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EXHIBIT 10.16
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of March 25,
1998, by and among R.F.L. ENTERPRISES, INC., an Indiana corporation ("Seller"),
Xxxxxx X. Xxxxxxxx, an individual resident of the State of Indiana and sole
shareholder of Seller ("Xxxxxxxx") and NATIONSRENT OF INDIANA, INC., a Delaware
corporation (together with its permitted successors and assigns, "Nations").
W I T N E S S E T H:
WHEREAS, Seller presently owns and operates a machine and tool rental
business, excluding any real property, real property leases and fixtures (the
"Business");
WHEREAS, Xxxxxxxx currently owns one hundred percent (100%) of the
issued and outstanding capital stock of Seller;
WHEREAS, Seller and Xxxxxxxx desire to sell and transfer to Nations and
Nations desires to purchase and acquire from Seller and Xxxxxxxx substantially
all the assets, properties and rights related to the Business (the
"Acquisition") on the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, in connection with the Acquisition, Nations and Xxxxxxxx
desire to enter into an employment arrangement (the "Employment Arrangement"),
which will include provisions relating to annual compensation, an incentive
bonus package and a benefit package; and
WHEREAS, in connection with the Acquisition, Nations and Xxxxxxxx also
desire to enter into a five (5) year non-competition arrangement (the
"Non-Competition Arrangement").
NOW, THEREFORE, in consideration of the mutual promises set forth
herein and other good and valuable consideration, the parties hereto, upon the
terms and subject to the conditions contained herein, hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1. Purchase and Sale of Assets. Upon the terms and subject to
the conditions contained herein, Seller shall sell, convey, set over, deliver,
assign and transfer to Nations and Nations shall purchase and acquire from
Seller, at the Closing (as defined in Section 1.4), the assets referred to or
described in this Section 1.1 and the Schedules attached hereto and made a part
hereof.
(a) Transferred Assets. Seller shall sell, transfer, assign,
grant, convey and deliver (or cause to be sold, transferred, assigned, granted,
conveyed and delivered) to Nations, and Nations
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shall purchase, acquire and accept at the Closing (as defined in Section 1.4
hereof) all of the right, title and interest of Seller in the assets, business,
properties, goodwill and rights of Seller of every nature, kind and description,
wherever located, tangible and intangible, personal and mixed, which are related
to, or used or usable in connection with, the Business, as the same exists on
the Closing Date (all of such assets, business, properties, goodwill and rights
are collectively referred to hereinafter as the "Transferred Assets") except for
the Excluded Assets identified on Schedule 1.1(a). The Transferred Assets to be
sold to Nations include, without limitation:
(i) all machinery, equipment, scaffolding, hoppers,
miscellaneous tools, computers, office equipment, replacement parts,
furniture, vehicles, transportation equipment and other tangible assets
or property, wherever located, used in the operation of the Business
and owned by Seller;
(ii) all inventories, raw materials, supplies, works in
process and samples, wherever located, used in the operation of the
Business and owned by Seller;
(iii) all of the right, title and interest of Seller in, to
and under any contracts, agreements, commitments, plans, arrangements,
leases of personal property, licenses, instruments, that are related to
the Business (the "Contracts"), including, without limitation, those
listed on Schedule 1.1(a)(iii);
(iv) all registrations, licenses, permits, approvals,
grants, franchises and consents for operation of the Business;
(v) all right, title and interest of Seller in and to any
and all patents, trademarks, trademark applications, trade names,
copyrights and copyright registrations, know-how, inventions,
processes, formulae, and proprietary technical information, logos,
designs or other intellectual rights related to the Business;
(vi) all databases in all forms, versions and media
including all customer lists and records, together with prior and
proposed updates, modifications and enhancements thereto, as well as
documentation and listing therefor used in the Business;
(vii) all computer software in source and object code, and
all prior and proposed versions, releases, modifications, updates,
upgrades and enhancements thereto, as well as all documentation and
listings related thereto used in the Business;
(viii) all cash, billed and unbilled accounts receivable,
including work in process ("Accounts Receivable"), notes, drafts,
advances and other rights to receive the payment of money, insurance
policies, rights to receive damages arising out of or for breach or
default in respect of any accounts or agreements, and rights to receive
payments from customers for goods or services rendered in connection
with the Business;
(ix) all right, title and interest of Seller in and to all
prepaid deposits and other prepaid expenses, all credit balances and
rights of Seller under any state unemployment compensation plan or fund
relating to employees of the Business hired by Nations;
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(x) the non-exclusive right to possession of all books
and records, including all sales and credit records, advertising and
sales material, literature, financial records, personnel and payroll
records and production records of Seller relating to the Business;
provided, that Seller shall be entitled to retain copies of all of the
foregoing; and
(xi) the Business as a going concern and the goodwill
thereof and all other property and assets of any member of Seller
related to the Business, real or personal, tangible or intangible, of
every kind whatsoever and wherever situated.
All of the Transferred Assets shall be conveyed to Nations free and clear of all
liabilities, obligations, liens and encumbrances, except for Assumed Liabilities
(as defined in Section 1.2).
(b) Effectuation of Purchase and Sale. The transfer of the
Transferred Assets as herein provided shall be effected by bills of sale,
endorsements, assignments, subleases, drafts, checks, and other instruments of
transfer and conveyance delivered to Nations contemporaneously herewith in form
and substance satisfactory to Nations. Seller and Xxxxxxxx covenant that they
will (i) at any time and from time to time after the Closing Date, execute and
deliver such other instruments of transfer and conveyance and do all such
further acts and things as may be reasonably requested by Nations to transfer
and deliver to Nations or to aid and assist Nations in collecting and reducing
to possession, any and all of the Transferred Assets, and (ii) transfer and
deliver to Nations or as directed by Nations any cash or other property that
Seller or Xxxxxxxx may receive after the Closing Date in respect of or arising
out of the Transferred Assets. After the Closing Date, at reasonable times and
upon reasonable notice, Seller and Xxxxxxxx shall have access to, and the right,
at its sole cost and expense, to make copies of, the books and records conveyed
to Nations hereunder, and Nations shall have access to, and the right, at its
sole cost and expense, to make copies of, any minute books, stock books and
similar corporate records relating to the Business retained by Seller or
Xxxxxxxx. Each of Nations, Seller and Xxxxxxxx covenants to the other that it
will not destroy any of the books and records referred to in the preceding
sentence without first offering possession thereof to the other.
(c) Consents. To the extent requested by Nations, Seller shall use
its best efforts to obtain the consent of any parties to any Contracts,
including but not limited to those listed on Schedule 1.1(a)(iii) attached
hereto, licenses, leases, commitments, sales orders, purchase orders or other
agreements being assigned by Seller to Nations hereunder as shall be requested
by Nations, which consent shall specifically state that such party consents to
the assignment to Nations on substantially the same terms and conditions as were
applicable to Seller. If any required consent is not obtained, this Agreement
shall not constitute an agreement to assign the instrument relating thereto, and
notwithstanding anything herein to the contrary, Nations shall not assume any
liability associated with any such contract, license, lease, commitment, sales
order, purchase order or other agreement. Seller and Xxxxxxxx shall cooperate
with Nations in any reasonable arrangement to provide for Nations the benefits
under any such contract, license, lease, commitment, sales order, purchase order
or other agreement, including enforcement, at the cost and for the benefit of
Nations, of any and all rights of Seller against the other party thereto arising
out of the breach or cancellation by such party or otherwise; provided, that
nothing in this sentence shall constitute a waiver by Nations of any conditions
contained in this Agreement.
