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EXHIBIT 10.23
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of May
30, 1998 by and among NATIONSRENT, INC., a Delaware corporation ("Nations"); THE
X. XXXXX CO., INC., a Michigan corporation ("Company"); Xxxxx X. Xxxxx and
Xxxxxxxx X. Xxxxx who together constitute all of the shareholders of the Company
(collectively, the "Shareholder"). Certain other capitalized terms used herein
are defined in Article XI and throughout this Agreement.
RECITALS
The Shareholder owns the capital stock of and operates a construction
equipment rental business in Michigan (the "Business"). The parties have
determined that it is in their respective best interests for Nations to acquire
all of the issued and outstanding shares (the "Shares") of common stock, $1.00
par value, of the Company (the "Company Common Stock") which are held by the
Shareholder upon the terms and subject to the conditions set forth in this
Agreement.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE
1.1 THE ACQUISITION. Upon the terms and subject to the conditions of this
Agreement, at the Closing (as defined below), the Shareholder will sell, assign,
transfer, convey and deliver to Nations and Nations shall purchase, acquire and
accept from the Shareholder, the Shares, free and clear of any liens (the
"Acquisition").
1.2 CONSIDERATION.
(a) As consideration for the Shares, Nations shall, upon the terms and
subject to the conditions of this Agreement, remit to Shareholder (the "Purchase
Price"): (i) at the Closing (as hereinafter defined), Four Million Five Hundred
Thousand Dollars ($4,500,000.00) (the "Closing Payment") in immediately
available funds net of: (A) Indebtedness (as defined in Section 3.10) of the
Company; (B) the cash surrender value of the Life Insurance Policy listed on
Schedule 5.9(b); (C) Officer and Shareholder loans; and (D) expenses of the
transactions contemplated hereby
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incurred by the Shareholder including but not limited to accounting and legal
expenses; (ii) at the Closing, a Promissory Note from Nations in the original
principal amount of Two Million Five Hundred Thousand Dollars ($2,500,0000.00)
the form of which is provided as Exhibit A attached hereto (the "Promissory
Note"); and (iii) during the three year period after the Closing Date (the
"Earn-Out Period"), fifteen (15%) of the net earnings before interest payments,
income taxes and corporate charges determined in accordance with GAAP,
consistently applied by NationsRent for operations located in Michigan which are
managed by Company Management or Xxxxx X. Xxxxx (the "Earn-Out Amount"),
provided, however, in no event shall the aggregate Earn-Out Amount payable
hereunder be less than $500,000 (the "Minimum Earn-Out Amount") or more than
$1,500,000. The Promissory Note shall be subject to the set off rights, and upon
conversion, hold back rights described in Section 8.3.
(b) The Earn-Out Amount shall be calculated annually but shall be
aggregated during the Earn-Out Period. By way of illustration a loss in year one
shall be aggregated with income earned in years two and three to determine the
aggregate Earn-Out Amount. The Minimum Earn-Out Amount shall be paid to
Shareholder in three installments after each of the first three anniversaries of
the Closing Date (the "Minimum Earn-Out Payment Dates"). One third of the
Minimum Earn-Out Amount or $166,666,66 shall be paid to Shareholder on each
Minimum Earn-Out Payment Date. All remaining amounts due shall be paid as soon
as practicable after the calculation of the Earn-Out Amount and after the third
Earn-Out Payment Date. The calculation of the Earn-Out Amounts shall be provided
in writing to Shareholder. The Earn-Out Amount shall be paid after the third
Earn-Out Payment Date and ten (10) days from the date of such notice unless
Shareholder provides written notice to Nations that Shareholder is contesting
the calculation of the Earn-Out Amount setting forth in detail the amounts
contested. If no written objection is received by Shareholder during the ten-day
period, then such Earn-Out Amount shall be final and binding on the parties
hereto. In the event Shareholder gives written notice of any objection to the
calculation of the Earn-Out Amount, Nations and Shareholder shall use all
reasonable efforts to resolve the dispute within thirty (30) days following
receipt by Nations of written notice from Shareholder. If the parties are unable
to reach an agreement within such thirty (30) day period, the matter shall be
submitted to a mutually agreed upon certified public accounting firm for
determination which shall be final and binding upon the Parties hereto. Nations
and Shareholder shall contribute equally to all costs (including fees and
expenses charged by the selected firm of certified public accountants) in
connection with the resolution of any such dispute.
1.3 THE CLOSING. Subject to the terms and conditions of this Agreement,
the consummation of the Acquisition (the "Closing") shall take place as promptly
as practicable (and in any event within five (5) business days) after
satisfaction or waiver of the conditions set forth in Articles VI and VII, at
the offices of Company's counsel, Kemp, Klein, Xxxxxxx & Endelman, Troy,
Michigan, or such other time and place as the parties may otherwise agree (the
"Closing Date").
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1.4 PROCEDURE AT THE CLOSING. At the Closing, the Shareholder shall
deliver to Nations certificates representing the Shares duly endorsed for
transfer, and Nations shall pay the Purchase Price to Shareholder in accordance
with Section 1.2. In addition, at the Closing the Company and the Shareholder
shall deliver to Nations the documents, certificates, opinions, consents and
letters required by Article VI, and Nations shall deliver to the Company and the
Shareholder the documents and certificates required by Article VII.
1.5 ACCOUNTING TREATMENT. The parties hereto acknowledge and agree that
the transactions contemplated hereby are intended to be treated as a purchase by
Nations for accounting purposes.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF NATIONS
As a material inducement to the Shareholder to enter into this Agreement
and to consummate the transactions contemplated hereby, Nations makes the
following representations and warranties:
2.1 CORPORATE STATUS. Nations is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
2.2 CORPORATE POWER AND AUTHORITY. Nations has the corporate power and
authority to execute and deliver this Agreement, Promissory Note, Shareholder
Employment Agreement, Company Management Employment Agreement, Registration
Rights Agreement and the Leases (as such terms are hereinafter defined)
(collectively, the "Transaction Documents") to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby. Nations has taken all action necessary to authorize the execution and
delivery of the Transaction Documents, the performance of its obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby.
2.3 ENFORCEABILITY. Each of the Transaction Documents have been duly
executed and delivered by Nations and each Transaction Document constitute (or
will constitute) a legal, valid and binding obligation of Nations, enforceable
against Nations in accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity.
2.4 FINANCIAL STATEMENTS. Nations has delivered to the Shareholder the
financial statements for the Company for the period ending December 31, 1997,
prepared by the Company. Such financial statements fairly present the financial
position of Nations as of the dates indicated.
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2.5 NO VIOLATION. The execution and delivery of the Transaction Documents
by Nations, the performance by Nations of its obligations hereunder and the
consummation by Nations of the transactions contemplated by the Transaction
Documents will not (i) contravene any provision of the certificate of
incorporation or bylaws of Nations, (ii) violate or conflict with any law,
statute, ordinance, rule, regulation, decree, writ, injunction, judgment or
order of any Governmental Authority or of any arbitration award which is either
applicable to, binding upon or enforceable against Nations, (iii) conflict with,
result in any breach of, or constitute a default (or an event which would, with
the passage of time or the giving of notice or both, constitute a default)
under, or give rise to a right to terminate, amend, modify, abandon or
accelerate, any Contract which is applicable to, binding upon or enforceable
against Nations, (iv) result in or require the creation or imposition of any
Lien upon or with respect to any of Nations assets, or (v) require the consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Authority, any court or tribunal or any other Person.
2.6 NO COMMISSIONS. Nations has not incurred any obligation for any
finder's or broker's or agent's fees or commissions or similar compensation in
connection with the transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE SHAREHOLDER
As a material inducement to Nations to enter into this Agreement and to
consummate the transactions contemplated hereby, the Company and the
Shareholder, jointly and severally, make the following representations and
warranties to Nations:
3.1 CORPORATE STATUS. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Michigan and has
the requisite power and authority to own or lease its properties and to carry on
its business as now being conducted. The Company is legally qualified to do
business as a foreign corporation in each state where the nature of its
properties and the conduct of its business requires such qualification.
3.2 POWER AND AUTHORITY. The Company has the power and authority to
execute and deliver the Transaction Documents, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The Company has taken all action necessary to authorize the
execution and delivery of the Transaction Documents, the performance of its
obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby. The Shareholder has the requisite competence,
power and authority to execute and deliver the Transaction Documents, to perform
his obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.
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3.3 ENFORCEABILITY. This Agreement has been duly executed and delivered
and the Transaction Documents at Closing will be duly executed and delivered by
each of the Company, the Shareholder, and the Company Management, as the case
may be, and each Transaction Document constitutes (or will constitute) the
legal, valid and binding obligation of each of them, enforceable against each of
them in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity.
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3.4 CAPITALIZATION.
(a) Schedule 3.4(a) sets forth, with respect to the Company, (i) the
number of authorized shares of each class of its capital stock, and (ii) the
number of issued and outstanding shares of each class of its capital stock.
There are no outstanding or authorized rights, options, warrants, convertible
securities, subscription rights, conversion rights, exchange rights or other
agreements or commitments of any kind that could require the Company to issue or
sell any shares of its capital stock (or securities convertible into or
exchangeable for shares of its capital stock). There are no outstanding stock
appreciation, phantom stock, profit participation (other than the Company's
Profit Sharing Plan) or other similar rights with respect to the Company. There
are no proxies, voting rights or other agreements or understandings with respect
to the voting or transfer of the capital stock of the Company. The Company is
not obligated to redeem or otherwise acquire any of its outstanding shares of
capital stock.
(b) Schedule 3.4(b) sets forth, with respect to the Company, the name,
address and federal taxpayer identification number of, and the number of
outstanding shares of each class of its capital stock owned of record and/or
beneficially by, each shareholder of the Company as of the close of business on
the date of this Agreement. As of the date hereof, the Shareholder is the holder
of all issued and outstanding shares of capital stock of the Company, and the
Shareholder owns such shares free and clear of all Liens, restrictions and
claims of any kind.
