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EXHIBIT 10.6
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ASSET PURCHASE AGREEMENT
AMONG
RENTX INDUSTRIES, INC.
ZODIAC RENTALS, INC. and ZODIAC RENTALS, INC. III
AND XXXXXX X. XXXXX, XXXXXXX X. XXXXX,
XXXXXXX X. XXXXXXXX AND XXXXX X. XXXXXXXX
DATED AS OF APRIL 3, 1996
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TABLE OF CONTENTS
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1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Purchase and Sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1. Basic Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.2. Assumption of Certain Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3. Purchase Price; Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4. Sales Taxes, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.5. Closing; Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.6. Deliveries at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3. Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1. Representations and Warranties of the Seller and the Shareholders . . . . . . . . . . . . . . . . . 12
3.2. Representations and Warranties of the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.3. Survival of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.4. Representations as to Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4. Pre-Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.2. Operation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.3. Preservation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.4. Full Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.5. Notice of Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.6. Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.7. Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5. Post-Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.1. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.2. Transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.3. Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.4. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.5. Post-Closing Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.6. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.7. Satisfaction of Liabilities and Other Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.8. Collection of Guaranteed Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.9. Post-Closing Access to Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6. Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.1. Conditions to Obligation of the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.2. Conditions to Obligation of the Seller and the Shareholders . . . . . . . . . . . . . . . . . . . . 32
7. Remedies for Breaches of This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.1. Indemnification Provisions for Benefit of the Buyer . . . . . . . . . . . . . . . . . . . . . . . . 32
(i)
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7.2. Indemnification Provisions for Benefit of the Seller and the Shareholders . . . . . . . . . . . . . 34
7.3. Matters Involving Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.4. Right of Offset. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.5. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.1. Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.1. No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.2. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.3. Succession and Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.4. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.5. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.7. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.8. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.9. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.10. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.11. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.12. Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.13. Incorporation of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.14. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(ii)
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This Asset Purchase Agreement is entered into as of April 3,
1996 among RentX Industries, Inc., a Delaware corporation (the "Buyer"), Zodiac
Rentals, Inc., a Colorado corporation ("Zodiac One"), Zodiac Rentals, Inc.
III, a Colorado corporation ("Zodiac Three"), and Xxxxxx X. Xxxxx, Xxxxxxx X.
Xxxxx, Xxxxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxxx (individually, a
"Shareholder" and collectively, the "Shareholders").
Recitals
The Shareholders own all of the issued and outstanding capital
stock of Zodiac One and own or have the right to purchase all of the issued and
outstanding capital stock of Zodiac Three, which together operate an equipment
rental business under the Zodiac name. Each of Zodiac One and Zodiac Three
desires to sell, and the Buyer desires to purchase, substantially all of the
assets of Zodiac One and Zodiac Three as provided in this Agreement.
Agreement
NOW, THEREFORE, in consideration of the premises, the mutual
representations, warranties and covenants set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are acknowledged,
the parties agree as follows:
1. Definitions.
1.1. Defined Terms. The following terms used in this
Agreement will have the meanings designated below:
Acquired Assets means all right, title and interest
of the Seller in and to all of the tangible and intangible assets of the Seller
except the Excluded Assets, but including, without limitation, all of the
Seller's (a) tangible personal property (such as machinery, equipment,
inventories, supplies, manufactured and purchased parts, furniture,
automobiles, trucks, tractors, trailers and tools), (b) real property
leaseholds, and those improvements and fixtures located on the Premises which
can be removed therefrom without causing damage to the buildings from which
they are removed unless such damage is repaired by the Buyer, (c) corporate
names and tradenames, other Intellectual Property and goodwill, licenses and
sublicenses granted and obtained with respect thereto and rights thereunder,
remedies against infringements thereof, and rights to protection of interests
therein, (d) agreements, contracts, instruments, security interests, guaranties
and other similar arrangements and rights thereunder, except those representing
Employee Benefit Plans, Benefit Arrangements or other Liabilities that are not
Assumed Liabilities, (e) accounts, notes receivable and other receivables, (f)
securities, (g) $2,700 in cash, which will be left in the cash registers on the
Premises immediately after the Closing, (h) claims, deposits, payments,
refunds, causes of action, choses in action, rights of recovery, rights of
set-off and rights of recoupment (including any such item relating to the
payment of Taxes, other than the payment of income Taxes by the Shareholders),
(i) franchises, approvals, Permits, licenses, Orders in favor of the Seller,
registrations, certificates, variances and similar rights and items obtained
from Governmental
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Authorities, and rights thereunder, (j) the Assigned Vehicle Ownership Taxes,
and (k) books, records, ledgers, files, documents, correspondence, lists,
drawings, specifications, creative materials, advertising and promotional
materials, studies, reports and other printed or written materials.
Adverse Consequences means all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, penalties, fines,
costs, amounts paid in settlement, Liabilities, obligations, Taxes, liens,
losses, damages, costs, expenses and fees (including court costs and fees and
expenses of counsel and other experts), plus interest at a rate equal to the
prime rate quoted from time to time by Norwest Bank Colorado, N.A. plus two
percentage points accrued from the date any Adverse Consequence becomes a
liability of the party suffering the Adverse Consequence as determined in
accordance with GAAP.
Affiliated Group means any affiliated group within
the meaning of Code Section 1504 or any similar group defined under a similar
provision of state, local or foreign law.
Assigned Vehicle Ownership Taxes means specific
ownership tax payments made by the Seller or the Shareholders prior to the
Closing on the vehicles and mobile equipment included in the Acquired Assets,
to the extent such payments are attributable to the period from and after the
Closing Date and to the extent Colorado law permits such payments to be
assigned by the Seller and the Shareholders to the Buyer.
Assignment and Assumption Agreement means the
Assignment and Assumption Agreement between the Seller and the Buyer in the
form of Exhibit 1.1(a) to be entered into at the Closing, pursuant to which the
Seller will assign to the Buyer, and the Buyer will assume, the obligations of
the Seller arising after the Closing Date under certain contracts specified by
the Buyer which at the Closing will be identified on Schedule 1 thereto.
Assumed Debt means indebtedness and purchase price
payment obligations incurred by the Seller in connection with the purchase of
equipment approved by the Buyer, as described on Exhibit 1.1(b).
Assumed Liabilities means (a) the obligations of the
Seller arising after the Closing Date under those contracts which are
identified on Schedule 1 to the Assignment and Assumption Agreement with
respect to the period from and after the Closing Date, (b) the Assumed Debt,
(c) personal property taxes on the Acquired Assets for the period from and
after the Closing, determined by prorating personal property taxes for the
current year in proportion to the number of days in the year prior to and
including the date of the Closing compared to the number of days in the year
remaining after the date of the Closing, and (d) fees and specific ownership
taxes payable by the Buyer to Governmental Authorities upon the registration in
the Buyer's name after the Closing of the vehicles and mobile equipment
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included in the Acquired Assets. Assumed Liabilities will not include any
other Liability, including but not limited to the following: (i) any Liability
relating to or arising directly or indirectly out of any product sold, leased
or delivered or any service provided by the Seller or its predecessors prior to
the Closing, (ii) the failure of the Seller or any predecessor to comply with
any Environmental Obligation or Other Legal Requirement, (iii) any Liability
with respect to which the Buyer is entitled to indemnification pursuant to
Section 7, (iv) any Liability for Taxes arising in connection with the
consummation of the transactions contemplated hereby, (v) any Liability of the
Seller for the unpaid Taxes of any other Person under Treasury Regulations
Section 1.1502-6 (or any similar provision of state, local or foreign law), as
a transferee or successor by contract or otherwise, (vi) any Liability of the
Seller or any Shareholder for costs and expenses incurred in connection with
this Agreement, any Other Seller Agreement or any Other Shareholder Agreement
and the transactions contemplated hereby or thereby (including, without
limitation, those for which the Shareholders are responsible pursuant to
Section 9.10), (vii) any Liability of the Seller or any Shareholder under this
Agreement, any Other Seller Agreement or any Other Shareholder Agreement,
(viii) any Liability under COBRA or the Worker Adjustment and Retraining
Notification Act, as amended, or any similar state or local law arising out of
the consummation of the transactions contemplated by this Agreement or any
termination of the employment of any employee of the Seller, (ix) any Liability
under any Employee Benefit Plan or Benefit Arrangement, (x) any Liability of
the Seller to indemnify any Person by reason of the fact that such Person was a
director, officer, employee or agent of the Seller or was serving as a partner,
trustee, director, officer, employee or agent of another entity, (xi) any
Liability relating to any Excluded Asset, (xii) any Liability relating to or
arising out of any failure to comply with any bulk sales or fraudulent transfer
law in connection with the consummation of the transactions contemplated by
this Agreement and (xiii) any contingent Liability of the Seller in existence
at Closing or arising prior to Closing.
Benefit Arrangement means any employment, severance
or other similar contract, arrangement or policy and each plan or agreement
(whether written or oral) providing through insurance coverage or through
self-insured arrangements, workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
deferred compensation, profit sharing, bonuses, stock options, stock
appreciation rights or other forms of incentive compensation, reduced interest
or interest-free loans, mortgages, relocation assistance or post- retirement
insurance, compensation or other benefits (including without limitation any
contracts, arrangements or understanding relating to this Agreement) that (a)
is not an Employee Benefit Plan, (b) is entered into, maintained or contributed
to by the Seller and (c) benefits any employee or former employee of the Seller
or any relative thereof.
Business means the businesses conducted by the Seller
at any time within the period of 24 months prior to the Closing.
Business Day means any day other than a Saturday, a
Sunday or a day on which banks in Denver, Colorado are permitted or required by
law to be closed.
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Closing has the meaning given it in Section 2.5.
Closing Accounts Receivable means all accounts
receivable of the Seller which arose from the ordinary course of its business
and are included in the Acquired Assets, as set forth on the Closing Balance
Sheet.
Closing Balance Sheet means the balance sheet of the
Seller as of the Closing Date prepared in accordance with GAAP on an accrual
basis consistent (other than the preparation thereof on an accrual, rather than
cash, basis) with the Seller's past practice and audited, at the Buyer's
expense, by a certified public accounting firm chosen by the Buyer.
Closing Date has the meaning given it in Section 2.5.
Closing Inventory means the Seller's current
inventory of goods and equipment held for rent or sale in the ordinary course
of its business which are included in the Acquired Assets, as set forth on the
Closing Balance Sheet.
COBRA means the provisions currently contained in
Section 4980B of the Code and the regulations promulgated thereunder.
Code means the Internal Revenue Code of 1986, as
amended.
Confidential Information means any information
concerning the subject Person or the subject Person's business, products,
financial condition, prospects and affairs that is not generally available to
the public.
Employee Benefit Plan means any (a) nonqualified
deferred compensation or retirement plan or arrangement which is an Employee
Pension Benefit Plan, (b) qualified defined contribution retirement plan or
arrangement which is an Employee Pension Benefit Plan, (c) qualified defined
benefit retirement plan or arrangement which is an Employee Pension Benefit
Plan (including any Multiemployer Plan) or (d) Employee Welfare Benefit Plan.
Employee Pension Benefit Plan has the meaning set
forth in ERISA Section 3(2).
Employee Welfare Benefit Plan has the meaning set
forth in ERISA Section 3(1).
Employment Agreements means the Employment and
Noncompetition Agreements between the Buyer and each of Xxxxxx X. Xxxxx and
Xxxxx X. Xxxxxxxx in the form of Exhibit 1.1(c) to be entered into at the
Closing.
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Encumbrance means any mortgage, pledge, conditional
sale agreement, charge, claim, interest of another Person, lien, security
interest, title defect or other encumbrance.
Environmental Obligations means all federal, state
and local laws, regulations, rules, orders, permits, licenses, approvals,
ordinances, judgments, injunctions, directives, and common law relating to land
use, public health, safety, welfare or the environment or to the impact of
business and activities upon land use, public health, safety, welfare or the
environment, including, but not limited to, all requirements of the following
federal statutes and regulations promulgated pursuant thereto, as amended from
time to time: the Clean Air Act; the Clean Water Act; the Resource
Conservation and Recovery Act; the Safe Drinking Water Act; the Federal
Insecticide, Fungicide and Rodenticide Act; the National Environmental Policy
Act; the Comprehensive Environmental Response, Compensation, and Liability Act;
OSHA; the Emergency Planning and Community Right-to-Know Act; the Toxic
Substances Control Act; and any state or local law counterpart or supplement to
such Acts.
