<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) April 14, 1997
-------------------------------
RENTAL SERVICE CORPORATION
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 000-21237 33-0569350
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(State or Other Jurisdiction (Commission File (I.R.S. Employer
of Incorporation) Number) Identification No.)
14505 North Hayden Road, Suite 322, Scottsdale, Arizona 85260
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(602)905-3300
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(Registrant's Telephone Number, including Area Code)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
- --------------------------------------------------------------------------------
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 25, 1997, Rental Service Corporation ("RSC" or the "Company")
acquired all of the outstanding stock of Comtect, Inc. and subsidiaries d/b/a
Industrial Air Tool ("IAT") for $32.6 million in cash and 189,189 shares of RSC
common stock. Up to an additional 108,108 shares of RSC common stock may be paid
to the sellers over a three year period if certain performance objectives are
met. IAT is a leading "on-site" small tool provider, rental management company
and maintenance, repair and operating (MRO) supplier and operates a total of
four locations in Texas and Louisiana. This acquisition is anticipated to result
in $23.0 million in goodwill, which will be amortized over 40 years. Pursuant to
the acquisition agreement, IAT's results of operations are included in the
Company's consolidated statement of operations beginning March 1, 1997 and IAT's
balance sheet will be consolidated with the Company's under the purchase method
of accounting on April 25, 1997.
ITEM 5. OTHER EVENTS.
The Company has promoted Douglas A. Waugaman to Senior Vice President of
Operations, effective April 14, 1997. Mr. Waugaman was most recently the
Company's Vice President and Chief Financial Officer.
Robert M. Wilson has joined the Company as Senior Vice President and Chief
Financial Officer, effective April 14, 1997. Mr. Wilson was most recently Senior
Vice President of Operations, Finance and Administration for Shade/Allied Inc.
of Green Bay, Wisconsin. He previously held several executive positions for
Simon Engineering plc of Manchester, England.
Bruce A. Lisanti has joined the Company as Senior Vice President of
Marketing, effective April 21, 1997. Mr. Lisanti was most recently Vice
President of Sales and Marketing for Petroleum Information Corp. of Houston,
Texas. He was previously Vice President of Sales and Marketing for Corporate
Express and National Sales Manager for General Electric's Computer Services
Division.
On April 25, 1997, the Company reached a definitive agreement to acquire
substantially all of the assets of Brute Equipment Co. d/b/a Foxx Hy-Reach
Company ("Foxx") for $32.7 million in cash and 169,014 shares of RSC common
stock. The purchase price is subject to adjustment based on levels of accounts
receivable, inventory and equipment. Up to an additional 204,866 shares of RSC
common stock may be paid to the seller over a three year period if certain
performance objectives are met. Foxx specializes in the rental and sale of
aerial equipment to construction and industrial customers and operates a total
of four locations in Iowa and Illinois. The transaction is anticipated to close
by June 30, 1997, and will be recorded under the purchase method of accounting.
The closing is subject to a number of closing conditions, including early
termination or expiration of the waiting period under the Hart-Scott-Rodino Act.
2
<PAGE>
On April 26, 1997, the Company reached a definitive agreement to acquire
substantially all of the assets of Central States Equipment, Inc. and Equipment
Lessors, Inc. (collectively, "Central") for approximately $18.0 million in cash
and 102,432 shares of RSC common stock. The purchase price is subject to
adjustment based on levels of accounts receivable, inventory and equipment. An
additional 102,435 shares of RSC common stock will be paid to the sellers over a
five year period, which may be accelerated to three years if certain performance
objectives are met. Central specializes in the rental and sale of aerial
equipment, ladders and scaffolding and operates a total of four locations in
Kansas, Missouri and Oklahoma. The transaction is anticipated to close by June
30, 1997, and will be recorded under the purchase method of accounting. The
closing is subject to a number of closing conditions, including early
termination or expiration of the waiting period under the Hart-Scott-Rodino Act.
On April 28, 1997, at the Company's Annual Meeting of Stockholders, eight
directors (Martin R. Reid, William M. Barnum, Jr., James R. Buch, Christopher A.
Laurence, Britton H. Murdoch, Eric L. Mattson, John G. Quigley and Frederick J.
Warren) were re-elected to the Company's Board of Directors to serve for the
ensuing year or until their successors are elected and have been qualified. The
Company's stockholders also approved the Employee Qualified Stock Purchase Plan
of Rental Service Corporation ("Stock Purchase Plan") and ratified the selection
of Ernst & Young LLP as independent auditors for the Company for 1997. Under the
Stock Purchase Plan, the Company has reserved 250,000 shares of common stock for
sale to employees at 85% of the lesser of the fair market value of such shares
at the beginning or end of each semiannual offering period.
3
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired
The audited financial statements of IAT are not included with this
Current Report on Form 8-K, but will be filed as an amendment to this
Form 8-K within 60 days.
(b) Pro Forma Financial Information
The pro forma financial information relating to the acquisition of IAT
is not included with this Current Report on Form 8-K, but will be filed
as an amendment to this Form 8-K within 60 days.
(c) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- ----------------------------- -------------------------------------------------
<S> <C>
10.1 Stock Purchase Agreement by and among Andy G.
Gessner; Larry R. Bush; Stacy K. Bush; Larry R.
Bush, Trustee of the Stacy K. Bush Trust and Roy
B. Bush as "Sellers," Acme Dixie, Inc. as
"Buyer", Rental Service Corporation as "Parent"
and Comtect, Inc. and Comtect, Inc.'s
Subsidiaries being IAT Interests of Nevada,
Inc.; RNJB, Inc.; CFTSIJC, Inc.; Industrial Air
Tool Pasadena, Inc.; Industrial Air Tool Texas
City, Inc.; PST, Inc. of Louisiana and LRB
Supply, Inc. as the "Company", dated March 14,
1997.
10.2 Asset Purchase Agreement by and among Brute
Equipment Co. d/b/a "Foxx Hy-Reach Company" as
"Seller," Rental Service Corporation, Walker
Jones Equipment Company as "Buyer" and Thomas H.
Foster, dated April 25, 1997.
10.3 Asset Purchase Agreement by and among Central
States Equipment, Inc. and Equipment Lessors,
Inc. as "Sellers," Walker Jones Equipment
Company as "Buyer" and the stockholders of
Sellers, dated April 26, 1997.
</TABLE>
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RENTAL SERVICE CORPORATION
Date: May 5, 1997 By: /s/ Douglas A. Waugaman
----------------------------
Douglas A. Waugaman
Senior Vice President of Operations
5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- ----------------------------- -------------------------------------------------
<S> <C>
10.1 Stock Purchase Agreement by and among Andy G.
Gessner; Larry R. Bush; Stacy K. Bush; Larry R.
Bush, Trustee of the Stacy K. Bush Trust and Roy
B. Bush as "Sellers," Acme Dixie, Inc. as
"Buyer", Rental Service Corporation as "Parent"
and Comtect, Inc. and Comtect, Inc.'s
Subsidiaries being IAT Interests of Nevada,
Inc.; RNJB, Inc.; CFTSIJC, Inc.; Industrial Air
Tool Pasadena, Inc.; Industrial Air Tool Texas
City, Inc.; PST, Inc. of Louisiana and LRB
Supply, Inc. as the "Company", dated March 14,
1997.
10.2 Asset Purchase Agreement by and among Brute
Equipment Co. d/b/a "Foxx Hy-Reach Company" as
"Seller," Rental Service Corporation, Walker
Jones Equipment Company as "Buyer" and Thomas H.
Foster, dated April 25, 1997.
10.3 Asset Purchase Agreement by and among Central
States Equipment, Inc. and Equipment Lessors,
Inc. as "Sellers," Walker Jones Equipment
Company as "Buyer" and the stockholders of
Sellers, dated April 26, 1997.
</TABLE>
6
<PAGE>
EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
by and among
Andy G. Gessner, Larry R. Bush, Stacy K. Bush,
Larry R. Bush, Trustee of the Stacy K. Bush Trust,
and Roy B. Bush
as "Sellers"
Acme Dixie, Inc.
as "Buyer"
Rental Service Corporation
as "Parent"
and
Comtect, Inc.
and Comtect, Inc.'s Subsidiaries
being IAT Interests of Nevada, Inc.,
RNJB, Inc., CFTSIJC, Inc.,
Industrial Air Tool Pasadena, Inc.,
Industrial Air Tool Texas City, Inc.,
PST, Inc. of Louisiana and
LRB Supply, Inc.
as the "Company"
March 14, 1997
<PAGE>
STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I DEFINITIONS............................................ 1
1.1 Defined Terms.......................................... 1
1.2 Other Defined Terms.................................... 4
ARTICLE II SALE AND TRANSFER OF SHARES............................ 5
2.1 Transfer of Shares..................................... 5
2.2 Purchase Price......................................... 5
2.3 Closing of Books, Benefits and Risks of Ownership...... 7
2.4 Transfer Taxes and Fees................................ 7
2.5 Earn-Out............................................... 7
ARTICLE III CLOSING................................................ 7
3.1 Closing................................................ 8
3.2 Conveyances at Closing................................. 8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE
COMPANY................................................ 8
4.1 Organization of the Company............................ 8
4.2 Authorization.......................................... 9
4.3 No Violation........................................... 9
4.4 Capitalization......................................... 9
4.5 Related Entities....................................... 10
4.6 Equipment and Other Assets; Absence of Encumbrances.... 10
4.7 Facilities............................................. 11
4.8 Contracts and Commitments.............................. 12
4.9 Permits................................................ 13
4.10 Financial Statements................................... 13
4.11 Books and Records...................................... 13
4.12 Litigation............................................. 13
4.13 Labor Matters.......................................... 13
4.14 Compliance with Law.................................... 13
4.15 No Brokers............................................. 14
4.16 No Other Agreements to Sell the Company................ 14
4.17 Proprietary Rights..................................... 14
4.18 Tax Matters............................................ 15
4.19 Accounts Receivable.................................... 15
4.20 Inventory.............................................. 16
4.21 Employees and Employee Benefits........................ 16
4.22 Compliance With Environmental Laws..................... 19
4.23 Liabilities............................................ 21
4.24 Insurance.............................................. 21
4.25 Conduct of the Business................................ 22
4.26 Securities Law Matters................................. 22
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE V REPRESENTATIONS AND WARRANTIES OF
BUYER AND PARENT....................................... 23
5.1 Organization of Buyer and Parent....................... 23
5.2 Authorization.......................................... 23
5.3 No Conflict or Violation............................... 23
5.4 Consents and Approvals................................. 23
5.5 Covenants & Funding of Profit Sharing.................. 23
5.6 Covenants & Capital Contributions and Payment.......... 23
ARTICLE VI COVENANTS OF BUYER, THE COMPANY AND SELLER............. 24
6.1 Further Assurances..................................... 24
6.2 No Solicitation........................................ 24
6.3 Notification of Certain Matters........................ 25
6.4 Access to Information.................................. 25
6.5 Conduct of Business.................................... 25
6.6 [Reserved]............................................. 25
6.7 Environmental Assessments and Remediation.............. 26
6.8 Registration Rights.................................... 27
6.9 Accounts Receivable.................................... 27
6.10 Real Property.......................................... 27
6.11 Key Man Life Insurance; Dividends...................... 27
ARTICLE VII CONDITIONS TO SELLERS' OBLIGATIONS..................... 27
7.1 Representations, Warranties and Covenants.............. 28
7.2 No Proceedings, Litigation or Laws..................... 28
7.3 Certificates........................................... 28
ARTICLE VIII CONDITIONS TO BUYER'S OBLIGATIONS...................... 28
8.1 Representations, Warranties and Covenants.............. 28
8.2 Consents............................................... 28
8.3 No Proceedings or Litigation........................... 28
8.4 Opinion of Counsel..................................... 28
8.5 Certificates........................................... 30
8.6 Escrow Agreement....................................... 30
8.7 Employment and Non-Competition Agreements.............. 30
8.8 Release of Encumbrances................................ 30
8.9 Board Approval......................................... 30
8.10 Corporate Documents.................................... 30
8.11 Schedules and Due Diligence Review..................... 30
8.12 Solvency of Subsidiaries............................... 30
ARTICLE IX RISK OF LOSS; CONSENTS TO ASSIGNMENT................... 31
9.1 Consents to Assignment................................. 31
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE X ACTIONS BY SELLER AND BUYER
AFTER THE CLOSING............................ 31
10.1 Books and Records; Tax Examinations.......... 31
10.2 Survival of Representations, Etc............. 32
10.3 Indemnifications............................. 32
10.4 Further Action............................... 34
ARTICLE XI MISCELLANEOUS................................ 34
11.1 Termination.................................. 34
11.2 Assignment................................... 35
11.3 Notices...................................... 35
11.4 Choice of Law................................ 36
11.5 Entire Agreement; Amendments and Waivers..... 36
11.6 Multiple Counterparts........................ 37
11.7 Expenses..................................... 37
11.8 Invalidity................................... 37
11.9 Titles....................................... 37
11.10 Publicity; Confidentiality................... 37
11.11 Cumulative Remedies.......................... 37
11.12 Arbitration.................................. 37
11.13 Seller Representative........................ 37
ARTICLE XII SPECIAL PROVISIONS........................... 38
</TABLE>
iii
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement, dated as of March 14, 1997 (the
"Agreement"), is by and among Acme Dixie, Inc., a Delaware corporation, dba RSC
("Buyer"), Rental Service Corporation, a Delaware corporation ("Parent"), Andy
G. Gessner, Larry R. Bush, Stacy K. Bush, Larry R. Bush, as Trustee of the Stacy
K. Bush Trust and Roy B. Bush (each a "Seller" and collectively, the "Sellers")
and Comtect, Inc., a Nevada corporation (herein "Comtect"), IAT Interests of
Nevada, Inc., a Nevada corporation, RNJB, Inc., a Nevada corporation, CFTSIJC,
Inc., a Nevada corporation, Industrial Air Tool Pasadena, Inc., a Texas
corporation, Industrial Air Tool Texas City, Inc., a Texas corporation, PST,
Inc. of Louisiana, a Louisiana corporation and LRB Supply, Inc., a Texas
corporation (collectively, the "Subsidiaries" and together with Comtect, the
"Company").
RECITALS
--------
A. The company is engaged in the business of selling maintenance,
repair and operating supplies and the operation of a small tool equipment rental
business, operating under the "Industrial Air Tool" name or otherwise.
B. Sellers own, of record and beneficially, all of the issued and
outstanding shares of capital stock of the Company (the "Shares") and, as of the
Closing Date (as defined below), will own, of record and beneficially, all of
the Shares.
C. Buyer desires to purchase from Sellers, and Sellers desire to
sell to Buyer, all of the Shares upon the terms and subject to the conditions of
this Agreement, whereupon Buyer will own all of the equity interests in the
Company (the "Purchase").
AGREEMENT
---------
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Defined Terms. As used herein, the terms below shall have the
-------------
following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.
"Affiliate" shall have the meaning set forth in the Exchange Act.
---------
"Agreement" shall have the meaning specified in the first paragraph of
---------
this Agreement.
"Ancillary Agreements" shall mean the Employment and Non-Competition
--------------------
Agreements attached hereto as Exhibit 8.7.1, 8.7.2, 8.7.3 and 8.7.4 and the
Escrow Agreement attached hereto as Exhibit 8.6.
<PAGE>
"Assets" shall mean the assets of the Company as reflected on the
------
Balance Sheet dated February 28, 1996, (a) together with (i) the accounts
receivable purchased from the Related Entities pursuant to Section 6.9 and (ii)
real estate purchased from the Related Entities pursuant to Section 6.10, and
(iii) those assets acquired (less those assets disposed of) in the ordinary
course of Business since the Balance Sheet Date, and (b) less (i) all life
insurance transferred to the insured parties thereunder.
"Books and Records" shall mean (a) all records and lists pertaining to
-----------------
the Business, customers, suppliers or personnel of the Company, (b) all product,
business and marketing plans of the Company and (c) all books, ledgers,
subledgers, trial balances, files, reports, plans, drawings and operating
records of every kind maintained by the Company.
"Business" shall mean the Company's selling maintenance, repair,
--------
operation supplies business and small tool equipment rental business operating
under the "Industrial Air Tool" name or otherwise.
"Buyer" shall have the meaning specified in the first paragraph of
-----
this Agreement.
"Closing Date" shall mean the first date in which all of the
------------
conditions to Sellers' and Buyer's obligations to consummate the transactions
under this Agreement have been satisfied, as set forth in Articles VII and VIII
hereof, but in no event later than June 30, 1997.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
----
the rules and regulations thereunder.
"Commission" shall mean the Securities and Exchange Commission.
----------
"Company" shall have the meaning specified in the first paragraph of
-------
this Agreement.
"Contract" shall mean any agreement, contract, note, factoring
--------
agreement, loan, evidence of indebtedness, purchase order, letter of credit,
franchise agreement, lease, undertaking, covenant not to compete, employment
agreement, license, instrument, obligation or commitment to which the Company is
a party or is bound and which relates to the Business or Assets, whether oral or
written.
"Encumbrance" shall mean any claim, lien, pledge, option, charge,
-----------
easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other right of third parties, whether voluntarily incurred or
arising by operation of law, and includes, without limitation, any agreement to
give any of the foregoing in the future, and any contingent sale or other title
retention agreement or lease in the nature thereof.
"Equipment" shall mean all of the furniture, fixtures, furnishings,
---------
machinery, automobiles, trucks, spare parts, tools, supplies, equipment and
other tangible personal property owned by the Company and used in connection
with the Business.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended.
"Escrow Agent" shall mean the entity designated by Buyer and the
------------
Seller Representative to act as escrow agent under the Escrow Agreement.
2
<PAGE>
"Escrow Agreement" shall mean that certain Escrow Agreement, dated as
----------------
of the Closing Date, by and among Buyer, Seller Representative and the Escrow
Agent, substantially in the form of Exhibit 8.6 attached hereto.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended, and the rules and regulations promulgated thereunder.
"Facilities" shall mean the rental yards, stores, offices, maintenance
----------
and storage facilities, shops, warehouses, improvements and other structures,
together with all related fixtures and improvements, located at or on the Owned
Real Property or the Leased Real Property.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
--------
of 1976, as amended.
"Balance Sheet" shall mean the balance sheet of the Company as of the
-------------
Balance Sheet Date, restated on a pro forma basis to include (i) the accounts
receivable and real estate to be purchased from the Related Entities pursuant to
Sections 6.9 and 6.10, stated at their book value as of the Balance Sheet Date,
and (ii) the repayment of lines of credit owed to GT Financial, Ltd., in each
case less the cash, marketable securities and life insurance amounts to be paid
therefor.
"Balance Sheet Date" shall mean February 28, 1997.
------------------
"Financial Statements" shall mean the Balance Sheet and the related
--------------------
statement of operations of the Company for the eleven months ended on the
Balance Sheet Date.
"Inventory" shall mean all of the Company's inventory held for resale
---------
and all of the Company'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.
"Leased Real Property" shall mean all real property leased by the
--------------------
Company from an entity other than a Related Entity (except in the case where
such real properties are not purchased pursuant to Section 6.10 and are in fact
leased from a Related Entity) and which is used in the conduct of the Business,
including without limitation, all rights, easements and privileges appertaining
or relating thereto, all buildings, fixtures, and improvements located thereon
and all Facilities thereon, if any.
"Material Adverse Effect" or "Material Adverse Change" shall mean with
----------------------- -----------------------
respect to the Business or the Assets any significant and substantial adverse
effect or change in the condition (financial or other), business, results of
operations, prospects, assets, liabilities or operations of the Business or the
Assets or on the ability of the Sellers or the Company to consummate the
transactions contemplated hereby, or any event or condition which would, with
the passage of time, constitute a "Material Adverse Effect" or "Material Adverse
Change."
"Owned Real Property" shall mean all real property owned in fee by the
-------------------
Company, by the Sellers or by a Related Entity which is used in the conduct of
the Business, including without limitation, all rights, easements and privileges
appertaining or relating thereto, all buildings, fixtures, and improvements
located thereon and all Facilities thereon, if any.
"Parent" shall mean Rental Service Corporation, a Delaware
------
corporation.
3
<PAGE>
"Permits" shall mean all licenses, permits, franchises, approvals,
-------
authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, or any other person,
necessary or desirable for the past, present or anticipated conduct of, or
relating to the operation of, the Business.
"Related Entity" shall mean any corporation, partnership, trust or
--------------
other organization in which the Company or any of the Sellers has a material
interest and shall include, without limitation, GT Financial, Ltd. and Shield
Pt, Ltd.
"Rental and Non-Rental Asset Listing" shall mean the assets reflected
-----------------------------------
on the February 28, 1997 Balance Sheet and rental terms that exist in the
equipment inventory as of February 28, 1997.
"Representative" shall mean any officer, director, principal,
--------------
attorney, agent, employee or other representative.
"Securities Act" shall mean the Securities Act of 1933, as amended,
--------------
and the rules and regulations promulgated thereunder.
"Sellers" shall have the meaning specified in the first paragraph of
-------
this Agreement.
"Shares" shall mean all of the issued and outstanding shares of
------
capital stock of the Company.
"Seller Representative" shall mean Andy G. Gessner, whom Sellers have
---------------------
irrevocably made, constituted and appointed their agent pursuant to Section
11.13 hereof.
"Tax" shall mean any federal, state, local, foreign or other tax,
---
levy, impost, fee, assessment or other government charge, including without
limitation income, estimated income, business, occupation, franchise, property,
payroll, personal property, sales, transfer, use, employment, commercial rent,
occupancy, franchise or withholding taxes, and any premium, including without
limitation interest, penalties and additions in connection therewith.
"Year-End Balance Sheets" shall mean the balance sheet of the Company
-----------------------
at each of March 31, 1994, 1995 and 1996.
"Year-End Financial Statements" shall mean the Year End Balance Sheet
-----------------------------
dated as of March 31, 1996, and the related statements of operations of the
Company for the fiscal year then ended.
1.2 Other Defined Terms. The following terms shall have the meanings
-------------------
defined for such terms in the Sections set forth below:
<TABLE>
<CAPTION>
Term Section
----- -------
<S> <C>
Actions 4.12
Benefit Arrangement 4.2.1
Cash Purchase Price 2.2.1.1
Claim 10.3.4
Claim Notice 10.3.4
Closing 3.1
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Company 4.22.1.1
Consultant 6.7.1
Contingent Purchase Price 2.2.1.1
Damages 10.3.1
Employee Plans 4.21.1
Environmental Laws 4.22.2
Environmental Assessments 6.7.1
ERISA Affiliate 4.21.1
Factor 4.19
GAAP 4.10
Hazardous Substance 4.22.1.3
Holdback Amount 2.2.3.1
Multiemployer Plan 4.21.1
PBGC 4.21.1
Pension Plan 4.21.1
Parent Common Stock 2.2.1.1
Proposed Acquisition Transaction 6.2
Proprietary Rights 4.17.1
Purchase Price 2.2.1.1
Real Property Purchase 4.7
Release 4.22.1.2
Remediation Standard 6.7.2
Required Remediation 6.7.2
Seller Representative 11.13.1
Welfare Plan 4.21.1
</TABLE>
ARTICLE II
SALE AND TRANSFER OF SHARES
---------------------------
2.1 Transfer of Shares. Upon the terms and subject to the conditions
------------------
contained herein, at the Closing, Sellers will sell, convey, transfer, assign
and deliver to Buyer, and Buyer will acquire from Sellers, the Shares, for the
consideration specified in Section 2.2.1 less the Holdback Amount specified in
Section 2.2.3.
2.2 Purchase Price.
--------------
2.2.1 Purchase Price.
--------------
2.2.1.1 At the Closing, upon the terms and subject to the
conditions set forth herein, Buyer shall pay to Sellers in consideration for the
Shares, the aggregate amount of Thirty-eight Million One Hundred Thousand
Dollars ($38,100,000) (the "Purchase Price") of which (i) Thirty-Two Million Six
Hundred Thousand Dollars ($32,600,000) (the "Cash Purchase Price") shall be paid
to Sellers by wire transfer of immediately available funds to accounts
designated by Sellers in the amounts as set forth on Schedule 2.2.1.1, (ii)
Three Million Five Hundred Thousand Dollars ($3,500,000) shall be paid by
delivery to Sellers of Common Stock, par value $.01 per share, of Parent (the
"Parent Common Stock") and (iii) Two Million Dollars ($2,000,000) shall be paid
in the form of additional shares of Parent Common Stock pursuant to the "earn-
out" provisions of Section 2.5 (the "Contingent Purchase Price"). The number
5
<PAGE>
of shares of Parent Common Stock to be issued to Sellers shall be determined as
set forth in Section 2.2.1.2. The Cash Purchase Price, Parent Common Stock,
Contingent Purchase Price and the Holdback Amount (as specified below), and any
remittance to Sellers of the Holdback Amount pursuant to the Escrow Agreement,
shall be allocated among the Sellers in accordance with Schedule 2.2.1.1.
2.2.1.2 The number of shares of Parent Common Stock to be issued to
Sellers shall be 189,189 (equal to the result of dividing Three Million Five
Hundred Thousand Dollars ($3,500,000) by $18.50, the closing share price of
Parent Common Stock on the Nasdaq National Market on the date of this
Agreement).
2.2.1.3 If between the date of this Agreement and the Closing Date,
the outstanding shares of Parent Common Stock shall have been changed into a
different number of shares or a different class by reason of any
reclassification, recapitalization, split-up, stock dividend, stock combination,
exchange of shares or readjustment, the number of shares of Parent Common Stock
issued to Sellers pursuant to Section 2.2.1.2 shall be proportionately adjusted.
2.2.1.4 No fractional shares of Parent Common Stock shall be
issued, but in lieu thereof, each Seller who would otherwise be entitled to
receive a fraction of a share of Parent Common Stock shall receive from Buyer an
amount of cash equal to the product of the fraction of a share of Parent Common
Stock to which such holder would otherwise be entitled, multiplied by $18.50.
2.2.2 Employment and Non-competition Agreements. Company shall enter
-----------------------------------------
into Employment and Non-competition Agreements, in substantially the form
attached hereto as Exhibits 8.7.1, 8.7.2, 8.7.3 and 8.7.4, with each of Andy G.
Gessner, Larry R. Bush, William E. Pinkley and Gordon L. McDonald.
2.2.3 Holdback and Escrow Agreement.
-----------------------------
2.2.3.1 The "Holdback Amount" shall be a cash amount equal to
Three Million Five Hundred Thousand Dollars ($3,500,000) which, at the Closing,
shall be placed in escrow on the Closing Date pursuant to the Escrow Agreement,
pending the Sellers' indemnification obligations, if any, as set forth in
Section 10.3, and any remediation required under Section 6.7 hereof which is not
resolved by the Closing Date. The Escrow Agent will remit to Sellers the entire
Holdback Amount, net of any amount which Buyer is entitled under the provisions
of Sections 6.7 and 10.3 hereof, in accordance with the provisions of the Escrow
Agreement. In the event of any disagreement between Buyer and Sellers regarding
the dollar amount of any such indemnification or remediation obligation, Buyer
and Sellers shall submit such dispute to a third-party arbitrator for binding
arbitration pursuant to Section 11.13 of this Agreement. Any unused balance of
the Holdback Amount shall be paid to Sellers in conformity with Escrow
Agreement. Notwithstanding any other provision contained in this Agreement,
Buyer shall be limited to a maximum amount as set forth in Section 10.3 to fully
satisfy all indemnification and remediation obligations and all other claims,
rights and causes of action arising hereunder that Buyer, Parent, Affiliate
and/or Company may have against Seller now or in the future, of the Seller to
Company, Buyer and/or Parent (except under Sections 4.4 and 4.18 hereof, and in
the case of fraud on the part of any Seller).
2.2.3.2 Buyer and the Seller Representative, acting on behalf
of the Sellers, shall enter into the Escrow Agreement, in substantially the form
attached hereto as Exhibit 8.6, pursuant to which Buyer shall deposit with the
Escrow Agent the Holdback Amount of Three Million Five Hundred
6
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Thousand Dollars ($3,500,000). All costs of the escrow shall be paid by Sellers,
all as further provided in the Escrow Agreement.
2.3 Closing of Books, Benefits and Risks of Ownership. The transactions
--------------------------------------------------
contemplated by this Agreement shall be deemed effective as of March 1, 1997 and
all profits and losses of the Company from and after March 1, 1997 shall be
solely for the account of, and inure solely to the benefit or detriment of,
Buyer, except as otherwise set forth in this Agreement; provided, however, that
any vendor rebates (SPIFFs) relating to periods of operation of the Company
prior to January 1, 1997, even if received by the Company after March 1, 1997,
shall be solely for the account of Sellers. The accounting books and records of
the Company will be closed as of the close of business on February 28, 1997.
Sellers shall operate the business subject to and pursuant to the requirements
set forth in Section 6.5 of this Agreement by, from and after March 1, 1997
until such time as this Agreement is terminated or closed. Without the consent
of Buyer, until the Closing Date the Company or Seller shall not repurchase,
sell or transfer any Shares, make or declare any dividends (except as expressly
contemplated by this Agreement), or otherwise take any action restricted under
Section 6.5 of this Agreement. If this transaction does not close for any reason
on or prior to June 30, 1997 and is not extended by agreement of the parties,
then the Company shall pay within ten days to the Buyer profits accumulated
during the period from March 1, 1997 to the date that the closing is deemed not
to occur or to the date the Agreement is terminated, but not later than June 30,
1997. If this transaction does not close for any reason on or prior to June 30,
1997 and is not extended by agreement of the parties, then the Buyer shall
within ten days pay to the Company all losses accumulated (offset by any non-
refundable contributions made by Buyer) by the Company during the period from
March 1, 1997 to the date that the closing is deemed not to occur, but not later
than June 30, 1997.
2.4 Transfer Taxes and Fees. Sellers shall be responsible for any
-----------------------
documentary and transfer taxes and any sales, use or other taxes imposed by
reason of the transfer of Shares provided hereunder and any deficiency, interest
or penalty asserted with respect thereto. Sellers shall pay the fees and costs
of recording or filing all UCC termination statements and other releases of
Encumbrances.