3.5 NO VIOLATION. Except as set forth on Schedule 3.5, the execution and
delivery of this Agreement by the Company and the Shareholder, the performance
by the Company and the Shareholder of their respective obligations hereunder and
the consummation by the Company and the Shareholder of the transactions
contemplated by this Agreement will not (i) contravene any provision of the
articles of incorporation or bylaws of the Company, (ii) violate or conflict
with any law, statute, ordinance, rule, regulation, decree, writ, injunction,
judgment or order of any Governmental Authority or of any arbitration award
which is either applicable to, binding upon or enforceable against the Company
or the Shareholder, (iii) conflict with, result in any breach of, or constitute
a default (or an event which would, with the passage of time or the giving of
notice or both, constitute a default) under, or give rise to a right to
terminate, amend, modify, abandon or accelerate, any Contract which is
applicable to, binding upon or enforceable against the Company or the
Shareholder, (iv) result in or require the creation or imposition of any Lien
upon or with respect to any of the Company Assets (as defined in Section 3.14),
or (v) require the consent, approval, authorization or permit of, or filing with
or notification to, any Governmental Authority, any court or tribunal or any
other Person.
3.6 SUBSIDIARIES. The Company does not own, directly or indirectly, any
outstanding voting securities of or other interests in, or control, any other
corporation, partnership, joint venture or other business entity.
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3.7 NO COMMISSIONS. Neither the Company nor the Shareholder have incurred
any obligation for any finder's or broker's or agent's fees or commissions or
similar compensation in connection with the transactions contemplated hereby.
3.8 FINANCIAL STATEMENTS. The Company has delivered to Nations (i) the
financial statements of the Company for the year ending March 31, 1997,
including the notes thereto, reviewed by Xxxxxx Xxxxxxx, C.P.A., and (ii) the
financial statements of the Company for the nine month and eleven month periods
ended December 31,1997 and February 28, 1998, and for the year ended March 31,
1998, including the notes thereto, compiled by Xxxxxx X. Xxxxxxx and Associates
(the financial statements of the Company dated December 31, 1997, February 28,
1998 and March 31, 1998 are collectively referred to as the "Financial
Statements"), copies of which are attached to Schedule 3.8 hereto. The balance
sheet dated as of December 31, 1997 of the Company included in the Financial
Statements are referred to herein as the "Current Balance Sheet." The Financial
Statements fairly present the financial position of the Company each of the
balance sheet dates and the results of operations for the periods covered
thereby, and have been prepared in accordance with GAAP consistently applied
throughout the periods indicated except as indicated in Schedule 3.8. The books
and records of the Company fully and fairly reflect all transactions,
properties, assets and liabilities of the Company. There are no extraordinary or
material non-recurring items of income or expense during the periods covered by
the Financial Statements and the balance sheets included in the Financial
Statements do not reflect any writeup or revaluation increasing the book value
of any assets, except as specifically disclosed in the notes thereto. The
Financial Statements reflect all adjustments necessary for a fair presentation
of the financial information contained therein.
3.9 CHANGES SINCE THE CURRENT BALANCE SHEET. Except for Schedule 3.9,
since the date of the Current Balance Sheet, the Company has operated in the
ordinary course of business and has not (i) issued any capital stock or other
securities; (ii) made any distribution of or with respect to its capital stock
or other securities or purchased or redeemed any of its securities; (iii) paid
any bonus to or increased the rate of compensation of any of its officers or
salaried employees or amended any other terms of employment of such persons;
(iv) sold, leased or transferred any of its properties or assets other than in
the ordinary course of business consistent with past practice; (v) made or
obligated itself to make capital expenditures out of the ordinary course of
business consistent with past practice; (vi) made any payment in respect of its
liabilities other than in the ordinary course of business consistent with past
practice; (vii) incurred any obligations or liabilities (including any
indebtedness) or entered into any transaction or series of transactions
involving in excess of $10,000 in the aggregate out of the ordinary course of
business, except for this Agreement and the transactions contemplated hereby;
(viii) suffered any theft, damage, destruction or casualty loss, not covered by
insurance and for which a timely claim was filed, in excess of $10,000 in the
aggregate; (ix) suffered any extraordinary losses (whether or not covered by
insurance); (x) waived, canceled, compromised or released any rights having a
value in excess of $10,000 in the aggregate; (xi) made or adopted any change in
its accounting practice or policies; (xii) made any adjustment to its books and
records other than in respect of the conduct of its business activities in the
ordinary course
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consistent with past practice; (xiii) entered into any transaction with any
Affiliate; (xiv) entered into any employment agreement; (xv) terminated, amended
or modified any agreement involving an amount in excess of $10,000; (xvi)
imposed any security interest or other Lien on any of its assets other than in
the ordinary course of business consistent with past practice; (xvii) delayed
paying any accounts payable which is due and payable except to the extent being
contested in good faith; (xviii) made or pledged any charitable contribution in
excess of $1,000; (xix) entered into any other transaction or been subject to
any event which has or may have a Material Adverse Effect on the Company or
agreed to do or authorized any of the foregoing.
3.10 LIABILITIES OF THE COMPANY. The Company has no liabilities or
obligations, whether accrued, absolute, contingent or otherwise, except (a) to
the extent reflected or taken into account in the Current Balance Sheet and not
heretofore paid or discharged, (b) liabilities incurred in the ordinary course
of business consistent with past practice since the date of the Current Balance
Sheet (none of which relates to breach of contract, breach of warranty, tort,
infringement or violation of law, or which arose out of any action, suit, claim,
governmental investigation or arbitration proceeding), and (c) normal accruals,
reclassifications, and audit adjustments which would be reflected on an audited
financial statement and which could not be material in the aggregate. Schedule
3.10(a) sets forth any liability or indebtedness for borrowed money by the
Company or secured by the Assets, as defined in Section 3.14(a) (the
"Indebtedness"). Schedule 3.10(b) sets forth certain trade or other borrowings
of the Company which will be assumed by Nations plus amounts borrowed after
December 31, 1997 to fund incremental equipment purchases all of which shall not
be deemed Indebtedness for purposes of this Agreement.
3.11 LITIGATION. Except as set forth on Schedule 3.11, there is no action,
suit, or other legal or administrative proceeding or governmental investigation
pending, threatened, and to the knowledge of the Shareholder and the Company
anticipated or contemplated against, by or affecting the Company or the
Shareholder, or which question the validity or enforceability of this Agreement
or the transactions contemplated hereby, and to the knowledge of the Shareholder
and the Company there is no basis for any of the foregoing. During the
three-year period prior to the date hereof, there has been no action, suit or
other legal or administrative proceeding or governmental investigation against,
by or affecting the Company or the Shareholder in which the amount in question
exceeded $10,000. There are no outstanding orders, decrees, stipulations or
agreements issued by any Governmental Authority in any proceeding or agreed to
by the Company or the Shareholder to which the Company or the Shareholder are or
were a party which have not been complied with in full or which continue to
impose any obligations on the Company or the Shareholder or which may have a
Material Adverse Effect on the Company or the Shareholder.
3.12 ENVIRONMENTAL MATTERS.
(a) The Company is and has at all times been in full compliance with
all Environmental Laws (as defined in clause (g) below) governing its business,
operations, properties
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and assets, including, without limitation: (i) all requirements relating to the
Discharge (as defined in clause (g) below) and Handling (as defined in clause
(g) below) of Hazardous Substances (as defined in clause (g) below); (ii) all
requirements relating to notice, record keeping and reporting; (iii) all
requirements relating to obtaining and maintaining Licenses (as defined in
clause (g) below) for the ownership of its properties and assets and the
operation of its business as presently conducted, and (iv) all applicable writs,
orders, judgements, injunctions, governmental communications, decrees,
informational requests or demands issued pursuant to, or arising under, any
Environmental Laws.
(b) There are no (and to the knowledge of the Shareholder and the
Company there is no basis for any) non-compliance orders, warning letters,
notices of violation (collectively, "Notices"), claims, suits, actions,
judgments, penalties, fines, or administrative or judicial investigations or
proceedings (collectively, "Proceedings") pending or threatened against or
involving the Company or its business, operations, properties, or assets, issued
by any Governmental Authority or third party with respect to any Environmental
Laws or Licenses issued to the Company thereunder in connection with, related to
or arising out of the ownership by the Company of its properties or assets or
the operation of the Business, which have not been resolved or which would
impose any obligation, burden or continuing liability on Nations in the event
that the transactions contemplated by this Agreement are consummated, or which
could have a Material Adverse Effect on the Company.
(c) The Company has not Handled or Discharged, nor has it at any time
allowed or arranged for any third party to Handle or Discharge, Hazardous
Substances to, at or upon: (i) any location other than a site lawfully permitted
to receive such Hazardous Substances; (ii) any real property currently or
previously owned or operated by the Company; or (iii) any site which, pursuant
to any Environmental Laws, (x) has been placed on the National Priorities List
or its state equivalent; or (y) the United States Environmental Protection
Agency or the relevant state agency or other Governmental Authority has notified
the Company that such Governmental Authority has proposed or is proposing to
place on the National Priorities List or its state equivalent. There has not
occurred, nor is there presently occurring, a Discharge, or threatened
Discharge, of any Hazardous Substance on, into or beneath the surface of, or
adjacent to, any real property currently or previously owned or operated by the
Company in an amount requiring a notice or report to be made to a Governmental
Authority or in violation of any applicable Environmental Laws.
(d) Schedule 3.12 identifies the operations and activities, and
locations thereof, which have been conducted or are being conducted by the
Company on any real property currently or previously owned or operated by the
Company which have involved the Handling or Discharge of Hazardous Substances.
(e) Except as set forth on Schedule 3.12, the Company does not use,
nor has it used, any Aboveground Storage Tanks (as defined in clause (g) below)
or Underground Storage
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Tanks (as defined in clause (g) below), and there are not now nor have there
ever been any Underground Storage Tanks beneath any real property currently or
previously owned or operated by the Company that are required to be registered
under applicable Environmental Laws.
(f) Schedule 3.12 identifies (i) all environmental audits,
assessments or occupational health studies undertaken by the Company or its
agents or any Governmental Authority or third party, relating to or affecting
the Company or any real property currently or previously owned or operated by
the Company; (ii) the results of any ground, water, soil, air or asbestos
monitoring undertaken by the Company or its agents or any Governmental Authority
or third party, relating to or affecting the Company or any real property
currently or previously owned or operated by the Company which indicate the
presence of Hazardous Substances at levels requiring a notice or report to be
made to a Governmental Authority or in violation of any applicable Environmental
Laws; (iii) all material written communications between the Company and any
Governmental Authority arising under or related to Environmental Laws; and (iv)
all outstanding citations issued under OSHA, or similar state or local statutes,
laws, ordinances, codes, rules, regulations, orders, rulings, or decrees,
relating to or affecting the Company or any real property currently or
previously owned or operated by the Company.
