EXHIBIT 10.2
ASSET PURCHASE AGREEMENT
by and among
Brute Equipment Co.
dba "Foxx Hy-Reach Company"
as "Seller,"
Rental Service Corporation,
Xxxxxx Xxxxx Equipment Company
as "Buyer"
and Xxxxxx X. Xxxxxx
April 25, 1997
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
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Page
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ARTICLE I - DEFINITIONS......................................... 1
1.1 Defined Terms...................................... 1
1.2 Other Defined Terms................................ 5
ARTICLE II - PURCHASE AND SALE OF ASSETS........................ 6
2.1 Transfer of Assets................................. 6
2.2 Assumption of Liabilities.......................... 6
2.3 Excluded Liabilities............................... 6
2.4 Purchase Price..................................... 7
2.5 Purchase Price Adjustments......................... 8
2.6 Prorations......................................... 10
2.7 Closing Costs; Transfer Taxes and Fees............. 10
ARTICLE III - CLOSING........................................... 10
3.1 Closing............................................ 10
3.2 Conveyances at Closing............................. 10
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLER........... 11
4.1 Organization of Seller............................. 11
4.2 Authorization...................................... 11
4.3 No Changes to the Assets........................... 12
4.4 Assets............................................. 12
4.5 Facilities......................................... 12
4.6 Contracts and Commitments.......................... 13
4.7 Permits and Consents............................... 14
4.8 No Conflict or Violation........................... 14
4.9 Financial Statements............................... 14
4.10 Books and Records.................................. 15
4.11 Litigation......................................... 15
4.12 Labor Matters...................................... 15
4.13 Compliance with Law................................ 15
4.14 No Brokers......................................... 16
4.15 No Other Agreements to Sell the Assets............. 16
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4.16 Proprietary Rights................................. 16
4.17 Tax Matters........................................ 16
4.18 Accounts Receivable................................ 17
4.19 Inventory.......................................... 17
4.20 Employees.......................................... 18
4.21 Compliance With Environmental Laws................. 18
4.22 Liabilities........................................ 21
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER............. 21
5.1 Organization of Buyer.............................. 21
5.2 Authorization...................................... 21
5.3 No Conflict or Violation........................... 21
5.4 Consents and Approvals............................. 21
ARTICLE VI - COVENANTS OF SELLER AND BUYER...................... 22
6.1 Further Assurances................................. 22
6.2 No Solicitation.................................... 22
6.3 Notification of Certain Matters.................... 22
6.4 Access to Information.............................. 23
6.5 Conduct of Business................................ 23
6.6 Employee Matters................................... 23
6.7 Environmental Assessments and Remediation.......... 24
6.8 Use of Name and Telephone Numbers.................. 25
ARTICLE VII - CONDITIONS TO SELLER'S OBLIGATIONS................ 25
7.1 Representations, Warranties and Covenants.......... 25
7.2 No Proceedings, Litigation or Laws................. 25
7.3 Assumption Document................................ 25
7.4 New Leases......................................... 25
ARTICLE VIII - CONDITIONS TO BUYER'S OBLIGATIONS................ 25
8.1 Representations, Warranties and Covenants.......... 26
8.2 Consents........................................... 26
8.3 No Proceedings or Litigation....................... 26
8.4 Opinion of Counsel................................. 26
8.5 Certificates....................................... 28
8.6 New Leases......................................... 28
8.7 Non-Competition Agreements......................... 28
8.8 Conveyancing Documents; Release of Encumbrances.... 28
8.9 Material Changes................................... 28
8.10 Corporate Documents................................ 28
8.11 Due Diligence Review............................... 28
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8.12 Permits............................................ 28
8.13 Completion of Environmental Remediation............ 28
ARTICLE IX - RISK OF LOSS; CONSENTS TO ASSIGNMENT............... 29
9.1 Risk of Loss....................................... 29
9.2 Consents to Assignment............................. 29
ARTICLE X - ACTIONS BY SELLER AND BUYER AFTER THE CLOSING....... 29
10.1 Books and Records; Payment of Liabilities.......... 29
10.2 Survival of Representations, Etc................... 30
10.3 Indemnifications................................... 30
10.4 Payment of Holdback Amount......................... 33
10.5 Taxes.............................................. 33
10.6 Tax Clearance Certificate.......................... 33
10.7 Further Action..................................... 33
ARTICLE XI - MISCELLANEOUS...................................... 33
11.1 Termination....................................... 33
11.2 Assignment........................................ 34
11.3 Notices........................................... 35
11.4 Choice of Law..................................... 35
11.5 Entire Agreement; Amendments and Waivers.......... 35
11.6 Multiple Counterparts............................. 36
11.7 Expenses.......................................... 36
11.8 Invalidity........................................ 36
11.9 Titles............................................ 36
11.10 Publicity; Confidentiality........................ 36
11.11 Cumulative Remedies............................... 36
11.12 Consent of Seller Stockholder..................... 36
11.13 Arbitration....................................... 36
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated as of April 25, 1997, is by and
among Rental Service Corporation ("RSC"), Xxxxxx Xxxxx Equipment Company, a
Mississippi corporation, a wholly owned subsidiary of RSC ("Buyer"), Brute
Equipment Co., an Iowa corporation d/b/a Foxx-Hy Reach Company ("Seller"), and
Xxxxxx X. Xxxxxx (the "Seller Stockholder").
RECITALS
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A. Seller owns certain assets which it uses in its conduct of the
Business (as defined below).
B. Buyer desires to purchase from Seller, and Seller desires to sell
to Buyer, such assets upon the terms and subject to the conditions of this
Agreement.
AGREEMENT
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NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
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1.1 Defined Terms. As used herein, the terms below shall have the
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following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.
"Affiliate" shall have the meaning set forth in the Securities
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Exchange Act of 1934, as amended, and the rules and regulations thereunder.
"Ancillary Agreements" shall mean the Employment and Non-Competition
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Agreement with Xxxxxx X. Xxxxxx attached hereto as Exhibit 8.7.1.
"Assets" shall mean all of the right, title and interest of Seller
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in and to the business, properties, assets and rights of any kind, whether
tangible or intangible, and constituting, or used or useful in connection with,
or related to, the Business, including without limitation all of Seller's right,
title and interest in the following (but not including, in any case, the
Excluded Assets):
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all rights of Seller under the Assumed Contracts listed on Schedule
4.6.1;
all rental and non-rental Equipment related to the Business as listed
on Exhibit 2.5.1;
all Inventory related to the Business;
all cash and cash equivalents, not in excess of the amount thereof on
the Interim Balance Sheet;
[intentionally left blank]
all Books and Records related to the Business;
all Proprietary Rights related to the Business;
to the extent transferable, all Permits related to the Business;
all computers and, to the extent transferable, software used in the
Business;
all utility deposits;
all available supplies, sales literature, promotional literature,
customer, supplier and distributor lists, display units, telephone and facsimile
numbers and purchasing records related to the Business;
all rights under or pursuant to all warranties, representations and
guarantees made by suppliers in connection with the Assets or services furnished
to Seller pertaining to the Business or affecting the Assets, to the extent such
warranties, representations and guarantees (i) are not required by Seller to
fulfill its obligations under this Agreement and (ii) are assignable;
except as may relate to Excluded Assets, all claims, causes of action,
choses in action, rights of recovery and rights of set-off of any kind, against
any person or entity, including without limitation any liens, security
interests, pledges or other rights to payment or to enforce payment in
connection with products delivered by Seller on or prior to the Closing Date;
provided, however, that all such claims etc. related to acquired accounts
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receivable shall be deemed to be reassigned to Seller at the time such accounts
receivable are returned to Seller pursuant to Section 2.7.3 hereof;
all accounts receivable as adjusted at the Closing and which are not
Excluded Assets; and
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all Open Rental Contracts and customer deposits made in connection
therewith (including, without limitation, deposits made in the form of cash,
check, or a preliminary charge on a credit or debit card).
"Assumed Leases" shall mean the Leases of the Facilities in Cedar
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Rapids and Des Moines, Iowa.
"Balance Sheet" shall mean the balance sheet of Seller at the date
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indicated thereon, together with the notes thereon.
"Books and Records" shall mean (a) all records and lists of Seller
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pertaining to the Assets, (b) all records and lists pertaining to the Business,
customers, suppliers or personnel (excluding confidential personnel records) of
Seller, (c) all product, business and marketing plans of Seller and (d) all
books, ledgers, trial balances, files, reports, plans, drawings and operating
records of every kind maintained by Seller, but excluding the originals of
Seller's minute books, stock books, tax returns and accounting ledgers (provided
that Buyer will be provided copies of tax returns and accounting records if it
so requests).
"Business" shall mean Seller's equipment rental and sales business,
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operating under the "Foxx Hy-Reach" name or otherwise.
"Closing Date" shall mean June 2, 1997 or such other date as Buyer and
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Seller shall mutually agree upon; provided that either party may elect to defer
the Closing Date to a date on or prior to June 30, 1997 (which date shall be a
date which is reasonably satisfactory to both parties) if necessary to complete
the Closing.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
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the rules and regulations thereunder.
"Contract" shall mean any agreement, contract, note, loan, evidence of
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indebtedness, purchase, order, letter of credit, franchise agreement,
undertaking, covenant not to compete, employment agreement, license, instrument,
obligation or commitment to which Seller is a party or is bound and which
relates to the Business or the Assets, whether oral or written.
"Encumbrance" shall mean any claim, lien, pledge, option, charge,
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easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other right of third parties, whether voluntarily incurred or
arising by operation of law, and includes, without limitation, any agreement to
give any of the foregoing in the future, and any contingent sale or other title
retention agreement or lease in the nature thereof.
"Equipment" shall mean all of the furniture, fixtures, furnishings,
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machinery, automobiles, trucks, spare parts, tools, supplies, equipment and
other tangible personal property owned by Seller and used in connection with the
Business, including without limitation all items listed on the Rental
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and Non-Rental Asset Listing and the Supplemental Rental and Non-Rental
Asset Listing (but not including any Excluded Assets listed thereon).
"Excluded Assets," notwithstanding any other provision of this
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Agreement, shall mean the following assets of Seller which are not to be
acquired by Buyer hereunder:
prepayments or prepaid expenses except customer and utility deposits
(including all prepaid insurance premiums and prepaid taxes) of Seller;
all Permits, to the extent not transferable;
all claims, causes of action, choses in action, rights of recovery and
rights of set-off of any kind against any person or entity arising out of or
relating to the Assets to the extent related to the Excluded Liabilities;
the ownership of and cash surrender value of all life insurance
policies;
all accounts receivable which have been written off on the Interim
Balance Sheet or are more than 90 days old at Closing;
all claims of Seller against Maryland Casualty Company with respect to
the claims of Xxxxxx Xxxxxx;
all insurance policies of Seller;
all obligations of officers or shareholders for repayment to Seller of
loans or other advances; and
all refunds from taxing authorities for periods prior to Closing.
"Facilities" shall mean the rental yards, stores, offices, maintenance
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and storage facilities, shops, warehouses, improvements, other structures, and
all real property and related facilities which are used (or will be used) in the
conduct of the Business, and which are located at:
- 0000-00xx Xxxxxx, Xxxxxx, XX 00000
- 0000 X. Xxxxxx Xxxxxx, Xxxxxx, XX 00000
- 0000 0xx Xxxxxx, Xxxxx Xxxxxx, XX 00000
- 0000 Xxxxxx Xxxxx, Xxx Xxxxxx, XX 00000
"Final Determination" means a final, non-appealable judgment by a court
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of competent jurisdiction.
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"Financial Statements" shall mean the Year-End Financial Statements and
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the Interim Financial Statements.
"Xxxxxx Litigation" shall mean Xxxxxx Xxxxxx v. Brute Equipment Co.,
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d/b/a/ Foxx Hy-Reach, an Iowa corporation, Docket #95L58 in the Circuit Court of
the Fourteenth Judicial Circuit, Rock Island County, Illinois, and any
litigation related thereto, including without limitation, appeals.
"Interim Balance Sheet" shall mean the Balance Sheet dated the Interim
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Balance Sheet Date.
"Interim Balance Sheet Date" shall mean February 28, 1997.
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"Interim Financial Statements" shall mean the Interim Balance Sheet and
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the income statement for the two months ended on the Interim Balance Sheet Date.
"Inventory" shall mean all of Seller's inventory held for resale and all
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of Seller's new repair or replacement parts, supplies and packaging items and
similar items with respect to the Business, in each case wherever the same may
be located.
"Material Adverse Effect" or "Material Adverse Change" shall mean with
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respect to the Business or the Assets any significant and substantial adverse
effect or change in the condition (financial or other), business, results of
operations, prospects, assets, liabilities or operations of the Business and/or
the Assets or on the ability of Seller to consummate the transactions
contemplated hereby, or any event or condition which would, with the passage of
time, constitute a "Material Adverse Effect" or "Material Adverse Change."
"Open Rental Contracts" shall mean (i) all Contracts pursuant to which
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Seller has rented Equipment and, as of the Closing Date, the rentee under each
such Contract is still in possession of such Equipment and (ii) all Contracts
under which the rentee has returned the Equipment but has not yet been invoiced.
"Owned Real Property" shall mean all real property owned in fee by the
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Seller Stockholder or related entities which is used in the conduct of the
Business, including without limitation all rights, easements and privileges
appertaining or relating thereto, all buildings, fixtures, and improvements
located thereon and all Facilities thereon, if any.
"Permits" shall mean all licenses, permits, franchises, approvals,
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authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, or any other person,
necessary or desirable for the past, present or anticipated conduct of, or
relating to the operation of, the Business.
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"Rental and Non-Rental Asset Listing" shall mean the asset listing
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provided to Buyer by Seller and attached as Exhibit 2.7.1 hereto, listing all
assets as of February 28, 1997, but not including any Excluded Assets listed
therein.
"Representative" shall mean any officer, director, principal, attorney,
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agent, employee or other representative.
"Seller Stockholder" shall mean Xxxxxx X. Xxxxxx who will own all of the
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outstanding capital stock of Seller as of the Closing Date.
"Supplemental Rental and Non-Rental Asset Listing" shall mean the asset
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listing provided to Buyer by Seller and attached as Exhibit 2.7.1.1 hereto,
listing all assets acquired after February 28, 1997, through the Closing Date,
but not including any Excluded Assets listed therein.
"Tax" shall mean any federal, state, local, foreign or other tax, levy,
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impost, fee, assessment or other government charge, including without limitation
income, estimated income, business, occupation, franchise, property, payroll,
personal property, sales, transfer, use, employment, commercial rent, occupancy,
franchise or withholding taxes, and any premium, including without limitation
interest, penalties and additions in connection therewith.
"Year-End Financial Statements" shall mean the Balance Sheets and income
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statements dated as the Seller's fiscal years ended 1996, 1995, and 1994.