2.5 Earn-Out. The Contingent Purchase Price shall consist of Parent Common
--------
Stock with a fair market value of up to $2,000,000, the number of shares of
Parent Common Stock to be issued to Sellers shall be 108,108 (equal to the
result of dividing Two Million Dollars ($2,000,000) by $18.50, the closing share
price of Parent Common Stock on the Nasdaq National Market on the date of this
agreement). Such Parent Common Stock shall be issuable to Sellers over a three-
year period commencing on March 1, 1997 in accordance with specified growth and
profitability targets for the Business during such period. Such targets will be
established in good faith by mutual agreement of Buyer and Sellers. The
Contingent Purchase Price shall be paid to Sellers only to the extent that the
performance of the Business meets the agreed-upon targets, and if such targets
are not met, no portion (or a reduced portion, as applicable) of the Contingent
Purchase Price shall be paid.
ARTICLE III
CLOSING
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3.1 Closing. The Closing of the transactions contemplated herein (the
-------
"Closing") shall be held on the Closing Date at a time and place as the parties
shall mutually agree.
3.2 Conveyances at Closing.
----------------------
3.2.1 Sellers' Delivery Obligations. To effect the sale and transfer
-----------------------------
referred to in Section 2.1 hereof, Sellers will, at the Closing, execute and
deliver to Buyer:
3.2.1.1 certificates evidencing the Shares, free and clear of
any Encumbrances of any nature whatsoever, duly endorsed in blank for transfer
or accompanied by stock powers duly executed in blank;
3.2.1.2 all Ancillary Agreements required to be executed by any
of the Sellers;
3.2.1.3 all certificates, opinions of counsel and other
documents described in Article VIII; and
3.2.1.4 all Permits and any other third party consents required
for the valid transfer of the Shares as contemplated by this Agreement, or for
the continued operation of the Business following such transfer.
3.2.2 Buyer's Delivery Obligations. To effect the sale and transfer
----------------------------
referred to in Section 2.1 hereof, Buyer will, at the Closing, execute and
deliver to Sellers:
3.2.2.1 all Ancillary Agreements required to be executed by
Buyer; and
3.2.2.2 all certificates described in Article VII.
3.2.3 Form of Instruments. To the extent that a form of any document to
-------------------
be delivered hereunder is not attached as an Exhibit hereto, such documents
shall be in form and substance, and shall be executed and delivered in a manner,
reasonably satisfactory to the recipient which shall be approved by Sellers' and
Buyer's legal counsel.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE COMPANY
---------------------------------------------------------
Sellers and the Company hereby jointly and severally represent and
warrant to Buyer as follows, which representations and warranties are, as of the
date hereof, and will be, as of the Closing Date, true and correct:
8
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4.1 Organization of the Company. The Company is a corporation duly
---------------------------
organized, validly existing and in good standing under the laws of the States of
Texas, Nevada and Louisiana. Copies of the Articles of Incorporation and Bylaws
of the Company, and all amendments thereto, heretofore delivered to Buyer are
accurate and complete as of the date hereof. The Company is duly qualified or
licensed to do business as a foreign corporation in good standing in the
State(s) where this is legally required.
4.2 Authorization. Each of the Sellers and the Company has full power and
-------------
authority (corporate or other) to enter into this Agreement and the Ancillary
Agreements, as the case may be, and to carry out the transactions contemplated
hereby and thereby, and the Board of Directors of the Company and each of the
Sellers has taken all action required by law, its charter documents, as the case
may be, or otherwise to be taken by it to authorize the execution, delivery and
performance of this Agreement and the Ancillary Agreements, as the case may be,
and the consummation of the transactions contemplated hereby and thereby. This
Agreement and the Ancillary Agreements, as the case may be, are the legal, valid
and binding obligations of each of the Sellers and the Company, enforceable
against each of them in accordance with their respective terms. A copy of the
resolutions of the Company's board of directors and stockholders authorizing
this Agreement and the related transactions is attached hereto as Schedule 4.2.
4.3 No Violation. None of the execution, delivery and performance of this
------------
Agreement and the Ancillary Agreements nor the consummation of the transactions
contemplated hereby and thereby will (i) violate any provision of the Articles
of Incorporation or Bylaws of the Company, (ii) violate, result in a breach of,
conflict with, or constitute a default (or an event which, with the giving of
notice or lapse of time or both, would constitute a default) under, require any
consent under, or give to others any rights of termination, amendment,
acceleration, suspension, revocation or cancellation of any note, bond,
mortgage, or indenture, contract, agreement, lease, sublease, license, permit,
franchise, distributorship agreement (except as provided on Schedule 4.3) or
other instrument or arrangement to which any Seller or the Company is a party or
by which any of the Shares or any of the assets or properties of the Company or
any Seller are bound or affected, (iii) result in the creation or imposition of
any Encumbrance upon any of the Shares or any property or Assets of the Company
or any Seller under any agreement or commitment to which the Company or any
Seller is a party or by which the Company or any Seller is bound or affected, or
to which the property of the Company or any Seller is subject, or (iv) violate,
conflict with or result in the breach of (or cause an event which could have a
Material Adverse Effect as a result of) any statute or law or any judgment,
decree, order, regulation or rule of any court or governmental authority to
which any Seller, the Company, the Business or any of the properties or Assets
of any of the foregoing is subject. Except as set forth on Schedule 4.3, no
action, consent, approval or authorization by or filing with any person or
entity, including, without limitation, any governmental authority, is required
in connection with the execution, delivery and performance by each of the
Sellers and the Company of this Agreement and the Ancillary Agreements, as the
case may be, or the consummation by each of the Sellers and the Company of the
transactions respectively contemplated by each of them herein and therein.
4.4 Capitalization.
--------------
4.4.1 The authorized and the issued equity securities of the Company are
as set forth on Schedule 4.4. Sellers are and will be on the Closing Date the
record and beneficial owners and holders of the Shares as set forth on Schedule
4.4 (which schedule also sets forth the address of each such Seller and the
certificate numbers of the certificates representing the Shares), free and clear
of all Encumbrances (other than a legend indicating only that the Shares have
not been registered under the Securities Act).
9
<PAGE>
4.4.2 There are no other shares of capital stock of the Company issued
and outstanding and no shares of treasury stock. All Shares are validly issued,
fully paid and nonassessable. None of the Shares was issued in violation of any
preemptive rights. There are no outstanding (i) securities convertible into or
exchangeable or exercisable for any of the Company's capital stock; (ii)
options, warrants, calls or other rights, including, without limitation, rights
to demand registration or to sell in connection with any registration by the
Company under the Securities Act, with respect to the issued capital stock of
the Company, or to purchase or subscribe to capital stock of the Company or
securities convertible into or exchangeable or exercisable for capital stock of
the Company; (iii) contracts, commitments, agreements, understandings or
arrangements of any kind relating to the issuance, sale, transfer, and/or
assignment of any capital stock of the Company, any such convertible or
exchangeable securities or any such options, warrants or rights; or (iv) Shares
pledged as collateral to secure any agreement or obligation. There are no voting
trust agreements other than as set forth on Schedule 4.4.2 (which agreements
will be terminated at or prior to the Closing Date) or other contracts,
agreements, arrangements, commitments, plans, proxies or understanding
restricting or otherwise relating to conveyance, voting or dividend rights with
respect to the Shares. Upon consummation of the transactions contemplated by
this Agreement and registration of the Shares in the name of Buyer in the stock
records of the Company, the Buyer will own all of the issued and outstanding
equity securities of the Company of every sort whatsoever, free and clear of all
Encumbrances.
4.5 Related Entities.
----------------
4.5.1 Schedule 4.5(a) sets forth a complete and accurate list of all of
the Related Entities, all of which are, directly or indirectly, wholly-owned by
the Company, any or all of the Sellers, or some combination thereof. Schedule
4.5(a) also sets forth the jurisdiction of incorporation of each of the Related
Entities, each jurisdiction in which each such Related Entity is qualified to do
business, the number of shares of such Related Entities outstanding, and the
ownership thereof or other ownership interests thereof.
4.5.2 Schedule 4.5(b) sets forth a list of all agreements among the
Company, any of the Sellers and the Related Entities.
4.6 Equipment and Other Assets; Absence of Encumbrances. The Asset listing
---------------------------------------------------
attached as Schedule 4.6 sets forth the asset description and original cost of
all Equipment. Buyer and Parent understand, acknowledge and agree that except
as otherwise expressly provided in this Agreement, the Assets are included on an
"AS IS, WHERE IS" "WITH ALL FAULTS" basis. EXCEPT AS OTHERWISE SPECIFICALLY
PROVIDED IN THIS AGREEMENT, SELLERS EXPRESSLY DISCLAIM ALL IMPLIED WARRANTIES
EXISTING UNDER ANY APPLICABLE LAW WITH RESPECT TO THE ASSETS, INCLUDING, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. BUYER AND SELLERS AGREE
THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE, THE DISCLAIMERS
OF IMPLIED WARRANTIES CONTAINED IN THIS SECTION ARE "CONSPICUOUS" DISCLAIMERS
FOR PURPOSES OF ANY APPLICABLE LAW, RULE OR ORDER. Notwithstanding the
foregoing, any manufacturers warranties that are in effect will not be canceled
or diminished by the making of this agreement. Buyer shall have the right,
prior to Closing, to
10
<PAGE>
inspect all of the Assets (wherever located) that are reflected on the Balance
Sheet. In the event that any such Assets are not operable, rental ready or in
good condition or repair, Buyer shall have the right to exclude such Assets from
the purchase and make an appropriate adjustment to the Purchase Price.
4.7 Facilities.
----------
4.7.1 Real Property. After the Company purchases the Owned Real Property
-------------
from the Sellers and/or the Related Entities, pursuant to Section 6.10 of this
Agreement (the "Real Property Purchase"), the only Owned Real Property will be
the parcels located at 1305 West Jackson, Pasadena, Texas 77506, 220 29th Street
South, Texas City, Texas 77592 and 1710 Industrial Park Dr., Nederland, Texas
77627, as described on Schedule 4.7. The Sellers, the Company or a Related
Entity has delivered to Buyer an accurate copy of their existing policy of title
insurance as to the Owned Real Property, which policies are listed on Schedule
4.7. After the Purchase, the Company will enjoy peaceful and undisturbed
possession of the Owned Real Property and will have good and marketable title to
all of the Owned Real Property (including all Facilities located thereon), free
and clear of all Encumbrances, other than (i) Encumbrances reflected or reserved
against on the Balance Sheet, (ii) Encumbrances that do not materially affect
the value of the Owned Real Property or the Company's ability to conduct the
Business thereon created by the owner thereof or (iii) restrictions,
reservations, easements, zoning ordinances and other matters of public record
affecting said properties, provided that none of such matters materially
interfere with the Company's ability to use the Owned Real Property in the
manner currently used.
The only Leased Real Property is the parcel located at 2208 Industrial
Drive, Sulphur, Louisiana 70663, as described on Schedule 4.7. The Sellers and
the Company have delivered to Buyer an accurate copy of the Leases covering the
Leased Real Property. Neither the Company nor any lessor under the Leases is
in material breach or default of its obligations thereunder. The Company enjoys
peaceful and undisturbed possession of the Leased Real Property.
There are no leases, subleases (except as disclosed on Schedule 4.7),
licenses, occupancy agreements, options, rights, concessions or other agreements
or arrangements, written or oral, granting to any person the right to purchase,
use or occupy the Facilities or any portion thereof. The Facilities are
supplied with utilities and other services necessary for the operation of the
Business.
4.7.2 Improvements, Fixtures and Equipment. To the best of Sellers' and
------------------------------------
the Company's knowledge, the Facilities and the improvements thereon, including
without limitation all Equipment (including all fixtures) and other tangible
assets owned, leased or used by the Company at the Facilities are insured to the
extent and in a manner customary in the industry, are sufficient for the
operation of the Business as presently conducted and are in conformity, in all
material 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
the Company or third parties. Buyer understands, acknowledges and agrees that
except as otherwise expressly provided in this Agreement, the Facilities are
included on an "AS IS, WHERE IS" "WITH ALL FAULTS" basis. EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED IN THIS AGREEMENT, SELLERS EXPRESSLY DISCLAIM ALL EXPRESS
OR IMPLIED WARRANTIES EXISTING UNDER ANY APPLICABLE LAW WITH RESPECT TO THE
FACILITIES, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, ANY
EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, WARRANTY OF HABITABILITY, AND SELLERS DO NOT WARRANT THE DESCRIPTION,
VALUE, QUALITY OR
11
<PAGE>
CONDITION OF ANY OF THE FACILITIES, EXCEPT AS SET FORTH IN THIS AGREEMENT. Buyer
and Sellers agree that, to the extent required by applicable law to be
effective, the disclaimers of implied warranties contained in this Section are
"conspicuous" disclaimers for purposes of any applicable law, rule or order.
Notwithstanding the foregoing, Buyer shall have the right, prior to Closing, to
inspect all of the Facilities. In the event that any of such Facilities are not
in good condition or repair, or sufficient for the operation of the Business as
currently conducted, Buyer shall have the right to exclude such Facilities from
the purchase and to make an appropriate adjustment to the Purchase Price.
4.7.3 Conformity. All Facilities have received all required approvals
----------
of governmental authorities (including without limitation Permits and a
certificate of occupancy or other similar certificate permitting lawful
occupancy of the Facilities) required in connection with the operation thereof.
4.8 Contracts and Commitments.
-------------------------
4.8.1 Contracts. Schedule 4.8 sets forth a complete and accurate list
---------
of all material Contracts of the following categories:
4.8.1.1 Contracts not made in the ordinary course of the
Company's conduct of the Business;
4.8.1.2 Employment contracts and severance agreements;
4.8.1.3 Supply, purchase, distribution, franchise, license, sales
or commission contracts related to the Business;
4.8.1.4 Contracts involving expenditures or liabilities, actual
or potential, in excess of $5,000 or otherwise material to the Business, and not
cancelable (without liability) within 30 calendar days;
4.8.1.5 Contracts or commitments relating to commission
arrangements with others;
4.8.1.6 Factoring agreements, promissory notes, loans,
agreements, evidences of indebtedness, letters of credit, guarantees, or other
instruments relating to an obligation to pay money, whether the Company shall be
the borrower, lender or guarantor thereunder or whereby any Equipment or
Inventory are pledged (excluding credit provided by the Company in the ordinary
course of the Business to its customers);
4.8.1.7 Leases of personal property not cancelable (without
liability) within 30 calendar days; and
4.8.1.8 Contracts containing covenants limiting the freedom of
the Company or any officer, director or shareholder of the Company to engage in
any line of business or compete with any person.
12
<PAGE>
Sellers have either delivered to Buyer or have made available to Buyer at the
Company's place of business true, correct and complete copies of all of the
Contracts listed on Schedule 4.8, including all amendments and supplements
thereto.
4.8.2 Absence of Breaches or Defaults. To the best of Seller's and
-------------------------------
Company's knowledge, all of the material Contracts are valid and in full force
and effect. The Company has duly performed all of its material obligations
under the Contracts to the extent those obligations to perform have accrued, and
no violation of, or default or breach under any Contracts by the Company or, to
the best of Sellers' knowledge, any other party has occurred and neither the
Company nor any other party has repudiated any provisions thereof. All of the
material Contracts will be enforceable by the Company after the Closing to the
same extent as if the transactions contemplated by this Agreement had not been
consummated.
4.9 Permits. The Company has all material Permits required to conduct the
-------
Business, except where the failure to obtain such Permits would not have a
material effect on the Business. All Permits of the Company related to the
Business are valid and in full force and effect and are listed on Schedule 4.9.
4.10 Financial Statements. The Company has heretofore delivered to Buyer the
--------------------
Financial Statements and Year-End Financial Statements. The Financial
Statements and Year-End Financial Statements (a) are in accordance with the
underlying books and records of the Company, (b) have been prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied throughout the periods covered thereby, except that the Year-End
Financial Statements were prepared in accordance with the existing Company tax
basis of accounting and (c) fairly and accurately present the assets,
liabilities (including all reserves) and financial position of the Business as
of the respective dates thereof and the results of operations and changes in
cash flows for the periods then ended (subject to normal year-end adjustments).
At the Balance Sheet Date there were no liabilities of the Company, which, in
accordance with GAAP, should have been shown or reflected in the Financial
Statements or the notes thereto, which are not shown or reflected in the
Financial Statements or the notes thereto.
4.11 Books and Records. The Company has made and kept (and given Buyer
-----------------
access to) Books and Records and accounts, which, in reasonable detail,
accurately and fairly reflect the activities of the Company. The minute books of
the Company previously delivered to Buyer accurately and adequately reflect all
action previously taken by the shareholders, board of directors and committees
of the board of directors of the Company. The stock book records of the Company
made available to Buyer are true, correct and complete, and accurately reflect
all transactions effected in the Company's stock through and including the date
hereof.
4.12 Litigation. Except as set forth on Schedule 4.12, there is no action,
----------
order, writ, injunction, judgment or decree outstanding or any claim, suit,
litigation, proceeding, labor dispute, arbitral action, governmental audit or
investigation (collectively, "Actions") pending, or to the best of the Sellers'
or Company's knowledge, threatened or anticipated (a) against, related to or
affecting the Company or the Business or (b) seeking to delay, limit or enjoin
the transactions contemplated by this Agreement. The Company is not in default
with respect to or subject to any judgment, order, writ, injunction or decree of
any court or governmental agency, and there are no unsatisfied judgments against
the Company or the Business.
4.13 Labor Matters. The Company is not a party to any labor agreement with
-------------
respect to its employees with any labor organization, union, group or
association and there are no employee unions (nor any other similar labor or
employee organizations) under local statutes, custom or practice. To the best
13
<PAGE>
of Sellers' and Company's knowledge, the Company has not experienced within the
past five (5) years any attempt by organized labor or its representatives to
make the Company conform to demands of organized labor relating to its employees
or to enter into a binding agreement with organized labor that would cover the
employees of the Company.
4.14 Compliance with Law. The Company, the conduct of the Business and the
-------------------
operation of the Facilities have not materially violated and are in material
compliance with all laws, statutes, ordinances, regulations, rules and orders of
any foreign, federal, state or local government and any other governmental
department or agency, and any judgment, decision, decree or order of any court
or governmental agency, department or authority, including without limitation
Environmental Laws (as defined in Section 4.22.2), relating to the Assets,
Facilities or Business or operations of the Company, except where the violation
or failure to comply, individually or in the aggregate would not have a Material
Adverse Effect on the Facilities, Assets or Business. The Company and the
conduct of the Business and the operation of the Facilities are in material
conformity with all energy, public utility, zoning, building and health codes,
regulations and ordinances, the Americans with Disabilities Act, ERISA, OSHA and
Environmental Laws and all other foreign, federal, state, and local governmental
and regulatory requirements. The Company has not received any notice to the
effect that, or otherwise been advised that, it is not in compliance with any
such statutes, regulations, rules, judgments, decrees, orders, ordinances or
other laws, and the Company has no reason to anticipate that any existing
circumstances are likely to result in violations of any of the foregoing.
4.15 No Brokers. None of the Sellers, the Company or any of the Company's
----------
officers, directors, employees or Affiliates has employed or made any agreement
with any broker, finder or similar agent or any person or firm which will result
in an obligation on the part of the Company or Buyer to pay any finder's fee,
brokerage fees or commission or similar payment in connection with the
transactions contemplated hereby.
4.16 No Other Agreements to Sell the Company. None of the Sellers have any
---------------------------------------
commitment or legal obligation, absolute or contingent, to any other person or
firm other than the Buyer to sell, assign, transfer or effect a sale of any of
the Shares or the Assets or to effect any merger, consolidation, liquidation,
dissolution or other reorganization of the Company.
4.17 Proprietary Rights.
------------------
4.17.1 Proprietary Rights. To the best of Sellers' and Company's
------------------
knowledge, Schedule 4.17 lists all of the Company's federal, state and foreign
registrations of trademarks, service marks and other marks, trade names or other
trade rights, and all pending applications for any such registrations, all other
trademarks and other marks, trade names and other trade rights or in which the
Company has any interest whatsoever, and all other trade secrets, if any, and
other proprietary rights, whether or not registered, and all computer software
(including without limitation the tool rental control software used by the
Company), created or used by or on behalf of the Company, in each case relating
to the Business (collectively, "Proprietary Rights"). The Proprietary Rights
listed in Schedule 4.17 are all those used by the Company in connection with the
Business.
4.17.2 Royalties and Licenses. To the best of Sellers' and Company's
----------------------
knowledge, no person has a right to receive a royalty or similar payment in
respect of any Proprietary Rights. Except as set forth on Schedule 4.17.2 the
Company has no licenses granted, sold or otherwise transferred by or to it or
other agreements to which it is a party, relating in whole or in part to any of
the Proprietary Rights.
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4.17.3 Ownership and Protection of Proprietary Rights. To the best of
----------------------------------------------
Sellers' and Company's knowledge, the Company owns or licenses, and has the sole
right to use or (as it so elects) to sublicense, each of the Proprietary Rights.
To the best of Sellers' and Company's knowledge, none of the Proprietary Rights
is involved in any pending or threatened litigation. The Company has not
received any notice of invalidity or infringement of any rights of others with
respect to such Proprietary Rights. To the best of Sellers' and Company's
knowledge, the Company has taken all reasonable and prudent steps to protect the
Proprietary Rights from infringement by any other firm, corporation, association
or person. To the best of Sellers' and Company's knowledge, the Company's use
of the Proprietary Rights is not infringing upon or otherwise violating the
rights of any third party in or to such Proprietary Rights, nor has such
infringement been alleged by any third party. To the best of Sellers' and
Company's knowledge, all of the Proprietary Rights are valid and enforceable
rights of the Company and will not cease to be valid and in full force and
effect by reason of the execution, delivery and performance of this Agreement or
the consummation of the transactions contemplated by this Agreement.
4.18 Tax Matters.
-----------
4.18.1 Filing of Tax Returns. The Company has timely filed with the
---------------------
appropriate taxing authorities all returns (including without limitation
information returns and other material information) in respect of Taxes required
to be filed through the date hereof and will timely file any such returns
required. The returns and other information filed are complete and accurate in
all material respects. Except as specified in Schedule 4.18, neither the
Company, nor any group of which the Company now or was a member, has requested
any extension of time within which to file returns (including without limitation
information returns) in respect of any taxes. The Company has delivered to
Buyer complete and accurate copies of the Company's federal, state and local tax
returns for its fiscal years ended March 31, 1994, 1995 and 1996, and will
deliver to Buyer copies of the Company's federal, state and local tax returns
for the eleven months ended February 28, 1997 when completed.
4.18.2 Payment of Taxes. All Taxes, in respect of taxable periods ending
----------------
on or before the Balance Sheet Date, have been timely paid, or will be timely
paid prior to the Balance Sheet Date, or will be fully accrued for on the
Balance Sheet. Any unpaid Taxes relating to periods ending on or before the
Balance Sheet Date (whether full or partial periods) that are not fully accrued
for on the Balance Sheet will be subject to full indemnification by Sellers in
accordance with Section 10.3 hereof (without being limited as to the amount).
Sellers shall have no liability for Taxes accruing as a result of the actions of
Buyer after March 1, 1997.
4.18.3 Audits, Investigations or Claims. To the best of Sellers' and
--------------------------------
Company's knowledge, except as set forth in Schedule 4.18, the consolidated
federal income tax returns and any required state tax returns of the Company
have been examined by the Internal Revenue Service and any applicable state
taxing authority for all periods to and including those set forth in Schedule
4.18, and except to the extent shown therein, no material deficiencies for
Taxes, have been claimed, proposed or assessed by any taxing or other
governmental authority against the Company. Except as set forth in Schedule
4.18, there are no pending or, to the best of the Sellers' or Company's
knowledge, threatened audits, investigations or claims for or relating to any
material additional liability in respect of Taxes, and there are no matters
under discussion with any governmental authorities with respect to Taxes that in
the reasonable judgment of the Company, or its counsel, is likely to result in a
material additional liability for Taxes. To the best of Sellers' and Company's
knowledge, audits of federal, state, and local returns for Taxes by the relevant
taxing authorities have been completed for each period and set forth in Schedule
4.18 and, except as set forth therein, the Company has not been notified that
any taxing authority intends to audit a return for any
15
<PAGE>
period. Except as set forth in Schedule 4.18, no extension of a statute of
limitations relating to Taxes is in effect with respect to the Company.
4.18.4 Lien. There are no liens for Taxes (other than as could be
----
asserted for current Taxes not yet due and payable) on the Assets.
4.19 Accounts Receivable. To the best of Sellers' and Company's knowledge,
-------------------
the accounts receivable reflected in the Balance Sheet represent bona fide
claims of the Company or GT Financial, Ltd. (the "Factor") 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 were delivered or performed in accordance with the applicable orders,
Contracts or customer requirements. To the best of Sellers' and Company's
knowledge, all of such accounts receivables are collectible in the ordinary
course of business except to the extent reserved against on the Balance Sheet.
Following the repurchase of accounts receivable from the Factor pursuant to
Section 6.9, the Company will own all such accounts receivable, free and clear
of all Encumbrances.
4.20 Inventory. All the Inventory is located at (i) the Facilities or (ii)
---------
on consignment at various customer sites. To the best of Sellers' and Company's
knowledge, there has been no material decrease in the book value or fair value
of the Inventory since the Balance Sheet Date. The values at which the Inventory
is shown on the Balance Sheet have been determined on LIFO method in accordance
with Federal tax regulations, consistently applied throughout the periods
covered by the Financial Statements.
4.21 Employees and Employee Benefits.
-------------------------------
4.21.1 As used in this Section 4.21, the following terms have the
meanings set forth below.
"Benefit Arrangement" shall mean any employment, consulting, severance or
-------------------
other similar contract, arrangement or policy and each plan, arrangement
(written or oral), program, agreement or commitment providing for insurance
coverage (including without limitation any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits, life, health, disability or accident benefits
(including without limitation any "voluntary employees' beneficiary association"
as defined in Section 501(c)(9) of the Code providing for the same or other
benefits) or for deferred compensation, profit-sharing bonuses, stock options,
stock appreciation rights, stock purchases or other forms of incentive
compensation or post-retirement insurance, compensation or benefits which (A) is
not a Welfare Plan, Pension Plan or Multiemployer Plan, (B) is entered into,
maintained, contributed to or required to be contributed to, as the case may be,
by the Company or an ERISA Affiliate or under which the Company or any ERISA
Affiliate may incur any liability, and (c) covers any employee or former
employee of the Company or any ERISA Affiliate (with respect to their
relationship with such entities).
"Employee Plans" shall mean all Benefit Arrangements, Multiemployer
--------------
Plans, Pension Plans and Welfare Plans.
"ERISA Affiliate" shall mean any entity which is (or at any relevant time
---------------
was) a member of a "controlled group of corporations" with, under "common
control" with, or a member of an "affiliated service group" with, the Company as
defined in Section 414(b), (c), (m) or (o) of the Code, or under "common
control" with the Company, within the meaning of Section 4001(b)(1) of ERISA.
16
<PAGE>
"Multiemployer Plan" shall mean any "multiemployer plan," as defined in
------------------
Section 4001(a)(3) of ERISA, (A) which the Company or any ERISA Affiliate
maintains, administers, contributes to or is required to contribute to, or,
after September 25, 1980, maintained, administered, contributed to or was
required to contribute to, or under which the Company or any ERISA Affiliate may
incur any liability and (B) which covers any employee or former employee of the
Company or any ERISA Affiliate (with respect to their relationship with such
entities).
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
----
"Pension Plan" shall mean any "employee pension benefit plan" as defined
------------
in Section 3(2) of ERISA (other than a Multiemployer Plan) which (A) the Company
or any ERISA Affiliate maintains, administers, contributes to or is required to
contribute to, or, within the five years prior to the Closing Date, maintained,
administered, contributed to or was required to contribute to, or under which
the Company or any ERISA Affiliate may incur any liability; (B) covers any
employee or former employee of the Company or any ERISA Affiliate (with respect
to their relationship with such entities); and (C) is not a Multiemployer Plan.
"Welfare Plan" shall mean any "employee welfare benefit plan" as defined
------------
in Section 3(1) of ERISA, which (A) the Company or any ERISA Affiliate
maintains, administers, contributes to or is required to contribute to, or under
which the Company or any ERISA Affiliate may incur any liability; (B) covers any
employee or former employee of the Company or any ERISA Affiliate (with respect
to their relationship with such entities); and (C) is not a Multiemployer Plan.
4.21.2 Schedule 4.21(a): (i) contains a list of all current employees of
the Company, and their wage rates or salaries, as of the date of this Agreement,
and (ii) sets forth the dates of employment for such employees.
4.21.3 Disclosure; Delivery of Copies of Relevant Documents and Other
--------------------------------------------------------------
Information. Schedule 4.21(b) contains a complete list of Employee Plans. True
- -----------
and complete copies of each of the following documents have been delivered by
the Company to Buyer: (i) each Welfare Plan, Pension Plan and Multiemployer
Plan (and, if applicable, related trust agreements) and all amendments thereto,
all written interpretations thereof and written descriptions thereof which have
been distributed to the Company's employees and all annuity contracts or other
funding instruments; (ii) each Benefit Arrangement including written
interpretations thereof and written descriptions thereof which have been
distributed to the Company's employees (including descriptions of the number and
level of employees covered thereby) and a complete description of any Benefit
Arrangement which is not in writing; (iii) the most recent determination or
opinion letter issued by the Internal Revenue Service with respect to each
Pension Plan and each Welfare Plan; (iv) for the three most recent plan years,
Annual Reports on Form 5500 Series required to be filed with any governmental
agency for each Pension Plan and each Welfare Plan; (v) all actuarial reports
prepared for the last three plan years for each Pension Plan; (vi) a description
of complete age, salary, service and related data as of the last day of the last
plan year for employees and former employees of the Company; and (vii) a
description setting forth the amount of any liability of the company as of the
Closing Date for payments more than thirty (30) calendar days past due with
respect to each Welfare Plan.
4.21.4 Representations.
---------------
4.21.4.1 Pension Plans. No Pension Plan is subject to the
-------------
minimum funding requirements of Title IV of ERISA or Section 412 of the Code.
Neither the Company nor any ERISA
17
<PAGE>
Affiliate is required to provide security to a Pension Plan under Section
401(a)(29) of the Code. Each Pension Plan which is intended to be qualified (and
each related trust agreement, annuity contract or other funding instrument) is
qualified and tax-exempt under the provisions of Code Sections 401(a) (or
403(a), as appropriate) and 501(a) and has been so qualified during the period
from its adoption to date. Neither the Company nor any ERISA Affiliate has
engaged in, or is a successor or parent corporation to an entity that has
engaged in, a transaction described in Section 4069 of ERISA. There has been no
"reportable event" (as defined in Section 4043(c) of ERISA and the PBGC
regulations under such Section) with respect to any Pension Plan and neither the
Company nor any ERISA Affiliate is subject to Section 4043(b) of ERISA.