(g) For purposes of this Section 3.12, the following terms shall have
the meanings
ascribed to them below:
"Aboveground Storage Tank" shall have the meaning ascribed to such
term in Section 6901 et seq., as amended, of RCRA, or any applicable state
or local statute, law, ordinance, code, rule, regulation, order ruling, or
decree governing Aboveground Storage Tanks.
"Discharge" means any manner of spilling, leaking, dumping,
discharging, releasing or emitting, as any of such terms may further be
defined in any Environmental Law, into or through any medium including,
without limitation, ground water, surface water, land, soil or air.
"Environmental Laws" means all federal, state, regional or local
statutes, laws, rules, regulations, codes, orders, plans, injunctions,
decrees, rulings, and changes or ordinances or judicial or administrative
interpretations thereof, or similar laws of foreign jurisdictions where
the Company conducts business, whether currently in existence or hereafter
enacted or promulgated, any of which govern (or purport to govern) or
relate to pollution, protection of the environment, public health and
safety, air emissions, water discharges, hazardous or toxic substances,
solid or hazardous waste or occupational health and safety, as any of
these terms are or may be defined in such statutes, laws, rules,
regulations, codes, orders, plans, injunctions, decrees, rulings and
changes or ordinances, or judicial or administrative interpretations
thereof, including, without limitation: the Comprehensive Environmental
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Response, Compensation and Liability Act of 1980, as amended by the
Superfund Amendment and Reauthorization Act of 1986, 42 U.S.C. ss.9601, et
seq. (collectively "CERCLA"); the Solid Waste Disposal Act, as amended by
the Resource Conservation and Recovery Act of 1976 and subsequent
Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. ss.6901 et seq.
(collectively "RCRA"); the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. ss.1801, et seq. (the "Hazardous Materials
Transportation Act"); the Clean Water Act, as amended, 33 U.S.C. ss.1311,
et seq. (the "Clean Water Act"); the Clean Air Act, as amended (42 U.S.C.
ss.7401-7642) (the "Clean Air Act"); the Toxic Substances Control Act, as
amended, 15 U.S.C. ss.2601 et seq. (the "Toxic Substances Control Act");
the Federal Insecticide, Fungicide, and Rodenticide Act as amended, 7
U.S.C. ss.136-136y ("FIFRA"); the Emergency Planning and Community
Right-to-Know Act of 1986 as amended, 42 U.S.C. ss.11001, et seq. (Title
III of XXXX) ("EPCRA"); and the Occupational Safety and Health Act of
1970, as amended, 29 U.S.C. ss.651, et seq. ("OSHA").
"Handle" means any manner of generating, accumulating, storing,
treating, disposing of, transporting, transferring, labeling, handling,
manufacturing or using, as any of such terms may further be defined in any
Environmental Law, of any Hazardous Substances or Waste.
"Hazardous Substances" shall be construed broadly to include any
toxic or hazardous substance, material, or waste, and any other
contaminant, pollutant or constituent thereof, whether liquid, solid,
semi-solid, sludge and/or gaseous, including without limitation,
chemicals, compounds, by-products, pesticides, asbestos containing
materials, petroleum or petroleum products, and polychlorinated biphenyls,
the presence of which requires investigation or remediation under any
Environmental Laws or which are or become regulated, listed or controlled
by, under or pursuant to any Environmental Laws, including, without
limitation, RCRA, CERCLA, the Hazardous Materials Transportation Act, the
Toxic Substances Control Act, the Clean Air Act, the Clean Water Act,
FIFRA, EPCRA and OSHA, or any similar state statute, or any future
amendments to, or regulations implementing such statutes, laws,
ordinances, codes, rules, regulations, orders, rulings, or decrees, or
which has been or shall be determined or interpreted at any time by any
Governmental Authority to be a hazardous or toxic substance regulated
under any other statute, law, regulation, order, code, rule, order, or
decree.
"Licenses" means all licenses, certificates, permits, approvals and
registrations.
"Underground Storage Tank" shall have the meaning ascribed to such
term in Section 6901 et seq., as amended, of RCRA, or any applicable state
or local statute, law, ordinance, code, rule, regulation, order ruling, or
decree governing Underground Storage Tanks.
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3.13 REAL ESTATE. The Company does not own any parcels of real property.
Schedule 3.13 sets forth (a) a list of all leases, licenses or similar
agreements ("Real Property Leases" ) copies of which have previously been
furnished to Nations), (b) the lessor and lessee thereof and the date and term
of each of such leases, (c) the legal description, if known, including street
address, of each property covered thereby (the "Leased Premises"), and (d) a
brief description (including size and function) of the principal improvements
and buildings thereon. The Real Property Leases are in full force and effect and
have not been amended, and no party thereto is in default or breach under any
such Lease. No event has occurred which, with the passage of time or the giving
of notice or both, would cause a breach of or default by the Company under any
of such leases and there is no breach or anticipated breach by any other party
to such leases. With respect to each of the Leased Premises: the Company has
valid leasehold interests or other rights of use and occupancy in the Leased
Premises, free and clear of any Liens on such leasehold interests or other
rights of use and occupancy, or any covenants, easements or title defects known
to or created by the Company, except as do not affect the occupancy or uses of
such properties; the portions of the buildings located on the Leased Premises
that are used in the business of the Company are within the property setback and
building lines of the respective property, are in good repair and condition,
normal wear and tear excepted, and are in the aggregate sufficient to satisfy
the Company' respective normal business activities as conducted thereat; each of
the Leased Premises (a) has direct access to public roads or access to public
roads by means of a perpetual access easement, such access being sufficient to
satisfy the current and reasonably anticipated normal transportation
requirements of the Company' respective business as presently conducted at such
parcel; and (b) is served by all utilities in such quantity and quality as are
sufficient to satisfy the current normal business activities as conducted at
such parcel; and the Company has not received notice of (a) any condemnation
proceeding with respect to any portion of the Leased Premises or any access
thereto and no such proceeding is contemplated by any Governmental Authority; or
(b) any special assessment which may affect any of the Leased Premises and no
such special assessment is contemplated by any Governmental Authority.
3.14 GOOD TITLE TO AND CONDITION OF ASSETS. Except as set forth on
Schedule 3.14(a), the Company has, and at the Closing will have, good and
marketable title to its Assets, as hereinafter defined, with full power to sell,
transfer and assign the same free and clear of any Lien. The Assets and the
Leased Premises constitute, in the aggregate, all of the assets and properties
necessary for the conduct of the Business in the manner in which and to the
extent to which such Business is currently being conducted. Assets means all of
the properties and assets of the Company, including the Leased Premises, whether
personal or mixed, tangible or intangible, wherever located. The Assets are in
good operating condition, normal wear and tear excepted, and have been
maintained in accordance with all applicable specifications and warranties. All
inventory of rental equipment of the Company set forth on Schedule 3.14(b)
hereto and all inventory of merchandise set forth in Schedule 3.14(c) hereto,
consists of a quality and quantity usable, rentable, or salable in the ordinary
course of business of the Company, except for obsolete items and items of
below-standard quality, all of which have been written off, written down or
adequately reserved against to their net realizable
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value in the Current Balance Sheet. All such inventory not written off has been
recorded at the lower of cost or net realizable value, and depreciated in
accordance with an accelerated cost recovery system. The quantities of each item
of such inventory are reasonable in the present circumstances of the Company.
All such inventory is in good operating condition and repair, subject to normal
wear and tear, and has been maintained in accordance with normal industry
practice.
3.15 COMPLIANCE WITH LAWS. The Company is and has been in compliance with
all laws, regulations and orders applicable to it, its business and operations
(as conducted by it now and in the past), the Assets and any other properties
and assets (in each case owned or used by it now or in the past). The Company
has not been cited, fined or otherwise notified of any asserted past or present
failure to comply with any laws, regulations or orders and no proceeding with
respect to any such violation is pending or threatened. Neither the Company, nor
any of its employees or agents, has made any payment of funds which is
prohibited by law, and no funds have been set aside to be used for any payment
prohibited by law. The Company is not subject to any Contract, decree or
injunction which restricts the continued operation of the Business or the
expansion thereof to other geographical areas, customers or suppliers, or to
other lines of business.
3.16 LABOR AND EMPLOYMENT MATTERS. Schedule 3.16 sets forth the name and
current rate of compensation of each employee of any of the Company. The Company
is not a party to or bound by any collective bargaining agreement or any other
agreement with a labor union, and there has been no effort by any labor union
during the twenty-four (24) months prior to the date hereof to organize any
employees of the Company into one or more collective bargaining units. There is
no pending or threatened labor dispute, strike or work stoppage which affects or
which may affect the Business. Neither the Company, nor any agent,
representative or employee thereof has since the date of incorporation of the
Company committed any unfair labor practice as defined in the National Labor
Relations Act, as amended, and there is no pending or threatened charge or
complaint against the Company or any of the Companies by or with the National
Labor Relations Board or any representative thereof. The Company is not aware
that any key employee or group of employees have any plans to terminate his or
their employment with the Company. The Company is not a party or subject to any
employment agreements, noncompetition agreements, or consulting agreements. The
Company has no knowledge of any violations of, received no notice of any
violations of and made a good faith effort to comply with all applicable laws,
rules and regulations relating to employment, civil rights and equal employment
opportunities, including but not limited to, the Civil Rights Act of 1964, the
Fair Labor Standards Act, and Americans with Disabilities Act, each as amended.
3.17 EMPLOYEE BENEFIT PLANS.
(a) Schedule 3.17 sets forth each Employment Benefit Plan of the
Company. With respect to each Employee Benefit Plan (as defined in clause (d)
below) of the Company, (i) each has been administered in compliance with its
terms and with all applicable laws including, without
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limitation, ERISA and the Code; (ii) no actions, suits, claims or disputes are
pending or threatened; (iii) no audits, proceedings, claims or demands are
pending with any Governmental Authority; (iv) all reports, returns and similar
documents required to be filed with any Governmental Authority or distributed to
any plan participant have been duly or timely filed or distributed; (v) no
"prohibited transaction" has occurred within the meaning of ERISA or the Code;
(vi) no such plan provides medical or dental benefits for any current or former
employees of the Company or its predecessors after termination of employment
other than rights that may be provided by law; (vii) no such plan obligates the
Company to pay separation, severance, termination or similar benefits as a
result of any transaction contemplated by this Agreement or solely as a result
of a "change of control" (as defined in Section 280G of the Code); (viii) all
required or discretionary (in accordance with historical practices) payments,
premiums, contributions, reimbursements or accruals for all periods ending prior
to or as of the Closing shall have been made or properly accrued on the Current
Balance Sheet or will be properly accrued on the books and records of the
Company as of the Closing; (ix) no such plan has any unfunded liabilities which
are not reflected on the Current Balance Sheet or the books and records of the
Company; (x) the Company has complied with the notice and continuation of
coverage requirements of Section 4980B of the Code and the regulations
thereunder with respect to any group health plan within the meaning of Code
Section 5000(b)(1); and (xi) the Company does not participate in, or have ever
participated in, or have any withdrawal liability under ERISA with respect to, a
"multiemployer plan" (as defined in Section 3(37) of ERISA). True and accurate
copies of each Employee Benefit Plan of the Company, together with the most
recent annual reports on Form 5500, all IRS favorable determination letters and
summary plan descriptions for such plans have been furnished to Nations.
