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EXHIBIT 10.12
AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of March 24,
1998, by NationsRent, Inc., a Delaware corporation ("Buyer"), Xxxx-Xxxx Limited
Partnership, an Ohio limited partnership (the "Partnership"), Xxxxxxx X. Xxxxx
Foundation, an Ohio nonprofit corporation (the "Foundation" and, collectively
with the Partnership, "Sellers"), Xxxxxxx X. Xxxxx, Xx., individually ("Ray"),
Xxxxxxx X. Xxxxx, III, individually ("Ray III"), Xxxxxxx X. Xxxxx, individually
("Xxxxxxx"), and Xxxxx X. Xxxxx, individually ("Xxxxx").
RECITALS
Sellers desire to sell, and Buyer desires to purchase, all of the
issued and outstanding shares (the "Shares") of capital stock of The Xxxx-Xxxx
Company, an Ohio corporation (the "Company"), for the consideration and on the
terms set forth in this Agreement.
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"APPLICABLE CONTRACT"-any Contract (a) under which the Company has or
may acquire any rights, (b) under which the Company has or may become subject to
any obligation or liability, or (c) by which the Company or any of the assets
owned or used by it is or may become bound.
"BALANCE SHEET"-as defined in Section 3.4.
"BEST EFFORTS"-the efforts that a prudent Person desirous of achieving
a result would use in similar circumstances to ensure that such result is
achieved as expeditiously as possible; provided however that an obligation to
use Best Efforts under this Agreement does not require the Person subject to
that obligation to take actions that would result in a materially adverse change
in the benefits to such Person of this Agreement and the Contemplated
Transactions.
"BREACH"-a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been any inaccuracy in or breach of, or any failure to perform or comply with,
such representation, warranty, covenant, obligation, or other provision; and the
term "Breach" means any such inaccuracy, breach, or failure.
"BUYER"-as defined in the first paragraph of this Agreement.
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"CLOSING"-as defined in Section 2.3.
"CLOSING DATE"-the date and time as of which the Closing actually takes
place.
"COMPANY"-as defined in the Recitals of this Agreement.
"CONSENT"-any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONSULTING AGREEMENT"-as defined in Section 2.4(a)(iii)(A).
"CONTEMPLATED TRANSACTIONS"-all of the transactions contemplated by
this Agreement, including:
(a) the sale of the Shares by Sellers to Buyer;
(b) the execution, delivery, and performance of the
Promissory Note, the Consulting Agreement, the Employment Agreements,
the Leases, and the Sellers Releases;
(c) the performance by Buyer and Sellers of their
respective covenants and obligations under this Agreement; and
(d) Buyer's acquisition and ownership of the Shares.
"CONTRACT"-any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding, other than a Company Plan or Company Other Benefit Obligation (as
defined in Section 3.13).
"DAMAGES"- as defined in Section 10.2.
"DISCLOSURE SCHEDULE"-the disclosure schedule delivered by Sellers to
Buyer concurrently with the execution and delivery of this Agreement.
"EMPLOYMENT AGREEMENTS"-as defined in Section 2.4(b)(v).
"ENCUMBRANCE"-any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"ENVIRONMENT"-soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any
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other environmental medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES"-any material cost,
damages, expense, liability, obligation, or other responsibility arising prior
to the Closing Date from or under Environmental Law or Occupational Safety and
Health Law and consisting of or relating to:
(a) fines, penalties, judgments, awards, settlements,
legal or administrative proceedings, damages, losses, claims, demands
and response, investigative, remedial, or inspection costs and expenses
arising under Environmental Law or Occupational Safety and Health Law;
(b) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective
action, including any investigation, cleanup, removal, containment, or
other remediation or response actions ("Cleanup") required by
applicable Environmental Law or Occupational Safety and Health Law and
for any natural resource damages; or
(c) any other compliance, corrective, investigative, or
remedial measures required under Environmental Law or Occupational
Safety and Health Law.
The terms "removal," "remedial," and "response action," include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as amended
("CERCLA").
"ENVIRONMENTAL LAW"-any Legal Requirement as of the Closing Date that
requires or relates to:
(a) advising a Governmental Body of intended or actual
Releases of Hazardous Materials or violations of discharge limits;
(b) preventing or reducing to legally required levels the
release of pollutants or hazardous substances or materials into the
Environment;
(c) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated,
packaged, and used so that they do not present unreasonable risks to
human health or the Environment when used or disposed of;
(e) protecting resources, species, or ecological
amenities;
(f) reducing to legally required levels the risks
inherent in the transportation
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of hazardous substances, pollutants, oil, or other potentially harmful
substances;
(g) cleaning up pollutants that have been released,
preventing the threat of release, or paying the costs of such clean up
or prevention; or
(h) making responsible parties pay private parties, or
groups of them, for damages done to their health or the Environment, or
permitting self-appointed representatives of the public interest to
recover for injuries done to public assets.
"ERISA"-the Employee Retirement Income Security Act of 1974, as
amended, or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.
"FACILITIES"-any real property, leaseholds, or other interests
currently or formerly owned or operated by the Company and any buildings,
plants, structures, or equipment (including motor vehicles) currently or
formerly owned or operated by the Company.
"GAAP"-generally accepted United States accounting principles, applied
on a basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 3.4 were prepared.
"GOVERNMENTAL AUTHORIZATION"-any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY"-any:
(a) nation, state, county, city, town, village, district,
or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory,
or taxing authority or power of any nature.
"HAZARDOUS ACTIVITY"-the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous Materials
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in, on, under, about, or from the Facilities or any part thereof into the
Environment.
"HAZARDOUS MATERIALS"-any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos containing materials.
"INDEBTEDNESS"-as applied to any Person, means: (i) all obligations of
that Person to repay or pay money borrowed from another Person or the deferred
portion of the purchase price of services or property; (ii) all obligations of
that Person under bankers acceptances; (iii) all obligations of that Person
under letters of credit; (iv) obligations of others which that Person has
directly or indirectly guaranteed, endorsed (otherwise than for collection or
deposit in the ordinary course of business), discounted or sold with recourse or
agreed (contingently or otherwise) to purchase or repurchase or otherwise
acquire, or in respect of which that Person has agreed to supply or advance
funds (whether by way of loan, stock purchase, capital contribution or
otherwise) or otherwise to become directly or indirectly liable; (v) all
obligations evidenced or secured by any mortgage, pledge, lien or conditional
sale or other title retention agreement to which any property or asset owned or
held by that Person is subject, whether or not the obligation evidenced or
secured thereby shall have been assumed; and (vi) all other items (except items
of capital stock, capital surplus, general contingency reserves, deferred income
taxes, retained earnings and amounts attributable to minority interest, if any)
which in accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet of that Person as of the date
Indebtedness is to be determined, including obligations of that Person properly
treated as capital lease obligations or their equivalent under GAAP.
"INDEMNIFIED PERSONS"-as defined in Section 10.2.
"INTELLECTUAL PROPERTY ASSETS"-as defined in Section 3.24.
"INTERIM BALANCE SHEET"-as defined in Section 3.4.
"IRC"-the Internal Revenue Code of 1986, as amended, or any successor
law, and regulations issued by the IRS pursuant to the Internal Revenue Code or
any successor law.
"IRS"-the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"KNOWLEDGE"-an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) such individual is actually aware of such fact or
other matter; or
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(b) a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the course of
conducting a reasonably comprehensive investigation concerning the
existence of such fact or other matter.
A Person (other than an individual), including the Company, will be
deemed to have "Knowledge" of a particular fact or other matter only if any
individual who is currently serving as a senior management employee of such
Person has, or at any time had, Knowledge of such fact or other matter.
"LEASES"-as defined in Section 2.4(a)(iv).
"LEGAL REQUIREMENT"-any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"OCCUPATIONAL SAFETY AND HEALTH LAW"-any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards.
"ORDER"-any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS"-an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of
such Person and is taken in the ordinary course of the normal
operations of such Person;
(b) such action is not required to be authorized by the
board of directors of such Person (or by any Person or group of Persons
exercising similar authority) and is not required to be specifically
authorized by the parent company (if any) of such Person; and
(c) such action is similar in nature and magnitude to
actions customarily taken, without any authorization by the board of
directors (or by any Person or group of Persons exercising similar
authority), in the ordinary course of the normal operations of other
Persons that are in the same line of business as such Person.
"ORGANIZATIONAL DOCUMENTS"-(a) the articles or certificate of
incorporation and the regulations or bylaws of a corporation; (b) the
partnership agreement and any statement of partnership of a general partnership;
(c) the limited partnership agreement and the certificate of limited partnership
of a limited partnership; (d) any charter or similar document adopted or filed
in connection with the creation, formation, or organization of a Person; and (e)
any amendment to any of the foregoing.
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"PERSON"-any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PLAN"-as defined in Section 3.15.
"PROCEEDING"-any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"PROMISSORY NOTE"-the promissory note described in Section 2.4(b)(ii).
"RELATED PERSON"-with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled
by such individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of
such individual's Family hold (individually or in the aggregate) a
Material Interest; and
(d) any Person with respect to which such individual or
one or more members of such individual's Family serves as a director,
officer, partner, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly or indirectly
under common control with such specified Person;
(b) any Person that holds a Material Interest in such
specified Person;
(c) each Person that serves as a director, officer,
partner, executor, or trustee of such specified Person (or in a similar
capacity);
(d) any Person in which such specified Person holds a
Material Interest;
(e) any Person with respect to which such specified
Person serves as a general partner or a trustee (or in a similar
capacity); and
(f) any Related Person of any individual described in
clause (b) or (c).
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For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse and former spouses,
(iii) any other natural person who is related to the individual or the
individual's spouse within the second degree, and (iv) any other natural person
who resides with such individual, and (b) "Material Interest" means direct or
indirect beneficial ownership (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of voting securities or other voting interests
representing at least 5% of the outstanding voting power of a Person or equity
securities or other equity interests representing at least 10% of the
outstanding equity securities or equity interests in a Person.
"RELEASE"-any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"RENTAL EQUIPMENT"-means all machinery, equipment, tools, supplies, and
other similar tangible personal property used or held for use by the Company or
its customers.
"REPRESENTATIVE"-with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"SECURITIES ACT"-the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"SELLERS"-as defined in the first paragraph of this Agreement.
"SELLERS NOTES" means (a) the Promissory Note and (b) any other notes
whether outstanding on the date of this Agreement or thereafter created,
incurred or assumed, given by Buyer or any Buyer Subsidiary in connection with
the acquisition by Buyer or any Buyer Subsidiary of any business, properties,
stock or assets to the sellers of such businesses, properties, stock or assets.
"SELLERS RELEASES"-as defined in Section 2.4.
"SENIOR INDEBTEDNESS"-the principal of (and premium, if any) and
interest on (a) all bank financing and other indebtedness, public or private, of
Buyer and any Buyer Subsidiary, other than the Sellers Notes, whether
outstanding on the date of this Agreement or thereafter created, incurred or
assumed, which is (i) reasonably determined by Buyer or any Buyer Subsidiary to
be necessary or appropriate (A) in connection with the acquisition of any
businesses, properties, stock, or assets, or (B) to finance the working capital
needs of Buyer and any Buyer Subsidiary, and (ii) for money borrowed; (b)
obligations of Buyer and any Buyer Subsidiary, whether outstanding on the date
of this Agreement or thereafter created, incurred or assumed, as lessee under
(i) leases of properties or assets, which leases are required to be capitalized
on the balance sheet of the lessee under GAAP, and (ii) leases of properties or
assets made as part of any sale and lease-back transaction to which Buyer or any
Buyer Subsidiary is a party, and (c) amendments, renewals, extensions,
modifications and refundings of any such indebtedness or obligation, unless
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in any case in the instrument creating or evidencing any such indebtedness or
obligation or pursuant to which the same is outstanding it is provided that such
indebtedness or obligation is not superior in right of payment to the Promissory
Note.
"SHARES"-as defined in the Recitals of this Agreement.
"SUBSIDIARY"-with respect to any Person (the "Owner"), any corporation
or other Person of which securities or other interests having the power to elect
a majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred), are held by the Owner or one or more of its Subsidiaries.
"TAX"-any tax (including any income tax, capital gains tax, value-added
tax, sales or use tax, employment tax, excise tax, gross receipts tax, property
tax, gift tax, or estate tax), levy, assessment, tariff, duty (including any
customs duty), deficiency, or other fee, and any related charge or amount
(including any fine, penalty, interest, or addition to tax), imposed, assessed,
or collected by or under the authority of any Governmental Body or payable
pursuant to any tax-sharing agreement or any other Contract relating to the
sharing or payment of any such tax, levy, assessment, tariff, duty, deficiency,
or fee.
"TAX RETURN"-any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"THREAT OF RELEASE"-a substantial likelihood of a Release that may
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.
"THREATENED"-a claim, Proceeding, dispute, action, or other matter will
be deemed to have been "Threatened" if any demand or statement has been made (in
writing) or any notice has been given (in writing).
"RAY"-as defined in the first paragraph of this Agreement.
"RAY III"-as defined in the first paragraph of this Agreement.
"XXXXXXX"-as defined in the first paragraph of this Agreement.
"XXXXX"-as defined in the first paragraph of this Agreement.
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2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES
Subject to the terms and conditions of this Agreement, at the Closing,
Sellers will sell and transfer the Shares to Buyer, and Buyer will purchase the
Shares from Sellers.
2.2 PURCHASE PRICE
The purchase price (the "Purchase Price") for the Shares will be
Forty-One Million Five Hundred Thousand Dollars ($41,500,000.00), representing
the sum of the cash to be paid by Buyer to Sellers at the Closing as specified
in Section 2.4(b)(i) plus the principal amount of the Promissory Note to be
delivered by Buyer to Sellers at the Closing as specified in Section 2.4(b)(ii).
2.3 CLOSING
The purchase and sale (the "Closing") provided for in this Agreement
will take place at the Columbus offices of Buyer's counsel, Squire, Xxxxxxx &
Xxxxxxx L.L.P., at 10:00 a.m. (local time) on the later of (i) April 1, 1998 or
(ii) the date that is five business days following the satisfaction or waiver of
all conditions to the obligations of the parties to consummate the Contemplated
Transactions (other than conditions with respect to actions the respective
parties will take at the Closing itself), it being understood and acknowledged
that Section 9.1(b) and (d) provide for termination of this Agreement by Buyer
or Sellers if the Closing has not occurred on or before April 8, 1998, or (iii)
such other time and place as the parties may agree. Subject to the provisions of
Section 9, failure to consummate the purchase and sale provided for in this
Agreement on the date and time and at the place determined pursuant to this
Section 2.3 will not result in the termination of this Agreement and will not
relieve any party of any obligation under this Agreement.
2.4 CLOSING OBLIGATIONS
At the Closing:
(a) Sellers, Xxx, Xxx III, Xxxxxxx, and Xxxxx will deliver to
Buyer:
(i) certificates representing the Shares, duly endorsed
(or accompanied by duly executed stock powers) for transfer to Buyer;
(ii) releases in the form of Exhibit 2.4(a)(ii) executed
by Sellers, Xxx, Xxx III, Xxxxxxx, and Xxxxx (collectively, "Sellers
Releases");
(iii) a consulting agreement in the form of Exhibit
2.4(a)(iii) (the "Consulting
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Agreement"), executed by Ray;
(iv) a lease agreement in the form of Exhibit 2.4(a)(iv),
executed by the owner(s) thereof with respect to each of the
properties, and on the terms, described in Schedule 2.4(a)(iv)
(collectively, the "Leases");
(v) a certificate executed by Sellers, Xxx, Xxx III,
Xxxxxxx, and Xxxxx representing and warranting to Buyer that each of
the representations and warranties of Sellers, Xxx, Xxx III, Xxxxxxx,
and Xxxxx in this Agreement (as supplemented pursuant to Section 5.5)
was accurate in all respects as of the date of this Agreement and is
accurate in all respects as of the Closing Date as if made on the
Closing Date (giving full effect to any supplements to the Disclosure
Schedule that were delivered by Sellers to Buyer prior to the Closing
Date in accordance with Section 5.5 and the transactions contemplated
by Section 5.2 hereof).