4.21.4.2 Multiemployer Plans. Neither the Company nor any ERISA
-------------------
Affiliate has any Multiemployer Plans.
4.21.4.3 Welfare Plans. Except for the Cafeteria Plan in force
-------------
with the Company, none of the Company, any ERISA Affiliate or any Welfare Plan
has any present or future obligation to make any payment to, or with respect to
any present or former employee of the Company or any ERISA Affiliate pursuant
to, any retiree medical benefit plan, or other retiree Welfare Plan, and no
condition exists which would prevent the Company from amending or terminating
any such benefit plan or Welfare Plan. To the best of Sellers' and Company's
knowledge, each Welfare Plan which is a "group health plan," as defined in
Section 607(1) of ERISA, has been operated in compliance with provisions of Part
6 of Title I, Subtitle B of ERISA and Section 4980B of the Code at all times.
4.21.4.4 Compliance with Law. To the best of Sellers' and
-------------------
Company's knowledge, each Employee Plan has been maintained in compliance with
its terms and with the requirements prescribed by any and all statutes, orders,
rules and regulations which are applicable to such Employee Plan, including
without limitation ERISA and the Code.
4.21.4.5 Employment at Will. Except as provided by law, the
------------------
employment of all persons presently employed (other than Andy G. Gessner and
Larry R. Bush) or retained by the Company is terminable at will.
4.21.4.6 Unrelated Business Taxable Income. To the best of
---------------------------------
Sellers' and Company's knowledge, no Employee Plan (or trust or other funding
vehicle pursuant thereto) is subject to any tax under Code Section 511.
4.21.4.7 Deductibility of Payments. Except for the contracts with
-------------------------
Andy G. Gessner and Larry R. Bush, there is no contract, agreement, plan or
arrangement covering any employee or former employee of the Company (with
respect to its relationship with such entities) that, individually or
collectively, provides for the payment by the Company of any amount (i) that is
not deductible by the Company under Section 162(a)(1) or 404 of the Code,
whichever is applicable, (ii) for which the deduction by the Company would be
disallowed under Section 162(m) of the Code, or (iii) that is an "excess
parachute payment" pursuant to Section 280G of the Code.
4.21.4.8 Fiduciary Duties and Prohibited Transactions. To the
--------------------------------------------
best of Sellers' and Company's knowledge, neither the Company nor any plan
fiduciary of any Welfare Plan or Pension Plan has engaged in any transaction in
violation of Sections 404 or 406 of ERISA or any "prohibited transaction," as
defined in Section 4975(c)(1) of the Code, for which no exemption exists under
Section 408 of ERISA or Section 4975(c)(2) or (d) of the Code, or has otherwise
violated the provisions of Part 4 of Title I, Subtitle B of ERISA. To the best
of Sellers' and Company's knowledge, the Company has not
18
<PAGE>
knowingly participated in a violation of Part 4 of Title I, Subtitle B of ERISA
by any plan fiduciary of any Welfare Plan or Pension Plan (or other employee
benefit plan subject to ERISA) and has not been assessed any civil penalty under
Section 502(l) of ERISA.
4.21.4.9 Validity and Enforceability. To the best of Sellers'
---------------------------
and Company's knowledge, each Welfare Plan, Pension Plan, related trust
agreement, annuity contract or other funding instrument and Benefit Arrangement
is legally valid and binding and in full force and effect.
4.21.4.10 Litigation. To the best of Sellers' and Company's
----------
knowledge, there is no action, order, writ, injunction, judgment or decree
outstanding or claim, suit, litigation, proceeding, arbitral action,
governmental audit or investigation relating to or seeking benefits under any
Employee Plan that is pending, threatened or anticipated against the Company,
any ERISA Affiliate or any Employee Plan.
4.21.4.11 No Amendments. To the best of Sellers' and Company's
-------------
knowledge, neither the Company nor any ERISA Affiliate has any announced plan or
legally binding commitment to create any additional Employee Plans or to amend
or modify any existing Employee Plan.
4.21.4.12 No Other Material Liability. No event has occurred in
---------------------------
connection with which the Company or any ERISA Affiliate or any Employee Plan,
directly or indirectly, could be subject to any material liability (A) under any
statute, regulation or governmental order relating to any Employee Plans or (B)
pursuant to any obligation of the Company to indemnify any person against
liability incurred under any such statute, regulation or order as they relate to
the Employee Plans.
4.21.4.13 Unpaid Contributions. Except for the profit sharing
--------------------
contribution to be accrued on February 28, 1997, neither the Company nor any
ERISA Affiliate has any liability for unpaid contributions under Section 515 of
ERISA with respect to any Pension Plan or Welfare Plan.
4.21.4.14 Insurance Contracts. To the best of Sellers' and
-------------------
Company's knowledge, neither the Company nor any Employee Plan holds as an asset
of any Employee Plan any interest in any annuity contract, guaranteed investment
contract or any other investment or insurance contract issued by an insurance
company that is the subject of bankruptcy, conservatorship or rehabilitation
proceedings.
4.21.4.15 No Acceleration or Creation of Rights. To the best of
-------------------------------------
Sellers' and Company's knowledge, neither the execution and delivery of this
Agreement by the Company nor the consummation of the transactions contemplated
hereby will result in the acceleration or creation of any rights of any person
to benefits under any Employee Plan (including, without limitation, the
acceleration of the vesting except by plan termination or exercisability of any
stock options, the acceleration of the vesting of any restricted stock, the
acceleration of the accrual or vesting of any benefits under any Pension Plan
except by plan termination or the acceleration or creation of any rights under
any severance, parachute or change in control agreement).
4.22 Compliance With Environmental Laws.
----------------------------------
4.22.1 Definitions. The following terms, when used in this Section
-----------
4.21, shall have the following meanings. Unless the context otherwise requires,
any of these terms may be used in the singular or the plural depending on the
reference.
4.22.1.1 "Company". For purposes of this Section 4.22 only, the
-------
term "Company" shall include (I) all Related Entities of the Company, including,
without limitation the Sellers,
19
<PAGE>
(ii) all partnerships, joint ventures and other entities or organizations in
which the Company was at any time or is a partner, joint venturer, member or
participant and (iii) all predecessor or former corporations, partnerships,
joint ventures, organizations, businesses or other entities, whether in
existence as of the date hereof or at any time prior to the date hereof, the
assets or obligations of which have been acquired or assumed by the Company or
to which the Company has succeeded.
4.22.1.2 "Release" shall mean and include any spilling, leaking,
-------
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
migrating, leaching, dumping or disposing into the environment or the work place
of any Hazardous Substance, and otherwise as defined in any Environmental Law.
4.22.1.3 "Hazardous Substance" shall mean any quantity of
-------------------
asbestos in any form, urea formaldehyde, PCBs, radon gas, crude oil or any
fraction thereof, all forms of natural gas, petroleum products or by-products,
any radioactive substance, any toxic, infectious, reactive, corrosive, ignitible
or flammable chemical or chemical compound and any other hazardous substance,
material or waste (as defined in or for purposes of any Environmental Law),
whether solid, liquid or gas.
4.22.2 Compliance With Environmental and Zoning Law. Except as set forth
--------------------------------------------
on Schedule 4.22 and except as set forth in the environmental assessments
referred to in Section 6.7, the Facilities have been owned, leased, operated and
maintained in material compliance with all environmental laws, regulations and
requirements (collectively, "Environmental Laws").
4.22.3 Facilities. Except as set forth in the environmental assessments
----------
referred to in Section 6.7, the Facilities are, and at all times have been,
owned, leased and operated in material compliance with all Environmental Laws
and in a manner that will not give rise to any liability under any Environmental
Laws.
4.22.4 Permits. The Company has, and at all times has had, all material
-------
Permits required under any Environmental Law and the Facilities are, and at all
times have been, in material compliance with all such Permits subject to the
environmental assessments referred to in Section 6.7.
4.22.5 Permits Required. The consummation of any of the transactions
----------------
contemplated by this Agreement will not require an application for issuance,
renewal, transfer or extension of, or any other administrative action regarding,
any Permit required under any Environmental Law subject to the environmental
assessments referred to in Section 6.7.
4.22.6 Notice of Violation. The Company has not received any notice at
-------------------
any time that it or the Facilities is or were claimed to be in violation of the
provisions of any Environmental Law or in non-compliance with the conditions of
any Permit, and there is no pending or threatened lawsuit, governmental or other
legal action to that effect.
4.22.7 Pending Actions. There is not now pending or threatened, nor any
---------------
basis for, nor has there ever been, any Action against the Company, nor, to the
best of Sellers' knowledge, any basis for any Action, under any Environmental
Law or otherwise with respect to any Release or mishandling of any Hazardous
Substance.
4.22.8 Judgments. There are no consent decrees, judgments, judicial or
---------
administrative orders or agreements with, or liens by, any governmental
authority or quasi-governmental entity relating to any
20
<PAGE>
Environmental Law which regulate, obligate, bind or in any way materially affect
the Company or the Facilities.
4.22.9 Hazardous Substances. To the best of Sellers' or Company's
--------------------
knowledge, there is not and has not been any Hazardous Substance used,
generated, treated, stored, transported, disposed of, handled or otherwise
existing on, under, about or from any Facility, except for quantities of any
such Hazardous Substances stored or otherwise held on, under or about any such
Facility in material compliance with all Environmental Laws and necessary for
the operation of the Business.
4.22.10 Handling of Hazardous Substances. To the best of Sellers'
--------------------------------
knowledge, the Company has at all times used, generated, treated, stored,
transported, disposed of or otherwise handled its Hazardous Substances in
compliance with all Environmental Laws and in a manner that will not result in
liability of the Company or Buyer under any Environmental Law. Sellers have
made available TNRCC reports to Buyer that have been filed with the State of
Texas.
4.22.11 RESERVED.
4.22.12 RESERVED.
4.22.13 Storage Tank. To the best of Sellers' knowledge, Schedule 4.22,
------------
sets out the past and present underground and above ground tanks at the
Facilities.
4.22.14 Environmental Audits or Assessments. True, complete and correct
-----------------------------------
copies of the written reports, if any, and all parts thereof, including any
drafts of such reports if such drafts are in the possession or control of the
Company, of all environmental audits or assessments which have been conducted at
any Facility within the past five years, either by the Company or any attorney,
environmental consultant or engineer engaged for such purpose, have been
delivered to Buyer and a list of all such reports, audits and assessments and
any other similar report, audit or assessment of which the Company or Sellers
have knowledge is included on Schedule 4.22.
4.22.15 Indemnification Agreements. To the best of Sellers' knowledge,
--------------------------
except for all Facility leases and facility access agreements and Contracts, the
Company is not a party, whether as a direct signatory or as successor, assign or
third party beneficiary, or otherwise bound, to any Contract under which the
Company is obligated by or entitled to the benefits of, directly or indirectly,
any representation, warranty, indemnification, covenant, restriction or other
undertaking concerning Environmental Conditions.
4.22.16 Releases or Waivers. To the best of Sellers' knowledge, the
-------------------
Company has not released any other person from any claim under any Environmental
Law or waived any rights concerning any Environmental Condition.
4.22.17 Notices, Warnings and Records. To the best of Sellers'
-----------------------------
knowledge, the Company has given all notices and warnings, made all reports, and
has kept and maintained all records required by and in compliance with all
Environmental Laws.
4.23 Liabilities. The Company has no liabilities or obligations (absolute,
-----------
accrued, contingent or otherwise) except (i) liabilities which are reflected on
the Balance Sheet, (ii) liabilities incurred in the ordinary course of the
Business and consistent with past practice since the Balance Sheet Date, and
(iii) liabilities arising under Contracts identified in Schedule 4.8 to which
the Company is a party.
21
<PAGE>
4.24 Insurance.
---------
4.24.1 To the best of Sellers' knowledge, Schedule 4.24 describes all
currently in force policies of insurance (including the insurer, type of
insurance and period of coverage) to which the Company or any Related Entity is
a party or under which the Company, any Related Entity or any employee, officer
or director of the Company or any Related Entity (in his or her capacity as
such) is or has been insured. All such policies will continue in full force and
effect following the Closing.
4.24.2 RESERVED.
4.24.3 RESERVED.
4.24.4 To the best of Sellers' knowledge, the Company and any Related
Entity have paid all accumulated premiums due, or have accrued same as a
liability and has otherwise performed substantially all of its material
respective obligations, under each such current insurance policy.
4.25 Conduct of the Business. To the best of Sellers' knowledge, since the
-----------------------
Balance Sheet Date, the Company has conducted its operations in the ordinary
course of the Business and substantially in accordance with past practice, and
has not taken any action that, if taken after the date hereof, would violate
Section 6.5.
4.26 Securities Law Matters.
----------------------
4.26.1 Each Seller confirms that it is acquiring the Parent Common
Stock for its own account as principal, for investment purposes only, and not
with a view to, or for, resale or distribution thereof, and no other person has
or will have a direct or indirect beneficial interest in such Parent Common
Stock.
4.26.2 Each Seller understands that the offering and sale of the
Parent Common Stock is intended to be a transaction by an issuer not involving
any public offering exempt from registration under the Securities Act by virtue
of Section 4(2) of the Securities Act and the rules and regulations of the
Commission thereunder;
4.26.3 Each Seller who will be receiving Parent Common Stock
represents that it is an "accredited investor" as such term is defined in Rule
501 under the Securities Act;
4.26.4 Each Seller understands and acknowledges that there are
substantial risks of loss of investment involved in an investment in the Parent
Common Stock, and that the investment in the Parent Common Stock is an illiquid
investment subject to transfer restrictions, and Sellers represent and warrant
that they have the financial ability to bear the economic risk of such
investment;
4.26.5 Each Seller who will be receiving Parent Common Stock has such
knowledge and experience in financial and business matters, including
investments of the type represented by the Parent Common Stock, as to be capable
of evaluating the merits of investment in therein;
4.26.6 Each Seller has been furnished with a copy of the recent
periodic reports filed by Parent with the Commission and any documents that may
have been made available otherwise or upon its request, have carefully read and
understand such materials and have evaluated the risks of an acquisition of the
Parent Common Stock;
22
<PAGE>
4.26.7 Each Seller has been given the opportunity to ask questions of,
and receive answers from, representatives of Parent in order for it to evaluate
the merits and risks of investment in the Parent Common Stock; and
4.26.8 No Seller has been furnished with or has relied upon any oral or
written representation, warranty or information in connection with the offering
of the Parent Common Stock except for that set forth in this Agreement and in
Parent's Prospectus, 10K and Parent's Annual Report.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
--------------------------------------------------
Buyer and Parent hereby represent and warrant to Sellers as follows,
which representations and warranties are, as of the date hereof, and will be, as
of the Closing Date, true and correct:
5.1 Organization of Buyer and Parent. Buyer is a corporation duly organized,
--------------------------------
validly existing and in good standing under the laws of the State of Delaware.
Parent is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
5.2 Authorization. Except as provided in Section 8.9, each of Buyer and
-------------
Parent has all requisite corporate power and authority, and has taken all
corporate action necessary, to execute and deliver this Agreement and the
Ancillary Agreements to which it is a party, to consummate the transactions
contemplated hereby and thereby and to perform its respective obligations
hereunder and thereunder. This Agreement has been duly executed and delivered
by Buyer and Parent and is, and (following their execution and delivery by
Buyer, Parent, the Company, the Seller Representative or the Sellers, as
applicable, each of the Ancillary Agreements will be) a legal, valid and binding
obligation of Buyer or Parent, as applicable, enforceable against Buyer or
Parent, as applicable, in accordance with its terms.
5.3 No Conflict or Violation. Neither the execution, delivery or performance
------------------------
of this Agreement or the Ancillary Agreements nor the consummation of the
transactions contemplated hereby or thereby, nor compliance by Buyer or Parent
with any of the provisions hereof or thereof, will (a) violate or conflict with
any provision of the Certificate of Incorporation or Bylaws of Buyer or Parent,
or (b) violate any statute, rule, regulation, ordinance, code, order, judgment,
ruling, writ, injunction, decree or award binding upon Buyer or Parent.
5.4 Consents and Approvals. No notice to, declaration, filing or
----------------------
registration with, or authorization, consent or approval of, or permit from, any
governmental or regulatory body or authority, or any other person or entity, is
required to be made or obtained by Buyer or Parent in connection with the
execution, delivery and performance of this Agreement or the Ancillary
Agreements and the consummation of the transactions contemplated hereby or
thereby, except (a) as may be required by Buyer to operate the Business after
the Closing, (b) as has been obtained on or prior to the date hereof or (c) as
set forth in Schedule 5.4.
23
<PAGE>
5.5 Covenant of Funding of Profit Sharing. The Company will accrue a
-------------------------------------
contribution to the Company's profit sharing plan on or about February 28, 1997
and Buyer and Parent agree to timely use the Company's funds to fund such Profit
Sharing Plan in conformity with such accrual.
5.6 Covenant of Capital Contribution and Payment. In the event that Company
--------------------------------------------
does not have sufficient marketable securities, cash value in life insurance and
cash to repurchase the accounts receivable from Factor, the Owned Real Property
from Related Entities and repay the lines of credit or other indebtedness to the
Factor, then Company shall, on Closing, use funds contributed by Buyer to settle
such obligation of Company fully and in this regard, Buyer and Parent agree to
make capital contributions or loans to Company sufficient in amount to fully
fund such shortfall.
ARTICLE VI
COVENANTS OF BUYER, THE COMPANY AND SELLER
------------------------------------------
Buyer, the Company and Sellers each covenant with the others as follows:
6.1 Further Assurances. Upon the terms and subject to the conditions
------------------
contained herein, each of the parties hereto agrees, both before and after the
Closing, (i) to use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, (ii) to execute any documents, instruments or conveyances of any kind
which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder, and (iii) to cooperate with each other in
connection with the foregoing, including using their respective best efforts (A)
to obtain all necessary waivers, consents and approvals from third parties;
provided, however, that Buyer shall not be required to make any payments,
commence litigation or agree to modifications of the terms of Contracts or
Leases in order to obtain any such waivers, consents or approvals, (B) to obtain
all necessary Permits as are required to be obtained under any federal, state,
local or foreign law or regulations, (C) to effect all necessary registrations
and filings, including without limitation required filings under the HSR Act and
all other submissions of information requested by governmental authorities, and
(D) to fulfill all conditions to this Agreement.
6.2 No Solicitation. From the date hereof through the Closing or the earlier
---------------
termination of this Agreement, each of the Company and the Sellers shall not,
and shall cause their Representatives (including without limitation investment
bankers, attorneys and accountants) not to, directly or indirectly, enter into,
solicit, initiate or continue any discussions or negotiations with, or encourage
or respond to any inquiries or proposals by, or participate in any negotiations
with, or provide any information to, or otherwise cooperate in any other way
with, any corporation, partnership, person or other entity or group, other than
Buyer and its Representatives, concerning any sale of all or a portion of the
Assets, the Shares or the Business, or any merger, consolidation, liquidation,
dissolution or similar transaction involving the Company (each such transaction
collectively being referred to herein as a "Proposed Acquisition Transaction").
The Company and the Sellers shall not, directly or indirectly, through any
Representative or otherwise, solicit, initiate or encourage the submission of
any proposal or offer from any person or entity relating to any Proposed
Acquisition Transaction or participate in any negotiations regarding, or furnish
to any other person any information with respect to the other party for the
purposes of, or otherwise cooperate in any way with, or assist or participate
in, facilitate or encourage, any effort or attempt by any other person to seek
or effect a Proposed Acquisition Transaction. The Company and the Sellers each
hereby represents that it is not now engaged in discussions or negotiations with
any party (other than Buyer) with respect to any of the foregoing. The Company
or Sellers shall promptly notify Buyer (orally
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and in writing) of any offer, inquiry or contact with any person with respect to
a Proposed Acquisition Transaction, including the terms thereof and the identity
of the prospective purchaser or soliciting party.
6.3 Notification of Certain Matters. From the date hereof through the
-------------------------------
Closing, Buyer or Parent shall give prompt notice to Sellers and the Company of
(a) the occurrence, or failure to occur, of any event which occurrence or
failure would be likely to cause any representation or warranty of the Buyer or
Parent contained in this Agreement or in any exhibit or schedule hereto to be
untrue or inaccurate in any material respect and (b) any failure of Buyer or
Parent to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement or any exhibit or schedule
hereto; provided, however, that such disclosure shall not be deemed to cure any
breach of a representation, warranty, covenant or agreement or to satisfy any
condition.
From the date hereof through the Closing, Sellers and the Company shall give
prompt notice to Buyer or Parent of (a) the occurrence, or failure to occur, of
any event which occurrence or failure would be likely to cause any
representation or warranty of the Sellers or Company contained in this
Agreement or in any exhibit or schedule hereto to be untrue or inaccurate in any
material respect and (b) any failure of Sellers or Company to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement or any exhibit or schedule hereto; provided, however,
that such disclosure shall not be deemed to cure any breach of a representation,
warranty, covenant or agreement or to satisfy any condition.
6.4 Access to Information. From the date hereof through the Closing, the
---------------------
Company shall, and shall cause its Representatives to, afford the
Representatives of Buyer and its Affiliates complete access at all reasonable
times to the Assets and the Facilities for the purpose of inspecting and
conducting appropriate tests upon the same, and to the officers, employees,
agents, attorneys, accountants, properties, Books and Records and Contracts of
the Company, and shall furnish Buyer and its Representatives all financial,
operating and other data and information as Buyer or its Affiliates, through
their respective Representatives, may reasonably request, including but not
limited to data relating to operating procedures, workers' compensation history,
legal, tax and environmental, zoning and other legal compliance.
6.5 Conduct of Business. From the date hereof through the Closing, the
-------------------
Sellers shall, except as contemplated by this Agreement or as consented to by
Buyer in writing, operate the Business in the ordinary course of the Business
and substantially in accordance with past practice and will not take any action
inconsistent with this Agreement or with the consummation of the Closing.
Without limiting the generality of the foregoing, the Company shall not, except
as specifically contemplated by this Agreement or as consented to in writing by
Buyer:
6.5.1 issue or repurchase any shares of capital stock or warrants,
options or other rights to acquire any such shares;
6.5.2 enter into, extend, materially modify, terminate or renew any
Contract;
6.5.3 purchase or enter into any agreement to purchase any item of
Inventory or Equipment;
6.5.4 make any material increase in compensation or benefits payable to
any employee of the Company, or adopt any new employee benefit plan or policy;
25
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6.5.5 sell, assign, transfer, convey, lease, mortgage, pledge or
otherwise dispose of or encumber any of the Assets, or any interests therein;
6.5.6 accelerate the collection of accounts receivable, extend the
payment of accounts payable, or reduce inventories in a manner inconsistent with
the ordinary course of the Business's operation; or
6.5.7 fail to pay its accounts payable and any debts owed or obligations
due by it, or pay or discharge when due any liabilities.
6.6 [Reserved].
6.7 Environmental Assessments and Remediation.
-----------------------------------------
6.7.1 Buyer has retained Dames & Moore (the "Consultant") to perform
Level 1 environmental assessments with respect to each of the Facilities. Upon
its availability, Consultant will deliver such assessments to Buyer and the
Company. In the event any such assessment recommends the performance of
additional investigation (including, without limitation, Level 2 environmental
assessments), such additional investigation shall, if requested by Buyer, be
undertaken promptly and delivered to each of the Company and Buyer. The
environmental assessments and investigations undertaken pursuant to this Section
6.7.1 are collectively referred to herein as the "Environmental Assessments."
Buyer shall be solely responsible for the cost of the Environmental Assessments.
6.7.2 In the event any of the Environmental Assessments reveals any
remediation work which must be completed in order to bring the Facilities into
compliance with applicable Environmental Laws or eliminate any potential
environmental liability, the Consultant shall be directed to prepare and to
deliver to each of the Company and Buyer a written report setting forth in
reasonable detail the scope of required remediation and an estimate of the cost
of completing such remediation. For the purposes of Section 6.7, "required
remediation" shall mean any action necessary to (i) comply with any governmental
order, (ii) comply with any Environmental Law effective at the Closing or (iii)
eliminate a potential environmental liability (the "Remediation Standard"), as
applicable to the Facilities or the operation thereof by the Company as of the
Closing Date. Notwithstanding anything contained in this Agreement to the
contrary, if the remediation requirement for any Facility is deemed to be
uneconomical by Sellers, such Facility may be excluded at the election of
Sellers (which election shall be made no less than 48 hours prior to Closing)
from the transaction with a reduction in Purchase Price based on book value as
shown on Schedule 4.7, and Buyer may instead elect to lease said Facility at
current rent.
6.7.3 Within 60 days of completion of the Consultant's report referred
to in Section 6.7.2 and Sellers' election to sell the Facilities to Buyer, the
Company shall engage a reliable environmental engineering firm reasonably
acceptable to Buyer to perform any required remediation, as well as to remove
any underground storage tanks and perform all required remediation in connection
therewith. The Company shall use its best efforts to cause such required
remediation to be completed on or before the Closing Date, and the Company shall
bear all costs of such required remediation; Buyer may, in its sole discretion,
authorize Sellers to defer any portion of the required remediation which the
Company and its contractors are unable to complete prior to Closing, in which
case Sellers shall cause the portion of the required remediation so deferred to
be completed as promptly as practicable, but in no event later than 180 days
following Closing, at the Sellers' sole expense (which may be satisfied from the
Holdback Amount pursuant to the Escrow Agreement). Buyer may monitor the
performance of the required remediation and application of the Remediation
Standard, and at its election may cause the Consultant to review the
26
<PAGE>
performance of the required remediation. If Buyer directs the Consultant to
undertake such review, the required remediation shall be deemed completed only
upon certification of its completion by the Consultant. If, however, there is a
dispute as to the performance of the required remediation or the application of
the Remediation Standard, any such dispute shall be settled by a mutually
agreed upon environmental expert not otherwise involved in the required
remediation, whose determination shall be final and binding on the parties.
6.7.4 The Holdback Amount placed in escrow under the Escrow Agreement
shall secure the completion by Sellers of any required remediation which has not
been resolved by the Closing Date pursuant to this Section 6.7. Upon the
completion of the required remediation, certification of such completion by
the Consultant or mutually agreed-upon third party expert, and payment by
Sellers of all expenses of such remediation and certification, all in accordance
with the standards set forth in this Section 6.7, no further claims may be made
against the Holdback Amount on account of Sellers' obligations under this
Section 6.7. However, if such required remediation has not been completed by
Sellers and so certified on or prior to the date which is no later than 180 days
following the Closing Date, Buyer shall be entitled to engage its own
environmental engineering firm to complete such required remediation, and to
distribute from escrow such portion of the Holdback Amount as is necessary to
pay the fees and costs of such firm, or other costs incurred, in completing such
required remediation, all in accordance with the Escrow Agreement. For purposes
of this Section 6.7, no remediation shall be required with respect to any
Facility that has been excluded from the transaction pursuant to Section 6.7.2.
6.8 Registration Rights. In the event that, at any time prior to the first
-------------------
anniversary of the Closing Date, Parent files a registration statement under the
Securities Act covering shares of Parent Common Stock, other than a registration
statement on Form S-4 or Form S-8, or a registration statement filed pursuant to
"demand" or similar contractual registration rights of any other stockholders of
Parent, then Sellers shall have the right to include in such registration
statement (on a "piggyback" basis) any or all of their shares of Parent Common
Stock, and to receive the benefit of any representations, indemnities, opinions
or comfort letters given by the Parent (or its counsel or underwriters) to any
underwriter in connection with such registration, provided, however, that if the
managing underwriter or underwriters in the registered offering advise the
Parent that the inclusion in the offering of shares of Parent Common Stock owned
by Sellers would have a material adverse effect on the marketability or price of
the offering, then the number of shares of Parent Common Stock to be included by
Sellers shall be reduced on a pro rata basis in proportion to the number of
shares of Parent Common Stock requested to be included by each Seller and by any
other stockholder of the Company.
6.9 Accounts Receivable. Prior to the Closing Date, the Company will
-------------------
repurchase from the Factor all of the outstanding accounts receivable of the
Company that previously have been sold to the Factor, pursuant to factor
agreements, by and between the Company and the Factor. The Company will ensure
that, as of the Closing Date, all accounts receivable will be free from any and
all liens and Encumbrances.
6.10 Real Property. Subject to Section 6.7, the Company will purchase from
-------------
the current owner thereof all of the Owned Real Property that is owned by the
Sellers or Related Entities, as set forth on Schedule 4.7, for the cash
consideration shown thereon.
27
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ARTICLE VII
CONDITIONS TO SELLERS' OBLIGATIONS
----------------------------------
The obligations of Sellers to consummate the transactions provided for
hereby are subject to the satisfaction, on or prior to the Closing Date, of each
of the following conditions, any of which may be waived by Sellers:
7.1 Representations, Warranties and Covenants. All representations and
-----------------------------------------
warranties of Buyer and Parent contained in this Agreement shall be true and
correct in all material respects at and as of the date of this Agreement and at
and as of the Closing Date, except as and to the extent that the facts and
conditions upon which such representations and warranties are based are
expressly required or permitted to be changed by the terms hereof, and Buyer and
Parent shall have performed and satisfied all agreements and covenants required
hereby to be performed by them prior to or on the Closing Date.
7.2 No Proceedings, Litigation or Laws. No Action by any governmental
----------------------------------
authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby and
which could reasonably be expected to materially damage Sellers if the
transactions contemplated hereunder are consummated. The waiting period under
the HSR Act shall have expired or been terminated, and there shall not be any
statute, rule or regulation that makes the purchase and sale of the Shares,
Business or the Assets contemplated hereby illegal or otherwise prohibited.
7.3 Certificates. Buyer and Parent shall furnish Sellers with such
------------
certificates of their officers and others to evidence compliance with the
conditions set forth in this Article VII as may be reasonably requested by
Sellers.
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
---------------------------------
The obligations of Buyer to consummate the transactions provided for
hereby are subject, to the satisfaction, on or prior to the Closing Date, of
each of the following conditions, any of which may be waived by Buyer:
8.1 Representations, Warranties and Covenants. All representations and
-----------------------------------------
warranties of Sellers and the Company contained in this Agreement shall be true
and correct in all material respects at and as of the date of this Agreement and
at and as of the Closing Date, except as and to the extent that the facts and
conditions upon which such representations and warranties are based are
expressly required or permitted to be changed by the terms hereof, and Sellers
and the Company shall have performed and satisfied all agreements and covenants
required hereby to be performed by them prior to or on the Closing Date.