(b) With respect to each Employee Benefit Plan of the Company
intended to qualify under Code Section 401(a) or 403(a), (i) the Internal
Revenue Service has issued a favorable determination letter, which has not been
revoked, that any such plan is tax-qualified and exempt from federal income tax;
(ii) no reportable event (within the meaning of Section 4043 of ERISA) has
occurred; and (iii) the present value of all liabilities under any such plan
will not exceed the current fair market value of the assets of such plan
(determined using the actuarial assumption used for the most recent actuarial
valuation for such plan).
(c) Nations will not suffer any loss, cost or liability as a result
of any claim that the Company, or any entity that would be aggregated with the
Company under Code Section 414(b), (c), (m) or (0), has not complied with the
provisions of paragraphs (a) and (b) above with respect to each Employee Benefit
Plan maintained by any such entity.
(d) For purposes hereof, "Employee Benefit Plan" means any: (i)
employee pension benefit plan as defined in Section 3(2) of ERISA; (ii)
multiemployer plan as defined in Section 3(37) of ERISA; (iii) employee welfare
benefit plan as defined in Section 3(1) of ERISA; and (iv) any stock option,
bonus, stock purchase, or insurance plan and any severance or termination pay
plan or policy in which employees, spouses or dependents participate.
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3.18 TAX MATTERS. Except as set forth on Schedule 3.18, all Tax Returns
required to be filed prior to the date hereof with respect to the Company or its
respective income, properties, franchises or operations have been timely filed,
each such Tax Return has been prepared in compliance with all applicable laws
and regulations, and all such Tax Returns are true and accurate in all respects.
All Taxes due and payable by or with respect to the Company and the Business
have been paid or are accrued on the Current Balance Sheet. The Company has
withheld and paid all Taxes to the appropriate Governmental Authority required
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party.
With respect to each taxable period of the Company: (i) no deficiency or
proposed adjustment which has not been settled or otherwise resolved for any
amount of Taxes has been asserted or assessed by any taxing authority against
the Company; (ii) the Company has not consented to extend the time in which any
Taxes may be assessed or collected by any taxing authority; (iii) the Company
has not requested or been granted an extension of the time for filing any Tax
Return to a date later than the Closing; (iv) there is no action, suit, taxing
authority proceeding, or audit or claim for refund now in progress, pending or
threatened against or with respect to the Company regarding Taxes; and (v) there
are no Liens for Taxes (other than for current Taxes not yet due and payable)
upon the Assets of the Company. No sales or use tax (other than sales tax on
motor vehicles), non-recurring intangible tax, documentary stamp tax or other
excise tax (or comparable tax imposed by any governmental entity) will be
payable by the Company or Nations by virtue of the transactions contemplated in
this Agreement.
3.19 INSURANCE. Schedule 3.19 provides a list of all insurance policies of
the Company currently in force and provides the insurer, type of coverage and
policy period for each policy. The Company is covered by valid, outstanding and
enforceable policies of insurance issued to it covering its properties, assets
and business against risks of the nature normally insured against by
corporations in the same or similar lines of business and in coverage amounts
typically and reasonably carried by such corporations (the "Insurance
Policies"). Such Insurance Policies are in full force and effect, and all
premiums due thereon have been paid. The Company has complied with the
provisions of such Insurance Policies. During the three year period to the date
hereof, the Company has not made any claims under any of the Insurance Policies,
and has suffered no losses that would give rise to any such claims, for an
amount in excess of $10,000. The Company has not failed to give, in a timely
manner, any notice required under any of the Insurance Policies to preserve its
rights thereunder. Through the Closing Date, each of the Insurance Policies will
be in full force and effect.
3.20 RECEIVABLES/EMPLOYEE LOANS. All of the receivables of the Company are
valid and legally binding, represent bona fide transactions and arose in the
ordinary course of business of the Company. All of such receivables are good and
collectible receivables, and eighty percent (80%) will be collected in full
within 120 days of the Closing and twenty percent (20%) will be collected in
full within 180 days of the Closing, without set off or counterclaims, subject
to the allowance for doubtful accounts, if any, set forth on the Current Balance
Sheet, as reasonably adjusted since the date of the Current Balance Sheet in the
ordinary course of business consistent with past practice.
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Schedule 3.20 sets forth all loans to Company employees except for the
Shareholder, the current balance of which does not exceed $20,000. Each such
loan is in writing and is a binding and enforceable obligation of such
employees.
3.21 LICENSES AND PERMITS. The Company possesses all licenses and required
governmental or official approvals, permits or authorizations (collectively, the
"Permits") for the Business and operations, and Schedule 3.21 sets forth a true,
complete and accurate list of all such Permits. All such Permits are valid and
in full force and effect, the Company is in full compliance with the respective
requirements thereof, and no proceeding is pending or threatened to revoke or
amend any of them. None of such Permits is or will be impaired or in any way
affected by the execution and delivery of this Agreement or the transactions
contemplated hereby.
3.22 RELATIONSHIPS WITH CUSTOMERS AND SUPPLIERS; AFFILIATED TRANSACTIONS.
No current customer or supplier of the Company has threatened to terminate its
business relationship with the Company for any reason. Schedule 3.22 sets forth
the top 25 suppliers of goods and/or services to the Company. The Company has no
direct or indirect interest in any customer, supplier or competitor of the
Company, or in any person from whom or to whom the Company leases real or
personal property, except for the Real Property Leases. No officer, director, or
shareholder of the Company, nor any person related by blood or marriage to any
such person, nor any entity in which any such person owns any beneficial
interest, is a party to any Contract or transaction with the Company has any
interest in any property used by the Company.
3.23 CONTRACTS. Schedule 3.23 sets forth a list of each Contract to which
the Company is a party or by which it or its properties and assets are bound and
which is material to its business, assets, properties or prospects (the
"Material Contracts"), true, correct and complete copies of which have been
provided to Nations. The copy of each Material Contract furnished to Nations is
a true and complete copy of the document it purports to represent and reflects
all amendments thereto made through the date of this Agreement. The Company has
not violated any of the terms or conditions of any Material Contract or any term
or condition which would permit termination or modification of any Material
Contract, and all of the covenants to be performed by any other party thereto
have been fully performed, and there are no claims for breach or indemnification
or notice of default or termination under any Material Contract. No event has
occurred which constitutes, or after notice or the passage of time, or both,
would constitute, a default by the Company under any Material Contract, and no
such event has occurred which constitutes or would constitute a default by any
other party. The Company is not subject to any liability or payment resulting
from renegotiation of amounts paid under any Material Contract. As used in this
Section 3.23, Material Contracts shall include, without limitation, formal or
informal, written or oral, in each case which is material to the business,
assets, properties or prospects of the Company, (a) loan agreements, indentures,
mortgages, pledges, hypothecations, deeds of trust, conditional sale or title
retention agreements, security agreements, equipment financing obligations or
guaranties, or other sources of contingent liability in respect of any
indebtedness or obligations to any other Person(s), or letters of intent or
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commitment letters with respect to same; (b) contracts obligating the Company to
provide products or services for a period of one year or more, excluding
standard collection contracts entered into in the ordinary course of its
business without material modification from the preprinted forms used by the
Company in the ordinary course of business, copies of which have been supplied
to Nations; (c) leases of real property and leases of personal property not
cancelable without penalty on notice of sixty (60) days or less or calling for
payment of an annual gross rental exceeding $10,000; (d) distribution, sales
agency or franchise or similar agreements, or agreements providing for an
independent contractor's services, or letters of intent with respect to same;
(e) employment agreements, management service agreements, consulting agreements,
confidentiality agreements, non-competition agreements, employee handbooks,
policy statements and any other agreements relating to any employee, officer or
director of any of the Company; (f) licenses, assignments or transfers of
trademarks, trade names, service marks, patents, copyrights, trade secrets or
know how, or other agreements regarding proprietary rights or intellectual
property; (g) any Contract relating to pending capital expenditures by any of
the Company; (h) any non-competition agreements restricting the Company in any
manner; and (i) other material Contracts or understandings, irrespective of
subject matter and whether or not in writing, not entered into in the ordinary
course of business by the Company and not otherwise disclosed on the Schedules
calling for payments by the Company exceeding $10,000.
3.24 ACCURACY OF INFORMATION FURNISHED. No statement or information made
or furnished by the Company or the Shareholder to Nations or any of Nations'
representatives, including those contained in this Agreement and the various
schedules attached hereto and the other information and statements referred to
herein and previously furnished by the Company and the Shareholder, contains or
shall contain any untrue statement of a fact or omits or shall omit any fact
necessary to make the information contained therein not misleading. The Company
and the Shareholder have provided Nations with true, accurate and complete
copies of all documents listed or described in the various Schedules attached
hereto.
3.25 CUSTOMERS. All of the customers listed on the customer lists attached
hereto as Schedule 3.25 are subject to valid and enforceable customer contracts.
True, correct and complete copies of the form of such contracts have been
furnished by the Company to Nations. The Company has not violated any of the
terms or conditions of any of the customer contracts, and all of the covenants
to be performed by any other party thereto have been fully performed and there
are no claims for breach or indemnification or notice of default or termination
thereunder. Schedule 3.25 notes the top 25 customers of the Company as measured
by annual revenue for the last twelve months.
