CONFIDENTIAL
Strategic Alliance Agreement
between
NationsRent, Inc.
and
Xxxx'x Companies, Inc.
October 12, 2000
Table of Contents
TAB
| Exhibit A - Roll out Schedule for 2000 and 2001 |
2 |
| Exhibit B - Operating Matters |
3 |
| Exhibit C - Form of Lease |
4 |
| Exhibit D - Competitive Companies |
5 |
| Exhibit E - List of On-Site Rental Equipment |
6 |
| Exhibit F - List of On-Site Rental Merchandise |
7 |
| Exhibit G - Xxxx'x Xxxx |
8 |
| Exhibit H - Prototypical Plans for On-Site Rental Store |
9 |
| Exhibit I - Prototypical Signage |
10 |
| Confidentiality Agreement, dated January 28, 2000 |
11 |
October 12, 2000
Xxxx'x Companies, Inc.
X.X. Xxx 0000
Xxxxx Xxxxxxxxxx, XX 00000
Gentlemen:
Pursuant to the terms of the Strategic Alliance Letter
Agreement, dated as of April 3, 2000 (the "Pilot Agreement"), between
NationsRent, Inc., a Delaware corporation, through its operating subsidiaries
("NRI") and Xxxx'x Companies, Inc., a North Carolina corporation,
through its operating subsidiaries, Xxxx'x Home Centers, Inc. and Xxxx'x HIW,
Inc. ("Lowe's"), NRI and Lowe's have tested the concept of operating
equipment rental locations on-site at Xxxx'x home improvement stores (the
"On-Site Rental Concept"). NRI and Lowe's now desire to establish a
long-term strategic alliance to roll-out the On-Site Rental Concept to certain
existing and subsequently opened Lowe's stores on the following terms and
subject to the following conditions:
| 1. |
Roll-Out Schedule. During the Term (as defined in paragraph 5
below), upon the terms and subject to the conditions of this agreement, Lowe's
grants to NRI the right and obligation to, and NRI shall, open and operate
equipment rental stores ("On-Site Rental Stores") at designated existing and
newly constructed Lowe's home improvement stores ("Participating Lowe's
Stores"). In each calendar quarter during the Term, Lowe's and NRI shall
cooperate to develop and review a schedule for constructing and opening On-Site
Rental Stores at Participating Lowe's Stores on a twelve (12) month rolling
basis, which schedule shall be reasonably adjusted by the parties based on site
specific conditions. The parties shall develop and finalize such schedule in
good faith and with due consideration for each other's objectives and operating
parameters and shall exchange appropriate market information (including trending
and indexing of existing store total revenue, commercial sales revenue,
transactions and product category mix) to assist in developing On-Site Rental
Stores in desirable markets. Exhibit A sets forth a finalized schedule
for the remainder of calendar year 2000 and a preliminary schedule for calendar
year 2001, which 2001 schedule will be finalized as to the number of sites on or
before November 1, 2000. The parties agree that they shall finalize successive
schedules six (6) months in advance of the quarter for which construction shall
commence on any particular On-Site Rental Store. For each calendar year during
the Term, Lowe's agrees to designate at least 30 Participating Lowe's Stores in
which NRI may open and operate On-Site Rental Stores and NRI agrees to operate
at least 30 On-Site Rental Stores at Participating Lowe's Stores pursuant to the
agreed upon schedule.
|
| |
(a) |
NRI. During the Term and for the period described in paragraph
5(d) hereof following the termination or expiration of this agreement, NRI shall
not (i) engage in discussions or negotiations or enter into any agreement with
third parties to develop the On-Site Rental Concept, which shall be deemed to
include on-site equipment rental at other big-box retailers that directly
compete with Lowe's (such as Home Depot, Wal-Mart, Sears and Home Base), (ii)
engage, directly or indirectly, in the home improvement retailing business,
except as ancillary to its business as presently conducted and except for
e-commerce initiatives, or (iii) advertise for sale at its On-Site Rental Stores
any used rental equipment which is available for sale (other than through Lowe's
specialty order program) at the respective Participating Lowe's Stores or to
display "for-sale" signs on any such used equipment at its On-Site Rental
Stores, provided, however, that nothing shall prohibit NRI from
(x) actually selling such used rental equipment at any On-Site Rental Store, (y)
advertising the sale of any used rental equipment not available for sale at the
respective Participating Lowe's Store whether at any On-Site Rental Store or any
other NRI store, or (z) displaying a sign at any On-Site Rental Store no larger
than 11 x 17 inches regarding selling used equipment at other NRI stores that
are not On-Site Rental Stores.