8.2 Consents. All Permits and waivers necessary for the consummation by
--------
Buyer and Parent of the transactions contemplated hereby and for the continued
operation of the Business after the Closing (including, without limitation, all
required waivers of Parent's lenders and all required waivers of the Company's
vendors under supplier agreements other than as set forth on Schedule 8.2) shall
have been obtained; provided that Sellers may terminate this Agreement unless
Buyer has delivered to Seller Representative a copy of the required lender
waiver by April 14, 1997. Company will use its best efforts to obtain oral or
written consents from customers to continue doing business with the Company from
and after the date of this Agreement.
28
<PAGE>
8.3 No Proceedings or Litigation. No Action by any governmental authority
----------------------------
or other person shall have been instituted or threatened which questions the
validity or legality of the transactions contemplated hereby and which could
reasonably be expected to damage Buyer materially if the transactions
contemplated hereby are consummated, including without limitation any material
adverse effect on the right or ability of the Company to own, operate, possess
or transfer the Assets after the Closing. The waiting period under the HSR Act
shall have expired or been terminated, and there shall not be any statute, rule
or regulation that makes the purchase and sale of the Business or the Assets
contemplated hereby illegal or otherwise prohibited.
8.4 Opinion of Counsel. The Company shall have delivered to Buyer an
------------------
opinion of Gary Tradd, Esq., counsel to the Company and the Sellers, dated as of
the Closing Date, in form and substance reasonably satisfactory to Buyer, to the
effect that:
8.4.1 Incorporation. Comtect has been duly incorporated and is validly
-------------
existing and in good standing under the laws of the State of Nevada. The
Subsidiaries have been duly incorporated and are validly existing and in good
standing under the laws of either the State of Nevada, the State of Louisiana or
the State of Texas;
8.4.2 Corporate Power and Authority. The Company has the necessary
-----------------------------
corporate power and authority to enter into this Agreement and the Ancillary
Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby and to own, lease and operate the Assets and its
other properties and to conduct the Business as presently conducted;
8.4.3 Corporate Action. The execution, delivery and performance of this
----------------
Agreement and the Ancillary Agreements to which the Company is a party have been
duly authorized by all necessary corporate action of the Company, and this
Agreement and the Ancillary Agreements have been duly executed and delivered by
the Company or the Sellers, as applicable;
8.4.4 Obligation of the Company or Sellers. This Agreement and each
------------------------------------
Ancillary Agreement constitutes a legally valid and binding obligation of the
Company or the Sellers, as applicable, enforceable against the Company or the
Sellers in accordance with its terms, except as limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally or by equitable principles (whether considered in an
action at law or in equity), (ii) limitations imposed by federal or applicable
state law or equitable principles upon the availability of specific performance,
injunctive relief or other equitable remedies, or (iii) other customary
limitations reasonably satisfactory to Buyer's counsel;
8.4.5 No Breach. Neither the execution and delivery of this Agreement
---------
or the Ancillary Agreements by the Company or the Sellers, as applicable, nor
the consummation of the transactions contemplated hereby or thereby will (I)
violate or conflict with any provision of the Articles of Incorporation or
Bylaws of the Company, or of the charter documents or other organizational
instrument of any Seller that is not a natural person, (ii) breach, or cause a
default under, any term or provision of any material contract listed on a
schedule to such opinion to which contract the Company or the Sellers are a
party or by which the Assets are bound, or (iii) violate any judgment, decree,
injunction, writ or order applicable to the Company or the Sellers;
8.4.6 No Permits Required. No Permit of, or filing with, any
-------------------
governmental authority or, to the best knowledge of such counsel, any other
person, is required for the execution and delivery of this Agreement or the
Ancillary Agreements by the Company or the Sellers, as applicable, or the
consummation
29
<PAGE>
by the Company or the Sellers of the transactions contemplated hereby or
thereby, except as set forth in this Agreement or the schedules or exhibits
hereto;
8.4.7 No Actions Pending. Except as set forth in this Agreement or the
------------------
schedules hereto, to the best knowledge of such counsel, no Action is pending or
threatened (i) against the Company or the Business, (ii) against any of the
officers or directors of the Company as such, (iii) in which the Company is a
plaintiff, or (iv) which questions the validity or legality of the transactions
contemplated hereby;
8.4.8 No Violation of Law. Neither the execution and delivery of this
-------------------
Agreement or the Ancillary Agreement by the Company or the Sellers, as
applicable, nor the consummation of the transactions contemplated hereby or
thereby will violate or result in a failure to comply with any statute, law,
ordinance, regulation, rule or order of any federal, state or local government
or any other governmental department or agency, or any judgment, decree or order
of any court, applicable to the Company, the Sellers or the Business; and, to
the best knowledge of such counsel, the Company has all licenses, franchises and
other authority required to conduct the Business as it is now being conducted;
8.4.9 Title to Shares. The authorized capital stock of the Company
---------------
consists of common stock and preferred stock, and the issued and outstanding
common and preferred stock of the Company consists solely of the Shares, all of
which are owned of record and beneficially by the Sellers, free and clear of all
Encumbrances. To the knowledge of such counsel, there are no outstanding
warrants, options or other rights to acquire, or securities convertible into or
exercisable or exchangeable for, shares of capital stock of the Company, nor any
commitments or agreements by the Company to issue any such rights or securities
or shares of capital stock. Upon Closing, Buyer will acquire good and valid
title to all of the Shares, free and clear of all Encumbrances.
8.4.10 Other Opinions. Such other opinions as any lender to Buyer may
--------------
reasonably request. In rendering such opinions, such counsel may rely as to
factual matters upon certificates and assurances of public officials, Sellers,
and officers of the Company. In addition, such opinions may be subject to such
additional qualifications and exceptions as are reasonably acceptable to counsel
to Buyer.
8.4.11 Schedules. At or prior to Closing the Sellers shall attach all
---------
Schedules to this Agreement and the Buyer shall have the opportunity to review
and approve such Schedules, such approval to not be unreasonably withheld.
8.5 Certificates. Sellers and the Company shall furnish Buyer with such
------------
certificates of Sellers, the officers of the Company and others to evidence
compliance with the conditions set forth in this Article VIII as may be
reasonably requested by Buyer.
8.6 Escrow Agreement. The Company, the Sellers and Buyer shall have entered
----------------
into the Escrow Agreement substantially in the forms attached as Exhibit 8.6.
8.7 Employment and Non-Competition Agreements. Company and Andy G. Gessner,
-----------------------------------------
Larry R. Bush, William E. Pinkley and Gordon McDonald shall have entered into an
Employment and Non-Competition Agreement in the forms attached as Exhibits
8.7.1, 8.7.2, 8.7.3 and 8.7.4 hereto.
8.8 Release of Encumbrances. The Company shall have filed (where necessary)
-----------------------
and delivered to Buyer all documents necessary to release the Assets from all
Encumbrances which documents shall be in a form reasonably satisfactory to
Buyer's counsel.
30
<PAGE>
8.9 Board Approval. The Board of Directors of Parent shall have approved the
--------------
execution, delivery and performance of this Agreement. If the Board of
Directors of Parent does not approve this Agreement by April 14, 1997, this
Agreement may be terminated by Buyers or Sellers in accordance with Section
11.1.
8.10 Corporate Documents. Buyer shall have received from the Company
-------------------
resolutions adopted by its board of directors approving this Agreement and the
Ancillary Agreements to which it will be a party, and the transactions
contemplated hereby and thereby.
8.11 Schedules and Due Diligence Review. Buyer and its Representatives shall
----------------------------------
be provided the opportunity to have conducted a due diligence review (including
without limitation, a gross margins audit and study of 11-month results) of the
Company's Books and Records, Financial Statements, and other records and
accounts of the Business, and Sellers shall have delivered to Buyer all
Schedules required by this Agreement. Buyer shall be satisfied in its sole
discretion with its due diligence findings (including without limitation, the
results of the gross margins audit and study of 11-month results), and the
contents of the Schedules; if Buyer is not so satisfied in its sole discretion,
it may terminate this Agreement at any time prior to Closing in accordance with
Section 11.1 subject to payment by Buyer of liquidated damages as set out in
Section 11.1.2.2.
8.12 Solvency of Subsidiaries: Comtect's Subsidiaries shall be solvent as of
------------------------
the Balance Sheet Date. Board of Director minutes dated as of February 28, 1997
contributing sufficient capital shall satisfy this requirement.
ARTICLE IX
CONSENTS TO ASSIGNMENT
----------------------
9.1 Consents to Assignment. Anything in this Agreement to the contrary
----------------------
notwithstanding, this Agreement shall not constitute an agreement to assign or
to effect a change of control with respect to any Contract, lease, license,
sales order, purchase order or any claim or right or any benefit arising
thereunder or resulting therefrom if an attempted assignment or change of
control thereof, without the consent of a third party thereto, would constitute
a breach thereof or in any way adversely affect the rights of Buyer thereunder.
If such consent is not obtained, or if an attempted assignment or change of
control thereof would be ineffective or would affect the rights thereunder so
that Buyer would not receive all such rights, the Company will cooperate with
Buyer, in all reasonable respects, to provide to Buyer the benefits under any
such Contract, lease, license, sales order, purchase order, claim or right
including without limitation enforcement for the benefit of Buyer of any and all
rights of the Company against a third party thereto arising out of the breach or
cancellation by such third party or otherwise.
ARTICLE X
ACTIONS BY SELLERS AND BUYER
----------------------------
AFTER THE CLOSING
-----------------
10.1 Books and Records; Tax Examinations.
-----------------------------------
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10.1.1 Books and Records. Each party agrees that it will cooperate
-----------------
with and make available to the other party, during normal business hours, all
Books and Records, information and employees (without substantial disruption of
employment) retained and remaining in existence after the Closing which are
necessary or useful in connection with any tax inquiry, audit, investigation or
dispute, any litigation or investigation or any other matter requiring any such
Books and Records, information or employees for any reasonable business purpose.
10.1.2 Cooperation and Records Retention. Sellers and Buyer shall (i)
---------------------------------
each provide the other with such assistance as may reasonably be requested by
any of them in connection with the preparation of any return, audit, or other
examination by any taxing authority or judicial or administrative proceedings
relating to liability for Taxes, (ii) each retain and provide the other with any
records or other information that may be relevant to such return, audit or
examination, proceeding or determination, and (iii) each provide the other with
any final determination of any such audit or examination, proceeding, or
determination that affects any amount required to be shown on any tax return of
the other for any period.
10.2 Survival of Representations, Etc. All statements contained in any
---------------------------------
certificate, schedule, exhibit, instrument or conveyance delivered by or on
behalf of the parties pursuant to this Agreement or in connection with the
transactions contemplated hereby shall be deemed to be representations and
warranties by the parties hereunder. The representations, warranties, covenants
and agreements of Sellers, the Company, Parent and Buyer contained herein shall
survive the consummation of the transactions contemplated hereby and the Closing
Date, without regard to any investigation made by any of the parties hereto.
All such representations and warranties and all claims and causes of action with
respect thereto (other than the provisions of Sections 4.4, 4.18, and this
Section 10.2, and all claims and causes of action with respect thereto) shall
terminate upon expiration of three years after the Closing Date. The
representations and warranties in Sections 4.4, 4.18 and shall survive until the
expiration of the applicable statute of limitations (with extensions) with
respect to the matters addressed in such sections. The termination of the
representations and warranties provided herein shall not affect the rights of a
party in respect of any Claim made by such party in a writing received by the
other party prior to the expiration of the applicable survival period provided
herein.
10.3 Indemnifications.
----------------
10.3.1 By Sellers. Sellers shall indemnify, defend, save and hold
----------
harmless Buyer, its Affiliates (including the Company from and after the
Closing), and its and their respective Representatives, from and against any and
all uninsured claims, damages, costs, losses (including without limitation
diminution in value), Taxes, liabilities, judgments, penalties, fines,
obligations, lawsuits, deficiencies, demands and expenses (whether or not
arising out of third-party claims), including without limitation interest,
penalties, costs of mitigation, losses in connection with any Environmental Law
(including without limitation any clean-up or remedial action), lost profits and
other losses resulting from any shutdown or curtailment of operations, damages
to the environment, attorneys' fees, experts' fees and all amounts paid in
investigation, defense or settlement of any of the foregoing (herein,
"Damages"), incurred in connection with, arising out of, resulting from or
incident to (i) any breach of any representation or warranty, or the inaccuracy
of any representation or warranty, made by the Company or Sellers in or pursuant
to this Agreement; (ii) any breach of any covenant or agreement made by the
Company or Sellers in or pursuant to this Agreement; (iii) any liability arising
under any Environmental Law on account of the conduct of the Company or any
Seller or prior owners or users of the Facilities or other persons, or on
account of the operation of the Business or the Facilities, or related to any
Environmental Condition existing, in each case on or at any time prior to the
Closing Date; or (iv) any liability for Taxes in respect of taxable periods
ending on or
32
<PAGE>
before the Balance Sheet Date in excess of the amounts paid prior to Closing or
accrued on the Balance Sheet. Without limiting the generality of the foregoing,
the indemnification provided herein, insofar as it relates to any Environmental
Law or Environmental Condition, shall specifically cover costs incurred in
connection with any investigation of site conditions (excepting the cost of the
Environmental Assessments) or any clean-up, remedial, removal or restoration
work required by any federal, state or local governmental agency or political
subdivision or by the provisions of Section 6.7 hereof. Damages (except under
Sections 4.4 and 4.18 or caused by the fraud of Seller as defined in Article
XII) are limited by the terms of Article XII of this Agreement. The time and
scope of this indemnity and all other claims, rights, causes of action and
remedies of Buyer, its affiliates and the Company as against Sellers is limited
under all circumstances to: (I) during the first full year after the Balance
Sheet Date to five million dollars ($5,000,000), (ii) during the second full
year after the Balance Sheet Date to three million dollars ($3,000,000), and
(iii) during the third full year after the Balance Sheet Date to two million
dollars ($2,000,000). For purposes of this section 10.3, the date of an
indemnifiable claim shall be determined based upon the date a Claim Notice is
delivered.
10.3.2 By Parent and Buyer. Parent and Buyer shall indemnify and save
-------------------
and hold harmless Sellers, their Affiliates and their Representatives from and
against any and all Damages incurred in connection with, arising out of,
resulting from or incident to (I) any breach of any representation or warranty,
or the inaccuracy of any representation or warranty, made by Parent or Buyer in
or pursuant to this Agreement; or (ii) any breach of any covenant or agreement
made by Parent or Buyer in or pursuant to this Agreement, and (iii) any
liability arising after March 1, 1997 arising out of or related to the Buyer's
ownership or operation of the Company.
10.3.3 Cooperation. The indemnified party shall cooperate in all
-----------
reasonable respects with the indemnifying party and such attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom; provided, however, that the indemnified party may, at its own
cost, participate in the investigation, trial and defense of such lawsuit or
action and any appeal arising therefrom. The parties shall cooperate with each
other in any notifications to insurers.
10.3.4 Defense of Claims. If a claim for Damages (a "Claim") is to be
-----------------
made by a party entitled to indemnification hereunder against the indemnifying
party, the party claiming such indemnification shall, subject to Section 10.2,
give written notice (a "Claim Notice") to the indemnifying party as soon as
practicable after the party entitled to indemnification becomes aware of any
fact, condition or event which may give rise to Damages for which
indemnification may be sought under this Section 10.3. If any lawsuit or
enforcement action is filed against any party entitled to the benefit of
indemnity hereunder, written notice thereof shall be given to the indemnifying
party as promptly as practicable (and in any event within fifteen (15) calendar
days after the service of the citation or summons). The failure of any
indemnified party to give timely notice hereunder shall not affect rights to
indemnification hereunder, except to the extent that the indemnifying party
demonstrates actual damage caused by such failure. After such notice, if the
indemnifying party shall acknowledge in writing to the indemnified party that
the indemnifying party shall be obligated under the terms of its indemnity
hereunder in connection with such lawsuit or action, then the indemnifying party
shall be entitled, if it so elects, (i) to take control of the defense and
investigation of such lawsuit or action, (ii) to employ and engage attorneys of
its own choice (which shall be reasonably acceptable to the indemnified party)
to handle and defend the same, at the indemnifying party's cost, risk and
expense unless the named parties to such action or proceeding include both the
indemnifying party and the indemnified party and the indemnified party has been
advised in writing by counsel that there may be one or more legal defenses
available to such indemnified party that are different from or additional to
those available to the indemnifying party, and (iii) to compromise or settle
such claim, which compromise or settlement shall be made only with the written
consent of both the
33
<PAGE>
indemnifying and the indemnified party, such consent not to be unreasonably
withheld; provided, however, if the remediation or resolution of any such Claim
will occur on or at any Facility or is reasonably expected to have a material
adverse effect on the indemnified party's business operations, then,
notwithstanding the foregoing, the indemnified party shall be entitled to
control such resolution, including without limitation to take control of the
defense and investigation of such lawsuit or action, to employ and engage
attorneys of its own choice to handle and defend the same, at the indemnifying
party's cost, risk and expense, and to compromise or settle such Claim with the
consent of the Indemnifying Party. If the indemnifying party fails to assume the
defense of such claim within fifteen (15) calendar days after receipt of the
Claim Notice, the indemnified party against which such claim has been asserted
will (upon delivering notice to such effect to the indemnifying party) have the
right to undertake, at the indemnifying party's cost and expense, the defense,
compromise or settlement of such claim on behalf of and for the account and risk
of the indemnifying party. In the event the indemnified party assumes the
defense of the claim, the indemnified party will keep the indemnifying party
reasonably informed of the progress of any such defense, compromise or
settlement. The indemnifying party shall be liable for any settlement of any
action effected with its consent pursuant to and in accordance with this Section
10.3 and for any final judgment (subject to any right of appeal), and the
indemnifying party agrees to indemnify and hold harmless an indemnified party
from and against any Damages by reason of such settlement or judgment.
10.3.5 Buyer's Right to Distribution of Holdback Amount. Buyer and its
------------------------------------------------
Affiliates and Representatives may at their election collect any amount due from
Sellers pursuant to Sellers' indemnification obligations under this Section 10.3
by distribution of an applicable portion of the Holdback Amount from the Escrow
Agreement, in accordance with the procedures set forth therein.
10.3.6 Limitations. Neither Buyer or Parent on the one hand, nor
-----------
Sellers on other hand, shall be liable to the other under this Section 10.3 for
any Damages until the amount otherwise due the party being indemnified exceeds
$100,000 in the aggregate, in which case such indemnifying party will be liable
to the indemnified party for all such amounts, including the first $100,000.
Notwithstanding the preceding sentence, this limitation shall not apply with
respect to Damages arising out of a breach of a representation or warranty
contained in Sections 4.18 or 4.22 or due to fraud on the part of a Seller as
defined in Article XII.
10.3.7 Liability and Remedies, etc. Except as set forth below, no
----------------------------
individual Representative of any party shall be personally liable for any
Damages under the provisions contained in this Section 10.3. Nothing herein
shall relieve either party of any liability to make any payment expressly
required to be made by such party pursuant to this Agreement. Subject to
Special Provisions Article XII, the term "Damages" as used in this Section 10.3
is not limited to matters asserted by third parties against Sellers or Buyer,
but includes Damages incurred or sustained by an indemnified party in the
absence of third party claims. Payments by an indemnified party of amounts for
which such party is indemnified hereunder shall not be a condition precedent to
recovery.
10.4 Further Action. After the Closing, Sellers shall take all actions
--------------
reasonably necessary to effect the conveyance of the Shares to Buyer free and
clear of all Encumbrances and otherwise required by Buyer's lenders.
34
<PAGE>
ARTICLE XI
MISCELLANEOUS
-------------
11.1 Termination.
-----------
11.1.1 Termination. This Agreement may be terminated at any time prior
-----------
to Closing:
11.1.1.1 By mutual written consent of Buyer and the Seller
Representative;
11.1.1.2 By Buyer or Sellers if the Closing shall not have
occurred on or before June 30, 1997; provided, however, that this provision
-------- -------
shall not be available to Buyer if Sellers have the right to terminate this
Agreement under Section 11.1.1.4, and this provision shall not be available to
Sellers if Buyer has the right to terminate this Agreement under Section
11.1.1.3;
11.1.1.3 By Buyer if there is a material breach of any
representation or warranty set forth in Article IV hereof or any covenant or
agreement to be complied with or performed by Sellers or the Company pursuant to
the terms of this Agreement or the failure of a condition set forth in Article
VIII to be satisfied (and such condition is not waived in writing by Buyer) on
or prior to the Closing Date, or the occurrence of any event which results or
would result in the failure of a condition set forth in Article VIII to be
satisfied on or prior to the Closing Date, provided that Buyer may not terminate
this Agreement prior to the Closing if Sellers or the Company have not had an
adequate opportunity to cure such failure; or
11.1.1.4 By Sellers if there is a material breach of any
representation or warranty set forth in Article V hereof or of any covenant or
agreement to be complied with or performed by Buyer pursuant to the terms of
this Agreement or the failure of a condition set forth in Article VII to be
satisfied (and such condition is not waived in writing by Sellers) on or prior
to the Closing Date, or the occurrence of any event which results or would
result in the failure of a condition set forth in Article VII to be satisfied on
or prior to the Closing Date; provided that Sellers may not terminate this
--------
Agreement prior to the Closing Date if Buyer has not had an adequate opportunity
to cure such failure.
11.1.2 In the Event of Termination. In the event of termination of this
---------------------------
Agreement:
11.1.2.1 Each party will redeliver all documents, work papers
and other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same; and
11.1.2.2 If this transaction does not close by June 30, 1997 for
any reason whatsoever, including but not limited to outright breach of the
agreement by any party hereto (other than the failure of the Sellers to close
the transaction contemplated by the Agreement after satisfaction of or Buyer's
waiver of all the conditions to closing set forth in Article VIII hereof) and/or
the failure to secure approval of the transaction under the HSR Act, the Buyer
will pay to Seller liquidated damages of $760,000. Both the parties to this
Agreement recongnize that actual damages will be difficult to ascertain and that
the liquidated damages provided hereby constitute an adequate estimate of actual
damages and do not constitute a penalty. Upon payment of said liquidated damages
this agreement shall terminate and no party shall have any further liability
hereunder. Notwithstanding the foregoing, the Buyer reserves its rights under
Section VIII to waive conditions and proceed to Closing.
35
<PAGE>
11.2 Assignment. Neither this Agreement nor any of the rights or
----------
obligations hereunder may be assigned by any party without the prior written
consent of the other parties; except that Parent or Buyer may, without such
consent, assign all such rights to any lender as collateral security, and Buyer
may assign all such rights and obligations to a wholly-owned subsidiary or
subsidiaries of Parent or Buyer (or a partnership controlled by Parent or Buyer)
which shall assume all obligations and liabilities of Buyer under this
Agreement. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, and no other person shall have any right, benefit or
obligation under this Agreement as a third party beneficiary or otherwise.
11.3 Notices. All notices, requests, demands and other communications which
-------
are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given when received if personally delivered; when
transmitted if transmitted by telecopy, electronic or digital transmission
method; the day after it is sent, if sent for next day delivery to a domestic
address by recognized overnight delivery service (e.g., Federal Express); and
----
upon receipt, if sent by certified or registered mail, return receipt requested.
In each case notice shall be sent to:
If to Sellers, addressed to:
Andy G. Gessner
1053 Richelieu
Houston, Texas 77018
Attention: [Seller Representative]
with a copy to:
Gary Tradd, Esq.
Gary Tradd, P.C.
4731 Ingersoll Street
Houston, Texas 77027
If to Parent or Buyer, addressed to:
Rental Service Corporation
14505 N. Hayden Road, Suite 322
Scottsdale, Arizona 85260
Attention: Chief Executive Officer
with a copy to:
Rental Service Corporation
3301 Cities Service Highway
Westlake, Louisiana 70669
Attention: Vice President, Operations
and
Robert A. Koenig, Esq.
Richard D. Strulson, Esq.
Latham & Watkins
36
<PAGE>
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
11.4 Choice of Law. This Agreement shall be construed, interpreted and the
-------------
rights of the parties determined in accordance with the laws of the State of
Delaware (without reference to the choice of law provisions thereof), except
with respect to matters of law concerning the internal corporate affairs of any
corporate entity which is a party to or the subject of this Agreement, and as to
those matters the law of the jurisdiction under which the respective entity
derives its powers shall govern.
11.5 Entire Agreement; Amendments and Waivers. This Agreement, together with
----------------------------------------
all exhibits and schedules hereto and the Ancillary Agreements, constitutes the
entire agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto. No amendment, supplement, modification or waiver of this Agreement shall
be binding unless executed in writing by the party to be bound thereby. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
11.6 Multiple Counterparts. This Agreement may be executed in one or more
---------------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.7 Expenses. Except as otherwise specified in this Agreement, each party
--------
hereto shall pay its own legal, accounting, out-of-pocket and other expenses
incident to this Agreement and to any action taken by such party in preparation
for carrying this Agreement into effect.
11.8 Invalidity. In the event that any one or more of the provisions
----------
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
11.9 Titles. The titles, captions or headings of the Articles, Sections and
------
subsections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
11.10 Publicity; Confidentiality. None of Parent, Buyer, Sellers, the
--------------------------
Company or their respective Affiliates or Representatives shall issue any press
release or make any public statement regarding, or disclose to any third party
(except as required by law or legal process, and except to each party's lenders
if such lenders so require) any of the terms of, the transactions contemplated
hereby, without prior written approval of the other party, provided that Parent,
Buyers, Sellers and the Company may, if they mutually agree, issue or make an
appropriate press release or public announcement after the Closing Date. In the
event that this Agreement is terminated prior to Closing, Buyer agrees to return
to Sellers and the Company all correspondence and documents furnished by Sellers
or the Company's Representatives, and agrees not to disclose or use for its own
purposes any confidential or proprietary information of Sellers that has been
furnished to it by Sellers or the Company's Representatives.
37
<PAGE>
11.11 Remedies. All rights and remedies of the parties hereto are set forth
--------
specifically in this Agreement and the attachments hereto.
11.12 Arbitration. Any controversy arising after the Closing out of or
-----------
relating to this Agreement (including, without limitation, pursuant to Section
10.3, but excluding for purposes of this Section 11.13, the employment and non-
competition agreements attached as Exhibits hereto), or relating to the breach
hereof, shall be settled by arbitration conducted in Houston, Texas 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.
11.13 Seller Representative.
---------------------
11.13.1 The Sellers irrevocably make, constitute and appoint Andy G.
Gessner as their agent (the "Seller Representative") and authorize and empower
---------------------
him to fulfill the role of Seller Representative hereunder and under the Escrow
Agreement. In the event of the resignation, death or incapacity of a Seller
Representative, his successor shall be appointed within 14 days of his death or
incapacity by mutual agreement of the remaining Sellers, and such successor
either shall be a Seller or shall otherwise be acceptable to Buyer. If the
Sellers fail to appoint a successor within such 21-day period, then Buyer shall
have the right to appoint the successor from among the Sellers. The choice of a
successor Seller Representative appointed in any manner permitted above shall be
final and binding upon all of the Sellers. The decisions and actions of any
successor Seller Representative shall be, for all purposes, those of a Seller
Representative as if originally named herein.
11.13.2 Each Seller has made, constituted and appointed and by the
execution of this Agreement hereby irrevocably makes, constitutes and appoints
the Seller Representative as such person's true and lawful attorney in fact and
agent, for such person and in such person's name, (i) to execute and perform the
Escrow Agreement on behalf of each Seller, (ii) to receive all notices and
communications directed to such Seller under this Agreement or the Escrow
Agreement and to take any action (or to determine to take no action) with
respect thereto, as he may deem appropriate as effectively as such Seller could
act for himself or herself, including without limitation, the settlement or
compromise of any dispute or controversy, and (iii) to execute and deliver all
instruments and documents of every kind incident to the foregoing to all intents
and purposes and with the same effect as such Seller could do personally, and
each such Seller hereby ratifies and confirms as his or her own act, all that
the Seller Representative shall do or cause to be done pursuant to the
provisions hereof.
11.13.3 The incapacity of any Seller shall not terminate the authority
and agency of the Seller Representative.
ARTICLE XII
38
<PAGE>
SPECIAL PROVISIONS
12.1 These special provisions shall control where inconsistent with any other
term or provision of this Agreement and these special provisions are a material
inducement to Sellers to enter into this Contract.
12.2 The Buyer and Parent acknowledge that Sellers have made no warranties,
representations, covenants or agreements or provided other inducements that are
not specifically set forth in this Agreement. The Buyer and Parent have been
provided open and complete access to all books, records, facilities, equipment,
rolling stock, furniture, fixtures, inventory, books, tax returns, records,
minute books, contracts and any and all other data relating to the Company, its
facilities, its assets, its real properties, its facilities and any other
property, tangible or intangible, that are owned by the Company and Buyer and
Parent shall satisfy themselves regarding the value of such assets and the value
of the Shares being sold and purchased hereunder independently and in reliance
upon its own audit, experts and consultants.
12.3 The Buyer alone is obligated to buy and Sellers are obligated to sell
the Shares upon execution of this Agreement. Parent shall not be responsible or
jointly liable for Buyer's obligations hereunder.
12.4 Except as provided in Section 8.9, each party hereto represents that
where required, it has taken proper corporate action to give full authority for
the adoption and execution of this Agreement and each person signing has full
authority to bind the respective corporation to the terms and condition of this
Agreement, and each person signing has full authority to do so as the act and
deed of said corporation, and that the signature is genuine and authentic and
that the Agreement and all of its terms are valid and binding obligations
against each party hereto.
12.5 The representations and warranties contained in this Agreement and in
any instrument or document delivered pursuant to this Agreement shall survive
for a period of three (3) years after the Closing Date and shall not survive
thereafter. Any claim or cause of action for indemnification (except under
Sections 4.4 or 4.18 and except for fraud claims) based upon or arising out of
any breach of a representation or warranty or covenant made hereunder or any
indemnified act or in any instrument or document delivered pursuant hereto or
any other claim or cause of action arising hereunder or in connection with this
transaction must be made within the three (3) year survival period or the party
against which such claim is made shall have no liability with respect thereto.
Nothing contained herein shall affect or limit the obligation of either party to
perform the obligations to be performed by it hereunder after the Closing Date.