ERISA means the Employee Retirement Income Security
Act of 1974, as amended, and any regulations, rules or orders promulgated
thereunder.
Escrow Account means the account established at the
Closing to be held by the Escrow Agent pursuant to the Escrow Agreement.
Escrow Agent means Norwest Bank Colorado, N.A.
Escrow Agreement means the Escrow Agreement among the
Buyer, the Seller, the Shareholders and the Escrow Agent in the form of Exhibit
1.1(d) to be entered into at the Closing.
Escrow Period means the period commencing on the
Closing Date and ending on the first anniversary of the Closing Date.
Excluded Assets means (a) the Seller's corporate
charter, taxpayer and other identification numbers, seals, minute books, stock
transfer books and other documents relating solely to the organization,
maintenance and existence of the Seller as a corporation, (b) any rights of the
Seller under this Agreement and the Other Seller Agreements, (c) the land and
buildings which constitute the Premises, except the fixtures and improvements
which can be removed therefrom without causing damage to the buildings from
which they are removed unless such damage is repaired by the Buyer, (d)
agreements, contracts, plans or similar arrangements representing Employee
Benefit Plans or Benefit Arrangements and (e) claims for refunds of income
taxes paid by any Shareholder with respect to the Seller's business.
GAAP means generally accepted accounting principles as
in effect from time to time in the United States.
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Governmental Authority means (a) the United States of
America, (b) any state, commonwealth, territory or possession of the United
States of America and any political subdivision thereof (including counties,
municipalities and the like), (c) any foreign (as to the United States of
America) sovereign entity and any political subdivision thereof or (d) any
agency, authority or instrumentality of any of the foregoing, including,
without limitation, any court, tribunal, department, bureau, commission or
board.
Hazardous Materials means any material, chemical,
compound, mixture, substance or waste which is regulated by any Governmental
Authority having jurisdiction over any premises, including but not limited to
(a) any oil or petroleum compounds, flammable substances, explosives,
radioactive materials, or any other materials or pollutants which pose a hazard
to the premises or to persons in or about the premises or which cause the
premises to be in violation of any Legal Requirement, (b) asbestos,
asbestos-containing or presumed asbestos-containing material of any kind or
character, (c) polychlorinated biphenyls, (d) any materials or substances
designated as "hazardous substances" pursuant to Section 311 of the Clean Water
Act, 33 U.S.C. Section 1251 et seq., (e) "economic poison," as defined in the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section 135 et
seq., (f) "chemical substance," "new chemical substance," or "hazardous
chemical substance or mixture" pursuant to Sections 3, 6 and 7 of the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq., (g) "hazardous
substances" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., and
(h) "hazardous waste" pursuant to Section 1004 of the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq.
Xxxxxxxxx Noncompetition Agreement means the
Noncompetition Agreement between Xxxxxxx Xxxxxxxxx and Zodiac Three in the form
of Exhibit 1.1(e) to be executed and delivered by the parties thereto prior to
the Closing and assigned to the Buyer by Zodiac Three at the Closing.
Intellectual Property means (a) all inventions
(whether patentable or unpatentable and whether or not reduced to practice),
all improvements thereto, and all patents, patent applications and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof, (b)
all trademarks, service marks, trade dress, logos, trade names and corporate
names, together with all translations, adaptations, derivations and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations and renewals in connection therewith, (c) all
copyrightable works, all copyrights and all applications, registrations and
renewals in connection therewith, (d) all mask works and all applications,
registrations and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other
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proprietary rights and (h) all copies and tangible and intangible embodiments
thereof (in whatever form or medium).
Latest Balance Sheet has the meaning given it in
Section 3.1(f).
Legal Requirement means any constitution, statute,
ordinance, code, law, rule, regulation, order or other requirement, standard or
procedure enacted, adopted or applied by any Governmental Authority, including
judicial decisions applying common law or interpreting any other Legal
Requirement.
Liabilities Reserve means funds on deposit at any
time in the demand deposit account established on the Closing Date in the name
of the Buyer and the Seller in an amount equal to the Reserve Amount deposited
therein at the Closing less the aggregate amount of such funds applied since
the Closing to satisfy Reserved Liabilities.
Liability means any liability or obligation (whether
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any liability for Taxes.
Multiemployer Plan has the meaning set forth in ERISA
Section 3(37).
Orders means all applicable judgments, injunctions,
orders, decrees, notices of violation or other requirements of any Governmental
Authority or arbitrator having jurisdiction in the matter, including a
bankruptcy court or trustee.
OSHA means the Occupational Safety and Health Act of
1970, as amended, and any regulations, rules or orders promulgated thereunder.
Other Buyer Agreements means the Assignment and
Assumption Agreement, the Employment Agreements, the Escrow Agreement, the
Premises Leases and the other documents and instruments to be executed and
delivered by the Buyer pursuant to this Agreement.
Other Seller Agreements means the Assignment and
Assumption Agreement, the Escrow Agreement, the Xxxxxxxxx Noncompetition
Agreement, the xxxx of sale and other documents and instruments to be executed
and delivered by the Seller or any affiliate thereof pursuant to this
Agreement.
Other Shareholder Agreements means the Employment
Agreements, the Escrow Agreement, the Premises Leases and the other documents
and instruments to be executed and delivered by any or all of the Shareholders
pursuant to this Agreement.
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Permits means all permits, licenses, consents,
franchises, authorizations, approvals, privileges, waivers, exemptions,
exclusionary or inclusionary orders and other concessions, whether governmental
or private, including, without limitation, all environmental, public health or
safety permits required in connection with the Business.
Person means an individual, partnership, corporation,
association, joint stock company, trust, joint venture, limited liability
company, unincorporated organization or Governmental Authority.
Premises means the business premises leased by the
Seller, which are located and owned as set forth on Exhibit 1.1(f).
Premises Leases means the leases and assignments of
lease in the form of Exhibit 1.1(g) under which the Buyer will lease the
Premises from the Shareholders and take assignments of leases for Premises
owned by Persons other than the Shareholders at the Closing.
Price Allocation Schedule has the meaning given it in
Section 2.3(b).
Qualified Rental Equipment Payments means amounts
paid by the Seller prior to the Closing Date as the purchase price of all or
any part of the equipment described on Exhibit 1.1(b).
Reserve Amount means an amount equal to Reserved
Liabilities as of the Closing Date, as estimated in good faith by the
Shareholders and the Buyer on the day before the Closing occurs.
Reserved Liabilities means all Liabilities relating
to the Seller, the Business or the Acquired Assets (including Liabilities which
at the time of calculation are accrued but not yet payable) except the Assumed
Liabilities.
Right means any right, property interest, concession,
patent, trademark, trade name, copyright, know-how or other proprietary right
of another Person.
Seller means either or both of Zodiac One and Zodiac
Three, as the context requires.
Shareholders has the meaning given it in the preamble
to this Agreement.
Subsidiary means any corporation with respect to
which a specified Person directly or indirectly owns a majority of the common
stock or has the power to vote or direct the voting of sufficient securities to
elect a majority of the directors.
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Survival Period means the applicable periods after
the Closing Date during which representations and warranties survive pursuant
to Section 3.3.
Tax means any federal, state, local or foreign
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, documentary, personal property, sales, use, transfer, registration,
value added, alternative or add-on minimum, estimated or other tax of any kind
whatsoever, including any interest, penalty or addition thereto, whether
disputed or not.
Tax Return means any return, declaration, report,
claim for refund or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
Vehicle Fee and Tax Reimbursement means an amount
equal to the Assigned Vehicle Ownership Taxes plus vehicle licensing fees on
the vehicles and mobile equipment included in the Acquired Assets which are
paid by the Seller or the Shareholders prior to the Closing and attributable to
periods after the Closing Date.
2. Purchase and Sale.
2.1. Basic Transaction. Subject to the terms and
conditions set forth in this Agreement, the Buyer agrees to purchase from the
Seller, and the Seller agrees to sell to the Buyer, all the Acquired Assets
free and clear of any Encumbrance for the consideration specified in Section
2.3. The Buyer will have no obligation under this Agreement to purchase less
than all of the Acquired Assets.
2.2. Assumption of Certain Liabilities. Subject to the
terms and conditions set forth in this Agreement, the Buyer agrees to assume
and become responsible for all of the Assumed Liabilities at the Closing. The
Buyer will not assume or have any responsibility with respect to any Liability
not included within the definition of Assumed Liabilities.
2.3. Purchase Price; Payment. (a) The consideration for
the Acquired Assets will consist of $10,939,217 (plus interest on the deferred
portion thereof as described below) plus (i) an amount equal to the Vehicle Fee
and Tax Reimbursement and (ii) an amount equal to Qualified Rental Equipment
Payments, payable as described below, and the assumption by the Buyer of the
Assumed Liabilities. At the Closing the Buyer will pay to the Seller, by wire
transfer or other delivery of immediately available funds to an account
designated by the Seller prior to the Closing, an amount equal to $9,252,700
plus an amount equal to the Vehicle Fee and Tax Reimbursement as estimated in
good faith by the Buyer and the Seller on the day before the Closing. As soon
as practicable after the Closing the Buyer and the Seller will determine the
precise amount of the Vehicle Fee and Tax Reimbursement. Promptly after such
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determination they will instruct the Escrow Agent to disburse to the Buyer from
the Escrow Account the amount, if any, by which the estimated Vehicle Fee and
Tax Reimbursement paid by the Buyer at the Closing exceeds the Vehicle Fee and
Tax Reimbursement as finally determined, or the Buyer will pay to the Seller
the amount, if any, by which the Vehicle Fee and Tax Reimbursement as so
determined exceeds the estimated Vehicle Fee and Tax Reimbursement paid to the
Seller at the Closing. If the parties agree prior to the Closing that the
Buyer will assume any debt or payment obligation of the Seller or the
Shareholders in addition to the Assumed Debt, either the purchase price payable
by the Buyer at the Closing will be reduced by the amount of such debt or
payment obligation or the Seller or the Shareholders whose debt or payment
obligation is assumed will pay to the Buyer at the Closing cash in the amount
of such debt or obligations, as agreed by the parties prior to the Closing. At
the Closing the parties will arrange for any security for such additional debt
or payment obligations and the liability of the Seller and the Shareholders
with respect to the assumed debt or payment obligation to be released by the
creditor.
The Buyer will pay to the Seller, by wire transfer or other
delivery of immediately available funds to an account designated by the Seller
prior to the Closing, the deferred purchase price payments together with
interest set forth in Exhibit 2.3(a) on the dates set forth therein.
At the Closing the Buyer will deposit $750,000 into the Escrow
Account by wire transfer or other delivery of immediately available funds.
Such escrow deposit will be the property of the Seller subject to the Seller's
and the Shareholders' indemnification obligations set forth in this Agreement,
and will be held, invested, administered and disbursed according to Section
7.1(b) hereof and the Escrow Agreement. The Shareholders, on the one hand, and
the Buyer, on the other, each will pay one-half of the Escrow Agent's fees and
reimbursable expenses as and when due.
(b) If a reduction in the capital gains or
ordinary income tax rate, or any deduction or exclusion from capital gains or
ordinary income tax, is enacted into law which is effective as to the
transactions contemplated by this Agreement and which reduces the Liability of
the Shareholders or the Seller for capital gains or ordinary income tax from
the amount which they would be required to pay under the law and regulations in
effect as of the date of this Agreement, the purchase price for the Acquired
Assets will be reduced by one-half of the reduction in the Seller's and the
Shareholders' capital gains or ordinary income tax caused by such enactment.
The amount of such reduction in liability will be calculated by Xx. Xxxxxx
Xxxxxx and paid to the Buyer by the Shareholders as promptly as practicable
after such reduction, deduction or exclusion is enacted or adopted, but in no
event later than April 15 of the year following enactment or adoption. The
Price Allocation Schedule described below automatically will be deemed amended
to reflect a corresponding reduction in the amount of the purchase price
allocated to goodwill and, to the extent, if any, that the reduction in the
purchase price exceeds the total purchase price allocated to goodwill in the
Price Allocation Schedule at the Closing, a reduction in the amount of the
purchase price allocated to equipment in the Price Allocation Schedule as of
the Closing. Xx. Xxxxxx promptly will provide to the
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Buyer and the Shareholders his written explanation of the calculation
contemplated by this paragraph (b). The Buyer will give notice to the
Shareholders of any disagreement with the calculation within 20 days after
receipt of the written explanation. The parties will attempt in good faith to
resolve any disagreement about the calculation promptly, and if they cannot do
so the disagreement will be submitted to arbitration pursuant to this
Agreement. Each of the Buyer, on the one hand, and the Shareholders, on the
other, will pay one-half of the fee charged by Xx. Xxxxxx for the calculation
described in this paragraph (b).