3.26 INTELLECTUAL PROPERTY. The Company has full legal right, title and
interest to all of the proprietary rights of the Company, including without
limitation all trademarks, trade names, patents, patent applications, licenses
thereof, trade secrets, computer software, slogans, copyrights, processes,
operating rights, other licenses and permits and other similar intangible
property and rights relating
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to the Business, and all goodwill developed through the use of such property and
rights (collectively, "Intellectual Property"), as more particularly described
on Schedule 3.26 attached hereto and has not granted any rights in or to the
same to any third party. The Business as presently conducted, and the
unrestricted conduct and the unrestricted use and exploitation of the
Intellectual Property, does not infringe or misappropriate any rights held or
asserted by any Person, and no Person is infringing on the Intellectual
Property. No payments are required for the continued use of the Intellectual
Property. None of the Intellectual Property has ever been declared invalid or
unenforceable, or is the subject of any pending or threatened action for
opposition, cancellation, declaration, infringement, or invalidity,
unenforceability or misappropriation or like claim, action or proceeding.
3.27 BANK ACCOUNTS. Schedule 3.27 lists each account of each of the
Company with any bank, broker or other depository institution, and the names of
all persons authorized to withdraw funds from each such account, and the
locations of all safe deposit boxes of the Company and the names of all persons
authorized to have access to such safe deposit boxes.
3.28 NAMES; PRIOR ACQUISITIONS. All names under which the Company does
business as of the date hereof are specified on Schedule 3.28. Except as
otherwise disclosed in Schedule 3.28, the Company has not changed its name or
used any assumed or fictitious name or been the surviving entity in a merger,
acquired any business or changed its principal place of business or chief
executive office, within the past three years.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE CLOSING
4.1 CONDUCT OF BUSINESS PENDING THE CLOSING. The Company covenants and
agrees that, between the date of this Agreement and the Closing Date, the
Business shall be conducted only in, and shall not take any action except in,
the ordinary course of business consistent with past practice. The Company shall
use its reasonable best efforts to preserve intact its business organization, to
keep available the services of its current officers, employees and consultants,
and to preserve its present relationships with customers, suppliers and other
persons with which it has significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement, the
Company shall not between the date of this Agreement and the Closing Date,
directly or indirectly, do or propose or agree to do any of the following
without the prior written consent of Nations: amend or otherwise change its
articles of incorporation or bylaws or equivalent organizational documents;
issue or authorize the issuance of, any shares of its capital stock of any
class, or any options, warrants, convertible securities or other rights of any
kind to acquire any shares of capital stock or other ownership interest;
declare, set aside, make or pay any dividend or other distribution, payable in
cash, stock, property or otherwise, with respect to any of its capital stock;
reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire,
directly or indirectly, any of its capital stock; acquire (including, without
limitation, for cash, or shares of stock, property
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or services, by merger, consolidation or acquisition of stock or assets) any
interest in any corporation, partnership or other business organization or
division thereof; (f) incur any additional indebtedness or prepay any
Indebtedness other than in the ordinary course of business consistent with past
practices; (g) make any loans or advances to any person or entity or guarantee
the indebtedness of any person or entity, except in the ordinary course of
business consistent with past practice; (h) sell, dispose of or encumber any of
its assets, other than in the ordinary course of business, consistent with past
practice; (i) enter into, modify or terminate, any Contract, other than in the
ordinary course of business consistent with past practice; (j) pay any bonus to
or increase the compensation or benefits payable or to become payable to its
employees, independent contractors or consultants; (k) pay, discharge or satisfy
any existing claims, liabilities or obligations other than in the ordinary
course of business consistent with past practice; (l) increase or decrease
prices charged to its customers, except for previously announced price changes,
or take any other action which might reasonably result in any increase in the
loss of customers; or (m) agree, in writing or otherwise, to take or authorize
any of the foregoing actions or any other action which would make any
representation or warranty in Article III untrue or incorrect.
ARTICLE V
CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES
5.1 FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby and to
satisfy the conditions set forth in Article VI and Article VII. The Shareholder
shall cause the Company to comply with all of the covenants of the Company under
this Agreement.
5.2 OTHER ACTIONS. Each of the parties hereto shall use their reasonable
best efforts to take, or cause to be taken, all appropriate actions, and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated herein, including, without limitation, using their best efforts to
obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of any Governmental Authority and parties to Contracts
with the Company as are necessary for the consummation of the transactions
contemplated hereby. The Shareholder agrees to cooperate and assist and cause
its accountants to assist Nations in its audit of the Company, including but not
limited to the execution by Shareholder of customary and reasonable audit
representation letters. Each of the parties agrees to cooperate with the others
in the preparation and filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant to any
law, rule or regulation in connection with the transactions contemplated by this
Agreement, and to use their respective best efforts to agree jointly on a method
to overcome any objections by any Governmental Authority to any such
transactions. The parties also agree to use best efforts to defend all lawsuits
or other legal
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proceedings challenging this Agreement or the consummation of the transactions
contemplated hereby and to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby.
5.3 NOTIFICATION OF CERTAIN MATTERS. The Company and the Shareholder shall
give prompt notice to Nations of the occurrence or non-occurrence of any event
which would likely cause any representation or warranty contained herein to be
untrue or inaccurate, or any covenant, condition, or agreement contained herein
not to be complied with or satisfied.
5.4 CONFIDENTIALITY; PUBLICITY. Except as may be required by law or as
otherwise permitted or expressly contemplated herein, no party hereto or their
respective Affiliates, employees, agents and representatives shall disclose to
any third party this Agreement or the subject matter or terms hereof without the
prior consent of the other parties hereto. No press release or other public
announcement related to this Agreement or the transactions contemplated hereby
shall be issued by any party hereto without the prior approval of the other
parties.
5.5 NO OTHER DISCUSSIONS. The Company and the Shareholder agree that the
Company and the Shareholder and their respective Affiliates, employees, agents
and representatives will not (i) initiate, encourage the initiation by others of
discussions or negotiations with third parties or respond to solicitations by
third persons relating to any merger, sale or other disposition of any
substantial part of the assets, business or properties of the Company (whether
by merger, consolidation, sale of stock or otherwise), or (ii) enter into any
agreement or commitment (whether or not binding) with respect to any of the
foregoing transactions. The Company and the Shareholder will immediately notify
Nations if any third party attempts to initiate any solicitation, discussion or
negotiation with respect to any of the foregoing transactions.
5.6 DUE DILIGENCE REVIEW AND ENVIRONMENTAL ASSESSMENT. Nations shall be
entitled to conduct prior to the Closing at its cost a due diligence review of
the assets, properties, books and records of the Company and an environmental
assessment of the Leased Premises (hereinafter referred to as "Environmental
Assessment"). The Company shall cause their respective directors, officers,
employees, auditors, counsel and agents to afford Nations and its officers,
employees, auditors, counsel and agents reasonable access at all reasonable
times to the properties, offices, and other facilities of the Company, to its
respective officers and employees and to all books and records, and shall
furnish such persons with all financial, operating and other data and
information as may be requested. The Environmental Assessment may include a
physical examination of the Leased Premises and any structures, facilities, or
equipment located thereon, soil samples, ground and surface water samples,
storage tank testing and review of pertinent records, documents, and licenses of
the Company. Nations shall provide a copy of any Environmental Assessments to
the Company. Nations shall indemnify and hold harmless the Company from any
damages to the Leased Premises caused by such Environmental Assessments. If the
Environmental Assessment identifies environmental contamination which requires
remediation or further evaluation or if the results of the
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Environmental Assessment or due diligence review are otherwise not satisfactory
to Nations in its sole discretion, then Nations may elect not to close the
transactions contemplated by this Agreement and to terminate this Agreement.
Nations' failure or decision not to conduct any such due diligence review or
Environmental Assessment, and any information provided to or obtained by
Nations, shall not affect any representation or warranty of the Company or the
Shareholder under this Agreement. Nations shall complete its due diligence
review by June 12, 1998 and its Environmental Assessments shall be completed by
June 24, 1998 provided, however, if Company does not provide the materials
reasonably requested by Nations, Nations may extend the due diligence and
Environmental Assessment periods for a reasonable period of time.
5.7 RESTRICTIVE COVENANTS. In order to assure that Nations will realize
the benefits of the transactions contemplated hereby, the Company and the
Shareholder agree that he, will not:
(a) for a period of five (5) years following the Closing, directly or
indirectly, alone or as a partner, joint venturer, officer, director, employee,
consultant, agent, independent contractor, or security holder, of any company or
business, engage in, or finance, or provide financial assistance with respect
to, any business activity in the business of renting, selling, leasing,
distributing, servicing or repairing new or used equipment, spare parts and
related supplies to industrial, manufacturing, or construction customers (the
"Equipment Business") in any county in any state in the United States in which
NationsRent, Inc. or any of its subsidiaries, successors, or assigns
(collectively, the "Nations Companies") conducts such business at the time such
person commences to engage in such activity; provided, however, that the
beneficial ownership of less than five percent (5%) of any class of securities
of any entity having a class of equity securities actively traded on a national
securities exchange or over-the-counter market shall not be deemed, in and of
itself, to violate the prohibitions of this Section;
(b) for a period of five (5) years following the Closing, directly or
indirectly, (i) induce any customer acquired hereunder or any other customer of
the Nations Companies to patronize any business which is directly or indirectly
in competition with the Equipment Business conducted by any of the Nations
Companies; (ii) canvass, solicit or accept from any Person which is a customer
of the Equipment Business conducted by any of the Nations Companies, any such
competitive business; or (iii) request or advise any customer of the Equipment
Business conducted by any of the Nations Companies to withdraw, curtail or
cancel any such customer's business with the Nations Companies or their
successors;
(c) for a period of five (5) years following the Closing, directly or
indirectly, employ any person who was employed by the Nations Companies, within
six (6) months prior to the date being employed by the Nations Companies, or in
any manner seek to induce any employee of the Nations Companies to leave his or
her employment; and
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(d) at any time following the Closing Date, directly or indirectly, in
any way utilize, disclose, copy, reproduce or retain in his possession any of
the Companies' proprietary rights or records acquired hereunder, including, but
not limited to, any customer lists.
The parties acknowledge that should Nations vacate the Company facilities listed
at Section 5.9, or either of them, the Shareholder may lease such premises to
any Person including a competitor of Nations. The Company and the Shareholder
agree and acknowledge that the restrictions contained in this Section are
reasonable in scope and duration, and are necessary to protect the Nations
Companies. The Company and the Shareholder agree and acknowledge that any breach
of this Section will cause irreparable injury to the Nations Companies and upon
any breach or threatened breach of any provision of this Section, the Nations
Companies shall be entitled to injunctive relief, specific performance or other
equitable relief, without the necessity of posting bond; provided, however, that
this shall in no way limit any other remedies which the Nations Companies may
have as a result of such breach, including the right to seek monetary damages.