1.2 Other Defined Terms. The following terms shall have the meanings defined
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for such terms in the Sections set forth below:
Term Section
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Action 4.11
Agreed Value 2.5.1
Assumed Contracts 4.6
Assumed Liabilities 2.2
Assumption Document 3.2.2
CERCLA 4.21.2
Claim 10.3.4
Claim Notice 10.3.4
Closing 3.1
Damages 10.3.1
Employee Plans 4.20
Environmental Conditions 4.21.11
Environmental Laws 4.21.2
Environmental Assessments 6.7.1
Excluded Liabilities 2.3
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Hazardous Substance 4.21.1
Holdback Amount 2.4.3
Inventory Value 2.5.2
New Leases 7.4
Post-Closing Environmental Liability 10.3.1
Proposed Acquisition Transaction 6.2.1
Proprietary Rights 4.16.1
Purchase Price 2.4.1
RCRA 4.21.2
Release 4.21.1
Remediation Standard 6.7.2
Rental Ready 2.5.1
Retained Employees 6.6
ARTICLE II
PURCHASE AND SALE OF ASSETS
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2.1 Transfer of Assets. Upon the terms and subject to the conditions
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contained herein, at the Closing, Seller will sell, convey, transfer, assign and
deliver to Buyer, and Buyer will acquire from Seller, the Assets.
2.2 Assumption of Liabilities. Upon the terms and subject to the conditions
-------------------------
contained herein, at the Closing, Buyer shall assume all obligations and
liabilities accruing, arising out of, or relating to events or occurrences
happening after the Closing Date under, and only under, the Assumed Contracts
listed on Schedule 4.6.1, but not including any obligation or liability for any
breach of any Contract occurring on or prior to the Closing Date (together with
the liabilities assumed pursuant to the Assumed Contracts, the "Assumed
Liabilities").
2.3 Excluded Liabilities. Notwithstanding any other provision of this
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Agreement, except for the Assumed Liabilities expressly specified in Section
2.2, Buyer shall not assume, or otherwise be responsible for, any of Seller's
liabilities or obligations, whether actual or contingent, matured or unmatured,
liquidated or unliquidated, known or unknown, or related or unrelated to the
Business or the Assets, whether arising out of occurrences prior to, at or after
the date hereof (collectively, "Excluded Liabilities"), which Excluded
Liabilities include, without limitation:
2.3.1 Except as provided in Section 6.9, any liability or obligation to or
in respect of any employees or former employees of Seller including without
limitation (i) any employment agreement, whether or not written, between Seller
and any person, (ii) any liability under any Employee Plan at any time
maintained, contributed to or required to be contributed to by or with respect
to Seller or under which Seller may incur liability, or any contributions,
benefits or liabilities therefor, or any liability with respect to Seller's
withdrawal or partial withdrawal from or termination of any Employee Plan and
(iii) any claim of an unfair labor practice, or any claim under any state
unemployment compensation or worker's compensation law or regulation or under
any federal or state employment discrimination law or regulation, which shall
have been asserted on or prior to the Closing Date or is based on acts or
omissions which occurred on or prior to the Closing Date;
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2.3.2 Any liability or obligation of Seller in respect of any Tax;
2.3.3 Any liability or obligation of Seller in respect of any claims by
or with respect to Xxxxxx Xxxxxx;
2.3.4 Any liability arising from any injury to or death of any person or
damage to or destruction of any property, whether based on negligence, breach of
warranty, strict liability, enterprise liability or any other legal or equitable
theory arising from defects in products sold or services performed by or on
behalf of Seller or any other person or entity on or prior to the Closing Date,
or arising from any other cause, including without limitation any liabilities
arising (on a date of occurrence basis or otherwise) on or prior to the Closing
Date relating to the use or misuse of Equipment or to traffic accidents;
2.3.5 Any liability or obligation of Seller arising out of or related to
any Action against Seller or any Action which adversely affects the Assets and
which shall have been asserted on or prior to the Closing Date or to the extent
the basis of which shall have arisen on or prior to the Closing Date;
2.3.6 Any liability or obligation of Seller resulting from entering
into, performing its obligations pursuant to or consummating the transactions
contemplated by, this Agreement (including without limitation any liability or
obligation of Seller pursuant to Article X hereof);
2.3.7 Any liability or obligation related to the Facilities, except for
those expressly set forth in the New Leases and the Assumed Leases; and
2.3.8 Any liability or obligation arising out of CERCLA, any equivalent
state statute, or any other Environmental Law.
2.4 Purchase Price. At the Closing, upon the terms and subject to the
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conditions set forth herein, Buyer shall pay to Seller in consideration for the
Assets, by wire transfer of immediately available funds to an account designated
by Seller, the aggregate amount of Thirty-two Million Seven Hundred Thousand
Dollars ($32,700,000)(the "Cash Portion of the Purchase Price"), 169,014 shares
of RSC Common Stock subject, however, to adjustment as set forth in Section 2.5
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and less the Holdback Amount as described below. In addition, Buyer shall pay
additional Purchase Price of up to 204,866 shares of RSC Common Stock as
follows: 64,020 shares of RSC Common Stock paid at Closing; another 51,216
shares of RSC Common Stock will be paid on the first anniversary of the Closing;
and an additional 89,630 shares of RSC Common Stock will be paid if performance
objectives to be mutually agreed upon by Closing are met. Any RSC Common Stock
paid to Seller will be contributed by RSC to RSC Acquisition Corp. and by RSC
Acquisition Corp. to Buyer in a transaction intended to qualify under Section
351 of the Code immediately prior to delivery of such RSC Common Stock to
Seller. The Purchase Price shall be allocated among the Assets in the manner
required by Section 1060 of the Code and regulations thereunder. Exhibit 2.4
attached hereto sets forth the amount of the Purchase Price allocable to the
various Assets; provided that such allocation shall be subject to necessary
adjustments, to be completed and reflected in such allocation within 30 days
following the Closing Date, on account of the final Inventory and Equipment
valuations under Sections 2.4.1 and 2.4.2. Buyer and Seller agree to each
prepare and file on a timely basis with the Internal Revenue Service
substantially identical initial and supplemental Internal Revenue Service Forms
8594 "Asset
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Acquisition Statements Under Section 1060" consistent with Exhibit 2.4 and
which give effect to any adjustment to the Purchase Price determined in
accordance with Section 2.4 hereof.
2.5 Employment and Noncompetition Agreement. At the Closing, upon the terms
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and subject to the conditions set forth herein, Buyer and Xxxxxx X. Xxxxxx shall
enter into an Employment and Non-Competition Agreement in the form attached
hereto as Exhibit 8.7.1.
2.6 Holdback. The "Aggregate Holdback Amount" shall be an amount equal to
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$3,150,000, which Buyer, at the Closing, shall retain pending the determination
of the amount of the Equipment adjustment and Inventory adjustment pursuant to
Sections 2.7.1 and 2.7.2, respectively, Seller's indemnification obligations, if
any, as set forth in Section 10.3, pending the completion of any environmental
remediation required under Section 6.7 hereof which is not resolved by the
Closing Date and pending a Final Determination in the Xxxxxx Litigation. Of
such Aggregate Holdback Amount, (i) $400,000 will be allocated to the resolution
of the Equipment adjustment pursuant to Section 2.7.1, (ii) $50,000 will be
allocated to the resolution of the Inventory adjustment pursuant to Section
2.7.2, (iii) $200,000 will be allocated to the resolution of the Accounts
Receivable adjustment pursuant to Section 2.7.3, (iv) $1,000,000 will be
allocated to the resolution of Seller's indemnification obligations pursuant to
Xxxxxxx 00.0 (Xxxxxxx (x), (xx), (xxx) and (iv) being the "Holdback Amount"),
and (y) $1,500,000 will be allocated to resolution of the Xxxxxx Litigation (the
"Xxxxxx Holdback Amount"). Notwithstanding anything in the foregoing to the
contrary, if any portion of the Holdback Amount specified in this Section 2.7.3
proves to be insufficient for resolution of the matter subject to adjustment
therein, Buyer may in its sole discretion elect to transfer a portion of the
Holdback Amount allocated to another matter to resolve such deficiency.
Promptly upon the resolution of each of the foregoing adjustments or
indemnification or remediation obligations in accordance with the time periods
provided herein for its resolution, Buyer will instruct the Escrow Agent remit
to Seller that portion of the Holdback Amount allocated to the resolution of
such item, net of any amount which Buyer is entitled to retain under the
provisions of Sections 2.7 and 10.3 hereof. In the event of any disagreement
between Buyer and Seller regarding the dollar amount of any such adjustment or
indemnification or remediation obligation, Buyer shall nevertheless be obligated
to instruct the Escrow Agent remit to Seller any portion of the Holdback Amount
which is allocable to such item and is not in dispute. Promptly upon resolution
of any such disagreement in accordance with the terms hereof, Buyer shall remit
to Seller any remaining portion of the Holdback Amount to which Seller is
entitled. Notwithstanding the foregoing, Buyer shall not be limited to the
Holdback Amount (or allocable portion thereof) as a sole remedy in the event
that any purchase price adjustment or indemnification or remediation obligation
exceeds the Holdback Amount (or allocable portion thereof); rather, in such
event, Buyer shall have the right to collect promptly from Seller, in cash, the
amount of such excess. The Aggregate Holdback Amount will be held in escrow
pursuant to an Escrow Agreement in substantially the form attached hereto as
Exhibit 2.6.
2.7 Purchase Price Adjustments.
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2.7.1 Equipment Adjustment. The Rental and Non-Rental Asset Listing
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attached as Exhibit 2.7.1. sets forth the asset description, make, model,
original cost and net book value of all Equipment which, on the Closing Date,
will be fully operable, Rental Ready and available for transfer to Buyer. (The
net book value of each item of Equipment shown on Exhibit 2.7.1 is referred to
herein as the "Agreed Value.") On or prior to the 10th business day following
the Closing Date, personnel of Buyer and Seller jointly shall complete a
physical inventory of each item of Equipment comprising Exhibit 2.7.1, including
by visiting renters' locations as necessary to inspect such Equipment. The
Purchase Price shall be reduced, within thirty
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(30) calendar days after the Closing, for each item of Equipment contained in
Exhibit 2.7.1 which is missing, inoperable, not Rental Ready, or otherwise not
available for transfer to Buyer (including items previously sold by Seller),
provided that such reduction shall apply dollar for dollar with respect to items
sold by Seller, and otherwise only to the extent that the missing, inoperable,
non-Rental Ready or unavailable Equipment exceeds $50,000 in aggregate net book
value. The reduction in the Purchase Price shall be calculated by the aggregate
Agreed Value of all missing, inoperable, non-Rental Ready or unavailable
Equipment. The result of the foregoing calculation shall be subtracted from the
Purchase Price. In the event of a Purchase Price reduction as contemplated
hereby, Buyer shall be entitled to retain a portion of the Holdback Amount equal
to such reduction as specified in, or to have the other remedies set forth in,
Section 2.7. For purposes of this Agreement, an item of Equipment is "Rental
Ready" only if all required maintenance has been performed and it does not
require any repairs in excess of $100 per item. Any disputes as to the physical
count or Rental Readiness of any item of Equipment will, if possible, be
resolved while the physical inventory of such Equipment is being taken by Buyer
and Seller. Any disputes regarding the foregoing not resolved by the 10th
business day following the Closing Date will be separately listed and settled as
soon as expeditiously practicable thereafter by the parties or by another
independent third party mutually acceptable to both parties, and shall not be
the subject of any indemnification claim by Buyer under Section 10.3
In addition to the foregoing, the Purchase Price shall be increased, on a
dollar-for-dollar basis and with such increase to be payable in immediately
available funds on the Closing Date, by the cost to Seller of any item of
Equipment which was acquired by Seller subsequent to February 28, 1997 and is
listed in the Supplemental Rental and Non-Rental Asset Listing attached as
Exhibit 2.7.1.1.
2.7.2 Inventory Adjustment. The Purchase Price shall be adjusted,
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thirty (30) calendar days after Closing, on a dollar-for-dollar basis pursuant
to the procedures set forth below, by the amount, if any, by which the Inventory
Value as of the Closing Date is greater or less than the amount stated on the
Interim Balance Sheet. In the event of a Purchase Price reduction as
contemplated hereby, the cash portion of the purchase price will be reduced.
"Inventory Value" shall mean the lower of (x) vendor cost as last received
(excluding all freight and other charges) and (y) net book value, in each case
of all Inventory (excluding any non-salable or obsolete merchandise, parts or
supplies) as of the Closing Date, as determined in accordance with generally
accepted accounting principles. Inventory Value shall be determined pursuant to
a physical inventory to be taken on or promptly following the Closing Date, and
shall be finalized within 15 business days following the Closing Date (except to
the extent that particular matters are referred to a third party for resolution
as described below). In connection with such physical inventory, all items of
Inventory will be counted as to quantity, and assessed as to salability, by
personnel of Seller and Buyer using the same procedures normally used by Buyer
to take inventories of the type of Inventory being counted. Any disputes as to
the physical count, condition, salability or obsolescence of any item of
Inventory will, if possible, be resolved while such physical inventory is being
taken. Any disputes regarding the foregoing not resolved by the 15th business
day following the Closing Date will be separately listed and settled as soon as
expeditiously practicable thereafter by the parties or by another independent
third party mutually acceptable to both parties, and in any event will be
resolved no later than the 30th calendar day following the Closing.
2.7.3 Accounts Receivable Adjustment. The cash portion of the Purchase
------------------------------
Price shall be adjusted, one hundred twenty (120) calendar days after the
Closing, on a dollar-for-dollar basis, pursuant to the procedures set forth
below, by the amount, if any, by which the Accounts Receivable included in the
Assets are greater or have a value that is less than the net amount stated on
the Interim Balance Sheet. Any accounts receivable included in the Assets which
are not collected within ninety (90) calendar days after the
10
Closing will be returned to the Seller and deducted from the Holdback Amount.
All Open Rental Contracts and customer deposits in connection therewith become
the property of Buyer, and Buyer shall be entitled to all proceeds collected by
Seller from any contract which would have been an Open Rental Contract but for
Seller's failure to operate the Business in the ordinary course of the Business
and substantially in accordance with past practice, as provided in Section 6.5.
2.7.4 Finality of Third Party Determination. The determination of any
-------------------------------------
third party engaged pursuant to the foregoing provisions of this Section 2.7
shall be final and binding on the parties. The engagement of such third party
will be subject to the provisions of Section 11.13, provided that the parties
may retain an independent accounting firm rather than professional arbitrators
to settle a dispute, and may otherwise depart from the procedures specified in
Section 11.13, if they both so agree. No failure to resolve any matters
described in this Section 2.7 shall prevent the Closing or payment of the
Purchase Price for the Assets.