(c) As soon as practicable after the Closing, the
parties will prepare and initial a "Price Allocation Schedule" allocating the
total consideration for the Acquired Assets as of the Closing Date between the
categories of Acquired Assets described below. In preparing the Price
Allocation Schedule, the parties will allocate the total consideration for the
Acquired Assets among the Acquired Assets in the following manner:
(i) to Closing Inventory, equipment,
leasehold improvements and the other tangible property included in
Acquired Assets, the current book value thereof as reflected on the
Closing Balance Sheet (but determined on a tax, rather than GAAP,
basis), and to Closing Accounts Receivable the current book value
thereof as reflected on the Closing Balance Sheet, which in each case
the parties agree is the fair market value thereof; and
(ii) the entire balance to the goodwill
of the Business, or at the Buyer's sole discretion to the Seller's
other intangible assets which are included in the Acquired Assets.
The parties acknowledge that such allocations were determined pursuant to arm's
length bargaining regarding the fair market values of the Acquired Assets in
accordance with the provisions of Code Section 1060. The parties agree to be
bound by the allocations set forth in the Price Allocation Schedule for all
federal, state and local Tax purposes, including for purposes of determining
any income, gain, loss, depreciation or other deductions in respect of such
assets. The parties further agree to prepare and file all Tax Returns
(including Form 8594 under the Code) in a manner consistent with such
allocations and not to take any position contrary to such allocations in any
administrative or judicial proceeding.
(d) Satisfaction of Reserved Liabilities. At the
Closing the Shareholders will deposit into a demand deposit account in the name
of the Buyer and the Seller an amount equal to the Reserve Amount. Such
Liabilities Reserve will be applied to the payment of Reserved Liabilities, by
disbursements from that account, as they become due and payable. Reserved
Liabilities representing accrued vacation and other accrued employee benefits
will be satisfied by payment of the amount thereof to the Buyer as the Buyer
provides such benefits or makes cash payments in lieu thereof to employees.
The Buyer will give notice to any of the Shareholders when any Reserved
Liability becomes due and payable or is about to become due and payable. Such
notices will be given not more frequently than once each day,
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and not less frequently than once each week if any Reserved Liabilities become
due and payable during that week. The Buyer will use its best efforts to
process the payment of all Reserved Liabilities in accordance with the Seller's
historical practice. The Shareholders promptly will take all actions necessary
to cause the Liabilities Reserve to be applied to satisfy Reserved Liabilities
and, if the Liabilities Reserve has been exhausted, the Shareholders will
provide additional funds as required to satisfy Reserved Liabilities. Nothing
in this Agreement will be deemed to limit the joint and several obligations of
the Shareholders and the Sellers to pay the Reserved Liabilities in full.
After all Reserved Liabilities have been satisfied, any excess Liabilities
Reserve on deposit in the account created pursuant to this paragraph will be
paid to the Seller. Any disputes concerning the Liabilities Reserve will be
settled by arbitration as provided in this Agreement.
2.4. Sales Taxes, Etc. The Shareholders will pay all
sales, use, transfer and other Taxes, fees and charges, if any, payable in
respect of the sale and transfer of the Acquired Assets to the Buyer pursuant
to this Agreement (except licensing fees payable upon the transfer to the Buyer
of title to the vehicles and mobile equipment included in the Acquired Assets,
which are addressed in other provisions of this Agreement, and sales taxes on
accounts receivable collected by the Buyer after the Closing, which are
addressed by Section 5.8).
2.5. Closing; Effective Date. The closing of the
transactions contemplated by this Agreement (the "Closing") will take place on
a date agreed to by the parties, but in any event on or before April 30,1996,
commencing at 8:00 a.m. local time in Denver, Colorado, at the offices of
Xxxxxxx & Xxxxxx L.L.C. All transactions contemplated by this Agreement, the
Other Seller Agreements and the Other Shareholder Agreements will be effective
at 11:59 p.m. local time in Denver, Colorado on the day immediately preceding
the Closing (such effective time being the "Closing Date").
2.6. Deliveries at the Closing. At the Closing, (a) the
Seller and the Shareholders will deliver, or cause to be delivered, to the
Buyer the certificates, instruments and documents referred to in Section 6.1,
(b) the Buyer will deliver to the Seller and the Shareholders the certificates,
instruments and documents referred to in Section 6.2, (c) the Seller will
deliver to the Buyer instruments transferring to the Buyer title to the
Acquired Assets free and clear of any Encumbrances and (d) the Buyer will pay
and deposit the purchase price in accordance with Section 2.3.
3. Representations and Warranties.
3.1. Representations and Warranties of the Seller and the
Shareholders. The following representations and warranties as they apply to
the Seller will be deemed to apply to each of Zodiac One and Zodiac Three
individually and to Zodiac One and Zodiac Three collectively. The Seller and
the Shareholders jointly and severally represent and warrant to the Buyer that
the statements contained in this Section 3.1 are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made
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then and as though the Closing Date were then substituted for the date of this
Agreement throughout this Section 3.1).
(a) Certain Shareholder Matters. Each
Shareholder has full and absolute right, power, authority and legal capacity to
execute, deliver and perform this Agreement and all Other Shareholder
Agreements to which such Shareholder is a party, and this Agreement
constitutes, and such Other Shareholder Agreements will when executed and
delivered constitute, the legal, valid and binding obligations of, and be
enforceable in accordance with their respective terms against, such
Shareholder. The execution, delivery and performance of this Agreement and the
Other Shareholder Agreements to which the Shareholder is a party, and the
consummation of the transactions contemplated hereby and thereby, will not (i)
violate any Legal Requirement or Order to which the Shareholder is subject, or
(ii) violate, with or without the giving of notice or the lapse of time or
both, or conflict with or result in the breach or termination of any provision
of, or constitute a default under, or give any Person the right to accelerate
any obligation under, or result in the creation of any Encumbrance upon any
properties or assets of the Shareholder pursuant to, any indenture, mortgage,
deed of trust, lien, lease, agreement, instrument or other arrangement to which
the Shareholder is a party or by which the Shareholder or any of the
Shareholder's assets is bound or subject. No Shareholder need give any notice
to, make any filing with or obtain any authorization, consent or approval of
any Governmental Authority or other Person in order to consummate the
transactions contemplated hereby.
(b) Organization, Good Standing, Power, Etc.
Each of Zodiac One and Zodiac Three is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado, which is
the only jurisdiction in which the nature of the business conducted by each of
them or the properties owned, leased or operated by each of them make such
qualification necessary. Each of Zodiac One and Zodiac Three has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. The copies of the articles of
incorporation (certified by the Secretary of State of Colorado) and the bylaws
of each of Zodiac One and Zodiac Three, all as amended to date, which have been
delivered to the Buyer by the Shareholders are complete and correct, and
neither Zodiac One nor Zodiac Three is in default under or in violation of any
provision of its articles of incorporation or bylaws. The minute books
(containing the records of meetings of the shareholders, the board of directors
and any committees of the board of directors held or actions taken by any of
them) and the stock certificate books and the stock record books of each of
Zodiac One and Zodiac Three, copies of which have been delivered to the Buyer
by the Shareholders, are correct and complete. This Agreement and the Other
Seller Agreements and the consummation of the transactions contemplated hereby
and thereby have been duly and unanimously approved by the board of directors
and shareholders of each of Zodiac One and Zodiac Three, and this Agreement has
been duly executed and delivered by each of Zodiac One, Zodiac Three and the
Shareholders. Each of Zodiac One and Zodiac Three has full corporate power and
authority to execute, deliver and perform this Agreement and the Other Seller
Agreements, and this Agreement
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constitutes, and the Other Seller Agreements will when executed and delivered
constitute, the legal, valid and binding obligations of each of Zodiac One and
Zodiac Three, and will be enforceable in accordance with their respective terms
against each of Zodiac One and Zodiac Three.
(c) Capitalization, Etc. The authorized capital
stock of Zodiac One consists of 49,000 shares of common stock, no par value.
The authorized capital stock of Zodiac Three consists of 50,000 shares of
common stock, no par value. Xxxxxxx Xxxxxxxxx owns 100 shares of common stock
of Zodiac Three, which will be purchased by Xx. Xxxxx and Xx. Xxxxxxxx prior to
the Closing. At the Closing the Shareholders will own the following shares of
capital stock of Zodiac One and Zodiac Three:
Zodiac One Zodiac Three
---------- ------------
Xxxxxx Xxxxx 627 150
Xxxxxxx Xxxxx 156 2/3 0
Xxxxxxx Xxxxxxxx 156 2/3 0
Xxxxx Xxxxxxxx 627 150
(collectively, the "Shares"), which constitute all of the outstanding shares of
capital stock of Zodiac One and Zodiac Three, beneficially and of record, free
and clear of any Encumbrance or Tax. There are no existing rights of first
refusal, buy-sell arrangements, options, warrants, rights, calls or other
commitments or restrictions of any character relating to any of the Seller's
stock. The Seller has no authorized or outstanding securities convertible into
or exchangeable for, or any authorized or outstanding option, warrant or other
right to subscribe for or to purchase, or convert any obligation into, any
unissued shares of its capital stock, and has not agreed to issue securities so
convertible or exchangeable or any such option, warrant or other right. There
are no authorized or outstanding stock appreciation, phantom stock, profit
participation or similar rights with respect to either Zodiac One or Zodiac
Three. There are no voting trusts, voting agreements, proxies or other
agreements or understandings with respect to any capital stock of the Seller.
(d) No Subsidiaries or Affiliates. The Seller
has no Subsidiaries and no interest in any other corporation, partnership,
limited partnership, limited liability company, association or joint venture.
(e) No Violation of Agreements, Etc. The
execution, delivery and performance of this Agreement and the Other Seller
Agreements and the consummation of the transactions contemplated hereby and
thereby will not (i) violate any Legal Requirement or Order to which the Seller
is subject or any provision of the articles of incorporation or bylaws of the
Seller or (ii) violate, with or without the giving of notice or the lapse of
time or both, or conflict with or result in the breach or termination of any
provision of, or constitute a default under, or give any Person the right to
accelerate any obligation under, or result in the
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creation of any Encumbrance upon any properties, assets or business of the
Seller pursuant to, any indenture, mortgage, deed of trust, lien, lease,
license, agreement, instrument or other arrangement to which the Seller is a
party or by which the Seller or any of its assets and properties is bound or
subject. Except for notices that will be given and consents that will be
obtained by the Seller prior to the Closing (which are set forth in Exhibit
3.1(e)), the Seller need not give any notice to, make any filing with or obtain
any authorization, consent or approval of any Governmental Authority or other
Person in order for the parties to consummate the transactions contemplated by
this Agreement and the Other Seller Agreements.
(f) Financial Statements. The audited balance
sheets of the Seller as of December 31, 1994 and December 31, 1995, and the
related statements of income, shareholders' equity and cash flows for the
fiscal years then ended, the unaudited balance sheets of the Seller as of
December 31, 1992 and December 31, 1993, and the related statements of income,
shareholders' equity and cash flows for the fiscal years then ended, and the
unaudited balance sheet of the Seller as of January 31, 1996 (the latter being
referred to as the "Latest Balance Sheet"), and the related statement of
income, shareholders' equity and cash flows for the one-month period then ended
have been prepared in accordance with GAAP on a basis consistent with those of
prior years, are in accordance with the books and records of the Seller (which
books and records are complete and correct), are accurate and fairly present
the financial position and results of operations of the Seller as of those
dates and for each of the periods indicated. Copies of the financial
statements described in this Section 3.1(f) are attached as Exhibit 3.1(f). To
the best knowledge of the Shareholders and the Seller, such balance sheets make
full and adequate provision for all Liabilities of the Seller as of their
respective dates.