The parties hereto agree that Nations may assign, without limitation, the
foregoing restrictive covenants to any successor to Nations's Equipment
Business.
5.8 EMPLOYMENT AGREEMENTS.
(a) The Shareholder shall on the Closing Date enter into an employment
agreement with the Company, the form of which is provided at Exhibit B (the
"Shareholder Employment Agreement").
(b) The Company and Shareholder shall cause Xxxxx Xxxxxxx and Xxxx
Xxxxxx ("Company Management") to enter into three (3) year employment agreements
with the Company, the form of which is provided at Exhibit C (the "Company
Management Employment Agreement").
5.9 LEASES AND OTHER ASSETS.
(a) On the Closing Date the Company shall enter into leases (the form
of which is attached as Exhibit D (the "Leases") providing for the lease of the
Company facilities at 0000 X Xxxxx Xxxx Xxxx, Xxxxx Xxxx Xxxxxxxx at $7,887 per
month until such time that the Landlord completes its purchase and renovation
and receives a temporary or permanent certificate of occupancy of an adjacent
property at which time the rate shall be $15,800 per month; and 00000 Xxxxx
Xxxxx, Xxxx, Xxxxxxxx at $11,000 per month. Such other terms and conditions are
provided in the form of lease.
(b) The Company shall prior to the Closing Date distribute its rights
to that certain sublease between Detroit Cellular Telephone Company and the
Company, the life insurance policies and artwork listed on Schedule 5.9(b) to
the Shareholder.
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(c) Nations acknowledges it has no interest in certain tickets to the
Detroit Red Wings hockey games.
5.10 CONTRACTS; CONSENTS. Prior to the Closing, (i) the Company shall not
terminate or otherwise modify or amend any of its Contracts, and (ii) the
Company shall receive consents to the transactions contemplated hereby and
waivers of rights to terminate or modify any rights or obligations of the
Company from any Person(s) from whom such consent or waiver is required under
any Contract to which the Company or the Assets are bound as of a date not more
than ten (10) days prior to the Closing Date, or who, as a result of the
transactions contemplated hereby, would have such rights to terminate or modify
such contracts, either by the terms thereof or as a matter of law.
5.11 RECEIVABLES. At or prior to the Closing Date, the Company shall
deliver to Nations a true, complete and correct list of all receivables of the
Company.
5.12 PAYOFF AND ESTOPPEL LETTERS. Prior to the Closing, the Company shall
request and deliver to Nations payoff and estoppel letters from all holders of
any Indebtedness of the Company which letters shall contain payoff amounts, per
diem interest, wire transfer instructions and an agreement to deliver to
Nations, upon full payment of any such Indebtedness, UCC-3 termination
statements, satisfactions of mortgage or other appropriate releases and any
original promissory notes or other evidences of indebtedness marked canceled.
5.13 SHAREHOLDERS VOTE. The Shareholder, in executing this Agreement,
consent as shareholder of the Company to the transactions contemplated hereby,
and waive notice of any meeting in connection therewith.
5.14 OFFICER LOAN. Shareholder shall at Closing pay in full all Officer
and Shareholder loans.
5.15 PROFIT SHARING PLAN. The Shareholder shall cause the Company prior to
Closing to terminate the Company Profit Sharing Plan (the "Plan"). Nations
agrees to contribute to the unfunded portion of the 1998 fiscal year
contribution to the Plan up to an amount not exceeding in total $70,000. Until
such time as the assets of the Plan are distributed, Xxxxx X. Xxxxx shall remain
as sole trustee of the Plan. Nations will cooperate in the termination and
distribution of the Plan assets.
5.16 NOTE ISSUANCE. Nations shall issue to the Shareholder a second
promissory note (the "Second Promissory Note") in a principal amount not to
exceed Five Hundred Thousand Dollars ($500,000) promptly after that date which
is twenty-four months after Nations completes its initial public offering
("Adjustment Date"), if, and only if during such period (the "Adjustment
Period") the Shareholder could not have (i) converted the Promissory Note, in
accordance with Section 1.6 thereof, to common stock of Nations, $.01 par value
per share (the "Nations Common Stock) with
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an aggregate value (such stock to be valued at the average closing price per
share of Nations Common Stock as quoted by the Wall Street Journal during any
twenty day consecutive period during the Adjustment Period) of Three Million
Dollars (the "Converted Value") and (ii) sold, immediately following such
conversion of all of such Nations Common Stock in year one of the Adjustment
Period in accordance with an effective registration statement that includes the
Shareholder's converted shares, (the "Registration Statement") or in year two of
the Adjustment Period in accordance with Securities and Exchange Commission Rule
144 (without regard to any other shares held by Shareholder) or the Registration
Statement. A sale of the Shareholder's shares within twenty days after the
Adjustment Period shall satisfy the condition above. The amount of the Second
Promissory Note shall be determined as of the Adjustment Date, and be equal to
the lesser of (x) the difference between Three Million Dollars ($3,000,000)
minus the value of the number of shares of Nations Common Stock the Promissory
Note could have been converted into under Section 1.6 thereof on the Adjustment
Date (for purposes of this clause (x) the market value of the Nations Common
Stock shall be the average closing price per share as quoted by the Wall Street
Journal for the twenty consecutive trading days prior to the termination of the
Adjustment Period); or (y) $500,000 (the "Adjustment Amount"). The Second
Promissory Note shall not be convertible into Nations Common Stock. If the
Second Promissory Note is issued Nations shall pay interest upon issuance to the
Shareholder on the Adjustment Amount at the rate of seven percent (7%) per annum
commencing from the Closing Date. In addition, the terms of the Second
Promissory Note shall be the same as the Promissory Note except for sections 1.5
and 1.6 and further except that repayment may occur at Nations option at any
time.
5.17 SCHEDULES. The parties hereto acknowledge and agree that this
Agreement is being entered into by each such party as of the date hereof without
the benefit of completed Schedules being attached hereto. The Shareholder and
the Company agree to work diligently and in good faith to prepare the Schedules
and deliver them to Nations by June 8, 1998. Nations shall in good faith review
and comment upon such Schedules. Should Nations determine in its reasonable
judgement that certain disclosures on such Schedules make it inadvisable to
proceed with the transaction contemplated hereby they shall advise the
Shareholder and the Company in writing of its determination. The Shareholder and
the Company shall have five days to take such steps to alleviate Nations'
concerns. If the Shareholder and the Company do not take sufficient action to
alleviate Nations' concerns then this Agreement shall be deemed to be
terminated, each party shall be released from their respective obligations
hereunder, and no party shall have any obligation to any other party hereunder
on account of this Agreement or the transactions contemplated hereby.
5.18 REGISTRATION RIGHTS. On the Closing Date, Nations shall provide to
Shareholder certain registration rights pursuant to a registration rights
agreement, the form of which is attached as Exhibit E (the "Registration Rights
Agreement").
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ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF NATIONS
The obligations of Nations to effect the transactions contemplated hereby
shall be subject to the fulfillment at or prior to the Closing Date of the
following conditions, any or all of which may be waived in whole or in part in
writing by Nations:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Company and the
Shareholder contained in this Agreement shall be true and correct at and as of
the Closing Date with the same force and effect as though made at and as of that
time except (i) for matters specifically permitted by or disclosed on any
Schedule to this Agreement, and (ii) that those representations and warranties
which address matters only as of a particular date shall remain true and correct
as of such date. Each of the Company and Shareholder shall have performed and
complied with all of their respective obligations required by this Agreement to
be performed or complied with at or prior to the Closing Date. Each of the
Company and Shareholder shall have delivered to Nations a certificate, dated as
of the Closing Date, duly signed (in the case of the Company by its President),
certifying that such representations and warranties are true and correct and
that all such obligations have been complied with and performed.
6.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY. Between the
date hereof and the Closing Date, (i) there shall have been no Material Adverse
Change in the Assets or the Business, (ii) there shall have been no adverse
federal, state or local legislative or regulatory change affecting in any
respect the Assets or the Business, and (iii) none of the Assets shall have been
damaged by fire, flood, casualty, act of God or the public enemy or other cause
(regardless of insurance coverage for such damage), and there shall have been
delivered to Nations a certificate to that effect, dated the Closing Date and
signed by or on behalf of the Company and the Shareholder.
6.3 CORPORATE CERTIFICATE. The Company shall have delivered to Nations (i)
copies of its articles of incorporation and bylaws as in effect immediately
prior to the Closing Date, (ii) copies of resolutions adopted by its Board of
Directors and shareholder authorizing the transactions contemplated by this
Agreement, and (iii) a certificate of good standing issued by the Secretary of
State of Michigan as of a date not more than ten (10) days prior to the Closing
Date, certified in the case of subsections (i) and (ii) of this Section as of
the Closing Date by the Secretary of the Company as being true, correct and
complete.
6.4 DELIVERY OF THE SHARES. At the Closing, Shareholder shall duly endorse
for transfer and deliver to Nations (or its assignee) the Shares and such other
instruments of transfer of title as are necessary to transfer to Nations (or its
assignee) good and marketable title to the Shares free and clear of any Liens.
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6.5 OPINION OF COUNSEL. Nations shall have received an opinion dated as of
the Closing Date from counsel for the Company and the Shareholder, in form and
substance acceptable to Nations, but limited to Michigan law only, to the effect
that:
(i) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Michigan and is authorized
to carry on the business now conducted by it and to own or lease the properties
now owned or leased by it;
(ii) The Company has obtained all necessary authorizations and
consents of its Boards of Directors and Shareholder to consummate the
Acquisition and the other transactions contemplated hereby;
(iii) Such counsel after due investigation has no actual knowledge or
have reason to believe that there is any litigation, proceeding or investigation
pending or threatened which might result in any Material Adverse Effect on the
Company, or which questions the validity of this Agreement;
(iv) The execution and delivery of this Agreement by the Company and
the Shareholder, the performance by the Company and the Shareholder of their
respective obligations hereunder and the consummation by the Company and the
Shareholder of the transactions contemplated by this Agreement will not (a)
contravene any provision of the articles of incorporation or bylaws of the
Company, (b) violate or conflict with any law, statute, ordinance, rule,
regulation, to the best of our knowledge, decree, writ, injunction, judgment or
order of any Governmental Authority or of any arbitration award which is either
applicable to, binding upon or enforceable against the Company, or the
Shareholder, (c) to the best of our knowledge, conflict with, result in any
breach of, or constitute a default (or an event which would, with the passage of
time or the giving of notice or both, constitute a default) under, or give rise
to a right to terminate, amend, modify, abandon or accelerate, any Contract
which is applicable to, binding upon or enforceable against the Company or the
Shareholder, (d) result in or require the creation or imposition of any Lien
upon or with respect to any of the Assets, or (e) require the consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, any court or tribunal or any other Person; and
(v) This Agreement is a valid and binding obligation of the Company
and the Shareholder, and enforceable against each of them in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally or general equitable principles.
