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EXHIBIT 10.14
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PURCHASE AGREEMENT
AMONG
RENTX INDUSTRIES, INC.,
THE
SHAREHOLDERS
OF
SCOTTY RENTS, INC. AND
XXXXXXX X. XXXX
AS OF APRIL 21, 1997
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TABLE OF CONTENTS
Page
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1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Purchase and Sale. . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1. Basic Transaction . . . . . . . . . . . . . . . . . . . . . 1
2.2. Purchase Price; Payment . . . . . . . . . . . . . . . . . . 1
2.3. Sales Taxes, Etc. . . . . . . . . . . . . . . . . . . . . . 2
2.4. Closing; Closing Date . . . . . . . . . . . . . . . . . . . 2
2.5. Deliveries at the Closing . . . . . . . . . . . . . . . . . 2
3. Representations and Warranties and Agreements. . . . . . . . . . . . 2
3.1. Representations and Warranties of the Shareholders
and Xxxx . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2. Representations and Warranties of the Buyer . . . . . . . . 14
3.3. Survival of Representations . . . . . . . . . . . . . . . . 15
3.4. Representations as to Knowledge . . . . . . . . . . . . . . 15
4. Pre-Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . 15
4.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2. Operation and Preservation of Business . . . . . . . . . . . 15
4.3. Acquisitions and Dispositions of Rental Equipment . . . . . 15
4.4. Full Access . . . . . . . . . . . . . . . . . . . . . . . . 16
4.5. Notice of Developments . . . . . . . . . . . . . . . . . . . 16
4.6. Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . 16
4.7. Conveyance of Shareholder Property . . . . . . . . . . . . . 16
4.8. Announcements . . . . . . . . . . . . . . . . . . . . . . . 16
4.9. Closing Date Liabilities and Distribution. . . . . . . . . . 17
5. Post-Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . 17
5.1. Further Assurances . . . . . . . . . . . . . . . . . . . . . 17
5.2. Transition . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.3. Cooperation . . . . . . . . . . . . . . . . . . . . . . . . 17
5.4. Confidentiality . . . . . . . . . . . . . . . . . . . . . . 18
5.5. Post-Closing Announcements . . . . . . . . . . . . . . . . . 18
5.6. Financial Statements . . . . . . . . . . . . . . . . . . . . 18
5.7. Satisfaction of Liabilities . . . . . . . . . . . . . . . . 18
5.8. Certain Environmental Matters . . . . . . . . . . . . . . . 18
5.9. Repurchase of Unpaid Receivables . . . . . . . . . . . . . . 18
5.10. Termination of Obligations . . . . . . . . . . . . . . . . . 18
5.11. Use of Proprietary Software . . . . . . . . . . . . . . . . 19
5.12. Medical Benefits . . . . . . . . . . . . . . . . . . . . . . 19
5.13. Use of Certain Assets . . . . . . . . . . . . . . . . . . . 19
6. Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . 19
6.1. Conditions to Obligation of the Buyer . . . . . . . . . . . 19
6.2. Conditions to Obligation of the Shareholders and Xxxx . . . 21
7. Remedies for Breaches of This Agreement . . . . . . . . . . . . . . 22
7.1. Indemnification Provisions for Benefit of the Buyer and the
Company . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.2. Indemnification Provisions for Benefit of the Shareholders
and Xxxx . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.3. Matters Involving Third Parties . . . . . . . . . . . . . . 23
7.4. Right of Offset. . . . . . . . . . . . . . . . . . . . . . . 24
7.5. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . 24
(i)
3
8. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.1. Termination of Agreement . . . . . . . . . . . . . . . . . . 24
8.2. Effect of Termination . . . . . . . . . . . . . . . . . . . 25
8.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . 25
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.1. No Third-Party Beneficiaries . . . . . . . . . . . . . . . . 25
9.2. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 25
9.3. Succession and Assignment . . . . . . . . . . . . . . . . . 25
9.4. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 25
9.5. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.7. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 26
9.8. Amendments and Waivers . . . . . . . . . . . . . . . . . . . 26
9.9. Severability . . . . . . . . . . . . . . . . . . . . . . . . 26
9.10. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.11. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . 27
9.12. Construction . . . . . . . . . . . . . . . . . . . . . . . . 27
9.13. Incorporation of Exhibits . . . . . . . . . . . . . . . . . 27
9.14. Shareholders' Agent. . . . . . . . . . . . . . . . . . . . . 28
(ii)
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Exhibits:
Exhibit 1.1(a)
Exhibit 1.1(b)
Exhibit 1.1(c)
Exhibit 1.1(d)
Exhibit 1.1(e)
Exhibit 1.1(f)
Exhibit 1.1(g)
Exhibit 1.1(h)
Exhibit 1.1(i)
Exhibit 1.1(j)
Exhibit 3.1(a)(i)
Exhibit 3.1(a)(ii)
Exhibit 3.1(b)
Exhibit 3.1(c)(i)
Exhibit 3.1(c)(ii)
Exhibit 3.1(d)(i)(A)
Exhibit 3.1(d)(i)(B)
Exhibit 3.1(d)(i)(C)
Exhibit 3.1(e)(i)
Exhibit 3.1(e)(ii)
Exhibit 3.1(f)(iv)
Exhibit 3.1(f)(vii)
Exhibit 3.1(g)(i)(A)
Exhibit 3.1(g)(i)(B)
Exhibit 3.1(g)(ii)
Exhibit 3.1(h)(i)
Exhibit 3.1(h)(ii)
Exhibit 3.1(i)(i)
Exhibit 3.1(i)(ii)
Exhibit 3.1(k)
Exhibit 3.1(l)
Exhibit 3.1(m)
Exhibit 3.1(o)(i)
Exhibit 3.1(o)(ii)
Exhibit 3.1(r)(ii)
Exhibit 3.1(r)(iii)
Exhibit 4.3
Exhibit 6.1(j)
Exhibit 6.1(k)
Exhibit 6.2(e)
(iii)
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This Purchase Agreement is entered into as of April 21, 1997
among RentX Industries, Inc., a Delaware corporation (the "Buyer"), and Xxxxx
X. Xxxxx and Xxxxx X. Xxxxx (individually, a "Shareholder" and collectively,
the "Shareholders") and Xxxxxxx X. Xxxx ("Xxxx").
Recitals
Prior to the date hereof the Shareholders and Xxxx owned all of
the issued and outstanding capital stock of Scotty Rents, Inc., a California
corporation (the "Company"). The Shareholders have purchased all of the
capital stock of the Company owned by Xxxx with proceeds from their anticipated
sale of the capital stock of the Company hereunder and Xxxx will indirectly
receive benefits and other consideration from the purchase by the Buyer of the
outstanding capital stock of the Company and the other transactions
contemplated hereby. Following their acquisition of the capital stock of the
Company owned by Xxxx, the Shareholders desire to sell, and the Buyer desires
to purchase, all of the issued and outstanding capital stock of the Company as
provided in this Agreement, and the Buyer and Xxxx desire to enter into the
Employment Agreement and the other agreements and covenants as provided in this
Agreement.
Agreement
NOW, THEREFORE, in consideration of the premises, the mutual
representations, warranties and covenants set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are acknowledged,
the parties agree as follows:
1. Definitions. The terms defined in Exhibit 1.1(a) shall have the meanings
designated therein.
2. Purchase and Sale.
2.1. Basic Transaction. Subject to the terms and conditions set forth
in this Agreement, the Buyer agrees to purchase from the Shareholders, and the
Shareholders agree to sell to the Buyer, all the Shares free and clear of any
Encumbrance or Tax, for the consideration specified in Section 2.2. The Buyer
will have no obligation under this Agreement to purchase less than all of the
Shares.
2.2. Purchase Price; Payment.
(a) The purchase price for the Shares is $3,750,000, increased
or decreased as applicable for the Net Rental Equipment Adjustment. At the
Closing, the Buyer will, by wire transfer or other delivery of immediately
available funds, (i) pay to the Shareholders (subject to Section 2.2(b)),
$3,350,000, subject to increase or decrease as applicable for the Net Rental
Equipment Adjustment, plus $810.60 representing the Personal Property Tax
Amount, and (ii) deposit $400,000 into the Escrow Account (and the amounts paid
and deposited to and in respect of the Shareholders will constitute the full
purchase price for the Shares). The amount deposited in the Escrow Account
will belong to the Shareholders, subject to the Shareholders' indemnification
obligations set forth in this Agreement, and will be held, invested,
administered and disbursed according to Section 7.1(b) hereof and the Escrow
Agreement. The purchase price will be payable to the Shareholders in the
following percentage:
Percentage of
Shareholder No of Shares Owned Purchase Price
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Xxxxx X. Xxxxx and 62,707 100%
Xxxxx X. Xxxxx, jointly
(b) At the Closing, the Buyer will deposit into a demand
deposit account in the name of the Buyer and the Shareholders' Agent, from the
amount otherwise payable to the Shareholders pursuant to Section 2.2(a)(i), an
amount equal to the Reserve Amount, and such funds shall initially constitute
the Liabilities Reserve. The funds on deposit in the Closing Date Liabilities
Reserve will belong to the Shareholders, subject to the provisions of this
Section 2.2(b). Following the Closing, the Closing Date Liabilities Reserve
will be applied to the payment of Reserved Liabilities, by disbursements from
that account by the Buyer or the Shareholders' Agent, as the Reserved
Liabilities are ascertained. To the extent that the Buyer receives a xxxx or
invoice representing, or is otherwise aware of, any Reserved Liabilities, the
Buyer may cause funds to be disbursed from the Reserve Amount to satisfy such
Reserved Liabilities. Reserved Liabilities representing accrued vacation and
other accrued employee benefits with respect to those persons who are employees
of the Company as of immediately prior to the Closing Date and who become
employees of the Buyer effective as of the Closing
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will be satisfied by payment of the amount thereof to the Buyer as the Buyer
provides such benefits or makes cash payments in lieu thereof to employees.
The Shareholders' Agent will take all actions necessary to cause the
Liabilities Reserve to be applied to satisfy Reserved Liabilities and, if the
Liabilities Reserve has been exhausted, the Shareholders and Xxxx will provide
additional funds as required to satisfy Reserved Liabilities. Nothing in this
Agreement will be deemed to limit the joint and several obligations of the
Shareholders and Xxxx to pay the Reserved Liabilities in full. After all
Reserved Liabilities have been satisfied, any excess Liabilities Reserve on
deposit in the account created pursuant to this Section 2.2(b) will be paid to
the Shareholders. Any disputes concerning the Liabilities Reserve will be
settled by arbitration as provided in this Agreement.
2.3. Sales Taxes, Etc. The Shareholders and Xxxx will pay all sales,
use, transfer, licensing, recording, stamp and other Taxes, fees and charges
payable in respect of or as a result of the sale and transfer of the Shares to
the Buyer pursuant to this Agreement and of the merger of the Company into the
Buyer as contemplated by this Agreement.
2.4. Closing; Closing Date. The closing of the transactions
contemplated by this Agreement (the "Closing") is anticipated to take place on
April 21, 1997 (but in any event on or before May 31, 1997), commencing at 8:00
a.m. local time in Denver, Colorado, at the offices of Xxxxxxx & Xxxxxx L.L.C.,
and all transactions contemplated by this Agreement will be effective at 12:00
a.m. local time in Pleasant Hill, California on the day of the Closing (such
effective time being the "Closing Date").