(b) Buyer will deliver to Sellers, Xxx, Xxx III, Xxxxxxx, and
Xxxxx:
(i) $31,500,000 by wire transfer to an account specified
by Sellers;
(ii) a convertible promissory note subordinated to the
Senior Indebtedness payable to Sellers in the principal amount of
$10,000,000.00 in the form of Exhibit 2.4(b)(ii), executed by Buyer;
(iii) a registration rights agreement in the form of
Exhibit 2.4(b)(iv), executed by Buyer;
(iv) a warrant agreement in the form of Exhibit 2.4(b)(v),
executed by Buyer;
(v) an Employment Agreement with Xxxxx Xxxxx in the form
of Exhibit 2.4(c), executed by Buyer (subject to Xx. Xxxxx'x consent to
the terms and conditions thereof) (such Employment Agreement and the
Xxxxxxxx Employment Agreement (if applicable pursuant to Section
2.4(b)(vi) below) are referred to herein together as the "Employment
Agreement)";
(vi) an Employment Agreement with Xxxxxxx X. Xxxxxxxx in
the form of Exhibit 2.4(b)(vi) hereto, executed by Buyer; provided,
however, that in the event that Xx. Xxxxxxxx refuses to execute and
deliver to Buyer such an agreement on or before the Closing, Buyer, in
lieu of executing and delivering said agreement, shall after the
Closing pay Xx. Xxxxxxxx $1,500,000 in accordance with and pursuant to
the terms of Section 3.3 of said form of agreement in full satisfaction
of Buyer's obligations under this Section 2.4(b)(vi);
(vii) the Leases, executed by Buyer; and
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(viii) a certificate executed by Buyer to the effect that
each of Buyer's representations and warranties in this Agreement was
accurate in all respects as of the date of this Agreement and is
accurate in all respects as of the Closing Date as if made on the
Closing Date.
(c) The parties mutally agree to encourage Xxxxx Xxxxx to execute
and deliver an employment agreement in the form of Exhibit 2.4(c).
3. REPRESENTATIONS AND WARRANTIES OF SELLERS, XXX, XXX III, XXXXXXX, AND
XXXXX
Xxxxxxx, Xxx, Xxx III, Xxxxxxx, and Xxxxx represent and warrant to
Buyer that the statements contained in this Section 3 (as supplemented pursuant
to Section 5.5) 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). Such representations and warranties are made and
given subject to the disclosures in the Disclosure Schedule accompanying this
Agreement and initialed by Sellers, Xxx, Xxx III, Michael, Bruce, and Buyer, and
shall be further qualified by supplements to the Disclosure Schedule to the
extent provided in Section 5.5.
3.1 ORGANIZATION AND GOOD STANDING
(a) Part 3.1 of the Disclosure Schedule contains a complete and
accurate list for the Company as of the date of this Agreement of its name, its
jurisdiction of incorporation, other jurisdictions in which it is authorized to
do business, and its capitalization (including the identity of each shareholder
and the number of shares held by each). The Company is a corporation duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all its obligations
under Applicable Contracts. The Company is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties owned
or used by it, or the nature of the activities conducted by it, requires such
qualification, except where the lack of such qualification would not have a
material adverse effect on the business, operations, properties, assets, or
condition (financial or otherwise) of the Company.
(b) Sellers have delivered to Buyer copies of the Organizational
Documents of the Company, as currently in effect.
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3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding
obligation of the Partnership, Xxx, Xxx III, Xxxxxxx, and Xxxxx enforceable
against them in accordance with its terms and at the Closing will constitute the
legal, valid and binding obligation of the Foundation. Upon the execution and
delivery of the Sellers Releases, the Consulting Agreement, the Employment
Agreements, and the Leases (collectively, the "Sellers' Closing Documents") by
Sellers, Xxx, Xxx III, Michael, Bruce, and such other Persons as may be required
for the Sellers' Closing Documents to be effectuated, the Sellers' Closing
Documents will constitute the legal, valid, and binding obligations of Sellers,
Xxx, Xxx III, Michael, Bruce, and such other persons as may be required for the
Sellers' Closing Documents to be effectuated, enforceable against them in
accordance with their respective terms. Sellers, Xxx, Xxx III, Michael, Bruce,
and such other persons as may be required for the Sellers' Closing Documents to
be effectuated have the absolute and unrestricted right, power, authority, and
capacity to execute and deliver this Agreement and the Sellers' Closing
Documents and to perform their obligations under this Agreement and the Sellers'
Closing Documents.
(b) Except as set forth in Part 3.2 of the Disclosure Schedule,
neither the execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or indirectly
(with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation
of (A) any provision of the Organizational Documents of the Company, or
(B) any resolution adopted by the board of directors or the
shareholders of Company;
(ii) contravene, conflict with, or result in a violation
of, or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any
remedy or obtain any relief under, any Legal Requirement or any Order
to which Sellers or the Company, or any of the assets owned or used by
the Company, may be subject, except where the contravention, conflict,
violation, or right could not reasonably be expected to have a material
adverse effect in the business, operations, properties, prospects,
assets, or condition (financial or otherwise) of the Company, or, to
the Knowledge of Xxxxxxx, Xxx, and the Company, the prospects of the
Company;
(iii) contravene, conflict with, or result in a violation
of any of the terms or requirements of, or give any Governmental Body
the right to revoke, withdraw, suspend, cancel, terminate, or modify,
any material Governmental Authorization that is held by the Company or
that otherwise relates to the business of, or any of the assets owned
or used by, the Company;
(iv) cause the Company to become subject to, or to become
liable for the payment of, any tax;
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(v) to the Knowledge of Xxxxxxx, Xxx, and the Company,
cause any of the assets owned by the Company to be reassessed or
revalued by any taxing authority or other Governmental Body;
(vi) contravene, conflict with, or result in a violation
or breach of any provision of, or give any Person the right to declare
a default or exercise any remedy under, or to accelerate the maturity
or performance of, or to cancel, terminate, or modify, any Applicable
Contract involving monetary amounts in excess of $25,000; or
(vii) result in the imposition or creation of any
Encumbrance in excess of $25,000 in the aggregate upon or with respect
to any of the assets owned or used by the Company, except as it may
relate to Indebtedness of Buyer.
Except as set forth in Part 3.2 of the Disclosure Schedule, none of Sellers,
Xxx, Xxx III, Michael, Bruce, or the Company is or will be required to give any
notice to or obtain any Consent from any Person in connection with the execution
and delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions, except to the extent any Consent under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 and the rules and
regulations issued pursuant thereto may be required.
(c) Sellers are acquiring the Promissory Note for their own
account and not with a view to distribution thereof within the meaning of
Section 2(11) of the Securities Act. Sellers are an "accredited investor" as
such term is defined in Rule 501(a) under the Securities Act.
3.3 CAPITALIZATION
The authorized equity securities of the Company consist of 2500 shares
of common stock, no par value, of which 1250 shares are issued and outstanding
and constitute the Shares. Sellers are and will be on the Closing Date the
record and beneficial owner and holder of all of the Shares, free and clear of
all Encumbrances.
Except as set forth in Part 3.3 of the Disclosure Schedule, no legend
or other reference to any purported Encumbrance appears upon any certificate
representing equity securities of the Company. All of the outstanding equity
securities of the Company have been duly authorized and validly issued and are
fully paid and nonassessable. There are no Contracts relating to the issuance,
sale, or transfer of any equity securities or other securities of the Company
other than this Agreement. None of the outstanding equity securities or other
securities of the Company were issued in violation of the Securities Act or any
other material Legal Requirement. The Company neither owns nor has any Contract
to acquire any equity securities or other securities of any Person or any direct
or indirect equity or ownership interest in any other business.
15
3.4 FINANCIAL STATEMENTS
Sellers have delivered to Buyer: (a) audited balance sheets of the
Company as at December 31 in each of the years 1993 through 1995 (including the
notes thereto), and the related audited statements of income, changes in
stockholders' equity, and cash flow for each of the fiscal years then ended
(including in each case the notes thereto), together with the report thereon of
Xxxx Xxxxxxx and Company, independent certified public accountants, (b) an
audited balance sheet of the Company as at December 31, 1996 (including the
notes thereto) (the "Balance Sheet"), and the related audited statements of
income, changes in stockholders' equity and cash flow for the fiscal year then
ended (including in each case the notes thereto) together with the report
thereon, and (c) an unaudited balance sheet of the Company as at December 31,
1997 (the "Interim Balance Sheet"), and the related unaudited statements of
income, changes in stockholders' equity, and cash flow for the twelve months
then ended (including in each case the notes thereto). Such financial statements
and notes (i) except as disclosed in Part 3.4 of the Disclosure Schedule, fairly
present in all material respects the financial condition and the results of
operations, changes in stockholders' equity, and cash flow of the Company as at
the respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP; (ii) reflect the consistent application
of such accounting principles throughout the periods involved; and (iii) are
consistent with the books and records of the Company as of those dates (which
books and records are complete and correct in all material respects as of those
dates). No financial statements of any other Person are required by GAAP to be
included in consolidated financial statements with the Company.
3.5 BOOKS AND RECORDS
Except for the stock record book, which Xxxxxxx, Xxx, and the Company
are unable to locate, the books of account and other records of the Company, all
of which have been made available to Buyer, are complete and correct and have
been maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls. The minute books of the
Company are not materially incomplete or incorrect and the Company will not be
adversely affected by the manner in which such minute books have been maintained
or by the actions taken which are not fully reflected in such minute books. At
the Closing, all of the foregoing books and records will be in the possession of
the Company.
16
3.6 TITLE TO PROPERTIES
Part 3.6 of the Disclosure Schedule contains a complete and accurate
list of all real property used or held for use by the Company as of the date of
this Agreement. The Company has no fee simple or other similar ownership
interest in real property. Except as set forth in Part 3.6 of the Disclosure
Schedule, Sellers have delivered or made available to Buyer copies of all leases
or other Contracts with respect to leasehold or other contractual interests of
the Company in real property. The Company owns all the properties and assets
(whether real, personal, or mixed and whether tangible or intangible) that they
purport to own located in the facilities operated by the Company or reflected as
owned in the books and records of the Company, including all of the properties
and assets reflected in the Interim Balance Sheet (except for inventory and
Rental Equipment sold since the date of the Interim Balance Sheet, as the case
may be, in the Ordinary Course of Business), and all of the properties and
assets purchased or otherwise acquired by the Company since the date of the
Interim Balance Sheet (except for inventory and Rental Equipment subsequently
sold in the Ordinary Course of Business).
3.7 ENCUMBRANCES
Except as set forth in Part 3.7 of the Disclosure Schedule, all
material properties and assets reflected in the Interim Balance Sheet are free
and clear of all Encumbrances and, in the case of real property, are not subject
to any rights of way, building use restrictions, exceptions, variances,
reservations, or limitations of any nature; except, with respect to all such
properties and assets, (a) mortgages or security interests shown on the Interim
Balance Sheet as securing specified liabilities or obligations, with respect to
which no default (or event that, with notice or lapse of time or both, would
constitute a default) exists, (b) mortgages or security interests incurred in
the Ordinary Course of Business in connection with the purchase of property or
assets after the date of the Interim Balance Sheet (such mortgages and security
interests being limited to the property or assets so acquired), with respect to
which no default (or event that, with notice or lapse of time or both, would
constitute a default) exists, and (c) liens for current taxes not yet due. To
the Knowledge of Xxxxxxx, Xxx, and the Company, all buildings, plants, and
structures used or held for use by the Company lie wholly within the boundaries
of the real property leased by the Company and do not encroach upon the property
of, or otherwise conflict with the property rights of, any other Person.
17
3.8 CONDITION AND SUFFICIENCY OF ASSETS
Except as set forth in Part 3.8 of the Disclosure Schedule, the
buildings, plants, structures, and equipment of the Company are structurally
sound, are in good operating condition and repair (subject to normal wear and
tear), and are adequate for the uses to which they are being put, and none of
such buildings, plants, structures, or equipment is in need of maintenance or
repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost. The building, plants, structures, and equipment of
the Company are sufficient for the continued conduct of the Company's business
after the Closing in substantially the same manner as conducted prior to the
Closing.
3.9 ACCOUNTS RECEIVABLE
All accounts receivable of the Company that are reflected on the
Interim Balance Sheet or on the accounting records of the Company as of the
Closing Date (collectively, the "Accounts Receivable") represent or will
represent valid obligations arising from transactions in the Ordinary Course of
Business to which the Company was a party or from services actually performed in
the Ordinary Course of Business. Except for (a) Accounts Receivable of customers
disclosed in Part 3.9 of the Disclosure Schedule (which will be collected within
360 days) and (b) the respective reserves shown on the Interim Balance Sheet or
on the accounting records of the Company as of the Closing Date (which reserves
have been effected in a method and manner in accordance with GAAP consistently
applied and consistent with past practice and, in the case of the reserve as of
the Closing Date, will not represent a percentage of the Accounts Receivable as
of the Closing Date greater than 11%), the Accounts Receivable either have been
or will be collected in full, without any set-off, within 270 days. Part 3.9 of
the Disclosure Schedule contains a complete and accurate list of all Accounts
Receivable in excess of $25,000 as of February 9, 1998. Buyer agrees to assign
to Sellers any particular Accounts Receivable for which Sellers are required to
indemnify Buyer as a result of a Breach of this Section 3.9, but only if such
assignment does not result in a Breach of obligations under the Senior
Indebtedness.
3.10 INVENTORY
All inventory of the Company, whether or not reflected in the Interim
Balance Sheet, consists of a quality and quantity usable and salable in the
Ordinary Course of Business, except for obsolete items and items of
below-standard quality, all of which have been written off or written down to
net realizable value in the Interim Balance Sheet or on the accounting records
of the Company as of the Closing Date, as the case may be. All inventories not
written off have been priced at the lower of cost or net realizable value on the
basis reflected in the Interim Financial Statements. The quantities of each item
of inventory are reasonable in the present circumstances of the Company.
18
3.11 RENTAL EQUIPMENT
All Rental Equipment of the Company, whether or not reflected in the
Interim Balance Sheet or on the accounting records of the Company as of the
Closing Date, consists of a quality and quantity usable, rentable, or salable in
the Ordinary Course of Business, except for obsolete items and items of
below-standard quality, all of which have been written off, written down or
adequately reserved against to their net realizable value in the Interim Balance
Sheet. All such Rental Equipment not written off has been recorded at the lower
of cost or net realizable value, and depreciated consistent with the economic
life of such Rental Equipment. The quantities of each item of such Rental
Equipment are reasonable in the present circumstances of the Company. All such
Rental Equipment is in good operating condition and repair, subject to normal
wear and tear, and has been maintained in accordance with normal industry
practice.
3.12 NO UNDISCLOSED LIABILITIES
Except as set forth in Part 3.12 of the Disclosure Schedule, the
Company has no liabilities or obligations of any nature (whether known or
unknown and whether absolute, accrued, contingent, or otherwise) except for (a)
liabilities or obligations reflected or reserved against in the Interim Balance
Sheet and (b) trade payables and accrued expenses which would be properly
categorized as current liabilities incurred in the Ordinary Course of Business
since the respective dates thereof.