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Section 1.2. Assumed and Retained Liabilities.
(a) Assumed Liabilities. As partial consideration for the
Transferred Assets, effective as of the Closing Date, Nations shall assume and
shall thereafter pay when due or cause to be paid when due or otherwise
discharged, subject to the limitations contained herein, the following
liabilities (the "Assumed Liabilities") of Seller as the same shall exist on and
as of the Closing Date:
(i) Balance Sheet Liabilities. Certain trade accounts
payable and other liabilities as set forth on Schedule 1.2(a)(i) that
continue to exist on the Closing Date.
(ii) Leases and Other Contracts.
(A) Leases. Certain liabilities and obligations of
Seller under each of the Leases set forth on Schedule
1.2(a)(ii)(A) attached hereto (collectively the "Assumed
Leases"); provided, that Nations shall not assume or be
responsible for any such liabilities or obligations which
arise or accrue under the Assumed Leases prior to the Closing
Date.
(B) Other Contracts. Those liabilities and
obligations of Seller under the Contracts as set forth on
Schedule 1.1(a)(iii); provided, that Nations shall not assume
or be responsible for any such liabilities or obligations
which arise or accrue under the Contracts prior to the Closing
Date.
(iii) Warranty Obligations. Those liabilities and
obligations of Seller with respect to goods sold, leased or repaired in
the ordinary course of business prior to the Closing Date.
(b) Retained Liabilities. Nations shall not assume or be liable
for any debt, liability or obligation, known or unknown, fixed, contingent or
otherwise, of Seller, its stockholders, directors, officers, employees or
agents, other than those referred to in Section 1.2(a) (the liabilities and
obligations not being assumed by Nations shall collectively be referred to
hereinafter as the "Retained Liabilities"). The Retained Liabilities shall
include, without limitation, all obligations arising under: (i) any Employee
Plan (as defined in Section 2.1(j)) of Seller, unless scheduled as an Assumed
Liability; (ii) all loans or advances from, or any other liability to, any
stockholder, director, officer, employee or other affiliate of Seller,
including, without limitation, all liabilities reflected on the Balance Sheet as
shareholder loans and any arising thereafter; (iii) Seller's unpaid note payable
balance due to Fort Xxxxx National Bank; and (iv) any liabilities associated
with Seller's real estate. The Retained Liabilities shall be retained by Seller
and Seller shall pay when due or cause to be paid when due or otherwise
discharged, the Retained Liabilities and in all events will indemnify pursuant
to Section 4.1(iii).
Section 1.3. Purchase Price.
(a) Consideration. In consideration for the Transferred Assets,
including the Contracts, the Non-Competition Arrangement and the Employment
Arrangement, Nations shall assume the Assumed Liabilities as provided in Section
1.2 hereof and, in addition, shall pay the following amounts:
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(i) The Purchase Price. As consideration for the
Transferred Assets, including the Contracts, Nations shall, at the
Closing, make or cause to be made, a payment equal to $2,350,000 (the
"Purchase Price") to Seller by wire transfer of immediately available
funds to an account or accounts designated by Seller.
(b) Allocation of Purchase Price. The purchase price referred to
in subparagraph 1.3(a)(i) above shall be allocated among the Transferred Assets
based upon their relative fair market values, as determined by Nations'
appraiser in accordance with the allocation requirements of Section 1060 of the
Internal Revenue Code of 1986, as amended (the "Code") and the regulations
promulgated thereunder. Seller and Nations agree that each will report the
transactions consummated hereunder in accordance with such determination for all
federal, state and local tax purposes. Seller, on the one hand, and Nations, on
the other hand, also agree to indemnify and hold harmless the other party from
and against any and all losses, liabilities and expenses, including, without
limitation, additional income taxes and fees and disbursements of counsel,
incurred by the indemnified party as a result of the failure of the indemnifying
party to so report the transactions consummated hereunder; provided, however,
that no party hereunder shall be required to indemnify any other party hereunder
for any audit adjustments required to be made by the Internal Revenue Service.
Section 1.4. Time and Place of Closing. The "Closing" means the
time at which the parties hereto consummate the transfer of the Transferred
Assets and the assumption of the Assumed Liabilities contemplated hereby. The
Closing shall occur at a location and on a date mutually agreed upon by the
parties (the "Closing Date").
Section 1.5. Seller's Closing Deliveries. Prior to or at the
Closing, Seller shall deliver to Nations:
(a) the Transferred Assets, as well as all documents effectuating
the transfer of the Transferred Assets, as provided in Section 1.1(b);
(b) copies of the Articles of Incorporation of Seller, certified
by the Secretary of State of Indiana, and the Bylaws of Seller, certified by an
officer thereof;
(c) documentary evidence, in a form satisfactory to Nations, that
Seller has obtained all consents and waivers of third parties necessary to the
consummation of the transactions contemplated by this Agreement, including,
without limitation, the consent of Lull Industries, Inc. ("Lull") to assign the
Lull Industries, Inc. Equipment Dealer Agreement, dated as of January 1, 1996,
to which Seller is a party (the "Lull Agreement");
(d) certified copies of resolutions of each Seller's board of
directors and shareholders approving all actions taken or to be taken by Seller
and its respective officers in connection with the consummation of the
transactions contemplated by this Agreement;
(e) an opinion of counsel for Seller, in form and substance
satisfactory to Nations;
(f) receipts executed by the appropriate parties, dated the
Closing Date, acknowledging receipt from Nations of the payments listed in
Section 1.2(a); and
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(g) an executed agreement that provides for the Employment
Agreement and the Non-Competition Arrangement provided for in the recitals to
this Agreement (the "Employment and Non-Competition Agreement").
Section 1.6. Nations' Closing Deliveries. Prior to or at the
Closing, Nations shall deliverto Seller:
(a) the Purchase Price;
(b) certified copies of resolutions of the board of directors of
Nations authorizing the execution of this Agreement and the consummation of the
transactions contemplated hereby; and
(c) the Employment and Non-Competition Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties of Seller and
Xxxxxxxx. Seller and Xxxxxxxx represent and warrant to Nations as follows:
(a) Authorization; Non-Contravention. Seller has, and will have,
all requisite power, authority (including any necessary shareholder
authorizations), and capacity to execute, deliver and enter into this Agreement
and any other agreements contemplated hereby; to perform all of the obligations
to be performed by them hereunder and thereunder; and to consummate the
transactions contemplated hereby and thereby. Xxxxxxxx is competent to, and has
the authority to, execute and deliver this Agreement and any other agreements
contemplated hereby; and to consummate the transactions contemplated hereby and
thereby. This Agreement has been duly and validly authorized, executed and
delivered by and is the valid and binding obligation of Seller and is
enforceable in accordance with its terms.