2.5. Deliveries at the Closing. At the Closing, (a) the Shareholders
will deliver, or cause to be delivered, to the Buyer the certificates,
instruments and documents referred to in Section 6.1, (b) the Buyer will
deliver to the Shareholders the certificates, instruments and documents
referred to in Section 6.2, (c) the Shareholders will deliver to the Buyer
stock certificates representing all the Shares, duly endorsed in blank or
accompanied by stock powers duly executed in blank, free and clear of any
Encumbrances or Taxes and (d) the Buyer will pay and deposit the purchase price
in accordance with Section 2.2.
3. Representations and Warranties and Agreements.
3.1. Representations and Warranties of the Shareholders and Xxxx. The
Shareholders and Xxxx jointly and severally represent and warrant to the Buyer
that the statements contained in this Section 3.1 are correct and complete as
of the date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were then
substituted for the date of this Agreement throughout this Section 3.1).
Accordingly, the Shareholders and Xxxx each represent, warrant and agree:
(a) Organization, Good Standing, Etc. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California, and is not required to be qualified or
authorized to do business as a foreign corporation in any jurisdiction. The
Company has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
The copies of the articles of incorporation (certified by the Secretary of
State of California) and the bylaws of the Company, both as amended to date,
which have been delivered to the Buyer by the Shareholders and are attached as
Exhibits 3.1(a)(i) and 3.1(a)(ii), respectively, are complete and correct, and
the Company is not in default under or in violation of any provision of its
articles of incorporation or bylaws. The minute books (which contain the
records of all meetings of or actions by the shareholders, the board of
directors, and any committees of the board of directors) and the stock
certificate books and the stock record books of the Company, copies of which
have been delivered to the Buyer by the Shareholders, are correct and complete.
(b) Ownership and Capitalization. Each Shareholder owns,
beneficially and of record, free and clear of any Encumbrance or Tax, the
number of shares of the capital stock, $1.00 par value, of the Company set
forth opposite such Shareholder's name in Section 2.2(a), which constitutes all
of the issued and outstanding capital stock of the Company. The authorized
capital stock of the Company consists of 250,000 shares of one class of stock
designated as capital stock, $1.00 par value. All of the issued and
outstanding shares of the Company's capital stock have been duly authorized and
validly issued, and are fully paid and nonassessable, with no personal
Liability attaching to the ownership thereof. There are no authorized or
outstanding stock or securities convertible into or exchangeable for, or any
authorized or outstanding option, warrant or other right to subscribe for or to
purchase, or convert any obligation into, any unissued shares of its
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capital stock, and the Company has not agreed to issue securities so
convertible or exchangeable or any such option, warrant or other right. There
are no authorized or outstanding stock appreciation, phantom stock, profit
participation or similar rights with respect to the Company. There are no
voting trusts, voting agreements, proxies or other agreements or understanding
with respect to any capital stock of the Company. Except as set forth on
Exhibit 3.1(b), all of which the Shareholders shall cause to be terminated
prior to the Closing, there are no existing rights of first refusal, buy-sell
arrangements, options, warrants, rights, calls, or other commitments or
restrictions of any character relating to any of the Shares, except those
restrictions on transfer imposed by the Securities Act of 1933, as amended, and
applicable state securities laws. The Company has no subsidiaries and no
interest in any other corporation, partnership, limited partnership, limited
liability company, association or joint venture.
(c) Authority; No Violation. (i) Each Shareholder, Xxxx and
each relative or affiliate of the Company or of a Shareholder who is party to
any Other Seller Agreement has full and absolute right, power, authority and
legal capacity to execute, deliver and perform this Agreement and all Other
Seller Agreements to which such Person is a party, and this Agreement
constitutes, and the Other Seller Agreements will when executed and delivered
constitute, the legal, valid and binding obligations of, and shall be
enforceable in accordance with their respective terms against, each such Person
who is a party thereto. The execution, delivery and performance of this
Agreement and the Other Seller Agreements and the consummation of the
transactions contemplated hereby and thereby will not (A) violate any Legal
Requirement to which the Company, any Shareholder, Xxxx or any relative or
affiliate of the Company, Xxxx or of any Shareholder who is a party to any
Other Seller Agreement is subject or any provision of the articles of
incorporation or bylaws of the Company or of any such affiliate, or (B)
violate, with or without the giving of notice or the lapse of time or both, or
conflict with or result in the breach or termination of any provision of, or
constitute a default under, or give any Person the right to accelerate any
obligation under, or result in the creation of any Encumbrance upon any
properties, assets or business of the Company, of any Shareholder, of Xxxx or
of any such relative or affiliate pursuant to, any indenture, mortgage, deed of
trust, lien, lease, license, Permit, agreement, instrument or other arrangement
to which the Company, any Shareholder, Xxxx or any such relative or affiliate
is a party or by which the Company, any Shareholder, Xxxx or any such relative
or affiliate or any of their respective assets and properties is bound or
subject. Except for notices that will be given and consents that will be
obtained by the Shareholders or Xxxx prior to the Closing (which are set forth
in Exhibit 3.1(c)(i)), neither the Company, any Shareholder, Xxxx, nor any such
relative or affiliate need give any notice to, make any filing with or obtain
any authorization, consent or approval of any Governmental Authority or other
Person in order for the parties to consummate the transactions contemplated by
this Agreement and the Other Seller Agreements.
(ii) The merger immediately following the Closing of
the Company into the Buyer will not violate, with or without the giving of
notice or the lapse of time or both, or conflict with or result in the breach
or termination of any provision of, or constitute a default under, or give any
Person the right to accelerate any obligation under, or result in the creation
of any Encumbrance upon any properties, assets or business of the Buyer or the
Company pursuant to, any indenture, mortgage, deed of trust, lien, lease,
license, agreement, instrument or other arrangement to which the Company is a
party immediately prior to the transfer of the Shares to the Buyer pursuant to
this Agreement or by which the Company or any of its assets and properties is
bound or subject immediately prior to the transfer of the Shares to the Buyer
pursuant to this Agreement (collectively, the "Specified Agreements"). Except
for notices that will be given and consents that will be obtained by the
Shareholders or Xxxx prior to the Closing (which are set forth on Exhibit
3.1(c)(ii)), the Company, in connection with such merger, does not need to give
any notice to or obtain any consent from any Person in connection with any
Specified Agreement.
(d) Financial Statements; Absence of Liabilities. (i) The
unaudited balance sheets of the Company as of December 31, 1993, December 31,
1994, December 31, 1995 and December 31, 1996, the related statements of
income, shareholders' equity and cash flows for the fiscal years then ended,
the unaudited balance sheet of the Company as of February 28, 1997 (the latter
being referred to as the "Latest Balance Sheet"), and the related statement of
income, shareholders' equity and cash flows for the two-month period then
ended, have been prepared in accordance with good accounting practices and on a
basis consistent with those of prior years, are in accordance with the books
and records of the Company (which books and records are complete and correct),
are accurate and fairly present the financial position and results of
operations of the Company as of such dates and for each of the periods
indicated, do not list book values for the assets that are in excess of their
fair market values, and, except as set forth on Exhibit 3.1(d)(i)(A), make full
and adequate provision for all Liabilities to which the Company is subject.
Copies of the financial statements described in the first sentence in this
Section are attached as Exhibit 3.1(d)(i)(B). The expenses itemized on Exhibit
3.1(d)(i)(C) and reflected
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in the Company's financial performance for the 12-month period ended December
31, 1996 will not be realized on an on-going basis, and information sufficient
to determine such financial performance for such 12-month period has been
provided by the Shareholders and Xxxx to the Buyer prior to the date of this
Agreement.
(ii) Since the date of the Latest Balance Sheet, the
Company has not incurred or become subject to any Liability other than
Liabilities incurred in the ordinary course of business. As of the Closing,
the Company will have no Liability (and there is no basis for the assertion of
any Liability), except for the Retained Liabilities.
(e) Absence of Certain Leases, Changes or Events. The Company
is not, except as set forth on Exhibit 3.1(e)(i), a party to or otherwise bound
by any contract or agreement that has a term of three or more months pursuant
to which the Company is obligated to furnish any equipment, products or
services, and no such contract or agreement has been prepaid with respect to
any period after the Closing Date. Since December 1, 1996, the Company has not
(i) incurred any debt, indebtedness or other Liability, except current
Liabilities incurred in the ordinary course of business; (ii) delayed or
postponed the payment of accounts payable or other Liabilities or accelerated
the collection of any receivable beyond stated, normal terms; (iii) except as
set forth on Exhibit 3.1(e)(ii), sold (except as set forth on Exhibit 4.3 with
respect to the period between December 1, 1996 and the date of this Agreement
and as permitted by Section 4.3 with respect to the period after the date of
this Agreement and before the Closing Date) or otherwise transferred any of its
equipment or other assets or properties; (iv) cancelled, compromised, settled,
released, waived, written-off or expensed any account or note receivable,
right, debt or claim involving more than $10,000 in the aggregate; (v) changed
in any significant manner the way in which it conducts its business; (vi)
except as set forth on Exhibit 3.1(e)(ii), made or granted any individual wage
or salary increase in excess of 10% or $1.00 per hour, any general wage or
salary increase, or any additional benefits of any kind or nature; (vii) except
as otherwise expressly permitted by this Section 3.1(e), (A) except as set
forth on Exhibit 3.1(e)(ii), entered into any contracts or agreements, or made
any commitments, involving more than $10,000 individually or in the aggregate
or (B) accelerated, terminated, delayed, modified or cancelled any agreement,
contract, lease or license (or series of related agreements, contracts, leases
and licenses) involving more than $10,000 individually or in the aggregate;
(viii) suffered any adverse fact or change, including, without limitation, to
or in its business, assets, financial condition, prospects or customer or
supplier relationships; (ix) except as set forth on Exhibit 3.1(e)(ii), made
any payment or transfer to or for the benefit of any shareholder, officer or
director or any relative or affiliate thereof or permitted any Person,
including, without limitation, any shareholder, officer, director or employee
or any relative or affiliate thereof, to withdraw assets from the Company
(other than cash and other Excluded Assets distributed to the Shareholders or
Xxxx as set forth on Exhibit 3.1(e)(ii) and other than the payment to the
Shareholders or Xxxx of the proportionate monthly amount of their respective
normal annualized salaries due and payable during such period); (x) failed to
make purchases of new or used equipment necessary to maintain its rental/lease
inventory at the level which is reasonably necessary to maintain the revenue
base experienced by the Company during the 12 months preceding such date; (xi)
decreased its lease rate with respect to any equipment by 10% or more from the
applicable lease rate in effect on December 1, 1996 or rented or leased any
equipment or sold or otherwise transferred any inventory, equipment or services
at below-normal rental or lease rates or margins; (xii) suffered any other
significant occurrence, event, incident, action, failure to act or transaction
outside the ordinary course of business; or (xiii) agreed to incur, take, enter
into, make or permit any of the matters described in clauses (i) through (xii).
(f) Tax Matters.