2.7.5 Adjustment for Permitted Encumbrances. In addition to the
-------------------------------------
foregoing, the Purchase Price shall be decreased, on a dollar-for-dollar basis
and with such decrease to be deducted from the Purchase Price payable on the
Closing Date, by the amount of any Encumbrance on any Asset which Buyer has
specifically accepted pursuant to Section 4.4 hereof.
2.8 Xxxxxx Litigation. Promptly following a Final Determination of the
-----------------
Xxxxxx Litigation following which Buyer can have no further liability with
respect thereto, the Xxxxxx Holdback Amount, plus any income thereon remaining
in escrow, will be released to Seller.
2.9 Prorations. On the Closing Date, or as promptly as practicable
----------
following the Closing Date, but in no event later than sixty (60) calendar days
thereafter, the Facilities rent, real and personal property taxes, water, gas,
electricity and other utilities, local business or other license fees or taxes,
merchants' association dues and other similar periodic charges payable with
respect to the Assets or the Business shall be prorated between Buyer and Seller
effective as of the Closing Date. To the extent practicable, utility meter
readings for the Facilities shall be determined as of the Closing Date.
Seller's prorated share of the personal property taxes shall be payable
notwithstanding the fact that such tax may become payable after the Closing
Date, and such tax shall be paid to Buyer or the appropriate taxing authority on
or prior to the date on which such tax becomes due.
2.10 Closing Costs; Transfer Taxes and Fees. Seller shall be responsible for
--------------------------------------
any documentary and transfer taxes and any sales or other taxes (excluding use
taxes on equipment constituting registered motor vehicles, which use taxes will
be paid one-half by each of Seller and Buyer) imposed by reason of the transfers
of Assets provided hereunder and any deficiency, interest or penalty asserted
with respect thereto. Buyer will pay any licensing fees associated with re-
registering motor vehicles. Seller shall pay all costs of obtaining the
transfer of existing Permits which may be lawfully transferred. Seller shall
pay the fees and costs of recording or filing all applicable conveyancing
instruments described in Section 3.2.1, and shall pay the fees and costs of
recording or filing all UCC termination statements and other releases of
Encumbrances.
ARTICLE III
11
CLOSING
-------
3.1 Closing. The Closing of the transactions contemplated herein (the
-------
"Closing") shall be held on the Closing Date at a time and place as the parties
shall mutually agree.
3.2 Conveyances at Closing.
----------------------
3.2.1 Instruments and Possession. To effect the sale and transfer
----------------------------
referred to in Section 2.1 hereof, Seller will, at the Closing, execute and
deliver to Buyer:
3.2.1.1 one or more bills of sale, each in the form of Exhibit
3.2.1.1 attached hereto, conveying in the aggregate all of Seller's owned
personal property included in the Assets, free and clear of all Encumbrances,
except as otherwise provided in Section 2.5.5;
3.2.1.2 subject to Section 9.2, Assignments of Contract Rights, each
in the form of Exhibit 3.2.1.2 attached hereto, with respect to the Assumed
Contracts;
3.2.1.3 assignments of Trademarks, Service Marks and other
Proprietary Rights, each in the form of Exhibit 3.2.1.3 attached hereto, in
recordable form to the extent necessary to assign such rights; and
3.2.1.4 such other instruments as shall be requested by Buyer to
vest in Buyer title in and to the Assets in accordance with the provisions
hereof.
3.2.2 Assumption Document. Upon the terms and subject to the conditions
-------------------
contained herein, at the Closing Buyer shall deliver to Seller an instrument of
assumption substantially in the form attached hereto as Exhibit 3.2.2,
evidencing Buyer's assumption, pursuant to Section 2.2, of the Assumed
Liabilities (the "Assumption Document").
3.2.3 Form of Instruments. To the extent that a form of any document to
-------------------
be delivered hereunder is not attached as an Exhibit hereto, such documents
shall be in form and substance, and shall be executed and delivered in a manner,
reasonably satisfactory to the recipient.
3.2.4 Certificates; Opinions. Seller shall deliver to Buyer the
----------------------
certificates, opinions of counsel and other documents described in Article VIII.
3.2.5 Consents. Subject to Section 9.2, Seller shall deliver all Permits
--------
and any other third party consents required for the valid transfer of the
Assets as contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
12
Seller hereby represents and warrants to Buyer as follows, that, except
as set forth on the Disclosure Schedule attached hereto and made a part hereof
are incorporated herein by this reference, which representations and warranties
are, as of the date hereof, and will be, as of the Closing Date, true and
correct:
4.1 Organization of Seller. Seller is a corporation duly organized, validly
----------------------
existing and in good standing under the laws of the State of Iowa. Seller is
also duly qualified and in good standing as a foreign corporation under the laws
of the State of Illinois. Copies of the Articles of Incorporation and Bylaws of
Seller, and all amendments thereto, heretofore delivered to Buyer are accurate
and complete as of the date hereof. Seller has no direct or indirect stock or
other equity or ownership interest (whether controlling or not) in any
corporation, association, partnership, joint venture or other entity.
4.2 Authorization. Seller has all requisite corporate power and authority,
-------------
and has taken all corporate action necessary, to own, lease and operate the
Assets, to conduct the Business as it is presently being conducted, to execute
and deliver this Agreement, to consummate the transactions contemplated hereby
and thereby and to perform its obligations hereunder and thereunder. This
Agreement has been duly executed and delivered by Seller and is a legal, valid
and binding obligation of Seller enforceable against it in accordance with its
terms. Following their execution and delivery by Seller or the Seller
Stockholder or a related entity controlled by the Seller Stockholder, as
applicable, and Buyer, each of the New Leases will be a legal, valid and binding
obligation of Seller or the Seller Stockholder or such related entity, as
applicable, enforceable against them in accordance with its terms.
4.3 No Changes to the Assets. Since the Interim Balance Sheet Date:
------------------------
4.3.1 there has been no actual or threatened adverse change in the
financial condition or results of operation, the Business or the Assets or any
event, condition or state of facts, in either case that is, or would result in a
Material Adverse Change in the Assets or the Business or the prospects for the
Business, including without limitation the loss of any material customers;
4.3.2 there has not been any sale or other disposition, except in the
ordinary course of Seller's business, of any of the Assets, or any Encumbrance
placed on the Assets;
4.3.3 Seller has operated the Business in the ordinary course consistent
with Seller's past practice so as to preserve the Business intact, to keep
available to the Business the services of Seller's employees, and to preserve
the Business and the goodwill of Seller's suppliers, customers, distributors and
others having business relations with it; and
4.3.4 Except as set forth on Exhibits 2.5.1.1 and 2.5.1.2, Seller has not
purchased, or entered into any agreement to purchase any item, other than in the
ordinary course of business consistent with past practices, having a cost in
excess of $2,000, without the consent of Buyer.
4.4 Assets. Seller has and will transfer good and marketable fee simple
------
title to the Assets and upon the consummation of the transactions contemplated
hereby, Buyer will acquire good title to all of the Assets, free and clear of
any Encumbrances, except for any Encumbrance that Buyer, in its sole discretion,
specifically accepts in writing (in which case the Purchase Price will be
subject to adjustment as set forth in Section 2.5.5). The Assets reflected in
the Interim Balance Sheet and all of the Assets acquired after such date are or
will be valued at the lower of actual cost or market less an adequate and proper
depreciation
13
charge. The Assets include without limitation all assets necessary for the
conduct of the Business as presently conducted.
4.5 Facilities. The Seller has delivered to Buyer an accurate copy of its
----------
existing leases and, with respect to Owned Real Property, existing policies of
title insurance. The Seller enjoys peaceful and undisturbed possession of the
Leased Real Property. Other than the leases provided, there are no leases,
subleases, licenses, occupancy agreements, options, rights, concessions or other
agreements or arrangements, written or oral, granting to any person the right to
purchase, use or occupy the Facilities or any portion thereof, except the
billboard lease at the Moline Facility to be retained by Seller Stockholder, a
copy of which is attached hereto as Schedule 4.5.1. The Facilities are supplied
with utilities and other services necessary for the operation of the Business.
Seller has never owned any real property.
4.5.1 Improvements, Fixtures and Equipment. The Facilities and the
------------------------------------
improvements thereon, including without limitation all Equipment (including all
fixtures) and other tangible assets owned, leased or used by Seller at the
Facilities are (i) insured to the extent and in a manner customary in the
industry, (ii) structurally sound with no known material defects, (iii) in good
operating condition and repair, subject to ordinary wear and tear, (iv) not in
need of maintenance or repair except for ordinary routine maintenance and
repair, the cost of which would not be material, (v) sufficient for the
operation of the Business as presently conducted, and (vi) to the best of
Seller's knowledge, in conformity, in all material respects, with all applicable
laws, ordinances, orders, regulations and other requirements relating thereto
currently in effect. None of the improvements is subject to any commitment or
other arrangement for their sale or use by any Affiliate of Seller or third
parties.
4.5.2 Conformity. All Facilities have received all required approvals
----------
of governmental authorities (including without limitation Permits and a
certificate of occupancy or other similar certificate permitting lawful
occupancy of the Facilities) required in connection with the operation thereof.
To the best of Seller's knowledge, the Facilities are (and have been) operated
and maintained in accordance with applicable laws, rules, regulations and state,
county, municipal or other local ordinances, and conform to all other conditions
necessary for the lawful conduct of the Business as currently conducted at each
such Facility.
4.6 Contracts and Commitments.
-------------------------
4.6.1 Contracts. Schedule 4.6 sets forth a complete and accurate list
---------
of all Contracts of the following categories:
4.6.1.1 Contracts not made in the ordinary course of Seller's
conduct of the Business;
4.6.1.2 Employment contracts and severance agreements;
4.6.1.3 Distribution, franchise, license, sales or commission
contracts related to the Assets or the Business;
4.6.1.4 Contracts involving expenditures or liabilities, actual or
potential, in excess of $1,000 or otherwise material to the Business or the
Assets, and not cancelable (without liability) within 30 calendar days;
14
4.6.1.5 Contracts or commitments relating to commission
arrangements with others;
4.6.1.6 Promissory notes, loans, agreements, evidences of
indebtedness, letters of credit, guarantees, or other instruments relating to
an obligation to pay money, whether Seller shall be the borrower, lender or
guarantor thereunder or whereby any Assets are pledged (excluding credit
provided by Seller in the ordinary course of the Business to its customers);
4.6.1.7 Leases of personal property not cancelable (without
liability) within 30 calendar days; and
4.6.1.8 Contracts containing covenants limiting the freedom of
Seller or any officer, director or shareholder of Seller to engage in any line
of business or compete with any person.
For purposes of this Agreement, the "Assumed Contracts" are the Contracts listed
as such on Schedule 4.6.1. Seller has delivered to Buyer true, correct and
complete copies of all of the Contracts listed on Schedule 4.6, including all
amendments and supplements thereto, whether or not such Contracts are Assumed
Contracts.
4.6.2 Absence of Breaches or Defaults. All of the Contracts are valid
-------------------------------
and in full force and effect. Seller has duly performed all of its obligations
under the Contracts to the extent those obligations to perform have accrued, and
no violation of, or default or breach under any Contracts by Seller or any other
party has occurred and neither Seller nor any other party has repudiated any
provisions thereof.
4.7 Permits and Consents. Seller has all Permits required to conduct the
--------------------
Business, except where the failure to obtain such Permits would not have a
Material Adverse Effect on the Assets or the Business. All Permits of Seller
related to the Business are valid and in full force and effect and are listed on
Schedule 4.7. Except as disclosed on Schedule 4.7, no notice to, declaration,
filing or registration with, or authorization, or consent or approval of, or
Permit from, any governmental or regulatory body or authority (including without
limitation the U.S. Small Business Administration), or any other person or
entity, is required to be made or obtained by Seller or the Seller Stockholder
in connection with the execution, delivery or performance of this Agreement or
the New Leases and the consummation of the transactions contemplated hereby and
thereby. Schedule 4.7 sets forth all consents required for the assignment by
Seller to Buyer of the Assumed Contracts and the Assumed Leases. All of the
Assumed Contracts will be enforceable by Buyer after the Closing to the same
extent as if the transactions contemplated by this Agreement had not been
consummated. Each of Seller and the Seller Stockholder or the related entity
controlled by Seller Stockholder has legal authority to enter into the New
Leases to which it or they will be parties and to convey to Buyer the leasehold
interests created thereby, and no consent of the lessor under the Existing
Lease, of any lender, or of any other person or entity is required for the
execution by Seller or the Seller Stockholder or such related entity of the New
Leases.
4.8 No Conflict or Violation. After giving effect to consents and lien
------------------------
releases that have been obtained from third parties or will be so obtained prior
to the Closing Date, neither the execution and delivery of this Agreement or the
New Leases by Seller or the Seller Stockholder, as applicable, nor the
consummation of the transactions contemplated hereby or thereby, nor compliance
by Seller or the Seller Stockholder with any of the provisions hereof or
thereof, will (a) violate or conflict with any provision of the Articles of
Incorporation or Bylaws of Seller, (b) violate, conflict with, or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute
15
a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any Encumbrance upon any of the Assets
under, any of the terms, conditions or provisions of any Contract, Permit,
agreement, or other instrument or obligation (i) to which Seller or the Seller
Stockholder are parties or (ii) by which the Assets are bound, violate any
statute, rule, regulation, ordinance, code, order, judgment, ruling, writ,
injunction, decree or award or (d) impose any Encumbrance, restriction or
charge on the Assets, the Facilities or the Business.
4.9 Financial Statements. Seller has heretofore delivered to Buyer the
--------------------
Financial Statements. The Financial Statements (a) are in accordance with the
underlying books and records of Seller, (b) have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods covered thereby (except as otherwise described in Schedule 4.9) and
(c) fairly and accurately present the assets, liabilities (including all
reserves) and financial position of the Business as of the respective dates
thereof and the results of operations and changes in cash flows for the periods
then ended (subject, in the case of the Interim Financial Statements, to normal
year-end adjustments). At the respective dates of the Financial Statements,
there were no liabilities of Seller, which, in accordance with generally
accepted accounting principles, should have been shown or reflected in the
Financial Statements or the notes thereto, which are not shown or reflected in
the Financial Statements or the notes thereto.
4.10 Books and Records. Seller has made and kept (and given Buyer access
-----------------
to) Books and Records and accounts, which, in reasonable detail, accurately and
fairly reflect the activities of Seller. The minute books of Seller previously
delivered to Buyer accurately and adequately reflect all action previously taken
by the shareholders, board of directors and committees of the board of directors
of Seller. The copies of the stock book records of Seller previously delivered
to Buyer are true, correct and complete, and accurately reflect all transactions
effected in Seller's stock through and including the date hereof.
