Exhibit 10.36
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ASSET PURCHASE AGREEMENT
BY AND AMONG
R & R RENTALS, INC.,
THE STOCKHOLDER OF R & R RENTALS, INC.,
AND
NES ACQUISITION CORP.
DATED AS OF JULY 24, 1998
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS................................................................. 1
1.1 Definitions........................................................... 1
1.2 Other Definitional Provisions......................................... 5
1.3 Cross Reference of Other Definitions.................................. 5
ARTICLE II
PURCHASE AND SALE; ASSUMPTION OF CERTAIN LIABILITIES; CLOSING............... 7
2.1 Purchase and Sale..................................................... 7
2.2 Purchase Price Adjustments............................................10
2.3 Closing Transactions..................................................12
2.4 Distribution of Holdback..............................................13
ARTICLE III
CONDITIONS TO CLOSING.......................................................13
3.1 Conditions to the Purchaser's Obligations.............................13
3.2 Conditions to the Seller's Obligation.................................15
ARTICLE IV
COVENANTS PRIOR TO CLOSING..................................................17
4.1 Affirmative Covenants of the Seller and the Stockholder...............17
4.2 Negative Covenants of the Seller and the Stockholder..................18
4.3 Covenants of Purchaser................................................19
ARTICLE V
REPRESENTATIONS AND WARRANTIES
CONCERNING THE SELLER AND THE STOCKHOLDER...................................19
5.1 Organization and Corporate Power......................................19
5.2 Authorization of Transactions.........................................20
5.3 Capitalization........................................................20
5.4 Subsidiaries; Investments.............................................20
5.5 Absence of Conflicts..................................................21
5.6 Financial Statements and Related Matters..............................21
5.7 Absence of Undisclosed Liabilities....................................21
5.8 Absence of Certain Developments.......................................22
5.9 Assets................................................................23
5.10 Title to Properties...................................................24
5.11 Taxes.................................................................26
5.12 Contracts and Commitments.............................................27
5.13 Proprietary Rights....................................................29
5.14 Litigation; Proceedings...............................................30
5.15 Brokerage.............................................................30
5.16 Governmental Licenses and Permits..................................30
5.17 Employees..........................................................30
5.18 Employee Benefit Matters...........................................31
5.19 Insurance..........................................................32
5.20 Officers and Directors; Bank Accounts..............................32
5.21 Affiliate Transactions.............................................33
5.22 Compliance with Laws...............................................33
5.23 Environmental Matters..............................................33
5.24 Disclosure.........................................................34
5.25 Closing Date.......................................................34
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
CONCERNING THE PURCHASER.................................................34
6.1 Organization and Corporate Power...................................34
6.2 Authorization......................................................35
6.3 No Violation.......................................................35
6.4 Governmental Authorities and Consents..............................35
6.5 Litigation.........................................................35
6.6 Brokerage..........................................................35
6.7 Closing Date.......................................................35
ARTICLE VII
TERMINATION..............................................................36
7.1 Termination........................................................36
7.2 Effect of Termination..............................................36
ARTICLE VIII
INDEMNIFICATION AND RELATED MATTERS......................................36
8.1 Survival...........................................................36
8.2 Indemnification....................................................37
ARTICLE IX
ADDITIONAL AGREEMENTS....................................................40
9.1 Continuing Assistance..............................................40
9.2 Tax Matters........................................................40
9.3 Press Releases and Announcements...................................41
9.4 Further Transfers..................................................41
9.5 Specific Performance...............................................41
9.6 Transition Assistance..............................................41
9.7 Expenses...........................................................41
9.8 Exclusivity........................................................41
9.9 Books and Records..................................................42
9.10 Noncompetition, Nonsolicitation and Confidentiality................42
9.11 Employees..........................................................43
9.12 Seller's Use of Name...............................................44
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9.13 Allocation of Purchase Price.......................................44
9.14 Third Party Consents...............................................44
9.15 Bulk Sales Law.....................................................45
9.16 NES Stock..........................................................45
ARTICLE X
MISCELLANEOUS............................................................46
10.1 Amendment and Waiver...............................................46
10.2 Notices............................................................46
10.3 Binding Agreement; Assignment......................................47
10.4 Severability.......................................................47
10.5 No Strict Construction.............................................47
10.6 Captions...........................................................47
10.7 Entire Agreement...................................................47
10.8 Counterparts.......................................................48
10.9 Governing Law......................................................48
10.10 Parties in Interest................................................48
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INDEX OF SCHEDULES
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Schedule of Stockholders
Excluded Assets Schedule
Organization Schedule
Subsidiaries Schedule
Conflicts Schedule
Financial Statements Schedule
Developments Schedule
Assets Schedule
Real Property Schedule
Leases Schedule
Taxes Schedule
Contracts Schedule
Proprietary Rights Schedule
Litigation Schedule
Brokerage Schedule
Permits Schedule
Employees Schedule
Benefit Plans Schedule
Insurance Schedule
Officers, Directors and Bank Accounts Schedule
Affiliated Transactions Schedule
Environmental Schedule
Excluded Employee Schedule
Purchase Price Allocation Schedule
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of July 24, 1998, by and
among R & R Rentals, Inc., a Texas corporation (the "Seller"), Xxxxxx X.
Xxxxxxxxxx, the sole stockholder of the Seller (the "Stockholder"), and NES
Acquisition Corp., a Delaware corporation (the "Purchaser"). The Seller, the
Stockholder and the Purchaser are referred to herein collectively as the
"Parties" and individually as a "Party."
WHEREAS, the Stockholder owns beneficially and of record 100% of the
issued and outstanding shares of capital stock of the Seller;
WHEREAS, the Seller is, among other things, engaged in the business of
equipment rental (the "Business"); and
WHEREAS, effective as of July 1, 1998 (the "Effective Date"), upon the
terms and subject to the conditions set forth in this Agreement, the Purchaser
desires to acquire from the Seller, and the Seller desires to sell to the
Purchaser, substantially all of the Seller's business, assets and properties
(operating as a going concern) constituting the Business.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. For purposes hereof, the following terms, when used
herein with initial capital letters, shall have the respective meanings set
forth herein:
"Affiliate" of any Person means any other Person controlling,
controlled by or under common control with such first Person, where "control"
means the possession, directly or indirectly, of the power to direct the
management and policies of a Person whether through the ownership of voting
securities or otherwise.
"Affiliated Group" means an affiliated group as defined in Section
1504 of the Code (or any similar combined, consolidated or unitary group defined
under state, local or foreign income Tax law).
"Agreement" means this Asset Purchase Agreement, including all
Exhibits and Schedules hereto, as it may be amended from time to time in
accordance with its terms.
"Baseline Acquired Assets Amount" means $9,834,000.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks are authorized or required to close under the laws of
the United States.
"Cash" means cash, cash equivalents and marketable securities
(including, without limitation, all money market accounts, mutual fund accounts
and repurchase agreements).
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Environmental Affiliates" of any Person means, with respect to any
particular matter, all other Persons whose liabilities or obligations with
respect to that particular matter have been assumed by, or are otherwise deemed
by law to be those of, such first Person.
"Environmental and Safety Requirements" means all federal, state,
local and foreign statutes, regulations, ordinances and similar provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety and pollution or protection of the
environment, including all such standards of conduct and bases of obligations
relating to the presence, use, production, generation, handling, transport,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or by-products,
asbestos, polychlorinated biphenyls (or PCBs), noise or radiation.
"Environmental Lien" means any Lien, whether recorded or unrecorded,
in favor of any governmental entity or any department, agency or political
subdivision thereof relating to any liability of the Seller, any Subsidiary of
the Seller or any Stockholder or any Environmental Affiliate of the Seller, any
Subsidiary of the Seller or any Stockholder arising under any Environmental and
Safety Requirement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" means, at a given time, United States generally accepted
accounting principles, consistently applied.
"Indebtedness" of any Person means, without duplication: (a)
indebtedness for borrowed money or for the deferred purchase price of property
or services in respect of which such Person is liable, contingently or
otherwise, as obligor or otherwise (other than trade payables and other current
liabilities incurred in the ordinary course of business) and any commitment by
which such Person assures a creditor against loss, including contingent
reimbursement obligations with respect to letters of credit; (b) indebtedness
guaranteed in any manner by such Person, including a guarantee in the form of an
agreement to repurchase or reimburse; and (c) obligations under capitalized
leases in respect of which such Person is liable, contingently or otherwise, as
obligor, guarantor or otherwise, or in respect of which obligations such Person
assures a creditor against loss.
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"Insider" means, any officer, director, stockholder, partner or
Affiliate, as applicable, of the Seller or any individual related by marriage or
adoption to any such individual or any entity in which any such Person owns any
beneficial interest.
"Licenses" means all permits, licenses, franchises, certificates,
approvals and other authorizations of foreign, federal, state and local
governments or other similar rights.
"Liens" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, without limitation, any conditional sale
or other title retention agreement or lease in the nature thereof), any sale of
receivables with recourse against the Seller or any Affiliate, any filing or
agreement to file a financing statement as debtor under the Uniform Commercial
Code or any similar statute other than to reflect ownership by a third party of
property leased to the Seller or any of its Subsidiaries under a lease which is
not in the nature of a conditional sale or title retention agreement, or any
subordination arrangement in favor of another Person (other than any
subordination arising in the ordinary course of business).
"Loss" means, with respect to any Person, any diminution in value,
consequential or other damage, liability, demand, claim, action, cause of
action, cost, damage, deficiency, Tax, penalty, fine or other loss or expense,
whether or not arising out of a third party claim, including all interest,
penalties, reasonable attorneys' fees and expenses and all amounts paid or
incurred in connection with any action, demand, proceeding, investigation or
claim by any third party (including any governmental entity or any department,
agency or political subdivision thereof) against or affecting such Person or
which, if determined adversely to such Person, would give rise to, evidence the
existence of, or relate to, any other Loss and the investigation, defense or
settlement of any of the foregoing.
"Material Adverse Effect" means any material adverse effect on the
business, financial condition, operations, results of operations, employee
relations, customer or supplier relations, assets or future prospects of the
Business.
"Ordinary Course of Business" means the ordinary course of business of
the Business consistent with past practice (including, without limitation, with
respect to collection of accounts receivable, purchases of inventory and
supplies, repairs and maintenance, payment of accounts payable and accrued
expenses, levels of capital expenditures and operation of cash management
practices generally).
"Permitted Encumbrances" shall mean: (A) statutory liens for current
taxes or other governmental charges with respect to the Real Property not yet
due and payable or the amount or validity of which is being contested in good
faith and for which appropriate reserves have been established; (B) mechanics,
carriers, workers, repairers and similar statutory liens arising or incurred in
the ordinary course of business for amounts which are not delinquent and which
could not, individually or in the aggregate, have a Material Adverse Effect; (C)
zoning, entitlement, building and other land use regulations imposed by
governmental agencies having jurisdiction over the Real Property which are not
violated by the current use and operation of the Real Property; and (D)
covenants, conditions, restrictions, easements and other matters of record
affecting title to the Real
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Property which do not unreasonably interfere with the current use, occupancy, or
value, or the marketability of title, of the Real Property.
"Person" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof and any other entity.
"Proprietary Rights" means all (i) patents, patent applications,
patent disclosures and inventions, (ii) trademarks, service marks, trade dress,
trade names, logos, internet domain names and corporate names and registrations
and applications for registration thereof together with all of the goodwill
associated therewith, (iii) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for registration thereof,
(iv) mask works and registrations and applications for registration thereof, (v)
computer software, data, data bases and documentation thereof, (vi) trade
secrets and other confidential information (including, without limitation,
ideas, formulas, compositions, inventions (whether patentable or unpatentable
and whether or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial and marketing plans and customer and supplier lists and information),
(vii) other intellectual property rights and (viii) copies and tangible
embodiments thereof (in whatever form or medium).
"Release" has the meaning set forth in CERCLA.
"Subsidiary" means, with respect to any Person, any corporation a
majority of the total voting power of shares of stock of which is entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or any partnership, limited liability
company, association or other business entity a majority of the partnership or
other similar ownership interest of which is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that
Person or a combination thereof. For purposes of this definition, a Person is
deemed to have a majority ownership interest in a partnership, limited liability
company, association or other business entity if such Person is allocated a
majority of the gains or losses of such partnership, limited liability company,
association or other business entity or is or controls the managing director or
general partner of such partnership, limited liability company, association or
other business entity.
"Tax Returns" means returns, declarations, reports, claims for refund,
information returns or other documents (including any related or supporting
schedules, statements or information) filed or required to be filed in
connection with the determination, assessment or collection of Taxes of any
party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
"Taxes" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security,
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unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, or other
tax, fee, assessment or charge of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Transaction Documents" means this Agreement, and all other
agreements, instruments, certificates and other documents to be entered into or
delivered by any Party in connection with the transactions contemplated to be
consummated pursuant to this Agreement.
"Treasury Regulations" means the United States Treasury Regulations
promulgated pursuant to the Code.
1.2 Other Definitional Provisions.
(a) Accounting Terms. Accounting terms which are not otherwise
defined in this Agreement have the meanings given to them under GAAP. To the
extent that the definition of accounting term that is defined in this Agreement
is inconsistent with the meaning of such term under GAAP, the definition set
forth in this Agreement will control.
(b) "Hereof," etc. The terms "hereof," "herein" and "hereunder" and
terms of similar import are references to this Agreement as a whole and not to
any particular provision of this Agreement. Section, clause, Schedule and
Exhibit references contained in this Agreement are references to Sections,
clauses, Schedules and Exhibits in or to this Agreement, unless otherwise
specified.
(c) Successor Laws. Any reference to any particular Code section or
any other law or regulation will be interpreted to include any revision of or
successor to that section regardless of how it is numbered or classified.