(i) There has been duly and timely filed in proper
form by or on behalf of the Company, or a filing extension from the appropriate
Governmental Authorities has been obtained with respect to, all Tax Returns
required to be filed by applicable Legal Requirement on or prior to the date of
this Agreement. All assessments, Taxes, fees or other charges imposed on the
Company, any of its properties or any of its prior or present shareholders
(pursuant to the Company's "S" corporation election, if any such election has
been made) in respect of the periods covered by such Tax Returns have been
paid, or adequate reserves have been provided for (however, no representation
is made with respect to reserves by shareholders) with respect to the payment
of all Taxes (whether or not disputed) payable in respect of periods through
the date of this Agreement and all prior periods, and, to the best knowledge of
the Shareholders and Xxxx, all Tax Liabilities arising out of transactions
entered into or states of fact existing prior to the date of this Agreement.
There is no unpaid interest, penalty or addition to any Tax due or claimed to
be due from the Company (or any of its prior or present shareholders pursuant
to the Company's "S" corporation election, if any such election has been made),
or any Tax deficiency, determination or assessment outstanding against the
Company (or any of its prior or present shareholders
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pursuant to the Company's "S" corporation election, if any such election has
been made). No audit of any Tax Returns of the Company is pending or, to the
best knowledge of the Shareholders and Xxxx, has been threatened, and the
Company has not given any waiver of any statute of limitations relating to the
assessment or payment of Taxes, which waiver has not yet expired. All Tax
Returns, or extensions thereof required to be filed, and all Taxes required to
be paid, on or prior to the Closing Date by or on behalf of the Company, of any
nature whatsoever, shall have been so filed or paid prior to the Closing Date.
Following the Closing, the Shareholders and Xxxx (but not the Company) will pay
all Taxes attributable to the Company or its business and activities through
the Closing Date, including all Taxes attributable to the transactions
contemplated by this Agreement, such payment to be made on or before the due
date of such Tax Returns.
(ii) The Company has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and complete in all
respects. All Taxes owed by the Company (whether or not shown on any Tax
Return) have been paid. The Company is not currently the beneficiary of any
extension of time within which to file any Tax Return. No claim has ever been
made by an authority in a jurisdiction where the Company does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction. There
are no Encumbrances on any of the assets of the Company that arose in
connection with any failure (or alleged failure) to pay any Tax.
(iii) The Company has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, shareholder or other
third party.
(iv) To the best knowledge of the Shareholders and
Xxxx, there is no basis for any authority to assess any additional Taxes for
any period for which Tax Returns have been filed. There is no dispute or claim
concerning any Tax Liability of the Company either (A) claimed or raised by any
authority in writing or (B) as to which any of the Shareholders or Xxxx have
knowledge. Exhibit 3.1(f)(iv) lists all federal, state, local and foreign
income Tax Returns filed with respect to the Company for taxable periods ended
on or after January 1,1990, indicates those Tax Returns that have been audited
and indicates those Tax Returns that currently are the subject of audit. The
Shareholders and Xxxx have delivered to Buyer correct and complete copies of
all federal income Tax Returns, examination reports, and statements of
deficiencies filed or assessed against or agreed to by the Company since
January 1, 1990.
(v) The Company has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(vi) Neither the Company nor any of its shareholders
has ever filed (A) an election pursuant to Section 1362 of the Code that the
Company be taxed as an "S" corporation or (B) a consent pursuant to Section
341(f) of the Code relating to collapsible corporations. The Company has not
made any payments, is not obligated to make any payments and is not a party to
any agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Code Section 280G. The Company has
not been a United States real property holding corporation within the meaning
of Code Section 897(c)(2) during the applicable period specified in Code
Section 897(c)(1)(A)(ii). The Company has disclosed on its federal income Tax
Returns all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Code Section 6662.
The Company is not a party to any Tax allocation or sharing agreement. The
Company has not been a member of an Affiliated Group filing a consolidated
federal income Tax Return (other than a group the common parent of which was
the Company) and has no Liability for the Taxes of any Person (other than the
Company) under Treasury Regulation Section 1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or successor, by contract or
otherwise. The total adjusted basis of the Acquired Assets exceeds the sum of
the Company's Liabilities plus the amount of Liabilities to which the Acquired
Assets are subject.
(vii) Exhibit 3.1(f)(vii) sets forth the following
information with respect to the Company as of the most recent practicable date
(as well as on an estimated pro forma basis as of the Closing giving effect to
the consummation of the transactions contemplated hereby): (A) the basis of
the Company in its assets; and (B) the amount of any net operating loss, net
capital loss, unused investment or other credit, unused foreign tax credit or
excess charitable contribution allocable to the Company.
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(g) Assets and Properties.
(i) As of the date of this Agreement, the Company
owns all of the Acquired Assets (other than certain items of Shareholder
Property), free and clear of all Encumbrances (except for those Encumbrances
which the Company shall cause to be terminated as of the Closing). As of the
Closing, all of the Acquired Assets (including all of the Shareholder Property)
will be owned by the Company, free and clear of all Encumbrances, and the
Company will have good and marketable title to (or, in the case of Acquired
Assets that are leased, valid leasehold interests in) all the Acquired Assets.
The Acquired Assets consist of (A) the tangible and intangible assets of the
Company (exclusive of the Excluded Assets) in existence as of December 1, 1996
(except as set forth on Exhibit 3.1(e)(ii) with respect to cash and other
Excluded Assets which was distributed to its shareholders and except for such
changes in inventory and in accounts receivable in the ordinary course of
business as are not in violation of Section 3.1(e)(ii) or Section 4.3),
decreased by Current Rental Equipment disposed of from and after the date of
this Agreement in compliance with Section 4.3, and decreased by Current Rental
Equipment sold or otherwise transferred on or after December 1, 1996 but before
the date of this Agreement as set forth on Exhibit 4.3 and (B) all tangible and
intangible assets, including, without limitation, all improvements, fixtures
and fittings, owned by any Shareholder, Xxxx or any relative or affiliate
thereof or of the Company which have been used in its business at any time on
or after December 1, 1996 (the "Shareholder Property"), including, without
limitation, the tangible and intangible assets set forth on Exhibit
3.1(g)(i)(A) owned by any Shareholder, Xxxx or any relative or affiliate
thereof. Between December 1, 1996 and the day before the date of this
Agreement, the Company has sold, for cash only, the Current Rental Equipment
described in Exhibit 4.3, but has not otherwise sold, traded, transferred or
otherwise disposed of any Current Rental Equipment. The Acquired Assets are
all of the tangible and intangible assets (other than the Excluded Assets) used
by the Company in, or necessary for the conduct of, its business. The
Acquired Assets and the equipment leased by the Company from third parties who
are not relatives or affiliates of the Company, Xxxx or any Shareholder for
lease by the Company to its customers (the "Third-Party Equipment") encompass
all equipment used by the Company to generate the income reflected in the
financial statements attached as Exhibit 3.1(d)(i)(B), and the total cost to
the Company to lease such Third- Party Equipment during the fiscal year ended
December 31, 1996 and the two- month period ended February 28, 1997 did not
exceed $2,500 and $-0-, respectively. Exhibit 3.1(g)(i)(B) lists all Third
Party Equipment leased by the Company as of the date hereof. The Company does
not lease any equipment from any Shareholder, Xxxx or any relative or affiliate
of the Company, any Shareholder or Xxxx. Except for items rented or leased to
customers, all of the tangible Acquired Assets are located on the Premises.
(ii) The Premises constitute all of the real property,
buildings and improvements used by the Company in its business. The Premises
are supplied with utilities and other services necessary for the operation
thereof. Except as set forth on Exhibit 3.1(g)(ii), the Premises are free from
defects, have been maintained in accordance with normal industry practice, are
in good operating condition and repair and are suitable for the purposes for
which they presently are used. To the best knowledge of the Shareholders and
Xxxx, the Premises have received all approvals of Governmental Authorities
(including Permits) required in connection with the occupation and operation
thereof and have been occupied, operated and maintained in accordance with
applicable Legal Requirements. The Company has not received notice of
violation of any Legal Requirement or Permit relating to its operations or its
owned or leased properties.
(iii) No party to any lease with respect to any
Premises has repudiated any provision thereof, and there are no disputes, oral
agreements or forbearance programs in effect as to any such lease.
(h) Lists of Properties, Contracts and Other Data. Attached
as Exhibit 3.1(h)(ii) is a correct and complete list setting forth the items
identified on Exhibit 3.1(h)(i). True and complete copies of the items
referred to in Exhibit 3.1(h)(ii) have been delivered to the Buyer. All items
referred to in Exhibit 3.1(h)(ii) are valid, in full force and effect,
enforceable in accordance with their respective terms for the period stated
therein, and no party has repudiated any provision thereof and no action or
claim is pending or threatened to revoke, modify, terminate or render invalid
any of such items. Neither the Company nor any other party thereto is in
breach or default in performance of any of its respective obligations under,
and no event exists which, with the giving of notice or lapse of time or both,
would constitute a breach, default or event of default on the part of a party
to, any of the foregoing that is continuing unremedied.
- 6 -
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(i) Litigation; Compliance with Applicable Laws and Rights.
(i) There is no outstanding Order against, nor,
except as set forth on Exhibit 3.1(i)(i), is there any litigation, proceeding,
arbitration or investigation by any Governmental Authority or other Person
pending or threatened against, the Company, its properties or its business or
relating to the transactions contemplated by this Agreement, nor is there any
basis for any such action.
(ii) To the best knowledge of the Shareholders and
Xxxx, except as set forth on Exhibit 3.1(i)(ii), neither the Company nor the
Company's assets (including its Premises, facilities, machinery and equipment)
are in violation of any applicable Legal Requirement or Right. The Company has
not received notice from any Governmental Authority or other Person of any
violation or alleged violation of any Legal Requirement or Right, and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand or notice has been filed or commenced or is pending or threatened
against the Company alleging any such violation.
(j) Accounts Receivable. The accounts receivable of the
Company reflected on its Latest Balance Sheet, and all accounts receivable
arising prior to the Closing Date, arose and will arise from bona fide
transactions by the Company in the ordinary course of business, are valid
receivables with trade customers subject to no setoffs or counterclaims, and
are current and collectible.
(k) Product Quality, Warranty and Liability. All products and
services sold, rented, leased, provided or delivered by the Company to
customers on or prior to the Closing Date conform to applicable contractual
commitments, express and implied warranties, product and service specifications
and quality standards, and the Company has no Liability and there is no basis
for any Liability for replacement or repair thereof or other damages in
connection therewith. No product or service sold, rented, leased, provided or
delivered by the Company to customers on or prior to the Closing is subject to
any guaranty, warranty or other indemnity beyond the applicable standard terms
and conditions of sale, rent or lease. The Company has no Liability and there
is no basis for any Liability arising out of any injury to a Person or property
as a result of the ownership, possession, provision or use of any product or
service sold, rented, leased, provided or delivered by the Company on or prior
to the Closing Date. All product or service liability claims that have been
asserted against the Company since January 1, 1992, whether covered by
insurance or not and whether litigation has resulted or not, other than those
listed and summarized on Exhibit 3.1(i)(i), are listed and summarized on
Exhibit 3.1(k).