4.11 Litigation. Except as set forth on Schedule 4.11, there is no action,
----------
order, writ, injunction, judgment or decree outstanding or any claim, suit,
litigation, proceeding, labor dispute, arbitral action, governmental audit or
investigation (collectively, "Actions") pending, or to the best of Seller's
knowledge, threatened or anticipated (a) against, related to or affecting
Seller, the Business or the Assets or (b) seeking to delay, limit or enjoin the
transactions contemplated by this Agreement. Seller is not in default with
respect to or subject to any judgment, order, writ, injunction or decree of any
court or governmental agency, and there are no unsatisfied judgments against
Seller, the Business or the Assets.
4.12 Labor Matters. Except as stated in Exhibit 4.12, Seller is not a party
-------------
to a labor agreement with respect to its employees with any labor organization,
union, group or association and there are no employee unions (nor any other
similar labor or employee organizations) under local statutes, custom or
practice. Seller has not experienced any attempt by organized labor or its
representatives to make Seller conform to demands of organized labor relating to
its employees or to enter into a binding agreement with organized labor that
would cover the employees of Seller.
4.13 Compliance with Law. Seller, the conduct of the Business and the
-------------------
operation of the Facilities have not violated and are in compliance with all
laws, statutes, ordinances, regulations, rules and orders of any foreign,
federal, state or local government and any other governmental department or
agency, and any judgment, decision, decree or order of any court or governmental
agency, department or authority, including without limitation Environmental
Laws, relating to the Assets, Facilities or Business or operations of Seller,
16
except where the violation or failure to comply, individually or in the
aggregate, would not have a Material Adverse Effect on the Facilities, the
Assets or the Business. Seller and the conduct of the Business and the
operation of the Facilities are in conformity with all energy, public utility,
zoning, building and health codes, regulations and ordinances, OSHA and
Environmental Laws and all other foreign, federal, state, and local governmental
and regulatory requirements, except where any nonconformity would not have a
Material Adverse Effect on the Facilities, the Assets or the Business. Seller
has not received any notice to the effect that, or otherwise been advised that,
it is not in compliance with any such statutes, regulations, rules, judgments,
decrees, orders, ordinances or other laws, and Seller has no reason to
anticipate that any existing circumstances are likely to result in violations of
any of the foregoing, which non-compliance or violation could, in any one case
or in the aggregate, have a Material Adverse Effect on the Facilities, the
Assets or the Business.
4.14 No Brokers. Neither Seller nor any of its respective officers,
----------
directors, employees, shareholders or Affiliates has employed or made any
agreement with any broker, finder or similar agent or any person or firm which
will result in an obligation to pay any finder's fee, brokerage fees or
commission or similar payment in connection with the transactions contemplated
hereby.
4.15 No Other Agreements to Sell the Assets. Neither Seller nor any of its
--------------------------------------
respective officers, directors, shareholders or Affiliates have any commitment
or legal obligation, absolute or contingent, to any other person or firm other
than the Buyer to sell, assign, transfer or effect a sale of any of the Assets
(other than inventory in the ordinary course of business), to sell or effect a
sale of a majority of the capital stock of Seller or to effect any merger,
consolidation, liquidation, dissolution or other reorganization of Seller.
4.16 Proprietary Rights.
------------------
4.16.1 Proprietary Rights. Schedule 4.16 lists all of Seller's federal,
------------------
state and foreign registrations of trademarks, service marks and other marks,
trade names or other trade rights, and all pending applications for any such
registrations, all other trademarks and other marks, trade names and other trade
rights or in which Seller has any interest whatsoever, and all other trade
secrets and other proprietary rights, whether or not registered, created or used
by or on behalf of Seller, in each case relating to the Business (collectively,
"Proprietary Rights"). The Proprietary Rights listed in Schedule 4.16 are all
those used by Seller in connection with the Business.
4.16.2 Royalties and Licenses. No person has a right to receive a
----------------------
royalty or similar payment in respect of any Proprietary Rights. Seller has
no licenses granted, sold or otherwise transferred by or to it or other
agreements to which it is a party, relating in whole or in part to any of the
Proprietary Rights.
4.16.3 Ownership and Protection of Proprietary Rights. Seller owns
----------------------------------------------
and has the sole right to use each of the Proprietary Rights. None of the
Proprietary Rights is involved in any pending or threatened litigation. Seller
has not received any notice of invalidity or infringement of any rights of
others with respect to such Proprietary Rights. Seller has taken all
reasonable and prudent steps to protect the Proprietary Rights from
infringement by any other firm, corporation, association or person. Seller's
use of the Proprietary Rights is not infringing upon or otherwise violating the
rights of any third party in or to such Proprietary Rights, nor has such
infringement been alleged by any third party. All of the Proprietary Rights
are valid and enforceable rights of Seller, will be quit-claimed to Buyer and
will not cease to be valid and in full force
17
and effect by reason of the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated by this
Agreement.
4.17 Tax Matters.
-----------
4.17.1 Filing of Tax Returns. Seller has timely filed with the
---------------------
appropriate taxing authorities all returns (including without limitation
information returns and other material information) in respect of Taxes
required to be filed through the date hereof and will timely file any such
returns required to be filed on or prior to the Closing Date. The returns and
other information filed are complete and accurate in all material respects.
Except as specified in Schedule 4.17, neither Seller, nor any group of which
Seller now or was a member, has requested any extension of time within which
to file returns (including without limitation information returns) in respect
of any taxes. Seller has delivered to Buyer complete and accurate copies of
Seller's federal, state and local tax returns for the years 1993, 1994, and
1995, and shall deliver to Buyer complete and accurate copies of Seller's
federal, state and local tax returns for 1996 when such returns are filed.
4.17.2 Payment of Taxes. All Taxes, in respect of periods beginning
----------------
before the EFFECTIVE DATE, have been timely paid, or will be timely paid, or an
adequate reserve has been established therefor, as set forth in Schedule 4.17 or
the Financial Statements, and Seller does not have any material liability for
Taxes in excess of the amounts so paid or reserves so established.
4.17.3 Audits, Investigations or Claims. Except as set forth in
--------------------------------
Schedule 4.17, the consolidated federal income tax returns and any required
state tax returns of Seller have been examined by the Internal Revenue Service
and any applicable state taxing authority for all periods to and including those
set forth in Schedule 4.17, and except to the extent shown therein, no material
deficiencies for Taxes, have been claimed, proposed or assessed by any taxing or
other governmental authority against Seller. Except as set forth in Schedule
4.17, there are no pending or, to the best of Seller's knowledge, threatened
audits, investigations or claims for or relating to any material additional
liability in respect of Taxes, and there are no matters under discussion with
any governmental authorities with respect to Taxes that in the reasonable
judgment of Seller, or its counsel, is likely to result in a material additional
liability for Taxes. Audits of federal, state, and local returns for Taxes by
the relevant taxing authorities have been completed for each period and set
forth in Schedule 4.17 and, except as set forth therein, Seller has not been
notified that any taxing authority intends to audit a return for any period.
Except as set forth in Schedule 4.17, no extension of a statute of limitations
relating to Taxes is in effect with respect to Seller.
4.17.4 Lien. There are no liens for Taxes (other than as could be
----
asserted for current Taxes not yet due and payable) on the Assets.
4.17.5 No Withholding. The transaction contemplated herein is not
--------------
subject to the tax withholding provisions of Section 3406 of the Code, or of
Subchapter A of Chapter 3 of the Code or of any other provision of law.
4.17.6 Tax-Exempt Use Property. None of the Assets is a "tax-exempt
-----------------------
use property" within the meaning of Section 168(h) of the Code.
18
4.18 Accounts Receivable. The accounts receivable reflected in the
-------------------
Interim Balance Sheet, and all accounts receivable arising since the Interim
Balance Sheet Date, represent bona fide claims of Seller against debtors for
sales, services performed or other charges arising on or before the date hereof,
and all the goods delivered and services performed which gave rise to said
accounts were delivered or performed in accordance with the applicable orders,
Contracts or customer requirements.
4.19 Inventory. All the Inventory is located at the Facilities. The
---------
values at which the Inventory is shown on the Interim Balance Sheet have been
determined in accordance with generally accepted accounting principles, each
consistently applied throughout the periods covered by the Financial Statements,
with adequate provisions or adjustments for excess Inventory, slow-moving
Inventory and Inventory obsolescence and shrinkage. Schedule 4.19 sets forth a
complete and accurate list of all Inventory as of the date hereof, subject to
adjustment on and after the Closing Date in accordance with Section 2.4.2.
4.20 Employees. Schedule 4.20 (i) contains a list of all employees of
---------
Seller, and their wage rates or salaries, as of the date of this Agreement, (ii)
sets forth the dates of employment for such employees, and (iii) contains a list
of each contract, plan, arrangement, policy, program or commitment, whether oral
or written, providing for insurance coverage (including without limitation any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
life, health, disability or accident benefits or for deferred compensation,
pension, profit-sharing, bonuses, stock options, stock appreciation rights,
stock purchases or other forms of incentive compensation or post-retirement
insurance, compensation or benefits (collectively, "Employee Plans"). Seller has
paid all benefits due to its employees at any time under its Employee Plans,
including without limitation all severance, accrued vacation, health care
continuation coverage and other benefits to which its employees may be entitled
as a result of the transactions contemplated hereby.
4.21 Compliance With Environmental Laws.
----------------------------------
4.21.1 Definitions. The following terms, when used in this Section
-----------
4.21, shall have the following meanings. Unless the context otherwise requires,
any of these terms may be used in the singular or the plural depending on the
reference.
4.21.1.1 "Seller". For purposes of this Section 4.21 only, the term
------
"Seller" shall include (i) all Affiliates of Seller, including without
limitation the Seller Stockholder, (ii) all partnerships, joint ventures and
other entities or organizations in which Seller was at any time or is a partner,
joint venturer, member or participant and (iii) all predecessor or former
corporations, partnerships, joint ventures, organizations, businesses or other
entities, whether in existence as of the date hereof or at any time prior to the
date hereof, the assets or obligations of which have been acquired or assumed by
Seller or to which Seller has succeeded.
4.21.1.2 "Release" shall mean and include any spilling, leaking,
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pumping, pouring, emitting, emptying, discharging, injecting, escaping,
migrating, leaching, dumping or disposing into the environment or the workplace
of any Hazardous Substance, and otherwise as defined in any Environmental Law.
4.21.1.3 "Hazardous Substance" shall mean any quantity of asbestos
-------------------
in any form, urea formaldehyde, PCBs, radon gas, crude oil or any fraction
thereof, all forms of natural gas, petroleum
19
products or by-products, any radioactive substance, any toxic, infectious,
reactive, corrosive, ignitible or flammable chemical or chemical compound and
any other hazardous substance, material or waste (as defined in or for purposes
of any Environmental Law), whether solid, liquid or gas.
4.21.2 Compliance With Environmental Laws. Except as set forth on
----------------------------------
Schedule 4.20, the Facilities have been owned, leased, operated and maintained
in compliance with all federal, state, local or foreign laws, statutes,
ordinances, regulations, rules, judgments, orders, notice requirements, court
decisions, agency guidelines or principles of law, restrictions or licenses,
which (i) regulate or relate to the protection or clean-up of the environment,
the use, treatment, storage, transportation, handling or disposal of hazardous,
toxic or otherwise dangerous substances, wastes or materials (whether gas,
liquid or solid), the preservation or protection of waterways, groundwater,
drinking water, air, wildlife, plants or other natural resources, or the health
and safety of persons or property, including without limitation protection of
the health and safety of employees or (ii) impose liability with respect to any
of the foregoing, including without limitation the Federal Water Pollution
Control Act (33 U.S.C. (S) 1251 et seq.), Resource Conservation & Recovery Act
-- ---
(42 U.S.C. (S) 6901 et seq.) ("RCRA"), Safe Drinking Water Act (21 U.S.C. (S)
-- ---
349, 42 U.S.C. (S)(S) 201, 300f), Toxic Substances Control Act (15 U.S.C. (S)
2601 et seq.), Clean Air Act (42 U.S.C. (S) 7401 et seq.), the Comprehensive
-- --- -- ---
Environmental Response, Compensation, and Liability Act (42 U.S.C. (S) 9601 et
--
seq.) ("CERCLA"), or any other similar federal, state or local law of similar
---
effect, each as amended (collectively, "Environmental Laws").
4.21.3 Facilities. The Facilities are, and at all times have been,
----------
owned, leased and operated in compliance with all Environmental Laws and in a
manner that will not give rise to any liability under any Environmental Laws.
4.21.4 Permits. Seller has, and at all times has had, all Permits
-------
required under any Environmental Law and the Facilities are, and at all times
have been, in compliance with all such Permits.
4.21.5 Permits Required. The consummation of any of the transactions
----------------
contemplated by this Agreement will not require an application for issuance,
renewal, transfer or extension of, or any other administrative action regarding,
any Permit required under any Environmental Law.
4.21.6 Notice of Violation. Seller has not received any notice at any
-------------------
time that it or the Facilities is or were claimed to be in violation of the
provisions of any Environmental Law or in non-compliance with the conditions of
any Permit, and there is no pending or threatened lawsuit, governmental or other
legal action to that effect.
4.21.7 Pending Actions. There is not now pending or threatened, nor
---------------
any basis for, nor has there ever been, any Action against Seller, nor any basis
for any Action, under any Environmental Law or otherwise with respect to any
Release or handling of any Hazardous Substance.
4.21.8 Judgments. There are no consent decrees, judgments, judicial or
---------
administrative orders or agreements with, or liens by, any governmental
authority or quasi-governmental entity relating to any Environmental Law which
regulate, obligate, bind or in any way affect Seller or the Facilities.
4.21.9 Hazardous Substances. There is not and has not been any
--------------------
Hazardous Substance used, generated, treated, stored, transported, disposed of,
handled or otherwise existing on, under, about or from
20
any Facility, except for quantities of any such Hazardous Substances stored or
otherwise held on, under or about any such Facility in full compliance with all
Environmental Laws and necessary for the operation of the Business.
4.21.10 Handling of Hazardous Substances. Seller has at all times used,
--------------------------------
generated, treated, stored, transported, disposed of or otherwise handled its
Hazardous Substances in compliance with all Environmental Laws and in a manner
that will not result in liability of Seller or Buyer under any Environmental
Law. Schedule 4.21 sets forth a complete list of all contractors and other
third parties who at any time have hauled, handled, stored, transported or
disposed of any Hazardous Substance (i) on behalf of Seller or the Business, or
(ii) generated by Seller or the Business, together with a complete list of all
dumpsites and other off-site locations at which such Hazardous Substances have
been disposed of.