1.3 Cross Reference of Other Definitions. Each capitalized term
listed below is defined in the corresponding Section of this Agreement:
Term Section
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Acquired Assets.................................2.1(a)
Actual Acquired Assets Amount...................2.2(b)
Agreement.......................................Preface
Applicable Limitation Date......................8.1
Assumed Liabilities.............................2.1(c)
Business........................................Recitals
Cap.............................................8.2(b)(ii)
Cash Purchase Price.............................2.1(e)
Closing.........................................2.3(a)
Closing Date....................................2.3(a)
Closing Review..................................2.2(b)
Closing Transactions............................2.3(b)
COBRA...........................................5.18(a)
Confidential Information........................9.10(c)
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Division............................... Recitals
Draft Balance Sheet.................... 2.2(b)
Effective Date......................... Recitals
Estimated Acquired Assets Amount....... 2.2(a)
Estoppel Letters....................... 3.1(k)(v)
Excluded Assets........................ 2.1(b)
Excluded Employees..................... 9.11(b)
Excluded Liabilities................... 2.1(d)
Financial Statements................... 5.6(a)
Firm................................... 2.2(b)
Holdback............................... 2.1(e)
HSR Act................................ 3.1(f)
Improvements........................... 5.10(f)
Indemnified Party...................... 8.2(e)
Indemnifying Party..................... 8.2(e)
Latest Balance Sheet................... 5.6(a)
Leased Real Property................... 5.10(b)
Leases................................. 5.10(b)
Licenses............................... 5.16
NES.................................... 2.1(e)
NES Stock.............................. 2.1(e)
Noncompete Period...................... 9.10(a)
Noncompeting Parties................... 9.10(a)
Objection Notice....................... 2.2(a)
Owned Real Property.................... 5.10(a)
Party.................................. Preface
Pending Claim.......................... 2.4
Prime Rate............................. 2.2(c)
Purchase Price......................... 2.1(e)
Purchaser.............................. Preface
Purchaser Parties...................... 8.2(a)
Real Property.......................... 2.1(a)(v)
Real Property Permits.................. 5.10(g)
Real Property Law...................... 5.10(h)
Remaining Holdback..................... 2.4
Seller................................. Preface
Seller Parties......................... 8.2(c)
Specified Liabilities.................. 2.1(c)(i)
Stockholder............................ Preface
Unassigned Contracts................... 9.14
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ARTICLE II
PURCHASE AND SALE; ASSUMPTION OF CERTAIN LIABILITIES; CLOSING
2.1 Purchase and Sale.
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(a) Acquired Assets. Upon the terms and subject to the conditions set
forth in this Agreement, at the Closing the Seller shall sell, assign, transfer
and deliver to the Purchaser, and the Purchaser shall purchase, all properties,
assets, rights and interests of every kind and nature, whether tangible or
intangible, and wherever located and by whomever possessed, owned by the Seller
and related to the Business as of the Closing Date, except as set forth in
Section 2.1(b) below (collectively, the "Acquired Assets"), including, without
limitation (in each case, to the extent related to the Business):
(i) all Proprietary Rights, along with all income, royalties,
damages and payments due or payable as of the Closing or thereafter,
including, without limitation, damages and payments for past, present or
future infringements or misappropriations thereof, the right to xxx and
recover for past infringements or misappropriations thereof and any and all
corresponding rights that, now or hereafter, may be secured throughout the
world;
(ii) all of the Seller's rights existing under leases, contracts,
licenses, permits, distribution arrangements, sales and purchase
agreements, other agreements and business arrangements, including, without
limitation, all contracts and agreements described on the Contracts
Schedule attached hereto;
(iii) all real property owned or leased by the Seller, and all
plants, buildings and other improvements located on such owned or leased
property, and all easements, licenses, rights of way, permits and all
appurtenances to such owned or leased property, including, without
limitation, all appurtenant rights in and to public streets, whether or not
vacated (collectively, the "Real Property");
(iv) all leasehold improvements and all machinery, equipment
(including all transportation and office equipment), fixtures, trade
fixtures, tools, dyes and furniture owned by the Seller wherever located,
including, without limitation, all such items which are located in any
building, warehouse, office or other space leased, owned or occupied by the
Seller or used in connection with the Real Property;
(v) all rental equipment of any kind, wherever located, rented by
the Seller to or from any Person;
(vi) all inventories of work in process, semi-finished and
finished goods, stores, replacement and spare parts, packaging materials,
operating supplies, and fuels;
(vii) all office supplies, production supplies, spare parts,
other miscellaneous supplies, and other tangible property of any kind
wherever located, including, without limitation, all property of any kind
located in any building, office or other space
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leased, owned or occupied by the Seller or in any warehouse where any of
the Seller's properties and assets may be situated;
(viii) all prepayments and prepaid expenses;
(ix) except as specified in Section 2.1(b) below, all of the
Seller's claims, causes of action, choses in action, rights of recovery and
rights of set-off of any kind;
(x) the right to receive and retain mail and other
communications;
(xi) the right to xxxx and receive payment for products shipped
or delivered and services performed but unbilled as of the Closing;
(xii) all lists, records and other information pertaining to
accounts, personnel and referral sources, all lists and records pertaining
to suppliers and customers, and all books, ledgers, files and business
records of every kind, whether evidenced in writing, electronically
(including, without limitation, by computer) or otherwise;
(xiii) all advertising, marketing and promotional materials and
all other printed or written materials;
(xiv) all permits, licenses, certifications and approvals from
all permitting, licensing, accrediting and certifying agencies, and the
rights to all data and records held by such permitting, licensing and
certifying agencies;
(xv) all telephone numbers (e.g. "800" numbers) used by the
Seller;
(xvi) all goodwill as a going concern and all other intangible
properties;
(xvii) the name "R & R Rentals, Inc." (and all derivatives
thereof); and
(xviii) except as specified in Section 2.1(b) below, all other
property owned by the Seller, or in which it has an interest on the Closing
Date, including, without limitation, all fixed assets included on the
Latest Balance Sheet and any and all subsequent improvements or additions
thereon through the Closing Date.
(b) Excluded Assets. Notwithstanding Section 2.1(a) above, the
following assets are expressly excluded from the purchase and sale contemplated
hereby and, as such, are not Acquired Assets (collectively, the "Excluded
Assets"):
(i) all assets which are not related to the Business;
(ii) all accounts and notes receivables (whether current or
noncurrent) and all of the Seller's claims, causes of action, choses in action,
rights of recovery and rights of set-off of any kind relating primarily thereto
or arising primarily thereunder;
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(iii) all Cash, securities and other investments;
(iv) all monies to be received by the Seller from the Purchaser
in connection with the consummation of the transactions contemplated by the
Transaction Documents;
(v) all rights of the Seller under this Agreement;
(vi) all qualifications to do business as a foreign corporation;
(vii) all arrangements with registered agents relating to foreign
qualifications;
(viii) all taxpayer and other identification numbers;
(ix) all seals, minute books, stock transfer books, blank stock
certificates, and other documents relating to the organization,
maintenance, and existence of the Seller as a corporation; and
(x) all of the Seller's claims, causes of action, rights of
recovery and rights of set-off of any kind against or relating to either
Orix Credit Alliance, Inc., Jerolde X. Xxxxx or any member of his family,
Xxx Xxxxx, Trustee of the bankruptcy estate of Jerolde X. Xxxxx (or such
estate), or any other party who or which might be joined, or a necessary
party to, in each case solely to the extent relating primarily to,
Adversary No. 96-2107M, Case No. 91-21377-M-7, in the United States
Bankruptcy Court for the Southern District of Texas, McAllen Division.
(c) Assumed Liabilities. Subject to Section 2.1(d) below, as
additional consideration for the Acquired Assets, at the Closing the Purchaser
will assume the following liabilities and obligations of the Seller (the
"Assumed Liabilities"): all liabilities and obligations of the Business pursuant
to executory contracts, orders and commitments covering the purchase of
inventory and/or supplies or the sale or rental of equipment, merchandise or
services which are described on the attached Contracts Schedule.
(d) Excluded Liabilities. Except as set forth in Section 2.1(c) above,
the Purchaser shall not assume or become liable for, and shall not be deemed to
have assumed or have become liable for, any of the Seller's liabilities and
obligations not expressly assumed by the Purchaser pursuant to Section 2.1(c)
above, whether accrued, absolute or contingent, whether known or unknown,
whether disclosed or undisclosed, whether due or to become due and whether
related to the Acquired Assets or otherwise, and regardless of when asserted,
including, without limitation, any liabilities or obligations arising from or
relating to (i) the Acquired Assets, (ii) the Seller's operation of the Business
prior to the Closing Date or (iii) any Tax related to the Acquired Assets or the
Seller's operation of the Business (the "Excluded Liabilities").
(e) Purchase Price for Acquired Assets. The purchase price for the
Acquired Assets (the "Purchase Price") will consist of the assumption by
Purchaser of the Assumed Liabilities,
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the delivery of 296,297 shares of common stock, par value $.01 per share (the
"NES Stock") of National Equipment Services, Inc., a Delaware corporation
("NES"), and the payment of an aggregate of $22,634,000 (as adjusted pursuant to
Section 2.2 below), which shall be paid at Closing as follows: (i) the Purchaser
shall deliver $22,134,000 (as adjusted pursuant to Section 2.2 below) (the "Cash
Purchase Price") in cash and (iii) the Purchaser shall maintain $500,000 in a
book entry account of the Purchaser (the "Holdback"). The Holdback shall be
available to satisfy any amounts owing to the Purchaser pursuant to Section 2.2
(Purchase Price Adjustment) and/or Section 8.2 (Indemnification). The Purchase
Price is subject to adjustment pursuant to Section 2.2 hereof.
2.2 Purchase Price Adjustments.
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(a) Closing Date Adjustments. At the Closing, the Purchase Price will
be adjusted dollar-for-dollar as set forth in this Section 2.2(a).
(i) Acquired Assets. Not more than ten (10) Business Days, but in
no event less than five (5) Business Days, before the Closing Date, the
Seller and the Purchaser will, in good faith and in accordance with the
GAAP, jointly estimate the book value of the Acquired Assets as of the
close of business on June 30, 1998 on a reasonable basis using the Seller's
then available financial information; provided, however, that if the Seller
and the Purchaser cannot agree on an estimate of the book value of the
Acquired Assets, such estimate will be deemed to be equal to the average of
the Seller's and the Purchaser's good faith determinations thereof. The
book value of the Acquired Assets as finally estimated pursuant to this
Section 2.2(a), is referred to herein as the "Estimated Acquired Assets
Amount." At the Closing, if the Estimated Acquired Assets Amount is less
than the Baseline Acquired Assets Amount, then the Purchase Price will be
decreased by the amount of such deficiency, and if the Estimated Acquired
Assets Amount is greater than the Baseline Acquired Assets Amount, then the
Purchase Price will be increased by the amount of such excess.
(ii) Indebtedness. At the Closing, the Purchase Price will be
decreased dollar-for-dollar by an amount equal to the amount necessary to
discharge fully the then outstanding balance of the Seller's and its
Subsidiaries' Indebtedness secured by any of the Acquired Assets
(including, without limitation, prepayment penalties and premiums);
provided that at the election of the Purchaser any or all of such
Indebtedness may be assumed by the Purchaser rather than discharged, in
which case the Purchase Price will be decreased dollar-for-dollar by an
amount equal to the amount so assumed.
(b) Post-Closing Determination. Within 90 days after the Closing Date,
the Purchaser and its auditors will conduct a review (the "Closing Review") of
the book value of the Acquired Assets as of the close of business on June 30,
1998 and will prepare and deliver to the Seller a computation of the amount of
the book value of the Acquired Assets as of the close of business on June 30,
1998 (the "Draft Balance Sheet"). The Purchaser and its auditors will make
available to the Seller and its auditors all records and work papers used in
preparing the Draft Balance Sheet. If the Seller disagrees with the computation
of the book value of the Acquired Assets reflected on the Draft Balance Sheet,
the Seller may, within thirty (30) days after receipt of the Draft Balance
Sheet, deliver a notice (an "Objection Notice") to the Purchaser setting forth
the
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Seller's calculation of the amount of the book value of the Acquired Assets as
of the close of business on June 30, 1998. The Purchaser and the Seller will use
reasonable best efforts to resolve any disagreements as to the computation of
the book value of the Acquired Assets, but if they do not obtain a final
resolution within thirty (30) days after the Purchaser has received the
Objection Notice, the Purchaser and the Seller will jointly retain an
independent accounting firm of recognized national standing (the "Firm") to
resolve any remaining disagreements. If the Purchaser and the Seller are unable
to agree on the choice of the Firm, then the Firm will be a "big-six" accounting
firm selected by lot (after excluding one firm designated by the Purchaser and
one firm designated by the Seller). The Purchaser and the Seller will direct the
Firm to render a determination within 30 days of its retention and the
Purchaser, the Seller, the Stockholder and their respective agents will
cooperate with the Firm during its engagement. The Firm will consider only those
items and amounts in the Draft Balance Sheet set forth in the Objection Notice
which the Purchaser and the Seller are unable to resolve. In resolving any
disputed item, the Firm may not assign a value to any item greater than the
greatest value for such item claimed by either party or less than the smallest
value for such item claimed by either party. The Firm's determination will be
based solely on presentations by the Purchaser and the Seller (i.e., not on
independent review), and on the definition of Acquired Assets included herein.
The determination of the Firm will be conclusive and binding upon the Purchaser,
the Seller and the Stockholder. The Purchaser and the Seller shall bear the
costs and expenses of the Firm based on the percentage which the portion of the
contested amount not awarded to each party bears to the amount actually
contested by such party. The book value of the Acquired Assets, as finally
determined pursuant to this Section 2.2(b), is referred to herein as the "Actual
Acquired Assets Amount."
(c) Post-Closing Adjustment.
-----------------------
(i) Payment by the Purchaser. If the Actual Acquired Assets Amount is
greater than the Estimated Acquired Assets Amount, the Purchaser will,
within five (5) Business Days after the determination thereof, pay to the
Seller an amount equal to the sum of (A) the Actual Acquired Assets Amount
minus the Estimated Acquired Assets Amount plus (B) interest on such
difference from the Closing Date to the date of payment at an interest rate
equal to the "Prime Rate" as listed in The Wall Street Journal Midwest
Edition on the Closing Date (the "Prime Rate"). Such payment will be made
by wire transfer or delivery of other immediately available funds.
(ii) Payment by the Stockholder. If the Actual Acquired Assets Amount
is less than the Estimated Acquired Assets Amount, the Purchaser shall be
entitled to receive from the Holdback, within five (5) business days after
the determination thereof, the amount equal to the sum of (A) the Estimated
Acquired Assets Amount minus the Actual Acquired Assets Amount plus (B)
interest on such difference from the Closing Date to the date of payment at
an interest rate equal to the Prime Rate (provided, however, that if the
Holdback is less than the amount of such sum of (A) and (B) above, the
Stockholder shall pay to the Purchaser, within five (5) business days after
the determination of the Actual Acquired Assets Amount, the amount by which
the Holdback is less than the amount of such sum of (A) and (B) above).
Such payment will be made by wire transfer or delivery of other immediately
available funds.
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(iii) Dispute. If, pursuant to Section 2.2(b) above, there is a
dispute as to the final determination of the Actual Acquired Assets Amount,
the Purchaser and the Stockholder shall promptly pay to the other, as
appropriate, such amounts as are not in dispute, pending final
determination of such dispute pursuant to Section 2.2(b).
2.3 Closing Transactions.
--------------------
(a) Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxxx & Xxxxx,
000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, commencing at 10:00 a.m. on
the Business Day following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(other than conditions with respect to actions the respective Parties will take
at the Closing itself), or at such other place or on such other date as may be
mutually agreeable to the Purchaser and the Seller; provided that in any event,
if the Purchaser's senior lenders require that the Closing take place at the
offices of their attorneys, the Parties agree that the Closing shall take place
at such offices. The date and time of the Closing are herein referred to as the
"Closing Date." The transactions contemplated hereby shall be effective as of
the Effective Date.