(l) Insurance. The Company has policies of insurance (i)
covering risk of loss on its Acquired Assets, (ii) covering products and
services liability and liability for fire, property damage, personal injury and
workers' compensation coverage and (iii) for business interruption, all, to the
best knowledge of the Shareholders and Xxxx, with responsible and financially
sound insurance carriers in adequate amounts and in compliance with
governmental requirements and in accordance with good industry practice. All
such insurance policies are valid, in full force and effect and enforceable in
accordance with their respective terms and no party has repudiated any
provision thereof. All such policies will remain in full force and effect
until the Closing Date. Neither the Company nor any other party to any such
policy is in breach or default (including with respect to the payment of
premiums or the giving of notices) in the performance of any of their
respective obligations thereunder, and no event exists which, with the giving
of notice or the lapse of time or both, would constitute a breach, default or
event of default, or permit termination, modification or acceleration under any
such policy. There are no claims, actions, proceedings or suits arising out of
or based upon any of such policies nor, to the best knowledge of the
Shareholders and Xxxx, does any basis for any such claim, action, suit or
proceeding exist. All premiums have been paid on such policies as of the date
of this Agreement and will be paid on such policies through the Closing Date.
The Company has been covered during the five years prior to the date of this
Agreement by insurance in scope and amount customary and reasonable for the
businesses in which it has engaged during the aforementioned period. All
claims made during such five-year period with respect to any insurance coverage
of the Company, other than those described on Exhibit 3.1(k), are set forth on
Exhibit 3.1(l).
(m) Pension and Employee Benefit Matters.
(i) Exhibit 3.1(m) lists each Employee Benefit Plan
that: (A) is subject to any provision of ERISA; (B) is maintained,
administered or contributed to by the Company; (C) covers any employee or
former employee of the Company; or (D) under which the Company has any
liability to make contributions or pay benefits. Copies of all
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12
such plans, summary plan descriptions, annual reports, summary annual reports,
plan administrative records and financial records, correspondence and, if
applicable, related trust agreements, and all amendments and written
interpretations of such plans have been delivered by the Shareholders and Xxxx
to the Buyer and attached hereto as part of Exhibit 3.1(m), together with the
three most recent annual reports (Form 5500 including Schedule B if applicable)
prepared in connection with each such plan required to file an annual report.
Such plans are hereinafter referred to collectively as the "Company Employee
Benefit Plans."
(ii) Each Company Employee Benefit Plan has been
maintained and administered in substantial compliance with its terms and with
the requirements prescribed by any and all Legal Requirements that are
applicable to such Company Employee Benefit Plan.
(iii) The only Company Employee Benefit Plans that
individually or collectively would constitute Employee Pension Benefit Plans
(the "Retirement Plans") are identified in Exhibit 3.1(m) as the "Retirement
Plans."
(iv) Exhibit 3.1(m) lists each employment, severance
or other similar contract, arrangement or policy and each plan or arrangement
(written or oral) providing for insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits, deferred
compensation, profit sharing, bonuses, stock options, stock appreciation rights
or other forms of incentive compensation, reduced interest or interest free
loans, mortgages, relocation assistance or post-retirement insurance,
compensation or other benefits that: (A) is not an Employee Benefit Plan; (B)
is entered into, maintained or contributed to, by the Company; and (C) covers
any employee or former employee of the Company. Such contracts, plans and
arrangements as are described in this Section 3.1(m)(ix), are hereinafter
referred to collectively as the "Benefit Arrangements." Copies and
descriptions (including descriptions of the number and employment
classifications of employees covered by each such Benefit Arrangement) have
been delivered by the Shareholders and Xxxx to the Buyer and attached hereto as
part of Exhibit 3.1(m). Each Benefit Arrangement has been maintained and
administered in substantial compliance with its terms and with the requirements
prescribed by any and all Legal Requirements that are applicable to each such
Benefit Arrangement.
(v) Except as set forth in any Employee Benefit Plan
or Benefit Arrangement identified in Exhibit 3.1(m) and except as provided by
Legal Requirement or any collective bargaining agreement or any employment
contract identified on Exhibit 3.1(m), the employment of all persons presently
employed or retained by the Company is terminable at will.
(vi) No Company Employee Benefit Plan is maintained in
connection with any trust described in Section 501(c)(9) of the Code. Any
assets of any Company Employee Benefit Plan that are subject to the trust
requirement of ERISA Section 403 are held in trust in compliance with ERISA
Section 403.
(vii) Each Retirement Plan that is intended to be
Qualified within the meaning of Section 401(a) of the Code ("Qualified") is so
Qualified, has been so Qualified during the period from its adoption to date,
has been administered in a manner that would not adversely affect its Qualified
status and has received a currently effective determination letter from the
Internal Revenue Service that the Plan is (or continues to be) currently
Qualified for federal income tax purposes and shall be terminated by action of
the Board of the Company on or before the Closing Date. The Shareholders and
Xxxx have delivered to the Buyer copies of such determination letters and
termination Resolutions, and copies thereof have been attached hereto as part
of Exhibit 3.1(m). Each trust in which Retirement Plan assets are held is
exempt from tax pursuant to Section 501(a) of the Code.
(viii) There have been no prohibited transactions with
respect to any such Company Employee Benefit Plan. No "Fiduciary" (as defined
in Section 3(21) of ERISA) has any Liability for breach of fiduciary duty or
any other failure to act or comply in connection with the administration or
investment of the assets of any such Company Employee Benefit Plan. No action,
suit, proceeding, hearing or investigation with respect to the administration
or the investment of the assets of any such Company Employee Benefit Plan
(other than routine claims for benefits) is pending or, to the best knowledge
of the Shareholders and Xxxx is threatened. None of the Shareholders or Xxxx
has any knowledge of any basis for any such action, suit, proceeding, hearing
or investigation.
- 8 -
13
(ix) No condition exists that would prevent the
Company from amending or terminating any Company Employee Benefit Plan or
Benefit Arrangement providing health or medical benefits in respect of any
active or retired employees of the Company.
(x) Each Company Employee Benefit Plan and Benefit
Arrangement has been maintained and administered in compliance with its terms
and with the requirements prescribed by any and all Legal Requirements,
including but not limited to ERISA and the Code, that are applicable to such
Plans. Nothing done or omitted to be done and no transaction or holding of any
asset under or in connection with any Company Employee Benefit Plan or Benefit
Arrangement has or will make the Company or any officer or director of the
Company subject to any Liability under Title I of ERISA or any Liability for
any Tax under Section 4972 or Section 4975 through 4980B, inclusive, of the
Code.
(xi) Any Company Employee Benefit Plan that is a
"group health plan" (as defined in Code Section 5000(b)(l)) has been
administered in accordance with the requirements of Part 6 of Subtitle B of
Title I of ERISA and Code Section 4980B and nothing done or omitted to be done
in connection with maintenance or administration of any Company Employee
Benefit Plan that is a "group health plan" has or will make the Company subject
to any liability under Title I of ERISA, excise Tax Liability under Code
Section 4980B or has or will result in any loss of income exclusion for a
participant under Code Sections 105(h) or 106.
(xii) There is no contract, agreement, plan or
arrangement covering any employee or former employee of the Company that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to the terms of Section 280G or 162(a)(l) of
the Code.
(xiii) The Company has made, before the date of this
Agreement, all required contributions and premium payments under each Company
Employee Benefit Plan and Benefit Arrangement for all completed payroll
periods. The employer and employee contributions to any Retirement Plan for
any payroll period completed on or before the Closing Date will have been made
on or before the Closing Date.
(xiv) Except as disclosed in Exhibit 3.1(m), there has
not been with respect to the Company's active or retired employees, nor will
be, as of the Closing Date, any amendment to, written interpretation or
announcement (whether or not written) by the Company relating to, or change in
employee participation or coverage under, any Company Employee Benefit Plan or
Benefit Arrangement that would increase the expense of maintaining or funding
benefits under such Company Employee Benefit Plan or Benefit Arrangement above
the level of the expense incurred in respect thereof for the fiscal year ended
on December 31, 1996.
(xv) The Buyer will have no obligation to employ any
employee of the Company or to continue any Company Employee Benefit Plan, and
will have no Liability under any plan or arrangement maintained by the Company
for the benefit of any employee other than the Company's group health plan.
The Company will terminate all Company Employee Benefit Plans and any
Retirement Plan prior to the Closing Date other than the Company's group health
insurance plan, group life insurance plan, group dental insurance plan and
group vision service plan.
(n) Employees and Labor. The Company has not received any
notice, nor, to the best knowledge of the Shareholders and Xxxx, is there any
reason to believe that any executive or key employee of the Company or any
group of employees of the Company has any plans to terminate his, her or its
employment with the Company. No executive or key employee is subject to any
agreement, obligation, Order or other legal hindrance that impedes or might
impede such executive or key employee from devoting his or her full business
time to the affairs of the Company prior to the Closing Date and, if such
person becomes an employee of the Buyer, to the affairs of the Buyer after the
Closing Date. The Company will not be required to give any notice under the
Worker Adjustment and Retraining Notification Act, as amended, or any similar
Legal Requirement as a result of this Agreement, the Other Seller Agreements or
the transactions contemplated hereby or thereby. The Company does not have any
labor relations problems or disputes, nor has the Company experienced any
strikes, grievances, claims of unfair labor practices or other collective
bargaining disputes. The Company is not a party to or bound by any collective
bargaining agreement, there is no union or collective bargaining unit at the
Company's facilities, and no union organization effort has been threatened,
initiated or is in progress with respect to any employees of the Company.
- 9 -
14
(o) Customer and Supplier Relationships. Exhibit 3.1(o)(i)
lists each customer that individually or with its affiliates accounted for 5%
or more of the Company's sales, rental or lease revenues during either the
fiscal year ended December 31, 1996 or the two-month period ended February 28,
1997 (the "Principal Customers"). Exhibit 3.1(o)(ii) lists each supplier that
individually or with its affiliates accounted for 5% or more of the Company's
purchases of inventory or supplies during either the fiscal year ended December
31, 1996 or the two-month period ended February 28, 1997 (the "Principal
Suppliers"). The Company has good commercial working relationships with its
Principal Customers and Principal Suppliers and since January 1, 1996, no
Principal Customer or Principal Supplier has cancelled or otherwise terminated
its relationship with the Company, materially decreased or limited its
purchases, rentals or leases from, or inventory or supplies supplied to, the
Company, or threatened to take any such action. Neither the Shareholders nor
Xxxx have any basis to anticipate any problems with the Company's customer,
supplier or business relationships. To the best knowledge of the Shareholders
and Xxxx, no Principal Customer or Principal Supplier has any plans to reduce
its purchases, rentals or leases from, or inventory or supplies supplied to,
the Company below levels prevailing since December 31, 1996, and the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby will not adversely affect the relationship of the Company
with any Principal Customer or Principal Supplier prior to the Closing Date or
of the Buyer with any Principal Customer or Principal Supplier after the
Closing Date.
(p) Resale Inventory. The resale inventory of the Company
consists of goods which, in the aggregate, are merchantable, are fit for the
purposes for which they were procured and are held by the Company, are usable
in the ordinary course of the Company's business and are not obsolete.
(q) Condition, Adequacy and Type of Equipment. The
rental/lease inventory of the Company consists of machinery, equipment and
other tangible personal property which are merchantable, are fit and suitable
for the purpose for which they were procured and are held by the Company,
useable in the ordinary course of the Company's business and are not obsolete.
All of the machinery, equipment and other tangible personal property included
in the Acquired Assets (including that held for rental, lease or sale) has been
well maintained and is in good repair and good operating condition. None of
the machinery, equipment or other tangible personal property included in the
Acquired Assets (including that held for rental, lease or sale) is damaged or
defective, normal wear and tear excepted, the Company has not experienced
material problems or deficiencies with respect to its machinery, equipment and
other tangible personal property, and, to the best knowledge of the
Shareholders and Xxxx, there is no basis to anticipate any such problems or
deficiencies.