(b) Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Indiana and Seller
has the requisite power and authority to own, lease and operate its properties
and assets and to carry on its business as it has been and is now being
conducted. Seller is duly qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which the properties
owned or leased by it or the nature of the business conducted by it makes such
qualification or licensure necessary, except where the failure to be so
qualified or licensed and in good standing would not have a material adverse
effect on the Business. Seller has delivered to Nations true and correct copies
of its Articles of Incorporation or other governing documents as amended to date
and Bylaws as amended to date.
(c) Ownership. The persons or entities identified on Schedule
2.1(c) own all of the issued and outstanding capital stock of Seller free and
clear of all claims, options, liens, charges, equities, security interests,
encumbrances and other restrictions or limitations of any kind whatsoever except
as set forth on Schedule 2.1(c).
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(d) Financial Statements. Schedule 2.1(d) contains a true,
complete and correct copy of the adjusted balance sheet and profit and loss
statement of Seller for the fiscal years ended December 31, 1996 and December
31, 1997 and for the two months ended February 28, 1998 (hereinafter referred to
as the "Financial Statements"). Except as disclosed in Schedule 2.1(d), the
Financial Statements are complete and correct, and presents fairly the financial
condition of Seller as of such dates, and have been prepared in accordance with
generally accepted accounting principles, consistently applied ("GAAP"), except
to the extent that such unaudited financial statements are subject to
nonrecurring audit adjustments and do not contain all required footnote
disclosures.
(e) Leased Property. Schedule 2.1(e) hereof is a list, true and
correct, of all leases and subleases (collectively, the "Personal Property
Leases") with respect to all property, other than real property, leased by
Seller as lessee (the "Leased Personal Property"). Seller has delivered to
Nations true and correct copies of each of the Personal Property Leases.
(f) Title and Related Matters. Seller has good, valid and
marketable title to all of the Transferred Assets; except for the Leased
Personal Property, in which Seller has a valid leasehold interest and has all
rights under applicable state laws to maintain leasehold status as applicable,
and to maintain the use and benefit of such property as it is being used and
enjoyed on the date hereof. Except as identified on Schedule 2.1(f), all the
Transferred Assets referred to in the preceding sentence are presently owned or
held under lease by Seller, free and clear of all mortgages, liens, pledges,
charges, security interests, leasehold interests, options to purchase or other
encumbrances of any kind or character except: liens for taxes, assessments and
governmental charges or levies imposed upon Seller or upon its income or
profits, or upon any of its property, other than real property, or upon any part
thereof if the same shall not at the time be due and payable. The Personal
Property Leases and all other documents and agreements pursuant to which Seller
has obtained the right to use any personal property are valid and enforceable in
accordance with their respective terms; all licenses, permits and authorizations
in any manner related to the operation of the Business, or through the use of
the Leased Personal Property, are in good standing, valid and enforceable in
accordance with their respective terms; and there is not, under any of the
foregoing instruments, documents or agreements, any existing default or event
which with notice or lapse of time, or both, would constitute a default caused
or affected by Seller or, to the best knowledge of Seller, caused or affected by
any other party thereto.
(g) Absence of Undisclosed Liabilities. As of the date hereof,
Seller does not have any indebtedness, liability or obligations of any nature,
whether accrued, absolute, contingent or otherwise, and whether due or to become
due, which was not shown on or provided for in full on the Financial Statements
or in the notes thereto or related to the Assumed Contracts or Assumed Leases,
other than those liabilities incurred in the ordinary course of business since
February 28, 1998, the date of the most recent Financial Statements (the
"Financial Statements Date").
(h) Absence of Certain Changes or Events. Since the Financial
Statements Date, Seller has not, without Nations' prior written consent, with
respect to the Business:
(i) issued or sold, or contracted to sell, any of the
stock, notes, bonds, or other securities or interests of Seller, or any
option to purchase the same, or entered into any agreement with respect
thereto;
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(ii) amended the Articles of Incorporation or Bylaws of
Seller;
(iii) except as disclosed in Schedule 2.1(h)(iii), made any
capital expenditures or commitments for the acquisition, lease or
construction of any property, plant or equipment;
(iv) entered into any material transaction inconsistent in
any respect with the past practices of the Business and have not
conducted the Business in any manner materially inconsistent with past
practices;
(v) incurred any damage, destruction, requisition, taking
or similar loss or casualty event (whether or not covered by
insurance);
(vi) suffered any loss, or been threatened by any
prospective loss, of any dealer or supplier or alteration of any
contractual arrangement with any dealer or supplier the loss or
alteration of which would have a material adverse effect on the
Business;
(vii) incurred or accrued any material liability or
obligation (absolute or contingent) or made any material expenditure,
other than such as may have been incurred or made in the ordinary
course of business.
(viii) incurred any indebtedness for money borrowed from any
third parties or affiliates, other than trade payables in the ordinary
course, amended any agreement relating to existing indebtedness, or
made any loans or advances to any third parties or affiliates;
(ix) permitted the occurrence or continuance of any
default under any agreement;
(x) made any acquisition of stock of, all or
substantially all of the assets of, or merged or consolidated with, any
entity;
(xi) except as required by ERISA, adopted, amended in any
material respect or terminated any Employee Plan, severance plan or
collective bargaining agreement or make awards or distributions under
any Employee Plan not consistent with past practice or custom;
(xii) created, assumed or permitted to exist any lien,
pledge, security interest, encumbrance or mortgage of any kind on any
of its properties or assets other than liens existing on the date
hereof as set forth on Schedule 2.1(f) hereof;
(xiii) initiated any legal proceedings, including suits and
administrative proceedings;
(xiv) entered into, made any amendment of or terminated any
material lease or any material contract or agreement except in the
ordinary course of business;
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In addition, since the Financial Statements Date;
(A) there has been no material adverse change in the
business, operations, earnings, assets, financial condition or
prospects of Seller, and no event or events that would materially and
adversely affect the business, earnings, assets, condition (financial
or otherwise) or prospects of Seller has occurred;
(B) there has been no declaration, setting aside or
payment of any distribution or dividend in respect of the capital stock
of Seller;
(C) there has been no sale of Seller's accounts
receivable;
(D) there has been no purchase or disposal of, or
execution of a contract to purchase or dispose of, or grant or receipt
of an option to purchase or sell, any of the properties or assets of
Seller except in the ordinary course of business;
(E) except for normal annual compensation increases,
there has not been any increase in the rate of compensation payable or
to become payable to the directors, officers or employees of Seller or
any increase in the amounts paid or payable to such directors, officers
or employees under any bonus, insurance, pension or other benefit plan,
or any arrangements therefor made for or with any of said officers or
employees;
(F) Seller has not adopted or amended any collective
bargaining, bonus, profit-sharing, compensation, stock option, pension,
retirement, deferred compensation or other plan, agreement, trust, fund
or arrangement for the benefit of its employees;
(G) there has been no change in any material accounting
principle, procedure or practice followed by Seller or in the method of
applying any such principle, procedure or practice;
(H) Seller has not engaged in any transaction with any
affiliate thereof nor made any loan or advance to any affiliate thereof
other than advances or reimbursements for travel and entertainment
costs consistent with past practices.