The indemnification of Sellers and the aggregate liability of Sellers for any
other claims, rights or causes of action arising hereunder to Buyer, and its
affiliates, Parent and/or the Company (except under Sections 4.4 or 4.18 or in
connection with fraud by Sellers) shall be limited to $5 million during the
first full year after the Balance Sheet Date, $3 million during the second full
year after the Balance Sheet Date and $2 million during the third full year
after the Balance Sheet Date.
12.6 For purposes of this Agreement, fraud shall mean (i) judicial finding of
fraud from which all appeals have been exhausted or have expired, (ii) an
arbitrator's finding of fraud from which all appeals have been exhausted or have
expired, or (iii) the parties have mutually agreed in writing as to the
existence of fraud.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be duly executed on their respective behalf, by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
39
<PAGE>
COMTECT, INC. ACME DIXIE, INC.
(the "Company") ("Buyer")
By: /s/ Larry R. Bush By: /s/ Douglas A. Waugaman
---------------------------- ----------------------------
Name: Larry R. Bush Name: Douglas A. Waugaman
------------------------- -------------------------
Its: President Its: V.P & Secretary
-------------------------- --------------------------
SELLER STOCKHOLDERS RENTAL SERVICE CORPORATION
("Sellers") ("Parent")
/s/ Roy B. Bush
- -------------------------------
Roy B. Bush By: /s/ Douglas A. Waugaman
---------------------------
Name: Douglas A. Waugaman
-------------------------
/s/ Andy G. Gessner Its: V.P & Secretary
- ------------------------------- --------------------------
Andy G. Gessner
/s/ Larry R. Bush
- -------------------------------
Larry R. Bush
/s/ Stacy K. Bush
- -------------------------------
Stacy K. Bush
THE STACY K. BUSH TRUST
By: /s/ Larry R. Bush
----------------------------
Larry R. Bush, Trustee
INDUSTRIAL AIR TOOL PASADENA, INC.
By: /s/ Larry R. Bush
----------------------------
President
IAT INTERESTS OF NEVADA, INC.
By: /s/ Andy G. Gessner
----------------------------
President
40
<PAGE>
INDUSTRIAL AIR TOOL TEXAS CITY, INC.
By: /s/ Andy G. Gessner
----------------------------
President
PST, INC. OF LOUISIANA
By: /s/ Andy G. Gessner
----------------------------
President
41
<PAGE>
RNJB, INC.
By: /s/ Larry R. Bush
----------------------------
President
LRB SUPPLY, INC.
By: /s/ William Pinkley
----------------------------
President
CFTSIJC, INC.
By: /s/ William Pinkley
----------------------------
President
42
<PAGE>
EXHIBIT 10.2
ASSET PURCHASE AGREEMENT
by and among
Brute Equipment Co.
dba "Foxx Hy-Reach Company"
as "Seller,"
Rental Service Corporation,
Walker Jones Equipment Company
as "Buyer"
and Thomas H. Foster
April 25, 1997
<PAGE>
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - DEFINITIONS......................................... 1
1.1 Defined Terms...................................... 1
1.2 Other Defined Terms................................ 5
ARTICLE II - PURCHASE AND SALE OF ASSETS........................ 6
2.1 Transfer of Assets................................. 6
2.2 Assumption of Liabilities.......................... 6
2.3 Excluded Liabilities............................... 6
2.4 Purchase Price..................................... 7
2.5 Purchase Price Adjustments......................... 8
2.6 Prorations......................................... 10
2.7 Closing Costs; Transfer Taxes and Fees............. 10
ARTICLE III - CLOSING........................................... 10
3.1 Closing............................................ 10
3.2 Conveyances at Closing............................. 10
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLER........... 11
4.1 Organization of Seller............................. 11
4.2 Authorization...................................... 11
4.3 No Changes to the Assets........................... 12
4.4 Assets............................................. 12
4.5 Facilities......................................... 12
4.6 Contracts and Commitments.......................... 13
4.7 Permits and Consents............................... 14
4.8 No Conflict or Violation........................... 14
4.9 Financial Statements............................... 14
4.10 Books and Records.................................. 15
4.11 Litigation......................................... 15
4.12 Labor Matters...................................... 15
4.13 Compliance with Law................................ 15
4.14 No Brokers......................................... 16
4.15 No Other Agreements to Sell the Assets............. 16
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
4.16 Proprietary Rights................................. 16
4.17 Tax Matters........................................ 16
4.18 Accounts Receivable................................ 17
4.19 Inventory.......................................... 17
4.20 Employees.......................................... 18
4.21 Compliance With Environmental Laws................. 18
4.22 Liabilities........................................ 21
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER............. 21
5.1 Organization of Buyer.............................. 21
5.2 Authorization...................................... 21
5.3 No Conflict or Violation........................... 21
5.4 Consents and Approvals............................. 21
ARTICLE VI - COVENANTS OF SELLER AND BUYER...................... 22
6.1 Further Assurances................................. 22
6.2 No Solicitation.................................... 22
6.3 Notification of Certain Matters.................... 22
6.4 Access to Information.............................. 23
6.5 Conduct of Business................................ 23
6.6 Employee Matters................................... 23
6.7 Environmental Assessments and Remediation.......... 24
6.8 Use of Name and Telephone Numbers.................. 25
ARTICLE VII - CONDITIONS TO SELLER'S OBLIGATIONS................ 25
7.1 Representations, Warranties and Covenants.......... 25
7.2 No Proceedings, Litigation or Laws................. 25
7.3 Assumption Document................................ 25
7.4 New Leases......................................... 25
ARTICLE VIII - CONDITIONS TO BUYER'S OBLIGATIONS................ 25
8.1 Representations, Warranties and Covenants.......... 26
8.2 Consents........................................... 26
8.3 No Proceedings or Litigation....................... 26
8.4 Opinion of Counsel................................. 26
8.5 Certificates....................................... 28
8.6 New Leases......................................... 28
8.7 Non-Competition Agreements......................... 28
8.8 Conveyancing Documents; Release of Encumbrances.... 28
8.9 Material Changes................................... 28
8.10 Corporate Documents................................ 28
8.11 Due Diligence Review............................... 28
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
8.12 Permits............................................ 28
8.13 Completion of Environmental Remediation............ 28
ARTICLE IX - RISK OF LOSS; CONSENTS TO ASSIGNMENT............... 29
9.1 Risk of Loss....................................... 29
9.2 Consents to Assignment............................. 29
ARTICLE X - ACTIONS BY SELLER AND BUYER AFTER THE CLOSING....... 29
10.1 Books and Records; Payment of Liabilities.......... 29
10.2 Survival of Representations, Etc................... 30
10.3 Indemnifications................................... 30
10.4 Payment of Holdback Amount......................... 33
10.5 Taxes.............................................. 33
10.6 Tax Clearance Certificate.......................... 33
10.7 Further Action..................................... 33
ARTICLE XI - MISCELLANEOUS...................................... 33
11.1 Termination....................................... 33
11.2 Assignment........................................ 34
11.3 Notices........................................... 35
11.4 Choice of Law..................................... 35
11.5 Entire Agreement; Amendments and Waivers.......... 35
11.6 Multiple Counterparts............................. 36
11.7 Expenses.......................................... 36
11.8 Invalidity........................................ 36
11.9 Titles............................................ 36
11.10 Publicity; Confidentiality........................ 36
11.11 Cumulative Remedies............................... 36
11.12 Consent of Seller Stockholder..................... 36
11.13 Arbitration....................................... 36
</TABLE>
iv
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated as of April 25, 1997, is by and
among Rental Service Corporation ("RSC"), Walker Jones Equipment Company, a
Mississippi corporation, a wholly owned subsidiary of RSC ("Buyer"), Brute
Equipment Co., an Iowa corporation d/b/a Foxx-Hy Reach Company ("Seller"), and
Thomas H. Foster (the "Seller Stockholder").
RECITALS
--------
A. Seller owns certain assets which it uses in its conduct of the
Business (as defined below).
B. Buyer desires to purchase from Seller, and Seller desires to sell
to Buyer, such assets upon the terms and subject to the conditions of this
Agreement.
AGREEMENT
---------
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Defined Terms. As used herein, the terms below shall have the
-------------
following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.
"Affiliate" shall have the meaning set forth in the Securities
---------
Exchange Act of 1934, as amended, and the rules and regulations thereunder.
"Ancillary Agreements" shall mean the Employment and Non-Competition
--------------------
Agreement with Thomas H. Foster attached hereto as Exhibit 8.7.1.
"Assets" shall mean all of the right, title and interest of Seller
------
in and to the business, properties, assets and rights of any kind, whether
tangible or intangible, and constituting, or used or useful in connection with,
or related to, the Business, including without limitation all of Seller's right,
title and interest in the following (but not including, in any case, the
Excluded Assets):
1
<PAGE>
all rights of Seller under the Assumed Contracts listed on Schedule
4.6.1;
all rental and non-rental Equipment related to the Business as listed
on Exhibit 2.5.1;
all Inventory related to the Business;
all cash and cash equivalents, not in excess of the amount thereof on
the Interim Balance Sheet;
[intentionally left blank]
all Books and Records related to the Business;
all Proprietary Rights related to the Business;
to the extent transferable, all Permits related to the Business;
all computers and, to the extent transferable, software used in the
Business;
all utility deposits;
all available supplies, sales literature, promotional literature,
customer, supplier and distributor lists, display units, telephone and facsimile
numbers and purchasing records related to the Business;
all rights under or pursuant to all warranties, representations and
guarantees made by suppliers in connection with the Assets or services furnished
to Seller pertaining to the Business or affecting the Assets, to the extent such
warranties, representations and guarantees (i) are not required by Seller to
fulfill its obligations under this Agreement and (ii) are assignable;
except as may relate to Excluded Assets, all claims, causes of action,
choses in action, rights of recovery and rights of set-off of any kind, against
any person or entity, including without limitation any liens, security
interests, pledges or other rights to payment or to enforce payment in
connection with products delivered by Seller on or prior to the Closing Date;
provided, however, that all such claims etc. related to acquired accounts
- -------- -------
receivable shall be deemed to be reassigned to Seller at the time such accounts
receivable are returned to Seller pursuant to Section 2.7.3 hereof;
all accounts receivable as adjusted at the Closing and which are not
Excluded Assets; and
2
<PAGE>
all Open Rental Contracts and customer deposits made in connection
therewith (including, without limitation, deposits made in the form of cash,
check, or a preliminary charge on a credit or debit card).
"Assumed Leases" shall mean the Leases of the Facilities in Cedar
--------------
Rapids and Des Moines, Iowa.
"Balance Sheet" shall mean the balance sheet of Seller at the date
-------------
indicated thereon, together with the notes thereon.
"Books and Records" shall mean (a) all records and lists of Seller
-----------------
pertaining to the Assets, (b) all records and lists pertaining to the Business,
customers, suppliers or personnel (excluding confidential personnel records) of
Seller, (c) all product, business and marketing plans of Seller and (d) all
books, ledgers, trial balances, files, reports, plans, drawings and operating
records of every kind maintained by Seller, but excluding the originals of
Seller's minute books, stock books, tax returns and accounting ledgers (provided
that Buyer will be provided copies of tax returns and accounting records if it
so requests).
"Business" shall mean Seller's equipment rental and sales business,
--------
operating under the "Foxx Hy-Reach" name or otherwise.
"Closing Date" shall mean June 2, 1997 or such other date as Buyer and
------------
Seller shall mutually agree upon; provided that either party may elect to defer
the Closing Date to a date on or prior to June 30, 1997 (which date shall be a
date which is reasonably satisfactory to both parties) if necessary to complete
the Closing.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
----
the rules and regulations thereunder.
"Contract" shall mean any agreement, contract, note, loan, evidence of
--------
indebtedness, purchase, order, letter of credit, franchise agreement,
undertaking, covenant not to compete, employment agreement, license, instrument,
obligation or commitment to which Seller is a party or is bound and which
relates to the Business or the Assets, whether oral or written.
"Encumbrance" shall mean any claim, lien, pledge, option, charge,
-----------
easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other right of third parties, whether voluntarily incurred or
arising by operation of law, and includes, without limitation, any agreement to
give any of the foregoing in the future, and any contingent sale or other title
retention agreement or lease in the nature thereof.
"Equipment" shall mean all of the furniture, fixtures, furnishings,
---------
machinery, automobiles, trucks, spare parts, tools, supplies, equipment and
other tangible personal property owned by Seller and used in connection with the
Business, including without limitation all items listed on the Rental
3
<PAGE>
and Non-Rental Asset Listing and the Supplemental Rental and Non-Rental
Asset Listing (but not including any Excluded Assets listed thereon).
"Excluded Assets," notwithstanding any other provision of this
---------------
Agreement, shall mean the following assets of Seller which are not to be
acquired by Buyer hereunder:
prepayments or prepaid expenses except customer and utility deposits
(including all prepaid insurance premiums and prepaid taxes) of Seller;
all Permits, to the extent not transferable;
all claims, causes of action, choses in action, rights of recovery and
rights of set-off of any kind against any person or entity arising out of or
relating to the Assets to the extent related to the Excluded Liabilities;
the ownership of and cash surrender value of all life insurance
policies;
all accounts receivable which have been written off on the Interim
Balance Sheet or are more than 90 days old at Closing;
all claims of Seller against Maryland Casualty Company with respect to
the claims of Warren Hipple;
all insurance policies of Seller;
all obligations of officers or shareholders for repayment to Seller of
loans or other advances; and
all refunds from taxing authorities for periods prior to Closing.
"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 used (or will be used) in the
conduct of the Business, and which are located at:
- 3913-24th Street, Moline, IL 61265
- 1929 N. Morton Avenue, Morton, IL 61240
- 5950 6th Street, Cedar Rapids, IA 52404
- 2216 Valley Drive, Des Moines, IA 50321
"Final Determination" means a final, non-appealable judgment by a court
-------------------
of competent jurisdiction.
4
<PAGE>
"Financial Statements" shall mean the Year-End Financial Statements and
--------------------
the Interim Financial Statements.
"Hipple Litigation" shall mean Warren Hipple v. Brute Equipment Co.,
------------------ ------------- -------------------
d/b/a/ Foxx Hy-Reach, an Iowa corporation, Docket #95L58 in the Circuit Court of
the Fourteenth Judicial Circuit, Rock Island County, Illinois, and any
litigation related thereto, including without limitation, appeals.
"Interim Balance Sheet" shall mean the Balance Sheet dated the Interim
---------------------
Balance Sheet Date.
"Interim Balance Sheet Date" shall mean February 28, 1997.
--------------------------
"Interim Financial Statements" shall mean the Interim Balance Sheet and
----------------------------
the income statement for the two months ended on the Interim Balance Sheet Date.
"Inventory" shall mean all of Seller's inventory held for resale and all
---------
of Seller'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.
"Material Adverse Effect" or "Material Adverse Change" shall mean with
----------------------- -----------------------
respect to the Business or the Assets any significant and substantial adverse
effect or change in the condition (financial or other), business, results of
operations, prospects, assets, liabilities or operations of the Business and/or
the Assets or on the ability of Seller to consummate the transactions
contemplated hereby, or any event or condition which would, with the passage of
time, constitute a "Material Adverse Effect" or "Material Adverse Change."
"Open Rental Contracts" shall mean (i) all Contracts pursuant to which
---------------------
Seller has rented Equipment and, as of the Closing Date, the rentee under each
such Contract is still in possession of such Equipment and (ii) all Contracts
under which the rentee has returned the Equipment but has not yet been invoiced.
"Owned Real Property" shall mean all real property owned in fee by the
-------------------
Seller Stockholder or related entities which is used in the conduct of the
Business, including without limitation all rights, easements and privileges
appertaining or relating thereto, all buildings, fixtures, and improvements
located thereon and all Facilities thereon, if any.
"Permits" shall mean all licenses, permits, franchises, approvals,
-------
authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, or any other person,
necessary or desirable for the past, present or anticipated conduct of, or
relating to the operation of, the Business.
5
<PAGE>
"Rental and Non-Rental Asset Listing" shall mean the asset listing
-----------------------------------
provided to Buyer by Seller and attached as Exhibit 2.7.1 hereto, listing all
assets as of February 28, 1997, but not including any Excluded Assets listed
therein.
"Representative" shall mean any officer, director, principal, attorney,
--------------
agent, employee or other representative.
"Seller Stockholder" shall mean Thomas H. Foster who will own all of the
------------------
outstanding capital stock of Seller as of the Closing Date.
"Supplemental Rental and Non-Rental Asset Listing" shall mean the asset
------------------------------------------------
listing provided to Buyer by Seller and attached as Exhibit 2.7.1.1 hereto,
listing all assets acquired after February 28, 1997, through the Closing Date,
but not including any Excluded Assets listed therein.
"Tax" shall mean any federal, state, local, foreign or other tax, levy,
---
impost, fee, assessment or other government charge, including without limitation
income, estimated income, business, occupation, franchise, property, payroll,
personal property, sales, transfer, use, employment, commercial rent, occupancy,
franchise or withholding taxes, and any premium, including without limitation
interest, penalties and additions in connection therewith.
"Year-End Financial Statements" shall mean the Balance Sheets and income
-----------------------------
statements dated as the Seller's fiscal years ended 1996, 1995, and 1994.
1.2 Other Defined Terms. The following terms shall have the meanings defined
-------------------
for such terms in the Sections set forth below:
<TABLE>
<CAPTION>
Term Section
- --------------------------------------------------- -------
<S> <C>
Action 4.11
Agreed Value 2.5.1
Assumed Contracts 4.6
Assumed Liabilities 2.2
Assumption Document 3.2.2
CERCLA 4.21.2
Claim 10.3.4
Claim Notice 10.3.4
Closing 3.1
Damages 10.3.1
Employee Plans 4.20
Environmental Conditions 4.21.11
Environmental Laws 4.21.2
Environmental Assessments 6.7.1
Excluded Liabilities 2.3
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
Hazardous Substance 4.21.1
Holdback Amount 2.4.3
Inventory Value 2.5.2
New Leases 7.4
Post-Closing Environmental Liability 10.3.1
Proposed Acquisition Transaction 6.2.1
Proprietary Rights 4.16.1
Purchase Price 2.4.1
RCRA 4.21.2
Release 4.21.1
Remediation Standard 6.7.2
Rental Ready 2.5.1
Retained Employees 6.6
</TABLE>
ARTICLE II
PURCHASE AND SALE OF ASSETS
---------------------------
2.1 Transfer of Assets. Upon the terms and subject to the conditions
------------------
contained herein, at the Closing, Seller will sell, convey, transfer, assign and
deliver to Buyer, and Buyer will acquire from Seller, the Assets.
2.2 Assumption of Liabilities. Upon the terms and subject to the conditions
-------------------------
contained herein, at the Closing, Buyer shall assume all obligations and
liabilities accruing, arising out of, or relating to events or occurrences
happening after the Closing Date under, and only under, the Assumed Contracts
listed on Schedule 4.6.1, but not including any obligation or liability for any
breach of any Contract occurring on or prior to the Closing Date (together with
the liabilities assumed pursuant to the Assumed Contracts, the "Assumed
Liabilities").
2.3 Excluded Liabilities. Notwithstanding any other provision of this
--------------------
Agreement, except for the Assumed Liabilities expressly specified in Section
2.2, Buyer shall not assume, or otherwise be responsible for, any of Seller's
liabilities or obligations, whether actual or contingent, matured or unmatured,
liquidated or unliquidated, known or unknown, or related or unrelated to the
Business or the Assets, whether arising out of occurrences prior to, at or after
the date hereof (collectively, "Excluded Liabilities"), which Excluded
Liabilities include, without limitation:
2.3.1 Except as provided in Section 6.9, any liability or obligation to or
in respect of any employees or former employees of Seller including without
limitation (i) any employment agreement, whether or not written, between Seller
and any person, (ii) any liability under any Employee Plan at any time
maintained, contributed to or required to be contributed to by or with respect
to Seller or under which Seller may incur liability, or any contributions,
benefits or liabilities therefor, or any liability with respect to Seller's
withdrawal or partial withdrawal from or termination of any Employee Plan and
(iii) any claim of an unfair labor practice, or any claim under any state
unemployment compensation or worker's compensation law or regulation or under
any federal or state employment discrimination law or regulation, which shall
have been asserted on or prior to the Closing Date or is based on acts or
omissions which occurred on or prior to the Closing Date;
7
<PAGE>
2.3.2 Any liability or obligation of Seller in respect of any Tax;
2.3.3 Any liability or obligation of Seller in respect of any claims by
or with respect to Warren Hipple;
2.3.4 Any liability arising from any injury to or death of any person or
damage to or destruction of any property, whether based on negligence, breach of
warranty, strict liability, enterprise liability or any other legal or equitable
theory arising from defects in products sold or services performed by or on
behalf of Seller or any other person or entity on or prior to the Closing Date,
or arising from any other cause, including without limitation any liabilities
arising (on a date of occurrence basis or otherwise) on or prior to the Closing
Date relating to the use or misuse of Equipment or to traffic accidents;
2.3.5 Any liability or obligation of Seller arising out of or related to
any Action against Seller or any Action which adversely affects the Assets and
which shall have been asserted on or prior to the Closing Date or to the extent
the basis of which shall have arisen on or prior to the Closing Date;
2.3.6 Any liability or obligation of Seller resulting from entering
into, performing its obligations pursuant to or consummating the transactions
contemplated by, this Agreement (including without limitation any liability or
obligation of Seller pursuant to Article X hereof);
2.3.7 Any liability or obligation related to the Facilities, except for
those expressly set forth in the New Leases and the Assumed Leases; and
2.3.8 Any liability or obligation arising out of CERCLA, any equivalent
state statute, or any other Environmental Law.
2.4 Purchase Price. At the Closing, upon the terms and subject to the
--------------
conditions set forth herein, Buyer shall pay to Seller in consideration for the
Assets, by wire transfer of immediately available funds to an account designated
by Seller, the aggregate amount of Thirty-two Million Seven Hundred Thousand
Dollars ($32,700,000)(the "Cash Portion of the Purchase Price"), 169,014 shares
of RSC Common Stock subject, however, to adjustment as set forth in Section 2.5
------- -------
and less the Holdback Amount as described below. In addition, Buyer shall pay
additional Purchase Price of up to 204,866 shares of RSC Common Stock as
follows: 64,020 shares of RSC Common Stock paid at Closing; another 51,216
shares of RSC Common Stock will be paid on the first anniversary of the Closing;
and an additional 89,630 shares of RSC Common Stock will be paid if performance
objectives to be mutually agreed upon by Closing are met. Any RSC Common Stock
paid to Seller will be contributed by RSC to RSC Acquisition Corp. and by RSC
Acquisition Corp. to Buyer in a transaction intended to qualify under Section
351 of the Code immediately prior to delivery of such RSC Common Stock to
Seller. The Purchase Price shall be allocated among the Assets in the manner
required by Section 1060 of the Code and regulations thereunder. Exhibit 2.4
attached hereto sets forth the amount of the Purchase Price allocable to the
various Assets; provided that such allocation shall be subject to necessary
adjustments, to be completed and reflected in such allocation within 30 days
following the Closing Date, on account of the final Inventory and Equipment
valuations under Sections 2.4.1 and 2.4.2. Buyer and Seller agree to each
prepare and file on a timely basis with the Internal Revenue Service
substantially identical initial and supplemental Internal Revenue Service Forms
8594 "Asset
8
<PAGE>
Acquisition Statements Under Section 1060" consistent with Exhibit 2.4 and
which give effect to any adjustment to the Purchase Price determined in
accordance with Section 2.4 hereof.
2.5 Employment and Noncompetition Agreement. At the Closing, upon the terms
---------------------------------------
and subject to the conditions set forth herein, Buyer and Thomas H. Foster shall
enter into an Employment and Non-Competition Agreement in the form attached
hereto as Exhibit 8.7.1.
2.6 Holdback. The "Aggregate Holdback Amount" shall be an amount equal to
--------
$3,150,000, which Buyer, at the Closing, shall retain pending the determination
of the amount of the Equipment adjustment and Inventory adjustment pursuant to
Sections 2.7.1 and 2.7.2, respectively, Seller's indemnification obligations, if
any, as set forth in Section 10.3, pending the completion of any environmental
remediation required under Section 6.7 hereof which is not resolved by the
Closing Date and pending a Final Determination in the Hipple Litigation. Of
such Aggregate Holdback Amount, (i) $400,000 will be allocated to the resolution
of the Equipment adjustment pursuant to Section 2.7.1, (ii) $50,000 will be
allocated to the resolution of the Inventory adjustment pursuant to Section
2.7.2, (iii) $200,000 will be allocated to the resolution of the Accounts
Receivable adjustment pursuant to Section 2.7.3, (iv) $1,000,000 will be
allocated to the resolution of Seller's indemnification obligations pursuant to
Section 10.3 (Clauses (i), (ii), (iii) and (iv) being the "Holdback Amount"),
and (y) $1,500,000 will be allocated to resolution of the Hipple Litigation (the
"Hipple Holdback Amount"). Notwithstanding anything in the foregoing to the
contrary, if any portion of the Holdback Amount specified in this Section 2.7.3
proves to be insufficient for resolution of the matter subject to adjustment
therein, Buyer may in its sole discretion elect to transfer a portion of the
Holdback Amount allocated to another matter to resolve such deficiency.
Promptly upon the resolution of each of the foregoing adjustments or
indemnification or remediation obligations in accordance with the time periods
provided herein for its resolution, Buyer will instruct the Escrow Agent remit
to Seller that portion of the Holdback Amount allocated to the resolution of
such item, net of any amount which Buyer is entitled to retain under the
provisions of Sections 2.7 and 10.3 hereof. In the event of any disagreement
between Buyer and Seller regarding the dollar amount of any such adjustment or
indemnification or remediation obligation, Buyer shall nevertheless be obligated
to instruct the Escrow Agent remit to Seller any portion of the Holdback Amount
which is allocable to such item and is not in dispute. Promptly upon resolution
of any such disagreement in accordance with the terms hereof, Buyer shall remit
to Seller any remaining portion of the Holdback Amount to which Seller is
entitled. Notwithstanding the foregoing, Buyer shall not be limited to the
Holdback Amount (or allocable portion thereof) as a sole remedy in the event
that any purchase price adjustment or indemnification or remediation obligation
exceeds the Holdback Amount (or allocable portion thereof); rather, in such
event, Buyer shall have the right to collect promptly from Seller, in cash, the
amount of such excess. The Aggregate Holdback Amount will be held in escrow
pursuant to an Escrow Agreement in substantially the form attached hereto as
Exhibit 2.6.
2.7 Purchase Price Adjustments.
--------------------------
2.7.1 Equipment Adjustment. The Rental and Non-Rental Asset Listing
--------------------
attached as Exhibit 2.7.1. sets forth the asset description, make, model,
original cost and net book value of all Equipment which, on the Closing Date,
will be fully operable, Rental Ready and available for transfer to Buyer. (The
net book value of each item of Equipment shown on Exhibit 2.7.1 is referred to
herein as the "Agreed Value.") On or prior to the 10th business day following
the Closing Date, personnel of Buyer and Seller jointly shall complete a
physical inventory of each item of Equipment comprising Exhibit 2.7.1, including
by visiting renters' locations as necessary to inspect such Equipment. The
Purchase Price shall be reduced, within thirty
9
<PAGE>
(30) calendar days after the Closing, for each item of Equipment contained in
Exhibit 2.7.1 which is missing, inoperable, not Rental Ready, or otherwise not
available for transfer to Buyer (including items previously sold by Seller),
provided that such reduction shall apply dollar for dollar with respect to items
sold by Seller, and otherwise only to the extent that the missing, inoperable,
non-Rental Ready or unavailable Equipment exceeds $50,000 in aggregate net book
value. The reduction in the Purchase Price shall be calculated by the aggregate
Agreed Value of all missing, inoperable, non-Rental Ready or unavailable
Equipment. The result of the foregoing calculation shall be subtracted from the
Purchase Price. In the event of a Purchase Price reduction as contemplated
hereby, Buyer shall be entitled to retain a portion of the Holdback Amount equal
to such reduction as specified in, or to have the other remedies set forth in,
Section 2.7. For purposes of this Agreement, an item of Equipment is "Rental
Ready" only if all required maintenance has been performed and it does not
require any repairs in excess of $100 per item. Any disputes as to the physical
count or Rental Readiness of any item of Equipment will, if possible, be
resolved while the physical inventory of such Equipment is being taken by Buyer
and Seller. Any disputes regarding the foregoing not resolved by the 10th
business day following the Closing Date will be separately listed and settled as
soon as expeditiously practicable thereafter by the parties or by another
independent third party mutually acceptable to both parties, and shall not be
the subject of any indemnification claim by Buyer under Section 10.3
In addition to the foregoing, the Purchase Price shall be increased, on a
dollar-for-dollar basis and with such increase to be payable in immediately
available funds on the Closing Date, by the cost to Seller of any item of
Equipment which was acquired by Seller subsequent to February 28, 1997 and is
listed in the Supplemental Rental and Non-Rental Asset Listing attached as
Exhibit 2.7.1.1.
2.7.2 Inventory Adjustment. The Purchase Price shall be adjusted,
--------------------
thirty (30) calendar days after Closing, on a dollar-for-dollar basis pursuant
to the procedures set forth below, by the amount, if any, by which the Inventory
Value as of the Closing Date is greater or less than the amount stated on the
Interim Balance Sheet. In the event of a Purchase Price reduction as
contemplated hereby, the cash portion of the purchase price will be reduced.
"Inventory Value" shall mean the lower of (x) vendor cost as last received
(excluding all freight and other charges) and (y) net book value, in each case
of all Inventory (excluding any non-salable or obsolete merchandise, parts or
supplies) as of the Closing Date, as determined in accordance with generally
accepted accounting principles. Inventory Value shall be determined pursuant to
a physical inventory to be taken on or promptly following the Closing Date, and
shall be finalized within 15 business days following the Closing Date (except to
the extent that particular matters are referred to a third party for resolution
as described below). In connection with such physical inventory, all items of
Inventory will be counted as to quantity, and assessed as to salability, by
personnel of Seller and Buyer using the same procedures normally used by Buyer
to take inventories of the type of Inventory being counted. Any disputes as to
the physical count, condition, salability or obsolescence of any item of
Inventory will, if possible, be resolved while such physical inventory is being
taken. Any disputes regarding the foregoing not resolved by the 15th business
day following the Closing Date will be separately listed and settled as soon as
expeditiously practicable thereafter by the parties or by another independent
third party mutually acceptable to both parties, and in any event will be
resolved no later than the 30th calendar day following the Closing.