(r) Environmental Matters.
(i) The Company is conducting and at all times has
conducted its business and operations, and has occupied, used and operated the
Premises and all other real property and facilities presently or previously
owned, occupied, used or operated by the Company, in compliance with all
Environmental Obligations and so as not to give rise to Liability under any
Environmental Obligations or to any impact on the Company's business or
activities. Neither the Shareholders nor Xxxx have any knowledge of pending or
proposed changes to any Environmental Obligations which would require any
changes in any of the Company's Premises, facilities, equipment, operations or
procedures or affect the Company's business or its cost of conducting its
business as now conducted.
(ii) No conditions, circumstances or activities have
existed or currently exist, and neither the Company, Xxxx nor any Shareholder
has engaged in any acts or omissions, with respect to the Premises or any other
real properties, facilities or business presently or previously owned,
occupied, used or operated by the Company or any predecessor (including,
without limitation, off-site disposal or treatment of Hazardous Materials)
which could give rise to any Liability pursuant to any Environmental
Obligation. Exhibit 3.1(r)(ii) identifies all real properties and facilities,
including the addresses thereof, which have been owned, occupied, used or
operated by the Company or its predecessors at any time on or prior to the date
of this Agreement. There are no outstanding, pending or threatened Orders
against the Company, Xxxx or any Shareholder, nor are there any current,
pending or threatened investigations of any kind against the Company, Xxxx or
any Shareholder, concerning any Environmental Obligations. There are no
actions, suits or administrative, arbitral or other proceedings alleged,
claimed, threatened, pending against or affecting the Company, Xxxx or any
Shareholder at law or in equity with respect to any Environmental Obligations,
and no Shareholder or Xxxx has any knowledge of any existing grounds on which
any such action, suit or proceedings might be commenced.
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15
(iii) Any chemicals and chemical compounds and mixtures
which are included among the assets of the Company are integral to and required
for the conduct of the Company's business, have not been and are not intended
to be discarded or abandoned, and are not waste or waste materials. Except as
set forth in the environmental studies attached as Exhibit 3.1(r)(iii)
(collectively, the "Environmental Study"), the Company has not generated,
handled, used, transported or disposed of Hazardous Materials. All waste
materials which are generated as part of the business of the Company are
handled, stored, treated and disposed of in accordance with applicable Legal
Requirements and Environmental Obligations.
(iv) Except as set forth in the Environmental Study,
no underground or above ground storage tanks are or have been located on the
Premises or any other real properties or any facilities presently or previously
owned, occupied, used or operated by the Company or any predecessor. Except as
set forth in the Environmental Study, neither any of the Premises nor any other
real properties or facilities presently or previously owned, occupied, used or
operated by the Company or any predecessor has been used at any time as a
gasoline service station or any facility for storing, pumping, dispensing or
producing gasoline or any other petroleum products (other than such storage,
pumping and dispensing of fuels and lubricants as is incidental to the
Company's equipment rental/leasing business) or Hazardous Materials. No
building or other structure on any of the Premises contains asbestos-containing
materials. There are not nor have there been any incinerators, septic tanks,
xxxxx fields, cesspools or xxxxx (including without limitation dry, drinking,
industrial, agricultural and monitoring xxxxx) on any of the Premises, except
as set forth in the Environmental Study.
(s) Intellectual Property. The Company owns or has the legal
right to use and to transfer to the Buyer each item of Intellectual Property
required to be identified on Exhibit 3.1(h)(ii). The continued operation of
the business of the Company as currently conducted will not interfere with,
infringe upon, misappropriate or conflict with any Intellectual Property rights
of another Person. To the best knowledge of the Shareholders and Xxxx, no
other Person has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property rights of the Company or any
Intellectual Property included in the Shareholder Property. Neither the
Company nor any owner of any Intellectual Property included in the Shareholder
Property has granted any license, sublicense or permission with respect to any
Intellectual Property owned or used in the Company's business.
(t) Disclosure. None of the documents or information provided
to the Buyer by the Company, any Shareholder, Xxxx or any agent or employee
thereof in the course of the Buyer's due diligence investigation and the
negotiation of this Agreement and Section 3.1 of this Agreement and the
disclosure Exhibits referred to therein, including the financial statements
referred to above in Section 3.1, contain any untrue statement of any material
fact or omit to state a material fact necessary in order to make the statements
contained herein or therein not misleading. There is no fact which materially
adversely affects the business, prospects, condition, affairs or operations of
the Company or any of its properties or assets which has not been set forth in
this Agreement or such Exhibits, including such financial statements.
Nothing in the disclosure Exhibits referred to in Section 3.1
shall be deemed adequate to disclose an exception to a representation or
warranty made herein unless the applicable disclosure Exhibit identifies the
exception with particularity and describes the relevant facts in reasonable
detail. Without limiting the generality of the foregoing, the mere listing (or
inclusion of a copy) of a document or other item shall not be deemed adequate
to disclose an exception to a representation or warranty made herein (unless
the representation or warranty has to do with the existence of the document or
other item itself). The Shareholders and Xxxx acknowledge and agree that the
fact that they have made disclosures pursuant to Section 3.1 or otherwise of
matters, or did not have knowledge of matters, which result in Adverse
Consequences to the Buyer shall not relieve the Shareholders and Xxxx of their
obligation pursuant to Article 7 to indemnify and hold the Buyer harmless from
all Adverse Consequences.
3.2. Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Shareholders and Xxxx that the statements contained in this
Section 3.2 are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3.2).
(a) Organization, Good Standing, Power, Etc. The Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. This Agreement and the Other Buyer Agreements
and the transactions contemplated hereby and thereby have been duly approved by
all requisite corporate action. The Buyer
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16
has full corporate power and authority to execute, deliver and perform this
Agreement and the Other Buyer Agreements, and this Agreement constitutes, and
the Other Buyer Agreements will when executed and delivered constitute, the
legal, valid and binding obligations of the Buyer, and shall be enforceable in
accordance with their respective terms against the Buyer.
(b) No Violation of Agreements, Etc. The execution, delivery
and performance of this Agreement and the Other Buyer Agreements, and the
consummation of the transactions contemplated hereby and thereby will not (i)
violate any Legal Requirement to which the Buyer is subject or any provision of
the certificate of incorporation or bylaws of the Buyer or (ii) violate, with
or without the giving of notice or the lapse of time or both, or conflict with
or result in the breach or termination of any provision of, or constitute a
default under, or give any Person the right to accelerate any obligation under,
or result in the creation of any Encumbrance upon any properties, assets or
business of the Buyer pursuant to, any indenture, mortgage, deed of trust,
lien, lease, license, agreement, instrument or other arrangement to which the
Buyer is a party or which the Buyer or any of its assets and properties is
bound or subject. Except for notices and consents that will be given or
obtained by the Buyer prior to the Closing, the Buyer does not need to give any
notice to, make any filing with or obtain any authorization, consent or
approval of any Governmental Authority or other Person in order for the parties
to consummate the transactions contemplated by this Agreement.
3.3. Survival of Representations. The representations and warranties
contained in Sections 3.1 and 3.2 and the Liabilities of the parties with
respect thereto shall survive any investigation thereof by the parties and
shall survive the Closing for four years, except that the Liabilities of the
Shareholders and Xxxx with respect to the representations and warranties set
forth in Sections 3.1(a), 3.1(b), 3.1(c), 3.1(d)(ii), 3.1(f), 3.1(g), 3.1(m),
3.1(r), 3.1(s) and 3.1(t), and the Liabilities of the Buyer with respect to the
representations and warranties set forth in Sections 3.2(a) and 3.2(b), shall
survive without termination.
3.4. Representations as to Knowledge. The representations and
warranties contained in Article 3 hereof will in each and every case where an
exercise of discretion or a statement to the "best knowledge," "best of
knowledge" or "knowledge" is required on behalf of any party to this Agreement
be deemed to require that such exercise of discretion or statement be in good
faith after reasonable investigation (including, in the case of the
Shareholders, inquiry of the applicable employees of the Company), with due
diligence, to the best efforts of such party and be exercised always in a
reasonable manner and within reasonable times.
4. Pre-Closing Covenants. The parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
4.1. General. Each of the parties will use its best efforts to take
all actions necessary, proper or advisable in order to consummate and make
effective the transactions contemplated by this Agreement (including the
satisfaction, but not the waiver, of the closing conditions set forth in
Section 6) and the other agreements contemplated hereby. Without limiting the
foregoing, the Shareholders and Xxxx will, and will cause the Company to, give
any notices, make any filings and obtain any consents, authorizations or
approvals needed to consummate the transactions contemplated by this Agreement.
4.2. Operation and Preservation of Business. The Shareholders will not
cause or permit the Company to engage in any practice, take any action or enter
into any transaction outside its ordinary course of business; provided,
however, that in no event will any action be taken or fail to be taken or any
transaction be entered into which would result in a breach of any
representation, warranty or covenant of Xxxx or any Shareholder. The
Shareholders will cause the Company to keep its business and properties,
including its current operations, physical facilities, working conditions, and
relationships with customers, suppliers, lessors, licensors and employees,
intact and, in connection therewith, to continue to purchase new or used
equipment necessary to maintain its rental/lease inventory at the level
specified in Section 3.1(e)(x).
4.3. Acquisitions and Dispositions of Rental Equipment. From the date
of this Agreement through the Closing Date, the Company may purchase new or
used rental or lease equipment for use in the growth and expansion of its
business ("New Rental Equipment;" provided, however, that the term New Rental
Equipment shall not include any new or used rental or lease equipment acquired
to maintain the Seller's business) or may sell (but only for cash) rental or
lease
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17
equipment owned by the Company on or after January 1, 1997 ("Current Rental
Equipment"), but may not otherwise sell, trade, transfer or dispose of any
Current Rental Equipment; provided, however, that between the date of this
Agreement and the Closing Date, no New Rental Equipment shall be purchased and
no Current Rental Equipment shall be sold without the express prior written
approval of an officer of the Buyer and without the Shareholders' Agent and an
officer of the Buyer expressly agreeing on the amount by which the purchase
price payable pursuant to Section 2.2(a) shall be increased in respect of such
New Rental Equipment purchases ("New Rental Equipment Increases") and the
amount by which the purchase price payable pursuant to Section 2.2(a) shall be
decreased in respect of such Current Rental Equipment sales ("Current Rental
Equipment Decreases"). Exhibit 4.3 sets forth (a) New Rental Equipment
Increases with respect to New Rental Equipment purchased between February 6,
1997 and the date of this Agreement and (b) Current Rental Equipment Decreases
with respect to Current Rental Equipment sold between January 1, 1997 and the
date of this Agreement, as agreed by the Shareholders' Agent and an officer of
the Buyer. If any New Rental Equipment purchases or Current Rental Equipment
sales occur after the date hereof and before the Closing Date, Exhibit 4.3
shall be amended to reflect any agreed upon New Rental Equipment Increases and
Current Rental Equipment Decreases relating thereto.
4.4. Full Access. The Shareholders will cause the Company to permit
the Buyer and its agents to have full access at all reasonable times, and in a
manner so as not to interfere with the normal business operations of the
Company, to all premises, properties, personnel, books, records (including Tax
records), contracts and documents of or pertaining to the Company.