(i) Contracts. Schedule 2.1(i) contains a complete list or
description of (a) each material license, contract, agreement, commitment and
undertaking (whether written or oral) relating to Seller's business, or to which
Seller is a party, (b) each loan or credit agreement, security agreement,
guaranty, indenture, mortgage, pledge, conditional sale or title retention
agreement, equipment obligation, lease purchase agreement or other instrument
evidencing indebtedness relating to Seller, or to which Seller is a party, and
(c) each contract, agreement, commitment or undertaking whether or not fully
performed, between Seller and any officer, director, shareholder, affiliate,
consultant or other employee of Seller (d) each contract, agreement, commitment
and undertaking (whether written or oral) relating to the provision of services
by Seller. Seller has not breached or improperly terminated any contract and is
not in default under any contract by which it is bound, and there exists no
condition or event which, after notice or lapse of time or both, would
constitute any such breach, termination or default caused or affected by Seller.
Seller has delivered to, or have made available
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to, Nations true, correct and complete copies of each written contract listed in
Schedule 2.1(i), and all modifications and amendments thereto.
(j) Employee Benefit Plans. Except as disclosed in Schedule
2.1(j), Seller has no pension, retirement, profit-sharing, deferred
compensation, bonus or other incentive plan, any other employee program,
arrangement, agreement or understanding, any medical, vision, dental or other
health plan, any life insurance plan, severance plan or any other employee
benefit plan (each an "Employee Plan") subject to the Employee Retirement Income
Security Act of 1974, as amended.
(k) Non-Contravention; Consents. Except as set forth in Schedule
2.1(k) hereof, the execution and delivery of this Agreement and the consummation
of any of the transactions contemplated hereby by Seller does not and will not:
(i) violate any provision of the governing documents of
Seller;
(ii) violate, or result with the passage of time in the
violation of, any provision of, or result in the acceleration of or
entitle any party to accelerate (whether after the giving of notice or
lapse of time or both) any material obligation under, or result in the
creation or imposition of any lien, charge, pledge, security interest
or other encumbrance upon any of the properties necessary for the
conduct of the Business pursuant to any provision of, any mortgage,
lien, lease, contract, agreement, permit, indenture, license,
instrument, law, order, arbitration award, judgment or decree to which
Seller is a party or by which any of its properties or assets are
bound;
(iii) violate any law, order, judgment or decree to which
Seller is subject;
(iv) constitute an event of default or an event permitting
termination of any agreement to which Seller is a party or to which it
or any of its properties is subject.
Except as provided in Schedule 2.1(k), no consent, authorization, order or
approval of, or filing or registration with, any governmental commission, board
or other regulatory body is required for or in connection with the execution,
delivery and performance of this Agreement by Seller and the consummation by
each of them of any of the transactions contemplated hereby.
(l) Labor Relations. There are no agreements with, or pending
petitions for recognition of, any labor union or association as the bargaining
agent or representative for any or all of Seller's employees, and no such
petitions have been pending at any time within two (2) years of the date of this
Agreement, and there has been no organizing effort by any union or other group
seeking to represent any employees of Seller as their bargaining agent or
representative at any time within two (2) years of the date of this Agreement.
(m) Receivables. As of the date hereof: (A) no event has occurred
that would, under Seller's practices when the Financial Statements were
prepared, require a significant increase in the ratio of (i) the reserve for
uncollectible accounts receivable to (ii) the Accounts Receivable of Seller, and
(B) there has been no material adverse change in the composition of such
Accounts Receivable in terms of aging. There is no contest, claim or right of
set-off contained in any written agreement with any account debtor relating to
the amount or validity of any Account Receivable, all Accounts
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Receivable of Seller are and will be, unless previously collected, valid and
collectible, other than Accounts Receivable which do not exceed, in the
aggregate, the reserve for uncollected accounts reflected in the Financial
Statements. As of the date hereof and as of the Closing Date, all notes
receivable of Seller were, are and will be, respectively, unless previously
collected, valid and collectible and there is no contest, claim or right of
set-off contained in any written agreement with any note maker relating to the
amount or validity of any note. With respect to a claim for indemnity under
Section 4.1 and Section 4.3 hereof arising out of a breach of the
representations and warranty contained in this Section 2.1(m), such claim will
not be made until an Account Receivable is more than one year past due and, in
connection with payment of such claim, such Account Receivable will be assigned
to Seller.
(n) Customers and Suppliers. Since the Financial Statements Date,
there has not been any material adverse change in the business relationship of
the Business with any of its respective customers or suppliers nor has Seller
been involved in any material controversy with any of their respective customers
or suppliers.
(o) Insurance. Set forth in Schedule 2.1(o) hereof is a true,
correct and complete schedule of all insurance policies or binders of insurance
or programs of self-insurance that relate to the Business. The coverage under
each such policy and binder is in full force and effect, and no notice of
cancellation or nonrenewal with respect to, or disallowance of any claim under,
any such policy or binder has been received by Seller. Seller has no knowledge
of any fact or the occurrence of any event which reasonably might form the basis
of any claim against Seller relating to its business or operations or any of its
assets or properties covered by any of the policies or binders set forth in
Schedule 2.1(o), which claim Seller has reason to believe will materially
increase the insurance premiums payable under any such policy or binder.
(p) Patents, Trademarks, Etc.
(i) Schedule 2.1(q)(i) hereof sets forth a true and
complete list, including, where applicable, the date of registration,
serial or registration number or patent number, of Seller's United
States (including the individual states and territories of the United
States) and foreign registered trademarks, service marks and trade
names; trademark, service xxxx and trade name applications; product
designations and model numbers; unexpired patents; pending and filed
patent applications; and registered copyrights (collectively, the
"Intellectual Property").
(ii) Seller has not, whether directly, contributorily or
by inducement, within any time period as to which any potential
liability of Seller is not barred by statute, infringed any patent,
trademark, service xxxx, trade name or copyright or misappropriated any
intellectual property of another, or received from another any notice,
charge, claim or other assertion in respect thereto or committed any
acts of unfair competition.
(iii) Seller has not, within any time period as to which
any potential liability of another person is not barred by statute,
sent or otherwise communicated to such other person any notice, charge,
claim or other assertion of, or has any knowledge of, present,
impending or threatened patent, trademark, service xxxx, trade name or
copyright infringement by such other person, or misappropriation of any
Intellectual Property of Seller by such other person or any acts of
unfair competition by such other person.
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(q) Litigation. No litigation, action, suit, proceeding or
investigation is pending or threatened against Seller, or Seller's properties,
assets or capital stock. Seller is not subject to, or in default in respect of,
any judgment, order, writ, injunction or decree of any court or any federal,
state, local or other governmental department, commission, board, bureau, agency
or instrumentality. No action, suit, proceeding or investigation pending,
threatened, or related to the properties or businesses of Seller that might
adversely affect or restrict the ability of Seller to consummate the
transactions contemplated hereby.