4.21.11 Environmental Conditions. There are no present or past
------------------------
Environmental Conditions (as defined below) in any way relating to the Business
or Facilities. "Environmental Conditions" means the introduction into the soil,
groundwater or environment of the Facilities (through leak, spill, release,
discharge, escape, emission, dumping, disposal or otherwise) of any pollution,
including without limitation any contaminant, irritant or pollutant or Hazardous
Substance (whether or not upon the property of the Business and whether or not
such pollution constituted at the time thereof a violation of any Environmental
Law) as a result of which either Seller or, after the Closing, Buyer has or may
become liable to any person or federal, state, or local government or agency or
by reason of which any of the Assets may suffer or be subjected to any lien.
4.21.12 CERCLA or RCRA. No current or past use, generation, treatment,
--------------
transportation, storage, disposal or handling practice of Seller with respect to
any Hazardous Substance has or will result in any liability under the CERCLA or
RCRA or any state or local law of similar effect.
4.21.13 Storage Tank or Pipeline. Except as set forth on Schedule 4.21,
------------------------
there is not now and has not been at any time in the past any underground or
above-ground storage tank or pipeline at any Facility where the installation,
use, maintenance, repair, testing, closure or removal of such tank or pipeline
was not in compliance with all Environmental Laws and there has been no Release
from or rupture of any such tank or pipeline, including without limitation any
Release from or in connection with the filling or emptying of such tank.
4.21.14 Environmental Audits or Assessments. True, complete and correct
-----------------------------------
copies of the written reports, and all parts thereof, including any drafts of
such reports if such drafts are in the possession or control of Seller, of all
environmental audits or assessments which have been conducted at any Facility
within the past five years, either by Seller or any attorney, environmental
consultant or engineer engaged for such purpose, have been delivered to Buyer
and a list of all such reports, audits and assessments and any other similar
report, audit or assessment of which Seller has knowledge is included on
Schedule 4.21.
4.21.15 Indemnification Agreements. Seller is not a party, whether as a
--------------------------
direct signatory or as successor, assign or third party beneficiary, or
otherwise bound, to any lease or other Contract under which Seller is obligated
by or entitled to the benefits of, directly or indirectly, any representation,
warranty, indemnification, covenant, restriction or other undertaking concerning
Environmental Conditions.
21
4.21.16 Releases or Waivers. Seller has not released any other person
-------------------
from any claim under any Environmental Law or waived any rights concerning any
Environmental Condition.
4.21.17 Notices, Warnings and Records. Seller has given all notices and
-----------------------------
warnings, made all reports, and has kept and maintained all records required by
and in compliance with all Environmental Laws.
4.22 Liabilities. Seller has no liabilities or obligations (absolute,
-----------
accrued, contingent or otherwise) except (i) liabilities which are reflected on
the Interim Balance Sheet or which are not required under generally accepted
accounting principles to be reflected on the Interim Balance Sheet, (ii)
liabilities incurred in the ordinary course of the Business and consistent with
past practice since the Interim Balance Sheet Date, and (iii) liabilities
arising under Contracts identified in Schedule 4.6 to which Seller is a party.
4.23 Investment Representations. Seller and Seller Stockholder each
--------------------------
represent that any RSC Common Stock issued pursuant to this Agreement will be
acquired by Seller for its own account, for investment and with no intention of
distributing or reselling such RSC Common Stock or any part thereof in any
transaction that would be in violation of the securities laws of the United
States or any state thereof; provided that Seller may distribute any or all of
such RSC Common Stock to the Seller Stockholder upon liquidation of Seller.
Seller and the Selling Stockholder each represent that it or he is an
"accredited investor" within the meaning of Rule 501 under the Securities Act of
1933, as amended, and that, by reason of its or his business and financial
experience, it or he is capable of evaluating the merits and risks of the
acquisition of RSC Common Stock. Seller and the Seller Stockholder have reviewed
the SEC Documents referred to in Section 5.10 of this Agreement. Seller and the
Seller Stockholder hereby acknowledge that (i) shares of RSC Common Stock issued
pursuant to this Agreement may not be sold or otherwise transferred unless they
are registered under the Securities Act of 1933, as amended, or an exemption
from such registration is available; (ii) any sales of such securities made in
reliance upon Rule 144 promulgated under the Securities Act of 1933, as amended,
can be made only in accordance with the terms and conditions of Rule 144, and,
further, that if Rule 144 is not applicable, any resale of such securities under
circumstances in which Seller or the person through whom the sale is made may be
deemed to be an underwriter, as the term is defined in the Securities Act of
1933, as amended, may require compliance with some other exemption under the
Securities Act of 1933, as amended, or the rules and regulations of the SEC or
other governmental authority substituted therefor; and (iii) Buyer or RSC is
under no obligation to register any of the securities under the Securities Act
of 1933, as amended, or to comply with the terms and conditions of any exemption
thereunder, except as provided for in this Agreement.
The instruments evidencing the RSC Common Shares may bear a restrictive
legend in substantially the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"). These
securities have been acquired for investment and not with a view to
distribution or resale, and may not be sold, offered for sale, pledged or
hypothecated in the absence of an effective registration statement for such
shares under the Act or an opinion of counsel satisfactory in form and
content to the issuer that such registration is not required under such
Act."
If such a legal opinion indicates that the legend may be removed, Buyer
or RSC will substitute unlegended instruments for the instruments described in
the opinion. It is understood that the reference to
22
counsel in the legend above may include Seller's or Seller Stockholder's counsel
as may be reasonably satisfactory to RSC.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND RSC
-----------------------------------------------
Buyer hereby represents and warrants to Seller as follows, which
representations and warranties are, as of the date hereof, and will be, as of
the Closing Date, true and correct:
5.1 Organization of Buyer. Buyer is a corporation duly organized, validly
---------------------
existing and in good standing under the laws of the State of Mississippi.
5.2 Authorization. Buyer has all requisite corporate power and authority,
-------------
and has taken all corporate action necessary, to execute and deliver this
Agreement and the New Leases, to consummate the transactions contemplated hereby
and thereby and to perform its obligations hereunder and thereunder. This
Agreement has been duly executed and delivered by Buyer and is (and following
their execution and delivery by Buyer and Seller or the Seller Stockholder, as
applicable, each of the New Leases and Ancillary Agreements will be) a legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms.
5.3 No Conflict or Violation. Neither the execution, delivery or performance
------------------------
of this Agreement or the New Leases nor the consummation of the transactions
contemplated hereby or thereby, nor compliance by Buyer with any of the
provisions hereof or thereof, will (a) violate or conflict with any provision of
the Certificate of Incorporation or Bylaws of Buyer, or (b) violate any statute,
rule, regulation, ordinance, code, order, judgment, ruling, writ, injunction,
decree or award binding upon Buyer.
5.4 Consents and Approvals. No notice to, declaration, filing or
----------------------
registration with, or authorization, consent or approval of, or permit from, any
governmental or regulatory body or authority, or any other person or entity, is
required to be made or obtained by Buyer in connection with the execution,
delivery and performance of this Agreement or the New Leases and the
consummation of the transactions contemplated hereby or thereby, except (a) as
may be required by Buyer to operate the Business after the Closing, (b) as has
been obtained on or prior to the date hereof or (c) as set forth in Schedule
5.7.
Representations and Warranties of RSC. RSC represents and warrants to Seller
-------------------------------------
and the Seller Stockholder that:
5.5 Organization of RSC. RSC is a corporation duly organized, validly
-------------------
existing, and in good standing under the laws of the State of Delaware.
5.6 Authorization. At the Closing, the execution and delivery of this
-------------
Agreement and the consummation of the transactions contemplated hereby will be
duly authorized by all requisite corporate action on the part of RSC.
5.7 No Conflicts or Violations. The execution and delivery of this Agreement
--------------------------
and the consummation of the transactions contemplated hereby will not (i)
violate any provision of the Certificate of Incorporation or By-laws of RSC,
(ii) violate any applicable provision of law or regulation, order, injunction,
or decree,
23
or any other requirement of any governmental body or court relating to RSC or
its securities, property, or business, or (iii) (subject to RSC obtaining any
consent or approval required as a condition of Closing), violate, conflict
with, result in the breach or termination of, constitute a default under,
or result in the creation of any material lien, charge, or encumbrance upon
any of the properties or assets of RSC or any of its subsidiaries pursuant
to any agreement or instrument to which it or any of its subsidiaries is a
party, which violate, conflict, breach, termination, default, or creation would
have a material adverse effect on the business or financial condition of RSC and
it subsidiaries taken as a whole (an "RSC Material Adverse Effect").
5.8 Consents and Approvals. No notice to, declaration, filing or
----------------------
registration with, or authorization, consent or approval of, or permit
(collectively "Governmental Consents") from, any governmental or regulatory body
or authority, or any other person or entity, is required to be made or obtained
by RSC in connection with the execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement, except as required by the HSR Act and except for those Governmental
Consents the failure of which to make or obtain would not have an RSC Material
Adverse Effect.
5.9 RSC Common Stock. The Shares of RSC Common Stock to be issued pursuant
----------------
to this Agreement, when issued and delivered in accordance with the terms of
this Agreement, will be duly authorized, validly issued, fully paid, and
nonassessable and free of preemptive rights.
5.10 SEC Information Furnished Concerning RSC. RSC has filed with the
----------------------------------------
Securities and Exchange Commission ("SEC") those filings and reports required
pursuant to the Securities Exchange Act of 1934, as amended (the "SEC
Documents"). The audited consolidated financial statements for the year ended
December 31, 1996, contained within the SEC Documents have been prepared in
accordance with generally accepted accounting principles consistently applied
(except as may be otherwise noted therein) and fairly present the consolidated
financial position of RSC and its subsidiaries as of such date and the
consolidated results of operations of RSC and its subsidiaries for the year then
ended. As of their respective dates, the SEC Documents, including, but not
limited to, the financial statements contained therein, did not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
5.11 Litigation. Except as set forth in the SEC Documents, there are no
----------
suits, actions or administrative, arbitration, or other proceedings (including
proceedings concerning labor disputes or grievances) or governmental
investigations pending or, to the knowledge of RSC, threatened against RSC or
its properties or business that could reasonably be expected to have an RSC
Material Adverse Effect.
5.12 NASDAQ. The Shares of RSC Common Stock to be issued to Seller pursuant
------
to this Agreement have been approved for listing, subject to notice of issuance
on the NASDAQ National Market.
ARTICLE VI
COVENANTS OF SELLER, SELLER STOCKHOLDER AND BUYER
-------------------------------------------------
Buyer, Seller and the Seller Stockholder each covenant with the others as
follows:
24
6.1 Further Assurances. Upon the terms and subject to the conditions
------------------
contained herein, each of the parties hereto agrees, both before and after the
Closing, (i) to use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, (ii) to execute any documents, instruments or conveyances of any kind
which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder, and (iii) to cooperate with each other in
connection with the foregoing, including using their respective best efforts (A)
to obtain all necessary waivers, consents and approvals from other parties to
the Contracts to be assumed by Buyer; provided, however, that Buyer shall not be
required to make any payments, commence litigation or agree to modifications of
the terms thereof in order to obtain any such waivers, consents or approvals,
(B) to obtain all necessary Permits as are required to be obtained under any
federal, state, local or foreign law or regulations, (C) to effect all necessary
registrations and filings, including without limitation submissions of
information requested by governmental authorities, and (D) to fulfill all
conditions to this Agreement.
6.2 No Solicitation. From the date hereof through the Closing or the earlier
---------------
termination of this Agreement, each of Seller and the Seller Stockholder shall
not, and shall cause their Representatives (including without limitation
investment bankers, attorneys and accountants) not to, directly or indirectly,
enter into, solicit, initiate or continue any discussions or negotiations with,
or encourage or respond to any inquiries or proposals by, or participate in any
negotiations with, or provide any information to, or otherwise cooperate in any
other way with, any corporation, partnership, person or other entity or group,
other than Buyer and its Representatives concerning any sale of all or a portion
of the Assets or the Business, or of any shares of capital stock of Seller, or
any merger, consolidation, liquidation, dissolution or similar transaction
involving Seller (each such transaction collectively being referred to herein as
a "Proposed Acquisition Transaction"), except for the purchase by the Seller
Stockholder prior to Closing of all other shares of Seller from the other
shareholder. Seller and the Seller Stockholder shall not, directly or
indirectly, through any Representative or otherwise, solicit, initiate or
encourage the submission of any proposal or offer from any person or entity
relating to any Proposed Acquisition Transaction or participate in any
negotiations regarding, or furnish to any other person any information with
respect to the other party for the purposes of, or otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person to seek or effect a Proposed Acquisition
Transaction. Seller and the Seller Stockholder each hereby represents that it
is not now engaged in discussions or negotiations with any party (other than
Buyer) with respect to any of the foregoing. Seller shall promptly notify Buyer
(orally and in writing) of any offer, inquiry or contact with any person with
respect to a Proposed Acquisition Transaction, including the terms thereof and
the identity of the prospective purchaser or soliciting party.
6.3 Notification of Certain Matters. From the date hereof through the
-------------------------------
Closing, Seller shall give prompt notice to Buyer of (a) the occurrence, or
failure to occur, of any event which occurrence or failure would be likely to
cause any representation or warranty contained in this Agreement or in any
exhibit or schedule hereto to be untrue or inaccurate in any material respect
and (b) any failure of Seller, or any of its Affiliates, shareholders or
Representatives, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it under this Agreement or any exhibit or
schedule hereto; provided, however, that such disclosure shall not be deemed to
cure any breach of a representation, warranty, covenant or agreement or to
satisfy any condition.
25
6.4 Access to Information. From the date hereof through the Closing, Seller
---------------------
shall, and shall cause its Representatives to, afford the Representatives of
Buyer and its Affiliates complete access at all reasonable times to the Assets
and the Facilities for the purpose of inspecting and conducting appropriate
tests upon the same, and to the officers, employees, agents, attorneys,
accountants, properties, Books and Records and Contracts of Seller, and shall
furnish Buyer and its Representatives all financial, operating and other data
and information as Buyer or its Affiliates, through their respective
Representatives, may reasonably request, including but not limited to data
relating to operating procedures, workers' compensation history, legal, tax and
environmental, zoning and other legal compliance.
6.5 Conduct of Business. From the date hereof through the Closing, Seller
-------------------
shall, except as contemplated by this Agreement or as consented to by Buyer in
writing, operate the Business in the ordinary course of the Business and
substantially in accordance with past practice and will not take any action
inconsistent with this Agreement or with the consummation of the Closing.
Without limiting the generality of the foregoing, Seller shall not, except as
specifically contemplated by this Agreement:
6.5.1 enter into, extend, materially modify, terminate, renew, or fail
to renew any Contract, including any contract pursuant to which Seller has
rented Equipment, except in the ordinary course of the Business and
substantially in accordance with past practice;
6.5.2 sell, assign, transfer, convey, lease, mortgage, pledge or
otherwise dispose of or encumber any of the Assets, or any interests therein,
except in the ordinary course of the Business; or
6.5.3 fail to pay its accounts payable and any debts owed or obligations
due by it, or pay or discharge when due any liabilities, in the ordinary course
of the Business.
