EXHIBIT 10(n)
STOCK PURCHASE AGREEMENT
Dated as of October 24, 1997
by and among
UNITED RENTALS, INC.,
a Delaware corporation, and
THE SHAREHOLDERS OF
RENT-IT CENTER, INC.
TABLE OF CONTENTS
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Page
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SECTION 1. Certain Definitions................................................ 1
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SECTION 2. Transfer of Shares and Payment of Purchase Price................... 5
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2.1 Transfer of Shares................................................. 5
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2.2 Amount of Purchase Price........................................... 6
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2.3 Payment of Purchase Price.......................................... 6
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2.4 Purchase Price Adjustment.......................................... 6
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SECTION 3. Representations and Warranties of Rent-It and the Shareholders..... 11
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3.1 Organization and Authorization..................................... 11
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3.2 Articles of Incorporation; By-Laws; Minute Books................... 11
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3.3 No Liens - No Violations........................................... 12
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3.4 Authorized Capitalization.......................................... 12
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3.5 Subsidiaries; Investments; Affiliate Notes......................... 12
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3.6 Financial Statements............................................... 13
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3.7 Records and Books of Account....................................... 13
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3.8 Liabilities........................................................ 13
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3.9 Title to Assets; Liens and Encumbrances............................ 14
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3.10 Tangible Assets.................................................... 14
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3.11 Facilities......................................................... 15
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3.12 Leased Assets...................................................... 16
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3.13 Trademarks, Service Marks, Trade Names, Patents and Copyrights..... 16
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3.14 Contracts; Customers............................................... 17
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3.15 Labor Relations; Employees......................................... 18
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3.16 Legal Proceedings.................................................. 19
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3.17 Orders, Decrees, Etc............................................... 19
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3.18 Compliance With Law; Permits and Licenses.......................... 19
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3.19 Changes Since December 31, 1996.................................... 21
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3.20 No Material Adverse Change......................................... 22
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3.21 Capital Projects and Expenditures.................................. 23
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3.22 Employee Benefits.................................................. 23
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3.23 Governmental Approvals............................................. 26
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3.24 Tax Matters........................................................ 26
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3.25 Insurance Coverage................................................. 27
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3.26 Preservation of Property........................................... 28
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3.27 Accounts Receivable................................................ 28
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3.28 Representations and Warranties..................................... 28
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SECTION 4. Representations and Warranties of Buyer............................ 29
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4.1 Good Standing...................................................... 29
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4.2 Authorization...................................................... 29
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4.3 Representations and Warranties..................................... 29
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4.4 Governmental Approvals............................................. 29
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SECTION 5. Conditions of Buyer's Obligations to Close......................... 30
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5.1 Agreements and Conditions.......................................... 30
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5.2 Representations and Warranties..................................... 30
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5.3 No Legal Proceeding................................................ 30
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5.4 Deliveries......................................................... 30
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5.5 Legal Opinion...................................................... 31
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SECTION 6. Conditions of Rent-It's and the Shareholders' Obligation to Close.. 31
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6.1 Agreements and Conditions.......................................... 31
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6.2 Representations and Warranties..................................... 31
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6.3 Deliveries......................................................... 31
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6.4 No Legal Proceeding................................................ 31
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6.5 Legal Opinion...................................................... 32
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SECTION 7. Deliveries of Rent-It and the Shareholders on the Closing Date..... 32
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7.1 Stock Certificates................................................. 32
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7.2 Corporate Records.................................................. 32
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7.3 Resignations....................................................... 32
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7.4 Consents........................................................... 32
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7.5 Possession of Assets............................................... 32
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7.6 Lease Agreement.................................................... 32
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7.7 Legal Opinion...................................................... 32
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7.8 Employment or Consulting Agreements................................ 33
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SECTION 8. Deliveries of Buyer on the Closing Date............................ 33
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SECTION 9. Additional Covenants............................................... 33
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9.1 Cooperation of Buyer, Rent-It and the Shareholders................. 33
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9.2 Further Assurances of Rent-It, the Shareholders and Buyer.......... 34
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9.3 Non-Competition Covenant........................................... 35
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9.4 No Disparagement................................................... 36
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SECTION 10. Indemnification.................................................... 37
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10.1 Indemnification by Rent-It and the Shareholders.................... 37
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10.2 Indemnification by Buyer........................................... 37
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10.3 Procedures for Third Party Indemnification......................... 38
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10.4 Right of Set Off................................................... 38
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SECTION 11. Survival of Representations; Effect of Certificates................ 39
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SECTION 12. Brokerage Indemnity................................................ 39
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SECTION 13. Notices............................................................ 39
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SECTION 14. Termination........................................................ 41
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SECTION 15. Miscellaneous...................................................... 42
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15.1 Entire Agreement................................................... 42
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15.2 Taxes.............................................................. 43
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15.3 Governing Law...................................................... 43
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15.4 Arbitration........................................................ 43
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15.5 Representation by Counsel.......................................... 43
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15.6 Benefit of Parties; Assignment..................................... 44
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15.7 Pronouns........................................................... 44
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15.8 Headings........................................................... 44
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15.9 Expenses........................................................... 45
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15.10 Counterparts....................................................... 45
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated as of October 24, 1997 (this
"Agreement"), is by and among UNITED RENTALS, INC., a Delaware corporation
("Buyer"), and the persons whose names are listed on the signature page of this
Agreement (the "Shareholders").
RECITALS:
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A. The Shareholders own, of record and beneficially, all of the issued
and outstanding capital stock of Rent-It Center, Inc., a Utah corporation
("Rent-It"), which is engaged in the business of renting and selling equipment
in the state of Utah.
B. Buyer desires to purchase from the Shareholders, and the Shareholders
desire to sell to Buyer, on the terms and conditions set forth herein, all of
the issued and outstanding capital stock of Rent-It.
AGREEMENT
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NOW, THEREFORE, in consideration of the foregoing, and the mutual
agreements, representations, warranties and covenants contained herein, and for
other good and valuable consideration set forth herein, the parties hereto agree
as follows:
SECTION 1. Certain Definitions. For purposes of this Agreement, the
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following terms shall have the respective meanings set forth below:
"Actions" mean any claims, actions, suits, proceedings and
investigations, whether at law or in equity, before any court, arbitrator,
arbitration panel or Governmental Authority.
"Affiliate" of a party means any Person that, directly or indirectly,
controls, is controlled by, or is under common control with, such party.
"Balance Sheet" has the meaning specified in Section 3.6 below.
"Balance Sheet Date" means September 30, 1997.
"Business" means Rent-It's equipment rental and sales business.
"Buyer's Stock" means shares of common stock, $.001 par value, of
Buyer.
"Closing" means the closing of the transactions contemplated hereby,
which shall take place at the office of Holme Xxxxxxx & Xxxx LLP, Salt Lake
City, Utah, on the Closing Date commencing at 11:00 A.M., or at such other time
or place as the parties may agree upon in writing, and shall be effective as of
the close of business on the Closing Date.
"Closing Date" means October 24, 1997, or such other date as the
parties may agree upon in writing.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder.
"Contracts" mean all contracts, agreements, indentures, licenses,
leases, commitments, plans, arrangements, sales orders and purchase orders of
every kind, whether written or oral.
"Damages" mean losses, liabilities, obligations, penalties, costs,
damages, claims and expenses (including reasonable costs of investigation and
attorneys' fees and disbursements).
"Equipment" means all of the furniture, fixtures, furnishings,
machinery, automobiles, trucks, spare parts, tools, supplies, equipment and
other tangible personal property owned by Rent-It and used in connection with
the Business.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
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"ERISA Affiliate" means Rent-It and each corporation, partnership or
other trade or business, whether or not incorporated, which is or has been
treated as a single employer or controlled group member with Rent-It pursuant to
Code Section 414 or ERISA Section 4001.
"Environmental Law" has the meaning given in Section 3.18(c).
"Facilities" shall mean the rental yards, stores, offices, maintenance
and storage facilities, shops, warehouses, improvements, other structures, and
all real property and related facilities which are owned or leased by Rent-It
and located at 955 West 2100 South and 000 Xxxx 0000 Xxxxx, Xxxx Xxxx Xxxx,
Xxxx.
"Financial Statements" means those financial statements of Rent-It
referred to in Section 3.6.
"Governmental Authority" means any agency, instrumentality,
department, commission, court, tribunal or board of any government, whether
foreign or domestic and whether national, Federal, state, provincial or local.
"Inventory" means all of Rent-It's inventory held for resale and all
of Rent-It's new repair or replacement parts, supplies and packaging items and
similar items with respect to the Business, in each case wherever the same may
be located.
"Laws" mean laws, rules, regulations, codes, orders, ordinances,
judgments, injunctions, decrees and policies.
"Liabilities" mean debts (including interest thereon and any
prepayment penalties applicable thereto), liabilities, claims, obligations,
duties and responsibilities of any kind and description, whether absolute or
contingent, monetary or non-monetary, direct or indirect, known or unknown,
matured or unmatured, or of any other nature.
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"Lien" means any security interest, lien, mortgage, claim, charge,
pledge, restriction, equitable interest or encumbrance of any nature.