|
| |
(b) |
Lowe's. During the Term and for the period described in paragraph
5(d) hereof following the termination or expiration of this agreement, Lowe's
shall not (i) engage in discussions or negotiations, or enter into any agreement
with third parties to develop, or develop on its own, the On-Site Rental
Concept, or (ii) engage directly or indirectly in the equipment rental business
(except for e-commerce initiatives), which includes without limitation any
arrangement with companies engaged in the equipment rental business such as
United Rentals, Inc. and Hertz Corporation. Notwithstanding the foregoing, for
each calendar year during the Term, Lowe's shall be permitted to open and
operate (on its own without any third party) up to ten (10) equipment rental
stores at Xxxx'x Home Improvement Centers so long as all of the following
conditions have been satisfied: (w) such stores are located in a xxxxxxxxxxxx
xxxxxxxxxxx xxxx ("XXX") that is not in the top fifty (50), (x) there is a Home
Depot in such MSA that has an equipment rental program, (y) NRI declines the
opportunity to open and operate an On-Site Rental Store at such Lowe's Store,
after NRI has had at least six (6) months to evaluate such opportunity, and (z)
during such six-month period, the parties have negotiated in good faith
alternative ways to operate equipment rental at such stores, including
franchising, licensing or management arrangements on terms and conditions
mutually agreed between the parties. In addition, notwithstanding anything to
the contrary in this agreement, the prohibitions or limitations on Lowe's
operating its own equipment rental business shall not apply to a Participating
Lowe's Store if at such store the On-Site Rental Store lease terminates or is
not renewed for any reason.
|
| 3. |
General Terms of Sites. The parties agree that each On-Site Rental
Store and Participating Lowe's Store will be operated on the terms set forth on
Exhibit B. In addition, the parties agree that for each On-Site Rental Store,
they will execute a lease in substantially the form of Exhibit C.
|
| 4. |
Confidentiality/Publicity. The parties have executed a
confidentiality agreement dated January 28, 2000, which they agree shall remain
in full force and effect and shall govern any confidential information exchanged
by the parties pursuant to this agreement. In addition, no press release or
other public announcement related to this agreement or the transactions
contemplated hereby shall be made or issued by either party without the prior
approval of the other party, except as may be required by law or the listing
requirements of a national securities exchange.
|
| |
(a) |
Term. Unless terminated earlier pursuant to this paragraph 5, the
term of this agreement (the "Term") shall commence on the date hereof and shall
expire on December 31, 2003, provided, that the parties agree that the Term
shall automatically renew for successive three (3) year terms up to a maximum of
five (5) renewal terms, unless either party gives written notice to the other
party of its intention not to renew this agreement at least ninety (90) days
prior to the end of the then current Term. If one party gives notice of its
intention not to renew, then the other party in its sole discretion may (a)
notwithstanding the exclusivity provisions of paragraph 2 hereof, immediately
have discussions and negotiations and enter into an agreement with any third
party regarding the development of the On-site Rental Concept (but not actually
begin operating any such sites until the expiration of the exclusivity
provisions of paragraph 2 in accordance with paragraph 5(d)), and (b) at any
time prior to March 1 of the calendar year following the expiration of this
agreement, elect to terminate all of the then outstanding On-Site Rental Store
leases, effective one (1) year following written notice thereof, and thereafter
both parties shall cooperate with the orderly closing and winding up of such
On-Site Rental Stores during such one-year period. Except as set forth in the
prior sentence and except upon a termination described in paragraph 5(b) hereof,
the parties agree that notwithstanding the termination of this agreement, each
On-Site Rental Store lease shall remain in full force and effect in accordance
with its terms.