6.6 Employee Matters. Buyer shall hire all employees of the Business who
----------------
pass a physical examination and drug and alcohol abuse screening by a licensed
laboratory chosen by Buyer, and who otherwise meet Buyer's customary criteria
for employment, and Seller shall reasonably cooperate with Buyer in retaining
all such employees (the "Retained Employees"). Buyer agrees to give Retained
Employees credit for their time of employment with Seller with respect to their
seniority as an employee of Buyer. Seller shall be and remain solely responsible
for the payment of all benefits due to its employees at any time under its
Employee Plans, including without limitation all severance, accrued vacation,
health care continuation coverage and other benefits to which its employees may
be entitled as a result of the transactions contemplated hereby, whether or not
such employees are hired by Buyer. All Retained Employees will be at-will
employees of Buyer and may be terminated by Buyer in its sole discretion,
subject to the requirements of applicable laws governing employers and
employees, and will receive substantially the same total compensation as they
did when employed by Seller.
6.7 Environmental Assessments and Remediation.
-----------------------------------------
6.7.1 Buyer has retained Dames & Xxxxx (the "Consultant") to perform
Phase I environmental site assessments with respect to each of the Facilities.
Upon its availability, Buyer will deliver the final report of such assessments
to Seller. In the event any such assessment recommends the performance of
additional investigation (including, without limitation, Phase II environmental
site assessments), such additional investigation shall, if requested by Buyer,
be undertaken promptly and delivered to each of Seller and Buyer; provided that
no groundwater testing will be done in Iowa without Seller's consent. The
26
environmental assessments and investigations undertaken pursuant to this Section
6.7.1 are collectively referred to herein as the "Environmental Assessments."
Buyer shall be solely responsible for the cost of the Environmental Assessments.
6.7.2 In the event any of the Environmental Assessments reveals any
remediation work or other actions which must be completed in order to bring the
Facilities into compliance with applicable Environmental Laws or to eliminate
any potential environmental liability, the Consultant shall be directed to
prepare and to deliver to each of Seller and Buyer a written proposal setting
forth in reasonable detail the scope of required remediation and an estimate of
the cost of completing such remediation. For the purposes of Section 6.7,
"required remediation" shall mean any action necessary to (I) comply with any
governmental order, (ii) comply with any Environmental Law effective at the
Closing or (iii) eliminate a potential environmental liability (collectively the
"Remediation Standard"), as applicable to the Facilities or the operation
thereof by Seller as of the Closing Date. For the purposes of Section 6.7 and
with respect to any underground storage tanks at the Facility, "necessary
remediation" also shall include obtaining a closure letter from the governing
state agency confirming that the state agency has approved closure of the
underground storage tanks and will not take any further action related to any
liability associated with any underground storage tank at the Facilities.
6.7.3 Promptly upon completion of the Consultant's proposal referred to
in Section 6.7.2, Seller shall engage a reliable environmental engineering firm
reasonably acceptable to Buyer and authorized by any applicable federal, state,
or local law, policy, or regulation to perform any required remediation. Seller
shall use its best efforts to cause such required remediation to be completed on
or before the Closing Date, and Seller shall bear all costs of such required
remediation; provided that the completion of all such required remediation shall
be a condition to Buyer's obligations to consummate the transactions
contemplated by this Agreement. Buyer may, in its sole discretion, authorize
Seller to defer any portion of the required remediation which Seller and its
contractors are unable to complete prior to Closing, in which case Seller shall
cause the portion of the required remediation so deferred to be completed as
promptly as practicable, but in no event later than 60 days following Closing,
at Seller's sole expense. Buyer may monitor the performance of the required
remediation and application of the Remediation Standard, and at its election may
cause the Consultant to review the performance of the required remediation. If
Buyer directs the Consultant to undertake such review, the required remediation
shall be deemed completed only upon certification of its completion by the
Consultant. If, however, there is a dispute as to the performance of the
required remediation or the application of the Remediation Standard, any such
dispute shall be settled by a mutually agreed-upon environmental expert not
otherwise involved in the required remediation, whose determination shall be
final and binding on the parties.
6.7.4 Notwithstanding the foregoing, if Seller prefers not to do
recommended groundwater testing in Iowa or if Seller believes the "necessary
remediation" is uneconomic, Seller may elect instead to obtain a lease on, and
relocate the applicable portion of Seller's business to, a comparable site
reasonably acceptable to Buyer on substantially comparable economic terms to the
site being eliminated, all at Seller's expense.
6.8 Use of Name and Telephone Numbers. From and after Closing, upon filing
---------------------------------
of appropriate assumed name affidavits, Buyer will have the right to use the
name "Foxx Hy-Reach" or variations thereof in its operation of the Business.
Upon Closing, Seller shall assign to Buyer all of the telephone and facsimile
numbers currently used in the Business.
27
6.9 Certain Insurance Policies. At Closing, Seller will transfer the split-
--------------------------
dollar life insurance policies currently maintained by Seller on four of its
employees to such employees. Buyer will reimburse Seller or otherwise as Buyer
and Seller may agree, an amount equal to the aggregate amount of premiums
payable under such policies until they become self-funding, grossed up using a
method agreed upon between Buyer and Seller for any income taxes payable by such
employees as a result of such transfer, such amount to be determined and paid at
Closing.
6.10 Other Stockholder. Seller Stockholder has delivered to Buyer a copy of
-----------------
the agreement between Seller Stockholder and the other shareholder of Seller
regarding the purchase by Seller Stockholder of such other shareholder's stock.
Seller Stockholder will enforce such agreement, will not waive any of his rights
thereunder and will use his best efforts to purchase such shares prior to
Closing.
6.11 Schedules. Any Disclosure Schedule or any other schedule not delivered
---------
by Seller prior to execution of this Agreement will be delivered within five (5)
days thereafter.
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
----------------------------------
The obligations of Seller to consummate the transactions provided for
hereby are subject, in the discretion of Seller, to the satisfaction, on or
prior to the Closing Date, of each of the following conditions, any of which may
be waived by Seller:
7.1 Representations, Warranties and Covenants. All representations and
-----------------------------------------
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects at and as of the date of this Agreement and at and as of the
Closing Date, except as and to the extent that the facts and conditions upon
which such representations and warranties are based are expressly required or
permitted to be changed by the terms hereof, and Buyer shall have performed and
satisfied all agreements and covenants required hereby to be performed by it
prior to or on the Closing Date.
7.2 No Proceedings, Litigation or Laws. No Action by any governmental
----------------------------------
authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby and
which could reasonably be expected to materially damage Seller if the
transactions contemplated hereunder are consummated.
7.3 Assumption Document. Buyer shall have executed the Assumption Document.
-------------------
7.4 New Leases. Seller Stockholder or an entity controlled by the Seller
----------
Stockholder (as applicable) as lessor, and Buyer as lessee, shall have entered
into leases (the "New Leases") with respect to the Facilities in the form
attached as Exhibit 7.4.1 hereto.
28
7.5 Plan of Remediation. To the extent that any environmental remediation
-------------------
required pursuant to Section 6.7 has not been completed prior to Closing, Seller
shall approve of and proceed with any plan of remediation.
7.6 No Cessation of Trading. There shall have been no cessation of trading
-----------------------
of RSC's Common Stock on NASDAQ or a national securities exchange, and there
shall be no action, order or proceeding pending or, to RSC's knowledge,
threatened, by any regulatory agency to stop or investigate public trading of
RSC's Common Stock.
7.7 Acquisition of Stock. The Seller Stockholder shall acquire the 50% of
--------------------
the issued and outstanding capital stock of Seller currently not held by him.
7.8 Schedules. Buyer shall have approved in its sole discretion any portion
---------
of the Disclosure Schedule or the other schedule not delivered prior to
execution of this Agreement.
7.9 Opinion Letter of Buyer's Attorneys. Seller and Seller Stockholder shall
-----------------------------------
receive an opinion of Xxxxxx & Xxxxxxx, counsel for Buyer and RSC, dated as of
the Closing Date, in form and substance reasonably satisfactory to Seller and
the Seller Stockholder, to the effect that:
7.9.1 RSC has been duly incorporated and is validly existing and in
good standing under the laws of the State of Delaware, with corporate
power to own or lease its properties and to carry on its business as now
conducted;
[7.9.2 The execution, delivery and performance of this Agreement
and the consummation of the transaction contemplated by the Agreement
have been duly authorized by RSC, and the Agreement has been duly
executed and delivered by RSC.]
7.9.3 Assuming the due authorization, execution and delivery of the
Agreement by Buyer, the Agreement constitutes a legally valid and binding
obligation of Buyer or RSC, as applicable, enforceable against Buyer or
RSC in accordance with their terms, except as limited by (i) bankruptcy,
insolvency, reorganization, moratorium, or other similar laws relating to
creditors' rights generally or by equitable principles (whether
considered in an action at law or in equity), (ii) limitations imposed by
federal or applicable state law or equitable principles upon the
availability of specific performance, injunctive relief, or other
equitable remedies, or (iii) other customary limitations reasonably
satisfactory to Seller's and the Seller Stockholder's counsel;
7.9.4 RSC's Common Stock being delivered to Seller under the terms
of this Agreement have been duly authorized and reserved and, when
issued, will be validly issued, fully paid, and nonassessable;
7.9.5 Assuming the accuracy of the representations and warranties
in Section 4.23 of the Agreement, it is not necessary to register the RSC
Common Stock to be issued to Seller pursuant to the Agreement under the
Securities Act of 1933, as amended.
7.10 Buyer Corporate Documents. Buyer shall have delivered to Seller a copy
-------------------------
of its articles of incorporation certified by the Mississippi Secretary of
State, a good standing certificate dated no more than
29
one day prior to Closing by the Mississippi Secretary of State and a copy of the
resolutions adopted by Buyer in connection with this Agreement, certified by its
corporate secretary.
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
---------------------------------
The obligations of Buyer to consummate the transactions provided for
hereby are subject, in the discretion of Buyer, to the satisfaction, on or prior
to the Closing Date, of each of the following conditions, any of which may be
waived by Buyer:
8.1 Representations, Warranties and Covenants. All representations and
-----------------------------------------
warranties of Seller contained in this Agreement shall be true and correct in
all material respects at and as of the date of this Agreement and at and as of
the Closing Date, except as and to the extent that the facts and conditions upon
which such representations and warranties are based are expressly required or
permitted to be changed by the terms hereof, and Seller shall have performed and
satisfied all agreements and covenants required hereby to be performed by it
prior to or on the Closing Date.
8.2 Consents. All Permits and waivers necessary to the consummation of the
--------
transactions contemplated hereby and for the operation of the Business by Buyer
(including, without limitation, (a) all required third party consents to the
assignment of the Assumed Contracts to be assumed by Buyer and (b) all required
approvals of Buyer's lenders) shall have been obtained.
8.3 No Proceedings or Litigation. No Action by any governmental authority or
----------------------------
other person shall have been instituted or threatened which questions the
validity or legality of the transactions contemplated hereby and which could
reasonably be expected to damage Buyer materially if the transactions
contemplated hereby are consummated, including without limitation any Material
Adverse Effect on the right or ability of Buyer to own, operate, possess or
transfer the Assets after the Closing. There shall not be any statute, rule or
regulation that makes the purchase and sale of the Business or the Assets
contemplated hereby illegal or otherwise prohibited.
8.4 Opinion of Counsel. Seller shall have delivered to Buyer an opinion of
------------------
Xxxxxxx, Xxxxx & Xxxxxx, Attorneys, counsel to Seller and the Seller
Stockholder, dated as of the Closing Date, in form and substance reasonably
satisfactory to Buyer, to the effect that:
8.4.1 Incorporation. Seller has been duly incorporated and is validly
-------------
existing and in good standing under the laws of the State of Iowa and is
qualified to do business and in good standing as a foreign corporation in
Illinois;
8.4.2 Corporate Power and Authority. Seller has the necessary corporate
-----------------------------
power and authority to enter into this Agreement, the Ancillary Agreements and
the New Leases to which it is a party and to consummate the transactions
contemplated hereby and thereby and to own, lease and operate the Assets and its
other properties and to conduct the Business as presently conducted;
8.4.3 Corporate Action. The execution, delivery and performance of this
----------------
Agreement, the Ancillary Agreements and the New Leases to which an entity
controlled by Seller Stockholder is a party have
30
been duly authorized by all necessary corporate action of Seller, and this
Agreement and the New Leases have been duly executed and delivered by Seller or
such entity, as applicable; the approval of this Agreement by the stockholders
of Seller has been duly obtained in accordance with the provisions of Seller's
Articles of Incorporation and Bylaws and applicable law;
8.4.4 Obligation of Seller or Seller Stockholder. This Agreement, each
------------------------------------------
Ancillary Agreement and each New Lease constitutes a legally valid and binding
obligation of Seller or the Seller Stockholder, as applicable, enforceable
against Seller or the Seller Stockholder in accordance with their terms, except
as limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights generally or by equitable principles
(whether considered in an action at law or in equity), (ii) limitations imposed
by federal or applicable state law or equitable principles upon the availability
of specific performance, injunctive relief or other equitable remedies, or (iii)
other customary limitations reasonably satisfactory to Buyer's counsel;
8.4.5 No Breach. Neither the execution and delivery of this Agreement,
---------
the Ancillary Agreements or the New Leases by Seller or the Seller Stockholder,
as applicable, nor the consummation of the transactions contemplated hereby or
thereby will (i) violate or conflict with any provision of the Articles of
Incorporation or Bylaws of Seller, (ii) breach, or cause a default under, any
term or provision of any material contract listed on a schedule to such opinion
to which contract Seller or the Seller Stockholder are a party or by which the
Assets are bound, or (iii) violate any judgment, decree, injunction, writ or
order applicable to Seller or the Seller Stockholder;
8.4.6 No Permits Required. No Permit of, or filing with, any
-------------------
governmental authority or, to the best knowledge of such counsel, any other
person, is required for the execution and delivery of this Agreement, the
Ancillary Agreements or the New Leases by Seller or the Seller Stockholder, as
applicable, or the consummation by Seller or the Seller Stockholder of the
transactions contemplated hereby or thereby, except as set forth in this
Agreement or the schedules or exhibits hereto;
8.4.7 No Actions Pending. Except as set forth in this Agreement or the
------------------
schedules hereto, to the best knowledge of such counsel, no Action is pending or
threatened (i) against Seller or the Assets or the Business, (ii) against any of
the officers or directors of Seller as such, (iii) in which Seller is a
plaintiff, or (iv) which questions the validity or legality of the transactions
contemplated hereby;
8.4.8 No Violation of Law. Neither the execution and delivery of this
-------------------
Agreement, the Ancillary Agreements or the New Leases by an entity controlled by
the Seller Stockholder, as applicable, nor the consummation of the transactions
contemplated hereby or thereby will violate or result in a failure to comply
with any statute, law, ordinance, regulation, rule or order of any federal,
state or local government or any other governmental department or agency, or any
judgment, decree or order of any court, applicable to Seller, the Seller
Stockholder, such entity or the Business; and, to the best knowledge of such
counsel, Seller has all licenses, franchises and other authority required to
conduct the Business as it is now being conducted;
8.4.9 Transfer and Assignment. The documents to be delivered by
-----------------------
Seller at the Closing to effect the transfer and assignment to Buyer of all
right, title and interest in and to the Assets are effective to do so, subject
to (i) the effects of bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to creditors' rights generally and equitable
principles (whether considered in an action at law or in
31
equity), (ii) limitations imposed by federal, Iowa or Illinois law or equitable
principles upon the availability of specific performance, injunctive relief or
other equitable remedies, or (iii) other customary limitations reasonably
satisfactory to Buyer's counsel;
8.4.10 Other Opinions. Such other opinions, subject to the limitations
--------------
set forth above, as any lender to Buyer may reasonably request.
