms
of
this Agreement, such payment shall be deemed to have been paid directly to
the
Members and the Purchaser shall have no further obligation to the Members (and
the Members shall not have any claim against the Purchaser or any of its
Affiliates) with respect to such payment.
Section
13.2 Expenses.
Whether
or not the transactions contemplated by this Agreement are consummated, all
costs and expenses (including all legal, accounting, broker, finder or
investment banker fees) incurred in connection with this Agreement and the
transactions contemplated hereby are to be paid by the party incurring such
expenses except as expressly provided herein; provided,
however,
if the
Closing occurs, all Transaction Expenses shall be paid in accordance with
Section
2.2(c),
and
provided,
further,
however,
that
upon the earlier of (i) the Closing or (ii) the termination of this Agreement,
Purchaser shall reimburse the Sellers for up to $25,000 of legal fees and
expenses incurred by the Sellers’ counsel in connection with the review and
execution of the New Credit Agreement and the documents ancillary
thereto.
Section
13.3 Certain
Taxes and Fees.
All
transfer, documentary, sales, use, stamp, registration and other such Taxes
and
all conveyance fees, recording charges and other fees and charges (including
any
penalties and interest) (collectively, the “Transfer
Taxes”)
incurred in connection with the consummation of the transaction contemplated
by
this Agreement shall be paid by the Purchaser.
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Section
13.4 Successors
and Assigns.
This
Agreement is binding upon and inures to the benefit of the parties hereto and
their respective heirs or successors, as the case may be, and assigns, but
is
not assignable by any party without the prior written consent of the other
parties.
Section
13.5 Third
Party Beneficiaries.
Each
party hereto intends that this Agreement does not benefit or create any right
or
cause of action in or on behalf of any Person other than the parties
hereto.
Section
13.6 Further
Assurances.
The
parties shall execute such further instruments and take such further actions
as
may reasonably be necessary to carry out the intent of this Agreement. Each
party hereto shall cooperate affirmatively with the other parties, to the extent
reasonably requested by such other parties, to enforce rights and obligations
herein provided.
Section
13.7 Notices.
All
notices, requests, demands and other communications to be given under this
Agreement must be in writing and will be deemed duly given, unless otherwise
expressly indicated to the contrary in this Agreement, (i) when personally
delivered, (ii) upon delivery of a telephonic facsimile transmission (with
confirmation of such delivery), or (iii) one (1) Business Day after having
been
dispatched by a nationally recognized overnight courier service, addressed
to
the parties or their permitted assigns at the following addresses (or at such
other address or number as is given in writing by any party to the others)
as
follows:
|
If
to the Purchaser:
|
000
Xxxxx Xxxxxx, 00 Xxxxx
Xxx
Xxxx, XX 00000
Attn:
Xxxxxxxx X. Xxxx and Xxxxxx Xxxx
Fax:
(000) 000-0000
|
|
with
a copy to:
|
Xxxxxx
Xxxxxx Rosenman LLP
000
Xxxxxxx Xxxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxxx X. Xxxxxxxx
Fax:
(000) 000-0000
|
|
If
to the Seller Representative:
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KCP
Services LLC
0000
Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx,
XX 00000
Attention:
Xxxxxxx XxXxxxxxx
Fax:
(000) 000-0000
|
|
with
a copy to:
|
Xxxxx
Day
Xxxxx
Xxxxx
000
Xxxxxxxx Xxxxxx
Xxxxxxxxx,
Xxxx 00000
Attention:
Xxxxxxx X. Xxxxxx, Xx.
Fax:
(000) 000-0000
|
-52-
Section
13.8 Complete
Agreement.
This
Agreement and the Schedule and Exhibits hereto and the other documents delivered
by the parties in connection herewith, together with the Confidentiality
Agreement, contain the complete agreement between the parties hereto with
respect to the transactions contemplated hereby and thereby and supersede all
prior agreements and understandings between the parties hereto with respect
thereto.
Section
13.9 Captions.
The
captions contained in this Agreement are for convenience of reference only
and
do not form a part of this Agreement.
Section
13.10 Amendment.
This
Agreement may be amended or modified only by an instrument in writing duly
executed by the Seller Representative and the Purchaser; provided, however,
that
no amendment may be made that is prohibited by any Law.
Section
13.11 Waiver.
At any
time prior to the Closing Date, the Seller Representative and the Purchaser
may
(a) extend the time for the performance of any of the obligations or other
acts
of the parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, or
(c)
waive compliance with any of the agreements or conditions contained herein,
to
the extent permitted by applicable Law. Any agreement to any such extension
or
waiver will be valid only if set forth in a writing signed by the Seller
Representative and the Purchaser.
Section
13.12 Governing
Law.
This
Agreement is to be governed by, and construed and enforced in accordance with,
the laws of the State of New York, without regard to its rules of conflict
of
laws.
Section
13.13 Severability.
Any
term or provision of this Agreement that is invalid or unenforceable in any
jurisdiction will, as to that jurisdiction, be ineffective to the extent of
such
invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the validity
or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision will be interpreted to be only so broad as is
enforceable.