(r) Unlawful Payment. Seller has not made, directly or indirectly,
with respect to the business of Seller, any illegal political or illegal
charitable contributions, payments from corporate or partnership funds not
recorded on the books and records of Seller, payments from corporate funds that
were falsely recorded on the books and records of Seller, payments from
corporate funds to governmental officials in their individual capacities for the
purpose of affecting their action or the action of the government they represent
to obtain favorable treatment in securing businesses or licenses or to obtain
special concessions or payments to any officers, employees or agents of a
customer or supplier for the purpose of influencing their action or inaction or
the action or inaction of any other officer, employee or agent of such customer
or supplier.
(s) Compliance with Laws; Environmental Compliance. Seller has
complied with and made all filings required pursuant to all federal, state,
municipal or local constitutional provisions, laws, ordinances, rules,
regulations and orders in connection with the conduct of the Business,
including, without limitation, all rules and regulations of any federal or state
environmental agency applicable thereto. Seller has all governmental licenses,
permits and authorizations necessary for the conduct of its business as
currently conducted (the "Permits") and all such Permits are in full force and
effect, and no violations exist in respect of any such Permits, and no
proceeding is pending or threatened to revoke or limit any thereof. Seller has
not violated, and has no knowledge of any alleged or potential violation of, any
such constitutional provisions, laws, ordinances, rules, regulations or orders,
cured or not, or any injunction or governmental order or decree.
(t) Restrictive Covenants. Except as identified on Schedule 2.1(t)
and except as contemplated by this Agreement, Seller and Xxxxxxxx are not bound
by any agreement, contract or covenant limiting its freedom to compete in any
line of business or with any person or other entity in any geographic area.
(u) Tax Matters. For purposes of this Agreement, "Taxes" or "Tax"
means all net income, capital gains, gross income, gross receipts, sales, use,
ad valorem, franchise, profits, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, or windfall profit
taxes, customs duties, or other taxes, fees, assessments, or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax, or
additional amounts imposed by any taxing authority ("Taxing Authority") upon
Seller.
(i) Seller has filed when due all federal, foreign,
state, and local tax returns, tax information returns, reports, and
estimates for all years and periods (and portions thereof) ending on or
before the Closing Date for which any such returns, reports or
estimates were due. All such returns, reports, and estimates were
prepared in the manner required by applicable law, and all Taxes shown
thereby to be payable have been paid when due.
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(ii) Seller has withheld or will withhold amounts from the
compensation and other payments due and payable to its employees and
have filed or will file all federal, foreign, state, and local returns
and reports with respect to employee income tax withholding and social
security and unemployment taxes for all periods (or portions thereof)
ending on or before the Closing Date, in compliance with the provisions
of the Code and other applicable federal, foreign, state, and local
laws.
(iii) Seller has paid all federal, state, local, and
foreign Taxes, which are due and owing with respect to all periods, or
portions thereof, ending on or before the Closing Date.
(iv) There are no material claims or investigations by any
Taxing Authority pending or, to the best knowledge of Seller and
Xxxxxxxx, threatened against Seller for any past due Taxes; and there
has been no waiver of any applicable statute of limitations or
extension of the time for the assessment of any Tax against Seller.
(v) Seller has never been, nor is it currently, a party
to any agreement relating to the sharing of any liability for, or
payment of, taxes with any other person or entity.
(v) Bank Accounts. Schedule 2.1(v) hereof is a true, correct and
complete list of each bank, savings and loan, or other financial institution, in
which Seller has an account, including cash contribution accounts, or safe
deposit boxes, and, to the extent practicable, the names of all persons
authorized to draw thereon or to have access thereto.
(w) Employees; Compensation. Schedule 2.1(w) hereof is a true,
correct and complete list of all employees of Seller and all salary, bonuses and
other compensation paid or payable to such employees with respect to the current
fiscal year. Except as set forth on Schedule 2.1(w), there are no outstanding
liabilities or amounts due to shareholders, directors, officers or employees
(other than unpaid base salary, accrued vacations and cash advances in the
ordinary and normal course of business and not material in the aggregate) or
other related parties of Seller.
(x) Brokers. Seller and Xxxxxxxx have not expressly or impliedly
engaged any broker, finder or agent with respect to this Agreement or any
transaction contemplated hereby, nor is there any commission, fee or other
compensation due or to become due to any broker, finder or agent with respect to
this Agreement or any transaction contemplated hereby.
(y) Necessary Assets. The Transferred Assets constitute all the
properties (real and personal, tangible and intangible), rights and interests
necessary for the conduct by Nations of the Business as now being conducted by
Seller.
(z) Accuracy of Information Furnished. No statement by Seller or
Xxxxxxxx contained in this Agreement, in any Schedule hereto, and no statement
contained in any certificate or other instrument or document furnished or to be
furnished by or on behalf of Seller or Xxxxxxxx to Nations pursuant hereto, or
in connection with the transactions contemplated hereby, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact which is required to be stated herein or therein or which is
necessary to make the statements contained herein or therein in light of the
circumstances under which they were made, not misleading; provided, however,
that with respect to any projections furnished to Nations, Seller and Xxxxxxxx
represent
14
and warrant only that such projections were prepared in good faith and were
based upon assumptions that Seller and Xxxxxxxx believe to be reasonable.
(aa) Inventory. The values at which the inventories of Seller are
shown on the Financial Statements have been determined in accordance with the
normal valuation policies of Seller. The inventories of Seller shown on the
Financial Statements and thereafter acquired by Seller in the ordinary course of
business consist only of items of a quality and quantity commercially usable or
salable in the ordinary course of business. Such inventories represent a
reasonable distribution of the types of inventories utilized in the conduct of
the Business in accordance with good business practices.
Section 2.2. Representations and Warranties of Nations. Nations
represents and warrants to Seller and Xxxxxxxx as follows:
(a) Authorization. The execution, delivery and performance of this
Agreement and any other agreements contemplated hereby, and the consummation of
the transactions contemplated hereby and thereby, have been or will be duly
authorized and approved by the Board of Directors of Nations. Nations has the
power and authority to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby and thereby. This Agreement has
been, and the other agreements contemplated hereby, when executed and delivered
will be, duly and validly executed and delivered by, and is and will be, as
appropriate, the valid and binding obligations of Nations in accordance with its
terms.
(b) Organization. Nations is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Nations
has the corporate power and authority to own and lease its properties and assets
and to carry on its business as now being conducted. Nations is duly qualified
or licensed to do business as a foreign corporation and is in good standing in
each jurisdiction in which the properties owned or leased by it or the nature of
the business conducted by it makes such qualification or licensure necessary,
except where the failure to be so qualified or licensed and in good standing
would not have a material adverse effect on its business. Nations has delivered
to Seller true and correct copies of its Certificate of Incorporation and
Bylaws.