3.13 TAXES
Except as set forth in Schedule 3.13 or disclosed in the Interim
Balance Sheet:
(a) The Company has filed or caused to be filed on a timely basis
all material Tax Returns that are or were required to be filed by or with
respect to it, either separately or as a member of a group of corporations,
pursuant to applicable Legal Requirements. The Company has paid, or accrued for
the payment of, all material Taxes that have or may have become due pursuant to
those Tax Returns, or pursuant to any assessment received by Sellers or the
Company, except to the extent such Taxes, if any, as are listed in Part 3.13 of
the Disclosure Schedule and are being contested in good faith or as to which
adequate reserves (determined in accordance with GAAP for both current and
deferred Taxes) have been accrued in the Interim Balance Sheet. The Company has
not taken any material position on its Tax Returns which is not supported by
"substantial authority" as that term is defined in Section 6662 of the IRC.
Sellers and the Company have delivered to Buyer copies of, and Part 3.13 of the
Disclosure Schedule contains a complete and accurate list of, all federal and
state income Tax Returns filed on or since January 1, 1994.
(b) Except as set forth in Part 3.13 of the Disclosure Schedule,
the United States federal and state income Tax Returns of the Company have not
been audited by the IRS or relevant state tax authorities for any year not
closed by the applicable statute of limitations, except that the IRS
19
had a "no change" audit of the Company for the year 1994. Except as described in
Part 3.13 of the Disclosure Schedule, the Company has not given or been
requested to give waivers or extensions (or is or would be subject to a waiver
or extension given by any other Person) of any statute of limitations relating
to the payment of Taxes of the Company or for which the Company may be liable.
(c) The charges, accruals, and reserves with respect to Taxes on
the respective books of the Company are adequate (determined in accordance with
GAAP for both current and deferred Taxes) and are at least equal to the
liability for Taxes of the Company. There exists no proposed federal or state
income tax assessment or any other tax assessment against the Company except as
disclosed in the Balance Sheet or in Part 3.13 of the Disclosure Schedule or for
Taxes not yet due and payable. No consent to the application of Section
341(f)(2) of the IRC has been filed with respect to any property or assets held,
acquired, or to be acquired by the Company. All Taxes that the Company is or was
required by Legal Requirements to withhold or collect have been, in all material
respects, duly withheld or collected and paid to the proper Governmental Body or
other Person. To the Knowledge of Seller, there is no action, suit, proceeding,
investigation, audit, or claim now pending or Threatened by any taxing authority
related to the Company. No claim has ever been made by any taxing authority
since January 1, 1994 in a jurisdiction where the Company does not file Tax
Returns that the Company is subject to taxation in such jurisdiction. Except for
the Kentucky sales tax assessment discussed in Part 3.13 of the Disclosure
Schedule, the Company has complied in all material respects with sales and use
tax laws.
(d) There is no tax sharing agreement (or equivalent agreement)
that will require any payment by the Company after the date of this Agreement.
The Company is not, or within the five-year period preceding the Closing Date
has not been, an "S" corporation. To the Knowledge of Xxxxxxx, Xxx, and the
Company, during the one year period prior to the date hereof, neither the
Company nor any target affiliate (as defined in Section 338(h)(6) of the IRC
with respect to the sale of the Shares to Buyer) has sold any property or assets
to Buyer or to any Subsidiary of Buyer.
(e) The Company is not a party to any safe harbor lease within the
meaning of Section 168(f)(8) of the IRC, as in effect prior to amendment by the
Tax Equity and Fiscal Responsibility Act of 1982. The Company is not, and never
has been, a United States real property holding corporation within the meaning
of Section 897(c)(2) of the IRC and Buyer is not required to withhold tax on the
purchase of the stock of the Company by reason of Section 1445 of the IRC. No
Sellers are a "foreign person" as such term is defined in Section 1445 of the
IRC. The Company is not a "consenting corporation" under Section 341(f) of the
IRC. The Company has not entered into any compensatory agreements with respect
to the performance of services which payment thereunder will result in a
nondeductible expense to the Company pursuant to Section 280G of the IRC. The
Company has not participated in an international boycott as defined in Section
999 of the IRC. The Company has not agreed to make and is not required to make
any adjustment under Section 481(a) of the IRC by reason of a change in
accounting method or otherwise.
20
3.14 NO MATERIAL ADVERSE CHANGE
Since the date of the Interim Balance Sheet, (a) there has not been any
material adverse change in (i) the business, operations, properties, assets, or
condition of the Company, or (ii) to the Knowledge of Sellers and Ray, the
prospects of the Company, and (b) no event has occurred or circumstance exists
that will likely result in such a material adverse change.
3.15 EMPLOYEE BENEFITS
(a) As used in this Section 3.15, the following terms have the
meanings set forth below.
"COMPANY OTHER BENEFIT OBLIGATION" means an Other Benefit
Obligation owed, adopted, or followed by the Company or an ERISA
Affiliate of the Company.
"COMPANY PLAN" means all Plans of which the Company or an
ERISA Affiliate of the Company is or, during the prior six years, was a
Plan Sponsor, or to which the Company or an ERISA Affiliate of the
Company otherwise contributes or, during the prior six years, has
contributed to, or in which the Company or an ERISA Affiliate of the
Company otherwise participates or, during the prior six years, has
participated.
"ERISA AFFILIATE" means, with respect to the Company, any
trade or business (whether or not incorporated) that is part of the
same controlled group, or under common control with, or part of an
affiliated service group that includes the Company, within the meaning
of IRC Section 414 and/or ERISA Section 4001(a)(14).
"MULTIEMPLOYER PLAN" has the meaning given in ERISA
Sections 3(37)(A) and 4001(a)(3).
"OTHER BENEFIT OBLIGATIONS" means all material obligations,
arrangements, or customary practices to provide benefits to present or
former directors, officers, employees, or agents, other than
obligations, arrangements, and practices that are Plans. Other Benefit
Obligations include, without limitation, sabbatical policies, severance
payment policies, and fringe benefits within the meaning of IRC Section
132.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PENSION PLAN" has the meaning given In ERISA Section 3(2)(A).
"PLAN" has the meaning given in ERISA Section 3(3).
"PLAN SPONSOR" has the meaning given in ERISA Section
3(16)(B).
21
"QUALIFIED PLAN" means any Plan that meets or purports to meet
the requirements of IRC Section 401(a).
"TITLE IV PLANS" means all Pension Plans that are subject to
Title IV of ERISA, 29 U.S.C. Section 1301 et seq., other than
Multiemployer Plans.
"VEBA" means a voluntary employees' beneficiary association
under IRC Section 501(c)(9).
(b) (i) Part 3.15(i) of the Disclosure Schedule contains a
complete and accurate list of all Company Plans and Company Other
Benefit Obligations as of the date of this Agreement.
(ii) Part 3.15(ii) of the Disclosure Schedule contains a
complete and accurate list as of the date of this Agreement of (A) all
ERISA Affiliates of the Company, and (B) all Plans of which any such
ERISA Affiliate is or, during the prior six years, was a Plan Sponsor,
in which any such ERISA Affiliate participates or, during the prior six
years, has participated, or to which any such ERISA Affiliate
contributes or, during the prior six years, has contributed.
(c) Except as set forth in Paragraph 3.15(c) of the Disclosure
Schedule, Sellers have delivered or made available to Buyer:
(i) all documents that set forth the terms of each
Company Plan and Company Other Benefit Obligation and of any related
trust, including (A) all plan descriptions and summary plan
descriptions of Company Plans for which Sellers or the Company or any
ERISA Affiliate of the Company are required to prepare, file, and
distribute, and (B) all summaries and descriptions furnished to
participants and beneficiaries regarding Company Plans and Company
Other Benefit Obligations for which a plan description or summary plan
description is not required;
(ii) all personnel, payroll, and employment manuals and
policies;
(iii) all collective bargaining agreements pursuant to
which contributions have been made or obligations incurred (including
both pension and welfare benefits) by the Company and the ERISA
Affiliates of the Company, and all collective bargaining agreements
pursuant to which contributions are being made or obligations are owed
by such entities;
(iv) a written description of any Company Plan or Company
Other Benefit Obligation that is not otherwise in writing;
(v) all registration statements filed with respect to any
Company Plan and
22
Company Other Benefit Obligation;
(vi) all insurance policies purchased by or to provide
benefits under any Company Plan and Company Other Benefit Obligation;
(vii) all contracts with third party administrators,
actuaries, investment managers, consultants, and other independent
contractors that relate to any Company Plan or Company Other Benefit
Obligation;
(viii) all material reports submitted within the four years
preceding the date of this Agreement by third party administrators,
actuaries, investment managers, consultants, or other independent
contractors with respect to any Company Plan or Company Other Benefit
Obligation;
(ix) a sample of the notifications sent to employees of
their rights under ERISA Section 601 et seq. and IRC Section 4980B;
(x) the Form 5500 filed in each of the most recent three
plan years with respect to each Company Plan and Company Other Benefit
Obligation, including all schedules thereto and the opinions of
independent accountants;
(xi) all notices that were given by the Company or any
ERISA Affiliate of the Company or any Company Plan to the IRS, the U.S.
Department of Labor, the PBGC, or any participant or beneficiary,
pursuant to statute, regulation, or otherwise, within the four years
preceding the date of this Agreement, including notices that are
expressly mentioned elsewhere in this Section 3.15;
(xii) all notices that were given by the IRS, the PBGC, or
the Department of Labor to the Company, any ERISA Affiliate of the
Company, or any Company Plan within the four years preceding the date
of this Agreement;
(xiii) with respect to any Qualified Plan, the most recent
determination letter for each Company Plan that is a Qualified Plan;
and
(d) Except as set forth in Part 3.15(d) of the Disclosure
Schedule:
(i) The Company and the Company's ERISA Affiliates have
performed all of their respective material obligations under all
Company Plans and Company Other Benefit Obligations.
(ii) Except for any such statements made prior to the date
which is three years prior to the date hereof which have not had and
will not have any continuing adverse effect on the Company after such
date, no statement, either written or oral, has been made by the
23
Company to any Person with regard to any Plan or Other Benefit
Obligation that was not in accordance with the Plan or Other Benefit
Obligation and that will likely have an adverse economic consequence to
the Company or to Buyer;
(iii) The Company, with respect to all Company Plans and
Company Other Benefits Obligations are, and each Company Plan and
Company Other Benefit Obligation is, in material compliance with ERISA,
the IRC, and other applicable Laws including the provisions of such
Laws expressly mentioned in this Section 3.15, and with any applicable
collective bargaining agreement.
(A) No non-exempt transactions prohibited by
ERISA Section 406 and no non-exempt "prohibited transaction"
under IRC Section 4975(c) have occurred with respect to any
Company Plan.
(B) No Company Plan is a Title IV Plan, a
Multiemployer Plan, or a VEBA.
(C) Neither Sellers nor the Company nor any
ERISA Affiliate of the Company has any material liability to
the IRS with respect to any Plan, including any liability
imposed by Chapter 43 of the IRC.
(D) Neither Sellers nor the Company nor any
ERISA Affiliate of the Company has any material liability to
the PBGC with respect to any Plan or has any liability under
ERISA Section 502 or Section 4071.
(E) Except as disclosed in Part 3.15(d)(iii)(E)
of the Disclosure Schedule, all filings required by ERISA and
the IRC as to each Company Plan and Company Other Benefit
Obligation, have been timely filed, and all notices and
disclosures to participants required by either ERISA or the
IRC have been timely provided.
(F) Except as described in Part 3.15(d)(iii)(F)
of the Disclosure Schedule, all contributions and payments
made or accrued with respect to all Company Plans and Company
Other Benefit Obligations are deductible under IRC Section 162
or Section 404. No amount, or any asset of any Company Plan is
subject to tax as unrelated business taxable income.
(iv) Except as set forth in Paragraph 3.15(d)(iv) of the
Disclosure Schedule, each Company Plan and Company Other Benefit
Obligation can be terminated within thirty days, without payment of any
additional contribution or amount and without the vesting or
acceleration of any benefits promised by such Plan.
(v) To Sellers' Knowledge, no event has occurred or
circumstance exists that
24
is likely to result in a material increase in premium costs of Company
Plans and Company Other Benefit Obligations that are insured, or a
material increase in benefit costs of such Company Plan and Company
Other Benefit Obligation that are self-insured.
(vi) Other than claims for benefits submitted by
participants or beneficiaries, no claim against, or legal proceeding
involving, any Company Plan or Company Other Benefit Obligation is
pending or, to Sellers' Knowledge, is Threatened.
(vii) Except as set forth in Paragraph 3.15(d)(vii) of the
Disclosure Schedule, each Company Plan that is a Qualified Plan is
qualified in form and operation under IRC Section 401(a); each trust
for each such Plan is exempt from federal income tax under IRC Section
501(a). No event has occurred or circumstance exists that will or could
give rise to disqualification or loss of tax-exempt status of any such
Qualified Plan or trust.
(viii) With respect to each Company Plan, the Company and
each ERISA Affiliate of the Company has met the minimum funding
standard, and has made all contributions required, under ERISA Section
302 and IRC Section 412.
(ix) Neither Sellers nor the Company has Knowledge of any
facts or circumstances that may give rise to any liability of any
Sellers, the Company, any ERISA Affiliate of the Company, or Buyer to
the PBGC under Title IV of ERISA.
(x) Neither the Company nor any ERISA Affiliate of the
Company has ever established, maintained, or contributed to or
otherwise participated in, or had an obligation to maintain, contribute
to, or otherwise participate in any Multiemployer Plan.
(xi) Except to the extent required under ERISA Section 601
et seq. and IRC Section 4980B or other applicable law, the Company is
not required to provide health or welfare benefits for any retired or
former employee, officer, or director, or any other person, and is not
obligated to provide health or welfare benefits to any active employee,
officer, director, or any other Person following retirement or other
termination of service.
(xii) Sellers and the Company have complied with the
provisions of ERISA Section 601 et seq. and IRC Section 4980B in all
material respects.
(xiii) No payment that is owed or may become due to any
director, officer, employee, or agent of the Company will be
non-deductible to the Company or subject to tax under IRC Section 280G
or Section 4999; nor will the Company be required to "gross up" or
otherwise compensate any such person because of the imposition of any
excise tax on a payment to such person.
(xiv) The consummation of the Contemplated Transactions
will not result in the
25
payment, vesting, or acceleration of any benefit under any Company Plan
or Company Other Benefit Obligation.
3.16 COMPLIANCE WITH MATERIAL LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS
(a) Except as set forth in Part 3.16 of the Disclosure Schedule:
(i) the Company is, and at all times has been, in
compliance with each material Legal Requirement that is or was
applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets;
(ii) no event has occurred or circumstance exists that
(with or without notice or lapse of time) (A) may constitute or result
in a material violation by the Company of, or a failure on the part of
the Company to comply with, any material Legal Requirement, or (B) may
give rise to any material obligation on the part of the Company to
undertake, or to bear all or any portion of the cost of, any remedial
action of any nature; and
(iii) the Company has not received, at any time, any notice
or other communication (whether oral or written) from any Governmental
Body or any other Person regarding (A) any actual, alleged, possible,
or potential violation of, or failure to comply with, any material
Legal Requirement, or (B) any actual, alleged, possible, or potential
obligation on the part of the Company to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature.
(b) Part 3.16 of the Disclosure Schedule contains a complete and
accurate list as of the date of this Agreement of each material Governmental
Authorization that is held by the Company or that otherwise relates to the
business of, or to any of the assets owned or used by, the Company. Each
Governmental Authorization listed or required to be listed in Part 3.16 of the
Disclosure Schedule is valid and in force and effect.