(g) Absence of Undisclosed Liabilities. All
Liabilities of the Seller have been paid when due or, if not yet due, have been
accrued properly. The Seller has no Liability (and there is no basis for the
assertion of any Liability) arising out of any transaction entered into at or
prior to the Closing Date, any action or inaction at or prior to the Closing
Date or any state of facts existing at or prior to the Closing Date or
otherwise, except (i) Liabilities reflected on the Latest Balance Sheet and
(ii) current Liabilities which have arisen after the date of the Latest Balance
Sheet in the ordinary course of business. All Liabilities of the Seller due on
or prior to the Closing Date will have been paid by the Seller prior to the
Closing.
(h) Absence of Certain Changes or Events. Since
November 1, 1995, the Seller has not: (i) incurred any debt, indebtedness or
Liability, except Assumed Debt and current Liabilities incurred in the ordinary
course of business; (ii) delayed or postponed the payment of accounts payable
or other Liabilities except in accordance with past practice; (iii) accelerated
the collection of any receivable; (iv) leased, except in the ordinary course of
business, or sold or otherwise transferred any of its equipment or other assets
or properties; (v) subjected any of its assets or properties to any
Encumbrance; (vi) settled, compromised or expensed any receivable which is set
forth on Exhibit 3.1(h) or which arises between the date
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of this Agreement and the Closing; (vii) except as set forth in Exhibit 3.1(h),
changed in any way the manner in which it conducts business; (viii) except as
set forth in Exhibit 3.1(h), cancelled, compromised, waived or released any
right, debt or claim; (ix) transferred or granted any rights under any leases
(except to customers in the ordinary course of business), licenses or
agreements or with respect to any Intellectual Property; (x) except as set
forth in Exhibit 3.1(h), made or granted any individual wage or salary increase
in excess of 10% or any general wage or salary increase, entered into any
employment, agency or consulting contract, changed or increased the rate of
compensation payable through salary, bonus, pension or contract or changed any
term of employment with respect to, any shareholder, officer, director,
employee or consultant or any affiliate thereof for any period before or after
November 1, 1995; (xi) adopted, amended, modified or terminated any bonus,
profit-sharing, incentive, severance or other plan, contract or commitment for
the benefit of any of its shareholders, officers, directors, employees or any
affiliate thereof (or taken any such action with respect to any other Employee
Benefit Plan); (xii) except as otherwise expressly permitted by this Section
3.1(h), entered into contracts or agreements, or made commitments, involving
more than $10,000 in the aggregate; (xiii) suffered any adverse fact or change,
including, without limitation, to or in its business, financial condition,
prospects, customer relationships or properties; (xiv) except as set forth in
Exhibit 3.1(h), entered into any contract or commitment to make capital
expenditures in excess of $10,000 in the aggregate; (xv) purchased, redeemed or
otherwise acquired any shares of its capital stock or any other securities;
(xvi) made any loan to or given a guarantee for any Person or entered into any
transaction with (including, without limitation, any agreement or other
arrangement providing for employment of, furnishing of services by, rental of
real or personal property from, or otherwise requiring payment to) any
shareholder, officer or director or any affiliate thereof; (xvii) permitted any
Person to withdraw assets from the Seller except cash withdrawn upon prior
notice to the Buyer; (xviii) made any payment or transfer to or for the benefit
of any shareholder, officer or director or any affiliate thereof, other than
payments in the form of cash; (xix) made or pledged to make any charitable or
other contribution; (xx) accelerated, terminated, modified or cancelled any
agreement, contract, lease or license (or series of related agreements,
contracts, leases and licenses) involving more than $10,000 individually or in
the aggregate to which the Seller is a party or by which it is bound; (xxi)
rented any equipment or sold or otherwise transferred any inventory or services
at below-normal rental rates or margins; (xxii) changed its method of
depreciation; (xxiii) suffered any other material occurrence, event, incident,
action, failure to act or transaction outside the ordinary course of business;
or (xxiv) agreed to incur, take, make or permit any of the matters described in
clauses (i) through (xxiii).
(i) Permits. The Seller owns or holds all
Permits necessary to permit it to own, lease and operate its properties and to
conduct its business. Each of such Permits is listed on Exhibit 3.1(i). All
of such Permits are currently in full force and effect, no action or claim is
pending or threatened to revoke, modify or terminate any Permit or render any
Permit invalid, and all of the Permits are transferable to the Buyer at the
Closing without any action by any Person.
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(j) Tax Matters. There has been duly and timely
filed in proper form by or on behalf of the Seller, or a filing extension from
the appropriate Governmental Authorities has been obtained with respect to, all
Tax Returns required to be filed by applicable Legal Requirement on or prior to
the date of this Agreement. All assessments, Taxes, fees or other charges
imposed on the Seller or any of its properties, or on any of its Shareholders
pursuant to the Seller's "S" corporation election, in respect of the periods
covered by such Tax Returns have been paid or adequate reserves have been
provided for with respect to the payment of all Taxes (whether or not disputed)
payable in respect of periods through the date of this Agreement and all prior
periods and all Tax Liabilities arising out of transactions entered into or
states of fact existing prior to the date of this Agreement. There is no
unpaid interest, penalty or addition to any Tax due or claimed due from the
Seller, or from any of its Shareholders pursuant to the Seller's "S"
corporation election, or any Tax deficiency, determination or assessment
outstanding against the Seller or against any of its Shareholders pursuant to
the Seller's "S" corporation election. No audit of any Tax Return of the
Seller is pending or, to the best knowledge of the Seller and the Shareholders,
has been threatened, and the Seller has not waived any statute of limitations
relating to the assessment or payment of Taxes, which waiver has not yet
expired. All Tax Returns, or extensions thereof required to be filed, and all
Taxes required to be paid, prior to the Closing by or on behalf of the Seller
and by the Shareholders with respect to the Seller will have been so filed or
paid prior to the Closing. The Seller and the Shareholders will pay all Taxes
attributable to Seller's business through the Closing Date, including all Taxes
attributable to the transactions contemplated by this Agreement, on or before
the due date of such Tax Returns.
(k) Assets and Properties.
(i) The Seller does not own any real
property interest other than its leasehold interests in the Premises.
The Seller leases all buildings, and either owns or leases all
machinery, equipment and other assets necessary for the conduct of its
businesses as presently conducted. To the best knowledge of the
Shareholders and the Seller, the Premises comply in all respects with
the Americans with Disabilities Act, are free from defects, have been
maintained in accordance with normal industry practice, are in good
operating condition and repair and are suitable for the purposes for
which they presently are used. To the best knowledge of the
Shareholders and the Seller, the Premises have received all approvals
of Governmental Authorities (including Permits) required in connection
with the occupation and operation thereof and have been occupied,
operated and maintained in accordance with applicable Legal
Requirements. The Premises are supplied with all utilities and other
services necessary for the operation of said facilities. All of the
tangible Acquired Assets are located on the Premises. The Seller owns
all of the Acquired Assets, including, without limitation, the
properties and assets reflected in the Latest Balance Sheet or
acquired since the date thereof, free and clear of all Encumbrances.
The Seller has not received notice of violation of any Legal
Requirement, Order or Permit relating to its operations or its owned
or leased properties.
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(ii) All leases for the Premises are
valid and in full force and effect in accordance with their respective
terms and there is not, under any of such leases, any existing default
or event of default or event which, with notice or lapse of time or
both, would constitute a default. No party to any such lease has
repudiated any provision thereof, and there are no disputes, oral
agreements or forbearance programs in effect as to any such lease.
One or more of the Shareholders have good and marketable title to the
Premises described in Exhibit 1.1(f) as being owned by them, and to
the best knowledge of the Seller, the Shareholders and directors and
officers (and employees responsible for lease matters) of the Seller,
the other Persons have good and marketable title to the Premises
described in Exhibit 1.1(g) as being owned by them, in each case free
and clear of any Encumbrance, easement, covenant or other restriction,
except for installments of special assessments not yet delinquent and
recorded easements, covenants and other restrictions which do not
impair the current use, occupancy or value, or the marketability of
title, of the property subject thereto. Except as set forth in
Exhibit 3.1(k) the Seller does not sublease any real or personal
property.
(iii) The Acquired Assets constitute all
of the assets and properties used by the Seller and the Shareholders
in connection with the rental business and related businesses operated
by them.
(l) Lists of Properties, Contracts and Other
Data. The Seller will deliver to the Buyer pursuant to Section
3.1(af) a correct and complete list designated as Exhibit 3.1(l)
setting forth the following:
(i) the original cost, depreciation and
current book value of all items of tangible personal property included
in the Acquired Assets, including all items of tangible personal
property which as of the date of this Agreement have no book value
(except those items each of which was acquired by the Seller for
$1,000 or less and which have been expensed by the Seller);
(ii) all rights, licenses and leases to
which the Seller is a party which relate to the Acquired Assets or the
Assumed Liabilities;
(iii) all assignments, licenses,
indemnifications or other agreements which relate to the Acquired
Assets or the Assumed Liabilities;
(iv) all guaranty, warranty and indemnity
agreements which relate to the Acquired Assets or the Assumed
Liabilities, including those with respect to products or services
sold, leased, delivered or provided by the Seller;
(v) all contracts or agreements for the
purchase or sale of raw materials, supplies, products or other
personal property or for the furnishing or receipt of services which
relate to the Acquired Assets or the Assumed Liabilities;
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(vi) all contracts or agreements of the
Seller concerning any partnership, joint venture or investment;
(vii) all claims, deposits, causes of
action, choses in action, rights of recovery, rights of setoff and
rights of recoupment which relate to the Acquired Assets or the
Assumed Liabilities;
(viii) all franchises, approvals, Permits,
licenses, orders, registrations, certificates, variances and similar
rights;
(ix) all contracts or agreements
concerning confidentiality or prohibiting the Seller from freely
engaging in its business as now conducted or proposed to be conducted
or from competing anywhere in the world;
(x) all other contracts, agreements,
instruments, guarantees and commitments (including mortgages, deeds of
trust, indentures, loan agreements and credit agreements and including
a description of any oral contracts) which relate to the Acquired
Assets or the Assumed Liabilities to which the Seller is a party or by
which it or its assets is bound;
(xi) the names and annual rates of
compensation as of June 30, 1995 (and the increases in such rates
through the date hereof and through the Closing) of all officers and
directors of the Seller, all other management employees, and each
other employee whose annual rate of compensation is $30,000 or more;
(xii) the names of all retired employees,
if any, of the Seller who are receiving or are entitled to receive any
payments which are not fully covered by any Employee Pension Benefit
Plan of the Seller which is qualified under Code Section 401(a), their
ages and their current annual funded and unfunded benefits;
(xiii) the name of each bank or other
financial institution or entity in which the Seller has an account or
safe deposit box (with the identifying account number or symbol) and
the names of all persons authorized to draw thereon or to have access
thereto; and
(xiv) all outstanding notes or accounts
receivable relating to accounts with the Seller, or advances by the
Seller, to any shareholder, officer, director, employee or consultant
or affiliate thereof as of the date of this Agreement.
True and complete copies of the documents referred to in such list have been
delivered to the Buyer. All such rights, licenses, leases, registrations,
applications, contracts, agreements and commitments and other items referred to
in such list are valid, in full force and effect, enforceable in accordance
with their respective terms for the period stated therein, no party has
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repudiated any provision thereof and no breach or default will result from the
execution, delivery and performance of this Agreement, the Other Seller
Agreements, the Other Shareholder Agreements or the transactions contemplated
hereby or thereby. Neither the Seller nor any other party thereto is in breach
or default in performance of any of their respective obligations thereunder and
no event exists which, with the giving of notice or lapse of time or both,
would constitute a breach, default or event of default on the part of a party
to any of the foregoing that is continuing unremedied.
(m) Litigation, Etc. There is no outstanding
Order against, nor is there any litigation, proceeding, arbitration or
investigation by any Governmental Authority or other Person pending or
threatened against, the Seller, its properties or business or relating to the
transactions contemplated by this Agreement, nor is there any basis for any
such action.
(n) Notes and Accounts Receivable. The notes
receivable, if any, and accounts receivable of the Seller reflected on the
Latest Balance Sheet, and all notes and accounts receivable arising prior to
the Closing Date, arose and will arise from bona fide transactions by the
Seller in the ordinary course of business, are valid receivables with trade
customers subject to no setoffs or counterclaims, and are current and
collectible. The Seller and the Shareholders guarantee the collection by the
Buyer of accounts receivable, including sales taxes thereon, in an amount
described in Section 5.8 (all of which will consist of accounts receivable
arising from transactions prior to the Closing) within 180 days after the
Closing.