"Material" with respect to Rent-It means an event, change or effect
substantially related to the condition (financial or otherwise), operations or
prospects of the Business of Rent-It as currently conducted.
"Material Adverse Effect" means an event, change or effect that
substantially and adversely affects the condition (financial or otherwise),
operations or prospects of the Business of Rent-It, as currently conducted.
"Net Current Position" means with respect to Rent-It the difference
between the current assets (including all accrued but unbilled revenues) and
current liabilities (excluding the current portion of long-term debt) of Rent-It
on the Closing Date. For purposes of calculating the Net Current Position,
accounts receivable of Rent-It that are less than 90 days old on the Effective
Date shall be valued at 100% of their face value, and accounts receivable that
are over 89 days old shall be valued at 90% of their face value.
"Permits and Licenses" mean those municipal, state and federal
consents, orders, filings, franchisees, permits, licenses, agreements, waivers
and authorizations used in Rent-It's Business, including those listed on
Schedule 3.18.
"Person" means any natural person, corporation, trust, business trust,
joint venture, association, company, firm, partnership, limited liability
company or other entity or Governmental Authority.
"Plan" has the meaning given in Section 3.22.
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"Proportionate Share" with respect to Rent-It means, for each
Shareholder, that Shareholder's percentage interest in the capital stock of the
Rent-It, determined by dividing the number of shares of capital stock of Rent-It
held by that Shareholder by the number of Shares of Rent-It.
"Proprietary Right" means any trade name, trademark, trade secret,
know-how, service xxxx, patent or copyright and any application for any of the
foregoing.
"Rental Equipment" means all Equipment held by Rent-It for rental on a
commercial or consumer basis.
"Returns" mean all returns, declarations, reports, forms, estimates,
information returns and statements required to be filed with or supplied to any
Governmental Authority in connection with any Taxes.
"Shares" mean all of the issued and outstanding shares of common
stock of Rent-It.
"Taxes" mean all taxes, charges, fees, levies, customs, duties or
other assessments, including, without limitation, income, gross receipts,
excise, real and personal property, sales, transfer, license, payroll and
franchise taxes imposed by any Governmental Authority and shall include any
interest, penalties or additions to tax attributable to any of the foregoing.
As used in this Agreement, the terms "to the knowledge," "known to,"
and other phrases of like substance are to be broadly construed (i) to include
the knowledge of Rent-It and the Shareholders, and (ii) to represent that Rent-
It and the Shareholders have caused a thorough inquiry and investigation to be
made into the matter represented to be true.
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SECTION 2. Transfer of Shares and Payment of Purchase Price.
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2.1 Transfer of Shares. Based upon and subject to the terms,
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agreements, warranties, representations and conditions of this Agreement, the
Shareholders hereby agree to sell, convey, transfer, assign and deliver to Buyer
on the Closing Date, and Buyer hereby agrees to buy and accept on the Closing
date, all of the Shares of Rent-It held by the Shareholders.
2.2 Amount of Purchase Price. The total consideration (the "Purchase
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Price") to be paid by Buyer for the Shares shall be $4,500,000 (plus or minus
any Purchase Price adjustment as provided in paragraph 2.4).
2.3 Payment of Purchase Price. On the Closing Date, Buyer shall pay
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to the Shareholders in accordance with their Proportionate Share the Purchase
Price described in Section 2.2 less $250,000 (which shall be held back subject
to the provisions of Section 2.4) by means of a wire transfer of immediately
available funds to the account number and depository previously designated by
each Shareholder (or otherwise as directed by each Shareholder), except that
Xxxxxxx Xxxxxxx, as trustee of the Xxxxxxx X. Xxxxxxx Trust, shall receive a
convertible note in the principal amount of $300,000 in the form of Exhibit A
attached in lieu of $300,000 of cash Purchase Price.
2.4 Purchase Price Adjustment. The Purchase Price described in Section
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2.2 shall be adjusted as follows:
(a) Long-Term Debt. The amount shall be reduced by the amount of the
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long-term debt (including the current portion and any prepayment penalties
applicable thereto) of Rent-It on the Closing Date;
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(b) Purchases and Sales. The amount shall be increased by the
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purchase price of Equipment acquired by Rent-It after October 13, 1997, and
reduced by the sales price of Equipment of Rent-It sold after October 13, 1997
(provided that no purchase or sale described in this paragraph (b) that exceeds,
in the aggregate or individually, more than $25,000 shall have occurred unless
approved in advance by Buyer);
(c) Net Current Position. The amount shall be increased or decreased
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as follows.
Schedule 2.4 hereto sets out the projected Net Current Position of
Rent-It at the Closing Date (the "Projected Net Current Position"), which the
Shareholders represent has been prepared on a basis consistent with the Balance
Sheet referred to in Section 3.6, other than as specifically set forth in this
Agreement. The consideration to be paid to the Shareholders set out in Section
2.2 shall be increased by the amount shown as a positive balance on Schedule
2.4, or decreased by the amount shown as a negative balance on that schedule.
Promptly following the Closing Date (but in any event no later than 90 days
after the Closing Date) Rent-It shall prepare a schedule showing the actual Net
Current Position of Rent-It at the Closing Date (the "Closing Net Current
Position"). Buyer shall review the Closing Net Current Position and make any
adjustments it considers appropriate. The Closing Net Current Position with
such adjustments, if any, shall be given to the Shareholders. The Shareholders
shall have a period of 30 days after receipt of the Closing Net Current Position
to give to Buyer a notice (an "Objection Notice") specifying in reasonable
detail any objections they may have to the Closing Net Current Position. If an
Objection Notice is not given by the Shareholders within such 30-day period,
then the Closing Net Current Position shall be accepted as final, binding and
conclusive on the parties
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hereto. If an Objection Notice is given by the Shareholders within such 30-day
period, the Shareholders and Buyer shall attempt to reconcile such items as are
in dispute. If the Shareholders and Buyer are unable to reconcile all such
items within 30 days after the date on which the Objection Notice is given, then
such items as remain in dispute shall be determined in accordance with the
principles set forth in this Section 2.4 by a representative of a firm of
independent public accountants designated by a representative of the
Shareholders and a representative of Buyer. The determination of the items in
dispute shall be final, binding and conclusive on the parties hereto. The fees
and expenses of the designated accounting firm mentioned above shall be shared
equally by the Shareholders and the Buyer. In the event that the Closing Net
Current Position is greater than the Projected Net Current Position, the Buyer
shall pay to the Shareholders the amount of such excess in accordance with their
Proportionate Share. In the event that the Closing Net Current Position is less
than the Projected Net Current Position, the amount of such shortfall shall be
deducted from the amount withheld from the Purchase Price at Closing or, if such
amount is insufficient, the Shareholders shall pay to the Buyer the amount of
such shortfall (or the Buyer may offset amounts owed the Shareholders as
provided in Section 10.4), all in accordance with the Shareholders'
Proportionate Share.
(d) Equipment Adjustment. Schedule 3.10(a) sets forth the asset
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description, make, model, original cost and net book value of all Rental
Equipment that Seller owns as of the Closing Date. On or prior to 45 days
following the Closing Date, personnel of Seller and Buyer shall verify the
existence and condition of the Rental Equipment listed on said schedule as
necessary to inspect such Rental Equipment. Based on the physical inventory
inspection, Buyer shall be entitled to reduce the Purchase Price for each item
of Rental Equipment that is either
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missing or unavailable for rental due to Seller's failure to perform preventive
maintenance on said item of Rental Equipment in the ordinary course of business.
The value of each piece of Rental Equipment that is missing and the cost to
repair each piece of equipment that is unavailable for rental due to Seller's
failure to perform preventive maintenance in the ordinary course of business
shall be aggregated. If the aggregate value of all missing and unavailable
Rental Equipment is less than $50,000, Buyer shall make no adjustment to the
Purchase Price. If the aggregate value of said items exceeds $50,000, Buyer
shall adjust the Purchase Price by an amount which equals the total aggregate
cost of said items, less $50,000. Buyer shall make any adjustment no later than
90 days after the Closing Date, and shall be entitled to retain a portion of the
amount held back under Section 2.3, above, equal to said adjustment. For
purposes of valuing missing or unavailable Rental Equipment, the personnel of
Buyer and Seller shall agree upon a value, or if they cannot agree, an
independent third party mutually acceptable to both parties or an arbitrator, as
provided by Section 15.4, shall determine the appropriate value to be used in
computing any adjustment under this paragraph 2.4(d).
(e) Timing. Purchase price adjustments under this Section 2.4 shall
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be completed within 90 days after the Closing Date, and the amount held back
under Section 2.3, reduced by amounts described in paragraphs (a) through (d),
or the subject of indemnification claims under Section 10 hereof, shall be
released to the Shareholders in accordance with their Proportionate Share on or
before 180 days after the closing Date. Interest at an annual rate of seven
percent shall be paid on all amounts paid to the Shareholders under this
paragraph (e) from the Closing Date to the date such amounts are paid.
Notwithstanding the foregoing, Buyer shall not be limited to the held back
amount as its sole remedy in the event that any Purchase Price
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adjustment or indemnification exceeds the held back amount. In such event,
Buyer shall have the right to collect promptly from Shareholders, in cash, the
amount of such excess.