|
| |
(b) |
Termination. Either party may terminate this agreement (including
the On-Site Rental Store leases as described below) prior to the end of the Term
effective upon written notice to the other party if (i) the other party is in
material breach of its obligations hereunder and such breach continues uncured
for a period of sixty (60) days following written notice thereof by the
non-breaching party to the breaching party, or (ii) the other party files a
petition or answer (or an involuntary petition, answer, or proceeding is filed)
seeking bankruptcy protection, reorganization or other relief from creditors
generally, or taking advantage of any other insolvency laws, or (iii) the other
party consummates a merger or consolidation with, or sale of all or
substantially all of its assets to, any person or group acting in concert with
or on behalf of certain competitive companies described on Exhibit D
hereto (each a "Competitive Company") or a Competitive Company acquires
beneficial ownership (as defined in Section 13(d) of the Securities Exchange Act
of 1934, as amended and the rules promulgated thereunder) of 20% or more of the
voting stock of the other party or the other party elects or appoints one or
more members to its Board of Directors who is an officer, director or employee
of a Competitive Company. Simultaneously, with the termination of this agreement
under paragraph 5(b), the non-breaching party shall have the right (exercisable
only in conjunction with the termination of this agreement) to terminate all of
the On-Site Rental Store leases effective nine (9) months following the
termination of this agreement, unless such termination event occurs under
paragraph 5(b)(iii), in which case the non-breaching party may elect to reduce
such nine (9) month period to two (2) months. Following such nine (9) month or
two (2) month period, as the case may be, NRI shall begin incurring the hold
over rent as set forth in Section 12.9 of the leases until the premises are
vacated and delivered back to Lowe's in accordance with the leases. The parties
agree that their remedies are cumulative and that their respective rights to
terminate this agreement are in addition to any other remedies available to them
at law or in equity.
|
| |
(c) |
Material Breach. The parties agree that a material breach shall
include, but not be limited to, the following events:
|
| |
i. |
A material breach of the exclusivity provisions of paragraph 2;
|
| |
ii. |
A material breach of the On-Site Rental Store leases representing at least 10%
of all outstanding On-Site rental Store leases;
|
| |
iii. |
A material breach of the provisions of Exhibit B as they relate to at least 10%
of all outstanding On-Site Rental Stores or Participating Lowe's Stores, as the
case may be; and
|
| |
iv. |
A material breach of the provisions of paragraph 6(i) hereof.
|
| |
i. |
Exclusivity. In the event of the expiration of this agreement
pursuant to paragraph 5(a) hereof, the exclusivity provisions of paragraph 2
shall survive until the earlier of (A) one (1) year following such expiration
and (B) the expiration or earlier termination of all of the On-Site Rental Store
leases. In addition, if any On-Site Rental Store lease remains in effect
following such one-year period, then the scope of the exclusivity restrictions
contained in paragraph 2 shall be reduced to a radius of the surrounding trade
area for each On-Site Rental Store, which trade area the parties agree is within
a half-hour drive (at midnight) of such On-Site Rental Store (unless such store
is located in an MSA that is not within the top twenty-five (25), in which case
the trade area for these restrictions shall be reduced to a radius of
twenty-five (25) miles surrounding the On-Site Rental Store), and as modified,
the exclusivity provisions of paragraph 2 shall remain in effect with respect to
such geographic area until the expiration or earlier termination of such On-Site
Rental Store lease. In addition, in the event of the termination of this
agreement pursuant to paragraph 5(b), the exclusivity provision of paragraph 2
shall survive only for the benefit of the non-breaching party and shall only
restrict the breaching party for a period of nine (9) months following the
effective date of the termination of this agreement.
|
| |
ii. |
Other Terms. Notwithstanding the expiration or earlier termination
of this agreement, (A) the provisions of paragraph 4 shall survive indefinitely
and (B) the provisions of paragraphs 5 and 6 and Exhibit B as they may relate to
any particular On-Site Rental Store shall remain in effect with respect to each
On-Site Rental Store and Participating Lowe's Store until the expiration or
termination of the lease with respect to such store.