(c) Non-Contravention; Consents. The execution and delivery of
this Agreement and the consummation of any of the transactions contemplated
hereby does not and will not:
(i) violate any provision of the Certificate of
Incorporation or Bylaws of Nations;
(ii) violate, or result with the passage of time in the
violation of, any provision of, or result in the acceleration of or
entitle any party to accelerate (whether after the giving of notice or
lapse of time or both) any material obligation under, or result in the
creation or imposition of any lien, charge, pledge, security interest
or other encumbrance upon any of the properties necessary for the
conduct of the business of Nations or provision of, any mortgage, lien,
lease, contract, agreement, permit, indenture, license, instrument,
law, order, arbitration award, judgment or decree to which Nations is a
party or by which any of its respective properties or assets are bound;
(iii) violate any law, order, judgment or decree to which
Nations is subject;
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(iv) constitute an event of default or an event permitting
termination of any agreement to which Nations is a party or to which
any of its respective properties is subject.
No consent, authorization, order or approval of, or filing or registration with,
any governmental commission, board or other regulatory body is required for or
in connection with the execution, delivery and performance of this Agreement by
Nations and the consummation of the transactions contemplated hereby.
(d) Brokers. Nations has not expressly or impliedly engaged any
broker, finder or agent with respect to this Agreement or any transaction
contemplated hereby, nor is there any commission, fee or other compensation due
or to become due to any broker, finder or agent with respect to this Agreement
or any transaction contemplated hereby.
(e) Litigation. There is no action, suit, proceeding or
investigation pending or threatened against Nations that might adversely affect
or restrict the ability of Nations to consummate the transactions contemplated
hereby.
ARTICLE III
COVENANTS
Section 3.1. Covenants of Seller and Xxxxxxxx.
(a) Notification. Seller and/or Xxxxxxxx shall give prompt notice
to Nations of (i) any notice of, or other communication received by them
relating to, a default or event that with notice or lapse of time or both would
become a default, or which would cause any warranty or representation of Seller
and/or Xxxxxxxx to be untrue or misleading in any material respect, under this
Agreement, (ii) any notice or other communication received by them from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated hereby and (iii) any knowledge
received by them that would cause the representations and warranties contained
in Section 2.1(s) to not be true and correct, including, without limitation, any
knowledge received from Nations.
(b) Cooperation. Following the execution of this Agreement, Seller
and/or Xxxxxxxx, at the request of Nations where appropriate, will:
(i) comply promptly with all filing requirements that
foreign, federal or state law may impose on Seller with respect to the
transactions contemplated hereby;
(ii) use their best efforts to obtain any further consent,
authorization or approval of, or exemption by, any governmental
authority or agency necessary in connection with the consummation of
the transactions contemplated hereby;
(iii) cooperate with Nations in the filing of any necessary
or advisable applications, reports or other documents with any federal
or state governmental agencies or authorities with respect to the
Acquisition and the consummation of the related transactions
16
contemplated hereby (including any financing related to such
transactions), including, without limitation, the transfer of any
Permits, and in seeking and obtaining from such agencies or authorities
all necessary or advisable approvals or authorizations of said
acquisition and transactions;
(iv) use their best efforts to obtain any further consent,
authorization or approval of any third party, including without
limitation their landlords and lessors, necessary to consummate the
transactions contemplated hereby, including without limitation any and
all consents, authorizations and approvals necessary for the assignment
of rights for security to lenders of Nations, which consent,
authorization or approval shall specifically state that such party
consents to the assignment to Nations on substantially the same terms
and conditions as were applicable to the Seller.
(c) Employees. Seller and Xxxxxxxx agree that they shall use their
best efforts to assure that Seller's employees employed in connection with the
Business remain in the employ of Seller.
(d) Right to Investigate. Seller and Xxxxxxxx shall afford to the
officers, employees and authorized representatives of Nations free and full
access, during normal business hours and upon reasonable prior notice, to the
offices, properties, books and records of Seller in order that Nations may have
full opportunity to complete the consummation of the transactions contemplated
hereby, and Seller and Xxxxxxxx shall furnish Nations with such additional
financial and operating data and other information relating to the assets,
property and business of Seller as Nations shall from time to time reasonably
request. Nations shall indemnify Seller and Xxxxxxxx for any physical damage
caused to the offices, properties, books and records of Seller and Xxxxxxxx by
any officer, employee or authorized representative of Nations during the course
of its investigations pursuant to this Section 3.1(d). The representations,
warranties and agreements of each of the parties hereto shall be effective
regardless of, and shall not be affected by, any investigation that any party
has undertaken or failed to undertake.
(e) Evidence of Title. Seller and Xxxxxxxx shall provide Nations
with such title insurance policies, title reports, UCC reports or other
documentary evidence as Nations shall reasonably request in order to confirm the
accuracy of Seller and Lawrence's representations set forth in Section 2.1(f)
relating to the existence of liens or encumbrances affecting the Transferred
Assets.
(f) Employee Plans. Following the Closing Date, Seller shall
comply with the terms of the Employee Plans and with all laws, rules and
regulations relating to the Employee Plans.
(g) Short-Term Lease. At or after the Closing and if requested in
writing by Buyer within five (5) days prior to Closing, Seller or Xxxxxxxx, as
applicable, shall enter into a lease agreement with Buyer for the lease of the
real property used by Seller in connection with the Business. Such lease
agreement shall be in a form satisfactory to Buyer and Seller or Xxxxxxxx, as
applicable, and shall include the following terms:
(i) a term of not more than six (6) months;
(ii) monthly rental in the amount of $2,500; and
17
(iii) standard warranties and indemnities by lessee.
Section 3.2. Covenants of Nations.
(a) Notification. Nations shall give prompt notice to Seller or
Xxxxxxxx of (i) any notice of, or other communication received by Nations
subsequent to the date of this Agreement relating to an event that would cause
any warranty or representation of Nations to be untrue or misleading, under this
Agreement, and (ii) any notice or other communication of any third party
alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement.
(b) Consents. As soon as practicable following the execution of
this Agreement, Nations, with the cooperation of Seller and/or Xxxxxxxx where
appropriate, will:
(i) comply promptly with all filing requirements which
foreign, federal or state law may impose on Nations with respect to the
transactions contemplated hereby;
(ii) use its best efforts to obtain any consent,
authorization or approval of, or exemption by, any governmental
authority or agency necessary in connection with the consummation of
the transactions contemplated hereby;
(iii) cooperate with Seller in the filing of any necessary
or advisable applications, reports or other documents with any federal
or state governmental agencies or authorities with respect to the sale
by Seller of the Transferred Assets and the consummation of the related
transactions contemplated hereby (including any financing related to
such transactions), and in seeking and obtaining from such agencies or
authorities all necessary or advisable approvals or authorizations of
said acquisition and transactions;
Section 3.3. Certain Joint Covenants. Subject to the terms and
conditions of this Agreement, Seller, Xxxxxxxx and Nations will use their best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement and
not to undertake any course of action inconsistent with such intended result.
ARTICLE IV: CONDITIONS TO CLOSING
Section 4.1. Conditions to Nations' Obligations. The obligation of
Nations to consummate the transactions provided for by this Agreement is subject
to the satisfaction, on or prior to the Closing Date, of each of the following
conditions, any of which may be waived by Nations:
(a) Representations and Warranties. Each of the representations
and warranties of Seller and Xxxxxxxx made in Section 2.1 of this Agreement
shall be true and correct in all material respects both on the date hereof and
as of the Closing Date as though made at such time.