The Governmental Authorizations listed in Part 3.16 of the Disclosure
Schedule collectively constitute all of the material Governmental Authorizations
necessary to permit the Company to lawfully conduct and operate their businesses
in the manner they currently conduct and operate such businesses and to permit
the Company to own and use its assets in the manner in which it currently owns
and uses such assets.
3.17 LEGAL PROCEEDINGS; ORDERS
(a) Part 3.17 of the Disclosure Schedule contains a complete and
correct list of each Proceeding by or against the Company that is currently
pending, has been pending at any time since December 31, 1992 (with the stated
amount in controversy in excess of $25,000.00 and all Proceedings where no
dollar amount has been stipulated), and that:
26
(i) relates to or may affect the business of, or any of
the assets owned or used by, the Company; or
(ii) challenges, or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.
Except as disclosed in Part 3.17 of the Disclosure Schedule, to the Knowledge of
Xxxxxxx, Xxx, and the Company, (1) no such Proceeding has been Threatened, (2)
no event has occurred or circumstance exists that may give rise to or serve as a
basis for the commencement of any such Proceeding, and (3) no Proceeding has
been settled since December 31, 1992, for an amount greater than $25,000.00.
Sellers have made available to Buyer copies of all pleadings, correspondence,
and other documents relating to each Proceeding listed in Part 3.17 of the
Disclosure Schedule. The Proceedings listed in Part 3.17 of the Disclosure
Schedule will not have a material adverse effect on the business, operations,
assets, condition, or prospects of the Company.
(b) Except as set forth in Part 3.17 of the Disclosure Schedule:
(i) there is no Order to which the Company, or any of the
assets owned or used by the Company, is subject, which Order could
reasonably be expected to have a material adverse effect in the
business, operations, properties, prospects, assets, or condition
(financial or otherwise) of the Company;
(ii) Sellers are not subject to any Order that relates to
the business of, or any of the assets owned or used by, the Company,
which Order could reasonably be expected to have a material adverse
effect in the business, operations, properties, prospects, assets, or
conditions (financial or otherwise) of the Company; and
(iii) no officer, director, agent, or employee of the
Company is subject to any Order that prohibits such officer, director,
agent, or employee from engaging in or continuing any conduct,
activity, or practice relating to the business of the Company.
(c) Except as set forth in Part 3.17 of the Disclosure Schedule:
(i) the Company is, and at all times since December 31,
1992 has been, in full compliance with all of the material terms and
requirements of each Order to which it, or any of the assets owned or
used by it, is or has been subject;
(ii) to the Knowledge of Xxxxxxx, Xxx, and the Company, no
event has occurred or circumstance exists that may constitute or result
in (with or without notice or lapse of time) a violation of or failure
to comply with any term or requirement of any Order to which the
Company, or any of the assets owned or used by the Company, is subject;
and
27
(iii) to the Knowledge of Xxxxxxx, Xxx, and the Company,
the Company has not received any notice or other communication (whether
oral or written) from any Governmental Body or any other Person
regarding any actual, alleged, possible, or potential violation of, or
failure to comply with, any term or requirement of any Order to which
the Company, or any of the assets owned or used by the Company, is or
has been subject.
3.18 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Part 3.18 of the Disclosure Schedule, since the
date of the Interim Balance Sheet, the Company has conducted its business only
in the Ordinary Course of Business and there has not been any:
(a) change in the Company's authorized or issued capital stock;
grant of any stock option or right to purchase shares of capital stock of the
Company; issuance of any security convertible into such capital stock; grant of
any registration rights; purchase, redemption, retirement, or other acquisition
by the Company of any shares of any such capital stock; or declaration or
payment of any dividend or other distribution or payment in respect of shares of
capital stock;
(b) amendment to the Organizational Documents of the Company;
(c) payment or increase by the Company of any bonuses, salaries,
or other compensation to any stockholder, director, officer, or (except in the
Ordinary Course of Business) employee or entry into any employment, severance,
or similar Contract with any director, officer, or employee, or debt issued or
advances made to any shareholder, director, officer, or employee;
(d) adoption of, or increase in the payments to or benefits under,
any profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of the
Company;
(e) damage to or destruction or loss of any asset or property of
the Company, whether or not covered by insurance, which damage, destruction or
loss has materially and adversely affected the properties, assets, business, or
financial condition of the Company, taken as a whole, or, to the Knowledge of
Xxxxxxx, Xxx, and the Company, the prospects of the Company, taken as a whole;
(f) entry into, amendment or termination of, or receipt of notice
of termination of (i) any license, distributorship, dealer, nonemployee sales
representative, joint venture, credit, or similar agreement, or (ii) any
Contract or transaction involving a total remaining commitment by or to the
Company of at least $25,000.00 outside of the Ordinary Course of Business;
(g) sale (other than sales of inventory in the Ordinary Course of
Business), lease, or
28
other disposition of any asset or property of the Company with a value of
$25,000 or greater, or mortgage, pledge, or imposition of any lien or other
encumbrance on any material asset or property of the Company, including the
sale, lease, or other disposition of any of the Intellectual Property Assets;
(h) purchase outside the Ordinary Course of Business of any asset
or property for more than $25,000.00;
(i) cancellation or waiver of any claims or rights with a value to
the Company in excess of $25,000.00;
(j) repayment of any debt other than debt disclosed in the Balance
Sheet or the Interim Balance Sheet or incurred in the Ordinary Course of
Business since the respective dates thereof;
(k) material change in the accounting methods used by the Company;
or
(l) agreement, whether oral or written, by the Company to do any
of the foregoing.
3.19 CONTRACTS; NO DEFAULTS
(a) Part 3.19(a) of the Disclosure Schedule contains a complete
and accurate list as of the date of this Agreement, and Sellers have made
available to Buyer true and complete copies, of:
(i) each Applicable Contract that involves performance of
services or delivery of goods or materials by the Company of an amount
or value in excess of $25,000.00 (excluding the sale or rental of
Rental Equipment in the Ordinary Course of Business);
(ii) each Applicable Contract that involves performance of
services or delivery of goods or materials to the Company of an amount
or value in excess of $25,000.00;
(iii) each Applicable Contract that was not entered into in
the Ordinary Course of Business and that involves expenditures or
receipts of the Company in excess of $25,000.00;
(iv) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable
Contract affecting the ownership of, leasing of, title to, use of, or
any leasehold or other interest in, any real or personal property
(except personal property leases and installment and conditional sales
agreements having a value per item or aggregate payments of less than
$25,000.00);
(v) each licensing agreement or other Applicable Contract
with respect to patents, trademarks, copyrights, or other intellectual
property, including agreements with
29
current or former employees, consultants, or contractors regarding the
appropriation or the nondisclosure of any of the Intellectual Property
Assets;
(vi) each collective bargaining agreement and other
Applicable Contract to or with any labor union or other employee
representative of a group of employees;
(vii) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses, costs,
or liabilities by the Company with any other Person;
(viii) each Applicable Contract containing covenants that in
any way purport to restrict the business activity of the Company or any
Affiliate of the Company or limit the freedom of the Company or any
Affiliate of the Company to engage in any line of business or to
compete with any Person;
(ix) each Applicable Contract providing for payments to or
by any Person based on sales, purchases, or profits, other than direct
payments for goods;
(x) each power of attorney that is currently effective
and outstanding;
(xi) each Applicable Contract entered into other than in
the Ordinary Course of Business that contains or provides for an
express undertaking by the Company to be responsible for consequential
damages;
(xii) each Applicable Contract for capital expenditures in
excess of $25,000.00;
(xiii) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by the
Company other than in the Ordinary Course of Business; and
(xiv) each amendment, supplement, and modification (whether
oral or written) in respect of any of the foregoing.
Part 3.19(a) of the Disclosure Schedule sets forth reasonably complete details
concerning such Contracts, including the parties to the Contracts, the amount of
the remaining commitment of the Company under the Contracts, and the Company's
office where details relating to the Contracts are located.
(b) Except as set forth in Part 3.19(b) of the Disclosure Schedule
or as contemplated by this Agreement:
(i) neither Sellers nor any Related Person of Sellers has
or may acquire any
30
rights under, and neither Sellers nor any Related Person of Sellers has
or may become subject to any obligation or liability under, any
Contract that relates to the business of, or any of the assets owned or
used by, the Company; and
(ii) to the Knowledge of Xxxxxxx, Xxx, and the Company, no
officer, director, agent, employee, consultant, or contractor of the
Company is bound by any Contract that purports to limit the ability of
such officer, director, agent, employee, consultant, or contractor to
(A) engage in or continue any conduct, activity, or practice relating
to the business of the Company, or (B) assign to the Company or to any
other Person any rights to any invention, improvement, or discovery.
(c) Except as set forth in Part 3.19(c) of the Disclosure
Schedule, each Contract identified or required to be identified in Part 3.19(a)
of the Disclosure Schedule is in full force and effect with respect to the
Company in all material respects; each material Contract of the Company is valid
and enforceable in accordance with its material terms; and to the Knowledge of
Xxxxxxx, Xxx, and the Company, each Contract identified or required to be
identified in Part 3.19(a) of the Disclosure Schedule is valid and enforceable
in accordance with its material terms.
(d) Except as set forth in Part 3.19(d) of the Disclosure
Schedule:
(i) the Company is in full compliance with all applicable
material terms and requirements of each Contract under which the
Company has or had any obligation or liability or by which the Company
or any of the assets owned or used by the Company is or was bound;
(ii) to the Knowledge of Xxxxxxx, Xxx and the Company,
each other Person that has or had any obligation or liability under any
Contract required to be disclosed in Part 3.19 of the Disclosure
Schedule under which the Company has or had any rights is, and at all
times has been, in full compliance with all applicable material terms
and requirements of such Contract;
(iii) no material event has occurred or circumstance exists
that (with or without notice or lapse of time) may contravene, conflict
with, or result in a violation or breach of, or give the Company, or to
the Knowledge of Xxxxxxx, Xxx and the Company, any other Person, the
right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate, or
modify, any Contract required to be disclosed in Part 3.19 of the
Disclosure Schedule; and
(iv) the Company has not given to or received from any
other Person, at any time any notice or other written communication
regarding any actual, alleged, possible, or potential violation or
breach of, or default under, any Contract required to be disclosed in
Part 3.19 of the Disclosure Schedule.
31
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to the
Company under current or completed Contracts required to be disclosed in Part
3.19 of the Disclosure Schedule with any Person and, to the Knowledge of Sellers
and the Company, no such Person has made written demand for such renegotiation.
(f) The Contracts required to be disclosed in Part 3.19 of the
Disclosure Schedule relating to the sale, design, manufacture, or provision of
products or services by the Company have been entered into in the Ordinary
Course of Business and have been entered into without the commission of any act
alone or in concert with any other Person, or any consideration having been paid
or promised, that is or would be in violation of any Legal Requirement.
3.20 INSURANCE
(a) Sellers have delivered to Buyer:
(i) true and complete copies of all policies of insurance
(excluding the endorsements to such policies, which have been made
available to Buyer by Sellers) to which the Company is a party or under
which the Company, or any director of the Company, is or has been
covered at any time within the five years preceding the date of this
Agreement;
(ii) true and complete copies of all pending applications
for policies of insurance; and
(iii) any statement by the auditor of the Company's
financial statements with regard to the adequacy of such entity's
coverage or of the reserves for claims.
(b) Part 3.20(b) of the Disclosure Schedule describes (as of the
date of this Agreement):
(i) any self-insurance arrangement by or affecting the
Company, including any reserves established thereunder;
(ii) any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by the Company
outside the Ordinary Course of Business; and
(iii) all obligations of the Company to third parties in
excess of $25,000 with respect to insurance (including such obligations
under leases and service agreements) and identifies the policy under
which such coverage is provided.
(c) Except for health insurance claims of the Company's employees
which are covered by a Company health insurance policy or the obligation of an
employee of the Company, Part
32
3.20(c) of the Disclosure Schedule sets forth (as of the date of this
Agreement), by year, for the current policy year and each of the two preceding
policy years:
(i) a summary of the loss experience under each policy;
(ii) a statement describing each claim under an insurance
policy for an amount in excess of $25,000 (together with such
additional information as is readily available from the Company's
insurance company), which sets forth:
(A) a description of the policy by insurer, type
of insurance, and period of coverage; and
(B) the amount and a brief description of the
claim; and
(iii) a statement describing the loss experience for all
claims since December 31, 1994 that were self-insured, including the
number and aggregate cost of such claims.
(d) Except as set forth on Part 3.20(d) of the Disclosure
Schedule:
(i) All policies to which the Company is or was a party
since December 31, 1994 or that currently provide coverage to either
Sellers, the Company, or any director or officer of the Company:
(A) are or were valid, outstanding, and
enforceable;
(B) are or, to the Knowledge of Xxxxxxx, Xxx,
and the Company, were issued by an insurer that is financially
sound and reputable;
(C) taken together, provide or provided adequate
insurance coverage for the assets and the operations of the
Company for all risks normally insured against by a Person
carrying on the same business or businesses as the Company;
(D) are or were sufficient for compliance with
all Legal Requirements and Contracts required to be disclosed
in Part 3.19 of the Disclosure Schedule to which the Company
is a party or by which any of them is bound;
(E) will continue in full force and effect in
accordance with their terms following the consummation of the
Contemplated Transactions (except to the extent affected by
Buyer's purchase of the Shares); and
(F) do not provide for any retrospective premium
adjustment or other experienced-based liability on the part of
the Company.
33
(ii) Neither Sellers nor the Company has received (A) any
refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any other
indication that any insurance policy is no longer in full force or
effect or will not be renewed or that the issuer of any policy is not
willing or able to perform its obligations thereunder.
(iii) The Company has paid all premiums due, and has
otherwise performed all of its obligations, under each policy to which
the Company is a party or that provides coverage to the Company or
director thereof.
(iv) The Company have given notice to the insurer of all
material claims that may be insured thereby.
3.21 ENVIRONMENTAL MATTERS
Except as set forth in Part 3.21 of the Disclosure Schedule:
(a) To the Knowledge of Xxxxxxx, Xxx, and the Company, the Company
is, and at all material times has been, in material compliance with, and has not
been and is not in material violation of or liable under, any Environmental Law.
Neither Xxxxxxx, Xxx, nor the Company has any reasonable basis to expect, nor
has any of them or any other Person for whose conduct they are responsible
received, any actual or Threatened order, notice, or other material written
communication from (i) any Governmental Body or private citizen acting in the
public interest, or (ii) the current or prior owner or operator of any
Facilities, of any material actual or potential violation or failure to comply
with any Environmental Law, or of any material actual or Threatened obligation
to undertake or bear the cost of any Environmental, Health, and Safety
Liabilities with respect to any of the Facilities or any other properties or
assets (whether real, personal, or mixed) in which the Company has had an
interest, or with respect to any property or Facility at or to which Hazardous
Materials were generated, manufactured, refined, transferred, imported, used, or
processed by the Company, or any other Person for whose conduct it is or will
likely be held legally responsible, or from which Hazardous Materials have been
transported, treated, stored, handled, transferred, disposed, recycled, or
received.
(b) To the Knowledge of Xxxxxxx, Xxx, and the Company, there are
no pending or Threatened claims, Encumbrances, or other restrictions of any
nature, resulting from any Environmental, Health, and Safety Liabilities or
arising under or pursuant to any Environmental Law, with respect to or affecting
any of the Facilities or any other properties and assets (whether real,
personal, or mixed) in which Xxxxxxx, Xxx, or the Company has or had an
interest.