|
| |
(a) |
Governing Law. This agreement shall be governed by and construed
in accordance with the laws of the state of New York, without regard to the
choice of law principles applied in the courts of such state.
|
| |
(b) |
Amendments, Waivers. No term of this agreement shall be amended,
supplemented, waived or modified except in a written document signed by each of
the parties. No delay or omission in the exercise of any right or remedy shall
be deemed a waiver of any right or remedy. No waiver shall constitute a waiver
of any other provision, breach, right or remedy, nor shall any waiver constitute
a continuing waiver.
|
| |
(c) |
Indemnity, Remedies. Each party agrees to indemnify and hold
harmless the other party from any damage, loss, cost or liability (including
legal fees and the cost of enforcing this indemnity) arising out of or resulting
from any third party claim arising out of or related to a breach of this
agreement. Each party acknowledges that money damages would be both incalculable
and an insufficient remedy for any breach of paragraphs 2, 4 or 5(d) of this
agreement by it and that any such breach would cause the other party irreparable
harm. Accordingly, each party also agrees that in the event of any breach or
threatened breach of paragraphs 2, 4 or 5(d) of this agreement, the
non-breaching party, in addition to any other remedies at law or in equity,
shall be entitled, without the requirement of posting a bond or other security,
to equitable relief, including injunctive relief and specific performance.
Should any part of this agreement for any reason be declared by any court of
competent jurisdiction to be invalid, such decision shall not affect the
validity of any remaining portion, which remaining portion shall continue in
full force and effect.
|
| |
(d) |
Successors and Assignees. Neither party may assign its rights or
obligations under this agreement without the written consent of the other party
which consent may be withheld in such party's sole discretion; provided,
however, that this shall not be deemed to prohibit the merger or consolidation
with or into, or sale of all or substantially all of assets to, any other person
or entity This agreement shall be binding upon and inure to the benefit of the
parties and their respective permitted successors and assigns.
|
| |
(e) |
Entire Agreement. This agreement, together with the exhibits
hereto, the On-Site Rental Store leases executed pursuant to this agreement and
the confidentiality agreement, dated January 28, 2000, constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior or contemporaneous agreements, promises or representations,
written or oral, including the Pilot Agreement. No party is relying upon any
representations or promises other than those set forth herein.
|
| |
(f) |
Counterparts. This agreement may be executed by facsimile and in
one or more counterparts, each of which shall be deemed an original and all of
which shall constitute one and the same instrument.
|
| |
(g) |
Communications. Each party acknowledges that the roll-out schedule
and operating requirements contemplated by this agreement will require regular
and detailed communication and exchange of information between the parties.
Accordingly, the parties initially designate the following individuals to lead
and coordinate communications: (1) Chief Marketing Officer, NRI; and (2) Vice
President Specialty Sales, Lowe's. From time to time after the date hereof,
either party may designate one or more individuals to handle all or certain
specific communications upon prior notice to the other party.
|
| |
(h) |
Dispute Resolution. The parties will endeavor to resolve disputes
internally in the following manner:
|
| |
i. |
Each party will designate a representative in order to attempt to resolve any
disputes between the parties relating to the strategic alliance. In the event
that one of the parties desires to raise an issue relating to the strategic
alliance, that party's representative will summarize the issue in writing and
forward the writing to the other party's representative. The parties will
attempt to resolve the issue within ten (10) business days after receipt of the
writing by negotiating in good faith to develop a mutually satisfactory
solution. The parties must mutually agree to any resolution by the
representatives.
|
| |
ii. |
If the representatives are unable to resolve the matter within ten (10) business
days, the issue will be submitted to the Chief Marketing Officer for NRI and
Vice President of Specialty Sales for Lowe's (or such other persons as may be
designated from time to time by either party upon prior notice) for resolution
within ten (10) business days. The parties must mutually agree to any resolution
by such officers.
|
| |
iii. |
If such officers are unable to resolve the matter within such ten (10) business
day period, then either party may seek recourse through any other available
means.