(b) Covenants. Seller and Xxxxxxxx shall have performed and
complied with all covenants and agreements required to be performed or complied
with by them at or prior to the Closing Date.
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(c) Material Adverse Change. Since the date hereof, there shall
have occurred no material adverse change, or discovery of a condition or
occurrence of any event that might result in any such change, in the condition
(financial or otherwise), business, assets, properties, operations or prospects
of Seller or the Business.
(d) Consents. All consents necessary to consummate the
transactions contemplated hereunder shall have been obtained and satisfied
including, without limitation, the consent of Lull to assign the Lull Agreement.
(e) No Proceeding or Litigation. No litigation, action, suit,
investigation, claim or proceeding challenging the legality of, or seeking to
restrain, prohibit or materially modify, the transactions provided for in this
Agreement shall have been instituted and not settled or otherwise terminated.
(f) Legal Matters. All legal matters in connection with this
Agreement and the transactions contemplated hereby, and the form and substance
of all legal proceedings and of all papers, instruments and documents delivered
hereunder or incidental hereto shall, in the reasonable judgment of Nations, be
satisfactory to Nations, and if requested by Nations, to Xxxxx, Day, Xxxxxx &
Xxxxx, counsel to Nations.
(g) Certificate of Sellers. At the Closing, Seller shall have
delivered to Nations a Certificate signed by Seller's President, and attested to
by their Secretary or an Assistant Secretary, and dated the Closing Date, to the
effect that to the best of the knowledge and belief of such officers the
conditions specified in Sections 4.1(a), (b), (c) and (d) have been fulfilled.
(h) Certificate; Documents. Seller shall have delivered the
certificates, opinion of counsel and other documents required by Sections 1.5.
(i) Satisfaction of Indebtedness. Seller shall deliver to Nations
evidence, satisfactory to Nations, that the Transferred Assets are transferred
to Nations free and clear of all liabilities, obligations, liens and
encumbrances, except for Assumed Liabilities.
Section 4.2. Conditions to Seller's and Lawrence's Obligations. The
obligations of Seller and Xxxxxxxx to consummate the transactions provided for
by this Agreement are subject to the satisfaction, on or prior to the Closing
Date, of each of the following conditions, any of which may be waived by Seller
and Xxxxxxxx:
(a) Representations and Warranties. Each of the representations
and warranties of Nations made in Section 2.2 of this Agreement shall be true
and correct in all material respects both on the date hereof and as of the
Closing Date as though made at such time.
(b) Covenants. Nations shall have performed and complied with all
covenants and agreements required to be performed or complied with by it at or
prior to the Closing Date.
(c) No Proceeding or Litigation. No litigation, action, suit,
investigation, claim or proceeding challenging the legality of, or seeking to
restrain, prohibit or materially modify, the
19
transactions provided for in this Agreement shall have been instituted and not
settled or otherwise terminated.
(d) Legal Matters. All legal matters in connection with this
Agreement and the transactions contemplated hereby, and the form and substance
of all legal proceedings and of all papers, instruments and documents delivered
hereunder or incidental hereto shall, in the reasonable judgment of Seller and
Xxxxxxxx, be satisfactory to Seller and Xxxxxxxx, and if requested by Seller and
Xxxxxxxx, to Xxxxx & Xxxxxxx, counsel to Seller and Xxxxxxxx.
(e) Certificate of Nations. At the Closing, Nations shall have
delivered to Sellers a Certificate signed by the President or a Vice President
of Nations, and attested to by the Secretary or an Assistant Secretary of
Nations, and dated the Closing Date, to the effect that to the best of the
knowledge of such officers the conditions specified in Section 4.2(a) and (b)
have been fulfilled.
(f) Certificates; Documents. Nations shall have delivered the
certificates and other documents required by Section 1.6.
ARTICLE V
INDEMNIFICATION
Section 5.1. Indemnification by The Seller and Xxxxxxxx. From and
after the Closing Date, Seller and Xxxxxxxx, jointly and severally, shall
indemnify and save and hold Nations, and any director, officer, employee, agent
or representative of Nations, harmless from and against any and all liability,
loss, cost, judgments, damage (including consequential damages), punitive
damages, civil and criminal penalties or expense (including reasonable
attorneys' fees) whatsoever resulting from or arising out of or in connection
with (i) any breach of any representation or warranty of Seller and Xxxxxxxx,
(ii) any breach of any covenant or obligation of Seller and/or Xxxxxxxx
contained herein, or (iii) any liability or obligation whatsoever in respect of
the conduct of the Business or the ownership or use of any of the Transferred
Assets prior to the Closing Date, including, without limitation, the Retained
Liabilities, but not including the Assumed Liabilities.
Section 5.2. Indemnification by Nations. From and after the
Closing Date, Nations shall indemnify and save and hold Seller and Xxxxxxxx
harmless from and against any and all liability, loss, cost, judgments, damage
(including consequential damages) or expense (including reasonable attorneys'
fees) whatsoever resulting from, arising out of or in connection with (i) the
Assumed Liabilities, (ii) any breach of any representation or warranty of
Nations contained herein, (iii) any breach of any covenant or obligation of
Nations contained herein, or (iv) any liability or obligation whatsoever in
respect of the conduct of the Business or the ownership or use of any of the
Transferred Assets after the Closing Date other than the Retained Liabilities.
Section 5.3. Claims. In the event Nations, Seller or Xxxxxxxx (the
"Claimant") desires to make a claim against the other (the "Indemnitor") under
Section 5.1 or 5.2 hereof, the Claimant shall give prompt notice to the
Indemnitor of the institution of any actions, suits or proceedings and demands
at any time instituted against or made upon Claimant, or any state of facts
known to Claimant in connection with which the Claimant would claim
indemnification under Section 5.1 or
20
5.2; provided, however, that the failure of any Claimant to give notice as
provided herein shall not relieve the Indemnitor of its obligations under
Section 5.1 or 5.2, except to the extent that the Indemnitor's position has been
materially adversely affected by such failure. Indemnitor shall have the right,
but not the obligation, to assume the defense of any action, suit or proceeding
for which there is a claim for indemnification hereunder, provided that the
Indemnitor affirmatively assumes, in writing, the obligation to pay the loss,
cost, damage and expense arising from the claim of which defense is assumed. If
Indemnitor does not assume the defense of any such action, suit or proceeding
before the earlier to occur of (i) the thirtieth (30) day after receipt of
notice, or (ii) five days or any shorter period of time, if necessary, before
the date an answer or similar response to an initiation of judicial proceedings
is due, the Claimant shall, upon further notice to the Indemnitor, have the
right to undertake, at the expense of the Indemnitor, the defense, compromise,
or settlement of such claim on behalf of and for the account and risk of the
Indemnitor, subject to the right of the Indemnitor to assume the defense of such
claim at any time prior to settlement, compromise or final determination
thereof; provided, however, that the exercise of the right of Indemnitor to
assume the defense of such claim, once the Claimant has undertaken the defense,
compromise or settlement of such claim in accordance with this Section 5.3,
shall not prejudice the Claimant. Anything in this Article V to the contrary
notwithstanding, (i) if there is a reasonable probability that such an action,
suit or proceeding may materially and adversely affect the Claimant despite the
indemnity of the Indemnitor, the Claimant shall have the right to defend, at its
own cost and expense, and to compromise or settle such action, suit or
proceeding; provided, however, that the Indemnitor shall have given written
consent for such compromise or settlement, and (ii) the Indemnitor shall not,
without the written consent of the Claimant, which consent may not be
unreasonably withheld, settle or compromise any such action, suit or proceeding
or consent to the entry of any judgment. The Indemnitor shall remain fully
liable for its obligation of indemnity despite any action by the Claimant under
the preceding sentence. With respect to liquidated claims, if within thirty (30)
days the Indemnitor has not contested said claim in writing, the Indemnitor will
pay the full amount thereof in cash within ten (10) days after the expiration of
such period. Each party shall be responsible for its own expenses in any
arbitration or litigation between the parties hereto and any expenses not
attributable to either party, such as the cost of a third-party arbitrator (in
the event that the parties agree to arbitration), shall be shared equally by the
parties.