(vi) The Company has the corporate power and authority to borrow
money, obtain extensions of credit and to grant security interests in its
properties.
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(vii) The authorized stock of the Company consists of 50,000 shares
of $1.00 par value common stock of which 1,000 shares are issued and outstanding
and all of which are held of record as set forth on Schedule 3.4(b) of the
Agreement. The Company's common stock is validly issued and nonassessable and is
not subject to any statutory preemptive rights. The common stock outstanding
constitutes of record all of the outstanding capital stock of the Company. To
our actual knowledge the Company has no outstanding rights or options to
subscribe for or other agreements providing for or requiring the issuance by the
Company of any capital stock or any securities convertible into or exchangeable
for its capital stock.
Nation's lenders shall also receive an opinion dated as of the Closing Date with
respect to subparagraphs (i), (iii), except for the last phrase consisting of
eight words, (vi) and (vii).
6.6 NO ADVERSE LITIGATION. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the transactions contemplated hereby, and which, in the judgment of Nations,
makes it inadvisable to proceed with the transactions contemplated hereby.
6.7 DUE DILIGENCE REVIEW, SCHEDULES. Nations shall have completed its due
diligence review of the Company, the Assets and the Business pursuant to Section
5.6, and shall be satisfied with the results of such review and assessment.
Nations shall have accepted the Schedules in accordance with Section 5.17.
6.8 TRANSACTION DOCUMENTS. The Company shall have delivered the executed
Transaction Documents.
6.9 PAYMENT OF OFFICER LOANS. Shareholder shall have paid in full the
Shareholder and Officer loans.
6.10 CONSENTS. The Company shall have received the consents to the
transactions contemplated hereby in accordance with Section 5.10 hereof.
6.11 RESIGNATION OF MEMBERS OF BOARD OF DIRECTORS. The Board of Directors
of the Company shall have submitted their resignation from the Board of
Directors to the Company effective as of the Closing Date.
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ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
AND THE SHAREHOLDER
The obligations of the Company and the Shareholder to effect the
transactions contemplated hereby shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions, any or all of which may be
waived in whole or in part in writing by the Company and the Shareholder:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Nations contained in this
Agreement shall be true and correct at and as of the Closing Date with the same
force and effect as though made at and as of that time except (i) for changes
specifically permitted by or disclosed pursuant to this Agreement, and (ii) that
those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date. Nations shall
have performed and complied with all of its obligations required by this
Agreement to be performed or complied with at or prior to the Closing Date.
Nations shall have delivered to the Company, the Companies and the Shareholders
a certificate, dated as of the Closing Date, and signed by an officer thereof,
certifying that such representations and warranties are true and correct, and
that all such obligations have been performed and complied with, in all material
respects.
7.2 PURCHASE PRICE. At the Closing, Nations shall (i) pay to the
Shareholder the Closing Payment; and (ii) deliver the Transaction Documents and
the other documents contemplated hereby.
7.3 NO ORDER OR INJUNCTION. There shall not be pending by or before any
court or other governmental body an order or injunction restraining or
prohibiting the transactions contemplated hereby.
7.4 SCHEDULES; TRANSACTION DOCUMENTS. Nations shall have accepted the
Schedules in accordance with Section 5.17 and Nations shall have delivered
the executed Transaction Documents.
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ARTICLE VIII
INDEMNIFICATION
8.1 AGREEMENT TO INDEMNIFY. Shareholder, agrees to protect, defend,
indemnify and hold Nations harmless from and against the aggregate of all
expenses, losses, costs, deficiencies, liabilities and damages (including,
without limitation, related counsel and paralegal fees and expenses) incurred or
suffered by Nations resulting from or arising out of (i) any breach of a
representation or warranty made by the Company or Shareholder in or pursuant to
this Agreement, (ii) any breach of the covenants or agreements made by the
Company or the Shareholder in this Agreement, (iii) any inaccuracy in any
certificate delivered by the Company or the Shareholder pursuant to this
Agreement, or (iv) any loss of rights of use, occupancy or ownership with
respect to any defaults by the Shareholder pursuant to that certain Land
Contract dated January 25, 1983 relating to property in the City of Xxxxx Park,
Oakland County, Michigan among X. Xxxxxx, Xxxxx Xxxxxx, Xxxxx X. Xxxxx and
Xxxxxxxx X. Xxxxx and that certain Addendum to Land Contract dated January 25,
1983 or as a result of the effect or operation of Paragraph 3 of such Addendum
to Land Contract (collectively, "Indemnifiable Damages"). Without limiting the
generality of the foregoing with respect to the measurement of Indemnifiable
Damages, Nations shall have the right to be put in the same pre-tax consolidated
financial position as it would have been in had each of the representations and
warranties of the Company and the Shareholder hereunder been true and correct
and had the agreements and covenants of the Company and the Shareholder been
performed in full. Notwithstanding anything to the contrary contained herein,
Nations shall not be entitled to any Indemnifiable Damages unless the aggregate
of all such Indemnifiable Damages exceeds $65,000.00 (the "Indemnification
Threshold"), in which case, Nations shall be entitled to the full amount of
Indemnifiable Damages above the Indemnification Threshold, except that
Indemnifiable Damages shall be limited to the amount of the Purchase Price in
the case of a breach of Sections 3.1, 3.12, 3.17 and 3.18 herein, and to Three
Million Dollars ($3,000,000.00) for all other Indemnifiable Damages.
8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, COVENANTS AND AGREEMENTS.
Each of the representations and warranties made by the Company and the
Shareholder in this Agreement at Sections 3.1, 3.12, 3.17 and 3.18 shall survive
the Closing of the transactions contemplated hereby, subject to any statutes of
limitations. All other representations and warranties made by the Shareholder
shall survive for a period of three (3) years after the Closing. Notwithstanding
any knowledge of facts determined or determinable by any party by investigation,
each party shall have the right to fully rely on the representations,
warranties, covenants and agreements of the other parties contained in this
Agreement or in any other documents or papers delivered in connection herewith.
Each representation, warranty, covenant and agreement of the parties contained
in this Agreement is independent of each other representation, warranty,
covenant and agreement. All covenants and obligations of the parties will
survive the Closing hereunder and be enforceable in accordance with their
respective terms.
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8.3 SET OFF AND SECURITY FOR INDEMNIFICATION OBLIGATIONS. Shareholder
agrees that Nations may set off against and recoup from the Promissory Note and
the Earn-Out Amount any Indemnifiable Damages for which the Shareholder may be
responsible pursuant to this Agreement. Should the Promissory Note be (in
accordance with its terms) converted to Nations Common Stock, `the Shareholder
does hereby grant a first priority security interest in, and pledge and instruct
Nations to set aside and hold back Nations Common Stock equal to One Million
Dollars (the "Held Back Shares"). Nations may set off against the Held Back
Shares any Indemnifiable Damages for which the Shareholder is responsible in
accordance with this Agreement. The set off and hold back rights are subject,
however, to the following terms and conditions:
(a) Nations shall give written notice to the Shareholder of any claim
for Indemnifiable Damages or any other damages hereunder, which notice shall set
forth (i) the amount of Indemnifiable Damages or other loss, damage, cost or
expense which Nations claims to have sustained by reason thereof, and (ii) the
basis of the claim therefor.
(b) Such set off and recoupment shall be effected on the later to
occur of the expiration of ten (10) days from the date of such notice (the
"Notice of Contest Period") or, if such claim is contested, the date the dispute
is resolved.
(c) If, prior to the expiration of the Notice of Contest Period, the
Shareholder shall notify Nations in writing of an intention to dispute the claim
and if such dispute is not resolved within thirty (30) days after expiration of
such period (the "Resolution Period"), then Nations may elect that such dispute
shall be resolved by a committee of three (3) arbitrators (one appointed by the
Shareholder, one appointed by Nations and one appointed by the two arbitrators
so appointed), which shall be appointed within sixty (60) days after the
expiration of the Resolution Period. The arbitrators shall abide by the rules of
the American Arbitration Association and their decision shall be made within
forty-five (45) days of being appointed and shall be final and binding on all
parties. The proceedings shall take place in Oakland County, Michigan.
(d) The Held Back Amount shall constitute a deferred payment
obligation of Nations to the Shareholder which shall be paid to the eighteen
months after the Closing Date subject to any setoffs and recoupments by Nations
hereunder. All setoffs, recoupments and payments of Indemnifiable Damages
pursuant to this Section shall be treated as adjustments to the Purchase Price.
8.4 SALE OF, VOTING OF, AND DIVIDENDS ON THE HELD BACK SHARES. Except with
respect to shares transferred pursuant to the foregoing right of setoff (and in
the case of such shares, until the same are transferred), all Held Back Shares
shall be deemed to be owned by the Shareholder and the Shareholder shall be
entitled to sell and vote the same; provided, however, that, there shall also be
deposited with Nations subject to the terms of this Article, all proceeds of
such sale or all shares of Nations Common Stock issued to the Shareholder as a
result of any stock dividend or stock split and
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all cash issuable to the Shareholder as a result of any cash dividend, with
respect to the Held Back Shares. All cash and stock issued or paid upon Held
Back Shares shall be distributed to the Shareholder together with such Held Back
Shares.
8.5 DELIVERY OF HELD BACK SHARES. Nations agrees to deliver to the
Shareholder no later than the eighteen months after the Closing Date any Held
Back Shares then held by it (or proceeds from the Held Back Shares) unless there
then remains unresolved any claim for Indemnifiable Damages or other damages
hereunder as to which notice has been given, in which event any Held Back Shares
remaining on deposit (or proceeds from the sale of Held Back Shares) after such
claim shall have been satisfied shall be returned to the Shareholder promptly
after the time of satisfaction.
8.6 NO BAR; WAIVER. If the Held Back Shares and the Promissory Note is
insufficient to set off any claim for Indemnifiable Damages made hereunder (or
have been delivered to the Shareholder prior to the making or resolution of such
claim), then Nations may take any action or exercise any remedy available to it
by appropriate legal proceedings to collect the Indemnifiable Damages. The
Shareholder hereby waive any rights to contribution or any similar rights they
may have against the Company as a result of their agreement to indemnify Nations
under this Article VIII or otherwise.