|
| |
iv. |
In order to ensure the efficacy of this provision, each party is estopped from
asserting laches as a result of the other party's compliance with this paragraph
6(h). The parties also agree that any cure period for a material breach shall
run concurrently with this dispute resolution process.
|
| |
v. |
Nothing in this agreement is intended to preclude either party from seeking
injunctive or other equitable relief from a court of competent jurisdiction at
any time.
|
| |
vi. |
Any and all disputes with respect to an individual lease shall be governed
exclusively by the terms of the applicable lease, unless such dispute
constitutes a material breach of this agreement under paragraph 5.
|
| |
(i) |
Authority. Each party represents and warrants that it has the
authority to enter this agreement and perform its obligations hereunder and that
the execution of this agreement does not conflict with any other agreement to
which it is a party.
|
| |
(j) |
Force Majeure. Neither party shall be required to perform any
term, condition, or covenant of this agreement, so long as such performance is
delayed or prevented by acts of God, strikes (other than by vendors or vendors'
employees), lockouts (other than by vendors or vendors' employees), material or
labor restrictions by any governmental authority, civil riot, floods, and any
other cause not reasonably within the control of the party and which by the
exercise of due diligence the party is unable, wholly or in part, to prevent or
overcome.
|
| |
(k) |
Relationship of the Parties. The parties acknowledge and agree
that, with respect to the commitments and obligations contemplated by this
agreement, the parties are in a strategic alliance. Notwithstanding the
foregoing, the parties acknowledge and agree that no partnership or joint
venture is intended by this agreement and that they are not agents of each other
and that one party cannot legally bind the other. Accordingly, each party agrees
that it shall not order any merchandise or equipment, incur any indebtedness,
enter into any undertaking or make any commitment in the other party's name or
purporting to be on the other party's behalf. Each party agrees that it shall
not represent, suggest or indicate in any way to any of its suppliers, printers,
service companies or other business entities that it is financially affiliated
with, backed, supported, maintained or assisted by the other party in any
manner.
|
| |
(l) |
Notices. All notices and other communication required under this
agreement shall be in writing and shall be delivered by certified or registered
mail (first class postage pre-paid), by a commercially recognized guaranteed
overnight delivery service, or facsimile transmission (only if such transmission
is confirmed by certified or registered mail or guaranteed overnight delivery)
to Lowe's at Xxxx'x Companies, Inc., 0000 Xxxxxx Xxxxxx Xxxx, Xxxxx Xxxxxxxxxx,
XX 00000, Fax number 000-000-0000 Attn.: Vice President Specialty Sales, with a
copy to Law Department, 0000 Xxxxxx Xxxxxx Xxxx, Xxxxxxxxxx, XX 00000, Fax
number 000-000-0000 and to NRI at NationsRent, Inc., 000 Xxxx Xxx Xxxx
Xxxxxxxxx, Xxxx Xxxxxxxxxx, XX 00000, Fax number 000-000-0000, Attn.: Xxxxxx X.
Xxxxxxxxxx, Executive Vice President, with a copy to Xxxxxx X. Xxxxxxxx, Vice
President, General Counsel and Secretary, 000 Xxxx Xxx Xxxx Xxxxxxxxx, Xxxx
Xxxxxxxxxx, XX 00000, Fax number 000-000-0000 or to any subsequently designated
address. 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 guaranteed overnight delivery or certified or registered mail.
|
[Signatures on following page]
By executing this agreement, each of the undersigned
acknowledges and agrees that this agreement memorializes the principal terms and
conditions in which the parties will implement the On-Site Rental Concept and
constitutes the binding agreement of such party with respect to the transactions
described above. Except as otherwise set forth herein, each party will be
responsible for its own fees and costs in negotiating and entering into this
transaction and performing its obligations hereunder.
If you agree to the terms set forth in this agreement, please
sign a copy of this agreement in the space indicated below and return it to me.
Very truly yours,
NATIONSRENT, INC.
By:
Xxxxxx X. Xxxxxxxxxx
Executive Vice President
AGREED AND ACCEPTED AS OF THE
DATE FIRST ABOVE WRITTEN
XXXX'X COMPANIES, INC.
By:
Name:
Title:
