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Exhibit 10.2
PURCHASE AGREEMENT
THIS AGREEMENT is made as of June 4, 1996, between National Equipment
Services, Inc., a Delaware corporation (the "Company"), and Golder, Thoma,
Xxxxxxx, Xxxxxx Fund IV, L.P., an Illinois limited partnership (the
"Purchaser"). Except as otherwise indicated herein, capitalized terms used
herein are defined in Section 6 hereof.
The parties hereto agree as follows:
Section 1. Authorization and Closing.
1A. Authorization of the Common Stock. The Company shall authorize the
issuance and sale to the Purchaser of up to 24,250 shares of its Class A Common
Stock, par value $.01 per share (the "Class A Common"), and 75,000 shares of
its Class B Common Stock, par value $.01 per share (the "Class B Common"), each
having the rights and preferences set forth in Exhibit A attached hereto. The
Class A Common and the Class B Common are collectively referred to herein as
the "Common Stock."
1B. Purchase and Sale of the Common Stock.
(a) At the Closing (as defined in xxxxxxxxxxxx 0X xxxxx), the Company
shall sell to the Purchaser and, subject to the terms and conditions set forth
herein, the Purchaser shall purchase from the Company, 30,000 shares of Class B
Common at a price of $10 per share.
(b) The Company has been organized for the purpose of owning and operating
equipment rental facilities (the "Core Business") by means of first acquiring
an existing business satisfactory to the Purchaser and thereafter from time to
time making additional acquisitions which are synergistic with or otherwise
complementary to such initial acquisition and the Core Business. The Purchaser
intends to provide up to $25,000,000 (including the Common Stock purchased at
the Closing) in equity financing to the Company as the equity portion of the
debt and equity financing necessary to fund such acquisitions. The funds
obtained by the Company from the Purchaser on the date hereof, along with
additional investments by the Purchaser up to an aggregate of $500,000
(including the investment by the Purchaser on the date hereof), shall finance
the Company's costs of conducting a search for the initial acquisition. The
Purchaser's obligation to purchase any additional stock of the Company will be
conditioned on the Company not being in default under any of its material
agreements, adequate debt financing being available to fund any proposed
acquisition on terms satisfactory to the Purchaser and the Company's operations
and the acquisition being satisfactory to the Purchaser. In order to implement
the foregoing, the Purchaser may purchase from time to time after the Closing,
upon the written request of the Company's board of directors (the "Board"), up
to 24,250 shares of Class A Common at a price of $1,000 per share (as adjusted
from
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time to time as a result of stock dividends, stock splits, recapitalization and
similar events) and an additional 45,000 shares of Class B Common at a price of
$10 per share (as adjusted from time to time as a result of stock dividends,
stock splits, recapitalization and similar events). At the time of any such
purchase, the Purchaser shall be entitled to receive, and the Company shall be
obligated to deliver, satisfactory representations and warranties similar to
(and in addition to) those contained in Section 5 herein and all other
information and documentation as the Purchaser may reasonably request.
(c) Sellers of Businesses. The Purchaser hereby acknowledges that certain
sellers of businesses to be acquired by the Company ("Sellers") may desire to
invest in stock of the Company in connection with the consummation of such
acquisitions (whether such investments are structured as purchases for cash,
contributions of stock in transactions intended to be tax free under Section
351 of the IRC, or otherwise). Accordingly, the parties hereby agree upon the
occurrence of any such investment, the Purchaser's obligation to purchase
additional stock of the Company hereunder shall be reduced by the purchase
price of the stock of the Company to be purchased by any such Seller.
1C. The Closing. The closing of the purchase and sale of the Common Stock
(the "Closing") shall take place at the offices of Xxxxxxxx & Xxxxx, 000 Xxxx
Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 at 10:00 a.m. on the date hereof, or at
such other place or on such other date as may be mutually agreeable to the
Company and the Purchaser. At the Closing, the Company shall deliver to the
Purchaser stock certificates evidencing the Class B Common to be purchased by
the Purchaser, registered in the Purchaser's name, upon payment of the purchase
price thereof by a cashier's or certified check, or by wire transfer of
immediately available funds to such account as designated by the Company in the
amount of $300,000.
Section 2. Conditions of the Purchaser's Obligation at the Closing. The
obligation of the Purchaser to purchase and pay for the Common Stock at the
Closing is subject to the satisfaction as of the Closing of the following
conditions:
2A. Representations and Warranties; Covenants. The representations and
warranties contained in Section 5 hereof shall be true and correct at and as of
the Closing as though then made, except to the extent of changes caused by the
transactions expressly contemplated herein, and the Company shall have
performed in all material respects all of the covenants required to be
performed by it hereunder prior to the Closing.
2B. Certificate of Incorporation. The Company's certificate of
incorporation (the "Certificate of Incorporation") shall include the provisions
set forth in Exhibit A hereto, shall be in full force and effect under the laws
of Delaware as of the Closing and shall not have been amended or modified.
2C. Management Agreement. The Company shall have entered into management
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agreements, in form and substance substantially similar to Exhibits B-1
and B-2 attached hereto (the "Management Agreement"), with Xxxxx Xxxxxxx and
Xxxx Xxxxxxxxx (collectively, the "Executives"), the Management Agreements
shall not have been amended or modified and shall be in full force and effect
as of the Closing, and each of the Executives shall have purchased the Class B
Common proposed to be purchased by him thereunder.
2D. Stockholders Agreement. The Company, the Purchaser and the Executives
shall have entered into a stockholders agreement in form and substance
substantially similar to Exhibit C attached hereto (the "Stockholders
Agreement"), and the Stockholders Agreement shall be in full force and effect
as of the Closing.
2E. Professional Services Agreement. The Company and Golder, Thoma,
Cressey, Rauner, Inc. shall have entered into a professional services agreement
in form and substance substantially similar to Exhibit D attached hereto (the
"Professional Services Agreement"), and the Professional Services Agreement
shall be in full force and effect as of the Closing.
2F. Registration Agreement. The Company, the Purchaser and the Executives
shall have entered into a registration agreement in form and substance
substantially similar to Exhibit E attached hereto (the "Registration
Agreement"), and the Registration Agreement shall be in full force and effect
as of the Closing.
2G. Closing Documents. The Company shall have delivered to the Purchaser
all of the following documents:
(i) an Officer's Certificate, dated the date of the Closing, stating
that the conditions specified in Section 1 and paragraphs 2A through 2F,
inclusive, have been fully satisfied;
(ii) certified copies of the resolutions duly adopted by the Board
authorizing the execution, delivery and performance of this Agreement,
the Management Agreements, the Stockholders Agreement, the Professional
Services Agreement and each of the other agreements contemplated hereby,
the issuance and sale of the Class A Common and the Class B Common and
the consummation of all other transactions contemplated by this
Agreement;
(iii) certified copies of the Certificate of Incorporation and the
Company's bylaws, each as in effect at the Closing; and
(iv) such other documents relating to the transactions contemplated
by this Agreement as the Purchaser or its counsel may reasonably request.
2H. Fees and Expenses. The Company shall have reimbursed the Purchaser for
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the fees and expenses as provided in paragraph 7A hereof.
2I. Compliance with Applicable Laws. The purchase of Common Stock 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, in the Purchaser's sole judgment, 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.
2J. Waiver. Any condition specified in this Section 2 may be waived only
if such waiver is set forth in a writing executed by the Purchaser.
Section 3. Covenants.
3A. Financial Statements and Other Information. The Company shall deliver
to the Purchaser (so long as the Purchaser holds any Common Stock) and to each
holder of at least 25% of the Class A Investor Common Stock and each holder of
at least 25% of the Class B Investor Common Stock:
(i) as soon as available but in any event within 30 days after the
end of each quarterly accounting period in each fiscal year, unaudited
consolidating and consolidated statements of income and cash flows of the
Company and its Subsidiaries for such quarterly period and for the period
from the beginning of the fiscal year to the end of such quarter, and
consolidating and consolidated balance sheets of the Company and its
Subsidiaries as of the end of such quarterly period, all prepared in
accordance with generally accepted accounting principles, consistently
applied, subject to the absence of footnote disclosures and to normal
year-end adjustments;
(ii) accompanying the financial statements referred to in
subparagraph (i), an Officer's Certificate stating that neither the
Company nor any of its Subsidiaries is in default under any of its other
material agreements or, if any such default exists, specifying the nature
and period of existence thereof and what actions the Company and its
Subsidiaries have taken and propose to take with respect thereto;
(iii) within 120 days after the end of each fiscal year,
consolidating and consolidated statements of income and cash flows of the
Company and its Subsidiaries for such fiscal year, and consolidating and
consolidated balance sheets of the Company and its Subsidiaries as of the
end of such fiscal year, setting forth in each case comparisons to the
annual budget and to the preceding fiscal year, all prepared in
accordance with generally accepted accounting principles, consistently
applied, and accompanied by (a) with respect to the consolidated portions
of such statements (except with respect to budget data), an opinion
containing no exceptions or qualifications (except for qualifications
regarding specified contingent liabilities) of an independent accounting
firm of recognized national standing acceptable to the holders of a
majority of each of the Class A Investor Common
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Stock and the Class B Investor Common Stock, and (b) a copy of such
firm's annual management letter to the Board;
(iv) promptly upon receipt thereof, any additional reports,
management letters or other detailed information concerning significant
aspects of the Company's operations or financial affairs given to the
Company by its independent accountants (and not otherwise contained in
other materials provided hereunder);
(v) on or immediately prior to the date of consummation of the Base
Acquisition (as defined in the Management Agreements) and thereafter at
least 30 days prior to the beginning of each fiscal year, an annual
budget prepared on a monthly basis for the Company and its Subsidiaries
for such fiscal year (displaying anticipated statements of income and
cash flows), and promptly upon preparation thereof any other significant
budgets prepared by the Company and any revisions of such annual or other
budgets, and within 30 days after any monthly period in which there is a
material adverse deviation from the annual budget, an Officer's
Certificate explaining the deviation and what actions the Company has
taken and proposes to take with respect thereto;
(vi) promptly (but in any event within five business days) after the
discovery or receipt of notice of any default under any material
agreement to which it or any of its Subsidiaries is a party or any other
event or circumstance affecting the Company or any Subsidiary which is
reasonably likely to have a material adverse effect on the financial
condition, operating results, assets, operations or business prospects of
the Company or any Subsidiary (including the filing of any material
litigation against the Company or any Subsidiary or the existence of any
material dispute with any Person which involves a reasonable likelihood
of such litigation being commenced), an Officer's Certificate specifying
the nature and period of existence thereof and what actions the Company
and its Subsidiaries have taken and propose to take with respect thereto;
and
(vii) with reasonable promptness, such other information and
financial data concerning the Company and its Subsidiaries as any Person
entitled to receive information under this paragraph 3A may reasonably
request.
Each of the financial statements referred to in subparagraph (i) and (iii)
shall be true and correct in all material respects as of the dates and for the
periods stated therein, subject in the case of the unaudited financial
statements to changes resulting from normal year-end audit adjustments (none of
which would, alone or in the aggregate, be materially adverse to the financial
condition, operating results, assets, operations or business prospects of the
Company and its Subsidiaries taken as a whole).
3B. Inspection of Property. The Company shall permit any representatives
designated by the Purchaser (so long as the Purchaser holds at least 10% of the
Investor Common Stock) or any holder of at least 25% of the outstanding Class A
Investor Common Stock or at least
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25% of the outstanding Class B Investor Common Stock, upon reasonable notice
and during normal business hours and such other times as any such holder may
reasonably request, to (i) visit and inspect any of the properties of the
Company and its Subsidiaries, (ii) examine the corporate and financial records
of the Company and its Subsidiaries and make copies thereof or extracts
therefrom and (iii) discuss the affairs, finances and accounts of any such
corporations with the directors, officers, key employees and independent
accountants of the Company and its Subsidiaries; provided that the Company
shall have the right to have its chief financial officer present at any
meetings with the Company's independent accountants.
3C. Restrictions. The Company shall not, without the prior written
consent of the holders of a majority of the Class A Investor Common Stock or,
in the event no Class A Investor Common Stock is outstanding, without the prior
written consent of the holders of a majority of the Class B Investor Common
Stock:
(i) directly or indirectly declare or pay any dividends or make any
distributions upon any of its equity securities, other than payments of
Yield and return of Original Cost (as such terms are defined in the
Certificate of Incorporation) on the Class A Common pursuant to the
Certificate of Incorporation;
(ii) except pursuant to the Management Agreements and the
Stockholders Agreement, directly or indirectly redeem, purchase or
otherwise acquire, or permit any Subsidiary to redeem, purchase or
otherwise acquire, any of the Company's equity securities (including,
without limitation, warrants, options and other rights to acquire equity
securities);
(iii) except as expressly contemplated by this Agreement and the
Management Agreements, authorize, issue, sell or enter into any agreement
providing for the issuance (contingent or otherwise), or permit any
Subsidiary to authorize, issue, sell or enter into any agreement
providing for the issuance (contingent or otherwise) of, (a) any notes or
debt securities containing equity features (including, without
limitation, any notes or debt securities convertible into or exchangeable
for equity securities, issued in connection with the issuance of equity
securities or containing profit participation features) or (b) any equity
securities (or any securities convertible into or exchangeable for any
equity securities) or rights to acquire any equity securities, other than
the issuance of equity securities by a Subsidiary to the Company or
another Subsidiary;
(iv) merge or consolidate with any Person or permit any Subsidiary
to merge or consolidate with any Person (other than a wholly owned
Subsidiary);
(v) sell, lease or otherwise dispose of, or permit any Subsidiary to
sell, lease or otherwise dispose of, more than 5% of the consolidated
assets of the Company and its Subsidiaries (computed on the basis of book
value, determined in accordance with generally accepted accounting
principles consistently applied, or fair market value,
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determined by the Board in its reasonable good faith judgment) in any
transaction or series of related transactions (other than sales of
inventory in the ordinary course of business);
(vi) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction (including, without limitation,
any reorganization into partnership form);
(vii) acquire, or permit any Subsidiary to acquire, any interest in
any business (whether by a purchase of assets, purchase of stock, merger
or otherwise), or enter into any joint venture;
(viii) enter into, or permit any Subsidiary to enter into, the
ownership, active management or operation of any business other than the
Core Business and other related businesses;
(ix) enter into, or permit any Subsidiary to enter into, any
transaction with any of its or any Subsidiary's officers, directors,
employees or Affiliates or any individual related by blood, marriage or
adoption to any such Person (a "Relative") or any entity in which any
such Person or individual owns a beneficial interest (a "Related
Entity"), except for normal employment arrangements and benefit programs
on reasonable terms and except as otherwise expressly contemplated by
this Agreement, the Management Agreements and the Professional Services
Agreement; provided that in no event shall any Relative or Related Entity
be employed by, render services to or receive compensation from the
Company or any Subsidiary; or
(x) create, incur, assume or suffer to exist, or permit any
Subsidiary to create, incur, assume or suffer to exist, Indebtedness
exceeding the amounts approved therefor by the Board in the annual
budget.
3D. Affirmative Covenants. So long as the Purchaser holds at least
10% of the Investor Common Stock, the Company shall, and shall cause each
Subsidiary to:
(i) comply with all applicable laws, rules and regulations of all
governmental authorities, the violation of which would reasonably be
expected to have a material adverse effect upon the financial condition,
operating results, assets, operations or business prospects of the
Company and its Subsidiaries taken as a whole, and pay and discharge when
payable all taxes, assessments and governmental charges (except to the
extent the same are being contested in good faith and adequate reserves
therefor have been established); and
(ii) enter into and maintain appropriate nondisclosure and
noncompete agreements with its key employees.
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3E. Current Public Information. At all times after the Company has filed
a registration statement with the Securities and Exchange Commission pursuant
to the requirements of either the Securities Act or the Securities Exchange
Act, the Company shall file all reports required to be filed by it under the
Securities Act and the Securities Exchange Act and the rules and regulations
adopted by the Securities and Exchange Commission thereunder and shall take
such further action as any holder or holders of Restricted Securities may
reasonably request, all to the extent required to enable such holders to sell
Restricted Securities pursuant to (i) Rule 144 adopted by the Securities and
Exchange Commission under the Securities Act (as such rule may be amended from
time to time) or any similar rule or regulation hereafter adopted by the
Securities and Exchange Commission or (ii) a registration statement on Form S-2
or S-3 or any similar registration form hereafter adopted by the Securities and
Exchange Commission. Upon request, the Company shall deliver to any holder of
Restricted Securities a written statement as to whether it has complied with
such requirements.
3F. Amendment of Other Agreements. The Company shall not amend, modify or
waive any provision of the Management Agreements without the prior written
consent of the holders of a majority of each of the Class A Investor Common
Stock and Class B Investor Common Stock, and the Company shall enforce the
provisions of the Management Agreements and shall exercise all of its rights
and remedies thereunder (including, without limitation, any repurchase options
and first refusal rights) unless it is otherwise directed by the holders of a
majority of each of the Class A Investor Common Stock and Class B Investor
Common Stock.
3G. Limited Preemptive Rights.
(i) Except for the issuance of Common Stock or any securities containing
options or rights to acquire any shares of Common Stock (a) to the Executives
pursuant to the Management Agreements, (b) to other executives of the Company
on terms and conditions approved by the Board (provided that the exception
contained in this clause (b) shall not apply with respect to issuances in
excess of 6% of the Company's common equity), (c) in connection with the
acquisition of another company or business on terms and conditions approved by
the Board and the Purchaser, or (d) pursuant to a public offering registered
under the Securities Act, if the Company at any time after the Closing
authorizes the issuance or sale of any shares of Common Stock or any securities
containing options or rights to acquire any shares of Common Stock (other than
as a dividend on the outstanding Common Stock), the Company shall first offer
to sell to each holder of Investor Common Stock a portion of such stock or
securities equal to the quotient determined by dividing (1) the number of
shares of Investor Common Stock held by such holder by (2) the total number of
shares of Common Stock outstanding on a fully diluted basis immediately prior
to such issuance. Each holder of Investor Common Stock shall be entitled to
purchase all or any portion of such stock or securities at the most favorable
price and on the most favorable terms as such stock or securities are to be
offered to any other Persons.
(ii) In order to exercise its purchase rights hereunder, a holder of
Investor
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Common Stock must within 15 days after receipt of written notice from the
Company describing in reasonable detail the stock or securities being offered,
the purchase price thereof, the payment terms and such holder's percentage
allotment deliver a written notice to the Company describing its election
hereunder. If all of the stock and securities offered to the holders of
Investor Common Stock is not fully subscribed by such holders, the remaining
stock and securities shall be reoffered by the Company to the holders
purchasing their full allotment upon the terms set forth in this paragraph,
except that such holders must exercise their purchase rights within five days
after receipt of such reoffer.
(iii) Upon the expiration of the offering periods described above, the
Company shall be entitled to sell such stock or securities which the holders of
Investor Common Stock have not elected to purchase during the 90 days following
such expiration on terms and conditions no more favorable to the purchasers
thereof than those offered to such holders. Any stock or securities offered or
sold by the Company after such 90-day period must be reoffered to the holders
of Investor Common Stock pursuant to the terms of this paragraph.
(iv) Nothing contained in this paragraph 3G shall be deemed to amend,
modify or limit in any way the restrictions on the issuance of shares of Common
Stock set forth in paragraph 3C hereof or elsewhere in this Agreement, in the
Stockholders Agreement or in any other agreement to which the Company is bound.
3H. Public Disclosures. The Company shall not, nor shall it permit any
Subsidiary to, disclose the Purchaser's name or identity as an investor in the
Company in any press release or other public announcement or in any document or
material filed with any governmental entity, without the prior written consent
of the Purchaser, unless such disclosure is required by applicable law or
governmental regulations or by order of a court of competent jurisdiction, in
which case prior to making such disclosure the Company shall give written
notice to the Purchaser describing in reasonable detail the proposed content of
such disclosure and shall permit the Purchaser to review and comment upon the
form and substance of such disclosure.
3I. Unrelated Business Taxable Income. The Company shall not engage in
any transaction which is reasonably likely to cause the Investor or any of its
limited partners which are exempt from income taxation under Section 501(a) of
the IRC and, if applicable, any pension plan that any such trust may be a part
of, to recognize unrelated business taxable income as defined in Section 512
and Section 514 of the IRC.
3J. Xxxx-Xxxxx-Xxxxxx Compliance. In connection with any transaction in
which the Company is involved which is required to be reported under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended from time to
time (the "HSR Act"), the Company shall prepare and file all documents with the
Federal Trade Commission and the United States Department of Justice which may
be required to comply with the HSR Act, and shall promptly furnish all
materials thereafter requested by any of the regulatory agencies having
jurisdiction over such filings,
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in connection with the transactions contemplated thereby. The Company shall
take all reasonable actions and shall file and use reasonable best efforts to
have declared effective or approved all documents and notifications with any
governmental or regulatory bodies, as may be necessary or may reasonably be
requested under federal antitrust laws for the consummation of the subject
transaction. The Purchaser shall provide to the Company all information
concerning itself and its Affiliates as is necessary in order for the Company
to properly complete and file the documents referred to above in this paragraph
3J.
Section 4. Transfer of Restricted Securities.
(i) Restricted Securities are transferable only pursuant to (a) public
offerings registered under the Securities Act, (b) Rule 144 or Rule 144A of the
Securities and Exchange Commission (or any similar rule or rules then in force)
if such rule or rules are available and (c) subject to the conditions specified
in subparagraph (ii) below, any other legally available means of transfer.
(ii) In connection with the transfer of any Restricted Securities (other
than a transfer described in subparagraph 4(i)(a) or (b) above), the holder
thereof shall deliver written notice to the Company describing in reasonable
detail the transfer or proposed transfer, together with an opinion of Xxxxxxxx
& Xxxxx or other counsel which (to the Company's reasonable satisfaction) is
knowledgeable in securities law matters to the effect that such transfer of
Restricted Securities may be effected without registration of such Restricted
Securities under the Securities Act. In addition, if the holder of the
Restricted Securities delivers to the Company an opinion of Xxxxxxxx & Xxxxx or
such other counsel that no subsequent transfer of such Restricted Securities
shall require registration under the Securities Act, the Company shall promptly
upon such contemplated transfer deliver new certificates for such Restricted
Securities which do not bear the Securities Act legend set forth in paragraph
7C. If the Company is not required to deliver new certificates for such
Restricted Securities not bearing such legend, the holder thereof shall not
transfer the same until the prospective transferee has confirmed to the Company
in writing its agreement to be bound by the conditions contained in this
paragraph and paragraph 7C.
(iii) Upon the request of the Purchaser, the Company shall promptly supply
to the Purchaser or its prospective transferees all information regarding the
Company required to be delivered in connection with a transfer pursuant to Rule
144A of the Securities and Exchange Commission.
Section 5. Representations and Warranties of the Company. As a material
inducement to the Purchaser to enter into this Agreement and purchase the
Common Stock, the Company hereby represents and warrants to the Purchaser that:
5A. Organization and Corporate Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware and
is qualified to do
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business in every jurisdiction in which the failure to so qualify might
reasonably be expected to have a material adverse effect on the financial
condition, operating results, assets, operations or business prospects of the
Company and its Subsidiaries taken as a whole. The Company has all requisite
corporate power and authority and all material licenses, permits and
authorizations necessary to own and operate its properties, to carry on its
businesses as now conducted and presently proposed to be conducted and to carry
out the transactions contemplated by this Agreement. The copies of the
Company's Certificate of Incorporation and bylaws which have been furnished to
the Purchaser's counsel reflect all amendments made thereto at any time prior
to the date of this Agreement and are correct and complete.
5B. Capital Stock and Related Matters.
(i) As of the Closing and immediately thereafter, the authorized capital
stock of the Company shall consist of 175,000 shares of Common Stock, of which
25,000 shares shall be designated as Class A Common (none of which shall be
issued and outstanding and 24,250 of which shall be reserved for issuance to
the Purchaser pursuant to subparagraph 1B(b) hereof), and 150,000 shares shall
be designated as Class B Common (30,108 of which shall be issued and
outstanding, 45,000 of which shall be reserved for issuance to the Purchaser
pursuant to subparagraph 1B(b) hereof, 8,892 of which shall be reserved for
issuance to the Executives pursuant to the Management Agreements and 6,000
shall be reserved for issuance to certain other members of senior management of
the Company). As of the Closing, the Company shall not have outstanding any
stock or securities convertible or exchangeable for any shares of its capital
stock or containing any profit participation features, nor shall it have
outstanding any rights or options to subscribe for or to purchase its capital
stock or any stock or securities convertible into or exchangeable for its
capital stock or any stock appreciation rights or phantom stock plans other
than pursuant to and as contemplated by this Agreement and the Management
Agreements. As of the Closing, the Company shall not be subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock or any warrants, options or other rights
to acquire its capital stock, except pursuant to this Agreement and the
Management Agreements. As of the Closing, all of the outstanding shares of the
Company's capital stock shall be validly issued, fully paid and nonassessable.
(ii) There are no statutory or, to the best of the Company's knowledge,
contractual stockholders preemptive rights or rights of refusal with respect to
the issuance of the Class B Common hereunder or the issuance of the Common
Stock pursuant to paragraph 1B(b) hereof, except as expressly provided herein.
Based in part on the investment representations of the Purchaser in paragraph
7C hereof and of the Executives in paragraph 1(c) of each of the Management
Agreements, the Company has not violated any applicable federal or state
securities laws in connection with the offer, sale or issuance of any of its
capital stock, and the offer, sale and issuance of the Common Stock hereunder
and pursuant to paragraph 1B(b) hereof do not and will not require registration
under the Securities Act or any applicable state securities laws. To the best
of the Company's knowledge, there are no agreements between the Company's
stockholders with respect
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to the voting or transfer of the Company's capital stock or with respect to any
other aspect of the Company's affairs, except for Stockholders Agreement and
the Management Agreements.
5C. Subsidiaries; Investments. The Company does not own or hold any
shares of stock or any other security or interest in any other Person or any
rights to acquire any such security or interest, and the Company has never had
any Subsidiary.
5D. Authorization; No Breach. The execution, delivery and performance of
this Agreement, the Management Agreements, the Stockholders Agreement, the
Professional Services Agreement, the Registration Agreement and all other
agreements contemplated hereby to which the Company is a party and the filing
of the Certificate of Incorporation have been duly authorized by the Company.
This Agreement, the Management Agreements, the Stockholders Agreement, the
Professional Services Agreement, the Registration Agreement, the Certificate of
Incorporation and all other agreements contemplated hereby each constitutes a
valid and binding obligation of the Company, enforceable in accordance with its
terms. The execution and delivery by the Company of this Agreement, the
Management Agreements, the Stockholders Agreement, the Professional Services
Agreement, the Registration Agreement and all other agreements contemplated
hereby to which the Company is a party, the offering, sale and issuance of the
Common Stock hereunder and pursuant to subparagraph 1B(b) and the fulfillment
of and compliance with the respective terms hereof and thereof by the Company
do not and will not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, (iii) result in
the creation of any lien, security interest, charge or encumbrance upon the
Company's capital stock or assets pursuant to, (iv) give any third party the
right to modify, terminate or accelerate any obligation under, (v) result in a
violation of, or (vi) require any authorization, consent, approval, exemption
or other action by or notice to any court or administrative or governmental
body pursuant to, the Certificate of Incorporation or bylaws of the Company, or
any law, statute, rule or regulation to which the Company is subject, or any
agreement, instrument, order, judgment or decree to which the Company is a
party or by which it is bound.
5E. Conduct of Business; Liabilities. Other than the negotiation,
execution and delivery of this Agreement, the Management Agreements, the
Stockholders Agreement, the Professional Services Agreement, the Registration
Agreement and the other agreements contemplated hereby and thereby, prior to
the Closing, the Company has not (i) conducted any business, (ii) incurred any
expenses, obligations or liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise, whether or not known to the Company and whether due
or to become due and regardless of when asserted), (iii) owned any assets, (iv)
entered into any contracts or agreements, or (v) violated any laws or
governmental rules or regulations.
5F. Tax Matters. The Company has filed all tax returns (if any) which it
is required to file under applicable laws and regulations; all such returns are
complete and correct in all material respects; the Company has paid all taxes
due and owing by it and has withheld and paid over all taxes which it is
obligated to withhold from amounts paid or owing to any employee,
13
stockholder, creditor or other third party; the Company has not waived any
statute of limitations with respect to taxes or agreed to any extension of time
with respect to a tax assessment or deficiency; the assessment of any
additional taxes for periods for which returns have been filed is not expected;
no foreign, federal, state or local tax audits are pending or being conducted
with respect to the Company, no information related to tax matters has been
requested by any foreign, federal, state or local taxing authority and no
notice indicating an intent to open an audit or other review has been received
by the Company from any foreign, federal, state or local taxing authority; and
there are no unresolved questions or claims concerning the Company's tax
liability. The Company has not made an election under Section 341(f) of the
IRC.
5G. Litigation, etc. There are no actions, suits, proceedings, orders,
investigations or claims pending or, to the best of the Company's knowledge,
threatened against or affecting the Company (or to the best of the Company's
knowledge, pending or threatened against or affecting any of the officers,
directors or employees of the Company with respect to their businesses or
proposed business activities) at law or in equity, or before or by any
governmental department, commission, board, bureau, agency or instrumentality
(including, without limitations, any actions, suit, proceedings or
investigations with respect to the transactions contemplated by this Agreement)
which could have a material adverse effect on the financial condition,
operating results, assets, operations or business prospects of the Company and
its Subsidiaries taken as a whole; the Company is not subject to any
arbitration proceedings under collective bargaining agreements or otherwise or,
to the best of the Company's knowledge, any governmental investigations or
inquiries; and, to the best of the Company's knowledge, there is no basis for
any of the foregoing. The Company is not subject to any judgment, order or
decree of any court or other governmental agency. The Company has not 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 its business.
5H. 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 binding upon the
Company. The Company shall pay, and hold the Purchaser harmless against, any
liability, loss or expense (including, without limitation, attorneys, fees and
out-of-pocket expenses) arising in connection with any such claim.
5I. Governmental Consent, etc. No permit, consent, approval or
authorization of, or declaration to or filing with, any governmental authority
is required in connection with the execution, delivery and performance by the
Company of this Agreement or the other agreements contemplated hereby, or the
consummation by the Company of any other transactions contemplated hereby or
thereby.
5J. ERISA. The Company does not maintain or have any obligation to
contribute to or any other liability with respect to or under (including but
not limited to current or potential withdrawal liability), nor has it ever
maintained or had any obligation to contribute to or any other
14
liability with respect to or under, (i) any plan or arrangement whether or not
terminated, which provides medical, health, life insurance or other welfare
type benefits for current or future retired or terminated employees (except for
limited continued medical benefit coverage required to be provided under
Section 4980B of the IRC or as required under applicable state law), (ii) any
"multiemployer plan" (as defined in Section 3(37) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), (iii) any employee plan
which is a tax-qualified "defined benefit plan" (as defined in Section 3(35) of
ERISA), whether or not terminated, (iv) any employee plan which is a
tax-qualified "defined contribution plan" (as defined in Section 3(34) of
ERISA), whether or not terminated, or (v) any other plan or arrangement
providing benefits to current or former employees, including any bonus plan,
plan for deferred compensation, employee health or other welfare benefit plan
or other arrangement, whether or not terminated. For purposes of this
subparagraph 5J, the term "Company" includes all organizations under common
control with the Company pursuant to Section 414(b) or (c) of the IRC.
5K. Compliance with Laws. The Company has not violated any law or any
governmental regulation or requirement which violation would reasonably be
expected to have a material adverse effect upon the financial condition,
operating results, assets, operations or business prospects of the Company, and
the Company has not received notice of any such violation. The Company is not
subject to any clean up liability, and the Company has no reason to believe it
may become subject to any clean up liability, under any federal, state or local
environmental law, rule or regulation.
5L. Disclosure. Neither this Agreement nor any of the schedules,
attachments, written statements, documents, certificates or other items
prepared or supplied to the Purchaser by or on behalf of the Company with
respect to the transactions contemplated hereby 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 the Company
has not disclosed to the Purchaser in writing and of which any of its officers,
directors or executive employees is aware and which has had or might reasonably
be anticipated to have a material adverse effect upon the existing or expected
financial condition, operating results, assets, customer or supplier relations,
employee relations or business prospects of the Company.
5M. Closing Date. The representations and warranties of the Company
contained in this Section 5 and elsewhere in this Agreement and all information
contained in any exhibit, schedule or attachment hereto or in any writing
delivered by, or on behalf of, the Company to the Purchaser shall be true and
correct in all material respects on the date of the Closing as though then
made, except as affected by the transactions expressly contemplated by this
Agreement.
5N. Post-Closing Representations and Warranties. In connection with any
reaffirmation after the Closing of the representations and warranties contained
in this Section 5, the following shall apply:
15
(i) The representations contained in Section 5B shall be deemed to
be true and correct on any date after the Closing if such representations
are true and correct except for the fact that (A) shares of Class A
Common and additional shares of Class B Common may have been issued to
the Purchaser pursuant to subparagraph 1B(b) hereof, (B) additional
shares of Class B Common may have been issued to the Executives pursuant
to the Management Agreements, (C) additional shares of Common Stock or
securities containing options or rights to acquire any shares of Common
Stock may have been issued to the Company's employees on terms and
conditions approved by the Board and the Purchaser, and (D) additional
shares of Common Stock or securities containing options or rights to
acquire any shares of Common Stock may have been issued in connection
with the acquisition of another company or business on terms and
conditions approved by the Board and the Purchaser;
(ii) The representations contained in Section 5C shall be deemed to
be amended to add the following language at the end thereof:
"except for shares of stock or other securities or
interests in any Person and Subsidiaries acquired
after June 4, 1996, in each case with the approval of
the Board and the Purchaser."
(iii) The representations contained in Section 5E shall be deemed to
be amended to substitute the following representation in its place:
"The Company and its Subsidiaries do not have any
material obligation or liability (whether accrued,
absolute, contingent, unliquidated or otherwise,
whether or not known to the Company or any Subsidiary,
whether due or to become due and regardless of when
asserted) other than: (i) liabilities set forth on
most recent balance sheet (including any notes
thereof) delivered to the Purchaser pursuant to
Section 3A hereof; (ii) liabilities and obligations
which have arisen after the date of such balance sheet
in the ordinary course of business (none of which is a
liability resulting from breach of contract, breach of
warranty, tort, infringement, claim or lawsuit) and
(iii) liabilities and obligations which have been
disclosed to and approved by the Board."
(iv) The representations contained in Section 5J shall be deemed to
be amended to add the following language at the end of the first sentence
thereof:
", in each case except for such plans or arrangements
which have been approved by the Board."
16
Section 6. Definitions. For the purposes of this Agreement, the
following terms have the meanings set forth below:
"Affiliate" of any particular person or entity means any other person or
entity controlling, controlled by or under common control with such particular
person or entity.
"Class A Investor Common Stock" means (i) the Class A Common issued
pursuant to subparagraph 1B(b) and (ii) any capital stock issued or issuable
with respect to the Class A Common referred to in clause (i) above by way of
stock dividends or stock splits or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular shares of Class A Investor Common Stock, such shares shall cease to
be Class A Investor Common Stock when they have been (a) effectively registered
under the Securities Act and disposed of in accordance with the Registration
statement covering them or (b) distributed to the public through a broker,
dealer or market maker pursuant to Rule 144 under the Securities Act (or any
similar rule then in force).
"Class B Investor Common Stock" means (i) the Class B Common issued
hereunder or pursuant to subparagraph 1B(b) and (ii) any capital stock issued
or issuable with respect to the Class B Common referred to in clause (i) above
by way of stock dividends or stock splits or in connection with a combination
of shares, recapitalization, merger, consolidation or other reorganization. As
to any particular shares of Class B Investor Common Stock, such shares shall
cease to be Class B Investor Common Stock when they have been (a) effectively
registered under the Securities Act and disposed of in accordance with the
Registration statement covering them or (b) distributed to the public through a
broker, dealer or market maker pursuant to Rule 144 under the Securities Act
(or any similar rule then in force).
"Indebtedness" means all indebtedness for borrowed money (including
purchase money obligations) maturing one year or more from the date of creation
or incurrence thereof or renewable or extendible at the option of the debtor to
a date one year or more from the date of creation or incurrence thereof, all
indebtedness under revolving credit arrangements extending over a year or more,
all capitalized lease obligations and all guarantees of any of the foregoing.
"Investor Common Stock" means the Class A Investor Common Stock and the
Class B Investor Common Stock.
"IRC" means the Internal Revenue Code of 1986, as amended, and any
reference to any particular IRC section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
"Officer's Certificate" means a certificate signed by the Company's
president or its chief financial officer, in his capacity as such, stating
that, to the best of such officer's knowledge, (i) the officer signing such
certificate has made or has caused to be made such investigations as are
17
necessary in order to permit him to verify the accuracy of the information set
forth in such certificate and (ii) such certificate does not misstate any
material fact and does not omit to state any fact necessary to make the
certificate not misleading.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Restricted Securities" means (i) the Common Stock issued hereunder and
pursuant to subparagraph 1B(b) hereof and (ii) any securities issued with
respect to the securities referred to in clause (i) or (ii) above by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Restricted Securities, such securities shall cease to be Restricted
Securities when they have (a) been effectively registered under the Securities
Act and disposed of in accordance with the registration statement covering
them, (b) become eligible for sale pursuant to Rule 144(k) (or any similar
provision then in force) under the Securities Act or (c) been otherwise
transferred and new certificates for them not bearing the Securities Act legend
set forth in paragraph 7C have been delivered by the Company in accordance with
paragraph 4(ii). Whenever any particular securities cease to be Restricted
Securities, the holder thereof shall be entitled to receive from the Company,
without expense, new securities of like tenor not bearing a Securities Act
legend of the character set forth in paragraph 7C.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal law then in force.
"Securities and Exchange Commission" includes any governmental body or
agency succeeding to the functions thereof.
"Subsidiary" means any corporation of which the securities having a
majority of the ordinary voting power in electing the board of directors are,
at the time as of which any determination is being made, owned by the Company
either directly or through one or more Subsidiaries.
18
Section 7. Miscellaneous.
7A. Expenses. The Company agrees to pay, and hold the Purchaser and all
holders of Investor Common Stock harmless against liability for the payment of,
(i) the fees and expenses of their counsel arising in connection with the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated by this Agreement (including but not limited to fees
and expenses arising with respect to any subsequent purchase of Common Stock
pursuant to subparagraph 1B(b) hereof), (ii) the fees and expenses incurred
with respect to any amendments or waivers (whether or not the same become
effective) under or in respect of this Agreement, the Management Agreements,
the Stockholders Agreement, the Professional Services Agreement, the other
agreements contemplated hereby and the Certificate of Incorporation, (iii)
stamp and other taxes which may be payable in respect of the execution and
delivery of this Agreement or the issuance, delivery or acquisition of any
shares of Common Stock purchased hereunder or in accordance with subparagraph
1B(b) hereof, and (iv) the fees and expenses incurred with respect to the
interpretation or enforcement of the rights granted under this Agreement, the
Management Agreements, the Stockholders Agreement, the Professional Services
Agreement, the other agreements contemplated hereby and the Certificate of
Incorporation and the Company's bylaws.
7B. Remedies. Each holder of Investor Common Stock shall have all rights
and remedies set forth in this Agreement and the Certificate of Incorporation
and all rights and remedies which such holders have been granted at any time
under any other agreement or contract and all of the rights which such holders
have under any law. Any Person having any rights under any provision of this
Agreement shall be entitled to enforce such rights specifically (without
posting a bond or other security), to recover damages by reason of any breach
of any provision of this Agreement and to exercise all other rights granted by
law.
7C. Purchaser's Investment Representations. The Purchaser hereby
represents that it is acquiring the Restricted Securities purchased hereunder
or acquired pursuant hereto for its own account with the present intention of
holding such securities for purposes of investment, and that it has no
intention of selling such securities in a public distribution in violation of
the federal securities laws or any applicable state securities laws; provided
that nothing contained herein shall prevent the Purchaser and subsequent
holders of Restricted Securities from transferring such securities in
compliance with the provisions of Section 4 hereof. Each certificate for
Restricted Securities shall 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 transfer of the
securities represented by this certificate is subject to the
conditions specified in the Purchase Agreement, dated as of June
4, 1996, between the issuer (the "Company") and a certain
investor, and the Company reserves the right to refuse the
transfer of such securities until such conditions have been
fulfilled with respect to such transfer. A copy of such
conditions shall be furnished by the Company to the
19
holder hereof upon written request and without charge."
7D. Consent to Amendments. Except as otherwise expressly provided herein,
the provisions of this Agreement may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
holders of a majority of the Investor Common Stock. No other course of dealing
between the Company and the holder of any Common Stock or any delay in
exercising any rights hereunder or under the Certificate of Incorporation shall
operate as a waiver of any rights of any such holders. In addition, this
Agreement shall not be amended, modified or supplemented without the prior
written consent of the holders of a majority of the Common Stock then held by
the Executives and their Permitted Transferees (as defined in the Management
Agreements). For purposes of this Agreement, shares of Common Stock held by
the Company or any Subsidiaries shall not be deemed to be outstanding.
7E. Survival of Representations and Warranties. All representations and
warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, regardless of any
investigation made by any Purchaser or on its behalf.
7F. Successors and Assigns. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for the Purchaser's benefit as a
purchaser or holder of Common Stock are also for the benefit of, and
enforceable by, any subsequent holder of such Common Stock. The rights and
obligations of the Purchaser under this Agreement and the agreements
contemplated hereby may be assigned by the Purchaser at any time, in whole or
in part, to any investment fund managed by Golder, Thoma, Cressey, Rauner,
Inc., or any successor thereto.
7G. Generally Accepted Accounting Principles. Where any accounting
determination or calculation is required to be made under this Agreement or the
exhibits hereto, such determination or calculation (unless otherwise provided)
shall be made in accordance with generally accepted accounting principles,
consistently applied, except that if because of a change in generally accepted
accounting principles the Company would have to alter a previously utilized
accounting method or policy in order to remain in compliance with generally
accepted accounting principles, such determination or calculation shall
continue to be made in accordance with the Company's previous accounting
methods and policies.
7H. 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
20
of this Agreement.
7I. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together shall constitute one
and the same Agreement.
7J. Descriptive Headings; Interpretation. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute a
Section of this Agreement. The use of the word "including" in this Agreement
shall be by way of example rather than by limitation.
7K. Governing Law. The corporate law of Delaware shall govern all issues
concerning the relative rights of the Company and its stockholders. All other
questions concerning the construction, validity and interpretation of this
Agreement and the exhibits and schedules hereto shall be governed by and
construed in accordance with the internal laws of the State of Illinois,
without giving effect to any choice of law or conflict of law provision or rule
(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.
7L. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable express courier service (charges
prepaid) or mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to the Purchaser and to the Company at the address
indicated below:
21
If to the Company:
National Equipment Services, Inc.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: President
If to the Purchaser:
Golder, Thoma, Xxxxxxx, Xxxxxx Fund IV, L.P.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
* * * * *
22
IN WITNESS WHEREOF, the parties hereto have executed this Purchase
Agreement on the date first written above.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxxx
Its: President
GOLDER, THOMA, XXXXXXX, XXXXXX
FUND IV, L.P.
By: GTCR IV, L.P., its General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.,
its General Partner
By: /s/ Xxxx X. Xxxxx
Its: Principal