(b) Closing Transactions. Subject to the conditions set forth in this
Agreement, the Parties shall consummate the following transactions (the "Closing
Transactions") on the Closing Date:
(i) the Stockholder shall cause the Seller to, and the Seller shall
convey to the Purchaser good and marketable title to all of the Acquired
Assets, free and clear of all Liens (other than Permitted Encumbrances),
and deliver to the Purchaser warranty deeds, bills of sale, assignment of
leases and contracts and all other instruments of conveyance which are
necessary or desirable to effect transfer of the Acquired Assets, in form
and substance satisfactory to the Purchaser;
(ii) the Purchaser shall deliver to the Seller such instruments of
assumption as are required in order for the Purchaser to assume the Assumed
Liabilities;
(iii) pursuant to Section 2.2(a)(ii) above, the Purchaser shall repay,
or cause to be repaid, on behalf of the Seller and its Subsidiaries, all
amounts necessary to discharge fully the then outstanding balance of the
Seller's and its Subsidiary's Indebtedness secured by any of the Acquired
Assets (including, without limitation, prepayment penalties and premiums)
by wire transfer of immediately available funds as directed by the holders
of such Indebtedness at or prior to the Closing, and the Seller shall
deliver to the Purchaser all appropriate payoff letters at or prior to the
Closing and shall make arrangements reasonably satisfactory to Purchaser
for such holders to deliver lien releases and canceled notes as soon as
reasonably practicable after the Closing;
(iv) The Purchaser shall deliver to the Seller the Cash Purchase Price
by wire transfer of immediately available funds;
(v) The Purchaser shall deliver to the Seller the NES Stock;
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(vi) The Purchaser shall deliver to the Stockholder the amount set
forth in Section 9.10(a) by wire transfer of immediately available funds;
and
(vii) the Seller and the Purchaser, as applicable, shall deliver the
opinions, certificates and other documents and instruments required to be
delivered by or on behalf of such Party under Article III.
2.4 Distribution of Holdback. On the 120th day after the Closing
Date, the Purchaser shall pay to the Seller an amount equal to the amount of the
Holdback, if any, remaining after (i) all amounts owing to the Purchaser
pursuant to Section 2.2 (Purchase Price Adjustment) have been satisfied, and
(ii) all claims of the Purchaser under Section 8.2 (Indemnification) which have
theretofore been finally resolved have been satisfied (the "Remaining Holdback")
less any amount for which the Purchaser claims, prior to such 120th day, that it
is entitled to receive indemnification pursuant to Section 8.2 (each, a "Pending
Claim"). As soon as practicable following final resolution of all Pending
Claims, the Purchaser shall pay to the Sellers an aggregate amount equal to the
portion, if any, of the Holdback which remain after payment of the Remaining
Holdback and final resolution of all Pending Claims.
ARTICLE III
CONDITIONS TO CLOSING
---------------------
3.1 Conditions to the Purchaser's Obligations. The obligation of
the Purchaser to consummate the transactions contemplated by this Agreement is
subject to the satisfaction of the following conditions as of the Closing Date:
(a) The representations and warranties set forth in Article V hereof
shall be true and correct in all material respects at and as of the Closing Date
as though then made and as though the Closing Date were substituted for the date
of this Agreement throughout such representations and warranties (without taking
into account any disclosures made by the Seller or the Stockholder to the
Purchaser pursuant to Sections 4.1(g) or 5.25 hereof);
(b) The Seller and the Stockholder shall have performed and complied
with all of the covenants and agreements required to be performed by each of
them under this Agreement on or prior to the Closing;
(c) All consents by third parties that are required for the transfer
of the Acquired Assets to the Purchaser and the consummation of the other
transactions contemplated hereby or that are required in order to prevent a
breach of, a default under, a termination or modification of, or any
acceleration of, any obligations under any material contract to which the Seller
or any of its Subsidiaries is a party shall have been obtained, all on terms
reasonably satisfactory to the Purchaser;
(d) All governmental filings, authorizations and approvals that are
required for the transfer of the Acquired Assets to the Purchaser and the
consummation of the other transactions
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contemplated hereby shall have been duly made and obtained on terms reasonably
satisfactory to the Purchaser;
(e) The purchase of Acquired Assets by the Purchaser hereunder shall
not be prohibited by any applicable law or governmental regulation, shall not
subject the Purchaser to any penalty, liability or other onerous condition under
or pursuant to any applicable law or governmental regulation, and shall be
permitted by laws and regulations of the jurisdictions to which the Purchaser is
subject;
(f) The applicable waiting periods, if any, under the Xxxx-Xxxxx-
Xxxxxx Antitrust Improvement Act of 1976, as amended (the "HSR Act") shall have
expired or been terminated;
(g) No action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable judgment, decree, injunction, order or ruling would prevent the
performance of this Agreement or any of the transactions contemplated hereby,
declare unlawful the transactions contemplated by this Agreement, cause such
transactions to be rescinded or materially and adversely affect the right of the
Purchaser to own, operate or control the Acquired Assets, and no judgment,
decree, injunction, order or ruling shall have been entered which has any of the
foregoing effects;
(h) Since the date hereof, there shall have been no Material Adverse
Effect;
(i) Payoff letters with respect to all of the Seller's and its
Subsidiaries' Indebtedness secured by any of the Acquired Assets outstanding as
of the Closing and releases of any and all Liens (other than Permitted
Encumbrances) held by third parties against the Acquired Assets shall have been
obtained, all on terms reasonably satisfactory to the Purchaser;
(j) The Purchaser shall have received an opinion, dated the Closing
Date, of Xxxxxx & Xxxxxxx, counsel to the Seller and the Stockholder, in form
and substance satisfactory to the Purchaser;
(k) The Purchaser shall have received a copy of the new real estate
lease for the Mont Belvieu, Texas facility of the Business, and the rental rate
under such lease shall be no greater than the fair market rental rate for a
similar facility in such location, and shall be substantially the same as the
rental rate under the lease arrangement for such facility during the 1997 fiscal
year;
(l) On or prior to the Closing Date, the Stockholder shall have
delivered to the Purchaser all of the following:
(i) a certificate from the Seller and the Stockholder in a form
reasonably satisfactory to the Purchaser, dated the Closing Date, stating
that the preconditions specified in Sections 3.1(a) through (k) have been
satisfied;
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(ii) copies of all third party and governmental consents, approvals,
filings and releases required in connection with the consummation of the
transactions contemplated herein;
(iii) certified copies of the resolutions of the Stockholder and the
Seller's board of directors approving the transactions contemplated by this
Agreement;
(iv) certificates of the secretary of state of the State of Texas and
any other state where the Seller or any of its Subsidiaries is qualified to
do business providing that the Seller or such Subsidiary is in good
standing;
(v) landlord consent and estoppel letter (the "Estoppel Letter") with
respect to the Mont Belvieu, Texas facility from the landlords, lessors,
sublessors or licensors for such property in form and content reasonably
satisfactory to the Purchaser (and the Purchaser's lender, if any) and
containing such statements or agreements as the Purchaser or the
Purchaser's lender may reasonably request; and
(vi) such other documents or instruments as the Purchaser may
reasonably request to effect the transactions contemplated hereby;
(m) The Seller shall have obtained a non-disturbance agreement in form
and substance satisfactory to the Purchaser and the Purchaser's lender from each
lender encumbering the parcel of Leased Real Property at the Mont Belvieu, Texas
facility;
(n) The Purchaser and each of Xxxxxx X. Xxxxxxxxxx and Xxxx Xxxxxxxxxx
shall have entered into an agreement relating to such Person's employment or
consulting arrangement with the Purchaser and such Person's agreement not to
compete with the Purchaser, and such agreements shall be in full force and
effect; and
(o) All proceedings to be taken by the Seller, any of its Subsidiaries
and the Stockholder in connection with the consummation of the Closing
Transactions and the other transactions contemplated hereby and all
certificates, opinions, instruments and other documents required to be delivered
by the Seller, any of its Subsidiaries and the Stockholder to effect the
transactions contemplated hereby reasonably requested by the Purchaser shall be
reasonably satisfactory in form and substance to the Purchaser.
Any condition specified in this Section 3.1 may be waived by the Purchaser;
provided that no such waiver shall be effective against the Purchaser unless it
is set forth in a writing executed by the Purchaser.
3.2 Conditions to the Seller's Obligation. The obligation of the
Seller to consummate the transactions contemplated by this Agreement is subject
to the satisfaction of the following conditions as of the Closing Date:
(a) The representations and warranties set forth in Article VI shall
be true and correct in all material respects at and as of the Closing Date as
though then made and as though the
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Closing Date were substituted for the date of this Agreement throughout such
representations and warranties (without taking into account any disclosures made
by the Purchaser to the Seller pursuant to Sections 4.3(a) and 6.7 hereof);
(b) The Purchaser shall have performed and complied with all of the
covenants and agreements required to be performed by it under this Agreement on
or prior to the Closing;
(c) All governmental filings, authorizations and approvals that are
required for the transfer of the Acquired Assets to the Purchaser and the
consummation of the other transactions contemplated hereby shall have been duly
made and obtained on terms reasonably satisfactory to the Seller;
(d) No action, suit, or proceeding shall be pending before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator wherein an unfavorable judgment,
decree, injunction, order or ruling would prevent the performance of this
Agreement or any of the transactions contemplated hereby, declare unlawful the
transactions contemplated by this Agreement, cause such transactions to be
rescinded or materially and adversely affect the right of the Purchaser to own,
operate or control the Acquired Assets, and no judgment, decree, injunction,
order or ruling shall have been entered which has any of the foregoing effects;
(e) On or prior to the Closing Date, the Purchaser shall have
delivered to the Seller all of the following:
(i) a certificate from the Purchaser in a form reasonably
satisfactory to the Seller, dated the Closing Date, stating that the
preconditions specified in Sections 3.2(a) through (d), inclusive, have
been satisfied;
(ii) certificates of the secretary of state of the State of Delaware
providing that the Purchaser is in good standing;
(iii) certified copies of the resolutions of the Purchaser's board of
directors approving the transactions contemplated by this Agreement; and
(iv) such other documents or instruments as the Seller may reasonably
request to effect the transactions contemplated hereby;
(f) NES and the Seller shall have entered into a registration rights
agreement which sets forth certain registration rights relating to the NES
Stock, and such agreement shall be in full force and effect; and
(g) All proceedings to be taken by the Purchaser in connection with
the consummation of the Closing Transactions and the other transactions
contemplated hereby and all certificates, opinions, instruments and other
documents required to be delivered by the Purchaser to effect the transactions
contemplated hereby reasonably requested by the Seller shall be reasonably
satisfactory in form and substance to the Seller.
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Any condition specified in this Section 3.2 may be waived by the Seller;
provided that no such waiver shall be effective unless it is set forth in a
writing executed by the Seller.
ARTICLE IV
COVENANTS PRIOR TO CLOSING
4.1 Affirmative Covenants of the Seller and the Stockholder. Prior
to the Closing, unless the Purchaser otherwise agrees in writing and except as
expressly contemplated by this Agreement, the Stockholder shall cause the Seller
and each of its Subsidiaries to, the Seller and each of its Subsidiaries shall
and in the case of Sections 4.1(g), (h), (i) and (m) the Stockholder also shall:
(a) conduct the business and operations of the Business only in the
Ordinary Course of Business;
(b) keep in full force and effect its corporate existence and all
rights, franchises and intellectual property relating or pertaining to its
business and use its reasonable best efforts to cause its current insurance (or
reinsurance) policies not to be canceled or terminated or any of the coverage
thereunder to lapse;
(c) use its reasonable best efforts to carry on the Business in the
same manner as presently conducted and to keep the business organization and
properties of the Business intact, including its present business operations,
physical facilities, working conditions and employees and its present
relationships with lessors, licensors, suppliers and customers and others having
business relations with it;
(d) maintain the material assets of the Business in good repair,
order and condition (normal wear and tear excepted) consistent with current
needs, replace in accordance with prudent practices its inoperable, worn out or
obsolete assets with assets of good quality consistent with prudent practices
and current needs and, in the event of a casualty, loss or damage to any of such
assets or properties prior to the Closing Date, either repair or replace such
damaged property or use the proceeds of such insurance in such other manner as
mutually agreed upon by the Seller and the Purchaser;
(e) encourage employees to continue their employment with the
Purchaser and its Subsidiaries after the Closing;
(f) maintain the books, accounts and records of the Business in
accordance with past custom and practice as used in the preparation of the
Financial Statements;
(g) promptly (once the Seller or the Stockholder obtains knowledge
thereof) inform the Purchaser in writing of any variances from the
representations and warranties contained in Article V hereof or any breach of
any covenant hereunder by the Seller or the Stockholder;
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(h) cooperate with the Purchaser and use reasonable best efforts to
cause the conditions to the Purchaser's obligation to close to be satisfied
(including, without limitation, the execution and delivery of all agreements
contemplated hereunder to be so executed and delivered and the making and
obtaining of all third party and governmental notices, filings, authorizations,
approvals, consents, releases and terminations);
(i) use reasonable best efforts to obtain all third party and
governmental approvals and consents necessary or desirable to consummate the
transactions contemplated hereby and to cause the other conditions to the
Purchaser's obligations hereunder to be satisfied;
(j) maintain the existence of and use reasonable best efforts to
protect all Proprietary Rights used in the Business;
(k) maintain the existence of and protect all of the governmental
permits, licenses, approvals and other authorizations of the Business;
(l) comply with all applicable laws, ordinances, and regulations in
the operation of the Business; and
(m) cooperate with the Purchaser in the Purchaser's investigation of
the business and properties of the Business, to permit the Purchaser and its
employees, agents, accounting, legal and other authorized representatives to (i)
have full access to the premises, books and records of the Business at
reasonable hours, (ii) visit and inspect any of the properties of the Business,
and (iii) discuss the affairs, finances and accounts of the Business with the
directors, officers, partners, key employees, key customers, key sales
representatives, key suppliers and independent accountants of the Seller and
each of its Subsidiaries.
4.2 Negative Covenants of the Seller and the Stockholder . Prior to
the Closing, unless Purchaser otherwise agrees in writing and except as
expressly contemplated by this Agreement, the Stockholder shall cause the Seller
and each of its Subsidiaries to not and the Seller and each of its Subsidiaries
shall not (in each case, to the extent related to the Business):
(a) take any action that would require disclosure under Section 5.8;
(b) incur any Indebtedness other than Indebtedness to finance its
working capital needs;
(c) make any loans, enter into any transaction with any Insider, make
or grant any increase in any employee's, officer's or director's compensation,
authorize or pay any bonuses to any employee, officer, director or stockholder
or make or grant any increase in any employee benefit plan, incentive
arrangement or other benefit covering any of the employees of the Seller or its
Subsidiaries;
(d) establish or, except in the Ordinary Course of Business,
contribute to any pension, retirement, profit sharing or stock bonus plan or
multiemployer plan covering the employees of the Business;
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(e) except as specifically contemplated by this Agreement, enter into
any contract, agreement or transaction, other than in the Ordinary Course of
Business and at arm's length with unaffiliated Persons;
(f) declare, pay, make or otherwise effectuate any dividends,
distributions, redemptions, equity repurchases or other transactions involving
the Seller's or any of its Subsidiaries' capital stock or equity securities;
(g) engage in any activity other than in the Ordinary Course of
Business which would delay the payment of its accounts payable, delay its
capital expenditures, or reduce or otherwise restrict the amount of inventory on
hand; or
(h) sell, transfer, contribute, distribute, or otherwise dispose of
any securities, capital stock or assets (other than marketable securities) of
the Seller or of its Subsidiaries, or agree to do any of the foregoing, to any
Person, or negotiate or have any discussions with any Person with respect to any
of the foregoing, other than in the Ordinary Course of Business.
4.3 Covenants of Purchaser. Prior to the Closing, the Purchaser
shall:
(a) promptly (once it obtains knowledge thereof) inform the Seller in
writing of any variances from the representations and warranties contained in
Article VI or any breach of any covenant hereunder by Purchaser; and
(b) cooperate with Seller and use its reasonable best efforts to
cause the conditions to the Seller's obligation to close to be satisfied
(including, without limitation, the execution and delivery of all agreements
contemplated hereunder to be so executed and delivered and the making and
obtaining of all third party and governmental filings, authorizations,
approvals, consents, releases and terminations).
ARTICLE V
REPRESENTATIONS AND WARRANTIES
CONCERNING THE SELLER AND THE STOCKHOLDER
-----------------------------------------
As a material inducement to the Purchaser to enter into this Agreement, the
Seller and the Stockholder hereby jointly and severally represent and warrant
that:
5.1 Organization and Corporate Power. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Texas and is qualified to do business in every jurisdiction in which it
is required to be qualified. All jurisdictions in which the Seller is qualified
to do business are set forth on the "Organization Schedule" attached hereto. The
Seller has full power and authority and all licenses, permits and authorizations
necessary to own and operate its properties and to carry on its business as now
conducted. Correct and complete copies of the Seller's and each of its
Subsidiaries' articles of incorporation and by-laws have been furnished to the
Purchaser, which documents reflect all amendments made thereto at any time prior
to the date of this Agreement. Correct and complete copies of the minute books
containing the
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records of meetings of the stockholders and board of directors, the stock
certificate books and the stock record books of the Seller and each of its
Subsidiaries have been furnished to the Purchaser. Neither the Seller nor any of
its Subsidiaries is in default under or in violation of any provision of its
articles of incorporation or by-laws.
5.2 Authorization of Transactions. The Seller and the Stockholder
have full power and authority to execute and deliver the Transaction Documents
to which they are a party and to consummate the transactions contemplated hereby
and thereby. The Stockholder and the board of directors of the Seller, as
applicable, have duly approved the Transaction Documents to which the
Stockholder and/or the Seller are a party and have duly authorized the execution
and delivery of such Transaction Documents and the consummation of the
transactions contemplated thereby. No other corporate proceedings on the part of
the Stockholder or the Seller are necessary to approve and authorize the
execution and delivery of the Transaction Documents to which the Stockholder
and/or the Seller are a party and the consummation of the transactions
contemplated thereby. All Transaction Documents to which the Stockholder and/or
the Seller are a party have been duly executed and delivered by the Stockholder
and/or the Seller, as applicable, and constitute the valid and binding
agreements of the Stockholder and/or the Seller, as applicable, enforceable
against the Stockholder and/or the Seller in accordance with their terms.
5.3 Capitalization. The authorized, issued and outstanding stock of
the Seller consists of 10,000 shares of Common Stock, no par value per share, of
which 1,000 shares are issued and outstanding. All of the issued and outstanding
shares of the Seller's capital stock have been duly authorized, are validly
issued, fully paid, and nonassessable, and are held of record and beneficially
by the Stockholder free and clear of all Liens and are not subject to, nor were
they issued in violation of, any preemptive rights or rights of first refusal.
There are no outstanding or authorized options, warrants, rights, contracts,
calls, puts, rights to subscribe, conversion rights or other agreements or
commitments to which the Seller is a party or which are binding upon the Seller
providing for the issuance, disposition or acquisition of any of its capital
stock. There are no outstanding or authorized stock appreciation, phantom stock
or similar rights with respect to the Seller or any of its Subsidiaries. There
are no voting trusts, proxies or any other agreements or understandings with
respect to the voting of the capital stock of the Seller or any of its
Subsidiaries. Neither the Seller nor any of its Subsidiaries is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock.
5.4 Subsidiaries; Investments. The attached "Subsidiaries Schedule"
correctly sets forth the name of each of the Seller's direct or indirect
Subsidiaries, the jurisdiction of its incorporation, the number of authorized,
issued and outstanding shares of capital stock of such Subsidiary and the
Persons owning the outstanding capital stock of such Subsidiary. Each Subsidiary
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, possesses all requisite corporate power and
authority and all material licenses, permits and authorizations necessary to own
its properties and to carry on its businesses as now being conducted and is
qualified to do business in every jurisdiction in which its ownership of
property or the conduct of business requires it to qualify. All of the
outstanding shares of capital stock of each Subsidiary are validly issued, full
paid and nonassessable, and all such shares are owned by the Seller or another
Subsidiary free and clear of any Lien and not subject to any option or right to
purchase any such shares. Except as set forth on the Subsidiaries Schedule,
neither the
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Seller nor any of its Subsidiaries owns or holds the right to acquire any shares
of stock or any other security or interest in any other Person.
5.5 Absence of Conflicts. Except as set forth on the "Conflicts
Schedule" attached hereto, the execution, delivery and performance of the
Transaction Documents and the consummation of the transactions contemplated
thereby by the Seller and the Stockholder do not and shall not (a) conflict with
or result in any breach of any of the terms, conditions or provisions of, (b)
constitute a default under, (c) result in a violation of, (d) give any third
party the right to modify, terminate or accelerate any obligation under, (e)
result in the creation of any Lien upon the Acquired Assets or (f) require any
authorization, consent, approval, exemption or other action by or notice or
declaration to, or filing with, any court or administrative or other
governmental body or agency, under the provisions of the articles of
incorporation or by-laws of the Seller or any of its Subsidiaries or any
indenture, mortgage, lease, loan agreement or other agreement or instrument to
which the Seller, any of its Subsidiaries or the Stockholder is bound or
affected, or any law, statute, rule or regulation to which the Seller, any of
its Subsidiaries or the Stockholder is subject or any judgment, order or decree
to which the Seller, any of its Subsidiaries or the Stockholder is subject.
5.6 Financial Statements and Related Matters.
-----------------------------------------
(a) Financial Statements. Attached hereto as the "Financial
Statements Schedule" are copies of the (i) unaudited balance sheet of the
Business as of April 30, 1998 (the "Latest Balance Sheet") and the related
statements of income and cash flows for the four-month period then ended and
(ii) unaudited balance sheets and statements of income and cash flows of the
Business for the fiscal years ended December 31, 1997, 1996 and 1995. Each of
the foregoing financial statements (including in all cases the notes thereto, if
any) (the "Financial Statements") is accurate and complete, is consistent with
the books and records of the Business (which, in turn, are accurate and
complete), presents fairly the financial condition and results of operations of
the Business as of the times and for the periods referred to therein, and has
been prepared in accordance with GAAP, subject in the case of unaudited
financial statements to changes resulting from normal year-end adjustments for
recurring accruals (which shall not be material individually or in the
aggregate) and to the absence of footnote disclosure.
(b) Inventory. The inventory of the Business, net of the reserves
applicable to such inventory, consists of a quantity and quality which, except
as reflected in such reserve, is usable or saleable in the Ordinary Course of
Business, and the items of such inventory are not defective, slow-moving,
obsolete or damaged and are merchantable and fit for their particular use. The
Business has good title to such inventory, free and clear of all Liens (other
than Permitted Encumbrances).
5.7 Absence of Undisclosed Liabilities. Neither the Seller nor any
of its Subsidiaries has any obligations or liabilities related to the Business
(whether accrued, absolute, contingent, unliquidated or otherwise, whether or
not known, whether due or to become due and regardless of when asserted) arising
out of transactions entered into at or prior to the Closing, or any action or
inaction at or prior to the Closing, or any state of facts existing at or prior
to the Closing, except (i) obligations under executory contracts or commitments
described on the Contracts Schedule attached hereto or under executory contracts
and commitments which are not required to
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be disclosed thereon (but not liabilities for breaches thereof), (ii)
liabilities reflected on the liabilities side of the Latest Balance Sheet, and
(iii) liabilities which have arisen after the date of the Latest Balance Sheet
in the Ordinary Course of Business or otherwise in accordance with the terms and
conditions of this Agreement (none of which is a liability for breach of
contract, breach of warranty, tort or infringement or a claim or lawsuit or an
environmental liability).
5.8 Absence of Certain Developments. Except as set forth on the
"Developments Schedule" attached hereto and except as expressly contemplated by
this Agreement, since the date of the Latest Balance Sheet, neither the Seller
nor any of its Subsidiaries has (in each case, to the extent related to the
Business):
(a) suffered any change that has had or could reasonably be expected
to have a Material Adverse Effect or suffered any theft, damage, destruction or
casualty loss in excess of $50,000, to its assets, whether or not covered by
insurance or suffered any substantial destruction of its books and records;
(b) redeemed or repurchased, directly or indirectly, any shares of
capital stock or other equity security or declared, set aside or paid any
dividends or made any other distributions (whether in cash or in kind) with
respect to any shares of its capital stock or other equity security;
(c) issued, sold or transferred any equity securities, any securities
convertible, exchangeable or exercisable into shares of its capital stock or
other equity securities, or warrants, options or other rights to acquire shares
of its capital stock or other of its equity securities;
(d) incurred or become subject to any liabilities, except liabilities
incurred in the Ordinary Course of Business;
(e) subjected any portion of its properties or assets to any Lien
(other than Permitted Encumbrances);
(f) sold, leased, assigned or transferred (including, without
limitation, transfers to the Stockholder or any Insider) a portion of its
tangible assets, except for sales of inventory in the Ordinary Course of
Business, or canceled without fair consideration any material debts or claims
owing to or held by it;
(g) sold, assigned, licensed or transferred (including, without
limitation, transfers to the Stockholder or any Insider) any Proprietary Rights
owned by, issued to or licensed to it or disclosed any confidential information
(other than pursuant to agreements requiring the disclosure to maintain the
confidentiality of and preserving all its rights in such confidential
information) or received any confidential information of any third party in
violation of any obligation of confidentiality;
(h) suffered any extraordinary losses or waived any rights of
material value;
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(i) entered into, amended or terminated any material lease, contract,
agreement or commitment, or taken any other action or entered into any other
transaction other than in the Ordinary Course of Business;
(j) entered into any other material transaction, or materially
changed any business practice;
(k) made or granted any bonus or any wage, salary or compensation
increase to any director, officer, employee or sales representative, group of
employees or consultant or made or granted any increase in any employee benefit
plan or arrangement, or amended or terminated any existing employee benefit plan
or arrangement or adopted any new employee benefit plan or arrangement;
(l) made any other change in employment terms for any of its
directors, officers, and employees outside the Ordinary Course of Business;
(m) conducted its cash management customs and practices other than in
the Ordinary Course of Business (including, without limitation, with respect to
collection of accounts receivable, purchases of inventory and supplies, repairs
and maintenance, payment of accounts payable and accrued expenses, levels of
capital expenditures and operation of cash management practices generally);
(n) made any capital expenditures or commitments for capital
expenditures that aggregate in excess of $50,000;
(o) made any loans or advances to, or guarantees for the benefit of,
any Person;
(p) made charitable contributions, pledges, association fees or dues
in excess of $50,000; or
(q) committed to do any of the foregoing.
5.9 Assets. Except as set forth on the attached "Assets Schedule,"
the Seller and each of its Subsidiaries have good and marketable title to, or a
valid leasehold interest in, the properties and assets used by them, located on
their premises or shown on the Latest Balance Sheet or acquired thereafter, free
and clear of all Liens, except for Permitted Encumbrances and except for
properties and assets disposed of in the ordinary course of business since the
date of the Latest Balance Sheet. Except as described on the Assets Schedule,
the Seller's and each of its Subsidiaries' buildings, equipment and other
tangible assets are in good operating condition and are fit for use in the
ordinary course of business. The Seller and each of its Subsidiaries owns or
leases all buildings, machinery, equipment, and other assets necessary for the
conduct of its business as presently conducted. The Acquired Assets constitute
all of the assets and rights necessary for the conduct of the Business as it is
presently conducted.
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5.10 Title to Properties.
--------------------
(a) Owned Properties. The "Real Property Schedule" sets forth a list
of all owned real property (collectively, the "Owned Real Property") used by the
Seller or any of its Subsidiaries in the operation of their businesses. With
respect to each such parcel of Owned Real Property: (i) the Seller owns such
parcel free and clear of all encumbrances, except Permitted Encumbrances; (ii)
there are no leases, subleases, licenses, concessions, or other agreements,
written or oral, granting to any person the right of use or occupance of any
portion of such parcel; and (iii) there are no outstanding actions or rights of
first refusal to purchase such parcel, or any portion thereof or interest
therein.
(b) Leased Properties. The "Leases Schedule" sets forth a list of all
of the written leases and subleases, and a description of all oral arrangements
with respect to real property, related to the Business (the "Leases") and each
leased and subleased parcel of real property related to the Business in which
the Seller or any of its Subsidiaries has a leasehold or subleasehold interest
(including, without limitation, any month to month or other oral lease
arrangements) (the "Leased Real Property"). Each of the Leases is in full force
and effect and the Seller or one of its Subsidiaries holds a valid and existing
leasehold or subleasehold interest under each of the Leases. The Seller has
delivered to the Purchaser true, correct, complete and accurate copies of each
of the written Leases described in the Leases Schedule. With respect to each
Lease listed on the Leases Schedule: (i) the Lease is legal, valid, binding,
enforceable and in full force and effect; (ii) the Lease will continue to be
legal, valid, binding, enforceable and in full force and effect on identical
terms following the Closing; (iii) neither the Seller nor, to the knowledge of
the Seller or the Stockholder, any other party to the Lease is in breach or
default, and no event has occurred which, with notice or lapse of time, would
constitute such a breach or default or permit termination, modification or
acceleration under the Lease; (iv) no party to the Lease has repudiated any
provision thereof; (v) there are no disputes or forbearance programs in effect
as to the Lease; (vi) the Lease has not been modified in any respect, except to
the extent that such modifications are disclosed by the documents delivered to
the Purchaser; and (vii) neither the Seller nor any of its Subsidiaries has
assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any
interest in the Lease.
(c) Real Property Disclosure. Except as disclosed on the Real
Property Schedule and the Leases Schedule, there is no Real Property leased or
owned by the Seller or any of its Subsidiaries used in the Business. The Owned
Real Property and Leased Real Property constitute collectively the Real
Property.
(d) No Proceedings. There are no proceedings in eminent domain or
other similar proceedings pending or, to the knowledge of the Seller or the
Stockholder, threatened, affecting any portion of the Real Property. There
exists no writ, injunction, decree, order or judgment outstanding, nor any
litigation, pending or threatened, relating to the ownership, lease, use,
occupancy or operation by any Person of the Real Property.
(e) Current Use. The current use of the Real Property does not
violate in any material respect any instrument of record or agreement affecting
such Real Property. There is no violation of any covenant, condition,
restriction, easement, agreement or order of any governmental authority having
jurisdiction over any of the Real Property that affects such real property or
the use
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or occupancy thereof. No damage or destruction has occurred with respect to any
of the Real Property that, individually or in the aggregate, has had or resulted
in, or will have or result in, a Material Adverse Effect.