In rendering such opinions, such counsel may rely as to factual matters
upon certificates and assurances of public officials and officers of Seller. In
addition, such opinions may be subject to such additional qualifications and
exceptions as are reasonably acceptable to counsel to Buyer.
8.5 Certificates. Seller shall furnish Buyer with such certificates of its
------------
officers and others to evidence compliance with the conditions set forth in this
Article VIII as may be reasonably requested by Buyer.
8.6 New Leases. Selling Shareholder (or an entity owned by him),lessor, and
----------
Buyer as lessee, shall have entered into the New Leases with respect to the
Facilities in the form attached as Exhibit 7.4.1 hereto.
8.7 Employment and Non-Competition Agreements. Buyer and Xxxxxx X. Xxxxxx
-----------------------------------------
shall have entered into an Employment and Non-Competition Agreement in the form
attached as Exhibit 8.7.2 hereto.
8.8 Conveyancing Documents; Release of Encumbrances. Seller shall have
-----------------------------------------------
executed and delivered each of documents described in Section 3.2 hereof so as
to effect the transfer and assignment to Buyer of all right, title and interest
in and to the Assets and Seller shall have filed (where necessary) and delivered
to Buyer all documents necessary to release the Assets from all Encumbrances
(except for Encumbrances specifically accepted by Buyer under Section 4.4),
which documents shall be in a form reasonably satisfactory to Buyer's counsel.
8.9 Material Changes. Since the Interim Balance Sheet Date, there shall not
----------------
have been any Material Adverse Change with respect to the Business or the
Assets.
8.10 Corporate Documents. Buyer shall have received from Seller resolutions
-------------------
adopted by its board of directors and shareholders approving this Agreement, the
Ancillary Agreements and the New Leases to which it will be a party, and the
transactions contemplated hereby and thereby. Buyer's board of directors shall
have approved this Agreement and the transactions and agreements contemplated
hereby.
8.11 Due Diligence Review. Buyer and its Representatives shall have
--------------------
conducted a due diligence review of Seller's Books and Records, Financial
Statements, and other records and accounts of the Business, and in the sole
discretion of Buyer, Buyer shall be satisfied on the basis of such review that
there has been no breach of the representations and warranties or the pre-
closing covenants of Seller made pursuant to this Agreement. Such review shall
have no effect whatsoever on the liability of Seller to Buyer under this
Agreement or otherwise for breach of any representations, warranties, or
covenants of Seller or hereunder.
8.12 Permits. Buyer shall have obtained or been granted the right to use
-------
all Permits necessary to its operation of the Business.
32
8.13 Completion of Environmental Remediation. Seller or its agents shall
---------------------------------------
have completed any "required remediation" or shall have approved any plan of
remediation within the meaning of Section 6.7, subject to the procedures set
forth in Section 6.7 with respect to the certification of such completion and
the resolution of any disputes relating thereto.
8.14 Noncompetition Agreement. Each former shareholder of Seller shall have
------------------------
entered into a Noncompetition Agreement with Seller, assignable to Buyer, on
mutually acceptable terms.
8.15 Financing. Buyer shall have obtained all lender approvals and financing
---------
to pay the cash portion of the purchase price.
8.16 Tax Clearance Certificate. Seller shall provide to Buyer with a
-------------------------
clearance certificate or similar document(s) that may be required by any state
taxing authority in order to relieve Buyer of any obligation to withhold any
portion of the Purchase Price.
8.17 Audit. Ernst & Young shall have completed their audit of Seller's
-----
financial statements for 1995 and 1996 and shall have issued an unqualified
opinion thereon.
8.18 Dealerships. The manufacturers for whom Seller acts as a dealer or
-----------
distributor shall have given any required consents.
ARTICLE IX
RISK OF LOSS; CONSENTS TO ASSIGNMENT
------------------------------------
9.1 Risk of Loss. From the date hereof through the Closing, all risk of loss
------------
or damage to the property included in the Assets shall be borne by Seller, and
thereafter shall be borne by Buyer. If any portion of the Assets is destroyed
or damaged by fire or any other cause on or prior to the Closing, other than
use, wear or loss in the ordinary course of the Business, Seller shall give
written notice to Buyer as soon as practicable after discovery of such damage or
destruction, the amount of insurance, if any, covering such Assets and the
amount, if any, which Seller is otherwise entitled to receive as a consequence.
Prior to the Closing, Buyer shall have the option, which shall be exercised by
written notice to Seller within ten (10) calendar days after receipt of Seller's
notice or if there is not ten (10) calendar days prior to the Closing, as soon
as practicable prior to the Closing, of (a) accepting such Assets in their
destroyed or damaged condition in which event Buyer shall be entitled to the
proceeds of any insurance or other proceeds payable with respect to such loss
and to such indemnification for any uninsured portion of such loss pursuant to
Section 10.3, and the full Purchase Price shall be paid for such Assets, (b)
excluding such Assets from this Agreement, in which event the Purchase Price
shall be reduced by the amount allocated to such Assets, as mutually agreed
between the parties or (c) terminating this Agreement in accordance with Section
11.1. If Buyer accepts such Assets, then after the Closing, any insurance or
other proceeds shall belong, and shall be assigned to, Buyer without any
reduction in the Purchase Price; otherwise, such insurance proceeds shall belong
to Seller.
9.2 Consents to Assignment. Anything in this Agreement to the contrary
----------------------
notwithstanding, this Agreement shall not constitute an agreement to assign any
Contract, lease, license, sales order, purchase order or any claim or right or
any benefit arising thereunder or resulting therefrom if an attempted assignment
thereof, without the consent of a third party thereto, would constitute a breach
thereof or in any
33
way adversely affect the rights of Buyer thereunder. If such consent is
not obtained, or if an attempted assignment thereof would be ineffective or
would affect the rights thereunder so that Buyer would not receive all such
rights, Seller will cooperate with Buyer, in all reasonable respects, to provide
to Buyer the benefits under any such Contract, lease, license, sales order,
purchase order, claim or right including without limitation enforcement for the
benefit of Buyer of any and all rights of Seller against a third party thereto
arising out of the breach or cancellation by such third party or otherwise.
ARTICLE X
ACTIONS BY SELLER AND BUYER
---------------------------
AFTER THE CLOSING
-----------------
10.1 Books and Records; Payment of Liabilities.
-----------------------------------------
10.1.1 Books and Records. Each party agrees that it will cooperate with
-----------------
and make available to the other party, during normal business hours, all Books
and Records, information and employees (without substantial disruption of
employment) retained and remaining in existence after the Closing which are
necessary or useful in connection with any tax inquiry, audit, investigation or
dispute, any other litigation or investigation of any type, any product
liability claim or any other matter requiring any such Books and Records,
information or employees for any reasonable business purpose.
10.1.2 Cooperation and Records Retention. Seller and Buyer shall (i)
---------------------------------
each provide the other with such assistance as may reasonably be requested by
any of them in connection with the preparation of any return, audit, or other
examination by any taxing authority or judicial or administrative proceedings
relating to liability for Taxes, (ii) each retain and provide the other with any
records or other information that may be relevant to such return, audit or
examination, proceeding or determination, and (iii) each provide the other with
any final determination of any such audit or examination, proceeding, or
determination that affects any amount required to be shown on any tax return of
the other for any period. Without limiting the generality of the foregoing,
Buyer and Seller shall each retain, until the applicable statutes of limitations
(including any extensions) have expired, copies of all tax returns, supporting
work schedules, and other records or information that may be relevant to such
returns for all tax periods or portions thereof ending on or before the Closing
Date and shall not destroy or otherwise dispose of any such records without
first providing the other party with a reasonable opportunity to review and copy
the same.
10.1.3 Payment of Liabilities. Following the Closing Date, Seller
----------------------
shall pay promptly when due all of the debts and liabilities of Seller relating
to the Business other than Assumed Liabilities, including without limitation any
accounts payable not assumed by Buyer and any liability of Seller for Taxes;
provided, however, this covenant shall not apply to that portion (or all) of any
debt that Seller is disputing in good faith and gives prompt notice to Buyer of
such dispute.
10.2 Survival of Representations, Etc. All statements contained in any
---------------------------------
certificate, schedule, exhibit, instrument or conveyance delivered by or on
behalf of the parties pursuant to this Agreement or in connection with the
transactions contemplated hereby shall be deemed to be representations and
warranties by the parties hereunder. The representations, warranties, covenants
and agreements of Seller and Buyer contained herein shall survive the
consummation of the transactions contemplated hereby and the Closing
34
Date, without regard to any investigation made by any of the parties hereto.
Except as provided in this sentence, all such representations and warranties and
all claims and causes of action with respect thereto (other than the provisions
of Sections 4.17, 4.21 and this Section 10.2, and all claims and causes of
action with respect thereto) shall terminate upon expiration of two years after
the Closing Date. The representations and warranties in Sections 4.17 and 4.21
shall survive until the expiration of the applicable statute of limitations
(with extensions) with respect to the matters addressed in such sections. The
termination of the representations and warranties provided herein shall not
affect the rights of a party in respect of any Claim made by such party in a
writing received by the other party prior to the expiration of the applicable
survival period provided herein.
10.3 Indemnifications.
----------------
10.3.1 By Seller. Regardless of Seller's or Selling Stockholder's
---------
knowledge of the existence of an Indemnifiable Event, as defined below, Seller
and Selling Stockholder shall indemnify, defend, save and hold harmless Buyer,
its Affiliates and subsidiaries, and its respective Representatives, from and
against any and all claims, damages, costs, losses (including without limitation
diminution in value), Taxes, liabilities, judgments, penalties, fines,
obligations, lawsuits, deficiencies, demands and expenses (whether or not
arising out of third-party claims), including without limitation interest,
penalties, costs of mitigation, losses in connection with any Environmental Law
(including without limitation any clean-up or remedial action), lost profits and
other losses resulting from any shutdown or curtailment of operations, damages
to the environment, attorneys' fees, experts' fees and all amounts paid in
investigation, defense or settlement of any of the foregoing (herein,
"Damages"), incurred in connection with, arising out of, resulting from or
incident to (i) any breach of any representation or warranty, or the inaccuracy
of any representation or warranty, made by Seller or Selling Stockholder in or
pursuant to this Agreement; (ii) any breach of any covenant or agreement made by
Seller or Selling Stockholder in or pursuant to this Agreement; (iii) any
Excluded Liability; (iv) any liability of Seller imposed upon Buyer by reason of
Buyer's status as transferee of the Business or the Assets; (v) any liability
arising under any Environmental Law on account of the conduct of Seller or prior
owners or users of the Facilities or other persons, or on account of the
operation of the Business or the Facilities, or related to any Environmental
Condition existing, in each case on or at any time prior to the Closing Date; or
(vi) any Post-Closing Environmental Liability (collectively, the "Indemnifiable
Events"). Without limiting the generality of the foregoing, the indemnification
provided herein, insofar as it relates to any Environmental Law or Environmental
Condition, shall specifically cover costs incurred in connection with any
investigation of site conditions (excepting the cost of the Environmental
Assessments) or any clean-up, remedial, removal or restoration work required by
any federal, state or local governmental agency or political subdivision or by
the provisions of Section 6.7 hereof. For purposes of this Section 10.3.1,
"Post-Closing Environmental Liability" shall mean any liability imposed on Buyer
arising out of or related to events occurring on or after the Closing Date and
prior to the completion of all required remediation in accordance with Section
6.7 hereof, and resulting from any Environmental Condition described in the
Environmental Assessments, including without limitation those Environmental
Conditions described therein but not identified as being in violation of any
Environmental Law and those related to the absence of any Permits, but excluding
any liability to the extent such liability results from the negligent acts or
willful misconduct of Buyer or its Representatives. In addition to Seller's
obligations pursuant to Sections 6.7.3 and 6.7.4 of this Agreement, and without
limiting the generality of the foregoing, Seller shall specifically indemnify
Buyer, and Seller shall assume and discharge all Damages arising out of the pre-
Closing activities that are associated with: (i) any Release or threatened
Release of any Hazardous Substance that occurred or was in existence on the
Facilities on or
35
before the Closing Date; (ii) any offsite disposal, migration or Release of any
Hazardous Substance that has resulted or will result in the future as a result
of activities that occurred on or before the Closing Date; and (iii) any
removal, remediation or other activities taken with respect to the soil, surface
water or groundwater. Without limiting the foregoing, Seller shall also
specifically indemnify Buyer, and Seller shall assume and discharge all Damages
arising out of the pre-Closing operation, ownership, and use of the underground
storage tanks ("USTs") and aboveground storage tanks ("ASTs") (defined below),
including but not limited to: (I) any Release or threatened Release of any
Hazardous Substance that occurred or was in existence on the Facilities on or
before the closing date; (ii) any offsite disposal, migration or Release of any
Hazardous Substance that has resulted or will result in the future as a result
of activities that occurred on or before the closing date; and (iii) any
removal, remediation or other activities taken with respect to the soil, surface
water or groundwater.
10.3.2 By Buyer. Buyer shall indemnify and save and hold harmless
--------
Seller, its Affiliates and its Representatives from and against any and all
Damages incurred in connection with, arising out of, resulting from or incident
to (I) any breach of any representation or warranty, or the inaccuracy of any
representation or warranty, made by Buyer in or pursuant to this Agreement; (ii)
any breach of any covenant or agreement made by Buyer in or pursuant to this
Agreement; or (iii) any Assumed Liability insofar as such Assumed Liability
arises from and after the Closing.