4.5. Notice of Developments. The Shareholders and Xxxx will give
prompt written notice to the Buyer of any material development which occurs
after the date of this Agreement and affects the business, assets, Liabilities,
financial condition, operations, results of operations, future prospects,
representations, warranties, covenants or disclosure Exhibits of the Company.
No such written notice, however, will be deemed to amend or supplement any
disclosure Exhibit or to prevent or cure any misrepresentation, breach of
warranty or breach of covenant.
4.6. Exclusivity. Neither the Shareholders nor Xxxx will, and the
Shareholders will not cause or permit the Company to, (a) solicit, initiate or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of any capital stock or other voting securities, or any portion
of the assets of, the Company (including any acquisition structured as a
merger, consolidation or share exchange) or (b) participate in any discussions
or negotiations regarding, furnish any information with respect to, assist or
participate in or facilitate in any other manner any effort or attempt by any
Person to do or seek any of the foregoing. Neither Xxxx nor any Shareholder
will vote shares of the Company's stock in favor of any such transaction. The
Shareholders and Xxxx will notify the Buyer immediately if the Person makes any
proposal, offer, inquiry or contact with respect to any of the foregoing.
4.7. Conveyance of Shareholder Property. Prior to the Closing Date,
the Shareholders and Xxxx shall convey, and shall cause each relative or
affiliate of the Company, Xxxx or of any Shareholder to convey, to the Company,
free and clear of any Encumbrance or Tax, all of each Shareholder's, Xxxx'x and
each such relative's or affiliate's right, title and interest to the
Shareholder Property.
4.8. Announcements. Prior to the Closing, no party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other parties.
4.9. Closing Date Liabilities and Distribution. (a) Prior to the
Closing Date or concurrently with the Closing, the Shareholders and Xxxx shall
pay, or shall cause the Company to pay prior to the Closing Date as permitted
by Section 9.10, in full all known Closing Date Liabilities, the amount of
which is then ascertainable (including Seller Transaction Expenses as permitted
pursuant to Section 9.10). Following the Closing, the Shareholders and Xxxx
shall promptly pay in full all other Closing Date Liabilities. Effective as of
immediately prior to the Closing Date, the Shareholders and Xxxx hereby jointly
and severally assume all Closing Date Liabilities without further action by the
Company or any other Person.
(b) Prior to the Closing Date, the Shareholders shall cause
the Company to distribute to the Shareholders or other appropriate Person the
Excluded Assets (the "Pre-Closing Date Distribution"). Any and all Taxes
attributable to such distribution of Excluded Assets and to any prior
distribution or dividend of assets, including, without limitation, any
recognition by the Company of taxable income or gain with respect to the
distribution or dividend of the
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Excluded Assets or any prior distribution or dividend of assets, shall be paid
in full by the Shareholders and Xxxx and neither the Company nor the Buyer
shall not have any Liability with respect thereto.
5. Post-Closing Covenants. The parties agree as follows with respect to the
period following the Closing.
5.1. Further Assurances. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
party reasonably may request, all at the sole cost and expense of the
requesting party (unless the requesting party is entitled to indemnification
therefor under Section 7).
5.2. Transition. Each of the Shareholders and Xxxx will assist with
the transition of the Company's business to the Buyer during the first six
months following the Closing at no cost to the Buyer, provided however that
Xxxxx X. Xxxxx shall be permitted to use the administrative offices and
personnel of the Company to assist with such transition during such six-month
period to the extent such use is reasonable and does not interfere with Buyer's
operations. Neither Xxxx nor any Shareholder will take any action at any time
that is designed or intended to have the effect of discouraging any customer,
supplier, lessor, licensor or other business associate of the Company from
establishing or continuing a business relationship with the Buyer after the
Closing.
5.3. Cooperation. In the event and for so long as any party actively
is contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand in connection with (a) any
transaction contemplated by this Agreement or (b) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act or transaction on or prior to the Closing Date
involving any of the Acquired Assets or the Company's business, each of the
other parties will cooperate with such party and its counsel in the contest or
defense, make available their personnel, and provide such testimony and access
to their books and records as shall be reasonably necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting or
defending party (unless the contesting or defending party is entitled to
indemnification therefor under Section 7). The Buyer shall give prior notice
to the Shareholders and Xxxx of its intent to destroy any records of the
Company relating to matters existing prior to Closing. If the Shareholders or
Xxxx notify the Company within five days of receipt of the Company's notice
that they request delivery of such records, the Company will deliver such
records to the requesting party.
5.4. Confidentiality. The Shareholders and Xxxx will treat and hold as
confidential all Confidential Information concerning the Buyer, the Company's
business or the Acquired Assets, refrain from using any such Confidential
Information and deliver promptly to the Buyer or destroy, at the request and
option of the Buyer, all of such Confidential Information in its or their
possession.
5.5. Post-Closing Announcements. Following the Closing, neither Xxxx
nor any Shareholder will issue any press release or make any public
announcement relating to the subject matter of this Agreement without the prior
written approval of the Buyer.
5.6. Financial Statements. The Seller, Xxxx and the Shareholders will,
upon request of the Buyer, cooperate with the Buyer to produce such historical
and on-going financial statements and audits as the Buyer may request, all at
the sole cost and expense of the Buyer.
5.7. Satisfaction of Liabilities. Promptly following the Closing, the
Shareholders and Xxxx will pay and perform all Closing Date Liabilities, all
Taxes attributable to the transactions contemplated by this Agreement and all
accrued vacation and other accrued employee benefits; provided, however, that
accrued vacation and other accrued employee benefits with respect to those
persons who are employees of the Company as of immediately prior to the Closing
Date and who become employees of the Buyer effective as of the Closing will be
satisfied as set forth in Section 2.2(b). In addition, the Buyer will pay an
amount equal to the portion of the personal property taxes of the Company
attributable to the period from the Closing Date to June 30, 1997 (the
"Personal Property Tax Amount"). The Personal Property Tax Amount payable by
the Buyer will be determined by prorating personal property taxes of the
Company for the year beginning July 1, 1996 in proportion to the number of days
in that year prior to the Closing Date compared to the number of days in the
year remaining after the date on which the Closing occurs. Further, the
Shareholders and Xxxx, at their expense, promptly will take or cause to be
taken any action necessary to remedy any failure of the Premises or the
acquired
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business to comply at the Closing Date with any Legal Requirement, upon receipt
of notice from the Buyer at any time. The Buyer will pay and perform, as and
when due (except to the extent the validity thereof or the liability therefor
is being contested by the Buyer), the Retained Liabilities.
5.8. Certain Environmental Matters. Within 120 days of the Closing
Date, the Buyer will purchase and install wash water filtration systems at each
of the four store locations acquired by the Buyer from the Company. The cost
of such purchase and installation shall be paid as follows: 50% by the Buyer
and 50% by the Shareholders and Xxxx collectively. Prior to commencing such
installation the Buyer will provide the plans for such installation to the
Shareholders and Xxxx. Nothing in this Section 5.8 shall relieve any
Shareholder or Xxxx from any obligation or Liability under Section 7 of this
Agreement, obligate the Buyer to take any action or impose any Liability on the
Buyer.
5.9. Repurchase of Unpaid Receivables. The Shareholders and Xxxx
jointly and severally guarantee that 91.5% of the Closing Accounts Receivable
will be fully paid to the Buyer in accordance with their terms at their
recorded amounts not later than 120 days from the Closing Date. Upon demand by
the Buyer at any time after 120 days from the Closing Date, the Shareholders
and Xxxx shall jointly and severally pay to the Buyer the full amount of any
unpaid Closing Accounts Receivables which are the subject of such demand. Upon
such payment to the Buyer, the Closing Accounts Receivable which are so paid
for by the Shareholders or Xxxx shall, without further action of any party,
become the property of the Shareholders and Xxxx.
5.10. Termination of Obligations. Effective as of the Closing Date,
neither the Company nor the Buyer shall have any Liability to any Shareholder,
Xxxx or any relative or affiliate thereof or of the Company, except as
otherwise provided in this Agreement, the Employment Agreement, the Escrow
Agreement, the Noncompetition Agreement and the Shareholder Leases. Effective
as of the Closing Date, neither the Shareholders nor Xxxx shall have any
Liability to the Company or the Buyer, except as otherwise provided in this
Agreement, the Employment Agreement, the Escrow Agreement, the Noncompetition
Agreement and the Shareholder Leases.
5.11. Use of Proprietary Software. Effective as of the Closing Date,
the Shareholders hereby grant the Buyer a perpetual license to use the
Proprietary Software in connection with the Buyer's business. The Buyer shall
not be required to pay any amount to the Shareholders in respect of such
license.
5.12. Medical Benefits. For the period beginning on the Closing Date
and ending on the date which is five years after the Closing Date, the Buyer
shall provide medical coverage to each of Xxxxx X. Xxxxx and Xxxxx X. Xxxxx
pursuant to the medical coverage plans in effect from time to time for
employees of the Buyer (the "Medical Plans"), to the extent the terms of such
Medical Plans so permit and provided that Xxxxx X. Xxxxx and Xxxxx X. Xxxxx (i)
have requested continuous coverage pursuant to such plans and (ii) promptly
reimburse the Buyer in full for the total cost incurred by the Buyer in
providing such coverage. If the Medical Plans do not permit the Buyer to
provide such medical coverage to any of the above-referenced persons, the Buyer
shall not have any obligation to provide medical coverage to such person.
Further, the obligations of the Buyer pursuant to this Section 5.12 shall not
require the Buyer to "self-insure" or have any particular medical coverage
plan. The term "total cost" as used in this Section shall include all costs
and expenses incurred by the Buyer in providing such coverage, including,
without limitation, any increase in insurance premiums and costs associated
with the impact that inclusion of any of the above-referenced persons may have
on the Buyer's "risk pool" or "experience rating."
5.13. Use of Certain Assets. Until the fifth anniversary of the Closing
Date, Xxxxx X. Xxxxx may use the Buyer's rental equipment located at its
equipment rental stores formerly operated by the Company for his personal use
at his home in Concord, California, to the extent the rental equipment
requested by Xx. Xxxxx is not needed by the Buyer for rental to its customers.
Such use by Xx. Xxxxx will be subject to the Buyer's standard rental terms and
conditions, except that Xx. Xxxxx will not be charged any rental fee or
required to make any security deposit.
6. Conditions to Closing.
6.1. Conditions to Obligation of the Buyer. The obligation of the
Buyer to consummate the transactions contemplated by this Agreement is subject
to satisfaction of the following conditions:
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(a) the representations and warranties of each Shareholder and
Xxxx shall be correct and complete at and as of the Closing Date and the
Closing and any written notices delivered to the Buyer pursuant to Section 4.5
and the subject matter thereof shall be satisfactory to the Buyer;
(b) the Shareholders and Xxxx shall have performed and
complied with all of their covenants hereunder through the Closing;
(c) the Shareholders and Xxxx shall have given, or shall have
caused the Company to give, all notices and procured, or shall have caused the
Company to procure, all of the third-party consents, authorizations and
approvals required to consummate the transactions contemplated by this
Agreement (including the merger described in Section 3.1(c)(ii)), all in form
and substance reasonably satisfactory to the Buyer;
(d) no action, suit or proceeding shall be pending or
threatened before any Governmental Authority or any other Person wherein an
unfavorable Order would (i) prevent consummation of any of the transactions
contemplated by this Agreement, (ii) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation or (iii) affect
adversely the right of the Buyer to own the Shares or the Acquired Assets and
conduct the business represented by the Acquired Assets, and no such Order
shall be in effect;
(e) there shall have been no adverse change in the Company,
the Acquired Assets or the Company's business between the date of execution of
this Agreement and the Closing;
(f) the Shareholders and Xxxx shall have delivered to the
Buyer (i) a certificate to the effect that each of the conditions specified
above in Sections 6.1(a) through (e) is satisfied in all respects, (ii) a good
standing certificate, dated within 10 days of the Closing, from the Secretary
of State of the State of the Company's jurisdiction of incorporation and each
other state in which the Company is qualified or authorized to do business as a
foreign corporation and (iii) a Tax Clearance Certificate issued to the Company
by the State of California for use by the Buyer in connection with the merger
immediately following the Closing of the Company into the Buyer;
(g) the Buyer shall have completed its due diligence with
respect to the Company, the Company's business and the Acquired Assets with
results satisfactory to the Buyer.