8.7 INDEMNIFICATION PROCEDURE. The indemnification obligations under this
Agreement shall be subject to the following procedures:
(a) Third Party Claims. Promptly after receipt by Nations or the
Company (an "Indemnitee") under Section 8.7 of notice of the commencement of any
action against it, such Indemnitee will, if a claim is to be made against the
Shareholder under such Section, give notice to the Shareholder of the
commencement of such action, but the failure to notify the Shareholder will not
relieve the Shareholder of any liability that it may have to any Indemnitee,
except to the extent that the Shareholder demonstrates that the defense of such
action is prejudiced by the Indemnitee's failure to give such notice. With
respect to any such action, the Shareholder will be entitled to participate in
such action and, to the extent that it wishes (unless (i) the Shareholder is
also a party to such action and the Indemnitee determines in good faith that
joint representation would be inappropriate, or (ii) the Shareholder fails to
provide reasonable assurance to the Indemnitee of its financial capacity to
defend such action and provide indemnification with respect to such action), to
assume the defense of such action with counsel satisfactory to the Indemnitee
and, after notice from the Shareholder to the Indemnitee of its election to
assume the defense of such action, the Shareholder will not, as long as it
diligently conducts such defense, be liable to the Indemnitee for any fees of
other counsel or any other expenses with respect to the defense of such action,
in each case subsequently incurred by the Indemnitee in connection with the
defense of such action, other than reasonable costs of investigation. If the
Shareholder assumes the defense of an action, (i) no compromise or settlement of
such claims may be effected by the Shareholder without the Indemnitee's consent
unless (A) there is no finding or admission of any violation of law or any
violation of the rights of any Person and no effect on any other claims that may
be made against the
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Shareholder, and (B) the sole relief provided is monetary damages that are paid
in full by the Shareholder; and (ii)the Indemnitee will have no liability with
respect to any compromise or settlement of such claims effected without its
consent (which may not be unreasonably withheld). If notice is given to the
Shareholder of the commencement of any action and the Shareholder does not,
within ten days after the Indemnitee's notice is given, give notice to the
Indemnitee of its election to assume the defense of such action, the Shareholder
will be bound by any determination made in such action or any reasonable
compromise or settlement effected by the Indemnitee. Notwithstanding the
foregoing, if an Indemnitee determines in good faith that there is a reasonable
probability that an action may adversely affect it or its affiliates other than
as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the Indemnitee may, by notice to the
Shareholder, assume the exclusive right to defend, compromise, or settle such
action, but the Shareholder will not be bound by any determination of an action
so defended or any compromise or settlement effected without its consent (which
may not be unreasonably withheld).
(b) Other Claims. A claim for indemnification for any matter not
involving a third-party claim may be asserted by notice to the Shareholder.
ARTICLE IX
DEFINITIONS
9.1 DEFINED TERMS. As used herein, the following terms shall have the
following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, as in effect on the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and the
treasury regulations promulgated thereunder.
"Contract" means any agreement, contract, lease, note, mortgage,
indenture, loan agreement, franchise agreement, covenant, employment agreement,
license, instrument, purchase and sales order, undertaking, commitment,
obligation whether written or oral, express or implied.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time.
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"Governmental Authority" means any nation or government, any state,
regional, local or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, but not limited to, any conditional sale or other
title retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code or
comparable law or any jurisdiction in connection with such mortgage, pledge,
security interest, encumbrance, lien or charge).
"Material Adverse Change (or Effect)" means a change (or effect), in the
condition (financial or otherwise), properties, assets, liabilities, rights,
obligations, operations, business or prospects which change (or effect)
individually or in the aggregate, is materially adverse to such condition,
properties, assets, liabilities, rights, obligations, operations, business or
prospects.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, estate, trust, unincorporated association, joint venture,
Governmental Authority or other entity, of whatever nature.
"Tax Return" means any tax return, filing or information statement
required to be filed in connection with or with respect to any Taxes; and
"Taxes" means all taxes, fees or other assessments, including, but not
limited to, income, excise, property, sales, franchise, intangible, withholding,
social security and unemployment taxes imposed by any federal, state, local or
foreign governmental agency, and any interest or penalties related thereto.
9.2 OTHER DEFINITIONAL PROVISIONS. All terms defined in this Agreement
shall have the defined meanings when used in any certificates, reports or other
documents made or delivered pursuant hereto or thereto, unless the context
otherwise requires. Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa. All matters of an accounting
nature in connection with this Agreement and the transactions contemplated
hereby shall be determined in accordance with GAAP applied on a basis consistent
with prior periods, where applicable except as otherwise provided to the
contrary herein. As used herein, the neuter gender shall also denote the
masculine and feminine, and the masculine gender shall also denote the neuter
and feminine, where the context so permits.
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ARTICLE X
TERMINATION
10.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing Date: by mutual written consent of all of the parties hereto at any
time prior to the Closing; or by Nations in the event of a material breach by
the Company or the Shareholder of any provision of this Agreement; by the
Company in the event of a material breach by Nations of any provision of this
Agreement; (d) by Nations or the Shareholder in accordance with Section 5.17
hereof, or (e) by Nations or the Company if the Closing shall not have occurred
by July 31, 1998.
10.2 EFFECT OF TERMINATION. Except for the provisions of Section 5.4
hereof, which shall survive any termination of this Agreement, in the event of
termination of this Agreement pursuant to Section 10.1, this Agreement shall
forthwith become void and of no further force and effect, and the parties hereto
shall be released from any and all obligations hereunder; provided, however,
that nothing herein shall relieve any party from liability for the willful
breach of any of its representations, warranties, covenants or agreements set
forth in this Agreement.
ARTICLE XI
GENERAL PROVISIONS
11.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid), guaranteed overnight
delivery, or facsimile transmission if such transmission is confirmed by
delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall designate
in writing to the other party):
(a) IF TO NATIONS:
NationsRent, Inc.
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xx. Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Telecopy: (000) 000-0000
WITH A COPY TO:
Akerman, Senterfitt & Xxxxxx, P.A.
Xxx X.X. Xxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxxxx
Telecopy: (000) 000-0000
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(b) IF TO THE COMPANY OR SHAREHOLDER:
Mr. & Xxx. Xxxxx X. Xxxxx
00000 Xxxxxxx
Xxxxxx Xxx., XX 00000
Telecopy: (000) 000-0000
WITH A COPY TO:
Kemp, Klein, Xxxxxxx & Xxxxxxxx
X.X. Xxx 0000
Xxxx, XX 00000 - 4300
Attn.: Xxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
Notice shall be deemed given on the date sent if sent by facsimile
transmission and on the date delivered (or the date of refusal of delivery) if
sent by overnight delivery or certified or registered mail.
11.2 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement
(including the Exhibits and Schedules attached hereto) and other documents
delivered at the Closing pursuant hereto, contains the entire understanding of
the parties in respect of its subject matter and supersedes all prior agreements
and understandings (oral or written) between or among the parties with respect
to such subject matter. The Exhibits and Schedules constitute a part hereof as
though set forth in full above. Except for the Nations Companies which are
intended to be third party beneficiaries of this Agreement, this Agreement is
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder.
11.3 EXPENSES. Except as otherwise provided herein, the Shareholder and
Nations shall pay their own fees and expenses, including their own counsel fees,
incurred in connection with this Agreement or any transaction contemplated
hereby.
11.4 AMENDMENT; WAIVER. This Agreement may not be modified, amended,
supplemented, canceled or discharged, except by written instrument executed by
all parties. No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege. No waiver of any breach of
any provision shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision, nor shall any waiver be implied from
any course of dealing between the parties. No extension of
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time for performance of any obligations or other acts hereunder or under any
other agreement shall be deemed to be an extension of the time for performance
of any other obligations or any other acts. The rights and remedies of the
parties under this Agreement are in addition to all other rights and remedies,
at law or equity, that they may have against each other.
11.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall be
construed to give any other person any legal or equitable rights hereunder.
Except as expressly provided herein, the rights and obligations of this
Agreement may not be assigned by the Companies or the Shareholders without the
prior written consent of Nations.
11.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument. A telecopy signature of any party shall
be considered to have the same binding legal effect as an original signature.
11.7 INTERPRETATION. When a reference is made in this Agreement to an
article, section, paragraph, clause, schedule or exhibit, such reference shall
be deemed to be to this Agreement unless otherwise indicated. The headings
contained herein and on the schedules are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement or the
schedules. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." Time shall be of the essence in this Agreement.
11.8 CONSTRUCTION. The parties agree and acknowledge that they have
jointly participated in the negotiation and drafting of this Agreement. In the
event of an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumptions or burdens of proof shall arise favoring any party by virtue of the
authorship of any of the provisions of this Agreement. The parties agree that
prior drafts of this Agreement shall not be deemed to provide any evidence as to
the meaning of any provision hereof or the intent of the parties with respect
thereto. Any reference to any federal, state, local, or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. If any party has breached any
representation, warranty, or covenant contained herein in any respect, the fact
there exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty, or covenant.
11.9 GOVERNING LAW; SEVERABILITY. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
Florida applicable to contracts executed and to be wholly performed within such
State. If any word, phrase, sentence, clause, section, subsection
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or provision of this Agreement as applied to an party or to any circumstance is
adjudged by a court to be invalid or unenforceable, the same will in no way
affect any other circumstance or the validity or enforceability of any other
word, phrase, sentence, clause, section, subsection or provision of this
Agreement. If any provision of this Agreement, or any part thereof, is held to
be unenforceable because of the duration of such provision or the area covered
thereby, the parties agree that the court making such determination shall have
the power to reduce the duration and/or area of such provision, and/or to delete
specific words or phrases, and in its reduced form, such provision shall then be
enforceable and shall be enforced.
11.10 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly represents
and warrants to all other parties hereto that (a) before executing this
Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party has
had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
NATIONSRENT, INC., a Delaware corporation
By:/s/ Xxxx X. Xxxxxx
------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
THE X. XXXXX CO., a Michigan corporation
By:/s/ Xxxxx X. Xxxxx
------------------------------------------
Xxxxx X. Xxxxx, President
/s/ Xxxxx X. Xxxxx
---------------------------------------------
Xxxxx X. Xxxxx, as Shareholder
/s/ Xxxxxxxx X. Xxxxx
---------------------------------------------
Xxxxxxxx X. Xxxxx, as Shareholder
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