Section
13.14 Counterparts.
This
Agreement may be executed in two or more counterparts, each of which will be
deemed an original but all of which will constitute but one
instrument.
Section
13.15 Officers
and Directors Indemnification; Insurance.
(a) For
six
years after the Closing Date, the Purchaser shall cause Holdings and the Company
(and any of their respective successors) to indemnify and hold harmless, and
provide advancement of expenses to, all past and present directors, officers
and
employees of Holdings and the Company to the same extent such persons are
indemnified or have the right to advancement of expenses as of the Closing
Date
by Holdings or the Company pursuant to Holdings’ or the Company’s, as the case
may be, operating agreement, articles of organization or bylaws (or equivalent
organizational documents), for acts or omissions occurring at or prior to the
Closing Date. The foregoing obligation shall not apply to any claim or liability
for which Holdings or the Company would be prohibited from indemnifying and
holding harmless such director, officer or employee against under applicable
law. For six years after the Closing Date, the Purchaser shall cause Holdings
and the Company (and any of their successors) not to amend, restate or otherwise
modify any of their respective operating agreements, articles of organization
or
bylaws (or equivalent organizational documents) in any manner that would
adversely impact or otherwise limit, in any material respect, the rights of
the
directors, officers and employees of Holdings or the Company as described in
this Section
13.15.
-53-
(b) For
six
years after the Closing Date, Purchaser shall maintain in effect directors’ and
officers’ liability insurance, employment practices liability insurance and
fiduciary liability insurance covering acts or omissions occurring on or prior
to the Closing Date with respect to those Persons who are currently covered
by
Holdings’ or the Company’s comparable insurance policies on terms with respect
to such coverage and amount no less favorable to the insured than those of
such
current insurance coverages. Prior to the Closing Date, Purchaser shall deliver
to the Seller Representative reasonable evidence of the continuation as
aforesaid of such insurance coverages.
(c) The
provisions of this Section
13.15
are
intended to be for the benefit of, and will be enforceable by, each indemnified
party or insured person, his or her heirs and his or her representatives and
are
in additional to, and not in substitution for, any other right to
indemnification or contribution that any such Person may have by contract or
otherwise.
Section
13.16 Intentionally
Omitted.
Section
13.17 Specific
Performance.
The
parties agree that if any of the provisions of this Agreement were not performed
by the Members in accordance with their specific terms or were otherwise
breached by the Members, irreparable damage would occur, no adequate remedy
at
Law would exist and damages would be difficult to determine, and that Purchaser
will be entitled to specific performance of the terms hereof. The parties waive
any requirement for the posting of a bond in connection with any Action seeking
specific performance; provided, however, that nothing in this Section
13.17
will
affect the right of any of the parties to seek recovery against any party
hereto, at Law, in equity or otherwise, with respect to any covenants,
agreements or obligations to be performed by such party or parties after the
Closing Date.
Section
13.18 WAIVER
OF JURY TRIAL.
EACH
PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY LITIGATION, PROCEEDING
OR OTHER LEGAL ACTION IN CONNECTION WITH OR RELATING TO THIS AGREEMENT, OR
ANY
AGREEMENT OR TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
[Signatures
on Following Page]
-54-
IN
WITNESS WHEREOF, the Purchaser, the Company, Holdings, the Members and the
Seller Representative have executed, or have caused their duly authorized
representatives to execute, this Agreement as of the day and year first above
written.
|
By:
/s/ Xxxxxxxx X. Xxxx
|
|
|
Print
Name: Xxxxxxxx X. Xxxx
|
|
|
Title:
Chief Excutive Officer
|
|
|
|
|
|
ESSEX
CRANE RENTAL CORP.
|
|
|
By:
/s/ Xxxxxx X. Xxxxx
|
|
|
Print
Name: Xxxxxx X. Xxxxx
|
|
|
Title:
CEO / President
|
|
|
|
|
|
ESSEX
HOLDINGS LLC
|
|
|
By:
/s/ Xxxxxx X. Xxxxx
|
|
|
Print
Name: Xxxxxx X. Xxxxx
|
|
|
Title:
CEO / President
|
|
|
|
|
MEMBERS:
|
||
|
KIRTLAND
CAPITAL PARTNERS III L.P.