(h) the Other Seller Agreements shall have been executed and
delivered by the Shareholders and Xxxx, as applicable;
(i) the Premises Leases shall have been executed and delivered
by the parties thereto and the owners of the real property underlying the
Premises Leases, and each Person having an Encumbrance on such property, shall
have executed and delivered estoppel, nondisturbance and landlord waiver
agreements relating thereto satisfactory to the Buyer;
(j) the Buyer shall have received from counsel to the
Shareholders an opinion in form and substance as set forth in Exhibit 6.1(j)
addressed to the Buyer and its debt and equity financing sources and dated as
of the Closing;
(k) the Buyer shall have received from counsel to Xxxx an
opinion in form and substance as set forth in Exhibit 6.1(k) addressed to the
Buyer and its debt and equity financing sources and dated as of the Closing;
(l) financing necessary for the consummation of the
transactions contemplated hereby and the operation of the acquired business
shall be available to the Buyer on terms and conditions satisfactory to the
Buyer;
(m) a "Phase I" environmental study of each of the properties
comprising the Premises, and such additional environmental testing as the Buyer
shall request, shall have been completed at the Shareholders' and Xxxx'x
expense and supplied to the Buyer, and the contents and results thereof shall
be satisfactory to the Buyer;
(n) the Buyer shall have received the resignations, effective
as of the Closing, of each director and officer of the Company;
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21
(o) stock certificates representing the Shares, duly endorsed
in blank or accompanied by stock powers duly executed in blank, shall have been
delivered by the Shareholders to the Buyer;
(p) the Shareholders and Xxxx shall have delivered to the
Buyer possession and control of the Company and the Acquired Assets, including,
without limitation, all stock certificate books, minute books, corporate seals,
and all other corporate and financial records of the Company;
(q) the Buy and Sell Agreement entered into between Xxxxx X.
Xxxxx and Xxxxxxx X. Xxxx on December 12, 1986, as amended, shall have been
terminated and evidence of such termination shall have been delivered to the
Buyer;
(r) the Shareholders and Xxxx shall have delivered, or caused
the Company to deliver, to the Buyer such other instruments, certificates and
documents as are reasonably requested by the Buyer in order to consummate the
transactions contemplated by this Agreement, all in form and substance
reasonably satisfactory to the Buyer.
The Buyer may waive any condition specified in this Section 6.1 at or prior to
the Closing.
6.2. Conditions to Obligation of the Shareholders and Xxxx. The
obligation of the Shareholders and Xxxx to consummate transactions contemplated
by this Agreement is subject to satisfaction of the following conditions:
(a) the Buyer's representations and warranties shall be
correct and complete at and as of the Closing Date and the Closing;
(b) the Buyer shall have performed and complied with all of
its covenants hereunder through the Closing Date;
(c) the Buyer shall have delivered to the Shareholders and
Xxxx a certificate to the effect that each of the conditions specified above in
Sections 6.2(a) and (b) is satisfied in all respects;
(d) the Other Buyer Agreements shall have been executed and
delivered by the Buyer;
(e) the Shareholders and Xxxx shall have received from counsel
to the Buyer an opinion in form and substance as set forth in Exhibit 6.2(e),
addressed to the Shareholders and Xxxx and dated as of the Closing; and
(f) the Buyer shall have paid and deposited the purchase price
for the Shares pursuant to Section 2.2.
The Shareholders' Agent may waive any condition specified in this Section 6.2
at or prior to the Closing.
7. Remedies for Breaches of This Agreement.
7.1. Indemnification Provisions for Benefit of the Buyer and the
Company.
(a) If any Shareholder or Xxxx breaches (or if any Person
other than the Buyer alleges facts that, if true, would mean any Shareholder or
Xxxx has breached) any of the representations or warranties of any Shareholder
or Xxxx contained herein and the Buyer gives notice thereof to the
Shareholders' Agent within the Survival Period, or if any Shareholder or Xxxx
breaches (or if any Person other than the Buyer alleges facts that, if true,
would mean any Shareholder or Xxxx has breached) any covenants of any
Shareholder or Xxxx contained herein or any representations, warranties or
covenants of any Shareholder or Xxxx contained in any Other Seller Agreement
and the Buyer gives notice thereof to the Shareholders' Agent, then the
Shareholders and Xxxx agree to jointly and severally indemnify and hold
harmless the Buyer from and against any Adverse Consequences the Buyer may
suffer resulting from, arising out of, relating to or caused by any of the
foregoing regardless of whether the Adverse Consequences are suffered during or
after the Survival Period. In determining whether there has been a breach of
any representation or warranty contained in Section 3.1 and in determining for
purposes of the preceding sentence the amount of Adverse Consequences suffered
by the Buyer, such representations and warranties shall not be qualified (other
than by (A) the reference to "knowledge" set forth in the last sentence of
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Section 3.1(o) and (B) the references to "material" set forth in
Section 3.1(t)) by "material," "materiality," "in all material respects," "best
knowledge," "best of knowledge" or "knowledge" or words of similar import, or
by any phrase using any such terms or words. The Shareholders and Xxxx also
agree to jointly and severally indemnify and hold harmless the Buyer from and
against any Adverse Consequences the Buyer may suffer which result from, arise
out of, relate to or are caused by (i) any Liability of the Company, any
Shareholder or Xxxx not included in the Retained Liabilities (including,
without limitation, those concerning Hazardous Materials or the failure prior
to the Closing Date of the Company, any Shareholder, or Xxxx or any predecessor
to comply with any Environmental Obligation or other Legal Requirement), (ii)
any condition, circumstance or activity existing prior to the Closing Date on,
in or under any of the Premises which relates to any Environmental Obligation
or any act or omission of the Company, any Shareholder, or Xxxx or any
predecessor with respect to, or any event or circumstance related to, the
Company's, any Shareholder's, Xxxx'x or any predecessor's ownership,
occupation, use or operation of any of the Acquired Assets, the Excluded
Assets, the Premises or any other assets or properties or the conduct of its or
their business, regardless, in the case of (i) or (ii), of (A) whether or not
such Liability, act, omission, event, circumstance or matter was known or
disclosed to the Buyer, was disclosed on any Exhibit hereto or is a matter with
respect to which any Shareholder or Xxxx did or did not have knowledge, (B)
when such Liability, act, omission, event, circumstance or matter occurred,
existed, occurs or exists and (C) whether a claim with respect thereto was
asserted before or is asserted after the Closing Date, and (iii) any Liability
resulting from any failure of the parties to comply with any applicable bulk
sales or transfer Legal Requirement in connection with the transactions
contemplated by this Agreement. If any dispute arises concerning whether any
indemnification is owing which cannot be resolved by negotiation among the
parties within 30 days of notice of claim for indemnification from the party
claiming indemnification to the party against whom such claim is asserted, the
dispute will be resolved by arbitration pursuant to this Agreement.
(b) Amounts needed to cover any indemnification claims
resolved in favor of the Buyer against any Shareholder or Xxxx during the
Escrow Period will be paid to the Buyer first out of the funds escrowed
pursuant to the Escrow Agreement, along with interest from the date of the
Closing at the rate applicable to the escrowed funds. The Shareholders and
Xxxx will have joint and several Liability for any additional amounts needed to
cover such claims, which amounts will be paid directly to the Buyer. At the
end of the Escrow Period amounts that may be needed to cover pending
indemnification claims made by the Buyer (such amounts to be determined by the
Buyer based upon the reasonable exercise of its business judgment) will be
retained in the Escrow Account until such claims are resolved, and any excess
on deposit therein, including any accrued interest, will be paid to the
Shareholders. Nothing in this Section 7.1(b) will be construed to limit the
Buyer's right to indemnification to amounts on deposit in the Escrow Account.
The Buyer and the Shareholders' Agent shall jointly give instructions to the
Escrow Agent to carry out the intent of this Section 7.1(b). Any disputes
concerning the escrowed funds will be settled by arbitration as provided in
this Agreement. The Buyer, on the one hand, and the Shareholders jointly and
severally, on the other hand, shall each be responsible for one-half of the
fees, charges and expenses payable to the Escrow Agent pursuant to paragraph a.
of Article 2 of the Escrow Agreement and, except as otherwise determined
pursuant to Section 9.11 of this Agreement, one-half of any amounts payable
pursuant to paragraph b. of such Article 2.
7.2. Indemnification Provisions for Benefit of the Shareholders and
Xxxx. If the Buyer breaches (or if any Person other than a Shareholder or Xxxx
alleges facts that, if true, would mean the Buyer has breached) any of its
representations or warranties contained herein and the Shareholders' Agent
gives notice of a claim for indemnification against the Buyer within the
Survival Period, or if the Buyer breaches (or if any Person other than a
Shareholder or Xxxx alleges facts that, if true, would mean the Buyer has
breached) any of its covenants contained herein or any of its representations,
warranties or covenants contained in any Other Buyer Agreement and the
Shareholders' Agent gives notice thereof to the Buyer, then the Buyer agrees to
indemnify and hold harmless the Shareholders and Xxxx from and against any
Adverse Consequences the Shareholders or Xxxx may suffer which result from,
arise out of, relate to, or are caused by the breach or alleged breach,
regardless of whether the Adverse Consequences are suffered during or after the
Survival Period. In determining whether there has been a breach of any
representation or warranty contained in Section 3.2 and in determining the
amount of Adverse Consequences suffered by the Shareholders and Xxxx for
purposes of this Section, such representations and warranties shall not be
qualified by "material," "materiality," "in all material respects," "best
knowledge," "best of knowledge" or "knowledge" or words of similar import, or
by any phrase using any such terms or words. If any dispute arises concerning
whether any indemnification is owing which cannot be resolved by negotiation
among the parties within 30 days of notice of claim for indemnification from
the party claiming indemnification to the party against whom such claim is
asserted, the dispute will be resolved by arbitration pursuant to this
Agreement.
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7.3. Matters Involving Third Parties.