SECTION 3. Representations and Warranties of Rent-It and the
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Shareholders. The Shareholders hereby jointly and severally warrant and
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represent to and agree with Buyer as follows:
3.1 Organization and Authorization. Rent-It is a corporation duly
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organized, validly existing and in good standing under the laws of Utah, has
full power and authority to own, lease and operate its properties and assets and
to conduct its Business as now being conducted. Rent-It owns, leases and
operates properties, and conducts business only in the State of Utah. Rent-It
is qualified or licensed to do business only in the State of Utah. This
Agreement has been, and the other agreements, documents required to be delivered
by Rent-It and the Shareholders in accordance with the provisions hereof will
be, duly executed and delivered on behalf of Rent-It and the Shareholders and
constitute the valid and binding obligation of Rent-It and the Shareholders,
enforceable against them in accordance with their respective terms.
3.2 Articles of Incorporation; By-Laws; Minute Books. True and
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complete copies of the Articles of Incorporation and By-Laws, as amended, to and
including the date hereof, of Rent-It have been delivered to Buyer. The minute
books, stock books and stock transfer records of Rent-It, true and complete
copies of which have been delivered to Buyer, contain true and complete minutes
and records of all issuances and transfers of Shares of Rent-It and of all
minutes and records of all meetings, consents, proceedings and other actions of
the Shareholders, board of directors and committees of the board of directors of
Rent-It since the date of its incorporation.
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3.3 No Liens - No Violations. Except as provided on Schedule 3.3, no
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consent of any lender, trustee or other Person is required for Rent-It or the
Shareholders to enter into and deliver this Agreement or to consummate the
transactions contemplated hereby, nor does any Contract, mortgage or other
instrument to which Rent-It or any of the Shareholders is a party or by which
Rent-It or any of the Shareholders is bound or affecting any of its or his
properties conflicts with or restricts the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby. The
Shares are owned of record and beneficially by the Shareholders and are not
subject to any Lien or to any restriction on their transfer.
3.4 Authorized Capitalization. The authorized capital stock of Rent-
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It consists solely of 500,000 shares of common stock, with $1.00 par value, of
which 102,680 shares are issued and outstanding. All Shares of Rent-It are
validly issued and outstanding, fully paid and nonassessable, and are owned
beneficially and of record by the Shareholders. There are no outstanding
warrants, options or rights (preemptive or otherwise) or other securities, plans
or agreements that give the holder or any other Person the right to purchase or
otherwise acquire (whether from Rent-It, the Shareholders, or an Affiliate of
Rent-It or the Shareholders) any Shares of Rent-It or any securities convertible
into, or exchangeable or exercisable for, Shares or under which any such
warrant, option, right or security may be issued in the future.
3.5 Subsidiaries; Investments; Affiliate Notes. Rent-It has no
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directly or indirectly owned subsidiaries and, except as set forth on Schedule
3.5 hereto, has made no advances to or investments in, and does not own any
securities of or other interests in, any Person. Schedule 3.5 contains a list
of all notes held by Rent-It issued by the Shareholders or any Affiliate of the
Shareholders.
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3.6 Financial Statements. Annexed hereto as Schedule 3.6 are (a)
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unaudited financial statements of Rent-It for the three month period ended
September 30, 1997, including the balance sheet of Rent-It as of the Balance
Sheet Date (the "Balance Sheet") and (b) compiled financial statements of Rent-
It as of and for the fiscal years ended June 30, 1995, 1996 and 1997. The
financial statements referred to in the preceding sentence are referred to
collectively as the "Financial Statements." The Financial Statements in each
case have been prepared on an accrual basis of accounting consistently applied
throughout the periods covered thereby and fairly present the financial
condition, results of operations and cash flows of Rent-It as of, or for the
period ended on, their respective dates (subject in the case of interim
financial statements to normal year-end adjustments). Since the Balance Sheet
Date, Rent-It has conducted its Business in a consistent manner without change
of policy or procedure including, without limitation, its practices in
connection with the treatment of revenue recognition, capitalization policies,
reserves and expenses.
3.7 Records and Books of Account. Since January 1, 1996, the records
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and books of account of Rent-It have been regularly kept and maintained on an
accrual basis of accounting consistently applied.
3.8 Liabilities. On the Balance Sheet Date, there were no
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Liabilities of Rent-It that would have been required by an accrual basis of
accounting to be included on the balance sheet of Rent-It as of such date other
than those Liabilities (including, without limitation, product liabilities)
disclosed or provided for on the Balance Sheet or those described in Schedule
3.8. To the knowledge of the Shareholders, there are no other Liabilities of
Rent-It except (i) those incurred since the Balance Sheet Date in the ordinary
course of business consistent with past
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practice and not in violation of or in conflict with any of the terms,
agreements, warranties, representations and conditions of the Shareholders
contained in this Agreement, (ii) those set forth on Schedule 3.8 hereto and
(iii) those which would not, individually or in the aggregate, have a Material
Adverse Effect on Rent-It.
3.9 Title to Assets; Liens and Encumbrances. Rent-It is the owner
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of, and has good and marketable title to, or a valid leasehold interest in, or
has the legally enforceable right to use in its Business, all of the assets,
properties and rights currently used in the operation of the Business of Rent-
It, free and clear of all Liens except for the Liens, if any, set forth on the
Balance Sheet or on Schedule 3.9 hereto. The assets, properties and rights
referred to in the preceding sentence include, without limitation, all assets,
properties, rights and Business of Rent-It shown or reflected on the Balance
Sheet or acquired by Rent-It since the Balance Sheet Date. Rent-It owns or has
the legally enforceable right to use in its Business all of the assets used by
it in the operation and conduct of its Business, or required by it for the
normal conduct of its Business, except for those assets leased under leases
specifically identified on Schedule 3.11 or 3.12 hereto.
3.10 Tangible Assets. Schedule 3.10(a) contains a list of all of the
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Equipment owned, leased or otherwise held by Rent-It and used in the Business,
including its description, make, model, original cost and net book value, other
than Equipment whose value is not material to Rent-It and for which the
information described in this sentence is not reasonably available. Schedule
3.10(b) also contains a list of all of the Inventory owned, leased or otherwise
held by Rent-It and used in the Business. Schedule 3.10(c) contains a list of
all other tangible assets of Rent-It. All of the Inventory is located at the
Facilities. The values at which the Equipment are
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shown on the Balance Sheet have been determined on an accrual basis of
accounting consistently applied throughout the periods covered by the Financial
Statements. All tangible (other than real property) assets are listed on
Schedule 3.10(a), (b), or (c) and are either owned by Rent-It or leased under an
agreement reflected on Schedule 3.11 or 3.12. All Equipment, Inventory and
other tangible assets are merchantable, fit for the purpose for which it was
procured and are usable in the ordinary course of business, in good working
order and condition, normal wear and tear excepted, and are in conformity with
all applicable Laws.
3.11 Facilities.
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(a) Each parcel of real property owned or leased by Rent-It, including
the legal description and address thereof, is listed on Schedule 3.11(a), and
copies of all deeds, purchase documents, mortgages, other encumbrances and title
insurance policies or lawyer's title opinions relating to such parcels have been
provided to Buyer. Rent-It or its lessor, has good and marketable title to the
real property, and such real property is subject only to normal easements and
restrictions that do not interfere with Rent-It's current use and intended
future use of the real estate.
(b) Except for the lease of the Facility described on Schedule 3.11,
Rent-It does not lease any real property. Rent-It enjoys peaceful and
undisturbed possession of the leased premises.
(c) The Facilities and the improvements thereon, including without
limitation all Equipment (including all fixtures) and other tangible assets
owned, leased or used by Rent-It at the Facilities are insured to the extent and
manner customary in the industry, are sufficient for the operation of the
Business as presently conducted and are in conformity, in all Material
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respects, with all applicable laws, ordinances, orders, regulations and other
requirements currently in effect. None of the improvements is subject to any
commitment or other arrangement for their sale or use by any Affiliate of Rent-
It or third parties.
3.12 Leased Assets. Schedule 3.12 sets forth a true and complete
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list of each lease of assets including, without limitation, motor vehicles,
executed by or binding upon Rent-It as lessee or sublessee (the "Leased
Assets"), setting forth in each case rental payable thereunder and the term
(including any extensions available) thereof. Except as set forth on Schedule
3.12, each such lease is in full force and effect without any default or breach
thereof by Rent-It or any other party thereto. Except as set forth on Schedule
3.12, no consent of any lessor or any other party is required under any such
lease by reason of or in connection with the transfer of the Leased Assets to
Buyer as provided for in this Agreement and to keep such lease in full force and
effect after the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby. True and complete copies of all leases
required to be listed on Schedule 3.12, including all amendments, addenda,
waivers and all other binding documents affecting the lessee's rights
thereunder, have heretofore been provided to Buyer.
3.13 Trademarks, Service Marks, Trade Names, Patents and Copyrights.
--------------------------------------------------------------
Schedule 3.13 hereto sets forth a true and complete list of all Proprietary
Rights used by Rent-It in the conduct of its Business. Each such Proprietary
Right is owned or licensed by Rent-It and is not subject to any royalty
arrangement or dispute. To the knowledge of Rent-It and the Shareholders, no
other Proprietary Rights are used in Rent-It's Business as now conducted. No
claim has been asserted or, to the knowledge of Rent-It and the Shareholders,
threatened, by any
15
Person with respect to the ownership, validity, license or use of, or any
infringement resulting from, any of the Proprietary Rights used by Rent-It.
3.14 Contracts; Customers. Schedule 3.14(a) contains a list of all
--------------------
distribution, agency, franchise, license, sales or commission contracts to which
Rent-It is a party or by which it is bound. Schedule 3.7(b) contains a list of
all other Contracts not made in the ordinary course of business of Rent-It, and
other Contracts involving expenditures or Liability, actual or potential, in
excess of $1,000 or otherwise Material to Rent-It to which Rent-It is a party or
by which it is bound. Schedules 3.14(a) and (b) hereto contain a true and
complete description of the terms and conditions of each Contract on each such
schedule to which Rent-It is a party or to which it is subject or by which it is
bound that is not in writing.
A true and complete copy of all Contracts listed on Schedules 3.14(a)
and (b) has heretofore been provided to Buyer by Rent-It. Except as set forth
on Schedules 3.14(a) and (b), no Contract to which Rent-It is a party or to
which it is subject or by which it is bound conflicts with, would be terminated
by, would be breached as a result of, would be materially modified or changed
by, or requires the consent of any other Person by reason of, the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby, other than such Contracts the loss of which, individually or in the
aggregate, would not have a Material Adverse Effect on Rent-It, or the loss of
which would involve a loss of less than $1,000 ("Immaterial Contracts"). Each
of the Contracts to which Rent-It is a party or to which it is subject or by
which it is bound (including, without limitation, those set forth on Schedules
3.14(a) and (b) hereto) is a valid and subsisting Contract of all of the parties
thereto in full force and effect without modification, other than Immaterial
Contracts. Rent-It has performed all obligations
16
required to be performed by it and is not in default under any Contract,
instrument or other document to which it is a party or to which it is subject or
by which it is bound, and no event has occurred thereunder which, with or
without the lapse of time or the giving of notice, or both, would constitute a
default by it thereunder, other than Immaterial Contracts.
Schedule 3.14(c) is a list of all Customers of Rent-It who have
incurred charges of at least $1,000 in the last 12 months. None of such
customers has canceled or substantially reduced service or has given notice that
it intends to cancel or substantially reduce service.
3.15 Labor Relations; Employees. There are no labor strikes,
--------------------------
disputes, slow downs, work stoppages or other labor troubles or grievances
pending or, to the Shareholders' knowledge, threatened against Rent-It. No
unfair labor practice complaint before the National Labor Relations Board, no
charges pending before the Equal Employment Opportunity Commission and no
complaint, charge or grievance of any nature before any similar or comparable
Governmental Authority, in any case relating to Rent-It or the conduct of its
business, is pending or, to the knowledge of the Shareholders, threatened.
Rent-It has not received notice, nor has any knowledge, of the intent of any
Governmental Authority responsible for the enforcement of labor or employment
laws to conduct any investigation of or relating to such corporation or the
conduct of its Business. To the knowledge of the Shareholders, no officer or
key employee of Rent-It, other than Xxxxxx Xxxxxxx and Xxxx Xxxxxxx, has any
plan to terminate his or her employment with Rent-It. Schedule 3.15 is a true
and correct list of all employees of Rent-It as of Balance Sheet Date, by job
classification, their respective rates of compensation and all perquisites
provided to each such employee (i.e., company car, etc.).
----
17
3.16 Legal Proceedings. Except as set forth on Schedule 3.16 hereto,
-----------------
there are no Actions (whether or not purportedly on behalf of Rent-It) pending
or, to the knowledge of the Shareholders, threatened against Rent-It or any of
its properties, rights or Business. No Action involving negligence or strict
liability has ever been instituted or, to the knowledge of the Shareholders,
threatened against Rent-It. Rent-It is not in default with respect to any
order, writ, injunction or decree of any Governmental Authority. None of the
Actions referred to on Schedule 3.16, individually or in the aggregate, will
have a Material Adverse Effect on Rent-It.
3.17 Orders, Decrees, Etc. There are no orders, decrees,
--------------------
injunctions, rulings, publications, decisions, directives, consents,
pronouncements or regulations of any court or any Governmental Authority issued
against, or, to the knowledge of the Shareholders, binding on, Rent-It which do
or may affect, limit or control Rent-It's method or manner of doing business,
except for laws, statutes, ordinances, orders and regulations that affect all
similarly situated businesses.
3.18 Compliance With Law; Permits and Licenses.
------------------------------------------
(a) Rent-It has complied and is in compliance with all Laws of any
Governmental Authority applicable to it, and to its assets, property and its
operations, including, without limitation, Laws relating to zoning, building
codes, licensing, permits, antitrust, occupational safety and health,
environmental protection and conservation, water or air pollution, toxic and
hazardous waste and substance control, consumer product safety, product
liability, hiring, wages, hours, employee benefit plans and programs, collective
bargaining and withholding and social security taxes, other than any failure to
comply that, individually or in the aggregate, will not result in any Material
Liability or have a Material Adverse Effect on Rent-It.
18
(b) Rent-It presently holds all the permits, licenses and franchises
that are necessary for or Material to its current and known future use,
occupancy or operation of its assets or properties or the conduct of the
Business; and no notice of violation of any applicable zoning regulations,
ordinances or other similar Laws binding on Rent-It with respect to its assets,
properties or business has been received by Rent-It, the Shareholders or any of
their agents or affiliates. Schedule 3.18(b) lists all permits, licenses and
franchises held by Rent-It.
(c) Other than as set forth on Schedule 3.18(c) hereto, Rent-It has
not violated nor is alleged to have violated, nor is in violation of, any
Environmental Law, nor has released, treated, stored, disposed of or
transported, or arranged or contracted for the release, treatment, storage,
disposal or transportation of any Hazardous Substance in violation of any
Environmental Law. There are no Hazardous Substances located at, in, on, within
or under the surface of Rent-It's Assets, properties or Facilities in Material
violation of applicable Environmental Law. Other than as set forth on Schedule
3.18(c) hereto, neither the Shareholders nor Rent-It has received, or has any
knowledge of, any request for information, notice of claim, demand, lawsuit,
action or other notification from any Governmental Authority or any third party
that they or it may be responsible for any threatened or actual release of
Hazardous Substances, or be in violation of or in noncompliance with any
Environmental Law, and neither the Shareholders nor Rent-It is subject to any
agreement, consent, decree, administrative order, notice or enforcement action
brought under any Environmental Law. For purposes of this paragraph 3.18(c),
"Environmental Law" means any applicable Federal, state, local or Indian law,
rule, regulation, ordinance, program, permit, guidance, order, consent, decree
or notice of violation pertaining to the protection of natural resources, the
environment and the health and safety of employees and the
19
general public; and "Hazardous Substances" means any material, chemical,
compound, mixture, substance or waste which is regulated by any Governmental
Authority having jurisdiction over any premises, including, but not limited to
(a) any oil or petroleum compounds, flammable substances, explosives,
radioactive materials or any other materials or pollutants which pose a hazard
to the premises or to any persons on or about the premises or which cause
premises to be in violation of any legal requirements, (b) asbestos, (c)
polychlorinated biphenyls, (d) and any materials or substance designated as
hazardous substances, pursuant to Section 311 of the Clean Waters Act, 33 USC
Section 1251, (e) economic poison as defined in the Federal Insecticide,
Fungicide and Rodenticide Act. 7 USC Section 135, (f) new chemical substance or
mixture pursuant to 3, 6, 7 of the Toxic Substance Control Act, 15 USC Section
2601, (g) hazardous substances pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation, and Liability Act 42 USC Section 9601 and
(h) hazardous substances pursuant to section 1004 of Resource Conservation and
Recovery Act, 42 USA Section 6901.
(d) Except as set forth on Schedule 3.18(d), there is not now and has
not been at any time in the past any underground or above-ground storage tank or
pipeline at any Facility where the installation, use, maintenance, repair,
testing, closure or removal of such tank or pipeline was not in compliance with
all Environmental Laws and there has been no release from or rupture of any such
tank or pipeline, including without limitation any release from or in connection
with the filling or emptying of such tank.
3.19 Changes Since December 31, 1996. Except as set forth on
-------------------------------
Schedule 3.19 hereto, since December 31, 1996, Rent-It has not (i) incurred any
Liability, except current liabilities in the ordinary course of business
consistent with past practice and Liabilities incurred under
20
Contracts entered into in the ordinary course of business consistent with past
practice; (ii) discharged or satisfied any Lien or paid any Liability, other
than current liabilities shown on the Balance Sheet and current liabilities
incurred since the Balance Sheet Date in the ordinary course of business
consistent with past practice; (iii) sold or transferred any Material Assets or
written off any Accounts Receivable, except for the collection of Accounts
Receivable in the ordinary course of business; (iv) mortgaged, pledged or
subjected to any other Lien of its Assets or properties, other than Liens
reflected on the Balance Sheet or as set forth on Schedule 3.9; (v) suffered any
losses or waived any rights of substantial value; (vi) granted any bonuses or
commissions or increased the compensation payable to any of its employees,
directors or officers or increased the aggregate payment of any fees except for
customary bonuses and regular salary increases made in accordance with Rent-It's
past practices as summarized on Schedule 3.19 or in accordance with the employee
benefit plans described on Schedule 3.22; (vii) made any loans to any
individuals, firms, corporations or other entities; (viii) declared, made, set
aside or paid any dividend, distribution or payment on, or any purchase or
redemption of, any Shares or any commitment therefor, other than as described on
Schedule 3.19; (ix) made any Material change in any method of accounting (for
book or tax purposes), or (x) entered into any transaction not in the ordinary
course of business or agreed (whether or not in writing) to do any of the
foregoing. From January 1, 1997, the Business of Rent-It has been operated only
in the regular and ordinary course consistent with past practice.
3.20 No Material Adverse Change. Since June 30, 1997, there has not
--------------------------
been any Material adverse change in the condition (financial or otherwise),
Business, prospects of the Business as currently conducted, or operations, of
Rent-It, nor has there been any damage,
21
destruction or loss to property owned by Rent-It, whether or not covered by
insurance, that, individually or in the aggregate, has or will have a Material
Adverse Effect on the assets or Business of Rent-It.
3.21 Capital Projects and Expenditures. All capital expenditures of
---------------------------------
Rent-It since June 30, 1997, are listed on Schedule 3.21 hereto. In addition,
all capital projects and capital expenditures committed for or undertaken by
Rent-It that have not been completed by the Closing Date as well as the terms of
any and all financing arranged in connection therewith and details for payments,
if any, made with respect thereto, are set forth on Schedule 3.21 hereto, which
also describes all capital commitments of Rent-It that will survive the Closing.
Except as set forth on such Schedule 3.21, from June 30, 1997, to the date
hereof, Rent-It has not made any additional expenditures or additional
commitments for capital expenditures.
3.22 Employee Benefits.
-----------------
(a) Except for the plans of Rent-It set forth on Schedule 3.22 hereto
(the "Plans"), neither Rent-It nor any of its ERISA Affiliates maintains or
contributes to or has any liability with respect to any "employee benefit plan"
as that term is defined in Section 3(3) of ERISA, or any other bonus, incentive,
compensation, profit sharing, stock, severance, retirement, health, life,
disability, group insurance, vacation, holiday, fringe benefit, employment,
stock option, stock purchase, stock appreciation right, supplemental
unemployment, layoff or consulting plan, agreement, policy or understanding
(whether written or oral, qualified or nonqualified, currently effective or
terminated). True and complete copies of all the Plan documents and summary
plan descriptions have been furnished to Buyer (along with all related trust
agreements, insurance contracts or other funding agreements which implement each
Plan,
22
and all other documents, records or other materials related thereto reasonably
requested by Buyer).
(b) With respect to each Plan, the requirements of ERISA, the Code
(including, without limitation Part 6 of Subtitle B of Title I of ERISA and
Sections 105(h) and 4980B of the Code) and all other applicable laws have been
fulfilled in all respects, and copies of all filings with the Internal Revenue
Service and the Department of Labor or other applicable Governmental Authority
for the three most recent plan years for the Plans have been furnished to Buyer.
No written or oral representations have been made to any employee or former
employee of Rent-It promising or guaranteeing any employer payment or funding
for the continuation of medical, dental, life or disability coverage for any
period of time beyond the end of the current plan year (except to the extent of
coverage required under Section 4980B of the Code).
(c) Neither Rent-It nor any ERISA Affiliate has ever (i) maintained or
contributed to any plan subject to Section 412 of the Code and Section 302 of
ERISA or (ii) contributed to any "multi-employer plan," as such term is defined
in Section 3(37) of ERISA, and neither Rent-It nor any ERISA Affiliate has
effected either a "complete withdrawal" or a "partial withdrawal," as those
terms are defined in Sections 4203 and 4205, respectively, of ERISA, from any
such multi-employer plan.
(d) Except as set forth on Schedule 3.22 hereto, at the Balance Sheet
Date and at the date hereof, there was no bonus, profit sharing, incentive,
commission or other compensation of any kind with respect to work done prior to
the Balance Sheet Date or the date hereof due to or expected by present or
former employees of Rent-It not paid prior to such date
23
or, with respect to compensation for work done prior to the Balance Sheet Date,
not fully accrued on the Balance Sheet.
(e) Each Plan that is an "employee pension benefit plan" (as defined
in Section 3(2) of ERISA) meets the requirements of a "qualified plan" under
Section 401(a) of the Code in form and in operation, and such Plan, and each
trust (if any) forming a part thereof, has received a favorable determination
letter, or a favorable determination letter has been applied for, from the
Internal Revenue Service as to the qualification under the Code of such Plan and
the tax-exempt status of such related trust, and nothing has occurred since the
date of such determination letter, or request therefor, that could reasonably be
expected to adversely affect the qualification of such Plan or the tax-exempt
status of such related trust.
(f) There are no unfunded liabilities existing under any Plan, and,
subject to compliance with applicable notice requirements under ERISA and state
laws, each Plan could be terminated promptly following the Closing Date with no
liability to Buyer, Rent-It, any ERISA Affiliate or any Person that is under
common control, or is treated as a single employer, with Buyer under Section 414
of the Code or ERISA Section 4001.
(g) With respect to each Plan (i) there have been no non-exempt
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 liability
for breaching of fiduciary duty or any other failure to act or comply in
connection with the administration or investment of assets in such Plan, and
(iii) no actions, investigations, suits or claims with respect to the assets
thereof (other than routine claims for benefits) are pending or, to the
knowledge of the Shareholders,
24
threatened, and the Shareholders have no knowledge of any facts that would give
rise to or could reasonably be expected to give rise to any such actions, suits
or claims.
3.23 Governmental Approvals. To the knowledge of the Shareholders,
----------------------
no governmental authorization, approval, order, license, permit, franchise or
consent and no registration, declaration or filing by Rent-It or the
Shareholders with any Governmental Authority is required in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
3.24 Tax Matters.
-----------
(a) Rent-It (the "Taxpayer") has duly and timely filed all Returns
required to be filed by it. Rent-It is not currently the beneficiary of any
extension of time within which to file any Return. No claim has ever been made
by an authority in a jurisdiction where Rent-It does not file Returns that it is
or may be subject to taxation by that jurisdiction. All Returns filed by the
Taxpayer were correct and complete in all material respects. The Taxpayer has
paid in full all Taxes (whether or not shown on a Return) required to be paid by
the Taxpayer before such payment became delinquent. Rent-It has made adequate
provision in the Financial Statements, in conformity with an accrual method of
accounting, for the payment of all accrued Taxes not yet payable as of the
respective dates of such Financial Statements. All Taxes that the Taxpayer has
been required to collect or withhold have been duly collected or withheld and,
to the extent required when due, have been or will be duly and timely paid to
the proper taxing authority.
(b) There are no audits, inquiries, investigations or examinations
relating to any of the Taxpayer's Returns pending or threatened, and there are
no claims that have been or may be asserted relating to any of the Taxpayer's
Returns filed for any year which if determined
25
adversely would result in the assertion by any Governmental Authority of any Tax
deficiency against the Taxpayer. There have been no waivers or extensions of
statutes of limitations with respect to Taxes by the Taxpayer, or any agreements
to extend the time with respect to a Tax assessment or deficiency.
(c) Rent-It is not a party to any tax-sharing Contract or similar
arrangement with any Person. Rent-It has not made a disclosure on a Return
pursuant to Code Section 6662(d)(2)(B)(ii) and the Regulations thereunder.
(d) Rent-It has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, Shareholders or other third party.
(e) Rent-It has not been a member of an affiliated group filing
consolidated Federal income tax returns, or has any liability for Taxes of any
other person under Treasury Regulation section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract, or otherwise.
(f) Rent-It has not filed a consent under Code Section 341(f)
concerning collapsible corporations.
(g) Rent-It is not obligated to make any payments and is not a party
to any agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Code Section 280G.
3.25 Insurance Coverage. Schedule 3.25 hereto describes each
------------------
insurance policy (specifying the insured, the insurer, the amount of coverage,
the type of insurance, the policy number, the expiration date, the annual
premium, and any pending claims thereunder) maintained
26
by Rent-It. Rent-It is not in default in any Material respect with respect to
any provisions contained in any such insurance policy, and has not failed to
give any notice or present any presently existing Material claims under any such
insurance policy in due and timely fashion.
3.26 Preservation of Property. Between October 13, 1997 and the
------------------------
Closing Date, without Buyer's express prior written consent, Rent-It shall not
sell, assign, transfer, mortgage, hypothecate, or otherwise dispose of or
encumber any of the assets of Rent-It except for the disposition of Inventory in
the ordinary course of business. Buyer agrees that Buyer will not unreasonably
withhold written consent to a particular change and/or replacement of property
necessary for Rent-It either (i) to perform Rent-It's obligations under this
Agreement, or (ii) to conduct the operation of the Business between October 13,
1997 and the Closing Date, provided that such change or replacement does not
adversely affect the nature or quality or value of the Assets being purchased by
Buyer hereunder.
3.27 Accounts Receivable. Schedule 3.27 lists an aging report for
-------------------
Accounts Receivables (not including any accrued but unbilled revenues) as of
October 24, 1997. Accounts Receivable reflected in the Balance Sheet, and all
Accounts Receivable arising since the Balance Sheet Date, represent bona fide
claims of Rent-It against debtors for sales, services performed or other charges
arising on or before the date hereof, and all the goods delivered and services
performed which gave rise to said Accounts Receivable were delivered or
performed in accordance with the applicable orders, Contracts or customer
requirements.
3.28 Investment Representations.
--------------------------
(a) Each Shareholder who has elected to acquire a convertible note in
the form of Exhibit A (the "Notes"), and who will acquire the Buyer's Stock upon
conversion of the Notes,
27
is making such acquisitions for his or her own account for investment and not
for distribution, assignment or resale to others;
(b) Each such Shareholder understands that the issuance of the Notes
and the Buyer's Stock has not been registered under the Securities Act of 1933
(the "Act") in reliance upon an exemption therefrom for nonpublic offerings,
understands that the Notes and the Buyer's Stock may not be sold or otherwise
transferred unless such sale or other transfer is registered under the Act or an
exemption form registration is available (and a legend evidencing such
restrictions will be placed on the Notes and the Buyer's Stock), and understands
that Buyer is under no obligation to register the sale or other transfer of the
Notes or the Buyer's Stock;
(c) Each such Shareholder has sufficient knowledge and experience to
evaluate the merits and bear the economic risks of an investment in the Notes
and the Buyer's Stock;
(d) Each such Shareholder has been given the opportunity to ask
questions about Buyer's business and has had any such questions answered to his
satisfaction; and
(e) Each such Shareholder is an "accredited investor" as that term is
defined in Regulation D promulgated under the Act.
3.29 Representations and Warranties. The representations and
------------------------------
warranties contained in this Section 3 do not contain any untrue statement of a
fact or, to the knowledge of the Shareholders, omit to state a fact necessary in
order to make the statements made not misleading. There are no other facts or
circumstances known to the Shareholders not disclosed herein that may materially
and adversely affect the value of Rent-It's Assets or Business prospects.
28
SECTION 4. Representations and Warranties of Buyer. Buyer warrants
---------------------------------------
and represents to and agrees with Rent-It and the Shareholders as follows:
4.1 Good Standing. Buyer is a corporation duly organized, validly
-------------
existing and in good standing under the laws of Delaware.
4.2 Authorization. The execution and delivery of this Agreement and
-------------
the consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of Buyer, and all other corporate action of
Buyer, including all authorizations and ratifications, necessary to authorize
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, have been taken. This Agreement constitutes a
binding obligation of enforceable against Buyer in accordance with its terms.
No consent of any lender, trustee or security holder of Buyer, Buyer or any
other Person is required for Buyer to enter into and deliver this Agreement and
to consummate the transactions contemplated hereby.
4.3 Representations and Warranties. The representations and
------------------------------
warranties of Buyer contained in this Agreement do not contain any untrue
statement of a fact or omit to state a fact necessary in order to make the
statements made not misleading.
4.4 Governmental Approvals. No governmental authorization, approval,
----------------------
order, license, permit, franchise or consent and no registration, declaration or
filing by Buyer with any Governmental Authority is required in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
29
SECTION 5. Conditions of Buyer's Obligations to Close. The
------------------------------------------
obligations of Buyer under this Agreement are, at the option of Buyer, subject
to the conditions set forth below, which conditions may be waived by Buyer
without releasing or waiving any of its rights hereunder.
5.1 Agreements and Conditions. On or before the Closing Date, Rent-
-------------------------
It and the Shareholders shall have complied with and duly performed all
agreements and conditions on their part to be complied with and performed
pursuant to or in connection with this Agreement on or before the Closing Date.
5.2 Representations and Warranties. The representations and
------------------------------
warranties of Rent-It and the Shareholders contained in this Agreement, or
otherwise made in writing in connection with the transactions contemplated
hereby, shall be true and correct on and as of the Closing Date with the same
force and effect as though such representations and warranties had been made on
and as of the Closing Date.
5.3 No Legal Proceeding. No Action shall have been instituted or
-------------------
threatened to restrain or prohibit the acquisition by Buyer, and on the Closing
Date there are no Actions pending or threatened against the Shareholders or
Rent-It that involve a demand for any judgment or Liability, whether or not
covered by insurance, and that may result in any Material Adverse Effect on
Rent-It.
5.4 Deliveries. Buyer shall have received the deliveries to be made
----------
by Rent-It and the Shareholders pursuant to Section 7.
5.5 Legal Opinion. Buyer shall have received the favorable opinion
-------------
of Van Cott, Xxxxxx, Cornwall & XxXxxxxx substantially in the form of Exhibit A
attached hereto.
30
SECTION 6. Conditions of Rent-It's and the Shareholders' Obligation
--------------------------------------------------------
to Close. The obligations of Rent-It and the Shareholders under this Agreement
--------
are, at the option of Rent-It and the Shareholders, subject to the following
express conditions, which conditions may be waived by Rent-It and the
Shareholders without releasing or waiving any of the rights hereunder.
6.1 Agreements and Conditions. On or before the Closing Date, Buyer
-------------------------
shall have complied with and duly performed all of the agreements and conditions
on its part required to be complied with or performed pursuant to this Agreement
on or before the Closing Date.
6.2 Representations and Warranties. The representations and
------------------------------
warranties of Buyer contained in this Agreement, or otherwise made in writing in
connection with the transactions contemplated hereby, shall be true and correct
on and as of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date.
6.3 Deliveries. The Shareholders shall have received the deliveries to
-----------
be made by Buyer pursuant to Section 8.
6.4 No Legal Proceeding. No action shall have been initiated or
-------------------
threatened to restrain or prohibit the acquisition by Buyer and on the Closing
Date there are no actions pending or threatened against or affecting Buyer that
involve a demand for any judgment or liability, whether or not covered by
insurance, and that may result in any Material Adverse Effect on Buyer.
6.5 Legal Opinion. The Shareholders shall have received the
-------------
favorable opinion of Holme Xxxxxxx & Xxxx LLP, dated the Closing Date, and in
form and substance reasonably satisfactory to the Shareholders, to the effect
that the execution and delivery of this Agreement
31
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by Buyer, that this Agreement constitutes the valid and
binding obligation of Buyer and that Buyer is duly organized, validly existing
and in good standing under the laws of the State of Delaware.
SECTION 7. Deliveries of Rent-It and the Shareholders on the Closing
---------------------------------------------------------
Date. Rent-It and the Shareholders agree to deliver to Buyer on the Closing
----
Date the following:
7.1 Stock Certificates. Certificates representing all of the Shares
------------------
being acquired by Buyer hereunder, duly endorsed in blank for transfer or with
appropriate stock powers duly executed in blank.
7.2 Corporate Records. The stock books, minute books and corporate
------------------
seal of Rent-It.
7.3 Resignations. Written resignations of Rent-It's directors and
-------------
officers.
7.4 Consents. All consents required in connection with the execution
--------
and delivery of this Agreement and the transactions contemplated hereby.
7.5 Possession of Assets. Possession of the Assets and properties of
---------------------
Rent-It held by the Shareholders.
7.6 Lease Agreement. The Lease Agreement in the form attached as
----------------
Exhibit B.
7.7 Legal Opinion. The legal opinion of Van Cott, Xxxxxx, Cornwall &
--------------
XxXxxxxx, as described in Section 5.5.
7.8 Employment or Consulting Agreements. The Employment or
-----------------------------------
Consulting Agreements for Messrs. Burnett, Jensen, Guernsey and Xxxxxxx in the
forms of Exhibits C, D, E and F hereto.
7.9 Payoff Letters. Payoff letters from the creditors listed on
---------------
Schedule 7.6.
32
7.10 Revenue Agreement. The Revenue Agreement in the form of Exhibit
-----------------
G.
SECTION 8. Deliveries of Buyer on the Closing Date. Buyer agrees to
---------------------------------------
deliver to the Shareholders, on the Closing Date the Purchase Price described in
Section 2.2, the Notes described in Section 2.2, the Employment Agreements in
the forms of Exhibits C, D, E and F, the Lease Agreement in the form of Exhibit
B, and the legal opinion of Holme Xxxxxxx & Xxxx LLP as described in Section 6.5
and the Revenue Agreement in the form of Exhibit G..
SECTION 9. Additional Covenants.
--------------------
9.1 Cooperation of Buyer, Rent-It and the Shareholders. Rent-It and
--------------------------------------------------
the Shareholders shall cooperate with Buyer, and Rent-It and the Shareholders
shall use all reasonable efforts to have the officers, directors and other
employees of Rent-It cooperate with Buyer, at Buyer's request and expense, after
the Closing, in furnishing information, evidence, testimony and other assistance
in connection with any Actions involving the Shareholders and Rent-It and based
upon Contracts or acts of Rent-It which were in effect or occurred on or prior
to the Closing.
Buyer, Rent-It and the Shareholders shall each cooperate fully, as and
to the extent reasonably requested by the other party, in connection with any
audit, litigation or other Action, or the preparation of Returns with respect to
Taxes or other matters relating to the period prior to the Closing Date, at the
Shareholders' cost. Such cooperation shall include the retention and (upon the
other party's reasonable request) the provision of records and information,
including work papers of Rent-It and its independent auditors, but excluding
records and information that are protected by recognized professional privilege,
related to tax periods on or prior to the Closing Date, which are reasonably
relevant to any such audit, litigation or other Action, or any Returns, and
making employees available on a mutually convenient basis to provide additional
33
information and explanation of any material provided hereunder. Buyer, Rent-It
and the Shareholders agree (i) to retain all books and records with respect to
Tax matters pertinent to Rent-It relating to the six-year period (or portion
thereof) prior to the Closing, and (ii) to give the other party reasonable
written notice prior to destroying or discarding any such books and records and,
if the other party so requests, Buyer, Rent-It or the Shareholders, as the case
may be, shall allow the other party to take possession of such books and
records.
Rent-It and the Shareholders agree that for a period of three months
after the Closing Date they will, upon the written request of Buyer and at
Buyer's expense, visit (either alone or with a representative of Buyer, at
Buyer's option), any of Rent-It's customers who have declined or ceased, or whom
Buyer concludes may decline or cease, to rent or buy Equipment or Inventory
formerly provided by the Rent-It and attempt to persuade any such customer to
continue to rent or buy from Buyer.
9.2 Further Assurances of Rent-It, the Shareholders and Buyer. Rent-
---------------------------------------------------------
It and the Shareholders agree at any time and from time to time after the
Closing, upon the request of Buyer, to do, execute, acknowledge and deliver, or
to cause to be done, executed, acknowledged and delivered, all such further
acts, assignments, transfers, powers of attorney and assurances as may be
required and to carry out the terms and conditions of this Agreement. The
Shareholders shall cause to be prepared, at their sole cost and expense, all
short year federal, state and local Returns required by law for Rent-It for the
short year ending with the day of the Closing. Each such return shall be
prepared by Rent-It's accountants, and shall be delivered to Buyer, together
with all necessary supporting schedules, within 75 days following the Closing,
for its approval
34
(but such approval shall not relieve the Shareholders of their responsibility
for the Taxes and other amounts that may be assessed under these returns).
Buyer shall cause such returns to be timely filed with the appropriate
authorities. Rent-It shall be entitled to receive all refunds shown on such
returns and any such refunds received by Rent-It shall be remitted to the
Shareholders within five days of receipt unless otherwise previously credited to
the Shareholders. The Shareholders shall be responsible for any and all
assessments or deficiencies that may be due or become due in connection with the
short period set forth above or prior taxable years of Rent-It, unless any such
assessments or deficiencies are caused by changes in Rent-It's financial
accounting made at the request of Buyer. The Shareholders shall have the right
to examine all of the books and records of Rent-It necessary to determine the
items of income, loss, deduction and credit accrued or paid allocable to such
short year return period.
Buyer shall provide to each Shareholder who elects to acquire a Note
any opinion of issuer's counsel necessary for such Shareholder to sell Buyer's
Stock in compliance with Rule 144.
9.3 Non-Competition Covenant. Rent-It and the Shareholders covenant
------------------------
for itself and themselves, and its or any of their Affiliates that neither it
nor they nor any of its or their Affiliates shall engage, directly or indirectly
(whether as owner, partner, shareholder or investor (other than a holder of less
than 5% of the shares of a public company), or joint venturer, manager, investor
(which shall include any gift), advisor, consultant or otherwise), in the
business of equipment rental or sales and any related businesses for a period of
five years after the Closing Date in the State of Utah except as an employee of
Buyer or any Affiliate of Buyer,
35
or such other manner as Buyer shall consent to in writing. Rent-It and the
Shareholders covenant for itself and themselves and its and any of their
Affiliates that for a period of five years from and after the Closing Date
neither it nor they nor any of its or their Affiliates shall directly or
indirectly induce or solicit, or directly or indirectly aid or assist any other
Person to induce or solicit, any Person who is (or within the prior twelve
months had been) an employee, salesman, agent, consultant, distributor,
representative, advisor, customer or supplier of Rent-It to terminate that
Person's employment or business relations with such corporation.
If any provision of this covenant is deemed invalid in whole or in
part, it shall be curtailed, whether as to time, geographical area, scope of
activity or otherwise, as and to the extent required for its validity under
applicable law and, as so curtailed, shall be enforceable. Rent-It and the
Shareholders acknowledge that this Section 9.3 and its, their and its or their
Affiliates', obligations hereunder are a material inducement and condition to
Buyer's entering into this Agreement. In the event of a breach or threatened
breach of this paragraph, Buyer shall be entitled to an injunction restraining
such breach; however, nothing herein shall be construed as prohibiting Buyer
from pursuing any remedy available to Buyer as a result of such breach or
threatened breach.
9.4 No Disparagement. For the period of the covenant not to compete
----------------
set out in Section 9.3, Rent-It and the Shareholders covenant for itself and
themselves and its or any of their Affiliates, and Buyer covenants for itself
and its Affiliates, that neither party nor its Affiliates shall disparage the
other party or its Affiliates. As used in this section "disparage" shall
include, in addition to its common law meaning, negative comments concerning
Buyer's or any of its Affiliates', Rent-It's or any of its Affiliates', or the
Shareholders' or their Affiliates',
36
past, present or future business ethics or management decisions, or the quality
or effectiveness of their goods or services.
SECTION 10. Indemnification.
---------------
10.1 Indemnification by Rent-It and the Shareholders. Rent-It and
-----------------------------------------------
the Shareholders agree to indemnify Buyer and every Affiliate of Buyer against
and hold them harmless from any and all Damages that Buyer or any Affiliate of
Buyer may sustain at any time by reason of:
(a) the breach or inaccuracy (or alleged breach or inaccuracy) of, or
failure to comply with (or alleged failure to comply with), any of the
warranties, representations, covenants or agreements of Rent-It or the
Shareholders contained in this Agreement or in the exhibits or schedules hereto.
As used in this Agreement, the terms "alleged breach or inaccuracy" or "alleged
failure to comply with" shall only apply to allegations by parties other than
Buyer or its Affiliates as to such matters;
(b) any abatement order, compliance order, consent order, remediation
order, clean-up order or exhumation order, potentially responsible party
notification or Action against Rent-It arising out of any act or omission of
Rent-It or any shareholder, officer, director, employee, predecessor, consultant
or agent of Rent-It occurring on or prior to the Closing Date, or any
requirements related to remediation of the Facilities based on conditions
existing on the Closing Date, including, in each case, any such matter described
in any schedule hereto;
(c) any act or omission of Rent-It, or any shareholder, officer,
director, employee, predecessor, consultant or agent of Rent-It, occurring on or
prior to the Closing Date.
10.2 Indemnification by Buyer. Buyer agrees to indemnify and hold
------------------------
Rent-It and the Shareholders and every Affiliate of Rent-It and the Shareholders
harmless from and against any
37
and all Damages that Rent-It or the Shareholders or any Affiliate of Rent-It or
the Shareholders may sustain at any time by reason of the breach or inaccuracy
(or alleged breach or inaccuracy) of, or failure to comply with (or alleged
failure to comply with) any warranties, representations, conditions, covenants
or agreements of Buyer contained in this Agreement or in any exhibit or schedule
hereto, or for any acts or omissions of Buyer after the Closing Date.
10.3 Procedures for Third Party Indemnification. In those instances
------------------------------------------
in which a third party claim is asserted against any party hereto, or any party
hereto is made a party defendant in any action or proceeding, and such claim,
action or proceeding involves a matter that is the subject of this
indemnification, then such party (an "Indemnified Party") shall give written
notice to the other party hereto (the "Indemnifying Party") of such claim,
action or proceeding, and such Indemnifying Party shall have the right to join
in the defense of said claim, action or proceeding at such Indemnifying Party's
cost and expense and, if the Indemnifying Party agrees in writing to be bound by
and to promptly pay the full amount of any final judgment from which no further
appeal may be taken, and if the Indemnified Party is reasonably assured of the
Indemnifying Party's ability to satisfy such agreement, then at the option of
the Indemnifying Party, such Indemnifying Party may take over the defense of
such claim, action or proceeding, except that, in such case, the Indemnified
Party shall have the right to join in the defense of said claim, action or
proceeding at its own cost and expense.
10.4 Right of Set Off. In addition to any other rights Buyer has
----------------
under this paragraph 10 or elsewhere in this Agreement to indemnification or
recoupment, the Shareholders agree that Buyer is entitled to set off any amounts
it may owe the Shareholders under this Agreement or any Exhibits hereto, or any
other amounts owed to the Shareholders by Buyer, including amounts
38
owed under Section 2.2, against such claims for indemnity or recoupment. Such
right of set off may be exercised by Buyer at the time a claim for indemnity or
recoupment is made by Buyer. In the event such claim is contested by the
Shareholders, and the final resolution of the claim results in a reduction or
elimination of such claim, Buyer shall pay to the Shareholders the amount by
which the claim is reduced (limited by the amount of the set off applied against
such claim) plus interest on such amount at an annual rate equal to the prime
rate as announced from time to time by Buyer's primary lender.