(c) Neither the Company nor, to the Knowledge of Xxxxxxx, Xxx, and
the Company, any other Person for whose conduct it is responsible, has any
Environmental, Health, and Safety Liabilities with respect to the Facilities or,
to the Knowledge of Xxxxxxx, Xxx, and the Company, with respect to any other
properties and assets (whether real, personal, or mixed) in which the
34
Company (or any predecessor), has or had an interest, or, to the Knowledge of
Xxxxxxx, Xxx, and the Company, at any property geologically or hydrologically
adjoining the Facilities or any such other property or assets.
(d) Except for Hazardous Materials used by the Company in the
Ordinary Course of Business, there are no Hazardous Materials present on or in
the Environment at the Facilities or, to the Knowledge of Xxxxxxx, Xxx, and the
Company, at any geologically or hydrologically adjoining property, including any
Hazardous Materials contained in barrels, above or underground storage tanks,
landfills, land deposits, dumps, equipment (whether moveable or fixed) or other
containers, either temporary or permanent, and deposited or located in land,
water, sumps, or any other part of the Facilities or such adjoining property, or
incorporated into any structure therein or thereon. To the Knowledge of Xxxxxxx,
Xxx, and the Company, neither the Company nor any other Person for whose conduct
it is responsible, has permitted or conducted, or is aware of, any Hazardous
Activity conducted with respect to the Facilities or any other properties or
assets (whether real, personal, or mixed) in which the Company has or had an
interest.
(e) To the Knowledge of Xxxxxxx, Xxx, and the Company, there has
been no Release or Threat of Release of any Hazardous Materials at or from the
Facilities or at any other locations where any Hazardous Materials were
generated, manufactured, refined, transferred, produced, imported, used, or
processed from or by the Facilities.
(f) Sellers have delivered to Buyer true and complete copies and
results of any reports, studies, analyses, tests, or monitoring currently in the
Company's possession or initiated in the five years prior to the Closing Date by
Xxxxxxx, Xxx, or the Company pertaining to Hazardous Materials or Hazardous
Activities in, on, or under the Facilities, or concerning compliance by Xxxxxxx,
Xxx, the Company, or any other Person for whose conduct they are held legally
responsible, with Environmental Laws in connection with the Facilities.
3.22 EMPLOYEES
(a) Part 3.22 of the Disclosure Schedule contains a complete and
accurate list as of the date of this Agreement of the following information for
each employee, officer, or director of the Company who had compensation in
excess of $75,000 during the year ended December 31, 1996, including each
employee on leave of absence or layoff status: employer; name; job title;
current compensation paid or payable and any change in compensation since
December 31, 1996; vacation accrued; and service credited for purposes of
vesting and eligibility to participate in the Company Plans or any Company Other
Benefit Obligation.
(b) Except as specified in the Consulting Agreement as to Ray or
as set forth in Part 3.22 of the Disclosure Schedule, no officer, director or,
to the Knowledge of Xxxxxxx, Xxx, and the Company, employee, of the Company is a
party to, or is otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement, between such
employee, officer, or director and any other Person ("Proprietary Rights
35
Agreement") that in any way adversely affects or will affect (i) the performance
of his duties as an officer, director or, to the Knowledge of Xxxxxxx, Xxx, and
the Company, employee, of the Company, or (ii) the ability of the Company to
conduct its business, including any Proprietary Rights Agreement with Sellers or
the Company by any such employee, officer, or director. To the Knowledge of
Xxxxxxx, Xxx, and the Company, no director, officer, or other key employee of
the Company (other than Ray) intends to terminate his employment with the
Company and no such director, officer, or other key employee of the Company has
Threatened to terminate his employment with the Company.
(c) Excluding information relating to Company Plans, Part 3.22 of
the Disclosure Schedule also contains a complete and accurate list as of the
date of this Agreement of the following information for each retired employee,
officer, or director of the Company, or their dependents, receiving benefits or
scheduled to receive benefits in the future: name, pension benefit, pension
option election, retiree medical insurance coverage, retiree life insurance
coverage, and other benefits.
3.23 LABOR RELATIONS; COMPLIANCE
Except as disclosed in Part 3.23 of the Disclosure Schedule, the
Company has not been and is not currently a party to any collective bargaining
or other labor Contract. Except as disclosed in Part 3.23 of the Disclosure
Schedule, (i) there has not been since December 31, 1994, (ii) there is not
presently pending or existing, and (iii) to the Knowledge of Xxxxxxx, Xxx, and
the Company, there is not presently Threatened, (a) any strike, slowdown,
picketing, work stoppage, or employee grievance process, (b) any Proceeding
against or affecting the Company relating to the alleged violation of any
material Legal Requirement pertaining to labor relations or employment matters
with a stated amount in controversy in excess of $25,000, including any charge
or complaint filed by an employee or union with the National Labor Relations
Board, the Equal Employment Opportunity Commission, or any comparable
Governmental Body, organizational activity, or other labor or employment dispute
against or affecting the Company or its premises, or (c) any application for
certification of a collective bargaining agent. To the Knowledge of Xxxxxxx,
Xxx, and the Company, no event has occurred or circumstance exists that could
provide the basis for any work stoppage or other labor dispute. There is no
lockout of any employees by the Company, and no such action is contemplated by
the Company. The Company has complied in all respects with all material Legal
Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. The Company is not liable for the payment of any
compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing material Legal
Requirements. Sellers have provided Buyer with an opportunity to review the
employment files of all employees of the Company whose employment by the Company
was terminated since December 31, 1993, for any reason (whether voluntarily or
involuntarily and whether initiated by the Company or the employee), which
employment files are, to the Knowledge of Xxxxxxx, Xxx, and the Company,
complete and correct in all materal respects.
36
3.24 INTELLECTUAL PROPERTY
(a) Intellectual Property Assets-The term "Intellectual Property
Assets" includes:
(i) the name "Xxxx-Xxxx", all fictional business names,
trading names, registered and unregistered trademarks, service marks,
and applications (collectively, "Marks");
(ii) all copyrights in both published works and
unpublished works (collectively, "Copyrights"); and
(iii) all know-how, trade secrets, confidential
information, customer lists, software, technical information, data,
process technology, patents, plans, drawings, rights in mask works and
blue prints (collectively, "Trade Secrets"); owned, used, or licensed
by the Company as licensee or licenser.
(b) Agreements-Part 3.24(b) of the Disclosure Schedule contains a
complete and accurate list and summary description as of the date of this
Agreement, including any royalties paid or received by the Company, of all
Contracts relating to the Intellectual Property Assets to which the Company is a
party or by which the Company is bound, except for any license implied by the
sale of a product and perpetual, paid-up licenses for commonly available
software programs with a value of less than $25,000 under which the Company is
the licensee. There are no outstanding and, to the Knowledge of Xxxxxxx, Xxx,
and the Company, no Threatened disputes or disagreements with respect to any
such agreement.
(c) Know-How Necessary for the Business
(i) The Intellectual Property Assets are all those
necessary for the operation of the Company's business as it is
currently conducted, except for the Company's computer software
systems, of which the Company is a licensee. The Company is the owner
of all right, title, and interest in and to each of the Intellectual
Property Assets, free and clear of all liens, security interests,
charges, encumbrances, equities, and other adverse claims, and has the
right to use without payment to a third party all of the Intellectual
Property Assets.
(ii) To the Knowledge of Xxxxxxx, Xxx, and the Company,
none of the Marks or Copyrights are material to the Company (with the
exception of the name "The Xxxx-Xxxx Company" and the trademark "Onward
and Upward", which to the Knowledge of Xxxxxxx, Xxx, and the Company,
the Company is the owner of all right, title, and interest in and to
such name free and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims) and the only Trade
Secrets material to the Company are its customer lists and pricing
information. To the Knowledge of Xxxxxxx, Xxx, and the Company, there
have been no claims of infringement or challenges to the Company's use
37
of any Intellectual Property Assets.
3.25 CERTAIN PAYMENTS
To the Knowledge of Xxxxxxx, Xxx, and the Company, neither the Company
nor any director, officer, agent, or employee of the Company, nor any other
Person associated with or acting for or on behalf of the Company, has directly
or indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment in violation of any Legal Requirement,
applicable tort law, or any Applicable Contract, to any Person, private or
public, regardless of form, whether in money, property, or services (i) to
obtain favorable treatment in securing business, (ii) to pay for favorable
treatment for business secured, or (iii) to obtain special concessions or for
special concessions already obtained, for or in respect of the Company or any
Affiliate of the Company, or (b) established or maintained any fund or asset
that has not been recorded in the books and records of the Company.
3.26 DISCLOSURE
(a) No representation or warranty of Sellers, Xxx, Xxx III,
Xxxxxxx, or Xxxxx in this Agreement and no statement in the Disclosure Schedule
as amended pursuant to Section 5.5 omits to state a material fact necessary to
make the statements herein or therein, in light of the circumstances in which
they were made, not misleading.
(b) No notice given pursuant to Section 5.5 will contain any
untrue statement or omit to state a material fact necessary to make the
statements therein or in this Agreement, in light of the circumstances in which
they were made, not misleading.
3.27 RELATIONSHIPS WITH RELATED PERSONS
Except as set forth in Part 3.27 of the Disclosure Schedule, neither
Sellers nor any Related Person of Sellers or the Company has, or since December
31, 1990, has had, any interest in any property (whether real, personal, or
mixed and whether tangible or intangible), used in or pertaining to the business
of the Company. Neither Sellers nor any Related Person of Sellers or the Company
is, or since December 31, 1990, has owned (of record or as a beneficial owner)
an equity interest or any other financial or profit interest in, a Person that
has (i) had business dealings or a material financial interest in any
transaction with the Company, or (ii) engaged in competition with the Company
with respect to any line of the products or services of the Company (a
"Competing Business") in any market presently served by the Company. Except as
set forth in Part 3.27 of the Disclosure Schedule, no Sellers or any Related
Person of Sellers or the Company is, or since March 31, 1990, was, a party to
any Contract with, or has or had any claim or right against, the Company.
38
3.28 CUSTOMERS AND SUPPLIERS
In Part 3.28 of the Disclosure Schedule, Sellers have set forth the
Company's top twenty customers based on the revenue generated by such customers
during the fiscal year ended December 31, 1997. Also set forth therein are the
Company's top ten vendors based on the expenditures of the Company with such
vendor during such fiscal year. To the Knowledge of Xxxxxxx, Xxx, and the
Company, nothing has occurred since December 31, 1997, that would in any way
have a material adverse effect on the relationship that the Company has with any
party listed on such Schedule.
3.29 BROKERS OR FINDERS
Except as set forth in Part 3.29 of the Disclosure Schedule, Sellers
and their agents have incurred no obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement.
3.30 INDEBTEDNESS
Except for any interest-bearing Indebtedness incurred in the Ordinary
Course of Business from the date hereof through the Closing Date, the
interest-bearing Indebtedness of the Company does not, and at the Closing will
not, exceed Eighteen Million Five Hundred Thousand Dollars ($18,500,000.00).
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers that the statements contained
in this Section 4 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 4).
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware with full corporate power and
authority to conduct its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, and to perform all its
obligations under this Agreement and the documents contemplated by this
Agreement. Buyer is duly qualified to do business as a foreign corporation and
is in good standing under the laws of the State of Ohio and each state or other
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification, except where the lack of such qualification would not have a
material adverse effect on the business, operations, properties, prospects,
assets, or condition (financial or otherwise) of Buyer.
39
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Upon the execution and delivery by Buyer of the Promissory Note, the Consulting
Agreement, the Employment Agreements, and the Leases (collectively, the "Buyer's
Closing Documents"), the Buyer's Closing Documents will constitute the legal,
valid, and binding obligations of Buyer, enforceable against Buyer in accordance
with their respective terms. Buyer has the absolute and unrestricted right,
power, and authority to execute and deliver this Agreement and the Buyer's
Closing Documents and to perform its obligations under this Agreement and the
Buyer's Closing Documents.
(b) Neither the execution and delivery of this Agreement by Buyer
nor the consummation or performance of any of the Contemplated Transactions by
Buyer will give any Person the right to prevent, delay, or otherwise interfere
with any of the Contemplated Transactions pursuant to:
(i) any provision of Buyer's Organizational Documents or
the Organizational Documents of any Buyer Subsidiary;
(ii) any resolution adopted by the board of directors or
the stockholders of Buyer;
(iii) any Legal Requirement or Order to which Buyer or any
Buyer Subsidiary may be subject; or
(iv) any Contract to which Buyer or any Buyer Subsidiary
is a party or by which Buyer or any Buyer Subsidiary may be bound.
Buyer is not and will not be required to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
4.3 INVESTMENT INTENT
Buyer is acquiring the Shares for its own account and not with a view
to their distribution within the meaning of Section 2(11) of the Securities Act.
4.4 CERTAIN PROCEEDINGS
No Proceeding has been commenced or Threatened against Buyer that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions.
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4.5 BROKERS OR FINDERS
Buyer and its officers and agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement and will
indemnify and hold Sellers harmless from any such payment alleged to be due by
or through Buyer as a result of the action of Buyer or its officers or agents.
4.6 CAPITALIZATION
The authorized equity securities of Buyer consist of 100,000 shares of
common stock, $0.01 par value per share, of which 10,000 shares are issued and
outstanding on the date hereof. All of the issued and outstanding equity
securities of Buyer have been duly authorized and validly issued and are fully
paid and non-assessable. None of the outstanding equity securities or other
securities of Buyer were issued in violation of the Securities Act (or any other
material Legal Requirement). Set forth below is a listing of all of the
Subsidiaries of Buyer:
(i) NationsRent of West Virginia, Inc., a Delaware corporation
qualified to do business in West Virginia,
(ii) Titan Rentals, Inc., a West Virginia corporation,
(iii) NationsRent of Kentucky, Inc., a Delaware corporation
qualified to do business in Kentucky,
(iv) NationsRent of Indiana, Inc., a Delaware corporation qualified
to do business in Indiana,
(v) NationsRent of Ohio, Inc., a Delaware corporation qualified to
do business in Ohio,
(vi) Xxxxxxx Trailer Manufacturing Company, Inc., an Ohio
corporation, and
(vii) Sam's Equipment Rental, Inc., an Ohio corporation.
4.7 DISCLOSURE
No representation or warranty of Buyer in this Agreement or any other
document delivered by Buyer to Sellers pursuant to the terms of this Agreement
omits to state a material fact necessary to make the statements herein or
therein, in light of the circumstances which they were made, not misleading.
4.8 FINANCIAL STATEMENTS
Buyer has delivered to Sellers an unaudited consolidated balance sheet
of Buyer as of December 31, 1997, and the related unaudited statements of income
for the period then ended. Such financial statements are materially complete and
correct, materially consistent with the books and records of Buyer, are prepared
in accordance with GAAP, and fairly present in all material respects the
financial condition of Buyer; subject to (a) adjustments to reflect application
of
41
purchase accounting for the acquisitions made by Buyer during such period, (b)
adjustments to reflect adoption of a methodology of accounting for depreciation
and amortization, (c) year-end adjustments, (d) the absence of notes, and (e)
possible adjustment for the closing of the Central Rent-All acquisition on
January 8, 1998. Since the date of such financial statements, there has not been
any material adverse change in the business, operations, properties, assets, or
condition of Buyer or, to the Knowledge of Buyer, the prospects of Buyer.
4.9 NET WORTH
Buyer's Net Worth will be no less than (a) Thirty Million Dollars
($30,000,000) from the date hereof through June 30, 1998, or (b) Thirty-Five
Million Dollars ($35,000,000) thereafter for the term of the Promissory Note.