2.7.3 Accounts Receivable Adjustment. The cash portion of the Purchase
------------------------------
Price shall be adjusted, one hundred twenty (120) calendar days after the
Closing, on a dollar-for-dollar basis, pursuant to the procedures set forth
below, by the amount, if any, by which the Accounts Receivable included in the
Assets are greater or have a value that is less than the net amount stated on
the Interim Balance Sheet. Any accounts receivable included in the Assets which
are not collected within ninety (90) calendar days after the
10
<PAGE>
Closing will be returned to the Seller and deducted from the Holdback Amount.
All Open Rental Contracts and customer deposits in connection therewith become
the property of Buyer, and Buyer shall be entitled to all proceeds collected by
Seller from any contract which would have been an Open Rental Contract but for
Seller's failure to operate the Business in the ordinary course of the Business
and substantially in accordance with past practice, as provided in Section 6.5.
2.7.4 Finality of Third Party Determination. The determination of any
-------------------------------------
third party engaged pursuant to the foregoing provisions of this Section 2.7
shall be final and binding on the parties. The engagement of such third party
will be subject to the provisions of Section 11.13, provided that the parties
may retain an independent accounting firm rather than professional arbitrators
to settle a dispute, and may otherwise depart from the procedures specified in
Section 11.13, if they both so agree. No failure to resolve any matters
described in this Section 2.7 shall prevent the Closing or payment of the
Purchase Price for the Assets.
2.7.5 Adjustment for Permitted Encumbrances. In addition to the
-------------------------------------
foregoing, the Purchase Price shall be decreased, on a dollar-for-dollar basis
and with such decrease to be deducted from the Purchase Price payable on the
Closing Date, by the amount of any Encumbrance on any Asset which Buyer has
specifically accepted pursuant to Section 4.4 hereof.
2.8 Hipple Litigation. Promptly following a Final Determination of the
-----------------
Hipple Litigation following which Buyer can have no further liability with
respect thereto, the Hipple Holdback Amount, plus any income thereon remaining
in escrow, will be released to Seller.
2.9 Prorations. On the Closing Date, or as promptly as practicable
----------
following the Closing Date, but in no event later than sixty (60) calendar days
thereafter, the Facilities rent, real and personal property taxes, water, gas,
electricity and other utilities, local business or other license fees or taxes,
merchants' association dues and other similar periodic charges payable with
respect to the Assets or the Business shall be prorated between Buyer and Seller
effective as of the Closing Date. To the extent practicable, utility meter
readings for the Facilities shall be determined as of the Closing Date.
Seller's prorated share of the personal property taxes shall be payable
notwithstanding the fact that such tax may become payable after the Closing
Date, and such tax shall be paid to Buyer or the appropriate taxing authority on
or prior to the date on which such tax becomes due.
2.10 Closing Costs; Transfer Taxes and Fees. Seller shall be responsible for
--------------------------------------
any documentary and transfer taxes and any sales or other taxes (excluding use
taxes on equipment constituting registered motor vehicles, which use taxes will
be paid one-half by each of Seller and Buyer) imposed by reason of the transfers
of Assets provided hereunder and any deficiency, interest or penalty asserted
with respect thereto. Buyer will pay any licensing fees associated with re-
registering motor vehicles. Seller shall pay all costs of obtaining the
transfer of existing Permits which may be lawfully transferred. Seller shall
pay the fees and costs of recording or filing all applicable conveyancing
instruments described in Section 3.2.1, and shall pay the fees and costs of
recording or filing all UCC termination statements and other releases of
Encumbrances.
ARTICLE III
11
<PAGE>
CLOSING
-------
3.1 Closing. The Closing of the transactions contemplated herein (the
-------
"Closing") shall be held on the Closing Date at a time and place as the parties
shall mutually agree.
3.2 Conveyances at Closing.
----------------------
3.2.1 Instruments and Possession. To effect the sale and transfer
----------------------------
referred to in Section 2.1 hereof, Seller will, at the Closing, execute and
deliver to Buyer:
3.2.1.1 one or more bills of sale, each in the form of Exhibit
3.2.1.1 attached hereto, conveying in the aggregate all of Seller's owned
personal property included in the Assets, free and clear of all Encumbrances,
except as otherwise provided in Section 2.5.5;
3.2.1.2 subject to Section 9.2, Assignments of Contract Rights, each
in the form of Exhibit 3.2.1.2 attached hereto, with respect to the Assumed
Contracts;
3.2.1.3 assignments of Trademarks, Service Marks and other
Proprietary Rights, each in the form of Exhibit 3.2.1.3 attached hereto, in
recordable form to the extent necessary to assign such rights; and
3.2.1.4 such other instruments as shall be requested by Buyer to
vest in Buyer title in and to the Assets in accordance with the provisions
hereof.
3.2.2 Assumption Document. Upon the terms and subject to the conditions
-------------------
contained herein, at the Closing Buyer shall deliver to Seller an instrument of
assumption substantially in the form attached hereto as Exhibit 3.2.2,
evidencing Buyer's assumption, pursuant to Section 2.2, of the Assumed
Liabilities (the "Assumption Document").
3.2.3 Form of Instruments. To the extent that a form of any document to
-------------------
be delivered hereunder is not attached as an Exhibit hereto, such documents
shall be in form and substance, and shall be executed and delivered in a manner,
reasonably satisfactory to the recipient.
3.2.4 Certificates; Opinions. Seller shall deliver to Buyer the
----------------------
certificates, opinions of counsel and other documents described in Article VIII.
3.2.5 Consents. Subject to Section 9.2, Seller shall deliver all Permits
--------
and any other third party consents required for the valid transfer of the
Assets as contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
12
<PAGE>
Seller hereby represents and warrants to Buyer as follows, that, except
as set forth on the Disclosure Schedule attached hereto and made a part hereof
are incorporated herein by this reference, which representations and warranties
are, as of the date hereof, and will be, as of the Closing Date, true and
correct:
4.1 Organization of Seller. Seller is a corporation duly organized, validly
----------------------
existing and in good standing under the laws of the State of Iowa. Seller is
also duly qualified and in good standing as a foreign corporation under the laws
of the State of Illinois. Copies of the Articles of Incorporation and Bylaws of
Seller, and all amendments thereto, heretofore delivered to Buyer are accurate
and complete as of the date hereof. Seller has no direct or indirect stock or
other equity or ownership interest (whether controlling or not) in any
corporation, association, partnership, joint venture or other entity.
4.2 Authorization. Seller has all requisite corporate power and authority,
-------------
and has taken all corporate action necessary, to own, lease and operate the
Assets, to conduct the Business as it is presently being conducted, to execute
and deliver this Agreement, to consummate the transactions contemplated hereby
and thereby and to perform its obligations hereunder and thereunder. This
Agreement has been duly executed and delivered by Seller and is a legal, valid
and binding obligation of Seller enforceable against it in accordance with its
terms. Following their execution and delivery by Seller or the Seller
Stockholder or a related entity controlled by the Seller Stockholder, as
applicable, and Buyer, each of the New Leases will be a legal, valid and binding
obligation of Seller or the Seller Stockholder or such related entity, as
applicable, enforceable against them in accordance with its terms.
4.3 No Changes to the Assets. Since the Interim Balance Sheet Date:
------------------------
4.3.1 there has been no actual or threatened adverse change in the
financial condition or results of operation, the Business or the Assets or any
event, condition or state of facts, in either case that is, or would result in a
Material Adverse Change in the Assets or the Business or the prospects for the
Business, including without limitation the loss of any material customers;
4.3.2 there has not been any sale or other disposition, except in the
ordinary course of Seller's business, of any of the Assets, or any Encumbrance
placed on the Assets;
4.3.3 Seller has operated the Business in the ordinary course consistent
with Seller's past practice so as to preserve the Business intact, to keep
available to the Business the services of Seller's employees, and to preserve
the Business and the goodwill of Seller's suppliers, customers, distributors and
others having business relations with it; and
4.3.4 Except as set forth on Exhibits 2.5.1.1 and 2.5.1.2, Seller has not
purchased, or entered into any agreement to purchase any item, other than in the
ordinary course of business consistent with past practices, having a cost in
excess of $2,000, without the consent of Buyer.
4.4 Assets. Seller has and will transfer good and marketable fee simple
------
title to the Assets and upon the consummation of the transactions contemplated
hereby, Buyer will acquire good title to all of the Assets, free and clear of
any Encumbrances, except for any Encumbrance that Buyer, in its sole discretion,
specifically accepts in writing (in which case the Purchase Price will be
subject to adjustment as set forth in Section 2.5.5). The Assets reflected in
the Interim Balance Sheet and all of the Assets acquired after such date are or
will be valued at the lower of actual cost or market less an adequate and proper
depreciation
13
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charge. The Assets include without limitation all assets necessary for the
conduct of the Business as presently conducted.
4.5 Facilities. The Seller has delivered to Buyer an accurate copy of its
----------
existing leases and, with respect to Owned Real Property, existing policies of
title insurance. The Seller enjoys peaceful and undisturbed possession of the
Leased Real Property. Other than the leases provided, there are no leases,
subleases, licenses, occupancy agreements, options, rights, concessions or other
agreements or arrangements, written or oral, granting to any person the right to
purchase, use or occupy the Facilities or any portion thereof, except the
billboard lease at the Moline Facility to be retained by Seller Stockholder, a
copy of which is attached hereto as Schedule 4.5.1. The Facilities are supplied
with utilities and other services necessary for the operation of the Business.
Seller has never owned any real property.
4.5.1 Improvements, Fixtures and Equipment. The Facilities and the
------------------------------------
improvements thereon, including without limitation all Equipment (including all
fixtures) and other tangible assets owned, leased or used by Seller at the
Facilities are (i) insured to the extent and in a manner customary in the
industry, (ii) structurally sound with no known material defects, (iii) in good
operating condition and repair, subject to ordinary wear and tear, (iv) not in
need of maintenance or repair except for ordinary routine maintenance and
repair, the cost of which would not be material, (v) sufficient for the
operation of the Business as presently conducted, and (vi) to the best of
Seller's knowledge, in conformity, in all material respects, with all applicable
laws, ordinances, orders, regulations and other requirements relating thereto
currently in effect. None of the improvements is subject to any commitment or
other arrangement for their sale or use by any Affiliate of Seller or third
parties.
4.5.2 Conformity. All Facilities have received all required approvals
----------
of governmental authorities (including without limitation Permits and a
certificate of occupancy or other similar certificate permitting lawful
occupancy of the Facilities) required in connection with the operation thereof.
To the best of Seller's knowledge, the Facilities are (and have been) operated
and maintained in accordance with applicable laws, rules, regulations and state,
county, municipal or other local ordinances, and conform to all other conditions
necessary for the lawful conduct of the Business as currently conducted at each
such Facility.
4.6 Contracts and Commitments.
-------------------------
4.6.1 Contracts. Schedule 4.6 sets forth a complete and accurate list
---------
of all Contracts of the following categories:
4.6.1.1 Contracts not made in the ordinary course of Seller's
conduct of the Business;
4.6.1.2 Employment contracts and severance agreements;
4.6.1.3 Distribution, franchise, license, sales or commission
contracts related to the Assets or the Business;
4.6.1.4 Contracts involving expenditures or liabilities, actual or
potential, in excess of $1,000 or otherwise material to the Business or the
Assets, and not cancelable (without liability) within 30 calendar days;
14
<PAGE>
4.6.1.5 Contracts or commitments relating to commission
arrangements with others;
4.6.1.6 Promissory notes, loans, agreements, evidences of
indebtedness, letters of credit, guarantees, or other instruments relating to
an obligation to pay money, whether Seller shall be the borrower, lender or
guarantor thereunder or whereby any Assets are pledged (excluding credit
provided by Seller in the ordinary course of the Business to its customers);
4.6.1.7 Leases of personal property not cancelable (without
liability) within 30 calendar days; and
4.6.1.8 Contracts containing covenants limiting the freedom of
Seller or any officer, director or shareholder of Seller to engage in any line
of business or compete with any person.
For purposes of this Agreement, the "Assumed Contracts" are the Contracts listed
as such on Schedule 4.6.1. Seller has delivered to Buyer true, correct and
complete copies of all of the Contracts listed on Schedule 4.6, including all
amendments and supplements thereto, whether or not such Contracts are Assumed
Contracts.
4.6.2 Absence of Breaches or Defaults. All of the Contracts are valid
-------------------------------
and in full force and effect. Seller has duly performed all of its obligations
under the Contracts to the extent those obligations to perform have accrued, and
no violation of, or default or breach under any Contracts by Seller or any other
party has occurred and neither Seller nor any other party has repudiated any
provisions thereof.
4.7 Permits and Consents. Seller has all Permits required to conduct the
--------------------
Business, except where the failure to obtain such Permits would not have a
Material Adverse Effect on the Assets or the Business. All Permits of Seller
related to the Business are valid and in full force and effect and are listed on
Schedule 4.7. Except as disclosed on Schedule 4.7, no notice to, declaration,
filing or registration with, or authorization, or consent or approval of, or
Permit from, any governmental or regulatory body or authority (including without
limitation the U.S. Small Business Administration), or any other person or
entity, is required to be made or obtained by Seller or the Seller Stockholder
in connection with the execution, delivery or performance of this Agreement or
the New Leases and the consummation of the transactions contemplated hereby and
thereby. Schedule 4.7 sets forth all consents required for the assignment by
Seller to Buyer of the Assumed Contracts and the Assumed Leases. All of the
Assumed Contracts will be enforceable by Buyer after the Closing to the same
extent as if the transactions contemplated by this Agreement had not been
consummated. Each of Seller and the Seller Stockholder or the related entity
controlled by Seller Stockholder has legal authority to enter into the New
Leases to which it or they will be parties and to convey to Buyer the leasehold
interests created thereby, and no consent of the lessor under the Existing
Lease, of any lender, or of any other person or entity is required for the
execution by Seller or the Seller Stockholder or such related entity of the New
Leases.
4.8 No Conflict or Violation. After giving effect to consents and lien
------------------------
releases that have been obtained from third parties or will be so obtained prior
to the Closing Date, neither the execution and delivery of this Agreement or the
New Leases by Seller or the Seller Stockholder, as applicable, nor the
consummation of the transactions contemplated hereby or thereby, nor compliance
by Seller or the Seller Stockholder with any of the provisions hereof or
thereof, will (a) violate or conflict with any provision of the Articles of
Incorporation or Bylaws of Seller, (b) violate, conflict with, or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute
15
<PAGE>
a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any Encumbrance upon any of the Assets
under, any of the terms, conditions or provisions of any Contract, Permit,
agreement, or other instrument or obligation (i) to which Seller or the Seller
Stockholder are parties or (ii) by which the Assets are bound, violate any
statute, rule, regulation, ordinance, code, order, judgment, ruling, writ,
injunction, decree or award or (d) impose any Encumbrance, restriction or
charge on the Assets, the Facilities or the Business.
4.9 Financial Statements. Seller has heretofore delivered to Buyer the
--------------------
Financial Statements. The Financial Statements (a) are in accordance with the
underlying books and records of Seller, (b) have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods covered thereby (except as otherwise described in Schedule 4.9) and
(c) fairly and accurately present the assets, liabilities (including all
reserves) and financial position of the Business as of the respective dates
thereof and the results of operations and changes in cash flows for the periods
then ended (subject, in the case of the Interim Financial Statements, to normal
year-end adjustments). At the respective dates of the Financial Statements,
there were no liabilities of Seller, which, in accordance with generally
accepted accounting principles, should have been shown or reflected in the
Financial Statements or the notes thereto, which are not shown or reflected in
the Financial Statements or the notes thereto.
4.10 Books and Records. Seller has made and kept (and given Buyer access
-----------------
to) Books and Records and accounts, which, in reasonable detail, accurately and
fairly reflect the activities of Seller. The minute books of Seller previously
delivered to Buyer accurately and adequately reflect all action previously taken
by the shareholders, board of directors and committees of the board of directors
of Seller. The copies of the stock book records of Seller previously delivered
to Buyer are true, correct and complete, and accurately reflect all transactions
effected in Seller's stock through and including the date hereof.
4.11 Litigation. Except as set forth on Schedule 4.11, there is no action,
----------
order, writ, injunction, judgment or decree outstanding or any claim, suit,
litigation, proceeding, labor dispute, arbitral action, governmental audit or
investigation (collectively, "Actions") pending, or to the best of Seller's
knowledge, threatened or anticipated (a) against, related to or affecting
Seller, the Business or the Assets or (b) seeking to delay, limit or enjoin the
transactions contemplated by this Agreement. Seller is not in default with
respect to or subject to any judgment, order, writ, injunction or decree of any
court or governmental agency, and there are no unsatisfied judgments against
Seller, the Business or the Assets.
4.12 Labor Matters. Except as stated in Exhibit 4.12, Seller is not a party
-------------
to a labor agreement with respect to its employees with any labor organization,
union, group or association and there are no employee unions (nor any other
similar labor or employee organizations) under local statutes, custom or
practice. Seller has not experienced any attempt by organized labor or its
representatives to make Seller conform to demands of organized labor relating to
its employees or to enter into a binding agreement with organized labor that
would cover the employees of Seller.
4.13 Compliance with Law. Seller, the conduct of the Business and the
-------------------
operation of the Facilities have not violated and are in compliance with all
laws, statutes, ordinances, regulations, rules and orders of any foreign,
federal, state or local government and any other governmental department or
agency, and any judgment, decision, decree or order of any court or governmental
agency, department or authority, including without limitation Environmental
Laws, relating to the Assets, Facilities or Business or operations of Seller,
16
<PAGE>
except where the violation or failure to comply, individually or in the
aggregate, would not have a Material Adverse Effect on the Facilities, the
Assets or the Business. Seller and the conduct of the Business and the
operation of the Facilities are in conformity with all energy, public utility,
zoning, building and health codes, regulations and ordinances, OSHA and
Environmental Laws and all other foreign, federal, state, and local governmental
and regulatory requirements, except where any nonconformity would not have a
Material Adverse Effect on the Facilities, the Assets or the Business. Seller
has not received any notice to the effect that, or otherwise been advised that,
it is not in compliance with any such statutes, regulations, rules, judgments,
decrees, orders, ordinances or other laws, and Seller has no reason to
anticipate that any existing circumstances are likely to result in violations of
any of the foregoing, which non-compliance or violation could, in any one case
or in the aggregate, have a Material Adverse Effect on the Facilities, the
Assets or the Business.
4.14 No Brokers. Neither Seller nor any of its respective officers,
----------
directors, employees, shareholders or Affiliates has employed or made any
agreement with any broker, finder or similar agent or any person or firm which
will result in an obligation to pay any finder's fee, brokerage fees or
commission or similar payment in connection with the transactions contemplated
hereby.
4.15 No Other Agreements to Sell the Assets. Neither Seller nor any of its
--------------------------------------
respective officers, directors, shareholders or Affiliates have any commitment
or legal obligation, absolute or contingent, to any other person or firm other
than the Buyer to sell, assign, transfer or effect a sale of any of the Assets
(other than inventory in the ordinary course of business), to sell or effect a
sale of a majority of the capital stock of Seller or to effect any merger,
consolidation, liquidation, dissolution or other reorganization of Seller.
4.16 Proprietary Rights.
------------------
4.16.1 Proprietary Rights. Schedule 4.16 lists all of Seller's federal,
------------------
state and foreign registrations of trademarks, service marks and other marks,
trade names or other trade rights, and all pending applications for any such
registrations, all other trademarks and other marks, trade names and other trade
rights or in which Seller has any interest whatsoever, and all other trade
secrets and other proprietary rights, whether or not registered, created or used
by or on behalf of Seller, in each case relating to the Business (collectively,
"Proprietary Rights"). The Proprietary Rights listed in Schedule 4.16 are all
those used by Seller in connection with the Business.
4.16.2 Royalties and Licenses. No person has a right to receive a
----------------------
royalty or similar payment in respect of any Proprietary Rights. Seller has
no licenses granted, sold or otherwise transferred by or to it or other
agreements to which it is a party, relating in whole or in part to any of the
Proprietary Rights.
4.16.3 Ownership and Protection of Proprietary Rights. Seller owns
----------------------------------------------
and has the sole right to use each of the Proprietary Rights. None of the
Proprietary Rights is involved in any pending or threatened litigation. Seller
has not received any notice of invalidity or infringement of any rights of
others with respect to such Proprietary Rights. Seller has taken all
reasonable and prudent steps to protect the Proprietary Rights from
infringement by any other firm, corporation, association or person. Seller's
use of the Proprietary Rights is not infringing upon or otherwise violating the
rights of any third party in or to such Proprietary Rights, nor has such
infringement been alleged by any third party. All of the Proprietary Rights
are valid and enforceable rights of Seller, will be quit-claimed to Buyer and
will not cease to be valid and in full force
17
<PAGE>
and effect by reason of the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated by this
Agreement.
4.17 Tax Matters.
-----------
4.17.1 Filing of Tax Returns. Seller has timely filed with the
---------------------
appropriate taxing authorities all returns (including without limitation
information returns and other material information) in respect of Taxes
required to be filed through the date hereof and will timely file any such
returns required to be filed on or prior to the Closing Date. The returns and
other information filed are complete and accurate in all material respects.
Except as specified in Schedule 4.17, neither Seller, nor any group of which
Seller now or was a member, has requested any extension of time within which
to file returns (including without limitation information returns) in respect
of any taxes. Seller has delivered to Buyer complete and accurate copies of
Seller's federal, state and local tax returns for the years 1993, 1994, and
1995, and shall deliver to Buyer complete and accurate copies of Seller's
federal, state and local tax returns for 1996 when such returns are filed.
4.17.2 Payment of Taxes. All Taxes, in respect of periods beginning
----------------
before the EFFECTIVE DATE, have been timely paid, or will be timely paid, or an
adequate reserve has been established therefor, as set forth in Schedule 4.17 or
the Financial Statements, and Seller does not have any material liability for
Taxes in excess of the amounts so paid or reserves so established.
4.17.3 Audits, Investigations or Claims. Except as set forth in
--------------------------------
Schedule 4.17, the consolidated federal income tax returns and any required
state tax returns of Seller have been examined by the Internal Revenue Service
and any applicable state taxing authority for all periods to and including those
set forth in Schedule 4.17, and except to the extent shown therein, no material
deficiencies for Taxes, have been claimed, proposed or assessed by any taxing or
other governmental authority against Seller. Except as set forth in Schedule
4.17, there are no pending or, to the best of Seller's knowledge, threatened
audits, investigations or claims for or relating to any material additional
liability in respect of Taxes, and there are no matters under discussion with
any governmental authorities with respect to Taxes that in the reasonable
judgment of Seller, or its counsel, is likely to result in a material additional
liability for Taxes. Audits of federal, state, and local returns for Taxes by
the relevant taxing authorities have been completed for each period and set
forth in Schedule 4.17 and, except as set forth therein, Seller has not been
notified that any taxing authority intends to audit a return for any period.
Except as set forth in Schedule 4.17, no extension of a statute of limitations
relating to Taxes is in effect with respect to Seller.
4.17.4 Lien. There are no liens for Taxes (other than as could be
----
asserted for current Taxes not yet due and payable) on the Assets.
4.17.5 No Withholding. The transaction contemplated herein is not
--------------
subject to the tax withholding provisions of Section 3406 of the Code, or of
Subchapter A of Chapter 3 of the Code or of any other provision of law.
4.17.6 Tax-Exempt Use Property. None of the Assets is a "tax-exempt
-----------------------
use property" within the meaning of Section 168(h) of the Code.
18
<PAGE>
4.18 Accounts Receivable. The accounts receivable reflected in the
-------------------
Interim Balance Sheet, and all accounts receivable arising since the Interim
Balance Sheet Date, represent bona fide claims of Seller 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 were delivered or performed in accordance with the applicable orders,
Contracts or customer requirements.
4.19 Inventory. All the Inventory is located at the Facilities. The
---------
values at which the Inventory is shown on the Interim Balance Sheet have been
determined in accordance with generally accepted accounting principles, each
consistently applied throughout the periods covered by the Financial Statements,
with adequate provisions or adjustments for excess Inventory, slow-moving
Inventory and Inventory obsolescence and shrinkage. Schedule 4.19 sets forth a
complete and accurate list of all Inventory as of the date hereof, subject to
adjustment on and after the Closing Date in accordance with Section 2.4.2.
4.20 Employees. Schedule 4.20 (i) contains a list of all employees of
---------
Seller, and their wage rates or salaries, as of the date of this Agreement, (ii)
sets forth the dates of employment for such employees, and (iii) contains a list
of each contract, plan, arrangement, policy, program or commitment, whether oral
or written, providing for insurance coverage (including without limitation any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
life, health, disability or accident benefits or for deferred compensation,
pension, profit-sharing, bonuses, stock options, stock appreciation rights,
stock purchases or other forms of incentive compensation or post-retirement
insurance, compensation or benefits (collectively, "Employee Plans"). Seller has
paid all benefits due to its employees at any time under its Employee Plans,
including without limitation all severance, accrued vacation, health care
continuation coverage and other benefits to which its employees may be entitled
as a result of the transactions contemplated hereby.
4.21 Compliance With Environmental Laws.
----------------------------------
4.21.1 Definitions. The following terms, when used in this Section
-----------
4.21, shall have the following meanings. Unless the context otherwise requires,
any of these terms may be used in the singular or the plural depending on the
reference.
4.21.1.1 "Seller". For purposes of this Section 4.21 only, the term
------
"Seller" shall include (i) all Affiliates of Seller, including without
limitation the Seller Stockholder, (ii) all partnerships, joint ventures and
other entities or organizations in which Seller was at any time or is a partner,
joint venturer, member or participant and (iii) all predecessor or former
corporations, partnerships, joint ventures, organizations, businesses or other
entities, whether in existence as of the date hereof or at any time prior to the
date hereof, the assets or obligations of which have been acquired or assumed by
Seller or to which Seller has succeeded.
4.21.1.2 "Release" shall mean and include any spilling, leaking,
-------
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
migrating, leaching, dumping or disposing into the environment or the workplace
of any Hazardous Substance, and otherwise as defined in any Environmental Law.
4.21.1.3 "Hazardous Substance" shall mean any quantity of asbestos
-------------------
in any form, urea formaldehyde, PCBs, radon gas, crude oil or any fraction
thereof, all forms of natural gas, petroleum
19
<PAGE>
products or by-products, any radioactive substance, any toxic, infectious,
reactive, corrosive, ignitible or flammable chemical or chemical compound and
any other hazardous substance, material or waste (as defined in or for purposes
of any Environmental Law), whether solid, liquid or gas.
4.21.2 Compliance With Environmental Laws. Except as set forth on
----------------------------------
Schedule 4.20, the Facilities have been owned, leased, operated and maintained
in compliance with all federal, state, local or foreign laws, statutes,
ordinances, regulations, rules, judgments, orders, notice requirements, court
decisions, agency guidelines or principles of law, restrictions or licenses,
which (i) regulate or relate to the protection or clean-up of the environment,
the use, treatment, storage, transportation, handling or disposal of hazardous,
toxic or otherwise dangerous substances, wastes or materials (whether gas,
liquid or solid), the preservation or protection of waterways, groundwater,
drinking water, air, wildlife, plants or other natural resources, or the health
and safety of persons or property, including without limitation protection of
the health and safety of employees or (ii) impose liability with respect to any
of the foregoing, including without limitation the Federal Water Pollution
Control Act (33 U.S.C. (S) 1251 et seq.), Resource Conservation & Recovery Act
-- ---
(42 U.S.C. (S) 6901 et seq.) ("RCRA"), Safe Drinking Water Act (21 U.S.C. (S)
-- ---
349, 42 U.S.C. (S)(S) 201, 300f), Toxic Substances Control Act (15 U.S.C. (S)
2601 et seq.), Clean Air Act (42 U.S.C. (S) 7401 et seq.), the Comprehensive
-- --- -- ---
Environmental Response, Compensation, and Liability Act (42 U.S.C. (S) 9601 et
--
seq.) ("CERCLA"), or any other similar federal, state or local law of similar
- ---
effect, each as amended (collectively, "Environmental Laws").
4.21.3 Facilities. The Facilities are, and at all times have been,
----------
owned, leased and operated in compliance with all Environmental Laws and in a
manner that will not give rise to any liability under any Environmental Laws.
4.21.4 Permits. Seller has, and at all times has had, all Permits
-------
required under any Environmental Law and the Facilities are, and at all times
have been, in compliance with all such Permits.
4.21.5 Permits Required. The consummation of any of the transactions
----------------
contemplated by this Agreement will not require an application for issuance,
renewal, transfer or extension of, or any other administrative action regarding,
any Permit required under any Environmental Law.
4.21.6 Notice of Violation. Seller has not received any notice at any
-------------------
time that it or the Facilities is or were claimed to be in violation of the
provisions of any Environmental Law or in non-compliance with the conditions of
any Permit, and there is no pending or threatened lawsuit, governmental or other
legal action to that effect.
4.21.7 Pending Actions. There is not now pending or threatened, nor
---------------
any basis for, nor has there ever been, any Action against Seller, nor any basis
for any Action, under any Environmental Law or otherwise with respect to any
Release or handling of any Hazardous Substance.
4.21.8 Judgments. There are no consent decrees, judgments, judicial or
---------
administrative orders or agreements with, or liens by, any governmental
authority or quasi-governmental entity relating to any Environmental Law which
regulate, obligate, bind or in any way affect Seller or the Facilities.
4.21.9 Hazardous Substances. There is not and has not been any
--------------------
Hazardous Substance used, generated, treated, stored, transported, disposed of,
handled or otherwise existing on, under, about or from
20
<PAGE>
any Facility, except for quantities of any such Hazardous Substances stored or
otherwise held on, under or about any such Facility in full compliance with all
Environmental Laws and necessary for the operation of the Business.
4.21.10 Handling of Hazardous Substances. Seller has at all times used,
--------------------------------
generated, treated, stored, transported, disposed of or otherwise handled its
Hazardous Substances in compliance with all Environmental Laws and in a manner
that will not result in liability of Seller or Buyer under any Environmental
Law. Schedule 4.21 sets forth a complete list of all contractors and other
third parties who at any time have hauled, handled, stored, transported or
disposed of any Hazardous Substance (i) on behalf of Seller or the Business, or
(ii) generated by Seller or the Business, together with a complete list of all
dumpsites and other off-site locations at which such Hazardous Substances have
been disposed of.