10.3.3 Cooperation. The indemnified party shall cooperate in all
-----------
reasonable respects with the indemnifying party and such attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom; provided, however, that the indemnified party may, at its own
cost, participate in the investigation, trial and defense of such lawsuit or
action and any appeal arising therefrom. The parties shall cooperate with each
other in any notifications to insurers.
10.3.4 Defense of Claims. If a claim for Damages (a "Claim") is to be
-----------------
made by a party entitled to indemnification hereunder against the indemnifying
party, the party claiming such indemnification shall, subject to Section 10.2,
give written notice (a "Claim Notice") to the indemnifying party as soon as
practicable after the party entitled to indemnification becomes aware of any
fact, condition or event which may give rise to Damages for which
indemnification may be sought under this Section 10.3. If any lawsuit or
enforcement action is filed against any party entitled to the benefit of
indemnity hereunder, written notice thereof shall be given to the indemnifying
party as promptly as practicable (and in any event within fifteen (15) calendar
days after the service of the citation or summons). The failure of any
indemnified party to give timely notice hereunder shall not affect rights to
indemnification hereunder, except to the extent that the indemnifying party
demonstrates actual damage caused by such failure. After such notice, if the
indemnifying party shall acknowledge in writing to the indemnified party that
the indemnifying party shall be obligated under the terms of its indemnity
hereunder in connection with such lawsuit or action, then the indemnifying party
shall be entitled, if it so elects, (I) to take control of the defense and
investigation of such lawsuit or action, (ii) to employ and engage attorneys of
its own choice (which shall be reasonably acceptable to the indemnified party)
to handle and defend the same, at the indemnifying party's cost, risk and
expense unless the named parties to such action or proceeding include both the
indemnifying party and the indemnified party and the indemnified party has been
advised in writing by counsel that there may be one or more legal defenses
available to such indemnified party that are different from or additional to
those available to the indemnifying party, in which case the indemnifying party
shall engage separate counsel (reasonably acceptable to the indemnified party)
to represent the indemnified party, and (iii) to compromise
36
or settle such claim, which compromise or settlement shall be made only with the
written consent of the indemnified party, such consent not to be unreasonably
withheld; provided, however, if the remediation or resolution of any such Claim
will occur on or at any Facility or is reasonably expected to have a Material
Adverse Effect on the indemnified party's business operations, then,
notwithstanding the foregoing, the indemnified party shall be entitled to
control such remediation or resolution, including without limitation to take
control of the defense and investigation of such lawsuit or action, to employ
and engage attorneys of its own choice to handle and defend the same, at the
indemnifying party's cost, risk and expense, and to compromise or settle such
Claim. If the indemnifying party fails to assume the defense of such claim
within fifteen (15) calendar days after receipt of the Claim Notice, the
indemnified party against which such claim has been asserted will (upon
delivering notice to such effect to the indemnifying party) have the right to
undertake, at the indemnifying party's cost and expense, the defense, compromise
or settlement of such claim on behalf of and for the account and risk of the
indemnifying party. In the event the indemnified party assumes the defense of
the claim, the indemnified party will keep the indemnifying party reasonably
informed of the progress of any such defense, compromise or settlement. The
indemnifying party shall be liable for any settlement of any action effected
pursuant to and in accordance with this Section 10.3 and for any final judgment
(subject to any right of appeal), and the indemnifying party agrees to indemnify
and hold harmless an indemnified party from and against any Damages by reason of
such settlement or judgment.
10.3.5 Buyer's Right of Offset. Anything in this Agreement to the
-----------------------
contrary notwithstanding, Buyer may withhold and set off any amount as to which
Seller is obligated to indemnify Buyer pursuant to this Section 10.3 against (i)
the portion of the Holdback Amount allocable to the resolution of Seller's
indemnification obligations under this Section 10.3 and (ii) any other amounts
otherwise due Seller or Selling Stockholder.
10.3.6 Limitations. Neither Buyer nor Seller shall be liable to the
-----------
other under this Section 10.3 for any Damages until the amount otherwise due the
party being indemnified exceeds $50,000 in the aggregate, in which case such
indemnifying party will be liable to the indemnified party for all such amounts,
including the first $50,000. Notwithstanding the preceding sentence, this
limitation shall not apply with respect to Damages arising out of a breach of a
representation or warranty contained in Sections 4.17 or 4.21 or the covenants
contained in Section 10.1.3 or, with respect to Buyer, any Assumed Contracts,
Assumed Leases or Assumed Liabilities. Buyer shall give Seller prompt notice of
any Damages that might apply toward the first $50,000.
10.3.7 Liability and Remedies, etc. Except as set forth below, no
----------------------------
individual Representative of any party shall be personally liable for any
Damages under the provisions contained in this Section 10.3. Nothing herein
shall relieve either party of any liability to make any payment expressly
required to be made by such party pursuant to this Agreement. The term
"Damages" as used in this Section 10.3 is not limited to matters asserted by
third parties against Seller or Buyer, but includes Damages incurred or
sustained by Seller or Buyer in the absence of third party claims. Payments by
Buyer of amounts for which Buyer is indemnified hereunder, and payments by
Seller of amounts for which Seller is indemnified, shall not be a condition
precedent to recovery. Seller's obligation to indemnify Buyer, and Buyer's
obligation to indemnify Seller, shall not limit any other rights, including
without limitation rights of contribution which either party may have under
statute or common law. Buyer and Seller agree and acknowledge that offset
against the Holdback Amount shall not be Buyer's exclusive method of receiving
indemnification from Seller pursuant to Section 10.3; rather, Buyer will have
all other remedies provided by law or in this Agreement. The Seller
37
Stockholder shall be jointly and severally liable with Seller with respect to
all indemnification obligations of Seller under this Section 10.3.
10.4 Payment of Holdback Amount. On the first anniversary of the Closing
--------------------------
Date, if Buyer has not delivered a Claim Notice to Seller, the remaining portion
of the Holdback Amount allocable to the resolution of Seller's indemnification
obligations under Section 10.3 shall be paid promptly to Seller. Subject to
Section 2.4.3, if Buyer has delivered one or more Claim Notices to Seller on or
before the first anniversary of the Closing Date and has exercised its right of
offset pursuant to Section 10.3.5, or has not then determined the appropriate
amount to be offset, Buyer shall pay to Seller promptly after the first
anniversary of the Closing Date an amount equal to remaining allocable portion
of the Holdback Amount less any amounts offset against it pursuant to Section
10.3.5 and an amount reasonably estimated by Buyer to cover any unresolved
claims. As promptly as practicable after the first anniversary of the Closing
Date, Buyer shall determine the amount to be retained by it in satisfaction of
any such unresolved claims and submit the balance, if any, to Seller.
10.5 Taxes. Subject to Section 2.7, Seller shall pay, or cause to be paid,
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when due all Taxes for which Seller is or may be liable or that are or may
become payable with respect to all taxable periods ending on or prior to the
Closing Date.
10.6 Further Action. After the Closing, Seller shall take all actions
--------------
reasonably necessary to effect the conveyance of the Assets to Buyer free and
clear of all Encumbrances (except for Encumbrances specifically accepted by
Buyer under Section 4.4) and otherwise required by Buyer's lenders.
10.7 Registration Rights. Seller shall, with respect to the RSC Common
-------------------
Stock issued pursuant to this Agreement, have the registration rights set forth
as Annex A to RSC's Stockholder's Agreement as in effect on the date of this
Agreement.
ARTICLE XI
MISCELLANEOUS
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11.1 Termination.
-----------
11.1.1 Termination. This Agreement may be terminated at any time prior
-----------
to Closing:
11.1.1.1 By mutual written consent of Buyer and Seller;
11.1.1.2 By Buyer or Seller if the Closing shall not have occurred
on or before June 30, 1997; provided, however, that this provision shall not be
-------- -------
available to Buyer if Seller has the right to terminate this Agreement under
Section 11.1.1.4, and this provision shall not be available to Seller if Buyer
has the right to terminate this Agreement under Section 11.1.1.3;
11.1.1.3 By Buyer if there is a material breach of any
representation or warranty set forth in Article IV hereof or any covenant or
agreement to be complied with or performed by Seller pursuant to the terms of
this Agreement or the failure of a condition set forth in Article VIII to be
satisfied
38
(and such condition is not waived in writing by Buyer) on or prior to the
Closing Date, or the occurrence of any event which results or would result in
the failure of a condition set forth in Article VIII to be satisfied on or prior
to the Closing Date, provided that Buyer may not terminate this Agreement prior
to the Closing if Seller has not had an adequate opportunity to cure such
failure; or
11.1.1.4 By Seller if there is a material breach of any
representation or warranty set forth in Article V hereof or of any covenant or
agreement to be complied with or performed by Buyer pursuant to the terms of
this Agreement or the failure of a condition set forth in Article VII to be
satisfied (and such condition is not waived in writing by Seller) on or prior to
the Closing Date, or the occurrence of any event which results or would result
in the failure of a condition set forth in Article VII to be satisfied on or
prior to the Closing Date; provided that Seller may not terminate this Agreement
--------
prior to the Closing Date if Buyer has not had an adequate opportunity to cure
such failure.
11.1.2 In the Event of Termination. In the event of termination of this
---------------------------
Agreement:
11.1.2.1 Each party will redeliver all documents, work papers and
other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same; and
11.1.2.2 No party hereto shall have any liability or further
obligation to any other party to this Agreement, except as stated in Sections
11.7, 11.10, 11.1.2.1 or this Section 11.1.2.2, and except for any willful
breach of this Agreement occurring prior to the proper termination of this
Agreement. The foregoing provisions shall not limit or restrict the availability
of specific performance or other injunctive relief to the extent that specific
performance or such other relief would otherwise be available to a party
hereunder.
11.2 Assignment. Neither this Agreement nor any of the rights or
----------
obligations hereunder may be assigned by any party without the prior written
consent of the other parties; except that Buyer may, without such consent,
assign all such rights to any lender as collateral security and assign all such
rights and obligations to a wholly-owned subsidiary (or a partnership controlled
by Buyer) or subsidiaries of Buyer or to a successor in interest to Buyer or to
any entity to whom the Business may after the Closing be sold by Buyer which
shall assume all obligations and liabilities of Buyer under this Agreement.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, and no other person shall have any right, benefit or obligation under
this Agreement as a third party beneficiary or otherwise.
11.3 Notices. All notices, requests, demands and other communications which
-------
are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given when received if personally delivered; when
transmitted if transmitted by telecopy, electronic or digital transmission
method; the day after it is sent, if sent for next day delivery to a domestic
address by recognized overnight delivery service (e.g., Federal Express); and
----
upon receipt, if sent by certified or registered mail, return receipt requested.
In each case notice shall be sent to:
39
If to Seller or the Seller Stockholder, addressed to:
Xx. Xxxxxx X. Xxxxxx
00 Xxxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
with a copy to
Xxxxxx X. Xxxxxx, Esq
Xxxxxxx, Xxxxx & Xxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Fax (000) 000-0000
40
If to Buyer or RSC, addressed to:
XXXXXX XXXXX EQUIPMENT COMPANY
c/o Rental Service Corporation
00000 X. Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Fax (602) 905 - 3402
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
11.4 Choice of Law. This Agreement shall be construed, interpreted and the
-------------
rights of the parties determined in accordance with the laws of the State of
Illinois (without reference to the choice of law provisions thereof), except
with respect to matters of law concerning the internal corporate affairs of any
corporate entity which is a party to or the subject of this Agreement, and as to
those matters the law of the jurisdiction under which the respective entity
derives its powers shall govern.
11.5 Entire Agreement; Amendments and Waivers. This Agreement, together
----------------------------------------
with all exhibits and schedules hereto, constitutes the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. No
amendment, supplement, modification or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
11.6 Multiple Counterparts. This Agreement may be executed in one or more
---------------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.7 Expenses. Except as otherwise specified in this Agreement, each party
--------
hereto shall pay its own legal, accounting, out-of-pocket and other expenses
incident to this Agreement and to any action taken by such party in preparation
for carrying this Agreement into effect.
11.8 Invalidity. In the event that any one or more of the provisions
----------
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
11.9 Titles. The titles, captions or headings of the Articles, Sections
------
and subsections herein are inserted for convenience of reference only and are
not intended to be a part of or to affect the meaning or interpretation of this
Agreement.
11.10 Publicity; Confidentiality. Neither Buyer nor Seller shall issue any
--------------------------
press release or make any public statement regarding, or disclose to any third
party (except as required by law or legal process, and
41
except to each party's lenders if such lenders so require) any of the terms of,
the transactions contemplated hereby, without prior written approval of the
other party, provided that Buyer and Seller may, if they mutually agree, issue
or make an appropriate press release or public announcement after the Closing
Date. In the event that this Agreement is terminated prior to Closing, Buyer
agrees to return to Seller all correspondence and documents furnished by Seller
or its Representatives, and agrees not to disclose or use for its own purposes
any confidential or proprietary information of Seller that has been furnished to
it by Seller or its Representatives.
11.11 Cumulative Remedies. All rights and remedies of either party hereto
-------------------
are cumulative of each other and of every other right or remedy such party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
11.12 Consent of Seller Stockholder. In accordance with Iowa law, Seller
-----------------------------
Stockholder, by executing this Agreement, waives the notice of the meeting and
the right to receive any materials otherwise required to be furnished at a
meeting and consents to the transfer of the Assets to Buyer and the execution,
delivery and consummation of this Agreement. Seller Stockholder additionally
agrees to execute and deliver such separate certificates or instruments as may
be requested by Seller or Buyer to give effect to the waivers and consents given
herein.
11.13 Arbitration. Any controversy arising after the Closing out of or
-----------
relating to this Agreement (including, without limitation, pursuant to Section
2.4 or 10.3, but excluding for purposes of this Section 11.13, the leases,
employment and non-competition agreements attached as Exhibits hereto), or
relating to the breach hereof, shall be settled by arbitration conducted in
Moline, Illinois in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect (except as otherwise expressly
provided in this Agreement). The award rendered by the arbitrator(s) shall be
final and judgment upon the award rendered by the arbitrator(s) may be entered
upon it in any court having jurisdiction thereof. The arbitrator(s) shall
possess the powers to issue mandatory orders and restraining orders in
connection with such arbitration. The expenses of the arbitration shall be
borne by the losing party unless otherwise allocated by the arbitrator(s). The
agreement to arbitrate shall be specifically enforceable under the prevailing
arbitration law. During the continuance of any arbitration proceedings, the
parties shall continue to perform their respective obligations under this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be duly executed on their respective behalf, by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
XXXXXX XXXXX EQUIPMENT COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
------------------------
Its: V.P. & Secretary
------------------------------------
RENTAL SERVICE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
------------------------
Its: V.P. & Secretary
------------------------------------
BRUTE EQUIPMENT, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
-------------------------
Its: President
-------------------------------------
SELLER STOCKHOLDER:
/s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx
43