(o) Product Quality, Warranty Claims. All
products and services sold, leased, delivered or provided by the Seller to
customers on or prior to the Closing Date conform to applicable contractual
commitments, express and implied warranties, product and service specifications
and quality standards, and the Seller has no Liability (and there is no basis
for any present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand against the Seller giving rise to any
Liability) for replacement or repair thereof or other damages in connection
therewith. No product or service sold, leased, delivered or provided by the
Seller to customers on or prior to the Closing Date is subject to any guaranty,
warranty or other indemnity beyond the applicable standard terms and conditions
of sale or lease.
(p) Product Liability. The Seller has no
Liability (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand against
the Seller which might give rise to any Liability) arising out of any injury to
a Person or property as a result of the ownership, possession, provision or use
of any product or service sold, leased or delivered by the Seller on or prior
to the Closing Date. All product or service liability claims that have been
asserted against the Seller since January 1, 1991, whether covered by insurance
or not and whether litigation has resulted or not, are listed and summarized on
Exhibit 3.1(p).
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(q) Inventory. The inventory of the Seller
consists of goods which are merchantable, is fit for the purpose for which it
was procured and is held by the Seller, is usable in the ordinary course of
business and is good and not overvalued.
(r) Insurance. The Seller has policies of
insurance (i) covering risk of loss on the Acquired Assets, (ii) covering
products and services liability and liability for fire, property damage,
personal injury and workers' compensation coverage and (iii) for business
interruption, all with responsible and financially sound insurance carriers in
adequate amounts and in compliance with governmental requirements and in
accordance with good industry practice. To the best knowledge of the
Shareholders and the Seller, all such insurance policies are valid, in full
force and effect and enforceable in accordance with their respective terms and
no party has repudiated any provision thereof. All such policies will remain
in full force and effect until midnight on the Closing Date. Neither the
Seller, nor to the best knowledge of the Shareholders and the Seller any other
party to any such policy, is in breach or default (including with respect to
the payment of premiums or the giving of notices) in the performance of any of
their respective obligations thereunder, and no event exists which, with the
giving of notice or the lapse of time or both, would constitute a breach,
default or event of default, or permit termination, modification or
acceleration under any such policy. There are no claims, actions, proceedings
or suits arising out of or based upon any of such policies nor, to the best
knowledge of the Seller, the Shareholders and the directors and officers (and
employees responsible for insurance matters) of the Seller, does any basis for
any such claim, action, suit or proceeding exist. Descriptions, including
current premium amounts and the date and amount of the most recent premium
increase for each of the policies of insurance are set forth on Exhibit 3.1(r).
All premiums have been paid on such policies as of the date of this Agreement
and will be paid on such policies through the Closing Date, and the Seller has
not received notice of any increase in any such premium except as set forth on
Exhibit 3.1(r). The Seller has been covered during the five years prior to the
date of this Agreement by insurance in scope and amount customary and
reasonable for the businesses in which it has engaged during the aforementioned
period. All claims made during such five-year period with respect to any
insurance coverage of the Seller, other than those described on Exhibit 3.1(p),
are set forth on Exhibit 3.1(r). The Seller does not engage in any
self-insurance activities.
(s) Compliance with Applicable Laws and Rights.
To the best knowledge of the Shareholders and the Seller, the Seller is not in
violation of any applicable Legal Requirement, Order or Right. The Seller has
not received notice from any Governmental Authority or other Person of any
violation of any Legal Requirement, Order or Right, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand or notice
has been filed, commenced or threatened against the Seller alleging any such
violation. To the best knowledge of the Shareholders and the Seller, the
Seller's property, including its facilities, machinery and equipment, conforms
with applicable Legal Requirements and Orders, including, without limitation,
environmental and zoning laws and building codes, and is in compliance with
OSHA and the Americans with Disabilities Act. Neither the Seller, any
Shareholder nor any director or officer (or employee responsible for OSHA
matters) of the Seller has any
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knowledge of any pending or proposed OSHA regulations or amendments to OSHA
regulations (including toxic chemical regulations) which would require any
change in any of the Seller's facilities, equipment, operations or procedures
or affect the Business or the Seller's costs of conducting its business as now
conducted. The Seller has never made any payments for political contributions,
or any bribes, kickback payments or other illegal contributions.
(t) Pension and Employee Benefit Matters.
(i) The Buyer will not suffer any
Liability or Adverse Consequence from the Seller's administration or
termination of any of its Employee Benefit Plans or Benefit
Arrangements or from any failure of any post-Closing distribution of
benefits to employees of the Seller to be made by the Seller in
compliance with all applicable Legal Requirements.
(ii) The Buyer will have no obligation to
employ any employee of the Seller or to continue any Employee Benefit
Plan or Benefit Arrangement, and will have no obligation or Liability
under any such plan or arrangement maintained by the Seller. Except
for related Liabilities included in the Assumed Liabilities, the
Seller will remain liable for all costs of employee compensation,
including (A) all employee benefits and claims under any Employee
Benefit Plan or Benefit Arrangement, (B) Taxes relating to employment
and employees attributable to periods through the Closing Date,
whether reported by the Closing Date or thereafter, and (C) all group
health plan continuation coverage to which any employee, former
employee or dependent is entitled because of a qualifying event (as
defined in Section 4980B(f)(3) of the Code) occurring through the
Closing Date or as a result of termination of employment with the
Seller because of the transactions contemplated by this Agreement and
any benefit or excise tax liability or penalty or other costs arising
from any failure by the Seller to provide group health plan
continuation coverage.
(iii) The Seller has not incurred any
Liability under Title IV of ERISA arising in connection with any
termination or partial termination of any Employee Pension Benefit
Plan or any withdrawal from any Multiemployer Plan. None of the
assets of the Seller is the subject of any lien arising under Section
302(f) of ERISA or Section 412(n) of the Code; the Seller has not been
required to post any security under Section 307 of ERISA or Section
401(a)(29) of the Code; and no fact or event exists that could
reasonably be expected to give rise to any such lien or requirement to
post any such security.
(u) Employees and Labor. Except as set forth in
Exhibit 3.1(u), the Seller has not received any notice, nor, to the best
knowledge of the Seller, the Shareholders and the directors and officers (and
employees having responsibility for employment matters) of the Seller, is there
any reason to believe that any executive or key employee of the Seller or any
group of employees of the Seller has any plans to terminate his, her or its
employment
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with the Seller. No executive or key employee is subject to any agreement,
obligation, Order or other legal hindrance that impedes or might impede such
executive or key employee from devoting his or her full business time to the
affairs of the Seller prior to the Closing Date and, if such person becomes an
employee of the Buyer, to the affairs of the Buyer after the Closing Date. The
Seller has complied with all Legal Requirements relating to the employment of
labor, including provisions thereof relating to wages, hours, equal
opportunity, collective bargaining and the payment of social security and other
Taxes. The Seller will not be required to give any notice under any plant
closing or similar law as a result of this Agreement, the Other Seller
Agreements or the transactions contemplated hereby or thereby. The Seller does
not have any labor relations problems or disputes, nor has it experienced any
strikes, grievances, claims of unfair labor practices or other collective
bargaining disputes. The Seller is not a party to or bound by any collective
bargaining agreement, there is no union or collective bargaining unit at the
Seller's facilities, and no union organization effort has been threatened,
initiated or is in progress with respect to any employees of the Seller. The
Seller is not indebted to any Shareholder or any officer, director, employee or
consultant or any affiliate thereof, whether by loan, advance or otherwise,
other than for salaries accrued but not yet payable and reimbursable out-of-
pocket expenses incurred in the ordinary course of business and not yet
payable, nor is any Shareholder or any officer, director, employee or
consultant or any affiliate thereof so indebted to the Seller.
(v) Supplier and Customer Relationships. Exhibit
3.1(v) lists each supplier or customer that individually or with its affiliates
accounted for 2% or more of the Seller's purchases of supplies or sales or
rental revenues, respectively, during the fiscal years ending December 31,
1993, 1994 and 1995 and the two-month period ending February 29, 1996. The
Seller has good commercial working relationships with its customers and since
June 30, 1995 no customer or supplier accounting for 2% or more of the Seller's
gross sales or rental revenues or purchases of supplies has cancelled or
otherwise terminated its relationship with the Seller, materially decreased or
limited its purchases or rentals or materials supplied to the Seller, or
threatened to take any such action. The Seller and the Shareholders have no
basis to anticipate any problems with the Seller's business or customer
relationships. No customer has any plans to reduce its purchases or rentals
below levels prevailing in recent periods, and the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
will not adversely affect the relationship of the Seller with any supplier or
customer prior to the Closing Date or of the Buyer with any supplier or
customer after the Closing Date.
(w) Condition, Adequacy and Type of Equipment.
All of the machinery, equipment and other tangible personal property included
in the Acquired Assets has been well maintained, its operating condition is
adequate for its current use and it is suitable for the purposes for which it
is presently used and is sufficient for the conduct of the Seller's business as
now conducted. However, the Buyer acknowledges that at any particular time a
certain dollar amount of the Seller's equipment is in need of repair or is
being repaired. The Seller and the Shareholders represent and warrant that the
dollar amount of the Seller's
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equipment which is in need of repair or is being repaired as of the Closing
Date will not be greater than that amount which usually is in need of repair or
is being repaired. The Seller has not experienced material problems or
deficiencies with respect to such machinery, equipment and other tangible
personal property, and, to the best knowledge of the Seller, the Shareholders
and directors and officers (and employees with responsibility for such
machinery, equipment and other tangible personal property) of the Seller, there
is no basis to anticipate any such problems or deficiencies.
(x) Environmental Obligations. To the best
knowledge of the Shareholders and the Seller, the Seller is conducting, and the
Seller and its predecessors at all times have conducted their respective
businesses and operations, and have occupied and operated the Premises and all
other real property and facilities previously owned, occupied or operated by
the Seller or any predecessor, in accordance with and in compliance with all
Environmental Obligations and so as not to give rise to Liability under any
Environmental Obligations or to any impact on the Seller's business or
activities. To the best knowledge of the Seller, the Shareholders and
directors and officers (and employees responsible for environmental matters) of
the Seller, there is no basis to believe or suspect that the Seller's business
has been conducted or is being conducted in violation of any Environmental
Obligations, and the Seller, the Shareholders and directors and officers (and
employees responsible for environmental matters) of the Seller do not have any
knowledge of pending or proposed changes to any Environmental Obligations which
would require any changes in any of the Seller's facilities, equipment,
operations or procedures or affect the Seller's business or its cost of
conducting its business as now conducted.
(y) Compliance, Disclosure of Environmental
Conditions. To the best knowledge of the Shareholders and the Seller, no
conditions, circumstances or activities have existed or currently exist with
respect to the Premises, any other real property or facilities previously
owned, occupied or operated by the Seller or any predecessor, or the Seller's
business, facilities or property which could give rise to any Liability,
including but not limited to the recovery by any Governmental Authority or
other Person of any remedial or removal costs, response costs, natural resource
damages or other costs, expenses or damages arising from or relating to any
release or threat of release of any Hazardous Material or any alleged injury or
threat of injury or harm to public health, safety or the environment. No
conditions, circumstances or activities have existed or currently exist with
respect to the Premises, any other real property or facilities previously
owned, occupied or operated by the Seller or any predecessor, or the Seller's
business, facilities or property which could subject the Seller or the Buyer to
any administrative, civil or criminal liability, injunctive relief, penalty or
obligation, whether under common law, equitable theory or pursuant to
Environmental Obligations, or which in the future could result in or in the
past may have resulted in actual or threatened damage, harm or impairment of,
or a threat to, public health, safety, welfare or the environment. Exhibit
3.1(y) identifies all real property and facilities, including the addresses
thereof, which have been owned, occupied or operated by the Seller or its
predecessors at any time on or prior to the Closing.