SECTION 11. Survival of Representations; Effect of Certificates. The
---------------------------------------------------
parties hereto agree that, subject to the restrictions on Buyer's
indemnification rights under Section 10 hereof, all representations, warranties,
covenants and agreements contained herein or in any instrument or other document
delivered pursuant to this Agreement or in connection with the transactions
contemplated hereby shall survive the consummation of the transactions
contemplated hereby.
SECTION 12. Brokerage Indemnity. Buyer, on the one hand, and Rent-It
-------------------
and the Shareholders, on the other hand, each represent to the other that no
broker or finder has been involved with any of the transactions relating to this
Agreement except that the Shareholders have engaged Grand Teton Acquisitions to
advise them. In the event of a claim by any other broker or finder that such
broker or finder represented or was retained by Rent-It and the Shareholders on
the one hand, or Buyer, on the other hand, in connection herewith, (or in the
event Grand Teton Acquisitions makes any claim against Buyer) Rent-It and the
Shareholders or Buyer, as the case may be, agree to indemnify and hold the other
harmless from and against any and all loss, liability, cost, damage, claim and
expense, including, without limitation, attorneys' fees and disbursements, which
may be incurred in connection with such claim.
39
SECTION 13. Notices. All notices, requests, demands and other
-------
communications provided for by this Agreement shall be in writing and shall be
deemed to have been given when hand delivered, when received if sent by
telecopier or by same day or overnight recognized commercial courier service or
three business days after being mailed in any general or branch office of the
United States Postal Service, enclosed in a registered or certified postpaid
envelope, addressed to the address of the parties stated below or to such
changed address as such party may have fixed by notice:
To Rent-It or the Shareholders:
Xxxxxxx Xxxxxxx
0000 Xxxx Xxxxxx Xxxxx
Xxxxx, Xxxx 00000
Telecopier:
- copy to -
Van Cott, Xxxxxx, Cornwall & XxXxxxxx
00 Xxxxx Xxxx Xxxxxx, #0000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Telecopier: (000) 000-0000
To Buyer:
United Rentals, Inc.
Four Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Vice Chairman
Telecopier: (000) 000-0000
- copy to -
Xxxxx X. Xxxxxx, Esq.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
40
- and -
Holme Xxxxxxx & Xxxx LLP
0000 Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Telecopier: (000) 000-0000
provided, that any notice of change of address shall be effective only upon
receipt.
SECTION 14. Termination.
-----------
14.1 This Agreement may be terminated at any time prior to the Closing
by any of the following:
(a) By mutual written agreement of Buyer and the Shareholders;
(b) By either Buyer or the Shareholders, if the Closing has not
occurred by 11.59:00 p.m., October 31, 1997, upon written notice by such
terminating party, provided that at the time such notice is given a material
breach of this Agreement by such terminating party shall not be the reason for
the Closing's failure to occur;
(c) Subject to the provisions of Section 14.2, by Buyer, by written
notice to the Shareholders, if there has been a material violation or breach of
any of the Shareholders' covenants or agreements made herein or in connection
herewith or if any representation or warranty of the Shareholders made herein or
in connection herewith proves to be materially inaccurate or misleading with
respect to Rent-It, taken as a whole; or
(d) Subject to the provisions of Section 14.2, by the Shareholders, by
written notice to Buyer, if there has been a material violation or breach of any
of Buyer's covenants or agreements made herein or in connection herewith or if
any representation or warranty of Buyer made herein or in connection herewith
proves to be materially inaccurate or misleading.
41
14.2 If this Agreement is terminated as provided in Section 14.1,
then there shall be no liability or obligation on the part of any party hereto
(or any of their respective officers, directors or employees) except that if
Buyer terminates this Agreement pursuant to clause 14.1(c) or the Shareholders
terminates this Agreement pursuant to clause 14.1(d), the non-terminating party
shall remain liable for any breach hereof, but any damages shall be limited to
the out of pocket costs of the terminating party.
SECTION 15. Miscellaneous.
-------------
15.1 Entire Agreement. This Agreement, including the Exhibits and
----------------
Schedules hereto, sets forth the entire agreement and understanding among the
parties and merges and supersedes all prior discussions, agreements and
understandings of every kind and nature among them as to the subject matter
hereof, and no party shall be bound by any condition, definition, warranty or
representation other than as expressly provided for in this Agreement or as may
be on a date on or subsequent to the date hereof duly set forth in writing
signed by each party that is to be bound thereby. Unless otherwise expressly
defined, terms defined in this Agreement shall have the same meanings when used
in any Exhibit or Schedule and terms defined in any Exhibit or Schedule shall
have the same meanings when used in this Agreement or in any other Schedule.
This Agreement (including the Exhibits and Schedules hereto) shall not be
changed, modified or amended except by a writing signed by each party to be
charged and this Agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by each party to be charged.
42
15.2 Taxes. Any Taxes in the nature of a sales or transfer tax, and
-----
any stock transfer tax, payable on the sale or transfer of the Shares or the
consummation of any other transaction contemplated hereby shall be paid by the
Shareholders.
15.3 Governing Law. This Agreement and its validity, construction
-------------
and performance shall be governed in all respects by the laws of the State of
Utah without giving effect to principles of conflicts of law.
15.4 Arbitration. Any controversy arising after the Closing out of
-----------
or relating to Section 2.3 of this Agreement shall be settled by arbitration
conducted in Salt Lake City, Utah in accordance with the Commercial Arbitration
Rules of the American Arbitration Association then in effect (except as
otherwise expressly provided in this Agreement). The award rendered by the
arbitrator(s) shall be final and judgment upon the award rendered by the
arbitrator(s) may be entered upon it in any court having jurisdiction thereof.
The arbitrator(s) shall possess the powers to issue mandatory orders and
restraining orders in connection with such arbitration. The expenses of the
arbitration shall be borne by the losing party unless otherwise allocated by the
arbitrator(s). The agreement to arbitrate shall be specifically enforceable
under the prevailing arbitration law. During the continuance of any arbitration
proceedings, the parties shall continue to perform their respective obligations
under this Agreement.
15.5 Representation by Counsel. Each party hereto represents and
-------------------------
agrees with the other that it has been represented by independent counsel of its
own choosing; it has had the full right and opportunity to consult with its
respective attorneys and other advisors and has availed itself of this right and
opportunity; its authorized officers have carefully read and fully understand
this Agreement in its entirety and have had it fully explained to them by such
party's
43
counsel; it is fully aware of the contents hereof and the meaning, intent and
legal effect thereof; and its authorized officer is competent to execute this
Agreement and has executed this Agreement free from coercion, duress or undue
influence. Each party and its counsel cooperated in the drafting and
preparation of this Agreement and the documents referred to herein. Accordingly,
any rule of law or any legal decision that would require interpretation of any
ambiguities in this Agreement against the party that drafted it is of no
application and is hereby expressly waived. The provisions of this Agreement
shall be interpreted in a reasonable manner to effect the intentions of the
parties and this Agreement.
15.6 Benefit of Parties; Assignment. This Agreement shall be binding
------------------------------
upon and shall inure to the benefit of the parties hereto and their respective
successors, legal representatives and permitted assigns. The Agreement may not
be assigned by either Buyer or the Shareholders except with the prior written
consent of the other party or parties. Nothing herein contained shall confer or
is intended to confer on any third party or entity that is not a party to this
Agreement any rights under this Agreement.
15.7 Pronouns. Whenever the context requires, the use in this
--------
Agreement of a pronoun of any gender shall be deemed to refer also to any other
gender, the use of the singular shall be deemed to refer also to the plural and
the use of the plural shall be deemed to refer also to the singular.
15.8 Headings. The headings in the sections, paragraphs and
--------
Schedules of this Agreement are inserted for convenience of reference only and
shall not constitute a part hereof. The words "herein," "hereof," "hereto" and
"hereunder," and other words of similar import refer to this Agreement as a
whole and not to any particular provision of this Agreement.
44
15.9 Expenses. The parties hereto shall pay all of their own
--------
expenses relating to the transactions contemplated by this Agreement, including,
without limitation, the fees and expenses of their respective counsel,
accountants and financial advisors.
15.10 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same document.
45
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first written above.
UNITED RENTALS, INC., a Delaware corporation
By:/s/ Xxxx X. Xxxxx
-----------------
Name: Xxxx X. Xxxxx
Title: Vice Chairman
No. of Shares owned Shareholders:
5,300 /s/ Xxxxxx X. Xxxxxxx
---------------------
Xxxxxx X. Xxxxxxx
25,480 /s/ Xxxx X. Xxxxxxx
-------------------
Xxxx X. Xxxxxxx
71,900 /s/ Xxxxxxx X. Xxxxxxx
----------------------
Xxxxxxx X. Xxxxxxx, as Trustee of the Xxxxxxx X. Xxxxxxx
Trust
46