(a) If any Person not a party to this Agreement (including,
without limitation, any Governmental Authority) notifies any party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim") which
may give rise to a claim for indemnification against any other party (the
"Indemnifying Party"), then the Indemnified Party will notify each Indemnifying
Party thereof in writing within 15 days after receiving such notice. No delay
on the part of the Indemnified Party in notifying any Indemnifying Party will
relieve the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right, at its sole
cost and expense, to defend the Indemnified Party against the Third Party Claim
with counsel of its choice satisfactory to the Indemnified Party so long as (i)
the Indemnifying Party notifies the Indemnified Party in writing within 10 days
after the Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to or caused by the Third Party Claim, (ii) the
Indemnifying Party provides the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, (iii) the Third Party Claim involves
only money damages and does not seek an injunction or other equitable relief,
(iv) settlement of, or an adverse judgment with respect to, the Third Party
Claim is not, in the good faith judgment of the Indemnified Party, likely to
establish a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and (v) the
Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently. If the Indemnifying Party does not assume control of the defense
or settlement of any Third Party Claim in the manner described above, it will
be bound by the results obtained by the Indemnified Party with respect to the
Third Party Claim.
(c) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 7.3(b) above, (i)
the Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (not to be withheld unreasonably), and (iii)
the Indemnifying Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnified Party (not to be withheld unreasonably).
(d) In the event any of the conditions in Section 7.3(b) above
is or becomes unsatisfied, however, (i) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim in any manner it reasonably may deem
appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith), (ii) the
Indemnifying Parties will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim
(including reasonable attorneys' fees and expenses), and (iii) the Indemnifying
Parties will remain responsible for any Adverse Consequences the Indemnified
Party may suffer resulting from, arising out of, relating to or caused by the
Third Party Claim to the fullest extent provided in this Section 7.
7.4. Right of Offset. The Buyer will have the right to offset any
Adverse Consequences it may suffer against any amounts payable pursuant to this
Agreement or any Other Seller Agreement to any Shareholder, Xxxx or any
relative or affiliate of Xxxx or any Shareholder at or after the Closing.
7.5. Other Remedies. The foregoing indemnification provisions are in
addition to, and not in derogation of, any statutory, equitable or common law
remedy any party may have.
8. Termination.
8.1. Termination of Agreement. The parties may terminate this
Agreement as provided below:
(a) the Buyer and the Shareholders' Agent may terminate this
Agreement by mutual written consent at any time prior to the Closing;
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(b) the Buyer may terminate this Agreement by giving written
notice to the Shareholders' Agent at any time prior to the Closing (i) in the
event Xxxx or any Shareholder has breached any representation, warranty or
covenant contained in this Agreement in any material way, the Buyer has
notified the Shareholders' Agent of the breach, and the breach has not been
cured within 10 days after the notice of breach or (ii) if the Closing has not
occurred on or before May 31, 1997 because of the failure of any condition
precedent to the Buyer's obligations to consummate the Closing (unless the
failure results primarily from the Buyer breaching any representation, warranty
or covenant contained in this Agreement in any material way); or
(c) the Shareholders' Agent may terminate this Agreement by
giving written notice to the Buyer at any time prior to the Closing (i) if the
Buyer has breached any representation, warranty or covenant contained in this
Agreement in any material way, the Shareholders' Agent has notified the Buyer
of the breach, and the breach has not been cured within 10 days after the
notice of breach or (ii) if the Closing has not occurred on or before May 31,
1997 because of the failure of any condition precedent to the Shareholders' and
Xxxx'x obligations to consummate the Closing (unless the failure results
primarily from any Shareholder or Xxxx breaching any representation, warranty
or covenant contained in this Agreement in any material way).
8.2. Effect of Termination. The termination of this Agreement by a
party pursuant to Section 8.1 will in no way limit any obligation or liability
of any other party based on or arising from a breach or default by such other
party with respect to any of its representations, warranties, covenants or
agreements contained in this Agreement, and the terminating party will be
entitled to seek all relief to which it is entitled under applicable law.
8.3. Confidentiality. If this Agreement is terminated, each party will
treat and hold as confidential all Confidential Information concerning the
other parties which it acquired from such other parties in connection with this
Agreement and the transactions contemplated hereby.
9. Miscellaneous.
9.1. No Third-Party Beneficiaries. This Agreement will not confer any
rights or remedies upon any Person other than the parties and their respective
successors and permitted assigns.
9.2. Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the parties and
supersedes any prior understandings, agreements or representations by or among
the parties, written or oral, to the extent they relate in any way to the
subject matter hereof.
9.3. Succession and Assignment. This Agreement will be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Neither Xxxx nor any Shareholder may assign this Agreement
or any of his or her rights, interests or obligations hereunder without the
prior written approval of the Buyer. The Buyer may assign its rights and
obligations hereunder as permitted by law, including, without limitation, to
any debt or equity financing source.
9.4. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall be deemed to be one and the same instrument. The execution of a
counterpart of the signature page to this Agreement will be deemed the
execution of a counterpart of this Agreement.
9.5. Headings. The section headings contained in this Agreement are
inserted for convenience only and will not affect in any way the meaning or
interpretation of this Agreement.
9.6. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if it is
sent by registered or certified mail, return receipt requested, postage
prepaid, or by courier, telecopy or facsimile, and addressed to the intended
recipient as set forth below:
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If to Xxxx or any Shareholder: Copy to:
Addressed to the Xxxxxxxx & Ericsson
Shareholders' Agent at: 0000 Xxxxx Xxxxxxxx, Xxxxx 000
P.O. Box 5293
000 Xxxxxxx Xxxx Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Xxxxxxx, Xxxxxxxxxx 00000 Attn: Xxxx X. Ericsson
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
If to the Buyer: Copy to:
RentX Industries, Inc. Xxxxxxx & Xxxxxx L.L.C.
0000 Xxxxx Xxxxxx 000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000 Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx Attn: Xxxxxx X. Xxxxxx
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
Notices will be deemed given three days after mailing if sent by certified
mail, when delivered if sent by courier, and upon receipt of confirmation by
person or machine if sent by telecopy or facsimile transmission. Any party may
change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
9.7. Governing Law. This Agreement will be governed by and construed
in accordance with the domestic laws of the State of Colorado without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Colorado or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Colorado.
9.8. Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same is in writing and signed by the Buyer
and the Shareholders' Agent. No waiver by any party of any default,
misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, will be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence, and no waiver will be effective unless set forth in writing and
signed by the party against whom such waiver is asserted.
9.9. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
9.10. Expenses. Except as otherwise provided in Section 8.2, (a) the
Buyer shall bear its own costs and expenses (including, without limitation,
legal fees and expenses) incurred either before or after the date of this
Agreement in connection with this Agreement or the transactions contemplated
hereby and (b) the Shareholders and Xxxx will bear all costs and expenses
(including, without limitation, all legal, accounting and tax related fees and
expenses, all fees, commissions, expenses and other amounts payable to any
broker, finder or agent and the costs of any environmental study and additional
environmental testing contemplated by Section 6.1) incurred by the Company
prior to the Closing or by Xxxx or any Shareholder either before or after the
date of this Agreement in connection with this Agreement or the transactions
contemplated hereby (collectively, "Seller Transaction Expenses"); provided,
however, that prior to the Closing Date the Company may use any cash that would
otherwise be an Excluded Asset to pay Seller Transaction Expenses.
9.11. Arbitration. Any disputes arising under or in connection with
this Agreement, including, without limitation, those involving claims for
specific performance or other equitable relief, will be submitted to binding
arbitration under the Commercial Arbitration Rules of the American Arbitration
Association under the authority of federal and state arbitration statutes, and
shall not be the subject of litigation in any forum. EACH PARTY, BY SIGNING
THIS
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AGREEMENT, VOLUNTARILY, KNOWINGLY AND INTELLIGENTLY WAIVES ANY RIGHTS SUCH
PARTY MAY OTHERWISE HAVE TO SEEK REMEDIES IN COURT OR OTHER FORUMS, INCLUDING
THE RIGHT TO JURY TRIAL. No claim or claims shall be submitted to arbitration
as provided herein unless (a) the aggregate amount of such claim or claims
equals or exceeds $10,000, including, without limitation, any and all
counterclaims, ancillary claims or additional claims incorporated in such
arbitration proceeding, or (b) the claim is for specific performance or other
equitable relief. The arbitration will be conducted only in Denver, Colorado,
before a single arbitrator selected by the parties or, if they are unable to
agree on an arbitrator, before a panel of three arbitrators, one selected by
the Buyer, one selected by the Shareholders' Agent and the third selected by
the other two arbitrators. The arbitrators shall have full authority to order
specific performance and award damages and other relief available under this
Agreement or applicable law, but shall have no authority to add to, detract
from, change or amend the terms of this Agreement or existing law. All
arbitration proceedings, including settlements and awards, shall be
confidential. The decision of the arbitrators will be final and binding, and
judgment on the award by the arbitrators may be entered in any court of
competent jurisdiction. THIS SUBMISSION AND AGREEMENT TO ARBITRATE WILL BE
SPECIFICALLY ENFORCEABLE. The prevailing party or parties in any such
arbitration or in any action to enforce this Agreement will be entitled to all
reasonable costs and expenses, including fees and expenses of the arbitrators
and attorneys, incurred in connection therewith.
9.12. Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement will be construed
as if drafted jointly by the parties and no presumption or burden of proof will
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. The word "including" will mean including
without limitation. The parties intend that each representation, warranty and
covenant contained herein will have independent significance. If any party
breaches any representation, warranty or covenant contained herein in any
respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which the party has not breached will not detract from or
mitigate the fact that the party is in breach of the first representation,
warranty or covenant.
9.13. Incorporation of Exhibits. The Exhibits identified in this
Agreement are incorporated herein by reference and made a part hereof.
9.14. Shareholders' Agent. Each Shareholder and Xxxx hereby authorizes
and appoints the Shareholders' Agent to act as its, his or her exclusive agent
and attorney-in-fact to act on behalf of each of them with respect to all
matters which are the subject of this Agreement, including, without limitation,
(a) receiving or giving all notices, instructions, other communications,
consents or agreements that may be necessary, required or given hereunder and
(b) asserting, settling, compromising, or defending, or determining not to
assert, settle, compromise or defend, (i) any claims which any Shareholder or
Xxxx may assert, or have the right to assert, against the Buyer, or (ii) any
claims which the Buyer may assert, or have the right to assert, against any
Shareholder or Xxxx. The Shareholders' Agent hereby accepts such authorization
and appointment. Upon the receipt of written evidence satisfactory to the
Buyer to the effect that the Shareholders' Agent has been substituted as agent
of the Shareholders and Xxxx by reason of his death, disability or resignation,
the Buyer shall be entitled to rely on such substituted agent to the same
extent as they were theretofore entitled to rely upon the Shareholders' Agent
with respect to the matters covered by this Section 9.14. Neither Xxxx nor any
Shareholder shall act with respect to any of the matters which are the subject
of this Agreement except through the Shareholders' Agent. The Shareholders and
Xxxx acknowledge and agree that the Buyer may deal exclusively with the
Shareholders' Agent in respect of such matters, that the enforceability of this
Section 9.14 is material to the Buyer, and that the Buyer has relied upon the
enforceability of this Section 9.14 in entering into this Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BUYER:
RENTX INDUSTRIES, INC.
By: /s/ XXXXXXX X. XXXXX
-------------------------------------
Name: Xxxxxxx X. Xxxxx
-------------------------------------
Title: Vice President
-------------------------------------
SHAREHOLDERS:
/s/ XXXXX X. XXXXX
----------------------------------------------
Xxxxx X. Xxxxx
/S/ XXXXX X. XXXXX
----------------------------------------------
Xxxxx X. Xxxxx
XXXX:
/s/ XXXXXXX X. XXXX
----------------------------------------------
Xxxxxxx X. Xxxx
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT.]
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