For the purposes of this Agreement, "Net Worth" of Buyer shall mean the total
assets of Buyer less the total liabilities of Buyer as determined in accordance
with GAAP for purposes of balance sheet presentation.
4.10 REVOLVING CREDIT AGREEMENT
Buyer has heretofore deliverd to Sellers a true, correct and complete
copy of the Revolving Credit Agreement dated as of March 18, 1998 among Buyer
and its subsidiaries, BankBoston, N.A. as Agent, LaSalle National Bank, as
Documentation Agent, and the lending institutions party thereto, with BankBoston
Securities Inc., as Arranger.
5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date, Sellers will,
and will cause the Company and its Representatives to, (a) afford Buyer and its
Representatives and prospective lenders and their Representatives (collectively,
"Buyer's Advisors") full, free, and unrestricted access to the Company's
personnel, Representatives, properties, contracts, books and records, and other
documents and data, (b) furnish Buyer and Buyer's Advisors with copies of all
such contracts, books and records, and other existing documents and data as
Buyer may reasonably request, and (c) furnish Buyer and Buyer's Advisors with
such additional financial, operating, and other data and information as Buyer
may reasonably request. Buyer and Sellers will coordinate such activities in a
manner so as to eliminate or reduce the disruption to the Company's business
resulting therefrom.
5.2 OPERATION OF THE BUSINESS OF THE COMPANY
Between the date of this Agreement and the Closing Date, Sellers will,
and will cause the Company to:
(a) conduct the business of the Company only in the Ordinary
Course of Business and
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otherwise refrain from any extraordinary transactions;
(b) use their Best Efforts to preserve intact the current business
organization of the Company, keep available the services of the current
officers, employees, and agents of the Company, and maintain the relations and
good will with suppliers, customers, landlords, creditors, employees, agents,
and others having business relationships with the Company; and
(c) report periodically to Buyer concerning the status of the
business, operations, and finances of the Company.
5.3 NEGATIVE COVENANT
Except as otherwise expressly permitted by this Agreement, between the
date of this Agreement and the Closing Date, Sellers will not, and will cause
the Company not to, without the prior consent of Buyer, take any affirmative
action, or fail to take any reasonable action as a result of which any of the
changes or events listed in Section 3.18 will occur.
5.4 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Sellers
will, and will cause the Company to, make all filings required by Legal
Requirements to be made by them in order to consummate the Contemplated
Transactions. Between the date of this Agreement and the Closing Date, Sellers
will, and will cause the Company to, (a) cooperate with Buyer with respect to
all filings that Buyer elects to make or is required by Legal Requirements to
make in connection with the Contemplated Transactions, and (b) cooperate with
Buyer in obtaining all consents identified in Schedule 4.2.
5.5 SUPPLEMENTS TO DISCLOSURE SCHEDULE
The parties hereto hereby acknowledge and agree that the Disclosure
Schedule has not been fully completed by Sellers as of the date of this
Agreement and that, accordingly, Sellers shall complete the same by delivering
to Buyer on or before the Closing Date one or more supplements thereto.
5.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS
Sellers will, and will cause the Company to, cause all Indebtedness
owed to the Company by Xxxxxxx, Xxx, or any Related Person of Sellers or Ray to
be paid in full prior to Closing.
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5.7 NO NEGOTIATION
Until such time, if any, as this Agreement is terminated pursuant to
Section 9, Sellers, Xxx, Xxx III, Xxxxxxx, and Xxxxx will not, and will cause
the Company and their respective Representatives not to, directly or indirectly
solicit, initiate, or encourage any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or consider the merits of
any unsolicited inquiries or proposals from, any Person (other than Buyer)
relating to any transaction involving the sale of the business or assets (other
than in the Ordinary Course of Business) of the Company, or any of the capital
stock of the Company, or any merger, consolidation, business combination, or
similar transaction involving the Company, provided, however, that Ray may
contact United Rentals, Inc. to inform it of the execution of this Agreement.
Sellers, Xxx, Xxx III, Xxxxxxx, and Xxxxx will, and will cause the Company and
their respective Representatives to, immediately notify Buyer regarding any
contact between Sellers, Xxx, Xxx III, Michael, Bruce, the Company, or their
Representatives and any other Person regarding any such offer or proposal or any
related inquiry.
5.8 BEST EFFORTS
Between the date of this Agreement and the Closing Date, Sellers, Xxx,
Xxx III, Xxxxxxx, and Xxxxx will use their Best Efforts to cause the conditions
in Sections 7 and 8 to be satisfied.
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 APPROVALS OF GOVERNMENTAL BODIES
As promptly as practicable after the date of this Agreement, Buyer will
make all filings required by Legal Requirements to be made by it to consummate
the Contemplated Transactions. Between the date of this Agreement and the
Closing Date, Buyer will (i) cooperate with Sellers with respect to all filings
that Sellers are required by Legal Requirements to make in connection with the
Contemplated Transactions, and (ii) cooperate with Sellers in obtaining all
consents identified in Part 3.2 of the Disclosure Schedule; provided that this
Agreement will not require Buyer to dispose of or make any change in any portion
of its business or to incur any other burden to obtain a Governmental
Authorization.
6.2 BEST EFFORTS
Except as set forth in the proviso to Section 6.1, between the date of
this Agreement and the Closing Date, Buyer will use its Best Efforts to cause
the conditions in Sections 7 and 8 to be satisfied.
6.3 NOTIFICATION OF CERTAIN MATTERS
Between the date of this Agreement and the Closing Date, Buyer will
promptly notify
44
Sellers of the occurrence or nonoccurrence of any material event affecting
Buyer's financial condition.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS
(a) All of the representations and warranties of Sellers, Xxx, Xxx
III, Xxxxxxx, and Xxxxx in this Agreement (considered collectively), and each of
these representations and warranties (considered individually), must have been
accurate in all material respects as of the date of this Agreement (after giving
effect to any supplement to the Disclosure Schedule made pursuant to Section
5.5), and must be accurate in all material respects as of the Closing Date as if
made on the Closing Date (after giving effect to any supplement to the
Disclosure Schedule made pursuant to Section 5.5).
(b) Each of the representations and warranties of Sellers, Xxx,
Xxx III, Xxxxxxx, and Xxxxx in Sections 3.3, 3.4, 3.14, and 3.26 must have been
accurate in all respects as of the date of this Agreement, and must be accurate
in all respects as of the Closing Date as if made on the Closing Date, without
giving effect to any supplement to the Disclosure Schedule.
(c) The supplements to the Disclosure Schedule made pursuant to
Section 5.5 must not have revealed a change in the representation and warranties
of Sellers, Xxx, Xxx III, Xxxxxxx and Xxxxx which would have a material adverse
effect on the business of the Company.
7.2 SELLERS' PERFORMANCE
(a) All of the covenants and obligations that Sellers, Xxx, Xxx
III, Xxxxxxx, and Xxxxx are required to perform or to comply with pursuant to
this Agreement at or prior to the Closing (considered collectively), and each of
these covenants and obligations (considered individually), must have been duly
performed and complied with in all material respects.
(b) Each document required to be delivered pursuant to Section 2.4
must have been delivered and each of the other covenants and obligations in
Sections 5.4 and 5.8 must have been performed and complied with in all respects.
7.3 CONSENTS
Each of the Consents identified in Part 3.2 of the Disclosure Schedule
and any and all other Consents must have been obtained and must be in full force
and effect.
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7.4 BANK INDEBTEDNESS
Amendments to loan agreements, new loan agreements, estoppel
certificates, and/or other documentation fully assuring Buyer of continuation
and/or replacement of the Company's material Indebtedness, to such extent as
Buyer reasonably determines to be necessary or advisable (and otherwise in a
form reasonably satisfactory to Buyer and its counsel), must have been delivered
to or obtained by Buyer.
7.5 ADDITIONAL DOCUMENTS
Each of the following documents must have been delivered to Buyer:
(a) an opinion of Benesch, Friedlander, Xxxxxx & Xxxxxxx LLP,
dated the Closing Date, in the form of Exhibit 7.5(a);
(b) such other documents as Buyer may reasonably request for the
purpose of (i) enabling its counsel to provide the opinion referred to in
Section 8.3(a), (ii) evidencing the accuracy of any of the representations and
warranties of Sellers, Xxx, Xxx III, Xxxxxxx, and Xxxxx (as supplemented
pursuant to Section 5.5), (iii) evidencing the performance by Sellers, Xxx, Xxx
III, Xxxxxxx, and Xxxxx of, or the compliance by Sellers, Xxx, Xxx III, Xxxxxxx,
and Xxxxx with, any covenant or obligation required to be performed or complied
with by Sellers, Xxx, Xxx III, Xxxxxxx, and Xxxxx, (iv) evidencing the
satisfaction of any condition referred to in this Section 7, or (v) otherwise
facilitating the consummation or performance of any of the Contemplated
Transactions.
7.6 DUE DILIGENCE
Buyer must be satisfied, in its reasonable discretion, with the results
of its due diligence with respect to the Company's distributor/dealer
relationships with Hyster Company and Genie Financial Services, Inc.
7.7 NO PROCEEDINGS
Since the date of this Agreement, there must not have been commenced or
Threatened against Buyer, or against any Person affiliated with Buyer, any
Proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with
any of the Contemplated Transactions.
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7.8 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS
There must not have been made or, to the Knowledge of Sellers, Xxx, Xxx
III, Michael, Bruce, the Company, or Buyer, Threatened by any Person any claim
asserting that such Person (a) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of, any stock of, or any
other voting, equity, or ownership interest in, the Company, or (b) is entitled
to all or any portion of the Purchase Price payable for the Shares.
7.9 NO PROHIBITION
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), materially contravene, or conflict with, or result in a material
violation of, or cause Buyer or any Person affiliated with Buyer to suffer any
material adverse consequence under, (a) any applicable Legal Requirement or
Order, or (b) any Legal Requirement or Order that has been published,
introduced, or otherwise proposed by or before any Governmental Body.
8. CONDITIONS PRECEDENT TO THE OBLIGATION TO CLOSE OF SELLERS, XXX,
XXX III, XXXXXXX AND XXXXX
The obligation of Sellers, Xxx, Xxx III, Xxxxxxx and Xxxxx to sell the
Shares and to take the other actions required to be taken by them at the Closing
is subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by them, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS
All of Buyer's representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), must have been accurate in all material respects as
of the date of this Agreement and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date.
8.2 BUYER'S PERFORMANCE
(a) All of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with in all
material respects.
(b) Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Section 2.4 and must have made the cash payments
required to be made by Buyer pursuant to Section 2.4(b)(i).
47
8.3 ADDITIONAL DOCUMENTS
Buyer must have caused the following documents to be delivered to
Sellers:
(a) an opinion of Squire, Xxxxxxx & Xxxxxxx L.L.P., dated the
Closing Date, in the form of Exhibit 8.3(a); and
(b) such other documents as Sellers may reasonably request for the
purpose of (i) enabling their counsel to provide the opinion referred to in
Section 7.6(a), (ii) evidencing the accuracy of any representation or warranty
of Buyer, (iii) evidencing the performance by Buyer of, or the compliance by
Buyer with, any covenant or obligation required to be performed or complied with
by Buyer, (ii) evidencing the satisfaction of any condition referred to in this
Section 8, or (v) otherwise facilitating the consummation of any of the
Contemplated Transactions.
8.4 NO INJUNCTION
There must not be in effect any Legal Requirement or any injunction or
other Order that (a) prohibits the sale of the Shares by Sellers to Buyer, and
(b) has been adopted or issued, or has otherwise become effective, since the
date of this Agreement.
8.5 NO PROCEEDINGS
Since the date of this Agreement, there must not have been commenced or
Threatened against Sellers, or against any Person affiliated with Sellers, any
Proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with
any of the Contemplated Transactions.
8.6 NO PROHIBITION
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), materially contravene, or conflict, or result in a material violation of,
or cause Seller or any Person affiliated with Seller to suffer any material
adverse consequence under, (a) any applicable Legal Requirement or Order, or (b)
any Legal Requirement or Order that has been published, introduced or otherwise
proposed by or before any Governmental Body.
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9. TERMINATION
9.1 TERMINATION EVENTS
This Agreement may, by notice given prior to or at the Closing, be
terminated:
(a) by either Buyer or Sellers if a material Breach of any
provision of this Agreement has been committed by the other party and such
Breach has not been waived;
(b) (i) by Buyer if any of the conditions in Section 7 has
not been satisfied as of April 8, 1998, or if satisfaction of such a condition
is or becomes impossible (other than through the failure of Buyer to comply with
its obligations under this Agreement) and Buyer has not waived such condition on
or before April 8, 1998; or (ii) by Sellers, if any of the conditions in Section
8 has not been satisfied as of April 8, 1998, or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Sellers to
comply with their obligations under this Agreement) and Sellers have not waived
such condition on or before April 8, 1998;
(c) by mutual consent of Buyer and Sellers; or
(d) by either Buyer or Sellers if the Closing has not occurred
(other than through the failure of any party seeking to terminate this Agreement
to comply fully with its obligations in all material respects under this
Agreement) on or before April 8, 1998, or such later date as the parties may
agree upon.
9.2 EFFECT OF TERMINATION
Each party's right of termination under Section 9.1 is in addition to
any other rights it may have under this Agreement or otherwise, and the exercise
of a right of termination will not be an election of remedies. If this Agreement
is terminated pursuant to Section 9.1, all further obligations of the parties
under this Agreement will terminate, except that the obligations in Sections
11.1 and 11.3 will survive; provided, however, that if this Agreement is
terminated by a party because of the Breach of this Agreement by the other party
or because one or more of the conditions to the terminating party's obligations
under this Agreement is not satisfied as a result of the other party's failure
to comply with its obligations under this Agreement, the terminating party's
right to pursue all legal remedies will survive such termination unimpaired.
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10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE
All representations, warranties, covenants, and obligations in this
Agreement, the Disclosure Schedule, the supplements to the Disclosure Schedule,
the certificate delivered pursuant to Section 2.4(a)(v), and any other
certificate or document delivered pursuant to this Agreement will survive the
Closing, subject to the time limitations set forth in Section 10.5(a). The right
to indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation. The waiver of any condition based on the accuracy of
any representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
Damages, or other remedy based on such representations, warranties, covenants,
and obligations.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS, XXX, XXX III,
XXXXXXX, AND XXXXX
Xxxxxxx, Xxx, Xxx III, Xxxxxxx, and Xxxxx, jointly and severally,
(subject to Section 10.4(b)) will indemnify and hold harmless Buyer, the
Company, and their respective stockholders, controlling persons, agents, and
affiliates (collectively, the "Indemnified Persons") for, and will pay to the
Indemnified Persons the amount of, any loss, liability, claim, damage (including
consequential damages), expense (including reasonable costs of investigation and
defense and reasonable attorneys' fees) or diminution of value, whether or not
involving a third-party claim (collectively, "Damages"), arising, directly or
indirectly, from or in connection with:
(a) any Breach (in determining (i) whether any such Breach has
occurred for purposes of (A) this subsection (a), and (B) the entitlement to
indemnification therefor under this Section 10.2, and (ii) the Damages for any
such Breach, the word "material" or derivations thereof as used in Section 1 and
Sections 3.1 through 3.30 shall be ignored) of any representation or warranty
made by Sellers, Xxx, Xxx III, Xxxxxxx, and Xxxxx in this Agreement (after
giving effect to any supplements to the Disclosure Schedule made pursuant to
Section 5.5), the Disclosure Schedule, the supplements to the Disclosure
Schedule made pursuant to Section 5.5, or any other certificate or document
delivered by Sellers, Xxx, Xxx III, Xxxxxxx, and Xxxxx at the Closing pursuant
to this Agreement;
(b) any Breach by any of Sellers, Xxx, Xxx III, Xxxxxxx, and Xxxxx
of any of their respective covenants or obligations in this Agreement;
(c) any Tax in excess of amounts accrued on the Interim Balance
Sheet or disclosed in
50
Part 3.13 of the Disclosure Schedule (after giving effect to any supplements to
the Disclosure Schedule made pursuant to Section 5.5); or
(d) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with any of Sellers, Xxx, Xxx III,
Michael, Bruce, and the Company (or any Person acting on their behalf) in
connection with any of the Contemplated Transactions.