|
||
|
By:
|
Kirtland
Partners Ltd., its general partner
|
|
|
By:
/s/ Xxxx X. Xxxxxx
|
||
|
Print
Name: Xxxx X. Xxxxxx
|
||
|
Title:
President
|
||
|
|
||
|
KIRTLAND
CAPITAL COMPANY III LLC
|
||
|
By:
|
Kirtland
Partners Ltd., its managing member
|
|
|
By:
/s/ Xxxx X. Xxxxxx
|
||
|
Print
Name: Xxxx X. Xxxxxx
|
||
|
Title
President
|
||
|
|
||
|
Xxxxxx
X. Xxxxx /s/ Xxxxxx X.
Xxxxx
|
||
|
Xxxxxx
X. Xxxxx /s/ Xxxxxx X.
Xxxxx
|
||
|
Xxxxxxx
X. Xxxxx /s/ Xxxxxxx X.
Xxxxx
|
||
|
Xxxxxxx
X. X’Xxxxxx /s/ Xxxxxxx X.
X’Xxxxxx
|
||
|
SELLER
REPRESENTATIVE:
|
||
|
KCP
SERVICES LLC
|
||
|
By:
|
Kirtland
Capital Corporation, its managing member
|
|
|
By:
/s/ Xxxxxxx X. XxXxxxxxx
|
||
|
Print
Name: Xxxxxxx X. XxXxxxxxx
|
||
|
Title:
CFO
|
||
|
|
||
SCHEDULE
1
As
stated
in the Report of Independent Auditors issued by PricewaterhouseCoopers, the
financial statements of the Company are “prepared in accordance with GAAP except
for modifications specified below.” The financial report refers to Note #1 of
the financial statement for these descriptions. Summarized below are the
differences.
|
1.
|
When
Holdings acquired the Company, Holdings allocated the purchase price
between tangible assets and goodwill. The total cost of the acquisition
of
$169,352,174 was allocated to an opening balance sheet goodwill amount
of
$68,259,591 and then the remainder of $101,092,583 was allocated
among the
net tangible assets acquired based on their fair values. This resulted
in
$94,000,000 being allocated to all of the land, buildings, equipment
and
rental equipment acquired. The implications are as
follows:
|
(a) Under
GAAP on the date of acquisition there would have been no goodwill related to
the
acquisition since the appraised fair value of the assets on the date of
acquisition was over $240 million and in excess of the total purchase price.
As
a result there would be no amortization of goodwill under GAAP because there
would have been no goodwill.
(b) The
property and equipment would have been assigned the entire purchase price
allocated to goodwill under GAAP.
(c) The
property and equipment is depreciated on a much accelerated basis under the
Internal Revenue Service Regulations by using the modified accelerated cost
recovery system depreciation method. As an example, a new crawler crane under
this system is 100% depreciated within 6 years which on a GAAP basis this would
be significantly longer on these assets that last more than 40 years when
properly maintained.
|
2.
|
The
original purchase price had no value allocated to the spare parts
inventory because there was no perpetual inventory system at the
date of
acquisition and there were more than 10,000 part numbers located
in
several yard warehouses. Since the acquisition, new real-time systems
have
been implemented and a physical inventory has been taken. However,
the
Company had to continue the policies of its predecessor post acquisition
because of the lack of systems at that time. Accordingly, the purchase
of
spare parts inventory continues to be expensed at the time of purchase
and
is not capitalized in the financial statements. The values and quantities
are however tracked in the real-time ERP subsystem and general
ledger.
|
|
3.
|
The
accounting for interest rate swap’s
has been done on a cash basis, not in accordance with
GAAP.
|
|
4.
|
Accounting
for income taxes, does not follow GAAP accounting and footnote
disclosures.
|
|
5.
|
Accounting
for Information Systems Equipment and Software as noted in the financial
statement footnotes “certain
costs have been expensed under the modified tax basis approach that
would
otherwise have been capitalized under generally accepted accounting
principles in the United States of America as determined by SOP 98-1,
Accounting for the Costs of Computer Software Developed or Obtained
for
Internal Use.”
These costs have been amortized on a basis of three years straight
line.
|
Exhibit
A
Current
Assets
Cash:
Cash
will
include cash collected by the Company that is in the banking system but is
unavailable because of float.
Accounts
Receivable:
Accounts Receivable will exclude receivables from the sale of Rental
Equipment.
Prepaid
Expenses: Prepaid
expenses will exclude any prepaid transaction costs incurred related to the
proposed sale of the Company.
Spare
Parts Inventory:
Spare
Parts Inventory will be excluded from the determination of Working
Capital.
Current
Liabilities:
Accounts
Payable:
Accounts
Payable will exclude (i) payables related to the purchase of Rental Equipment
and (ii) $125,058.29 on account of the line item entitled “Accounts Payable
Other - State Tax Refund.” Accounts Payable will include (i) outstanding checks
at the Closing Date and (ii) payables with respect to transaction costs related
to the proposed sale of the Company but not treated at the Closing as
Transaction Expenses.
Interest
Payable: Accrued
Interest Payable will be excluded from the determination of Working
Capital.
Accrued
Management Fees: Accrued
Management Fees will be excluded from the determination of Working
Capital.
Accrued
Board of Director Fees:
Accrued
Board of Director Fees will be excluded from the determination of Working
Capital.
Other
Accrued Expenses: Accrued
bonuses will be included in the determination of Working Capital to the extent
in excess of the Bonus Amount.
Accrued
Vacation:
For the
avoidance of doubt the vacation accrual in the Closing Working Capital will
be
an amount not lower than $185,000.