(f) Condition and Operation of Improvements. All buildings and all
components of all buildings, structures and other improvements included within
the Real Property (the "Improvements"), including, without limitation, the roofs
and structural elements thereof and the heating, ventilation, air conditioning,
air pollution emission capture and abatement, plumbing, electrical, mechanical,
sewer, waste water and paving and parking equipment systems and facilities
included therein, are in good condition and repair and adequate to operate such
facilities as currently used and there are no facts or conditions affecting any
of the Improvements which would, individually or in the aggregate, interfere in
any significant respect with the use, occupancy or operation thereof as
currently used, occupied or operated or intended to be used, occupied or
operated. There are no structural deficiencies or latent defects affecting any
Improvements located upon the Real Property. All water, gas, electrical, steam,
compressed air, telecommunication, sanitary and storm sewage lines and systems
and other similar systems serving the Real Property are installed and operating
and are sufficient to enable the Real Property to continue to be used and
operated in the manner currently being used and operated, and any so-called
hook-up fees or other associated charges have been fully paid. Each such utility
or other service is provided by a public or private utility or service company
and enters the Real Property from an adjacent public street or valid private
easement owned by the supplier of such utility or other service. Each
Improvement has direct access to a public street adjoining the Real Property on
which such Improvement is situated over the driveways and accessways currently
being used in connection with the use and operation of such Improvement and no
existing accessway crosses or encroaches upon any property or property interest
not owned by the Seller or any of its Subsidiaries. No Improvement or portion
thereof is dependent for its access, operation or utility on any land, building
or other improvement not included in the Real Property.
(g) Permits. All certificates of occupancy, permits, licenses,
franchises, approvals and authorizations (collectively, the "Real Property
Permits") of all governmental authorities having jurisdiction over the Real
Property, required or appropriate to have been issued to the Seller or any of
its Subsidiaries to enable the Real Property to be lawfully occupied and used
for all of the purposes for which it is currently occupied and used have been
lawfully issued and are, as of the date hereof, in full force and effect. The
Seller has delivered complete and correct copies of the Real Property Permits to
the Purchaser. Neither the Seller nor any of its Subsidiaries has received or
been informed by a third party of the receipt by it of any notice from any
governmental authority having jurisdiction over the Real Property threatening a
suspension, revocation, modification or cancellation of any Real Property Permit
and, to the knowledge of the Seller or the Stockholder, there is no basis for
the issuance of any such notice or the taking of any such action.
(h) Compliance with Laws. The Real Property is in full compliance
with all applicable building, zoning, subdivision and other land use and similar
laws affecting the Real Property (collectively, the "Real Property Laws"), and
neither the Seller nor any of its Subsidiaries has received any notice of
violation or claimed violation of any Real Property Law. There is no pending or,
to the knowledge of the Seller or the Stockholder, any anticipated change in any
Real Property Law that will have or result in a significant adverse effect upon
the ownership, alteration,
-25-
use, occupancy or operation of the Real Properties or any portion thereof. No
current use by the Seller or any of its Subsidiaries of the Real Properties is
dependent on a nonconforming use or other approval from a governmental
authority, the absence of which would significantly limit the use of any of the
properties or assets in the operation of the business of the Seller or any of
its Subsidiaries.
5.11 Taxes. To the extent related to the Business, and except as set
forth on the attached "Taxes Schedule,"
(a) the Seller and each of its Subsidiaries has timely filed all Tax
Returns which are required to be filed, and all such Tax Returns are true,
complete and accurate in all respects and have been prepared in compliance with
applicable law;
(b) all Taxes due and payable by the Seller and each of its
Subsidiaries, whether or not shown on a Tax Return, have been paid by the Seller
or each such Subsidiary and no Taxes are delinquent;
(c) the amount accrued as a current liability for taxes on the Latest
Balance Sheet shall be sufficient to pay in full all Taxes for taxable periods
(or portions thereof) ending on or before the date of the Latest Balance Sheet,
whether or not such Taxes are due on or before such date and, since the date of
the Latest Balance Sheet, neither the Seller nor any of its Subsidiaries have
incurred any liability for Taxes other than in the Ordinary Course of Business;
(d) no deficiency for any amount of Tax which has not been resolved
has been asserted or assessed by a taxing authority against the Seller or any of
its Subsidiaries, and neither the Seller nor the Stockholder has knowledge that
any such assessment or asserted Tax liability shall be made;
(e) there is no action, suit, taxing authority proceeding or audit
now in progress, pending or, to the knowledge of the Seller or the Stockholder,
threatened against or with respect to the Seller or any of its Subsidiaries;
(f) neither the Seller nor the Stockholders reasonably expect any
taxing authority to claim or assess any additional Taxes in respect of the
Seller or any of its Subsidiaries for any period;
(g) neither the Seller nor any of its Subsidiaries has (i) waived any
statute of limitations, (ii) agreed to any extension of the period for
assessment or collection or (iii) executed or filed any power of attorney, in
each case with respect to any Taxes which waiver, agreement or power of attorney
is currently in force;
(h) neither the Seller nor any of its Subsidiaries has been a member
of an Affiliated Group (as defined in Section 1504 of the Code), or any similar
group defined under local, state or foreign Tax law and neither the Seller nor
any of its Subsidiaries has any liability for Taxes of any Person other than the
Seller or its Subsidiaries under Treasury Regulations Section 1.1502-6 or any
similar provision of local, state or foreign Tax law;
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(i) neither the Seller nor any of its Subsidiaries is a party to or
bound by any Tax allocation, sharing, indemnity or similar agreement or
arrangement with any Person and neither the Seller nor any of its Subsidiaries
has current or potential contractual obligation to indemnify any other Person
with respect to Taxes;
(j) neither the Seller nor any of its Subsidiaries has any obligation
to make any payment that could be non-deductible under Section 280G of the Code
(or any corresponding provision of state, local or foreign Tax law);
(k) no claim has ever been made by a taxing authority in a
jurisdiction where the Seller or any of its Subsidiaries does not pay Taxes or
file Tax Returns that the Seller or any such Subsidiary is or may be subject to
Taxes assessed by such jurisdiction;
(l) the Seller and each of its Subsidiaries have withheld and paid
all Taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, creditor, independent contractor or other third
party; and
(m) the Taxes Schedule contains a list of states, territories and
jurisdictions (whether foreign or domestic) in which the Seller and each of its
Subsidiaries are required to file Tax Returns relating to their respective
businesses.
5.12 Contracts and Commitments.
(a) Except as specifically contemplated by this Agreement and except
as set forth on the "Contracts Schedule" attached hereto, neither the Seller nor
any of its Subsidiaries is a party to or bound by, whether written or oral, any
(in each case, to the extent related to the Business):
(i) collective bargaining agreement or contract with any labor
union or any bonus, pension, profit sharing, retirement or any other form
of deferred compensation plan or any stock purchase, stock option,
hospitalization insurance or similar plan or practice, whether formal or
informal;
(ii) contract for the employment of any officer, individual employee
or other person on a full-time or consulting basis or any severance
agreements;
(iii) agreement or indenture relating to the borrowing of money or to
mortgaging, pledging or otherwise placing a Lien on any of its assets;
(iv) contract under which the Seller or any of its Subsidiaries has
advanced or loaned any other Person amounts in the aggregate exceeding
$25,000 (other than account and notes receivable incurred in the Ordinary
Course of Business);
(v) agreements with respect to the lending or investing of funds;
(vi) license or royalty agreements;
-27-
(vii) guaranty of any obligation, other than endorsements made for
collection;
(viii) management, consulting, advertising, marketing, promotion,
technical services, advisory or other contract or other similar arrangement
relating to the design, marketing, promotion, management or operation of
the Business;
(ix) outstanding powers of attorney executed on behalf of the
Seller;
(x) lease or agreement under which it is lessee of, or holds or
operates, any personal property owned by any other party calling for
payments in excess of $25,000 annually;
(xi) lease or agreement under which it is lessor of or permits any
third party to hold or operate any property, real or personal, owned or
controlled by it;
(xii) contract or group of related contracts with the same party
continuing over a period of more than six months from the date or dates
thereof, not terminable by it on 30 days or less notice without penalties
or involving more than $25,000;
(xiii) any confidentiality agreement or similar arrangement;
(xiv) contract which prohibits it from freely engaging in business
anywhere in the world; or
(xv) other agreement material to it whether or not entered into in
the Ordinary Course of Business.
(b) Except as disclosed on the Contracts Schedule, (i) no contract or
commitment required to be disclosed on the Contracts Schedule has been breached
or canceled by the other party and neither the Seller nor the Stockholder has
knowledge of any anticipated breach by any other party to any contract required
to be disclosed on the Contracts Schedule, (ii) no customer or supplier has
indicated in writing or orally to the Seller, any of its Subsidiaries or the
Stockholder that it shall stop or decrease the rate of business done with the
Business or that it desires to renegotiate its contract or current arrangement
with the Seller or any of its Subsidiaries, (iii) the Seller and each of its
Subsidiaries have performed all the obligations required to be performed by them
in connection with the contracts or commitments required to be disclosed on the
Contracts Schedule and are not in default under or in breach of any contract or
commitment required to be disclosed on the Contracts Schedule, and no event has
occurred which with the passage of time or the giving of notice or both would
result in a default or breach thereunder, (iv) neither the Seller nor any of
its Subsidiaries has any present expectation or intention of not fully
performing any obligation pursuant to any contract required to be set forth on
the Contracts Schedule, and (vi) each agreement required to be set forth on the
Contracts Schedule is legal, valid, binding, enforceable and in full force and
effect and will continue as such following the consummation of the transactions
contemplated hereby.
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(c) The Seller has provided the Purchaser with a true and correct
copy of all written contracts which are required to be disclosed on the
Contracts Schedule, in each case together with all amendments, waivers or other
changes thereto (all of which are disclosed on the Contracts Schedule). The
Contracts Schedule contains an accurate and complete description of all material
terms of all oral contracts referred to therein.
5.13 Proprietary Rights.
(a) The attached "Proprietary Rights Schedule" contains a complete
and accurate list of all (a) patented or registered Proprietary Rights owned or
used by the Seller or any of its Subsidiaries in connection with the Business,
(b) pending patent applications and applications for registrations of other
Intellectual Property Rights filed by the Seller or any of its Subsidiaries in
connection with the Business, (c) unregistered trade names, internet domain
names and corporate names owned or used by the Seller or any of its Subsidiaries
in connection with the Business and (d) unregistered trademarks, service marks,
and computer software owned or used by the Seller or any of its Subsidiaries in
connection with the Business. The Proprietary Rights Schedule also contains a
complete and accurate list of all licenses and other rights granted by the
Seller or any of its Subsidiaries to any third party with respect to any
Proprietary Rights related to the Business and all licenses and other rights
granted by any third party to the Seller or any of its Subsidiaries with respect
to any Proprietary Rights related to the Business, in each case identifying the
subject Proprietary Rights. Except as set forth on the Proprietary Rights
Schedule, the Seller and each of its Subsidiaries own, free of all Liens (except
Permitted Encumbrances), all right, title and interest to, or have the right to
use pursuant to a valid written license, all Proprietary Rights necessary for
the operation of the Business as presently conducted and such rights will be
owned or made available for use by the Purchaser after the Closing on terms and
conditions identical to those under which they were owned or used prior to the
Closing. Except as set forth on the Proprietary Rights Schedule, the loss or
expiration of any Proprietary Rights or related group of Proprietary Rights
owned or used by the Seller or any of its Subsidiaries related to the Business
has not had a Material Adverse Effect on the conduct of the Business and is not
pending or, to the knowledge of the Seller or the Stockholder, threatened or
reasonably foreseeable.
(b) Except as set forth on the Proprietary Rights Schedule, (i) the
Seller and each of its Subsidiaries owns and possesses without restriction as to
use, all right, title and interest in and to the Proprietary Rights necessary
for the operation of the Business as currently conducted; (ii) neither the
Seller nor any of its Subsidiaries has received any notices of invalidity,
infringement or misappropriation from any third party with respect to any such
Proprietary Rights; (iii) neither the Seller nor any of its Subsidiaries has
interfered with, infringed upon, misappropriated or otherwise come into conflict
with any Proprietary Rights of any third parties; and (iv) to the knowledge of
the Seller or the Stockholder, no third party has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any Proprietary
Rights of the Seller or its Subsidiaries related to the Business.
(c) The transactions contemplated by this Agreement shall have no
adverse effect on the Purchaser's right, title and interest in and to any of the
Proprietary Rights related to the Business. The Seller and each of its
Subsidiaries has taken all necessary and desirable actions to maintain
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and protect their Proprietary Rights related to the Business and shall continue
to maintain and protect those rights prior to the Closing so as to not adversely
affect the validity or enforcement of such Proprietary Rights.
5.14 Litigation; Proceedings. Except as set forth on the attached
"Litigation Schedule," there are no actions, suits, complaints, charges,
proceedings, orders, investigations or claims pending or, to the knowledge of
the Seller or the Stockholder, threatened against or affecting the Business (or
to the knowledge of the Seller or the Stockholder, pending or threatened against
or affecting any of the officers or key employees of the Business with respect
to the businesses or proposed business activities of the Business) at law or in
equity, or before or by any governmental department, commission, board, bureau,
agency or instrumentality (including, without limitation, any actions, suits,
complaints, charges, proceedings or investigations with respect to the
transactions contemplated by this Agreement); nor have there been any such
actions, suits, proceedings, orders, investigations or claims pending against or
affecting the Business during the past three years; and neither the Seller nor
any of its Subsidiaries is subject to any grievance arbitration proceedings
under collective bargaining agreements or otherwise or, to the knowledge of the
Seller or the Stockholder, any governmental investigations or inquiries related
to the Business. Neither the Seller nor any of its Subsidiaries is subject to
any judgment, order or decree of any court or other governmental agency (or
settlement enforceable therein), and neither the Seller nor any of its
Subsidiaries has received any opinion or memorandum or legal advice from legal
counsel to the effect that it is exposed, from a legal standpoint, to any
liability or disadvantage which may be material to the Business.
5.15 Brokerage. Except as set forth on the "Brokerage Schedule"
attached hereto, there are no claims for brokerage commissions, finders' fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of the
Seller, any of its Subsidiaries or the Stockholder.
5.16 Governmental Licenses and Permits. The "Permits Schedule"
attached hereto contains a complete listing and summary description of all
permits, licenses, certificates, approvals and other authorizations of any
governmental entity or any department, agency or political subdivision thereof,
or other similar rights (collectively, the "Licenses") owned or possessed by the
Seller or any of its Subsidiaries or used by it in the conduct of the Business.
Except as indicated on the Permits Schedule, the Seller and each of its
Subsidiaries own or possess all right, title and interest in and to all of the
Licenses that are necessary to conduct the Business as presently conducted,
including, without limitation, all Licenses required under any federal, state or
local law relating to public health and safety, employee health and safety,
pollution or protection of the environment. The Seller and each of its
Subsidiaries are in compliance with the terms and conditions of such Licenses
and have received no notices that they are in violation of any of the terms or
conditions of such Licenses. The Seller and each of its Subsidiaries have taken
all necessary action to maintain such Licenses. No loss or expiration of any
such License is threatened, pending or reasonably foreseeable other than
expiration in accordance with the terms thereof. Except as indicated on the
Permits Schedule, all of the Licenses shall survive the transactions
contemplated hereby.