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(z) No Outstanding Orders or Actions. There are
no outstanding Orders or any pending or threatened investigations of any kind
against the Seller or any Shareholder concerning any environmental, public
health, safety, welfare or land use matters or other Environmental Obligations,
including, but not limited to, the emission, discharge or release of hazardous
or toxic substances or wastes, pollutants or contaminants into the environment
or work place, or the handling, storage, treatment, disposal or transportation
of hazardous or toxic substances or wastes, pollutants or contaminants. There
are no actions, suits or administrative, arbitral or other proceedings alleged,
claimed, threatened, pending against or affecting the Seller or any Shareholder
at law or in equity with respect to any environmental, public health, safety or
land use matters or other Environmental Obligations, and the Seller, the
Shareholders and directors and officers (and employees responsible for
environmental matters) of the Seller have no knowledge of any existing grounds
on which any such action, suit or proceedings might be commenced.
(aa) No Waste Disposal. All chemicals and
chemical compounds and mixtures which are included among the assets of the
Seller are integral to and required for the conduct of the Seller's business,
have not been processed, have not been and are not intended to be discarded,
and are not waste or waste materials. The Seller has not generated, used,
transported or disposed of Hazardous Materials. All waste materials which are
or were generated as part of the business of the Seller are and have been
handled, stored, treated, disposed of and transported in accordance with
applicable Legal Requirements and Environmental Obligations.
(ab) Intellectual Property.
(i) Exhibit 3.1(ab) lists each item of
Intellectual Property owned by the Seller or any Shareholder or which
is used by the Seller in the Business and, in each case where the
Seller is not the owner, the owner of the Intellectual Property. The
Seller owns or has the legal right to use each such item of
Intellectual Property, and none of such Intellectual Property is
subject to any Encumbrance. Each item of Intellectual Property
described on Exhibit 3.1(ab) will be owned or available for use by the
Buyer on identical terms and conditions after the Closing. The Seller
has taken all necessary and desirable action to maintain and protect
each item of Intellectual Property that it owns or uses.
(ii) The Seller has not interfered with,
infringed upon, misappropriated or otherwise come into conflict with
any Intellectual Property rights of any other Person, and none of the
Seller and the directors and officers (and employees with
responsibility for Intellectual Property matters) of the Seller has
ever received any charge, complaint, claim, demand, or notice alleging
any such interference, infringement, misappropriation or violation
(including any claim that the Seller must license or refrain from
using any Intellectual Property rights of any other Person). The
continued operation of the Business as currently conducted will not
interfere with,
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infringe upon, misappropriate or conflict with any Intellectual
Property rights of another Person. To the best knowledge of the
Shareholders, the Seller and the directors and officers (and employees
with responsibility for Intellectual Property matters) of the Seller,
no other Person has interfered with, infringed upon, misappropriated
or otherwise come into conflict with any Intellectual Property rights
of the Seller.
(iii) The Seller has not granted any
license, sublicense or permission with respect to any Intellectual
Property owned or used in the Business. With respect to each item of
Intellectual Property required to be identified in Exhibit 3.1(ab), no
action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand is pending or is threatened which challenges the
legality, validity, enforceability, use or ownership of the item and
the Seller has never agreed to indemnify any Person for or against any
interference, infringement, misappropriation or other conflict with
respect to the item.
(iv) The Seller is not obligated to pay
any royalty or license or sublicense fee with respect any Intellectual
Property. With respect to each item of Intellectual Property required
to be identified in Exhibit 3.1(ab) which is not owned by the Seller:
(A) the license, sublicense, agreement or permission under which the
Seller has the right to use the item is legal, valid, binding,
enforceable and in full force and effect and (B) no party to the
license, sublicense, agreement or permission is in breach or default,
and no event has occurred which, with notice or lapse of time or both,
would constitute a breach, default or repudiation or permit
termination, modification or acceleration thereunder.
(ac) Guaranties. The Seller is not a guarantor of
or otherwise liable for any Liability (including indebtedness) of any other
Person.
(ad) Powers of Attorney. There are no outstanding
powers of attorney executed on behalf of the Seller.
(ae) Brokers' Fees. Except for the obligations of
the Shareholders to Xxxxxxxxx and Associates, Inc., neither the Seller nor any
Shareholder has any Liability to pay any fees or commissions to any broker,
finder or agent with respect to the transactions contemplated by this
Agreement.
(af) Disclosure. Each of the Exhibits referred to
throughout this Section 3.1 will be delivered to the Buyer as soon as
practicable after the execution of this Agreement, but in no event less than
five Business Days prior to the Closing. The Buyer will accept or reject the
contents of such Exhibits, in its sole discretion, by telephonic notice to any
or all of the Shareholders no later than the Business Day prior to the Closing.
Acceptance by the Buyer of each of such Exhibits will be a condition to the
Buyer's obligation to consummate the purchase of the Acquired Assets, as set
forth in Section 6.1(l). Considered together, the
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(i) documents and information provided to the Buyer by the Seller, any
Shareholder or any agent or employee thereof in the course of the Buyer's due
diligence investigation and the negotiation of this Agreement (including the
financial statements of the Seller as of December 31, 1995, December 31, 1994,
December 31, 1993 and December 31, 1992) and (ii) Section 3.1 of this Agreement
and the disclosure Exhibits referred to therein, including the financial
statements referred to above in Section 3.1, do not contain any untrue
statement of any material fact and do not omit to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. There is no fact which materially adversely affects the business,
prospects, condition, affairs or operations of the Seller or any of its
properties or assets which has not been set forth in this Agreement or such
Exhibits, including such financial statements. Nothing in the disclosure
Exhibits referred to in Section 3.1 will be deemed adequate to disclose an
exception to a representation or warranty made herein unless the applicable
disclosure Exhibit identifies the exception with particularity and describes
the relevant facts in reasonable detail. Without limiting the generality of
the foregoing, the mere listing (or inclusion of a copy) of a document or other
item will not be deemed adequate to disclose an exception to a representation
or warranty made herein (unless the representation or warranty has to do with
the existence of the document or other item itself). The Seller and the
Shareholders acknowledge and agree that the fact that they have made
disclosures pursuant to Section 3.1 or otherwise of matters, or did not have
knowledge of matters, which result in Adverse Consequences to the Buyer will
not relieve the Seller and the Shareholders of their obligation to indemnify
and hold the Buyer harmless from all Adverse Consequences pursuant to Section
7.
3.2. Representations and Warranties of the Buyer. The
Buyer represents and warrants to the Seller and the Shareholders that the
statements contained in this Section 3.2 are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Section 3.2).
(a) Organization, Good Standing, Power, Etc. The
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. This Agreement and the Other Buyer
Agreements and the transactions contemplated hereby and thereby have been duly
approved by all requisite corporate action of the Buyer. The Buyer has full
corporate power and authority to execute, deliver and perform this Agreement
and the Other Buyer Agreements, and this Agreement constitutes, and the Other
Buyer Agreements will when executed and delivered constitute, the legal, valid
and binding obligations of the Buyer, and will be enforceable in accordance
with their respective terms against the Buyer.
(b) No Violation of Agreements, Etc. The
execution, delivery and performance of this Agreement and the Other Buyer
Agreements, and the consummation of the transactions contemplated hereby and
thereby, will not (i) violate any Legal Requirement or Order to which the Buyer
is subject or any provision of the certificate of incorporation or
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bylaws of the Buyer or (ii) violate (with or without the giving of notice or
the lapse of time or both), conflict with or result in the breach or
termination of any provision of, constitute a default under, give any Person
the right to accelerate any obligation under, or result in the creation of any
Encumbrance upon any properties, assets or business of the Buyer pursuant to,
any indenture, mortgage, deed of trust, lien, lease, license, agreement,
instrument or other arrangement to which the Buyer is a party or by which the
Buyer or any of its assets and properties is bound or subject. Except for
notices and consents that will be given or obtained by the Buyer prior to the
Closing, the Buyer does not need to give any notice to, make any filing with or
obtain any authorization, consent or approval of any Governmental Authority or
other Person in order for the parties to consummate the transactions
contemplated by this Agreement.
3.3. Survival of Representations. The representations and
warranties contained in Sections 3.1 and 3.2 and the Liability of the parties
with respect thereto will survive any investigation thereof by the parties and
will survive the Closing for four years, except that the Liability of the
Seller and the Shareholders with respect to matters set forth in Sections
3.1(a), 3.1(b), 3.1(e), 3.1(j), 3.1(k), 3.1(t), 3.1(x), 3.1(y), 3.1(z),
3.1(aa), 3.1(ac) and 3.1(af), and the Liability of the Buyer with respect to
matters set forth in Section 3.2(b), will survive without termination.
3.4. Representations as to Knowledge. The representations
and warranties contained in Article 3 hereof will in each and every case where
an exercise of discretion or a statement to the "best knowledge," "best of
knowledge" or "knowledge" is required on behalf of any party to this Agreement
be deemed to require that such exercise of discretion or statement be in good
faith after reasonable investigation, with due diligence, to the best efforts
of each such party and be exercised always in a reasonable manner and within
reasonable times. For purposes of Section 3.1, the term "Seller" will, when
used in reference to a statement made to the "best knowledge," "best of
knowledge" or "knowledge" of Seller, include each Shareholder.
4. Pre-Closing Covenants. The parties agree as follows with
respect to the period between the execution of this Agreement and the Closing.
4.1. General. Each of the parties will use its best
efforts to take all actions necessary, proper or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including the satisfaction, but not the waiver, of the closing conditions set
forth in Section 6) and the other agreements contemplated hereby.
4.2. Operation of Business. The Seller will not, and
Shareholders will not cause or permit the Seller to, engage in any practice,
take any action or enter into any transaction outside its ordinary course of
business or which would result in a breach of any covenant, representation or
warranty of the Seller or the Shareholders in this Agreement.
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4.3. Preservation of Business. The Seller will keep its
business and properties, including its current operations, physical facilities,
working conditions, and its relationships with lessors, licensors, suppliers,
customers and employees, intact.
4.4. Full Access. The Seller will permit the Buyer and
its agents to have full access at all reasonable times, and in a manner so as
not to interfere with the normal business operations of the Seller, to all
premises, properties, personnel, books, records (including Tax records),
contracts and documents of or pertaining to the Seller. If for any reason the
Closing does not occur, the Buyer will not disclose to any other Person any
confidential information concerning the Seller which was provided to the Buyer
by the Seller or the Shareholders and which is not publicly available or known
to other industry participants and which was not available to the Buyer from
another source.
4.5. Notice of Developments. The Seller will give prompt
written notice to the Buyer of any material development which occurs after the
date of this Agreement and affects the assets, Liabilities, business, financial
condition, operations, results of operations, future prospects,
representations, warranties, covenants or disclosure Exhibits of the Seller.
No such written notice, however, will be deemed to amend or supplement any
disclosure Exhibit or to prevent or cure any misrepresentation, breach of
warranty or breach of covenant.
4.6. Exclusivity. Neither the Seller nor any Shareholder
will, and no Shareholder will cause or permit the Seller to, (a) solicit,
initiate or encourage the submission of any proposal or offer from any Person
relating to the acquisition of any capital stock or other voting securities, or
any portion of the assets of, the Seller (including any acquisition structured
as a merger, consolidation or share exchange) or (b) participate in any
discussions or negotiations regarding, furnish any information with respect to,
assist or participate in or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. No Shareholder will
vote shares of the Seller's stock in favor of any such transaction. The Seller
and Shareholders will notify the Buyer immediately if any Person makes any
proposal, offer, inquiry or contact with respect to any of the foregoing.
4.7. Announcements. Prior to the Closing no party will
issue any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the other
parties.
5. Post-Closing Covenants. The parties agree as follows with
respect to the period following the Closing.
5.1. Further Assurances. In case at any time after the
Closing any further action is necessary or desirable to carry out the purposes
of this Agreement, each of the parties will take such further action (including
the execution and delivery of such further instruments and documents) as any
other party reasonably may request, all at the sole cost and expense of
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the requesting party (unless the requesting party is entitled to
indemnification therefor under Section 7).
5.2. Transition. Each of the Shareholders will assist
with the transition of the Business to the Buyer during the first year
following the Closing at no cost to the Buyer. Neither the Seller nor the
Shareholders will take any action at any time that is designed or intended to
have the effect of discouraging any lessor, licensor, customer, supplier or
other business associate of the Seller from establishing a business
relationship with the Buyer after the Closing.