4.21.11 Environmental Conditions. There are no present or past
------------------------
Environmental Conditions (as defined below) in any way relating to the Business
or Facilities. "Environmental Conditions" means the introduction into the soil,
groundwater or environment of the Facilities (through leak, spill, release,
discharge, escape, emission, dumping, disposal or otherwise) of any pollution,
including without limitation any contaminant, irritant or pollutant or Hazardous
Substance (whether or not upon the property of the Business and whether or not
such pollution constituted at the time thereof a violation of any Environmental
Law) as a result of which either Seller or, after the Closing, Buyer has or may
become liable to any person or federal, state, or local government or agency or
by reason of which any of the Assets may suffer or be subjected to any lien.
4.21.12 CERCLA or RCRA. No current or past use, generation, treatment,
--------------
transportation, storage, disposal or handling practice of Seller with respect to
any Hazardous Substance has or will result in any liability under the CERCLA or
RCRA or any state or local law of similar effect.
4.21.13 Storage Tank or Pipeline. Except as set forth on Schedule 4.21,
------------------------
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.
4.21.14 Environmental Audits or Assessments. True, complete and correct
-----------------------------------
copies of the written reports, and all parts thereof, including any drafts of
such reports if such drafts are in the possession or control of Seller, of all
environmental audits or assessments which have been conducted at any Facility
within the past five years, either by Seller or any attorney, environmental
consultant or engineer engaged for such purpose, have been delivered to Buyer
and a list of all such reports, audits and assessments and any other similar
report, audit or assessment of which Seller has knowledge is included on
Schedule 4.21.
4.21.15 Indemnification Agreements. Seller is not a party, whether as a
--------------------------
direct signatory or as successor, assign or third party beneficiary, or
otherwise bound, to any lease or other Contract under which Seller is obligated
by or entitled to the benefits of, directly or indirectly, any representation,
warranty, indemnification, covenant, restriction or other undertaking concerning
Environmental Conditions.
21
<PAGE>
4.21.16 Releases or Waivers. Seller has not released any other person
-------------------
from any claim under any Environmental Law or waived any rights concerning any
Environmental Condition.
4.21.17 Notices, Warnings and Records. Seller has given all notices and
-----------------------------
warnings, made all reports, and has kept and maintained all records required by
and in compliance with all Environmental Laws.
4.22 Liabilities. Seller has no liabilities or obligations (absolute,
-----------
accrued, contingent or otherwise) except (i) liabilities which are reflected on
the Interim Balance Sheet or which are not required under generally accepted
accounting principles to be reflected on the Interim Balance Sheet, (ii)
liabilities incurred in the ordinary course of the Business and consistent with
past practice since the Interim Balance Sheet Date, and (iii) liabilities
arising under Contracts identified in Schedule 4.6 to which Seller is a party.
4.23 Investment Representations. Seller and Seller Stockholder each
--------------------------
represent that any RSC Common Stock issued pursuant to this Agreement will be
acquired by Seller for its own account, for investment and with no intention of
distributing or reselling such RSC Common Stock or any part thereof in any
transaction that would be in violation of the securities laws of the United
States or any state thereof; provided that Seller may distribute any or all of
such RSC Common Stock to the Seller Stockholder upon liquidation of Seller.
Seller and the Selling Stockholder each represent that it or he is an
"accredited investor" within the meaning of Rule 501 under the Securities Act of
1933, as amended, and that, by reason of its or his business and financial
experience, it or he is capable of evaluating the merits and risks of the
acquisition of RSC Common Stock. Seller and the Seller Stockholder have reviewed
the SEC Documents referred to in Section 5.10 of this Agreement. Seller and the
Seller Stockholder hereby acknowledge that (i) shares of RSC Common Stock issued
pursuant to this Agreement may not be sold or otherwise transferred unless they
are registered under the Securities Act of 1933, as amended, or an exemption
from such registration is available; (ii) any sales of such securities made in
reliance upon Rule 144 promulgated under the Securities Act of 1933, as amended,
can be made only in accordance with the terms and conditions of Rule 144, and,
further, that if Rule 144 is not applicable, any resale of such securities under
circumstances in which Seller or the person through whom the sale is made may be
deemed to be an underwriter, as the term is defined in the Securities Act of
1933, as amended, may require compliance with some other exemption under the
Securities Act of 1933, as amended, or the rules and regulations of the SEC or
other governmental authority substituted therefor; and (iii) Buyer or RSC is
under no obligation to register any of the securities under the Securities Act
of 1933, as amended, or to comply with the terms and conditions of any exemption
thereunder, except as provided for in this Agreement.
The instruments evidencing the RSC Common Shares may bear a restrictive
legend in substantially the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"). These
securities have been acquired for investment and not with a view to
distribution or resale, and may not be sold, offered for sale, pledged or
hypothecated in the absence of an effective registration statement for such
shares under the Act or an opinion of counsel satisfactory in form and
content to the issuer that such registration is not required under such
Act."
If such a legal opinion indicates that the legend may be removed, Buyer
or RSC will substitute unlegended instruments for the instruments described in
the opinion. It is understood that the reference to
22
<PAGE>
counsel in the legend above may include Seller's or Seller Stockholder's counsel
as may be reasonably satisfactory to RSC.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND RSC
-----------------------------------------------
Buyer hereby represents and warrants to Seller as follows, which
representations and warranties are, as of the date hereof, and will be, as of
the Closing Date, true and correct:
5.1 Organization of Buyer. Buyer is a corporation duly organized, validly
---------------------
existing and in good standing under the laws of the State of Mississippi.
5.2 Authorization. Buyer has all requisite corporate power and authority,
-------------
and has taken all corporate action necessary, to execute and deliver this
Agreement and the New Leases, to consummate the transactions contemplated hereby
and thereby and to perform its obligations hereunder and thereunder. This
Agreement has been duly executed and delivered by Buyer and is (and following
their execution and delivery by Buyer and Seller or the Seller Stockholder, as
applicable, each of the New Leases and Ancillary Agreements will be) a legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms.
5.3 No Conflict or Violation. Neither the execution, delivery or performance
------------------------
of this Agreement or the New Leases nor the consummation of the transactions
contemplated hereby or thereby, nor compliance by Buyer with any of the
provisions hereof or thereof, will (a) violate or conflict with any provision of
the Certificate of Incorporation or Bylaws of Buyer, or (b) violate any statute,
rule, regulation, ordinance, code, order, judgment, ruling, writ, injunction,
decree or award binding upon Buyer.
5.4 Consents and Approvals. No notice to, declaration, filing or
----------------------
registration with, or authorization, consent or approval of, or permit from, any
governmental or regulatory body or authority, or any other person or entity, is
required to be made or obtained by Buyer in connection with the execution,
delivery and performance of this Agreement or the New Leases and the
consummation of the transactions contemplated hereby or thereby, except (a) as
may be required by Buyer to operate the Business after the Closing, (b) as has
been obtained on or prior to the date hereof or (c) as set forth in Schedule
5.7.
Representations and Warranties of RSC. RSC represents and warrants to Seller
-------------------------------------
and the Seller Stockholder that:
5.5 Organization of RSC. RSC is a corporation duly organized, validly
-------------------
existing, and in good standing under the laws of the State of Delaware.
5.6 Authorization. At the Closing, the execution and delivery of this
-------------
Agreement and the consummation of the transactions contemplated hereby will be
duly authorized by all requisite corporate action on the part of RSC.
5.7 No Conflicts or Violations. The execution and delivery of this Agreement
--------------------------
and the consummation of the transactions contemplated hereby will not (i)
violate any provision of the Certificate of Incorporation or By-laws of RSC,
(ii) violate any applicable provision of law or regulation, order, injunction,
or decree,
23
<PAGE>
or any other requirement of any governmental body or court relating to RSC or
its securities, property, or business, or (iii) (subject to RSC obtaining any
consent or approval required as a condition of Closing), violate, conflict
with, result in the breach or termination of, constitute a default under,
or result in the creation of any material lien, charge, or encumbrance upon
any of the properties or assets of RSC or any of its subsidiaries pursuant
to any agreement or instrument to which it or any of its subsidiaries is a
party, which violate, conflict, breach, termination, default, or creation would
have a material adverse effect on the business or financial condition of RSC and
it subsidiaries taken as a whole (an "RSC Material Adverse Effect").
5.8 Consents and Approvals. No notice to, declaration, filing or
----------------------
registration with, or authorization, consent or approval of, or permit
(collectively "Governmental Consents") from, any governmental or regulatory body
or authority, or any other person or entity, is required to be made or obtained
by RSC in connection with the execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement, except as required by the HSR Act and except for those Governmental
Consents the failure of which to make or obtain would not have an RSC Material
Adverse Effect.
5.9 RSC Common Stock. The Shares of RSC Common Stock to be issued pursuant
----------------
to this Agreement, when issued and delivered in accordance with the terms of
this Agreement, will be duly authorized, validly issued, fully paid, and
nonassessable and free of preemptive rights.
5.10 SEC Information Furnished Concerning RSC. RSC has filed with the
----------------------------------------
Securities and Exchange Commission ("SEC") those filings and reports required
pursuant to the Securities Exchange Act of 1934, as amended (the "SEC
Documents"). The audited consolidated financial statements for the year ended
December 31, 1996, contained within the SEC Documents have been prepared in
accordance with generally accepted accounting principles consistently applied
(except as may be otherwise noted therein) and fairly present the consolidated
financial position of RSC and its subsidiaries as of such date and the
consolidated results of operations of RSC and its subsidiaries for the year then
ended. As of their respective dates, the SEC Documents, including, but not
limited to, the financial statements contained therein, did not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
5.11 Litigation. Except as set forth in the SEC Documents, there are no
----------
suits, actions or administrative, arbitration, or other proceedings (including
proceedings concerning labor disputes or grievances) or governmental
investigations pending or, to the knowledge of RSC, threatened against RSC or
its properties or business that could reasonably be expected to have an RSC
Material Adverse Effect.
5.12 NASDAQ. The Shares of RSC Common Stock to be issued to Seller pursuant
------
to this Agreement have been approved for listing, subject to notice of issuance
on the NASDAQ National Market.
ARTICLE VI
COVENANTS OF SELLER, SELLER STOCKHOLDER AND BUYER
-------------------------------------------------
Buyer, Seller and the Seller Stockholder each covenant with the others as
follows:
24
<PAGE>
6.1 Further Assurances. Upon the terms and subject to the conditions
------------------
contained herein, each of the parties hereto agrees, both before and after the
Closing, (i) to use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, (ii) to execute any documents, instruments or conveyances of any kind
which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder, and (iii) to cooperate with each other in
connection with the foregoing, including using their respective best efforts (A)
to obtain all necessary waivers, consents and approvals from other parties to
the Contracts to be assumed by Buyer; provided, however, that Buyer shall not be
required to make any payments, commence litigation or agree to modifications of
the terms thereof in order to obtain any such waivers, consents or approvals,
(B) to obtain all necessary Permits as are required to be obtained under any
federal, state, local or foreign law or regulations, (C) to effect all necessary
registrations and filings, including without limitation submissions of
information requested by governmental authorities, and (D) to fulfill all
conditions to this Agreement.
6.2 No Solicitation. From the date hereof through the Closing or the earlier
---------------
termination of this Agreement, each of Seller and the Seller Stockholder shall
not, and shall cause their Representatives (including without limitation
investment bankers, attorneys and accountants) not to, directly or indirectly,
enter into, solicit, initiate or continue any discussions or negotiations with,
or encourage or respond to any inquiries or proposals by, or participate in any
negotiations with, or provide any information to, or otherwise cooperate in any
other way with, any corporation, partnership, person or other entity or group,
other than Buyer and its Representatives concerning any sale of all or a portion
of the Assets or the Business, or of any shares of capital stock of Seller, or
any merger, consolidation, liquidation, dissolution or similar transaction
involving Seller (each such transaction collectively being referred to herein as
a "Proposed Acquisition Transaction"), except for the purchase by the Seller
Stockholder prior to Closing of all other shares of Seller from the other
shareholder. Seller and the Seller Stockholder shall not, directly or
indirectly, through any Representative or otherwise, solicit, initiate or
encourage the submission of any proposal or offer from any person or entity
relating to any Proposed Acquisition Transaction or participate in any
negotiations regarding, or furnish to any other person any information with
respect to the other party for the purposes of, or otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person to seek or effect a Proposed Acquisition
Transaction. Seller and the Seller Stockholder each hereby represents that it
is not now engaged in discussions or negotiations with any party (other than
Buyer) with respect to any of the foregoing. Seller shall promptly notify Buyer
(orally and in writing) of any offer, inquiry or contact with any person with
respect to a Proposed Acquisition Transaction, including the terms thereof and
the identity of the prospective purchaser or soliciting party.
6.3 Notification of Certain Matters. From the date hereof through the
-------------------------------
Closing, Seller shall give prompt notice to Buyer of (a) the occurrence, or
failure to occur, of any event which occurrence or failure would be likely to
cause any representation or warranty contained in this Agreement or in any
exhibit or schedule hereto to be untrue or inaccurate in any material respect
and (b) any failure of Seller, or any of its Affiliates, shareholders or
Representatives, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it under this Agreement or any exhibit or
schedule hereto; provided, however, that such disclosure shall not be deemed to
cure any breach of a representation, warranty, covenant or agreement or to
satisfy any condition.
25
<PAGE>
6.4 Access to Information. From the date hereof through the Closing, Seller
---------------------
shall, and shall cause its Representatives to, afford the Representatives of
Buyer and its Affiliates complete access at all reasonable times to the Assets
and the Facilities for the purpose of inspecting and conducting appropriate
tests upon the same, and to the officers, employees, agents, attorneys,
accountants, properties, Books and Records and Contracts of Seller, and shall
furnish Buyer and its Representatives all financial, operating and other data
and information as Buyer or its Affiliates, through their respective
Representatives, may reasonably request, including but not limited to data
relating to operating procedures, workers' compensation history, legal, tax and
environmental, zoning and other legal compliance.
6.5 Conduct of Business. From the date hereof through the Closing, Seller
-------------------
shall, except as contemplated by this Agreement or as consented to by Buyer in
writing, operate the Business in the ordinary course of the Business and
substantially in accordance with past practice and will not take any action
inconsistent with this Agreement or with the consummation of the Closing.
Without limiting the generality of the foregoing, Seller shall not, except as
specifically contemplated by this Agreement:
6.5.1 enter into, extend, materially modify, terminate, renew, or fail
to renew any Contract, including any contract pursuant to which Seller has
rented Equipment, except in the ordinary course of the Business and
substantially in accordance with past practice;
6.5.2 sell, assign, transfer, convey, lease, mortgage, pledge or
otherwise dispose of or encumber any of the Assets, or any interests therein,
except in the ordinary course of the Business; or
6.5.3 fail to pay its accounts payable and any debts owed or obligations
due by it, or pay or discharge when due any liabilities, in the ordinary course
of the Business.
6.6 Employee Matters. Buyer shall hire all employees of the Business who
----------------
pass a physical examination and drug and alcohol abuse screening by a licensed
laboratory chosen by Buyer, and who otherwise meet Buyer's customary criteria
for employment, and Seller shall reasonably cooperate with Buyer in retaining
all such employees (the "Retained Employees"). Buyer agrees to give Retained
Employees credit for their time of employment with Seller with respect to their
seniority as an employee of Buyer. Seller shall be and remain solely responsible
for the payment of all benefits due to its employees at any time under its
Employee Plans, including without limitation all severance, accrued vacation,
health care continuation coverage and other benefits to which its employees may
be entitled as a result of the transactions contemplated hereby, whether or not
such employees are hired by Buyer. All Retained Employees will be at-will
employees of Buyer and may be terminated by Buyer in its sole discretion,
subject to the requirements of applicable laws governing employers and
employees, and will receive substantially the same total compensation as they
did when employed by Seller.
6.7 Environmental Assessments and Remediation.
-----------------------------------------
6.7.1 Buyer has retained Dames & Moore (the "Consultant") to perform
Phase I environmental site assessments with respect to each of the Facilities.
Upon its availability, Buyer will deliver the final report of such assessments
to Seller. In the event any such assessment recommends the performance of
additional investigation (including, without limitation, Phase II environmental
site assessments), such additional investigation shall, if requested by Buyer,
be undertaken promptly and delivered to each of Seller and Buyer; provided that
no groundwater testing will be done in Iowa without Seller's consent. The
26
<PAGE>
environmental assessments and investigations undertaken pursuant to this Section
6.7.1 are collectively referred to herein as the "Environmental Assessments."
Buyer shall be solely responsible for the cost of the Environmental Assessments.
6.7.2 In the event any of the Environmental Assessments reveals any
remediation work or other actions which must be completed in order to bring the
Facilities into compliance with applicable Environmental Laws or to eliminate
any potential environmental liability, the Consultant shall be directed to
prepare and to deliver to each of Seller and Buyer a written proposal setting
forth in reasonable detail the scope of required remediation and an estimate of
the cost of completing such remediation. For the purposes of Section 6.7,
"required remediation" shall mean any action necessary to (I) comply with any
governmental order, (ii) comply with any Environmental Law effective at the
Closing or (iii) eliminate a potential environmental liability (collectively the
"Remediation Standard"), as applicable to the Facilities or the operation
thereof by Seller as of the Closing Date. For the purposes of Section 6.7 and
with respect to any underground storage tanks at the Facility, "necessary
remediation" also shall include obtaining a closure letter from the governing
state agency confirming that the state agency has approved closure of the
underground storage tanks and will not take any further action related to any
liability associated with any underground storage tank at the Facilities.
6.7.3 Promptly upon completion of the Consultant's proposal referred to
in Section 6.7.2, Seller shall engage a reliable environmental engineering firm
reasonably acceptable to Buyer and authorized by any applicable federal, state,
or local law, policy, or regulation to perform any required remediation. Seller
shall use its best efforts to cause such required remediation to be completed on
or before the Closing Date, and Seller shall bear all costs of such required
remediation; provided that the completion of all such required remediation shall
be a condition to Buyer's obligations to consummate the transactions
contemplated by this Agreement. Buyer may, in its sole discretion, authorize
Seller to defer any portion of the required remediation which Seller and its
contractors are unable to complete prior to Closing, in which case Seller shall
cause the portion of the required remediation so deferred to be completed as
promptly as practicable, but in no event later than 60 days following Closing,
at Seller's sole expense. Buyer may monitor the performance of the required
remediation and application of the Remediation Standard, and at its election may
cause the Consultant to review the performance of the required remediation. If
Buyer directs the Consultant to undertake such review, the required remediation
shall be deemed completed only upon certification of its completion by the
Consultant. If, however, there is a dispute as to the performance of the
required remediation or the application of the Remediation Standard, any such
dispute shall be settled by a mutually agreed-upon environmental expert not
otherwise involved in the required remediation, whose determination shall be
final and binding on the parties.
6.7.4 Notwithstanding the foregoing, if Seller prefers not to do
recommended groundwater testing in Iowa or if Seller believes the "necessary
remediation" is uneconomic, Seller may elect instead to obtain a lease on, and
relocate the applicable portion of Seller's business to, a comparable site
reasonably acceptable to Buyer on substantially comparable economic terms to the
site being eliminated, all at Seller's expense.
6.8 Use of Name and Telephone Numbers. From and after Closing, upon filing
---------------------------------
of appropriate assumed name affidavits, Buyer will have the right to use the
name "Foxx Hy-Reach" or variations thereof in its operation of the Business.
Upon Closing, Seller shall assign to Buyer all of the telephone and facsimile
numbers currently used in the Business.
27
<PAGE>
6.9 Certain Insurance Policies. At Closing, Seller will transfer the split-
--------------------------
dollar life insurance policies currently maintained by Seller on four of its
employees to such employees. Buyer will reimburse Seller or otherwise as Buyer
and Seller may agree, an amount equal to the aggregate amount of premiums
payable under such policies until they become self-funding, grossed up using a
method agreed upon between Buyer and Seller for any income taxes payable by such
employees as a result of such transfer, such amount to be determined and paid at
Closing.
6.10 Other Stockholder. Seller Stockholder has delivered to Buyer a copy of
-----------------
the agreement between Seller Stockholder and the other shareholder of Seller
regarding the purchase by Seller Stockholder of such other shareholder's stock.
Seller Stockholder will enforce such agreement, will not waive any of his rights
thereunder and will use his best efforts to purchase such shares prior to
Closing.
6.11 Schedules. Any Disclosure Schedule or any other schedule not delivered
---------
by Seller prior to execution of this Agreement will be delivered within five (5)
days thereafter.
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
----------------------------------
The obligations of Seller to consummate the transactions provided for
hereby are subject, in the discretion of Seller, to the satisfaction, on or
prior to the Closing Date, of each of the following conditions, any of which may
be waived by Seller:
7.1 Representations, Warranties and Covenants. All representations and
-----------------------------------------
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects at and as of the date of this Agreement and at and as of the
Closing Date, except as and to the extent that the facts and conditions upon
which such representations and warranties are based are expressly required or
permitted to be changed by the terms hereof, and Buyer shall have performed and
satisfied all agreements and covenants required hereby to be performed by it
prior to or on the Closing Date.
7.2 No Proceedings, Litigation or Laws. No Action by any governmental
----------------------------------
authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby and
which could reasonably be expected to materially damage Seller if the
transactions contemplated hereunder are consummated.
7.3 Assumption Document. Buyer shall have executed the Assumption Document.
-------------------
7.4 New Leases. Seller Stockholder or an entity controlled by the Seller
----------
Stockholder (as applicable) as lessor, and Buyer as lessee, shall have entered
into leases (the "New Leases") with respect to the Facilities in the form
attached as Exhibit 7.4.1 hereto.
28
<PAGE>
7.5 Plan of Remediation. To the extent that any environmental remediation
-------------------
required pursuant to Section 6.7 has not been completed prior to Closing, Seller
shall approve of and proceed with any plan of remediation.
7.6 No Cessation of Trading. There shall have been no cessation of trading
-----------------------
of RSC's Common Stock on NASDAQ or a national securities exchange, and there
shall be no action, order or proceeding pending or, to RSC's knowledge,
threatened, by any regulatory agency to stop or investigate public trading of
RSC's Common Stock.
7.7 Acquisition of Stock. The Seller Stockholder shall acquire the 50% of
--------------------
the issued and outstanding capital stock of Seller currently not held by him.
7.8 Schedules. Buyer shall have approved in its sole discretion any portion
---------
of the Disclosure Schedule or the other schedule not delivered prior to
execution of this Agreement.
7.9 Opinion Letter of Buyer's Attorneys. Seller and Seller Stockholder shall
-----------------------------------
receive an opinion of Latham & Watkins, counsel for Buyer and RSC, dated as of
the Closing Date, in form and substance reasonably satisfactory to Seller and
the Seller Stockholder, to the effect that:
7.9.1 RSC has been duly incorporated and is validly existing and in
good standing under the laws of the State of Delaware, with corporate
power to own or lease its properties and to carry on its business as now
conducted;
[7.9.2 The execution, delivery and performance of this Agreement
and the consummation of the transaction contemplated by the Agreement
have been duly authorized by RSC, and the Agreement has been duly
executed and delivered by RSC.]
7.9.3 Assuming the due authorization, execution and delivery of the
Agreement by Buyer, the Agreement constitutes a legally valid and binding
obligation of Buyer or RSC, as applicable, enforceable against Buyer or
RSC in accordance with their terms, except as limited by (i) bankruptcy,
insolvency, reorganization, moratorium, or other similar laws relating to
creditors' rights generally or by equitable principles (whether
considered in an action at law or in equity), (ii) limitations imposed by
federal or applicable state law or equitable principles upon the
availability of specific performance, injunctive relief, or other
equitable remedies, or (iii) other customary limitations reasonably
satisfactory to Seller's and the Seller Stockholder's counsel;
7.9.4 RSC's Common Stock being delivered to Seller under the terms
of this Agreement have been duly authorized and reserved and, when
issued, will be validly issued, fully paid, and nonassessable;
7.9.5 Assuming the accuracy of the representations and warranties
in Section 4.23 of the Agreement, it is not necessary to register the RSC
Common Stock to be issued to Seller pursuant to the Agreement under the
Securities Act of 1933, as amended.
7.10 Buyer Corporate Documents. Buyer shall have delivered to Seller a copy
-------------------------
of its articles of incorporation certified by the Mississippi Secretary of
State, a good standing certificate dated no more than
29
<PAGE>
one day prior to Closing by the Mississippi Secretary of State and a copy of the
resolutions adopted by Buyer in connection with this Agreement, certified by its
corporate secretary.
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
---------------------------------
The obligations of Buyer to consummate the transactions provided for
hereby are subject, in the discretion of Buyer, to the satisfaction, on or prior
to the Closing Date, of each of the following conditions, any of which may be
waived by Buyer:
8.1 Representations, Warranties and Covenants. All representations and
-----------------------------------------
warranties of Seller contained in this Agreement shall be true and correct in
all material respects at and as of the date of this Agreement and at and as of
the Closing Date, except as and to the extent that the facts and conditions upon
which such representations and warranties are based are expressly required or
permitted to be changed by the terms hereof, and Seller shall have performed and
satisfied all agreements and covenants required hereby to be performed by it
prior to or on the Closing Date.
8.2 Consents. All Permits and waivers necessary to the consummation of the
--------
transactions contemplated hereby and for the operation of the Business by Buyer
(including, without limitation, (a) all required third party consents to the
assignment of the Assumed Contracts to be assumed by Buyer and (b) all required
approvals of Buyer's lenders) shall have been obtained.
8.3 No Proceedings or Litigation. No Action by any governmental authority or
----------------------------
other person shall have been instituted or threatened which questions the
validity or legality of the transactions contemplated hereby and which could
reasonably be expected to damage Buyer materially if the transactions
contemplated hereby are consummated, including without limitation any Material
Adverse Effect on the right or ability of Buyer to own, operate, possess or
transfer the Assets after the Closing. There shall not be any statute, rule or
regulation that makes the purchase and sale of the Business or the Assets
contemplated hereby illegal or otherwise prohibited.
8.4 Opinion of Counsel. Seller shall have delivered to Buyer an opinion of
------------------
Stanley, Lande & Hunter, Attorneys, counsel to Seller and the Seller
Stockholder, dated as of the Closing Date, in form and substance reasonably
satisfactory to Buyer, to the effect that:
8.4.1 Incorporation. Seller has been duly incorporated and is validly
-------------
existing and in good standing under the laws of the State of Iowa and is
qualified to do business and in good standing as a foreign corporation in
Illinois;
8.4.2 Corporate Power and Authority. Seller has the necessary corporate
-----------------------------
power and authority to enter into this Agreement, the Ancillary Agreements and
the New Leases to which it is a party and to consummate the transactions
contemplated hereby and thereby and to own, lease and operate the Assets and its
other properties and to conduct the Business as presently conducted;
8.4.3 Corporate Action. The execution, delivery and performance of this
----------------
Agreement, the Ancillary Agreements and the New Leases to which an entity
controlled by Seller Stockholder is a party have
30
<PAGE>
been duly authorized by all necessary corporate action of Seller, and this
Agreement and the New Leases have been duly executed and delivered by Seller or
such entity, as applicable; the approval of this Agreement by the stockholders
of Seller has been duly obtained in accordance with the provisions of Seller's
Articles of Incorporation and Bylaws and applicable law;
8.4.4 Obligation of Seller or Seller Stockholder. This Agreement, each
------------------------------------------
Ancillary Agreement and each New Lease constitutes a legally valid and binding
obligation of Seller or the Seller Stockholder, as applicable, enforceable
against Seller or the Seller Stockholder in accordance with their terms, except
as limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights generally or by equitable principles
(whether considered in an action at law or in equity), (ii) limitations imposed
by federal or applicable state law or equitable principles upon the availability
of specific performance, injunctive relief or other equitable remedies, or (iii)
other customary limitations reasonably satisfactory to Buyer's counsel;
8.4.5 No Breach. Neither the execution and delivery of this Agreement,
---------
the Ancillary Agreements or the New Leases by Seller or the Seller Stockholder,
as applicable, nor the consummation of the transactions contemplated hereby or
thereby will (i) violate or conflict with any provision of the Articles of
Incorporation or Bylaws of Seller, (ii) breach, or cause a default under, any
term or provision of any material contract listed on a schedule to such opinion
to which contract Seller or the Seller Stockholder are a party or by which the
Assets are bound, or (iii) violate any judgment, decree, injunction, writ or
order applicable to Seller or the Seller Stockholder;
8.4.6 No Permits Required. No Permit of, or filing with, any
-------------------
governmental authority or, to the best knowledge of such counsel, any other
person, is required for the execution and delivery of this Agreement, the
Ancillary Agreements or the New Leases by Seller or the Seller Stockholder, as
applicable, or the consummation by Seller or the Seller Stockholder of the
transactions contemplated hereby or thereby, except as set forth in this
Agreement or the schedules or exhibits hereto;
8.4.7 No Actions Pending. Except as set forth in this Agreement or the
------------------
schedules hereto, to the best knowledge of such counsel, no Action is pending or
threatened (i) against Seller or the Assets or the Business, (ii) against any of
the officers or directors of Seller as such, (iii) in which Seller is a
plaintiff, or (iv) which questions the validity or legality of the transactions
contemplated hereby;
8.4.8 No Violation of Law. Neither the execution and delivery of this
-------------------
Agreement, the Ancillary Agreements or the New Leases by an entity controlled by
the Seller Stockholder, as applicable, nor the consummation of the transactions
contemplated hereby or thereby will violate or result in a failure to comply
with any statute, law, ordinance, regulation, rule or order of any federal,
state or local government or any other governmental department or agency, or any
judgment, decree or order of any court, applicable to Seller, the Seller
Stockholder, such entity or the Business; and, to the best knowledge of such
counsel, Seller has all licenses, franchises and other authority required to
conduct the Business as it is now being conducted;
8.4.9 Transfer and Assignment. The documents to be delivered by
-----------------------
Seller at the Closing to effect the transfer and assignment to Buyer of all
right, title and interest in and to the Assets are effective to do so, subject
to (i) the effects of bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to creditors' rights generally and equitable
principles (whether considered in an action at law or in
31
<PAGE>
equity), (ii) limitations imposed by federal, Iowa or Illinois law or equitable
principles upon the availability of specific performance, injunctive relief or
other equitable remedies, or (iii) other customary limitations reasonably
satisfactory to Buyer's counsel;
8.4.10 Other Opinions. Such other opinions, subject to the limitations
--------------
set forth above, as any lender to Buyer may reasonably request.