5.17 Employees. Except as set forth on the "Employees Schedule"
attached hereto, to the knowledge of the Seller or the Stockholder, no key
executive employee and no group
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of employees or independent contractors of the Business has any plans to
terminate his, her or its employment or relationship as an independent
contractor with the Business. The Seller and each of its Subsidiaries have
complied and remain in compliance with all applicable laws relating to the
employment of personnel and labor. Neither the Seller nor any of its
Subsidiaries is a party to or bound by any collective bargaining agreement, nor
has such party experienced any strikes, grievances, unfair labor practices
claims or other material employee or labor disputes related to the Business.
Neither the Seller nor any of its Subsidiaries has engaged in any unfair labor
practice. Neither the Seller nor the Stockholder has knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Business. Neither the Seller nor
any of its Subsidiaries has implemented any plant closing or mass layoff of
employees as those terms are defined in the Worker Adjustment Retraining and
Notification Act of 1988, as amended ("WARN"), or any similar state or local law
or regulation, and no layoffs that could implicate such laws or regulations will
have been implemented before Closing without advance notification to the
Purchaser.
5.18 Employee Benefit Matters.
------------------------
(a) Except as set forth on the "Benefit Plans Schedule" attached
hereto, neither the Seller nor any of its Subsidiaries maintains or contributes
to or has any actual or potential liability with respect to any (i) deferred
compensation or bonus or retirement plans or arrangements, (ii) qualified or
nonqualified defined contribution or defined benefit plans or arrangements which
are employee pension benefit plans (as defined in Section 3(2) of ERISA), or
(iii) employee welfare benefit plans, (as defined in Section 3(1) of ERISA),
stock option or stock purchase plans, or material fringe benefit plans or
programs whether in writing or oral and whether or not terminated. Neither the
Seller nor any of its Subsidiaries has ever contributed to any multiemployer
pension plan (as defined in Section 3(37) of ERISA), and neither the Seller nor
any of its Subsidiaries has ever maintained or contributed to any defined
benefit plan (as defined in Section 3(35) of ERISA). The plans, arrangements,
programs and agreements referred to in the preceding two sentences are referred
to collectively as the "Plans." Neither the Seller nor any of its Subsidiaries
maintains or contributes to any Plan which provides health, accident or life
insurance benefits to former employees of the Business, their spouses or
dependents, other than in accordance with Section 4980B of the Code ("COBRA").
(b) The Plans (and related trusts and insurance contracts) set forth
on the Benefit Plans Schedule comply in form and in operation with the
requirements of applicable laws and regulations, including ERISA and the Code
and the nondiscrimination rules thereof. All contributions, premiums or payments
which are due on or before the Closing Date under each Plan have been paid. Each
Plan which is intended to be qualified under Section 401(a) of the Code (i) has
been amended on a timely basis in compliance with the Code and (ii) has received
from the Internal Revenue Service a favorable determination letter which
considers the terms of such Plan as amended.
(c) All required reports and descriptions (including Form 5500 annual
reports, summary annual reports and summary plan descriptions) with respect to
the Plans set forth on the Benefit Plans Schedule have been properly and timely
filed with the appropriate government agency
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and distributed to participants as required. The Seller and each of its
Subsidiaries have complied with the requirements of COBRA.
(d) With respect to each Plan set forth on the Benefit Plans Schedule,
(i) there have been no prohibited transactions as defined in Section 406 of
ERISA or Section 4975 of the Code, (ii) 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 such Plans, and (iii) no actions, investigations, suits or claims
with respect to the assets thereof (other than routine claims for benefits) are
pending or threatened, and neither the Seller nor the Stockholder has knowledge
of any facts which would give rise to or could reasonably be expected to give
rise to any such actions, suits or claims.
(e) With respect to each of the Plans listed on the Benefit Plans
Schedule, the Seller has furnished to the Purchaser true and complete copies of
(i) the plan documents, summary plan descriptions and summaries of material
modifications and other material employee communications, (ii) the Form 5500
Annual Report (including all schedules and other attachments) for the most
recent three years, (iii) all related trust agreements, insurance contracts or
other funding agreements which implement such plans and (iv) all contracts
relating to each such plan, including, without limitation, service provider
agreements, insurance contracts, investment management agreements and
recordkeeping agreements.
(f) The Seller and each of its Subsidiaries has not incurred and has
no reason to expect that it will incur, any liability to the Pension Benefit
Guaranty Corporation (other than routine premium payments ) or otherwise under
Title IV of ERISA (including any withdrawal liability) or under the Code with
respect to any employee pension benefit plan (as defined in Section 3(2) of
ERISA) that the Seller or any member of its "controlled group" (within the
meaning of Section 414 of the Code) maintains or ever has maintained or to which
any of them contributes, ever has contributed, or ever has been required to
contribute.
5.19 Insurance. The "Insurance Schedule" attached hereto lists and
briefly describes each insurance policy maintained by the Seller and each of its
Subsidiaries with respect to the properties, assets and business of the
Business, together with a claims history for the past five years. All of such
insurance policies are in full force and effect, and neither the Seller nor any
of its Subsidiaries is in default with respect to its obligations under any such
insurance policies and neither the Seller nor any of its Subsidiaries has been
denied insurance coverage. Except as set forth on the Insurance Schedule,
neither the Seller nor any of its Subsidiaries has any self-insurance or co-
insurance programs related to the Business, and the reserves set forth on the
Latest Balance Sheet are adequate to cover all anticipated liabilities with
respect to self-insurance or coinsurance programs.
5.20 Officers and Directors; Bank Accounts. The "Officers, Directors
and Bank Accounts Schedule" attached hereto lists all officers and directors of
the Seller and each of its Subsidiaries, and all bank accounts, safety deposit
boxes and lock boxes (designating each authorized signatory with respect
thereto) for the Business.
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5.21 Affiliate Transactions. Except as disclosed on the "Affiliated
Transactions Schedule" attached hereto, no Insider is a party to any agreement,
contract, commitment or transaction with the Seller or any of its Subsidiaries
which is pertaining to the Business or has any interest in any property, real or
personal or mixed, tangible or intangible, used in or pertaining to the
Business.
5.22 Compliance with Laws. The Seller, each of its Subsidiaries and
their officers, directors, partners, agents and employees have complied with and
are in compliance with all applicable laws, regulations and ordinances of
foreign, federal, state and local governments and all agencies thereof which are
applicable to the Business, its business practices (including, but not limited
to, the marketing and sales of its products and services) or any owned or leased
properties of the Seller or any of its Subsidiaries related to the Business and
to which the Seller or any of its Subsidiaries may be subject, and no claims
have been filed against the Seller or any of its Subsidiaries alleging a
violation of any such laws or regulations, and neither the Seller nor any of its
Subsidiaries has received notice of any such violations.
5.23 Environmental Matters . Except as set forth on the "Environmental
Schedule" attached hereto:
(a) The Seller and each of its Subsidiaries have complied with and are
currently in compliance with all Environmental and Safety Requirements with
respect to the Business, and neither the Seller nor any of its Subsidiaries has
received any oral or written notice, report or information regarding any
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise)
or any corrective, investigatory or remedial obligations arising under
Environmental and Safety Requirements which relate to the Business or any of its
properties or facilities.
(b) Without limiting the generality of the foregoing, the Seller and
each of its Subsidiaries have obtained and complied with, and are currently in
compliance with, all permits, licenses and other authorizations that may be
required pursuant to any Environmental and Safety Requirements for the occupancy
of the properties or facilities of the Business or the operation of the
Business. A list of all such permits, licenses and other authorizations which
are material to the Business is set forth on the Environmental Schedule.
(c) Neither this Agreement or the other Transaction Documents nor the
consummation of the transactions contemplated hereby and thereby shall impose
any obligations on the Seller or its Subsidiaries or otherwise for site
investigation or cleanup, or notification to or consent of any government
agencies or third parties under any Environmental and Safety Requirements
(including, without limitation, any so called "transaction-triggered" or
"responsible property transfer" laws and regulations).
(d) None of the following exists at any property or facility owned,
occupied or operated by the Seller or any of its Subsidiaries related to the
Business: (i) underground storage tanks or surface impoundments; (ii) asbestos-
containing material in any form or condition; (iii) materials or equipment
containing polychlorinated biphenyls; or (iv) landfills.
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(e) Neither the Seller nor any of its Subsidiaries has treated,
stored, disposed of, arranged for or permitted the disposal of, transported,
handled or Released any substance (including, without limitation, any hazardous
substance) or owned, occupied or operated any facility or property, so as to
give rise to liabilities of the Seller or any of its Subsidiaries for response
costs, natural resource damages or attorneys' fees pursuant to CERCLA or any
other Environmental and Safety Requirements.
(f) Without limiting the generality of the foregoing, no facts, events
or conditions relating to the past or present properties, facilities or
operations of the Seller or any of its Subsidiaries shall prevent, hinder or
limit continued compliance with Environmental and Safety Requirements, give rise
to any corrective, investigatory or remedial obligations pursuant to
Environmental and Safety Requirements or give rise to any other liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise) pursuant to
Environmental and Safety Requirements, including, without limitation, those
liabilities relating to onsite or offsite Releases or threatened Releases of
hazardous materials, substances or wastes, personal injury, property damage or
natural resources damage.
(g) Neither the Seller nor any of its Subsidiaries has, either
expressly or by operation of law, assumed or undertaken any liability or
corrective investigatory or remedial obligation of any other Person relating to
any Environmental and Safety Requirements.
(h) No Environmental Lien has attached to any property owned, leased
or operated by the Seller or any of its Subsidiaries related to the Business.
5.24 Disclosure. Neither this Agreement, the other Transaction
Documents, nor any of the schedules, attachments or Exhibits hereto, contain any
untrue statement of a material fact or omit a material fact necessary to make
each statement contained herein or therein, not misleading. There is no fact
which has not been disclosed to the Purchaser of which the Seller or the
Stockholder has knowledge which has a Material Adverse Effect or could
reasonably be anticipated to have a Material Adverse Effect.
5.25 Closing Date. All of the representations and warranties
contained in this Article V and elsewhere in this Agreement and all information
delivered in any schedule, attachment or Exhibit hereto or in any writing
delivered to the Purchaser are true and correct on the date of this Agreement
and shall be true and correct on the Closing Date, except to the extent that the
Seller or the Stockholder has advised the Purchaser otherwise in writing prior
to the Closing.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES CONCERNING THE PURCHASER
-------------------------------------------------------
As a material inducement to the Seller to enter into this Agreement,
the Purchaser hereby represents and warrants to the Seller that:
6.1 Organization and Corporate Power. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with full
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corporate power and authority to enter into this Agreement and the other
agreements contemplated hereby to which the Purchaser is a party and perform its
obligations hereunder and thereunder.
6.2 Authorization of Transaction. The execution, delivery and
performance of this Agreement and the other agreements contemplated hereby to
which the Purchaser is a party have been duly and validly authorized by all
requisite corporate action on the part of the Purchaser, and no other corporate
proceedings on its part are necessary to authorize the execution, delivery or
performance of this Agreement. This Agreement constitutes, and each of the
other agreements contemplated hereby to which the Purchaser is a party shall
when executed constitute, a valid and binding obligation of the Purchaser,
enforceable in accordance with their terms.
6.3 No Violation. The Purchaser is not subject to or obligated
under its certificate of incorporation, its by-laws, any applicable law, or rule
or regulation of any governmental authority, or any agreement or instrument, or
any license, franchise or permit, or subject to any order, writ, injunction or
decree, which would be breached or violated by its execution, delivery or
performance of this Agreement and the other agreements contemplated hereby to
which the Purchaser is a party.
6.4 Governmental Authorities and Consents. Except for the
filing pursuant to the HSR Act, the Purchaser is not required to submit any
notice, report or other filing with any governmental authority in connection
with the execution or delivery by it of this Agreement and the other agreements
contemplated hereby to which the Purchaser is a party or the consummation of the
transactions contemplated hereby or thereby. Except for approval in connection
with the filing under the HSR Act, no consent, approval or authorization of any
governmental or regulatory authority or any other party or person is required to
be obtained by the Purchaser in connection with its execution, delivery and
performance of this Agreement and the other agreements contemplated hereby to
which the Purchaser is a party or the transactions contemplated hereby or
thereby.
6.5 Litigation. There are no actions, suits, proceedings or
orders pending or, to the Purchaser's knowledge, threatened against or affecting
the Purchaser at law or in equity, or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which would adversely affect the
Purchaser's performance under this Agreement and the other agreements
contemplated hereby to which the Purchaser is a party or the consummation of the
transactions contemplated hereby or thereby.
6.6 Brokerage. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of the Purchaser and which will not be paid in full by the Purchaser
at or prior to the Closing.
6.7 Closing Date. All of the representations and warranties
contained in this Article VI and elsewhere in this Agreement and all information
delivered in any schedule, attachment or Exhibit hereto or in any writing
delivered to Stockholders are true and correct on the date of this Agreement and
shall be true and correct on the Closing Date, except to the extent that the
Purchaser has advised the Seller otherwise in writing prior to the Closing.
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ARTICLE VII
TERMINATION
-----------
7.1 Termination. This Agreement may be terminated at any time prior
to the Closing:
(a) by mutual written consent of the Seller and the Purchaser;
(b) by the Seller or the Purchaser if there has been a material
misrepresentation or breach on the part of the other Party of the
representations, warranties or covenants set forth in this Agreement or if
events have occurred which have made it impossible to satisfy a condition
precedent to the terminating Party's obligations to consummate the transactions
contemplated hereby unless such terminating Party's willful or knowing breach of
this Agreement has caused the condition to be unsatisfied; or
(c) by the Seller or the Purchaser if the Closing has not occurred on
or prior to September 1, 1998; provided, however, that neither the Purchaser nor
the Seller shall be entitled to terminate this Agreement pursuant to this
Section 7.1(c) if such Party's willful or knowing breach of this Agreement has
prevented the consummation of the transactions contemplated hereby at or prior
to such time.
7.2 Effect of Termination. In the event of termination of this
Agreement by either the Seller or the Purchaser as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability on the
part of any Party to any other Party under this Agreement, except that the
provisions of Section 9.7 and Article X shall continue in full force and effect
and except that nothing herein shall relieve any Party from liability for any
breach of this Agreement prior to such termination.