5.3. Cooperation. In the event and for so long as any
party actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection with
(a) any transaction contemplated by this Agreement or (b) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act or transaction on or prior to the Closing Date
involving the Acquired Assets or the Business, each of the other parties will
cooperate with her, him or it and her, his or its counsel in the contest or
defense, make available their personnel, and provide such testimony and access
to their books and records as the other party deems necessary and requests in
connection with the contest or defense, all at the sole cost and expense of the
contesting or defending party (unless the contesting or defending party is
entitled to indemnification therefor under Section 7).
5.4. Confidentiality. The Seller and the Shareholders
will treat and hold as confidential all Confidential Information concerning the
Business and the Buyer, refrain from using any such Confidential Information
and deliver promptly to the Buyer or destroy, at the request and option of the
Buyer, all of such Confidential Information in its or their possession.
5.5. Post-Closing Announcements. Following the Closing,
neither the Seller nor any Shareholder will issue any press release or make any
public announcement relating to the subject matter of this Agreement without
the prior written approval of the Buyer.
5.6. Financial Statements. The Seller and the
Shareholders will, upon the request of the Buyer, cooperate with the Buyer to
produce such historical and on-going financial statements and audits as the
Buyer may request, all at the sole cost and expense of the Buyer.
5.7. Satisfaction of Liabilities and Other Obligations.
The Shareholders and the Seller will pay and perform, as and when due, all
Liabilities relating to the Seller, the Business and the Acquired Assets other
than the Assumed Liabilities. In addition, the Shareholders and the Seller, at
their expense, promptly will take or cause to be taken any action necessary to
remedy any failure of the Premises or the Business at the Closing Date to
comply with any Legal Requirement or Order upon receipt of notice from the
Buyer at any time. However, the Shareholders and the Seller will be required
to remedy such a failure
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involving the non-compliance of the Premises with the Americans with
Disabilities Act only if the Buyer becomes aware thereof, or such a condition
is required to be remedied, in connection with an event occurring after the
Closing (including, by way of example only, a remodeling of any of the Premises
or an investigation or inspection by a Governmental Authority). The
Shareholders and the Seller will pay to the Buyer, promptly after their receipt
of notice from the Buyer stating the amount payable by them and a copy of the
invoices from Governmental Authorities relating thereto, the portion of the
personal property taxes on the Acquired Assets attributable to the period from
January 1, 1996 to and including the date on which the Closing occurs. The
amount of such taxes payable by the Shareholders and the Seller will be
determined by prorating personal property taxes on the Acquired Assets for 1996
in proportion to the number of days in the year prior to and including the date
on which the Closing occurs compared to the number of days in the year
remaining after the date on which the Closing occurs. The Buyer will pay all
Assumed Liabilities as and when due (except to the extent the validity thereof
or the liability therefor is contested by the Buyer in good faith) if the
Closing occurs.
5.8. Collection of Guaranteed Receivables. The
Shareholders and the Seller guarantee that within 180 days after the Closing
the Buyer will have collected accounts receivable generated by transactions
occurring prior to the Closing in an aggregate amount equal to the amount
agreed to by the Seller, the Shareholders and the Buyer at or prior to the
Closing, inclusive of sales taxes (the "Guaranteed Receivable Amount"). If the
amount of accounts receivable from transactions prior to the Closing collected
by the Buyer within 180 days after the Closing is less than the Guaranteed
Receivable Amount, the Seller and the Shareholders will pay to the Buyer
immediately after the expiration of the 180 day period the difference between
the Guaranteed Receivable Amount and the amount of receivables from
transactions prior to the Closing collected by the Buyer within that period.
The Buyer acknowledges that such accounts receivable will include amounts
payable by customers as sales tax, which after collection the Buyer will be
required to remit to applicable Governmental Authorities.
5.9. Post-Closing Access to Records. The Shareholders and
the Seller will have reasonable access after the Closing during normal business
hours, at their own expense and upon at least 48 hours' prior notice to the
Buyer, to the books and records of the Business to the extent necessary for any
reasonable business purpose.
6. Conditions to Closing.
6.1. Conditions to Obligation of the Buyer. The
obligation of the Buyer to consummate the purchase of the Acquired Assets is
subject to satisfaction of the following conditions:
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(a) the Seller's and each Shareholder's
representations and warranties will be correct and complete at and as of the
Closing and any written notices delivered to the Buyer pursuant to Section 4.5
and the subject matter thereof will be satisfactory to the Buyer;
(b) the Seller and the Shareholders will have
performed and complied with all of their covenants and agreements hereunder
through the Closing;
(c) the Seller and the Shareholders will have
given all notices and procured all of the third-party consents, authorizations
and approvals required to consummate the transactions contemplated by this
Agreement, all in form and substance reasonably satisfactory to the Buyer;
(d) no action, suit or proceeding will be pending
or threatened before any Governmental Authority or any other Person wherein an
unfavorable Order would (i) prevent consummation of any of the transactions
contemplated by this Agreement, (ii) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation or (iii) affect
adversely the right of the Buyer to own the Acquired Assets or to conduct the
Business, and no such Order will be in effect;
(e) there will have been no adverse change in the
Acquired Assets or the Business between the date of execution of this Agreement
and the Closing;
(f) the Seller will have delivered to the Buyer a
certificate to the effect that each of the conditions specified in Sections
6.1(a) through (e) is satisfied in all respects;
(g) the Buyer will have completed its due
diligence with respect to the Seller, the Business and the Acquired Assets with
results satisfactory to it;
(h) the Other Seller Agreements and the Other
Shareholder Agreements will have been executed and delivered by the Seller and
the Shareholders which are parties thereto;
(i) the Buyer will have received from counsel to
the Seller and the Shareholders an opinion in form and substance as set forth
in Exhibit 6.1(i) addressed to the Buyer and its debt and equity financing
sources and dated as of the Closing;
(j) financing necessary for the consummation of
the transactions contemplated hereby and the operation of the Business will be
available to the Buyer on terms and conditions satisfactory to the Buyer;
(k) a written report of the results of a "Phase
I" environmental study of the Premises will have been completed at the
Shareholders' expense and supplied to the
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Buyer, and the contents of such report and the conditions described therein
will be satisfactory to the Buyer;
(l) the disclosure Exhibits to be delivered to
the Buyer pursuant to Section 3.1(af) will have been delivered to the Buyer by
the Seller and the Shareholders within the time period permitted by that
Section, and the contents of each will have been accepted by the Buyer in its
sole discretion;
(m) the Seller will have delivered to the Buyer
possession and control of the Acquired Assets;
(n) each of Zodiac One and Zodiac Three will have
authorized, prepared, executed and delivered to the Buyer an amendment to its
articles of incorporation for the purpose of changing its name to Xxxxxxx and
Xxxxxxx, Ltd. and Xxxxxxx and Xxxxxxx, Ltd. III, respectively which amendments
will not be filed until the Closing; and
(o) the Seller and the Shareholders will have
delivered, or caused the Seller to deliver, to the Buyer a waiver and release
executed by Xxxxxxx Xxxxxxxxx, a waiver and release executed by Xxxxxxxxx and
Associates, Inc., an assignment of the Xxxxxxxxx Noncompetition Agreement, an
assignment of the Assigned Vehicle Ownership Taxes and such other instruments,
certificates and documents as are reasonably requested by the Buyer in order to
consummate the transactions contemplated by this Agreement, all in form and
substance reasonably satisfactory to the Buyer.
The Buyer may waive any condition specified in this Section 6.1 at or prior to
the Closing.
6.2. Conditions to Obligation of the Seller and the
Shareholders. The obligation of the Seller and the Shareholders to consummate
the sale of the Acquired Assets is subject to satisfaction of the following
conditions:
(a) the Buyer's representations and warranties
will be correct and complete at and as of the Closing;
(b) the Buyer will have performed and complied
with all of its covenants hereunder through the Closing;
(c) the Buyer will have delivered to the Seller a
certificate to the effect that each of the conditions specified above in
Sections 6.2(a) and (b) is satisfied in all respects;
(d) the Other Buyer Agreements will have been
executed and delivered by the Buyer;
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(e) the Seller and Shareholders will have
received from counsel to the Buyer an opinion in form and substance as set
forth in Exhibit 6.2(e), addressed to the Seller and Shareholders and dated as
of the Closing; and
(f) the Buyer will have paid and deposited the
purchase price for the Acquired Assets pursuant to Section 2.3.
The Seller may waive any condition specified in this Section 6.2 at or prior to
the Closing.
7. Remedies for Breaches of This Agreement.
7.1. Indemnification Provisions for Benefit of the Buyer.
(a) If the Seller or a Shareholder breaches (or
if any Person other than the Buyer alleges facts that, if true, would mean the
Seller or a Shareholder has breached) any of the representations or warranties
contained herein and the Buyer gives notice thereof to the Seller or any
Shareholder within the Survival Period, or if the Seller or a Shareholder
breaches (or if any Person other than the Buyer alleges facts that, if true,
would mean the Seller or a Shareholder has breached) any covenant contained
herein or in the Other Seller Agreements or the Other Shareholder Agreements
and the Buyer gives notice thereof to the Seller or any Shareholder, then the
Seller and the Shareholders agree jointly and severally to indemnify the Buyer
from and against any Adverse Consequences the Buyer may suffer resulting from,
arising out of, relating to or caused by any of the foregoing regardless of
whether the Adverse Consequences are suffered during or after the Survival
Period. In addition, the Seller and the Shareholders agree jointly and
severally to indemnify the Buyer from and against any Adverse Consequences the
Buyer may suffer which result from, arise out of, relate to or are caused by
the consummation of the transactions contemplated by this Agreement whether or
not such matter was known to the Buyer or was disclosed on any Exhibit hereto
or is a matter with respect to which the Seller or any or all of the
Shareholders did or did not have knowledge, including, without limitation, (i)
any act or omission of the Seller or any Shareholder with respect to, or any
event or circumstance related to, the Seller's or any predecessor's ownership
or operation of the Acquired Assets or the Excluded Assets or the conduct of
its business, which act, omission, event or circumstance occurred or existed
prior to or at the Closing Date, without regard to whether a claim with respect
to such matter is asserted before or after the Closing Date, (ii) any Liability
not included in the Assumed Liabilities, (iii) the use, presence, generation,
handling, remediation, removal, transportation, release or disposal of
Hazardous Materials on, to or from any of the Premises or other real property
or facilities owned or occupied by the Seller or any predecessor prior to the
Closing Date, (iv) the failure of the Seller or any predecessor or of any
Shareholder to comply with any Environmental Obligation or other Legal
Requirement or Order or the violation by any of them of any Right, (v) any
claim that the transactions contemplated by this Agreement violate the Worker
Adjustment and Retraining Notification Act, as amended, or any similar state or
local Legal Requirement or any fraudulent conveyance laws of any jurisdiction,
and any Liability resulting therefrom, or
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(vi) any Liability resulting from any failure of the parties to comply with any
bulk sales or transfer law or other similar Legal Requirement of any applicable
jurisdiction in connection with the transactions contemplated by this
Agreement. If any dispute arises concerning whether any indemnification is
owing which cannot be resolved by negotiation among the parties within a
reasonable time, the dispute will be resolved by arbitration pursuant to this
Agreement.
(b) Amounts needed to cover any indemnification
claims resolved in favor of the Buyer against the Seller or the Shareholders
during the Escrow Period will be paid to the Buyer first out of the Escrow
Account, along with interest from the Closing Date at the rate applicable to
the escrowed funds. The Seller and the Shareholders will have joint and
several Liability for any additional amounts needed to cover such claims, which
amounts will be paid directly to the Buyer. At the end of the Escrow Period
amounts that may be needed to cover pending indemnification claims made by the
Buyer (such amounts to be determined by the Buyer based upon the reasonable
exercise of its business judgment) will be retained in the Escrow Account until
such claims are resolved, and any excess on deposit therein, including any
accrued interest, will be paid to the Seller. Nothing in this Section 7.1(b)
will be construed to limit the Buyer's right to indemnification to amounts on
deposit in the Escrow Account. The Buyer, the Shareholders and the Seller will
jointly give instructions to the Escrow Agent to carry out the intent of this
Section 7.1(b). The Shareholders will provide the Escrow Agent with
instructions to invest amounts held in the Escrow Account in one or more funds
chosen by the Shareholders the assets of which consist solely of securities
rated A-1, P-1 or higher. Any disputes concerning the escrowed funds will be
settled by arbitration as provided in this Agreement.