Section 5.4. Time Limitations on Claims for Indemnification. The
right of Nations to indemnification under Section 5.1 shall apply only to those
claims for indemnification that are given pursuant to this Agreement on or
before the respective dates set forth below:
(a) Any claim for indemnification relating to any breach of the
representations and warranties set forth in Section 2.1(u) shall be made on or
before forty-five days after the expiration of the applicable statute of
limitations (and any waivers or extensions thereof) applicable to any claim
arising in connection with any breach of any such representations and
warranties;
(b) No time limit shall apply to any right to indemnification
with respect to any breach of any representation or warranty contained in
Sections 2.1(a), (b), (f), or (s); and
(c) Any claim for indemnification not referred to in subsections
(a) or (b) of this Section 4.4 shall be made on or before the date which is
three (3) years following the Closing Date.
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Section 5.5. Threshold Amount. Seller and Xxxxxxxx shall not be
required to indemnify and save and hold Nations, and any director, officer,
employee, agent or representative of Nations, harmless under Section 5.1 unless
and until the amount of such indemnification equals $10,000 in the aggregate
(the "Threshold Amount") in which event Seller and Xxxxxxxx shall be obligated
to indemnify Nations, and Nations may assert its right to indemnification
hereunder to the full extent of all amounts relating to such right, including
amounts that are less than the Threshold Amount.
ARTICLE VI
MISCELLANEOUS
Section 6.1. Survival of Representations and Warranties. The
representations and warranties contained in this Agreement, and in any Schedule
delivered pursuant hereto, shall survive the Closing Date. Each of the covenants
and other agreements contained herein shall survive the Closing Date.
Section 6.2. Entire Agreement; Assignment. This Agreement,
including the Schedules attached and delivered pursuant hereto, constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof. This
Agreement shall not be assigned by operation of law or otherwise without the
prior written consent of the other party hereto except that Nations may assign
its rights and responsibilities hereunder to an affiliate without the prior
written consent of Seller or Xxxxxxxx. No assignment pursuant to this Section
6.2, however, shall release the assignor or any other person of any obligations
or liabilities hereunder.
Section 6.3. Validity; Severability. Each Article, section,
subsection and lesser section of this Agreement constitutes a separate and
distinct undertaking, covenant and/or provision hereof. Whenever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law. In the event that any provision of
this Agreement shall be determined to be unlawful, invalid or unenforceable,
such provision shall be deemed severed from this Agreement, but every other
provision of this Agreement shall remain in full force and effect. In
substitution for any provision of this Agreement held unlawful, invalid or
unenforceable, there shall be substituted a provision of similar import
reflecting the original intent of the parties hereto to the fullest extent
permissible under law.
Section 6.4. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered in person, by cable, telegram or telex, by
registered or certified mail (postage prepaid, return receipt requested) or by
facsimile, the receipt of which is acknowledged, to the respective parties as
follows:
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If to Seller:
R.F.L. Enterprises, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
With copies to:
Xxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
If to Xxxxxxxx:
Xxxxxx X. Xxxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000
With copies to:
Xxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
If to Nations:
NationsRent of Indiana, Inc.
Xxxxxxx Tower
00 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxx 00000
Attention: Xxxx Xxxxxxx
With copies to:
Xxxxx, Day, Xxxxxx & Xxxxx
0000 Xxxxxxxxxx Xxxxxx
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
23
Section 6.5. Amendment. This Agreement may not be amended except
by an instrument in writing signed on behalf of all the parties hereto.
Section 6.6. Waivers. At any time prior to the Closing Date, the
parties may (i) waive any inaccuracies in the representations and warranties
contained herein or in any document, certificate or writing delivered pursuant
hereto; or (ii) waive compliance with any of the agreements or conditions
contained herein; provided, however, that no failure or delay of any party
hereto in exercising any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right hereunder. Any agreement on
the part of any party to any such waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
Section 6.7. Governing Law. This Agreement shall be governed by
and construed in accordance with the internal substantive laws of the State of
Indiana, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws.
Section 6.8. Descriptive Headings. The descriptive headings
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
Section 6.9. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and their successors
and permitted assigns, and nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights, remedies, obligations or
liabilities of any nature whatsoever under or by reason of this Agreement.
Section 6.10. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
Section 6.11. Expenses. Except as otherwise provided herein, all
costs and expenses incurred in connection with the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses.
Section 6.12. Specific Performance. The parties hereto acknowledge
that damages would be an inadequate remedy for breach of this Agreement and that
the obligations of the parties shall be specifically enforceable.
Section 6.13. Passage of Title and Risk of Loss. Legal title,
equitable title and risk of loss with respect to the Transferred Assets shall
not pass to Nations until such assets are transferred at the Closing, which
transfer, once it has occurred, shall be deemed effective for tax, accounting
and other computational purposes as of midnight (Eastern Time) on the Closing
Date.
Section 6.14. Waiver of Compliance with Bulk Transfer Laws. Nations
hereby waives compliance by Seller with the provisions of Article 6 of the
Uniform Commercial Code of the State of Indiana, any similar articles or section
under the Uniform Commercial Code enacted in any other jurisdiction, or any
other bulk transfer laws enacted in any other jurisdiction in which any of the
Transferred Assets may be located that may be applicable to the transactions
contemplated by this
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Agreement. Seller and Xxxxxxxx, jointly and severally, agree to indemnify and
hold Nations harmless from any and all liabilities, costs, damages, claims,
suits and expenses, including reasonable attorneys' fees and expenses and court
costs, incurred with regard to creditors of Seller as a result of the failure to
comply with such bulk transfer laws other than with respect to Assumed
Liabilities.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, or
has caused this Agreement to be executed on its behalf by its duly authorized
officers, as the case may be, as of the day and year first above written.
NATIONSRENT OF INDIANA, INC.
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
------------------------------------
Title: Executive Vice President
-----------------------------------
R.F.L. ENTERPRISES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxxx
------------------------------------
Title:
-----------------------------------
/s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxxx, Individually