The remedies provided in this Section 10.2 will be the exclusive remedy
of Buyer with respect to Sellers, Xxx, Xxx III, Xxxxxxx and Xxxxx and this
Agreement.
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS AND RAY--
ENVIRONMENTAL MATTERS
In addition to the provisions of Section 10.2, Sellers and Ray, jointly
and severally, will indemnify and hold harmless Buyer, the Company, and the
other Indemnified Persons for, and will pay to Buyer, the Company, and the other
Indemnified Persons the amount of, any Damages (including costs of cleanup,
containment, or other remediation) arising, directly or indirectly, from or in
connection with:
(a) any Environmental, Health, and Safety Liabilities arising out
of or relating to: (i) (A) the ownership, operation, or condition at any time on
or prior to the Closing Date of the Facilities or any other properties and
assets (whether real, personal, or mixed and whether tangible or intangible) in
which Xxxxxxx, Xxx, or the Company has or had an interest, or (B) any Hazardous
Materials or other contaminants that were present on the Facilities or such
other properties and assets at any time on or prior to the Closing Date; or (ii)
(A) any Hazardous Materials or other contaminants, wherever located, that were
generated, transported, stored, treated, Released, or otherwise handled by
Xxxxxxx, Xxx or the Company or by any other Person for whose conduct they are or
may be held legally responsible at any time on or prior to the Closing Date, or
(B) any Hazardous Activities that were conducted by Xxxxxxx, Xxx, or the Company
or by any other Person for whose conduct they are or may be held responsible; or
(b) any bodily injury (including illness, disability, and death,
and regardless of when any such bodily injury occurred, was incurred, or
manifested itself), personal injury, property damage (including trespass,
nuisance, wrongful eviction, and deprivation of the use of real property), or
other damage of or to any Person, including any employee or former employee of
Xxxxxxx, Xxx, or the Company or any other Person for whose conduct they are or
may be held responsible, in any way arising from any Hazardous Activity
conducted or allegedly conducted with respect to the Facilities or the operation
of the Company prior to the Closing Date, or from Hazardous Material that was
(i) present on or before the Closing Date on or at the Facilities (or present on
any other property, if such Hazardous Material emanated from any of the
Facilities and was present on any of the Facilities on or prior to the Closing
Date) or (ii) Released by Xxxxxxx, Xxx, or the Company or any other Person for
whose conduct they are or may be held responsible,
51
at any time on or prior to the Closing Date.
Sellers will be entitled to control any Cleanup or related Proceeding
with respect to real property and any other Proceeding with respect to which
indemnity may be sought under this Section 10.3; provided, however, that (x)
Buyer may participate therein if it will likely adversely affect Buyer or the
Company, (y) no compromise, settlement or other significant action with respect
to any such Cleanup or related Proceeding may be effected by Sellers without
Buyer's consent unless (A) there is no finding or admission of any violation of
Legal Requirements or any violation of the rights of any Person and no effect on
any other claims that may be made against Buyer or the Company, and (B) (i) no
action to be taken pursuant thereto will likely materially adversely affect
Buyer's or the Company's business or operations, or (ii) the sole relief
provided is monetary damages that are paid in full by Sellers, and (z) neither
Buyer nor the Company will have any liability with respect to any compromise,
settlement or other such action effected without its consent, which consent will
not be unreasonably withheld.
Notwithstanding any provision of this Agreement to the contrary items disclosed
in the Disclosure Schedule shall have no effect whatsoever on the
indemnification obligations of Sellers and Ray under this Section 10.3
10.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Buyer will indemnify and hold harmless Sellers, Xxx, Xxx III, Michael,
Bruce, and the officers, and directors or trustees of the Foundation and will
pay to such parties the amount of any Damages arising, directly or indirectly,
from or in connection with (a) any Breach of any representation or warranty made
by Buyer in this Agreement or in any certificate delivered by Buyer pursuant to
this Agreement, (b) any Breach by Buyer of any covenant or obligation of Buyer
in this Agreement, or (c) any claim by any Person for brokerage or finder's fees
or commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting on its
behalf) in connection with any of the Contemplated Transactions.
10.5 TIME AND AMOUNT LIMITATIONS
(a) In order for Sellers, Xxx, Xxx III, Xxxxxxx, and Xxxxx to have
any liability for indemnification under Section 10.2 (excepting those
representations and warranties in Sections 3.3, 3.13, 3.15, and 3.21 of this
Agreement), Buyer must notify Sellers, Xxx, Xxx III, Xxxxxxx, or Xxxxx of a
claim specifying the factual basis of that claim in reasonable detail to the
extent then known by Buyer on or before May 31, 2000.
(b) (i) Sellers, Xxx, Xxx III, Xxxxxxx, and Xxxxx will have no
liability (for indemnification or otherwise) with respect to the matters
described in clauses (a) through (d) of Section 10.2 or Section 10.3 until the
total of all Damages with respect to such matters exceeds $250,000.00, and then
only for the amount by which such Damages exceed $250,000.00; and (ii)
52
Sellers, Xxx, Xxx III, Xxxxxxx, and Xxxxx will have no liability (for
indemnification or otherwise) with respect to the matters described in clauses
(a) through (d) of Section 10.2 or in Section 10.3 to the extent the total of
all Damages with respect to such matters exceeds $14,000,000.00.
(c) The Foundation will be liable (for indemnification or
otherwise) with respect to the matters described in Sections 10.2 and 10.3 only
up to the aggregate amount it receives from Buyer pursuant to this Agreement.
(d) Each of Ray III, Xxxxxxx, and Xxxxx will be liable (for
indemnification or otherwise) with respect to the matters described in Section
10.2 and 10.3 only up to an aggregate amount that is equal to the amount that he
directly or indirectly receives from Sellers from the date hereof through the
date such determination is to be made.
(e) However, this Section 10.5 will not apply to any Breach of any
of the representations and warranties of Sellers, Xxx, Xxx III, Xxxxxxx, and
Xxxxx of which such party was actually aware as of the Closing Date or any
intentional Breach by any such party of any covenant or obligation, and such
party will be personally liable for all Damages with respect to any such Breach.
53
10.6 RIGHT OF SET-OFF
Upon 20 days prior written notice to Sellers specifying in reasonable
detail the basis for such set-off (during which 20 days Buyer will be available
to meet with Sellers to discuss in good faith a resolution of the underlying
issues), Buyer may set off any amount to which it may be entitled under this
Section 10 against amounts otherwise payable under the Promissory Note, but only
in accordance with (i) a mutual agreement with Sellers or (ii) a decision of an
arbitrator pursuant to an arbitration satisfying the conditions set forth below.
The pursuit of exercise of such right of set-off by Buyer in good faith, whether
or not ultimately determined to be justified, will not constitute an event of
default under the Promissory Note. Neither the exercise of nor the failure to
pursue exercise of such right of set-off will constitute an election of remedies
or limit Buyer in any manner in the enforcement of any other remedies that may
be available to it. Before pursuing any other remedies it may have, Buyer agrees
to first pursue its rights of set-off hereunder against the principal amount
then outstanding under the Promissory Note (after taking into account any
conversion hereunder); provided, however, that Buyer may immediately pursue
other remedies to the extent of claims in excess of such principal amount (after
taking into account any conversion hereunder). Any arbitration pursuant to this
Section 10.6 shall be settled by arbitration in accordance with the Rules of the
American Arbitration Association then pertaining in Columbus, Ohio relating to
commercial arbitrations, and judgment upon the award rendered by the arbitrator
or arbitrators may be entered in any court having jurisdiction thereof. During
any such arbitration, the right of Sellers to convert under the Promissory Note
shall be suspended to the extent of the set-off claimed by Buyer in good faith
prior to receipt of a Written Conversion Notice (as defined on the Promissory
Note); provided, however, that Sellers shall be entitled to place in escrow the
amount so claimed by Buyer and thereby eliminate such suspension of its
conversion rights.
10.7 PROCEDURE FOR INDEMNIFICATION-THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party under Sections
10.2, 10.4, or Section 10.3 of the assertion of any claim or notice of the
commencement of any Proceeding against it in respect of which indemnification
may be sought, such indemnified party will, if a claim is to be made against an
indemnifying party under such Section, give written notice to the indemnifying
party of the assertion of such claim or commencement of such Proceeding, but the
failure to notify the indemnifying party will not relieve the indemnifying party
of any liability that it may have to any indemnified party, except to the extent
that the indemnifying party is prejudiced by the indemnified party's failure to
give such notice.
(b) Except as provided in Section 10.3, if any asserted claim or
Proceeding referred to in Section 10.7(a) is brought against an indemnified
party and it gives notice to the indemnifying party of the commencement of a
Proceeding, the indemnifying party will, except for Sellers, Xxx, Xxx III,
Xxxxxxx, and Xxxxx as to any claim which involves Taxes for a time period
subsequent to the Closing Date, be entitled to participate in such Proceeding
and, to the extent that it wishes (unless (i) the indemnifying party is also a
party to such Proceeding and the indemnified
54
party determines in good faith that joint representation would be inappropriate,
or (ii) the indemnifying party fails to provide reasonable assurance to the
indemnified party of its financial capacity to defend such Proceeding and
provide indemnification with respect to such Proceeding), to assume the defense
of such Proceeding with counsel reasonably satisfactory to the indemnified party
and, after notice from the indemnifying party to the indemnified party of its
election to assume the defense of such Proceeding, the indemnifying party will
not, as long as it diligently conducts such defense, be liable to the
indemnified party under this Section 10 for any fees of other counsel or any
other expenses with respect to the defense of such Proceeding, in each case
subsequently incurred by the indemnified party in connection with the defense of
such Proceeding. If the indemnifying party assumes the defense of a Proceeding,
(i) it will be conclusively established for purposes of this Agreement that the
claims made in that Proceeding are within the scope of and subject to
indemnification, except to the extent the indemnifying party reserves its rights
to challenge such conclusion in writing to the indemnified party before the
assumption of defense; (ii) no compromise or settlement of such claims may be
effected by the indemnifying party without the indemnified party's consent
unless (A) there is no finding or admission of any violation of Legal
Requirements or anyviolation of the rights of any Person and no effect on any
other claims that may be made against the indemnified party, and (B) the sole
relief provided is monetary damages that are paid in full by the indemnifying
party; and (iii) the indemnified party will have no liability with respect to
any compromise or settlement of such claims effected without its consent, which
consent will not be unreasonably withheld. In the case of a Proceeding involving
Taxes solely for a time period prior to the Closing Date for which Sellers, Xxx,
Xxx III, Xxxxxxx, or Xxxxx has, pursuant to this Section 10.7(b), assumed the
defense thereof, (x) Buyer may participate in the defense thereof if such
Proceeding may adversely affect Buyer's or the Company's Tax obligations for a
time period subsequent to the Closing Date, and (y) the indemnifying parties
shall not enter into a settlement agreement, file an amended tax return, or seek
a refund, with respect to Taxes relating to the operations of the Company or
take any other action adverse to Buyer without the prior written consent of
Buyer, which consent shall not be unreasonably withheld. If notice is given to
an indemnifying party of the commencement of any Proceeding and the indemnifying
party does not, within 28 days after the indemnified party's notice is given,
give notice to the indemnified party of its election to assume the defense of
such Proceeding, the indemnified party will not enter into any compromise or
settlement of such Proceeding without the prior written consent of the
indemnifying party, which consent shall not be unreasonably withheld, and the
indemnifying party will be bound by any determination made in such Proceeding.
(c) Notwithstanding the foregoing, except claims of damages
pursuant to Section 10.3, if an indemnified party determines in good faith that
there is a reasonable probability that a Proceeding will likely materially
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
indemnified party may, by notice to the indemnifying party, assume the exclusive
right to defend, compromise, or settle such Proceeding, but the indemnifying
party will not be bound by any determination of a Proceeding so defended or any
compromise or settlement effected without its consent (which may not be
unreasonably withheld).
55
(d) Buyer will not enter into a settlement agreement, file an
amended return, or seek a refund, with respect to Taxes relating to the
operations of the Company in a manner that would adversely affect the
obligations of Sellers, Xxx, Xxx III, Xxxxxxx, and Xxxxx to indemnify Buyer for
such Taxes under this Agreement, except with the prior written consent of
Sellers, Xxx, Xxx III, Xxxxxxx, and Xxxxx, which consent shall not be
unreasonably withheld.
(e) Notwithstanding the provisions of Section 11.5, Sellers, Xxx,
Xxx III, Xxxxxxx, and Xxxxx hereby consent to the non-exclusive jurisdiction of
any court in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this Agreement
with respect to such Proceeding or the matters alleged therein, and agree that
process may be served on them with respect to such a claim anywhere in the
world.
10.8 PROCEDURE FOR INDEMNIFICATION-OTHER CLAIMS
A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom indemnification is
sought.
10.9 DETERMINATION OF DAMAGES
In determining Damages for purposes of this Agreement, the parties
shall make appropriate adjustments for (a) Tax benefits (including, for example,
the deductions the Company obtains from the cost of the matters for which the
Company was indemnified, the Tax cost of receipt of any indemnification payment,
any reduction in Tax basis, and any reduction in depreciation and amortization
resulting if the indemnification payment is treated as an adjustment of the
Purchase Price), (b) insurance coverage (after reduction for costs incurred
therefor, including retrospective premium adjustments, experienced-based premium
adjustments, and indemnification obligations), and (c) reserves or allowances
reflected in the Interim Balance Sheet.
11. GENERAL PROVISIONS
11.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party to
this Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants. Sellers, Xxx, Xxx III, Xxxxxxx, and Xxxxx will cause
the Company not to incur any out-of-pocket expenses in connection with this
Agreement, or, to the extent so incurred, will cause the Company to be
reimbursed therefor by Sellers. In the event of termination of this Agreement,
the obligation of each party to pay its own expenses will be subject to any
rights of such party arising from a breach of this Agreement by another party.
Notwithstanding the foregoing, Buyer shall pay or reimurse Sellers at Closing an
amount up to $257,800 relating to the investment advisory fees payable by
Sellers to Falls River Group.
56
11.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this
Agreement or the Contemplated Transactions will be issued, if at all, at such
time and in such manner as Buyer determines; provided, however, that Buyer must
first obtain Sellers' approval of any such announcement or similar publicity,
which approval will not be unreasonably withheld. Unless consented to by Buyer
in advance (which consent shall not be unreasonably withheld) or required by
Legal Requirements, prior to the Closing Sellers, Xxx, Xxx III, Michael, Bruce,
and the Company shall keep this Agreement strictly confidential and may not make
any disclosure of this Agreement to any Person. Buyer and Sellers will consult
with each other concerning the means by which the employees, customers, and
suppliers of the Company and others having dealings with the Company will be
informed of the Contemplated Transactions, and Buyer will have the right to be
present for any such communication.