ARTICLE VIII
INDEMNIFICATION AND RELATED MATTERS
8.1 Survival. All representations, warranties, covenants and
agreements set forth in this Agreement or in any writing or certificate
delivered in connection with this Agreement shall survive the Closing Date and
the consummation of the transactions contemplated hereby and shall not be
affected by any examination made for or on behalf of any Party, the knowledge of
any of such Party's officers, directors, stockholders, employees or agents, or
the acceptance of any certificate or opinion. Notwithstanding the foregoing, no
Party shall be entitled to recover for any Loss pursuant to Section 8.2(a)(i) or
Section 8.2(c)(i) unless written notice of a claim thereof is delivered to the
other Party prior to the Applicable Limitation Date. For purposes of this
Agreement, the term "Applicable Limitation Date" shall mean the third
anniversary of the Closing Date; provided that the Applicable Limitation Date
with respect to the following Losses shall be as follows: (i) with respect to
any Loss arising from or related to a breach of the representations and
warranties of the Seller or the Stockholder set forth in Sections 5.11 (Taxes)
and 5.18 (Employee Benefits Matters), the Applicable Limitation Date shall be
the 60th day after expiration of the statute of limitations (including any
extensions thereto to the extent that such statute of limitations may be tolled)
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applicable to the Tax or ERISA statute, regulation or other authority which gave
rise to such Loss, (ii) with respect to any Loss arising from or related to a
breach of the representations and warranties of the Seller or the Stockholder
set forth in Section 5.23 (Environmental), the Applicable Limitation Date shall
be the fifth anniversary of the Closing Date, and (iii) with respect to any Loss
arising from or related to a breach of the representations and warranties of the
Seller or the Stockholder set forth in Section 5.1 (Organization and Corporate
Power), Section 5.2 (Authorization of Transactions), Section 5.3
(Capitalization), Section 5.5 (Absence of Conflicts), or Section 5.15
(Brokerage) and with respect to any Loss arising from or related to a breach of
the representations and warranties of Purchaser set forth in Section 6.1
(Organization and Corporate Power), 6.2 (Authorization of Transactions), 6.3 (No
Violation) or 6.6 (Brokerage), there shall be no Applicable Limitation Date
(i.e., such representations and warranties shall survive forever).
8.2 Indemnification.
(a) The Seller and the Stockholder shall jointly and severally
indemnify the Purchaser and each of its officers, directors, stockholders,
employees, agents, representatives, affiliates, successors and assigns
(collectively, the "Purchaser Parties") and hold each of them harmless from and
against and pay on behalf of or reimburse such Purchaser Parties in respect of
the entirety of any Losses the Purchaser Parties may suffer, sustain or become
subject to, through and after the date of the claim for indemnification
resulting from, arising out of, relating to, in the nature of, or caused by:
(i) the breach of any representation or warranty made by the Seller or
the Stockholder contained in this Agreement or any certificate delivered by
the Seller or any Stockholder to the Purchaser with respect thereto in
connection with the Closing;
(ii) the breach of any covenant or agreement made by the Seller or the
Stockholder contained in this Agreement or any certificate delivered by the
Seller or any Stockholder to the Purchaser with respect thereto in
connection with the Closing; or
(iii) any Excluded Liabilities.
The Purchaser's remedy for any indemnification of Losses hereunder may be
satisfied by proceeding against the Seller or the Stockholder individually for
all or any portion of any such Loss.
(b) The indemnification provided for in Section 8.2(a)(i) above is
subject to the following limitations:
(i) The Seller and the Stockholder will be liable to the Purchaser
Parties with respect to claims referred to in Section 8.2(a)(i) only if
Purchaser gives the Seller written notice thereof within the Applicable
Limitation Date; and
(ii) The aggregate amount of all payments made by the Seller and the
Stockholder in satisfaction of claims for indemnification pursuant to
Section 8.2(a)(i) shall not exceed the Purchase Price (the "Cap").
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Notwithstanding any implication to the contrary contained in this Agreement, so
long as the Purchaser delivers written notice of a claim to the Seller no later
than the Applicable Limitation Date, the Seller and the Stockholder shall be
required to indemnify the Purchaser Parties for all Losses (up to the Cap) which
the Purchaser Parties may incur in respect of the matters which are the subject
of such claim, regardless of when incurred.
(c) The Purchaser shall indemnify the Stockholder, the Seller and its
officers, directors, employees, agents, representatives, affiliates, successors
and assigns (collectively, the "Seller Parties") and hold each of them harmless
from and against and pay on behalf of or reimburse such Seller Parties in
respect of the entirety of any Losses the Seller Parties may suffer, sustain or
become subject to, through and after the date of the claim for indemnification
resulting from, arising out of, relating to, in the nature of, or caused by:
(i) the breach of any representation or warranty made by the Purchaser
contained in this Agreement or any certificate delivered by the Purchaser
to the Seller with respect thereto in connection with the Closing;
(ii) the breach of any covenant or agreement made by the Purchaser
contained in this Agreement or any certificate delivered by the Purchaser
to the Seller with respect thereto in connection with the Closing; or
(iii) any Assumed Liabilities.
(d) The indemnification provided for in Section 8.2(c)(i) above is
subject to the following limitations:
(i) The Purchaser will be liable to the Seller Parties with respect to
claims referred to in Section 8.2(c)(i) only if the Seller gives the
Purchaser written notice thereof within the Applicable Limitation Date; and
(ii) The aggregate amount of all payments made by the Purchaser in
satisfaction of claims for indemnification pursuant to Section 8.2(c)(i)
shall not exceed the Cap.
Notwithstanding any implication to the contrary contained in this Agreement, so
long as the Seller delivers written notice of a claim to the Purchaser no later
than the Applicable Limitation Date, the Purchaser shall be required to
indemnify the Seller Parties for all Losses (up to the Cap) which the Seller
Parties may incur in respect of the matters which are the subject of such claim,
regardless of when incurred.
(e) If a party hereto seeks indemnification under this Article VIII,
such party (the "Indemnified Party") shall give written notice to the other
party (the "Indemnifying Party") after receiving written notice of any action,
lawsuit, proceeding, investigation or other claim against it (if by a third
party) or discovering the liability, obligation or facts giving rise to such
claim for indemnification, describing the claim, the amount thereof (if known
and quantifiable), and the basis thereof; provided that the failure to so notify
the Indemnifying Party shall not relieve the Indemnifying Party of its or his
obligations hereunder except to the extent such failure shall have
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prejudiced the Indemnifying Party. In that regard, if any action, lawsuit,
proceeding, investigation or other claim shall be brought or asserted by any
third party which, if adversely determined, would entitle the Indemnified Party
to indemnity pursuant to this Article VIII, the Indemnified Party shall promptly
notify the Indemnifying Party of the same in writing, specifying in detail the
basis of such claim and the facts pertaining thereto and the Indemnifying Party
shall be entitled to participate in the defense of such action, lawsuit,
proceeding, investigation or other claim giving rise to the Indemnified Party's
claim for indemnification at its expense, and at its option (subject to the
limitations set forth below) shall be entitled to appoint lead counsel of such
defense with reputable counsel reasonably acceptable to the Indemnified Party;
provided that if the Indemnifying Party assumes control of such defense, it will
be deemed to have agreed to be fully responsible for all Losses relating to such
claims and to provide full indemnification to the Indemnified Party for all
Losses relating to such claim; provided further that the Indemnifying Party
shall not have the right to assume control of such defense and shall pay the
fees and expenses of counsel retained by the Indemnified Party, if the claim
which the Indemnifying Party seeks to assume control (i) seeks non-monetary
relief, (ii) involves criminal or quasi-criminal allegations, (iii) involves a
claim to which the Indemnified Party reasonably believes an adverse
determination would be detrimental to or injure the Indemnified Party's
reputation or future business prospects, or (iv) involves a claim which, upon
petition by the Indemnified Party, the appropriate court rules that the
Indemnifying Party failed or is failing to vigorously prosecute or defend.
If the Indemnifying Party is permitted to assume and control the defense
and elects to do so, the Indemnified Party shall have the right to employ
counsel separate from counsel employed by the Indemnifying Party in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel employed by the Indemnified Party shall be at the expense of the
Indemnified Party unless (i) the employment thereof has been specifically
authorized by the Indemnifying Party in writing, or (ii) the Indemnifying Party
has been advised by counsel that a reasonable likelihood exists of a conflict of
interest between the Indemnifying Party and the Indemnified Party.
If the Indemnifying Party shall control the defense of any such claim, the
Indemnifying Party shall obtain the prior written consent of the Indemnified
Party (which shall not be unreasonably withheld) before entering into any
settlement of a claim or ceasing to defend such claim, if pursuant to or as a
result of such settlement or cessation, injunction or other equitable relief
will be imposed against the Indemnified Party or if such settlement does not
expressly unconditionally release the Indemnified Party from all liabilities and
obligations with respect to such claim, without prejudice.
(f) Amounts paid to or on behalf of the Seller, the Stockholder or
the Purchaser as indemnification shall be treated as adjustments to the Purchase
Price.
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ARTICLE IX
ADDITIONAL AGREEMENTS
---------------------
9.1 Continuing Assistance. Subsequent to the Closing, the Seller,
the Stockholder and the Purchaser (at their own cost) shall assist each other
(including making records available) in the preparation of their respective Tax
Returns and the filing and execution of Tax elections, if required, as well as
any audits or litigation that ensue as a result of the filing thereof, to the
extent that such assistance is reasonably requested.
9.2 Tax Matters.
(a) All transfer, documentary, sales, use, stamp, registration and
other such Taxes and fees (including any penalties and interest thereon)
incurred in connection with this Agreement shall be paid by the Seller or the
Stockholder when due, and the Seller and the Stockholder shall, at his or its
own expense, file all necessary Tax Returns and other documentation with respect
to all such transfer, documentary, sales, use, stamp, registration and other
Taxes and fees, and if required by applicable law, the Purchaser shall, and
shall cause its affiliates to, join in the execution of any such Tax Returns and
other documentation.
(b) All real property taxes, personal property taxes, ad valorem
obligations and similar taxes imposed on a periodic basis, in each case levied
with respect to the Acquired Assets, other than conveyance taxes provided for in
Section 9.2(a), for a taxable period which includes (but does not end on) the
Closing Date shall be apportioned between the Seller and the Purchaser as of the
Closing Date based on the number of days of such taxable period included in the
pre-Closing Tax period and the number of days of such taxable period included in
the post-Closing period. The Seller shall be liable for the proportionate
amount of such Taxes that is attributable to the pre-Closing Tax period. Within
90 days after the Closing, the Seller and the Purchaser shall present a
reimbursement to which each is entitled under this Section 9.2(b) together with
such supporting evidence as is reasonably necessary to calculate the proration
amount. The proration amount shall be paid by the party owing it to the other
within 10 days after delivery of such statement. Thereafter, the Seller shall
notify the Purchaser upon receipt of any xxxx for real or personal property
taxes relating to the Acquired Assets, part or all of which are attributable to
the post-Closing Tax period, and shall promptly deliver such xxxx to the
Purchaser who shall pay the same to the appropriate taxing authority, provided
that if such xxxx covers the pre-Closing Tax period, the Seller shall also remit
prior to the due date of assessment to the Purchaser payment for the
proportionate amount of such xxxx that is attributable to the pre-Closing Tax
period. In the event that either the Seller or the Purchaser shall thereafter
make a payment for which it is entitled to reimbursement under this Section
9.2(b), the other party shall make such reimbursement promptly but in no event
later than 30 days after the presentation of a statement setting forth the
amount of reimbursement to which the presenting party is entitled along with
such supporting evidence as is reasonably necessary to calculate the amount of
reimbursement. Any payment required under this Section 9.2(b) and not made
within 10 days of delivery of the statement shall bear interest at the rate per
annum determined, from time to time, under the provisions of Section 6621(a)(2)
of the Code for each day until paid.
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9.3 Press Releases and Announcements. After the Closing Date, no
press releases related to this Agreement and the transactions contemplated
herein, or other announcements to the employees, customers or suppliers of the
Seller shall be issued without the Purchaser's consent (which shall not be
unreasonably withheld).
9.4 Further Transfers. The Seller shall execute and deliver such
further instruments of conveyance and transfer and take such additional action
as the Purchaser may reasonably request to effect, consummate, confirm or
evidence the transfer to the Purchaser of the Acquired Assets and any other
transactions contemplated hereby.
9.5 Specific Performance. The Seller and the Stockholders
acknowledge that the Business is unique and recognize and affirm that in the
event of a breach of this Agreement by the Seller or the Stockholder, money
damages may be inadequate and the Purchaser may have no adequate remedy at law.
Accordingly, the Seller and the Stockholder agree that the Purchaser shall have
the right, in addition to any other rights and remedies existing in its favor,
to enforce its rights and the Seller's and the Stockholder's obligations
hereunder not only by an action or actions for damages but also by an action or
actions for specific performance, injunctive and/or other equitable relief.
9.6 Transition Assistance. Neither the Seller nor the Stockholder
shall in any manner take any action which is designed, intended, or might be
reasonably anticipated to have the effect of discouraging customers, suppliers,
lessors, licensors and other business associates from maintaining the same
business relationships with the Purchaser after the date of this Agreement as
were maintained with the Seller with respect to the Business prior to the date
of this Agreement.
9.7 Expenses. Except as otherwise provided herein, the Seller and
the Stockholder and the Purchaser shall pay all of their own fees, costs and
expenses (including, without limitation, fees, costs and expenses of legal
counsel, investment bankers, brokers or other representatives and consultants
and appraisal fees, costs and expenses) incurred in connection with the
negotiation of this Agreement and the other agreements contemplated hereby, the
performance of its obligations hereunder and thereunder, and the consummation of
the transactions contemplated hereby and thereby.
9.8 Exclusivity. Until this Agreement is terminated by its terms,
neither the Seller nor the Stockholder (and neither the Seller nor the
Stockholder shall cause or permit any Insider or agent or any other Person
acting on behalf of the Stockholder, the Seller, or its Affiliates to), (a)
solicit, initiate or encourage the submission of any proposal or offer from any
Person (including any of them) relating to any (i) liquidation, dissolution or
recapitalization of, (ii) merger or consolidation with or into, (iii)
acquisition or purchase of assets of or any equity interest in or (iv) similar
transaction or business combination involving the Business 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 other Person to do or seek any of the foregoing. The Seller and
the Stockholder agree that they will discontinue immediately any negotiations or
discussion with respect to any of the foregoing. Until this Agreement is
terminated by its terms, the Stockholder and the Seller shall notify the
Purchaser immediately if any Person makes any proposal, offer, inquiry or
contact with respect to any of the foregoing.
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9.9 Books and Records. Unless otherwise consented to in writing by
the Seller or the Purchaser (as the case may be), the Purchaser and the Seller
will not, for a period of seven years following the date hereof, destroy, alter
or otherwise dispose of any of the books and records of the Seller acquired by
the Purchaser hereunder or retained by the Seller or the Stockholder without
first offering to surrender to the Seller, the Stockholder or the Purchaser such
books and records or any portion thereof of which the Seller, the Stockholder or
the Purchaser may intend to destroy, alter or dispose. The Purchaser, the Seller
and the Stockholder will allow the other party's representatives, attorneys and
accountants access to such books and records, upon reasonable request during
such party's normal business hours, for the purpose of examining and copying the
same in connection with any matter whether or not related to or arising out of
this Agreement or the transactions contemplated hereby.