(c) The Shareholders and the Seller will not be
required, in the aggregate, to indemnify the Buyer for any amount in excess of
$10,000,000.
7.2. Indemnification Provisions for Benefit of the Seller
and the Shareholders. If the Buyer breaches (or if any Person other than the
Seller and the Shareholders alleges facts that, if true, would mean the Buyer
has breached) any of its representations or warranties contained herein and the
Seller or the Shareholders gives notice of a claim for indemnification against
the Buyer within the Survival Period, or if the Buyer breaches (or if any
Person other than the Seller and the Shareholders alleges facts that, if true,
would mean the Buyer has breached) any of its covenants contained herein or in
the Other Buyer Agreements, then the Buyer agrees to indemnify Seller and the
Shareholders from and against any Adverse Consequences the Seller and the
Shareholders may suffer resulting from, arising out of, relating to, or caused
by the breach or alleged breach, regardless of whether the Adverse Consequences
are suffered during or after the Survival Period. If any dispute arises
concerning whether any indemnification is owing which cannot be resolved by
negotiation among the parties within a reasonable time, the dispute will be
resolved by arbitration pursuant to this Agreement.
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7.3. Matters Involving Third Parties.
(a) If any third party notifies any party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim") which
may give rise to a claim for indemnification against any other party (the
"Indemnifying Party"), then the Indemnified Party will notify each Indemnifying
Party thereof in writing within 15 days after receiving such notice. No delay
on the part of the Indemnified Party in notifying any Indemnifying Party will
relieve the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right,
at its sole cost and expense, to defend the Indemnified Party against the Third
Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party so long as (i) the Indemnifying Party notifies the
Indemnified Party in writing within 10 days after the Indemnified Party has
given notice of the Third Party Claim that the Indemnifying Party will
indemnify the Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from, arising out of,
relating to or caused by the Third Party Claim, (ii) the Indemnifying Party
provides the Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party will have the financial resources
to defend against the Third Party Claim and fulfill its indemnification
obligations hereunder, (iii) the Third Party Claim involves only money damages
and does not seek an injunction or other equitable relief, (iv) settlement of,
or an adverse judgment with respect to, the Third Party Claim is not, in the
good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice materially adverse to the continuing business
interests of the Indemnified Party, and (v) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently. If the Indemnifying
Party does not elect to assume control of or otherwise participate in the
defense or settlement of any Third Party Claim, it will be bound by the results
obtained by the Indemnified Party with respect to the Third Party Claim.
(c) So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in accordance with Section
7.3(b) above, (i) the Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of the Third Party Claim,
(ii) the Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (not to be withheld
unreasonably), and (iii) the Indemnifying Party will not consent to the entry
of any judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnified Party (not to be
withheld unreasonably).
(d) In the event any of the conditions in Section
7.3(b) above is or becomes unsatisfied, however, (i) the Indemnified Party may
defend against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it reasonably
may deem appropriate (and the Indemnified Party need not consult
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with, or obtain any consent from, any Indemnifying Party in connection
therewith), (ii) the Indemnifying Parties will reimburse the Indemnified Party
promptly and periodically for the costs of defending against the Third Party
Claim (including reasonable attorneys' fees and expenses), and (iii) the
Indemnifying Parties will remain responsible for any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating to or
caused by the Third Party Claim to the fullest extent provided in this Section
7.
7.4. Right of Offset. The Buyer will have the right to
offset any Adverse Consequences it may suffer against any amounts payable
pursuant to this Agreement or any Other Seller Agreement or Other Shareholder
Agreement to the Seller or any Shareholder or any current or future affiliate
of any of the foregoing at or after the Closing. The Buyer will give notice to
the Shareholders of its intent to make such an offset, and if there is a
dispute concerning the Buyer's right to indemnification for any such Adverse
Consequences, the Buyer will not deduct that amount from payments to be made by
the Buyer until the dispute is resolved by agreement of the parties or
arbitration.
7.5. Other Remedies. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable or common law remedy any party may have.
8. Termination.
8.1. Termination of Agreement. The parties may terminate
this Agreement as provided below:
(a) the Buyer, the Seller and the Shareholders
may terminate this Agreement by mutual written consent at any time prior to the
Closing;
(b) the Buyer may terminate this Agreement by
giving written notice to the Seller and the Shareholders at any time prior to
the Closing (i) in the event the Seller or any Shareholder has breached any
representation, warranty or covenant contained in this Agreement in any
material way, the Buyer has notified the Seller and the Shareholders of the
breach, and the breach has not been cured within 10 days after the notice of
breach or (ii) if the Closing has not occurred on or before April 30, 1996
because of the failure of any condition precedent to the Buyer's obligations to
consummate the Closing (unless the failure results primarily from the Buyer
breaching any representation, warranty or covenant contained in this
Agreement); and
(c) the Seller and the Shareholders may terminate
this Agreement by giving written notice to the Buyer at any time prior to the
Closing (i) if the Buyer has breached any representation, warranty or covenant
contained in this Agreement in any material way, the Seller has notified the
Buyer of the breach, and the breach has not been cured within 10 days after the
notice of breach or (ii) if the Closing has not occurred on or before April 30,
1996
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because of the failure of any condition precedent to the Seller's and the
Shareholders' obligations to consummate the Closing (unless the failure results
primarily from the Seller or any Shareholder breaching any representation,
warranty or covenant contained in this Agreement).
8.2. Effect of Termination. The termination of this
Agreement by a party pursuant to Section 8.1 will in no way limit any
obligation or liability of any other party based on or arising from a breach or
default by such other party with respect to any of its representations,
warranties, covenants or agreements contained in this Agreement, and the
terminating party will be entitled to seek all relief to which it is entitled
under applicable law.
8.3. Confidentiality. If this Agreement is terminated,
each party will treat and hold as confidential all Confidential Information
concerning the other parties which it acquired from such other parties in
connection with this Agreement and the transactions contemplated hereby.
9. Miscellaneous.
9.1. No Third-Party Beneficiaries. This Agreement will
not confer any rights or remedies upon any Person other than the parties and
their respective successors and permitted assigns.
9.2. Entire Agreement. This Agreement (including the
documents referred to herein) constitutes the entire agreement among the
parties and supersedes any prior understandings, agreements or representations
by or among the parties, written or oral, to the extent they relate in any way
to the subject matter hereof.
9.3. Succession and Assignment. This Agreement will be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. Neither the Seller nor any Shareholder may
assign this Agreement or any of their rights, interests or obligations
hereunder without the prior written approval of the Buyer. The Buyer may
assign its rights and obligations hereunder as permitted by law, including,
without limitation, to any lending institution that provides financing for the
Buyer's purchase of the Acquired Assets.
9.4. Counterparts. This Agreement may be executed in one
or more counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument.
9.5. Headings. The section headings contained in this
Agreement are inserted for convenience only and will not affect in any way the
meaning or interpretation of this Agreement.
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9.6. Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder will be deemed duly given if it is sent
by registered or certified mail, return receipt requested, postage prepaid, or
by courier, and addressed to the intended recipient as set forth below:
If to the Seller or
the Shareholders:
Xxxxxx and Xxxxxxx Xxxxx and Xxxxxxx and Xxxxx Xxxxxxxx
0000 Xxxx Xxxxxxx Xxxx Xxxxx 0000 Xxxxx Xxxxxxxxx Xx.
Xxxxxxxxx, Xxxxxxxx 00000 Xxxxxx, Xxxxxxxx 00000
If to the Buyer: Copy to:
RentX Industries, Inc. Xxxxxxx & Xxxxxx L.L.C.
0000 Xxxxx Xxxxxx 000 Xxxxxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxx 00000 Suite 3000
Attn: President Xxxxxx, Xxxxxxxx 00000
Attn: B. Xxxxx Xxxxxxx
Notices will be deemed given five days after mailing if sent by certified mail,
and when delivered if sent by courier. Any party may change the address to
which notices, requests, demands, claims and other communications hereunder are
to be delivered by giving the other parties notice in the manner herein set
forth.
9.7. Governing Law. This Agreement will be governed by
and construed in accordance with the domestic laws of the State of Colorado
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Colorado or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Colorado.
9.8. Amendments and Waivers. No amendment of any
provision of this Agreement will be valid unless the same is in writing and
signed by the Buyer, the Seller and the Shareholders. No waiver by any party
of any default, misrepresentation or breach of warranty or covenant hereunder,
whether intentional or not, will be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence, and no waiver will be effective unless set forth in writing and
signed by the party against whom such waiver is asserted.
9.9. Severability. Any term or provision of this
Agreement that is invalid or unenforceable in any situation in any jurisdiction
will not affect the validity or enforceability
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of the remaining terms and provisions hereof or the validity or enforceability
of the offending term or provision in any other situation or in any other
jurisdiction.
9.10. Expenses. The Buyer will bear its own costs and
expenses (including, without limitation, legal fees and expenses) incurred
either before or after the date of this Agreement in connection with this
Agreement or the transactions contemplated hereby. The Shareholders, and not
the Seller, will bear all costs and expenses (including, without limitation,
all legal, accounting and tax related fees and expenses and all fees,
commissions, expenses and other amounts payable to any broker, finder or agent
and the costs of the Phase I environmental study to be delivered pursuant to
Section 6.1(k)) incurred by the Shareholders or the Seller either before or
after the date of this Agreement in connection with this Agreement or the
transactions contemplated hereby.
9.11. Arbitration. Any disputes arising under this
Agreement, including, without limitation, those involving claims for specific
performance or other equitable relief, will be submitted to binding arbitration
under the Commercial Arbitration Rules of the American Arbitration Association
under the authority of federal and state arbitration statutes, and will not be
the subject of litigation in any forum. The arbitration will be conducted only
in Denver, Colorado, before a single arbitrator selected by the parties or, if
they are unable to agree on an arbitrator, before a panel of three arbitrators,
one selected by the Buyer, one selected by the Seller and the third selected by
the other two arbitrators. The award of the arbitrators will be final and
binding and judgment on the award may be entered by any court of competent
jurisdiction. THIS SUBMISSION AND AGREEMENT TO ARBITRATE WILL BE SPECIFICALLY
ENFORCEABLE. The prevailing party or parties in any such arbitration (as
determined by the arbitrator or arbitrators) or in any action to enforce this
agreement to arbitrate will be entitled to all reasonable costs and expenses,
including fees and expenses of the arbitrators and attorneys, incurred in
connection therewith. Notwithstanding the foregoing provisions of this Section
9.11, in any legal proceeding commenced by a Governmental Authority or other
Person against a party to this Agreement, that party will have the right to
bring a third party claim for indemnification against any other party which has
an obligation to indemnify it pursuant to this Agreement.
9.12. Construction. The parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement will be
construed as if drafted jointly by the parties and no presumption or burden of
proof will arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement. The word "including" will mean
including without limitation. The parties intend that each representation,
warranty and covenant contained herein will have independent significance. If
any party breaches any representation, warranty or covenant contained herein in
any respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which the party has not breached will not detract from or
mitigate the fact that the party is in breach of the first representation,
warranty or covenant.
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9.13. Incorporation of Exhibits. The Exhibits identified
in this Agreement are incorporated herein by reference and made a part hereof.
9.14. Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original and all of
which together will be deemed to be one and the same instrument. The execution
of a counterpart of the signature page to this Agreement will be deemed the
execution of a counterpart of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
RENTX INDUSTRIES, INC.
By: /s/ XXXXXXX X. XXXXX
------------------------------------
Name: Xxxxxxx X. Xxxxx
----------------------------------
Title: President
---------------------------------
ZODIAC RENTALS, INC.
By: /s/ XXXXXXX X. XXXXX
------------------------------------
Name: Xxxxxxx X. Xxxxx
----------------------------------
Title: President
---------------------------------
ZODIAC RENTALS, INC. III
By: /s/ XXXXXX X. XXXXX
------------------------------------
Name: Xxxxxx X. Xxxxx
----------------------------------
Title: Vice President
---------------------------------
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SHAREHOLDERS:
/s/ XXXXXX X. XXXXX
---------------------------------------
Xxxxxx X. Xxxxx
/s/ XXXXXXX X. XXXXX
---------------------------------------
Xxxxxxx X. Xxxxx
/s/ XXXXXXX X. XXXXXXXX
---------------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ XXXXX X. XXXXXXXX
---------------------------------------
Xxxxx X. Xxxxxxxx
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