11.3 CONFIDENTIALITY
Between the date of this Agreement and the Closing Date, except as and
to the extent required by law, absent express, written consent of Sellers, Buyer
shall not, directly or indirectly, disclose to third parties or use for its own
purposes any confidential or secret information of the Company or Sellers,
except to the extent permitted under this Agreement. Buyer also agrees that it
will, upon the completion of its investigation, return to the Company or
Sellers, all documents and other records or confidential information previously
authorized to be reviewed by Buyer. It is understood that both Federal and State
laws apply to some incidences of release of information, and that violation of
this provision may also be a violation of these laws. The term "confidential
information," as used in this paragraph, means any information received from the
Company or Sellers, including but not limited to, the names or addresses of
customers, research, inventions, discoveries, improvements, equipment, methods
of production, costs or prices or uses of either party's products or services,
business plans of either party, suppliers and costs thereof, development work,
any other information containing business information which is required to be
maintained as such for the business success of either party, and any other trade
secrets, whether or not contained in any written documents or financial
information other than information which (a) is already in the possession of
Buyer, its employees, representatives or agents (b) from customers of the
Company or Sellers known to Buyer prior to the date of this Agreement; (c) is or
becomes generally available to the public through no fault or actions by Buyer
or its employees, representatives or agents; or (d) becomes available to Buyer
from a source which is not prohibited from disclosing such information to Buyer
by a contractual obligation to the Company. The parties hereto agree that
Sellers would suffer irreparable harm in the event Buyer violates this paragraph
and either discloses or uses for its own purposes information received from the
Company or Sellers.
During the course of discussions between Buyer and Sellers, Sellers,
Xxx, Xxx III, Michael, Bruce, the Company, and the Company's employees,
representatives and agents may receive confidential, proprietary, non-public
business and other information concerning Buyer.
57
With respect to such information, the fact that Buyer has furnished such
information and the fact that there are ongoing discussions regarding the
Contemplated Transaction, Sellers, Xxx, Xxx III, Michael, Bruce, and the Company
agree to be bound with respect thereto to the same extent that Buyer is bound
hereunder with respect to information concerning Sellers.
11.4 NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Sellers, Xxx, Xxx III, Xxxxxxx X. Xxxxx, Xx.
Xxxxxxx, and Xxxxx: c/o Columbus Truck and Equipment
Company, Inc.
0000 Xxxx Xxxxx Xxxxxx
X.X. Xxx 00000
Xxxxxxxx, Xxxx 00000-0000
Facsimile No.: (000) 000-0000
with copies to: Xxxxxx Xxxxxxxx, Esq.
Benesch, Friedlander, Xxxxxx & Xxxxxxx LLP
2800 Cincinnati Commerce Center
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
Buyer: NationsRent, Inc.
00 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
with a copy to: Squire, Xxxxxxx & Xxxxxxx L.L.P.
0000 Xxxxxxxxxx Xxxxxx
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
58
11.5 JURISDICTION; SERVICES OF PROCESS
Except for arbitration prior to set off as contemplated in Section
10.6, any action or proceeding seeking to enforce any provision of, or based on
any right arising out of this Agreement shall be brought against any of the
parties in the courts of the State of Ohio, County of Franklin, or, if it has or
can acquire jurisdiction, in the United States District Court for the Southern
District of Ohio, and each of the parties consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
11.6 FURTHER ASSURANCES
(a) The parties agree (i) to furnish upon request to each other
such further information, (ii) to execute and deliver to each other such other
documents, and (iii) to do such other acts and things, all as the other party
may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
(b) In order to establish a factual basis for the resolution of
disputes with respect to environmental and related matters, subsequent to the
Closing Buyer and Sellers will establish a baseline or benchmark as to the
physical integrity or condition of the Environment at the Facilities. For such
purpose, Buyer and Sellers will determine the scope of and will perform such
additional soil tests, topographical, environmental, or wetland studies and any
other physical and engineering examinations as they mutually agree shall be
appropriate after review of the Phase I Environmental assessments currently
being performed by Industrial Safety and Health. Buyer and Sellers will each pay
one-half of the costs and expenses of all such additional tests, studies and
examinations, provided, however, that Buyer will pay all of the costs and
expenses of the Phase I Environmental assessments currently being performed.
59
11.7 WAIVER
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
11.8 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter (including the Letter of Intent dated December 19,
1997) and constitutes (along with the documents referred to in this Agreement) a
complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be amended
except by a written agreement executed by the party to be charged with the
amendment.
11.9 DISCLOSURE SCHEDULE
(a) The disclosures in the Disclosure Schedule, and those in any
Supplement thereto, must relate only to the representations and warranties in
the Section of the Agreement to which they expressly relate and not to any other
representation or warranty in this Agreement; provided, however, that cross
references incorporating other disclosures by such reference may be made.
(b) In the event of any inconsistency between the statements in
the body of this Agreement and those in the Disclosure Schedule (other than an
exception expressly set forth as such in the Disclosure Schedule with respect to
a specifically identified representation or warranty), the statements in the
body of this Agreement will control.
60
11.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this Agreement without
the prior consent of the other parties, which will not be unreasonably withheld,
except that Buyer may assign any of its rights under this Agreement to any Buyer
Subsidiary. Subject to the preceding sentence, this Agreement will apply to, be
binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and assigns.
11.11 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
11.12 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
11.13 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
11.14 GOVERNING LAW
This Agreement will be governed by the laws of the State of Ohio
without regard to conflicts of laws principles.
11.14A FACSIMILE SIGNATURES
The parties hereto may execute this Agreement by facsimile signature.
61
11.15 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
62
IN WITNESS WHEREOF, the parties have executed and delivered this Stock
Purchase Agreement as of the date first written above.
NATIONSRENT, INC. XXXX-XXXX LIMITED PARTNERSHIP
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxx, Xx.
-------------------------------- -------------------------------
Name: Xxxx X. Xxxxxx Xxxxxxx X. Xxxxx, Xx., Managing
------------------------------ General Partner
Title: Executive Vice President
-----------------------------
/s/ Xxxxxxx X. Xxxxx, Xx. XXXXXXX X. XXXXX FOUNDATION
-----------------------------------
Xxxxxxx X. Xxxxx, Xx., individually
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
/s/ Xxxxxxx X. Xxxxx, III Name: Xxxxxxx X. Xxxxx
----------------------------------- ------------------------------
Xxxxxxx X. Xxxxx, III, individually Title: Chairman
-----------------------------
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx, individually
/s/ Xxxxx X. Xxxxx
-----------------------------------
Xxxxx X. Xxxxx, individually
63
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT (this "Amendment") is
made and entered into as of April 6, 1998 by and between NATIONSRENT, INC., a
Delaware corporation ("Buyer"), XXXX-XXXX LIMITED PARTNERSHIP, an Ohio limited
partnership (the "Partnership"), XXXXXXX X. XXXXX FOUNDATION, an Ohio nonprofit
corporation (the "Foundation" and, together with the Partnership, "Sellers"),
XXXXXXX X. XXXXX, XX., individually ("Ray"), XXXXXXX X. XXXXX, III, individually
("Ray III"), XXXXXXX X. XXXXX, individually ("Xxxxxxx"), and XXXXX X. XXXXX,
individually ("Xxxxx").
RECITALS
The following recitals are representations with respect to certain
factual matters that form the basis of this Amendment and are an integral part
of this Amendment.
A. Buyer, Sellers, Xxx, Xxx III, Xxxxxxx and Xxxxx (collectively,
the "Parties") are parties to a certain Stock Purchase Agreement dated as of
March 24, 1998, relating to the purchase and sale of all of the issued and
outstanding shares of capital stock of The Xxxx-Xxxx Company, an Ohio
corporation (the "Agreement"). Capitalized terms which are not otherwise defined
herein shall have the meanings assigned to such terms in the Agreement.
B. Sections 2.3, 9.1(b) and 9.1(d) of the Agreement provide that
Buyer or Sellers may terminate the Agreement if the Closing has not occurred on
or before April 8, 1998.
C. The parties desire to amend the Agreement to extend the date
after which Buyer or Sellers may terminate the Agreement pursuant to Sections
9.1(b) and 9.1(d) from April 8, 1998 to April 30, 1998.
AGREEMENT
NOW, THEREFORE, in consideration of the agreement and undertakings of
the parties to amend the Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. All terms and conditions of the Agreement shall remain in full
force and effect without change, except that Sections 2.3, 9.1(b) and 9.1(d) of
the Agreement are hereby amended by deleting all references to "April 8, 1998"
and replacing such date with "April 30, 1998."
2. This Amendment may be simultaneously executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument. The parties hereto may execute this
Amendment by facsimile signature.
64
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment to Stock Purchase Agreement as of the date first set forth above.
NATIONSRENT, INC. XXXX-XXXX LIMITED PARTNERSHIP
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxx, Xx.
-------------------------------- --------------------------------
Name: Xxxx X. Xxxxxx Xxxxxxx X. Xxxxx, Xx., Managing
------------------------------ General Partner
Title: Executive Vice President
-----------------------------
/s/ Xxxxxxx X. Xxxxx, Xx. XXXXXXX X. XXXXX FOUNDATION
-----------------------------------
XXXXXXX X. XXXXX, XX., individually
By: /s/ Xxxxxxx X. Xxxxx, Xx.
--------------------------------
/s/ Xxxxxxx X. Xxxxx, III Name: Xxxxxxx X. Xxxxx, Xx.
----------------------------------- ------------------------------
XXXXXXX X. XXXXX, III, individually Title: Chairman
-----------------------------
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
XXXXXXX X. XXXXX, individually
/s/ Xxxxx X. Xxxxx
-----------------------------------
XXXXX X. XXXXX, individually
-2-
65
SECOND AMENDMENT TO STOCK PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO STOCK PURCHASE AGREEMENT (this "Amendment") is
made and entered into as of April 17, 1998 by and between NATIONSRENT, INC., a
Delaware corporation ("Buyer"), XXXX-XXXX LIMITED PARTNERSHIP, an Ohio limited
partnership (the "Partnership"), XXXXXXX X. XXXXX FOUNDATION, an Ohio nonprofit
corporation (the "Foundation" and, together with the Partnership, "Sellers"),
XXXXXXX X. XXXXX, XX., individually ("Ray"), XXXXXXX X. XXXXX, III, individually
("Ray III"), XXXXXXX X. XXXXX, individually ("Xxxxxxx"), and XXXXX X. XXXXX,
individually ("Xxxxx").
RECITALS
The following recitals are representations with respect to certain
factual matters that form the basis of this Amendment and are an integral part
of this Amendment.
A. Buyer, Sellers, Xxx, Xxx III, Xxxxxxx and Xxxxx (collectively,
the "Parties") are parties to a certain Stock Purchase Agreement dated as of
March 24, 1998, as amended by a certain First Amendment to Stock Purchase
Agreement dated as of April 6, 1998, relating to the purchase and sale of all of
the issued and outstanding shares of capital stock of The Xxxx-Xxxx Company, an
Ohio corporation (as amended, the "Agreement"). Capitalized terms which are not
otherwise defined herein shall have the meanings assigned to such terms in the
Agreement.
B. Buyer has determined that a filing under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), is required in
connection with the transaction contemplated by the Agreement.
C. The Parties desire to further amend the Agreement to (i) add
the expiration or termination of the applicable waiting periods under the HSR
Act as a condition precedent to the closing of the transactions contemplated by
the Agreement and (ii) to make certain other changes to the Agreement in
connection therewith.
AGREEMENT
NOW, THEREFORE, in consideration of the agreement and undertakings of
the Parties to amend the Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:
1. All terms and conditions of the Agreement shall remain in full
force and effect without change, except that:
66
(a) Section 1 (Definitions) of the Agreement is hereby amended by
adding the following between the definition of "Hazardous Materials" and the
definition of "Indebtedness":
"HSR ACT-the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, or any successor law, and regulations and
rules issued pursuant to that Act or any successor law."
(b) The following is hereby added at the end of Section 2.2
(Purchase Price):
"In the event that the Closing does not take place on or prior
to April 30, 1998, the Purchase Price shall be increased by an
amount (the "Purchase Price Adjustment Amount") equal to the
product of (i) $41,500,000 multiplied by (ii) the quotient of
(A) the number of days which elapse from and after May 1, 1998
through the Closing Date (e.g., if the Closing Date occurs on
May 3, 1998, then 3 days shall be deemed to have elapsed for
purposes hereof) divided by (B) 365 days multiplied by (iii)
the prime rate of interest on April 30, 1998, as published in
The Wall Street Journal. The Purchase Price Adjustment Amount,
if any, shall be payable by Buyer to Sellers in cash at the
Closing as specified in Section 2.4(b)(i)."
(c) Section 2.4(b)(i) is hereby deleted in its entirety and placed
with the following:
"(i) $31,500,000, plus the Purchase Price Adjustment
Amount (if any), by wire transfer to an account specified by
Sellers;"
(d) Section 5.4 (Required Approvals) of the Agreement is hereby
deleted in its entirety and replaced with the following:
"As promptly as practicable after the date of this Agreement,
Sellers will, and will cause the Company to, make all filings
required by Legal Requirements to be made by them in order to
consummate the Contemplated Transactions (including all
filings under the HSR Act); provided, however, that the
expense of any filings with respect to the HSR Act will be
borne by Buyer. Between the date of this Agreement and the
Closing Date, Sellers will, and will cause the Company to, (a)
cooperate with Buyer with respect to all filings that Buyer
elects to make or is required by Legal Requirements to make in
connection with the Contemplated Transactions, and (b)
cooperate with Buyer in obtaining all consents identified in
Part 3.2 of the Disclosure Schedule (including taking all
reasonable actions
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67
requested by Buyer to cause early termination of any
applicable waiting period under the HSR Act)."
(e) The following is hereby added at the end of Section 6.1
(Approvals of Governmental Bodies) of the Agreement"
"Without limiting the foregoing in any respect, Buyer hereby
agrees to make all filings under the HSR Act required to be
made by Buyer on or before April 17, 1998."
(f) The following is hereby added at the end of both Section 7.9
(No Prohibition) and Section 8.6 (No Prohibition) of the Agreement:
"All applicable waiting periods (and any extensions thereof)
under the HSR Act must have expired or otherwise been
terminated."
(g) Sections 2.3, 9.1(b) and 9.1(d) of the Agreement are hereby
amended by deleting all references to "April 30, 1998" and replacing such date
with "May 26, 1998."
2. This Amendment may be simultaneously executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument. The parties hereto may execute this
Amendment by facsimile signature.
[Remainder of this page intentionally left blank]
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68
IN WITNESS WHEREOF, the Parties have executed this Second Amendment to
Stock Purchase Agreement as of the date first set forth above.
NATIONSRENT, INC. XXXX-XXXX LIMITED PARTNERSHIP
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxx, Xx.
-------------------------------- --------------------------------
Name: Xxxx X. Xxxxxx Xxxxxxx X. Xxxxx, Xx., Managing
------------------------------ General Partner
Title: Executive Vice President
-----------------------------
/s/ Xxxxxxx X. Xxxxx, Xx. XXXXXXX X. XXXXX FOUNDATION
-----------------------------------
XXXXXXX X. XXXXX, XX., individually
By: /s/ Xxxxxxx X. Xxxxx, Xx.
--------------------------------
/s/ Xxxxxxx X. Xxxxx, III Name: Xxxxxxx X. Xxxxx, Xx.
----------------------------------- ------------------------------
XXXXXXX X. XXXXX, III, individually Title: Chairman
-----------------------------
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
XXXXXXX X. XXXXX, individually
/s/ Xxxxx X. Xxxxx
-----------------------------------
XXXXX X. XXXXX, individually
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