9.10 Noncompetition, Nonsolicitation and Confidentiality.
(a) Noncompetition. In consideration of the mutual covenants
provided for herein to the Seller and the Stockholder at the Closing and in
consideration of the additional payment set forth below, during the period
beginning on the Closing Date and ending on the fifth anniversary of the Closing
Date (the "Noncompete Period"), neither the Seller nor the Stockholder shall
(and the Seller and the Stockholder shall cause Xxxx Xxxxxxxxxx to not) (the
Seller, the Stockholder and Xxxx Xxxxxxxxxx are collectively referred to herein
as the "Noncompeting Parties") engage (whether as an owner, operator, manager,
employee, officer, director, consultant, advisor, representative or otherwise)
directly or indirectly in any business that competes with the Business as it is
conducted, or was conducted during the 12-month period ending on the Closing
Date, in any geographic area in which such Business is conducted as of the
Closing Date or during such 12-month period; provided that ownership of less
than 2% of the outstanding stock of any publicly-traded corporation shall not be
deemed to be engaging solely by reason thereof in any of its businesses. The
Parties acknowledge that as of the Closing Date the Business consists of the
rental of hydraulic cranes and self-propelled man lifts and the Business is
conducted in Texas and Louisiana. The parties hereto agree that the covenant set
forth in this Section 9.10 is reasonable with respect to its duration,
geographical area and scope. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 9.10(a) is
invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed. As further consideration for the
obligations of the Noncompeting Parties pursuant to this Section 9.10(a), the
Purchaser shall pay to the Stockholder $200,000 on the Closing Date.
(b) Nonsolicitation. During the Noncompete Period, neither the
Seller nor the Stockholder shall (and the Seller and the Stockholder shall cause
the other Noncompeting Parties to not) directly or indirectly through another
Person (i) induce or attempt to induce any employee of the Purchaser to leave
the employ of the Purchaser, or in any way interfere with the relationship
between the Purchaser and any employee thereof, (ii) hire any person who is then
an employee of the Purchaser or was an employee of the Seller or any of its
Subsidiaries in connection with the
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Business at any time during the three-year period immediately preceding the
Closing, or (iii) induce or attempt to induce any customer, supplier, licensee,
licensor, franchisee or other business relation of the Purchaser to cease doing
business with the Purchaser, or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and the
Purchaser.
(c) Confidentiality. The Seller and the Stockholder shall (and the
Seller and the Stockholder shall cause the other Noncompeting Parties to) treat
and hold as confidential any information concerning the business and affairs of
the Business that is not already generally available to the public (the
"Confidential Information"), refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly to
the Purchaser or destroy, at the request and option of the Purchaser, all
tangible embodiments (and all copies) of the Confidential Information which are
in his or its possession or under his or its control. In the event that any
Noncompeting Party is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, such Noncompeting Party shall notify the Purchaser promptly of the
request or requirement so that the Purchaser may seek an appropriate protective
order or waive compliance with the provisions of this Section 9.10(c). If, in
the absence of a protective order or the receipt of a waiver hereunder, the
Noncompeting Party is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt, such
Noncompeting Party may disclose the Confidential Information to the tribunal;
provided that such disclosing Noncompeting Party shall use his or its reasonable
best efforts to obtain, at the request of the Purchaser, an order or other
assurance that confidential treatment shall be accorded to such portion of the
Confidential Information required to be disclosed as the Purchaser shall
designate.
(d) Trade Names. Neither the Seller nor the Stockholder shall use or
permit any of its or his Affiliates to use the "R & R Rentals, Inc." name or any
name confusingly similar thereto in any manner anywhere in the world after
Closing.
(e) Remedy for Breach. Each Noncompeting Party that is a party to
this Agreement acknowledges and agrees that in the event of a breach by any
Noncompeting Party of any of the provisions of this Section 9.10, monetary
damages shall not constitute a sufficient remedy. Consequently, in the event of
any such breach, the Seller, the Purchaser and/or their respective successors or
assigns may, in addition to other rights and remedies existing in their favor,
apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce or prevent any
violations of the provisions hereof, in each case without the requirement of
posting a bond or proving actual damages.
9.11 Employees.
(a) The Seller has provided the Purchaser with a true, correct and
complete list of all of the employees of the Business indicating the rate of pay
of each such employee during the twelve months preceding the date hereof and the
status of each such employee as active, on leave, full-time, part-time or
otherwise.
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(b) Except for the employees set forth on the "Excluded Employees
Schedule" attached hereto (the "Excluded Employees"), the Purchaser will offer
at-will employment to all active full-time employees of the Business as of the
Closing Date (the "Continuing Employees") on terms and conditions which, in the
aggregate, are substantially equivalent to those applicable to such persons'
terms and conditions of employment with the Seller immediately prior to the
Closing Date. Nothing in this Section 9.11 shall obligate the Purchaser to
continue to employ any Continuing Employee for any period of time.
(c) The Seller will be responsible for and shall pay (and the
Stockholder shall cause the Seller to pay) to the employees of the Business (i)
all amounts of wages, bonuses and other renumeration (including, without
limitation, discretionary benefits and bonuses) payable to such employees with
respect to the period ending on the day prior to the Closing Date, (ii) any
workers' compensation claims, amounts payable under Plans maintained by the
Seller and other amounts payable on an ongoing basis to such employees in
connection with events or incidents occurring prior to the Closing Date, except
to the extent that such amounts are paid under insurance, (iii) amounts equal to
the vacation pay, sick leave pay and floating holiday pay earned or accrued by
such employees as of the close of business on the Closing Date, whether or not
such pay is vested or has been accrued on the books of the Business at such
close of business, based upon the remuneration of such employees, normally used
in computing such vacation pay, sick leave pay and floating holiday pay and (iv)
all severance payments, if any, due to such employees as a result of the
termination of their employment with the Seller. Seller shall also be
responsible for and shall pay any related payroll burden (including, without
limitation, FICA and other employment taxes) with respect to payments made under
this Section 9.11(c).
9.12 Seller's Use of Name. Upon consummation of the Closing, the
Seller will cease using the name "R & R Rentals, Inc." (and any name confusingly
similar thereto), it being the intent of the Parties that from and after the
Closing the Purchaser will have the sole right as against the Seller and all
other Persons to conduct business under such name and that the Purchaser will
commence doing so at the time of the Closing.
9.13 Allocation of Purchase Price. The allocation ("Allocation") of
the Purchase Price among the Acquired Assets shall be made as set forth on the
"Purchase Price Allocation Schedule" attached hereto. The Allocation shall be
determined jointly by the Purchaser and the Seller reasonably and in good faith,
and such Allocation shall be used by the Parties in preparing (a) Form 8594,
Asset Acquisition Statement, for each of the Purchaser and the Seller, and (b)
all Tax Returns. Each of the Purchaser and the Seller shall file Form 8594,
prepared in accordance with this Section, with its federal income Tax Return for
its Tax period including the Closing Date.
9.14 Third Party Consents. Notwithstanding anything to the contrary
contained in this Agreement, this Agreement shall not constitute an agreement to
transfer, sell or otherwise assign any instrument, contract, lease, license,
permit or other agreement or arrangement which is not permitted to be assigned
in connection with a transaction of the type contemplated by this Agreement
(collectively, the "Unassigned Contracts"). The beneficial interest in and to
each Unassigned Contract shall in any event pass to the Purchaser at the
Closing; and the Seller and the Stockholder covenant and agree to cooperate with
the Purchaser in any lawful and economically feasible arrangement to provide the
Purchaser with the Seller's entire interest in the benefits under
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each of the Unassigned Contracts. If and only if the Purchaser receives the
economic benefits under an Unassigned Contract, the Purchaser agrees to accept
the burdens and perform the obligations under such Unassigned Contract as
subcontractor of the Seller. Furthermore, if the other party(ies) to an
Unassigned Contract subsequently consent to the assignment of such contract to
the Purchaser (without modification thereto which is adverse to the Purchaser),
the Purchaser shall thereupon agree to assume and perform all liabilities and
obligations arising thereunder after the date of such consent, at which time
such Unassigned Contract shall be deemed an Acquired Asset. The Seller and the
Stockholder agree to indemnify the Purchaser and hold it harmless against any
Losses which the Purchaser may suffer, sustain or become subject to, as a result
of any claims by any party to any of the Unassigned Contracts for breach of
contract in connection with the consummation of the transactions contemplated by
this Agreement.
9.15 Bulk Sales Law. The Seller will bear any loss, liability,
obligation or cost suffered by the Seller or the Purchaser as a result of the
Parties' noncompliance with any provision of any bulk sales law which is
applicable to the transfer of the Acquired Assets pursuant to this Agreement.
9.16 NES Stock.
----------
(a) Each of the Seller and the Stockholder hereby irrevocably agree
not to sell, offer to sell, solicit an offer to buy, contract to sell, grant any
option to purchase or otherwise dispose of any shares of NES Stock, or any
securities convertible into or exercisable or exchangeable for shares of NES
Stock, until 180 days after the Closing Date. Prior to the expiration of such
period, neither the Seller nor the Stockholder shall announce or disclose any
intention to do anything after the expiration of such period which the Seller or
the Stockholder are prohibited, as provided in the preceding sentence, from
doing during such period.
(b) Each of the Seller and the Stockholder hereby acknowledge and
agree that the shares of NES Stock delivered pursuant to this Agreement will be
"restricted securities" within the meaning of Rule 144 as adopted by the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
(c) As a material inducement to the Purchaser to enter into this
Agreement, the Seller and the Stockholder hereby jointly and severally represent
and warrant that each of the Seller and the Stockholder (a) understands that the
shares of NES Stock delivered pursuant to this Agreement have not been, and will
not be, registered under the Securities Act of 1933, as amended, or under any
state securities laws, and are being offered and sold in reliance upon federal
and state exemptions for transactions not involving any public offering, (b)
understands that the transfer of the shares of NES Stock delivered pursuant to
this Agreement is restricted, (c) is acquiring the shares of NES Stock delivered
pursuant to this Agreement solely for his or its own account for investment
purposes, and not with a view to the distribution thereof, (d) is a
sophisticated investor with knowledge and experience in business and financial
matters, (e) has received certain information concerning the Purchaser and NES
and has had the opportunity to obtain additional information as desired in order
to evaluate the merits and the risks inherent in holding the shares of NES Stock
delivered pursuant to this Agreement and (f) is able to bear the economic risk
and lack of liquidity inherent in holding the shares of NES Stock delivered
pursuant to this Agreement.
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(d) Each certificate representing shares of NES Stock delivered
pursuant to this Agreement will be imprinted with a legend in substantially the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON
_______________, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). THE TRANSFER OF SUCH SECURITIES IS SUBJECT TO
THE CONDITIONS SET FORTH AND OTHERWISE REFERENCED IN THE ASSET PURCHASE
AGREEMENT, DATED AS OF JULY 24, 1998, BY AND AMONG NES ACQUISITION CORP., A
WHOLLY OWNED SUBSIDIARY OF THE ISSUER HEREOF, R & R RENTALS, INC. AND
XXXXXX X. XXXXXXXXXX, AND THE ISSUER HEREOF RESERVES THE RIGHT TO REFUSE TO
TRANSFER SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH
RESPECT TO SUCH TRANSFER. UPON WRITTEN REQUEST, A COPY OF SUCH CONDITIONS
WILL BE FURNISHED BY THE ISSUER HEREOF TO THE HOLDER HEREOF WITHOUT
CHARGE."
ARTICLE X
MISCELLANEOUS
-------------
10.1 Amendment and Waiver. This Agreement may be amended and any
provision of this Agreement may be waived, provided that any such amendment or
waiver shall be binding upon a Party only if such amendment or waiver is set
forth in a writing executed by Purchaser, the Seller and the Stockholder. No
course of dealing between or among any persons having any interest in this
Agreement shall be deemed effective to modify, amend or discharge any part of
this Agreement or any rights or obligations of any Party under or by reason of
this Agreement.
10.2 Notices. All notices, demands and other communications given or
delivered under this Agreement shall be in writing and shall be deemed to have
been given when personally delivered, mailed by first class mail, return receipt
requested, or delivered by express courier service or telecopied (with hard copy
to follow). Notices, demands and communications to the Stockholder, the Seller
and the Purchaser shall, unless another address is specified in writing, be sent
to the address or telecopy number indicated below:
Notices to the Seller and the Stockholder: with a copy to:
------------------------------------------- ----------------------------
R & R Rentals, Inc. Xxxxxx & Xxxxxxx
00000 Xxxxxxx 000 000 Xxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxxx Attention: Xxx Xxxxxxx, Esq.
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Notices to Purchser with a copy to:
---------------------------------- --------------------------------
c/o Kirkland & Xxxxx
National Equipment Services, Inc. 000 Xxxx Xxxxxxxx Xxxxx
0000 Xxxxxxx Xxxxxx, Xxxxx 000 Xxxxxxx, Xxxxxxxx 00000
Xxxxxxxx, Xxxxxxxx 00000 Telecopy: (000) 000-0000
Telecopy: (000) 000-0000 Attention: Xxxxxxx X. Perl, Esq.
Attention: Xxxxx X. Xxxxxxx
10.3 Binding Agreement; Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the Parties
and their respective successors and permitted assigns; provided that neither
this Agreement nor any of the rights, interests or obligations hereunder may be
assigned by the Seller or the Stockholder without the prior written consent of
Purchaser or by Purchaser (except as otherwise provided in this Agreement)
without the prior written consent of the Seller; provided further that:
(a) the Purchaser may at any time prior to the Closing, at its sole
discretion, assign, in whole or in part, its rights and obligations pursuant to
this Agreement to one or more of its Affiliates;
(b) the Purchaser may assign its rights under this Agreement for
collateral security purposes to any lender providing financing to the Purchaser
or any of its Affiliates and any such lender may exercise all of the rights and
remedies of the Purchaser hereunder; and
(c) the Purchaser may assign its rights under this Agreement, in
whole or in part, to any subsequent purchaser of the Purchaser or any material
portion of its assets (whether such sale is structured as a sale of stock, a
sale of assets, a merger or otherwise).
10.4 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provisions or the remaining provisions of this Agreement.
10.5 No Strict Construction. The language used in this Agreement
shall be deemed to be the language chosen by the Parties to express their mutual
intent, and no rule of strict construction shall be applied against any Party.
10.6 Captions. The captions used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement and
shall not be deemed to limit, characterize or in any way affect any provision of
this Agreement, and all provisions of this Agreement shall be enforced and
construed as if no caption had been used in this Agreement.
10.7 Entire Agreement. This Agreement and the documents referred to
herein contain the entire agreement between the Parties and supersede any prior
understandings,
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agreements or representations by or between the Parties, written or oral, which
may have related to the subject matter hereof in any way.
10.8 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute one and the same instrument.
10.9 Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision (whether of the State
of Illinois or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Illinois.
10.10 Parties in Interest. Nothing in this Agreement, express or
implied, is intended to confer on any person other than the Parties and their
respective successors and assigns any rights or remedies under or by virtue of
this Agreement.
* * * * *
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IN WITNESS WHEREOF, the Parties have executed this Asset Purchase
Agreement as of the date first written above.
NES ACQUISITION CORP.
By: /s/ XXXX X. XXXXXXXXX
-----------------------------------
Its: Vice President
R & R RENTALS, INC.
By: /s/ XXXXXX X. XXXXXXXXXX
------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title:President
/s/ XXXXXX X. XXXXXXXXXX
------------------------------------------
XXXXXX X. XXXXXXXXXX