In rendering such opinions, such counsel may rely as to factual matters
upon certificates and assurances of public officials and officers of Seller. In
addition, such opinions may be subject to such additional qualifications and
exceptions as are reasonably acceptable to counsel to Buyer.
8.5 Certificates. Seller shall furnish Buyer with such certificates of its
------------
officers and others to evidence compliance with the conditions set forth in this
Article VIII as may be reasonably requested by Buyer.
8.6 New Leases. Selling Shareholder (or an entity owned by him),lessor, and
----------
Buyer as lessee, shall have entered into the New Leases with respect to the
Facilities in the form attached as Exhibit 7.4.1 hereto.
8.7 Employment and Non-Competition Agreements. Buyer and Thomas H. Foster
-----------------------------------------
shall have entered into an Employment and Non-Competition Agreement in the form
attached as Exhibit 8.7.2 hereto.
8.8 Conveyancing Documents; Release of Encumbrances. Seller shall have
-----------------------------------------------
executed and delivered each of documents described in Section 3.2 hereof so as
to effect the transfer and assignment to Buyer of all right, title and interest
in and to the Assets and Seller shall have filed (where necessary) and delivered
to Buyer all documents necessary to release the Assets from all Encumbrances
(except for Encumbrances specifically accepted by Buyer under Section 4.4),
which documents shall be in a form reasonably satisfactory to Buyer's counsel.
8.9 Material Changes. Since the Interim Balance Sheet Date, there shall not
----------------
have been any Material Adverse Change with respect to the Business or the
Assets.
8.10 Corporate Documents. Buyer shall have received from Seller resolutions
-------------------
adopted by its board of directors and shareholders approving this Agreement, the
Ancillary Agreements and the New Leases to which it will be a party, and the
transactions contemplated hereby and thereby. Buyer's board of directors shall
have approved this Agreement and the transactions and agreements contemplated
hereby.
8.11 Due Diligence Review. Buyer and its Representatives shall have
--------------------
conducted a due diligence review of Seller's Books and Records, Financial
Statements, and other records and accounts of the Business, and in the sole
discretion of Buyer, Buyer shall be satisfied on the basis of such review that
there has been no breach of the representations and warranties or the pre-
closing covenants of Seller made pursuant to this Agreement. Such review shall
have no effect whatsoever on the liability of Seller to Buyer under this
Agreement or otherwise for breach of any representations, warranties, or
covenants of Seller or hereunder.
8.12 Permits. Buyer shall have obtained or been granted the right to use
-------
all Permits necessary to its operation of the Business.
32
<PAGE>
8.13 Completion of Environmental Remediation. Seller or its agents shall
---------------------------------------
have completed any "required remediation" or shall have approved any plan of
remediation within the meaning of Section 6.7, subject to the procedures set
forth in Section 6.7 with respect to the certification of such completion and
the resolution of any disputes relating thereto.
8.14 Noncompetition Agreement. Each former shareholder of Seller shall have
------------------------
entered into a Noncompetition Agreement with Seller, assignable to Buyer, on
mutually acceptable terms.
8.15 Financing. Buyer shall have obtained all lender approvals and financing
---------
to pay the cash portion of the purchase price.
8.16 Tax Clearance Certificate. Seller shall provide to Buyer with a
-------------------------
clearance certificate or similar document(s) that may be required by any state
taxing authority in order to relieve Buyer of any obligation to withhold any
portion of the Purchase Price.
8.17 Audit. Ernst & Young shall have completed their audit of Seller's
-----
financial statements for 1995 and 1996 and shall have issued an unqualified
opinion thereon.
8.18 Dealerships. The manufacturers for whom Seller acts as a dealer or
-----------
distributor shall have given any required consents.
ARTICLE IX
RISK OF LOSS; CONSENTS TO ASSIGNMENT
------------------------------------
9.1 Risk of Loss. From the date hereof through the Closing, all risk of loss
------------
or damage to the property included in the Assets shall be borne by Seller, and
thereafter shall be borne by Buyer. If any portion of the Assets is destroyed
or damaged by fire or any other cause on or prior to the Closing, other than
use, wear or loss in the ordinary course of the Business, Seller shall give
written notice to Buyer as soon as practicable after discovery of such damage or
destruction, the amount of insurance, if any, covering such Assets and the
amount, if any, which Seller is otherwise entitled to receive as a consequence.
Prior to the Closing, Buyer shall have the option, which shall be exercised by
written notice to Seller within ten (10) calendar days after receipt of Seller's
notice or if there is not ten (10) calendar days prior to the Closing, as soon
as practicable prior to the Closing, of (a) accepting such Assets in their
destroyed or damaged condition in which event Buyer shall be entitled to the
proceeds of any insurance or other proceeds payable with respect to such loss
and to such indemnification for any uninsured portion of such loss pursuant to
Section 10.3, and the full Purchase Price shall be paid for such Assets, (b)
excluding such Assets from this Agreement, in which event the Purchase Price
shall be reduced by the amount allocated to such Assets, as mutually agreed
between the parties or (c) terminating this Agreement in accordance with Section
11.1. If Buyer accepts such Assets, then after the Closing, any insurance or
other proceeds shall belong, and shall be assigned to, Buyer without any
reduction in the Purchase Price; otherwise, such insurance proceeds shall belong
to Seller.
9.2 Consents to Assignment. Anything in this Agreement to the contrary
----------------------
notwithstanding, this Agreement shall not constitute an agreement to assign any
Contract, lease, license, sales order, purchase order or any claim or right or
any benefit arising thereunder or resulting therefrom if an attempted assignment
thereof, without the consent of a third party thereto, would constitute a breach
thereof or in any
33
<PAGE>
way adversely affect the rights of Buyer thereunder. If such consent is
not obtained, or if an attempted assignment thereof would be ineffective or
would affect the rights thereunder so that Buyer would not receive all such
rights, Seller will cooperate with Buyer, in all reasonable respects, to provide
to Buyer the benefits under any such Contract, lease, license, sales order,
purchase order, claim or right including without limitation enforcement for the
benefit of Buyer of any and all rights of Seller against a third party thereto
arising out of the breach or cancellation by such third party or otherwise.
ARTICLE X
ACTIONS BY SELLER AND BUYER
---------------------------
AFTER THE CLOSING
-----------------
10.1 Books and Records; Payment of Liabilities.
-----------------------------------------
10.1.1 Books and Records. Each party agrees that it will cooperate with
-----------------
and make available to the other party, during normal business hours, all Books
and Records, information and employees (without substantial disruption of
employment) retained and remaining in existence after the Closing which are
necessary or useful in connection with any tax inquiry, audit, investigation or
dispute, any other litigation or investigation of any type, any product
liability claim or any other matter requiring any such Books and Records,
information or employees for any reasonable business purpose.
10.1.2 Cooperation and Records Retention. Seller and Buyer shall (i)
---------------------------------
each provide the other with such assistance as may reasonably be requested by
any of them in connection with the preparation of any return, audit, or other
examination by any taxing authority or judicial or administrative proceedings
relating to liability for Taxes, (ii) each retain and provide the other with any
records or other information that may be relevant to such return, audit or
examination, proceeding or determination, and (iii) each provide the other with
any final determination of any such audit or examination, proceeding, or
determination that affects any amount required to be shown on any tax return of
the other for any period. Without limiting the generality of the foregoing,
Buyer and Seller shall each retain, until the applicable statutes of limitations
(including any extensions) have expired, copies of all tax returns, supporting
work schedules, and other records or information that may be relevant to such
returns for all tax periods or portions thereof ending on or before the Closing
Date and shall not destroy or otherwise dispose of any such records without
first providing the other party with a reasonable opportunity to review and copy
the same.
10.1.3 Payment of Liabilities. Following the Closing Date, Seller
----------------------
shall pay promptly when due all of the debts and liabilities of Seller relating
to the Business other than Assumed Liabilities, including without limitation any
accounts payable not assumed by Buyer and any liability of Seller for Taxes;
provided, however, this covenant shall not apply to that portion (or all) of any
debt that Seller is disputing in good faith and gives prompt notice to Buyer of
such dispute.
10.2 Survival of Representations, Etc. All statements contained in any
---------------------------------
certificate, schedule, exhibit, instrument or conveyance delivered by or on
behalf of the parties pursuant to this Agreement or in connection with the
transactions contemplated hereby shall be deemed to be representations and
warranties by the parties hereunder. The representations, warranties, covenants
and agreements of Seller and Buyer contained herein shall survive the
consummation of the transactions contemplated hereby and the Closing
34
<PAGE>
Date, without regard to any investigation made by any of the parties hereto.
Except as provided in this sentence, all such representations and warranties and
all claims and causes of action with respect thereto (other than the provisions
of Sections 4.17, 4.21 and this Section 10.2, and all claims and causes of
action with respect thereto) shall terminate upon expiration of two years after
the Closing Date. The representations and warranties in Sections 4.17 and 4.21
shall survive until the expiration of the applicable statute of limitations
(with extensions) with respect to the matters addressed in such sections. The
termination of the representations and warranties provided herein shall not
affect the rights of a party in respect of any Claim made by such party in a
writing received by the other party prior to the expiration of the applicable
survival period provided herein.
10.3 Indemnifications.
----------------
10.3.1 By Seller. Regardless of Seller's or Selling Stockholder's
---------
knowledge of the existence of an Indemnifiable Event, as defined below, Seller
and Selling Stockholder shall indemnify, defend, save and hold harmless Buyer,
its Affiliates and subsidiaries, and its respective Representatives, from and
against any and all claims, damages, costs, losses (including without limitation
diminution in value), Taxes, liabilities, judgments, penalties, fines,
obligations, lawsuits, deficiencies, demands and expenses (whether or not
arising out of third-party claims), including without limitation interest,
penalties, costs of mitigation, losses in connection with any Environmental Law
(including without limitation any clean-up or remedial action), lost profits and
other losses resulting from any shutdown or curtailment of operations, damages
to the environment, attorneys' fees, experts' fees and all amounts paid in
investigation, defense or settlement of any of the foregoing (herein,
"Damages"), incurred in connection with, arising out of, resulting from or
incident to (i) any breach of any representation or warranty, or the inaccuracy
of any representation or warranty, made by Seller or Selling Stockholder in or
pursuant to this Agreement; (ii) any breach of any covenant or agreement made by
Seller or Selling Stockholder in or pursuant to this Agreement; (iii) any
Excluded Liability; (iv) any liability of Seller imposed upon Buyer by reason of
Buyer's status as transferee of the Business or the Assets; (v) any liability
arising under any Environmental Law on account of the conduct of Seller or prior
owners or users of the Facilities or other persons, or on account of the
operation of the Business or the Facilities, or related to any Environmental
Condition existing, in each case on or at any time prior to the Closing Date; or
(vi) any Post-Closing Environmental Liability (collectively, the "Indemnifiable
Events"). Without limiting the generality of the foregoing, the indemnification
provided herein, insofar as it relates to any Environmental Law or Environmental
Condition, shall specifically cover costs incurred in connection with any
investigation of site conditions (excepting the cost of the Environmental
Assessments) or any clean-up, remedial, removal or restoration work required by
any federal, state or local governmental agency or political subdivision or by
the provisions of Section 6.7 hereof. For purposes of this Section 10.3.1,
"Post-Closing Environmental Liability" shall mean any liability imposed on Buyer
arising out of or related to events occurring on or after the Closing Date and
prior to the completion of all required remediation in accordance with Section
6.7 hereof, and resulting from any Environmental Condition described in the
Environmental Assessments, including without limitation those Environmental
Conditions described therein but not identified as being in violation of any
Environmental Law and those related to the absence of any Permits, but excluding
any liability to the extent such liability results from the negligent acts or
willful misconduct of Buyer or its Representatives. In addition to Seller's
obligations pursuant to Sections 6.7.3 and 6.7.4 of this Agreement, and without
limiting the generality of the foregoing, Seller shall specifically indemnify
Buyer, and Seller shall assume and discharge all Damages arising out of the pre-
Closing activities that are associated with: (i) any Release or threatened
Release of any Hazardous Substance that occurred or was in existence on the
Facilities on or
35
<PAGE>
before the Closing Date; (ii) any offsite disposal, migration or Release of any
Hazardous Substance that has resulted or will result in the future as a result
of activities that occurred on or before the Closing Date; and (iii) any
removal, remediation or other activities taken with respect to the soil, surface
water or groundwater. Without limiting the foregoing, Seller shall also
specifically indemnify Buyer, and Seller shall assume and discharge all Damages
arising out of the pre-Closing operation, ownership, and use of the underground
storage tanks ("USTs") and aboveground storage tanks ("ASTs") (defined below),
including but not limited to: (I) any Release or threatened Release of any
Hazardous Substance that occurred or was in existence on the Facilities on or
before the closing date; (ii) any offsite disposal, migration or Release of any
Hazardous Substance that has resulted or will result in the future as a result
of activities that occurred on or before the closing date; and (iii) any
removal, remediation or other activities taken with respect to the soil, surface
water or groundwater.
10.3.2 By Buyer. Buyer shall indemnify and save and hold harmless
--------
Seller, its Affiliates and its Representatives from and against any and all
Damages incurred in connection with, arising out of, resulting from or incident
to (I) any breach of any representation or warranty, or the inaccuracy of any
representation or warranty, made by Buyer in or pursuant to this Agreement; (ii)
any breach of any covenant or agreement made by Buyer in or pursuant to this
Agreement; or (iii) any Assumed Liability insofar as such Assumed Liability
arises from and after the Closing.
10.3.3 Cooperation. The indemnified party shall cooperate in all
-----------
reasonable respects with the indemnifying party and such attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom; provided, however, that the indemnified party may, at its own
cost, participate in the investigation, trial and defense of such lawsuit or
action and any appeal arising therefrom. The parties shall cooperate with each
other in any notifications to insurers.
10.3.4 Defense of Claims. If a claim for Damages (a "Claim") is to be
-----------------
made by a party entitled to indemnification hereunder against the indemnifying
party, the party claiming such indemnification shall, subject to Section 10.2,
give written notice (a "Claim Notice") to the indemnifying party as soon as
practicable after the party entitled to indemnification becomes aware of any
fact, condition or event which may give rise to Damages for which
indemnification may be sought under this Section 10.3. If any lawsuit or
enforcement action is filed against any party entitled to the benefit of
indemnity hereunder, written notice thereof shall be given to the indemnifying
party as promptly as practicable (and in any event within fifteen (15) calendar
days after the service of the citation or summons). The failure of any
indemnified party to give timely notice hereunder shall not affect rights to
indemnification hereunder, except to the extent that the indemnifying party
demonstrates actual damage caused by such failure. After such notice, if the
indemnifying party shall acknowledge in writing to the indemnified party that
the indemnifying party shall be obligated under the terms of its indemnity
hereunder in connection with such lawsuit or action, then the indemnifying party
shall be entitled, if it so elects, (I) to take control of the defense and
investigation of such lawsuit or action, (ii) to employ and engage attorneys of
its own choice (which shall be reasonably acceptable to the indemnified party)
to handle and defend the same, at the indemnifying party's cost, risk and
expense unless the named parties to such action or proceeding include both the
indemnifying party and the indemnified party and the indemnified party has been
advised in writing by counsel that there may be one or more legal defenses
available to such indemnified party that are different from or additional to
those available to the indemnifying party, in which case the indemnifying party
shall engage separate counsel (reasonably acceptable to the indemnified party)
to represent the indemnified party, and (iii) to compromise
36
<PAGE>
or settle such claim, which compromise or settlement shall be made only with the
written consent of the indemnified party, such consent not to be unreasonably
withheld; provided, however, if the remediation or resolution of any such Claim
will occur on or at any Facility or is reasonably expected to have a Material
Adverse Effect on the indemnified party's business operations, then,
notwithstanding the foregoing, the indemnified party shall be entitled to
control such remediation or resolution, including without limitation to take
control of the defense and investigation of such lawsuit or action, to employ
and engage attorneys of its own choice to handle and defend the same, at the
indemnifying party's cost, risk and expense, and to compromise or settle such
Claim. If the indemnifying party fails to assume the defense of such claim
within fifteen (15) calendar days after receipt of the Claim Notice, the
indemnified party against which such claim has been asserted will (upon
delivering notice to such effect to the indemnifying party) have the right to
undertake, at the indemnifying party's cost and expense, the defense, compromise
or settlement of such claim on behalf of and for the account and risk of the
indemnifying party. In the event the indemnified party assumes the defense of
the claim, the indemnified party will keep the indemnifying party reasonably
informed of the progress of any such defense, compromise or settlement. The
indemnifying party shall be liable for any settlement of any action effected
pursuant to and in accordance with this Section 10.3 and for any final judgment
(subject to any right of appeal), and the indemnifying party agrees to indemnify
and hold harmless an indemnified party from and against any Damages by reason of
such settlement or judgment.
10.3.5 Buyer's Right of Offset. Anything in this Agreement to the
-----------------------
contrary notwithstanding, Buyer may withhold and set off any amount as to which
Seller is obligated to indemnify Buyer pursuant to this Section 10.3 against (i)
the portion of the Holdback Amount allocable to the resolution of Seller's
indemnification obligations under this Section 10.3 and (ii) any other amounts
otherwise due Seller or Selling Stockholder.
10.3.6 Limitations. Neither Buyer nor Seller shall be liable to the
-----------
other under this Section 10.3 for any Damages until the amount otherwise due the
party being indemnified exceeds $50,000 in the aggregate, in which case such
indemnifying party will be liable to the indemnified party for all such amounts,
including the first $50,000. Notwithstanding the preceding sentence, this
limitation shall not apply with respect to Damages arising out of a breach of a
representation or warranty contained in Sections 4.17 or 4.21 or the covenants
contained in Section 10.1.3 or, with respect to Buyer, any Assumed Contracts,
Assumed Leases or Assumed Liabilities. Buyer shall give Seller prompt notice of
any Damages that might apply toward the first $50,000.
10.3.7 Liability and Remedies, etc. Except as set forth below, no
----------------------------
individual Representative of any party shall be personally liable for any
Damages under the provisions contained in this Section 10.3. Nothing herein
shall relieve either party of any liability to make any payment expressly
required to be made by such party pursuant to this Agreement. The term
"Damages" as used in this Section 10.3 is not limited to matters asserted by
third parties against Seller or Buyer, but includes Damages incurred or
sustained by Seller or Buyer in the absence of third party claims. Payments by
Buyer of amounts for which Buyer is indemnified hereunder, and payments by
Seller of amounts for which Seller is indemnified, shall not be a condition
precedent to recovery. Seller's obligation to indemnify Buyer, and Buyer's
obligation to indemnify Seller, shall not limit any other rights, including
without limitation rights of contribution which either party may have under
statute or common law. Buyer and Seller agree and acknowledge that offset
against the Holdback Amount shall not be Buyer's exclusive method of receiving
indemnification from Seller pursuant to Section 10.3; rather, Buyer will have
all other remedies provided by law or in this Agreement. The Seller
37
<PAGE>
Stockholder shall be jointly and severally liable with Seller with respect to
all indemnification obligations of Seller under this Section 10.3.
10.4 Payment of Holdback Amount. On the first anniversary of the Closing
--------------------------
Date, if Buyer has not delivered a Claim Notice to Seller, the remaining portion
of the Holdback Amount allocable to the resolution of Seller's indemnification
obligations under Section 10.3 shall be paid promptly to Seller. Subject to
Section 2.4.3, if Buyer has delivered one or more Claim Notices to Seller on or
before the first anniversary of the Closing Date and has exercised its right of
offset pursuant to Section 10.3.5, or has not then determined the appropriate
amount to be offset, Buyer shall pay to Seller promptly after the first
anniversary of the Closing Date an amount equal to remaining allocable portion
of the Holdback Amount less any amounts offset against it pursuant to Section
10.3.5 and an amount reasonably estimated by Buyer to cover any unresolved
claims. As promptly as practicable after the first anniversary of the Closing
Date, Buyer shall determine the amount to be retained by it in satisfaction of
any such unresolved claims and submit the balance, if any, to Seller.
10.5 Taxes. Subject to Section 2.7, Seller shall pay, or cause to be paid,
-----
when due all Taxes for which Seller is or may be liable or that are or may
become payable with respect to all taxable periods ending on or prior to the
Closing Date.
10.6 Further Action. After the Closing, Seller shall take all actions
--------------
reasonably necessary to effect the conveyance of the Assets to Buyer free and
clear of all Encumbrances (except for Encumbrances specifically accepted by
Buyer under Section 4.4) and otherwise required by Buyer's lenders.
10.7 Registration Rights. Seller shall, with respect to the RSC Common
-------------------
Stock issued pursuant to this Agreement, have the registration rights set forth
as Annex A to RSC's Stockholder's Agreement as in effect on the date of this
Agreement.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 Termination.
-----------
11.1.1 Termination. This Agreement may be terminated at any time prior
-----------
to Closing:
11.1.1.1 By mutual written consent of Buyer and Seller;
11.1.1.2 By Buyer or Seller if the Closing shall not have occurred
on or before June 30, 1997; provided, however, that this provision shall not be
-------- -------
available to Buyer if Seller has the right to terminate this Agreement under
Section 11.1.1.4, and this provision shall not be available to Seller if Buyer
has the right to terminate this Agreement under Section 11.1.1.3;
11.1.1.3 By Buyer if there is a material breach of any
representation or warranty set forth in Article IV hereof or any covenant or
agreement to be complied with or performed by Seller pursuant to the terms of
this Agreement or the failure of a condition set forth in Article VIII to be
satisfied
38
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(and such condition is not waived in writing by Buyer) on or prior to the
Closing Date, or the occurrence of any event which results or would result in
the failure of a condition set forth in Article VIII to be satisfied on or prior
to the Closing Date, provided that Buyer may not terminate this Agreement prior
to the Closing if Seller has not had an adequate opportunity to cure such
failure; or
11.1.1.4 By Seller if there is a material breach of any
representation or warranty set forth in Article V hereof or of any covenant or
agreement to be complied with or performed by Buyer pursuant to the terms of
this Agreement or the failure of a condition set forth in Article VII to be
satisfied (and such condition is not waived in writing by Seller) on or prior to
the Closing Date, or the occurrence of any event which results or would result
in the failure of a condition set forth in Article VII to be satisfied on or
prior to the Closing Date; provided that Seller may not terminate this Agreement
--------
prior to the Closing Date if Buyer has not had an adequate opportunity to cure
such failure.
11.1.2 In the Event of Termination. In the event of termination of this
---------------------------
Agreement:
11.1.2.1 Each party will redeliver all documents, work papers and
other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same; and
11.1.2.2 No party hereto shall have any liability or further
obligation to any other party to this Agreement, except as stated in Sections
11.7, 11.10, 11.1.2.1 or this Section 11.1.2.2, and except for any willful
breach of this Agreement occurring prior to the proper termination of this
Agreement. The foregoing provisions shall not limit or restrict the availability
of specific performance or other injunctive relief to the extent that specific
performance or such other relief would otherwise be available to a party
hereunder.
11.2 Assignment. Neither this Agreement nor any of the rights or
----------
obligations hereunder may be assigned by any party without the prior written
consent of the other parties; except that Buyer may, without such consent,
assign all such rights to any lender as collateral security and assign all such
rights and obligations to a wholly-owned subsidiary (or a partnership controlled
by Buyer) or subsidiaries of Buyer or to a successor in interest to Buyer or to
any entity to whom the Business may after the Closing be sold by Buyer which
shall assume all obligations and liabilities of Buyer under this Agreement.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, and no other person shall have any right, benefit or obligation under
this Agreement as a third party beneficiary or otherwise.
11.3 Notices. All notices, requests, demands and other communications which
-------
are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given when received if personally delivered; when
transmitted if transmitted by telecopy, electronic or digital transmission
method; the day after it is sent, if sent for next day delivery to a domestic
address by recognized overnight delivery service (e.g., Federal Express); and
----
upon receipt, if sent by certified or registered mail, return receipt requested.
In each case notice shall be sent to:
39
<PAGE>
If to Seller or the Seller Stockholder, addressed to:
Mr. Thomas H. Foster
28 Timber Ridge
Coal Valley, Illinois 61240
with a copy to
Steven T. Hunter, Esq
Stanley, Lande & Hunter
900 Firstar Center
Davenport, Iowa 52801
Fax (319) 326-6266
40
<PAGE>
If to Buyer or RSC, addressed to:
WALKER JONES EQUIPMENT COMPANY
c/o Rental Service Corporation
14505 N. Hayden Road, Suite 322
Scottsdale, AZ 85260
Attention: Chief Executive Officer
Fax (602) 905 - 3402
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
11.4 Choice of Law. This Agreement shall be construed, interpreted and the
-------------
rights of the parties determined in accordance with the laws of the State of
Illinois (without reference to the choice of law provisions thereof), except
with respect to matters of law concerning the internal corporate affairs of any
corporate entity which is a party to or the subject of this Agreement, and as to
those matters the law of the jurisdiction under which the respective entity
derives its powers shall govern.
11.5 Entire Agreement; Amendments and Waivers. This Agreement, together
----------------------------------------
with all exhibits and schedules hereto, constitutes the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. No
amendment, supplement, modification or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
11.6 Multiple Counterparts. This Agreement may be executed in one or more
---------------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.7 Expenses. Except as otherwise specified in this Agreement, each party
--------
hereto shall pay its own legal, accounting, out-of-pocket and other expenses
incident to this Agreement and to any action taken by such party in preparation
for carrying this Agreement into effect.
11.8 Invalidity. In the event that any one or more of the provisions
----------
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
11.9 Titles. The titles, captions or headings of the Articles, Sections
------
and subsections herein are inserted for convenience of reference only and are
not intended to be a part of or to affect the meaning or interpretation of this
Agreement.
11.10 Publicity; Confidentiality. Neither Buyer nor Seller shall issue any
--------------------------
press release or make any public statement regarding, or disclose to any third
party (except as required by law or legal process, and
41
<PAGE>
except to each party's lenders if such lenders so require) any of the terms of,
the transactions contemplated hereby, without prior written approval of the
other party, provided that Buyer and Seller may, if they mutually agree, issue
or make an appropriate press release or public announcement after the Closing
Date. In the event that this Agreement is terminated prior to Closing, Buyer
agrees to return to Seller all correspondence and documents furnished by Seller
or its Representatives, and agrees not to disclose or use for its own purposes
any confidential or proprietary information of Seller that has been furnished to
it by Seller or its Representatives.
11.11 Cumulative Remedies. All rights and remedies of either party hereto
-------------------
are cumulative of each other and of every other right or remedy such party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
11.12 Consent of Seller Stockholder. In accordance with Iowa law, Seller
-----------------------------
Stockholder, by executing this Agreement, waives the notice of the meeting and
the right to receive any materials otherwise required to be furnished at a
meeting and consents to the transfer of the Assets to Buyer and the execution,
delivery and consummation of this Agreement. Seller Stockholder additionally
agrees to execute and deliver such separate certificates or instruments as may
be requested by Seller or Buyer to give effect to the waivers and consents given
herein.
11.13 Arbitration. Any controversy arising after the Closing out of or
-----------
relating to this Agreement (including, without limitation, pursuant to Section
2.4 or 10.3, but excluding for purposes of this Section 11.13, the leases,
employment and non-competition agreements attached as Exhibits hereto), or
relating to the breach hereof, shall be settled by arbitration conducted in
Moline, Illinois 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.
42
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be duly executed on their respective behalf, by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
WALKER JONES EQUIPMENT COMPANY
By: /s/ Douglas A. Waugaman
-------------------------------
Name: Douglas A. Waugaman
------------------------
Its: V.P. & Secretary
------------------------------------
RENTAL SERVICE CORPORATION
By: /s/ Douglas A. Waugaman
-------------------------------
Name: Douglas A. Waugaman
------------------------
Its: V.P. & Secretary
------------------------------------
BRUTE EQUIPMENT, INC.
By: /s/ Thomas H. Foster
--------------------------------
Name: Thomas H. Foster
-------------------------
Its: President
-------------------------------------
SELLER STOCKHOLDER:
/s/ Thomas H. Foster
---------------------------------------
Thomas H. Foster
43
<PAGE>
EXHIBIT 10.3
ASSET PURCHASE AGREEMENT
by and among
Central States Equipment, Inc.
and
Equipment Lessors, Inc.
as "Sellers,"
Walker Jones Equipment Company
as "Buyer"
and the stockholders of Sellers
April 26, 1997
<PAGE>
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I - DEFINITIONS...................................................... 1
1.1 Defined Terms....................................................... 1
1.2 Other Defined Terms................................................. 6
ARTICLE II - PURCHASE AND SALE OF ASSETS..................................... 6
2.1 Transfer of Assets.................................................. 6
2.2 Assumption of Liabilities........................................... 7
2.3 Excluded Liabilities................................................ 7
2.4 Purchase Price...................................................... 8
2.5 Purchase Price Adjustments.......................................... 9
2.6 Prorations.......................................................... 11
2.7 Closing Costs; Transfer Taxes and Fees.............................. 11
ARTICLE III - CLOSING........................................................ 11
3.1 Closing............................................................. 11
3.2 Conveyances at Closing.............................................. 11
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLERS....................... 12
4.1 Organization of Central and EL Seller............................... 12
4.2 Authorization....................................................... 13
4.3 No Changes to the Assets............................................ 13
4.4 Assets.............................................................. 13
4.5 Facilities.......................................................... 14
4.6 Contracts and Commitments........................................... 14
4.7 Permits and Consents................................................ 15
4.8 No Conflict or Violation............................................ 15
4.9 Financial Statements................................................ 16
4.10 Books and Records................................................... 16
4.11 Litigation.......................................................... 16
4.12 Labor Matters....................................................... 16
4.13 Compliance with Law................................................. 17
4.14 No Brokers.......................................................... 17
4.15 No Other Agreements to Sell the Assets.............................. 17
4.16 Proprietary Rights.................................................. 17
4.17 Tax Matters......................................................... 18
4.18 Accounts Receivable................................................. 18
4.19 Inventory........................................................... 18
ii
<PAGE>
4.20 Employees........................................................... 19
4.21 Compliance With Environmental Laws.................................. 19
4.22 Liabilities......................................................... 22
4.23 Securities Law Matters.............................................. 22
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER.......................... 23
5.1 Organization of Buyer............................................... 23
5.2 Authorization....................................................... 23
5.3 No Conflict or Violation............................................ 23
5.4 Consents and Approvals.............................................. 23
5.5 No Brokers.......................................................... 23
ARTICLE VI - COVENANTS OF SELLERS AND BUYER.................................. 24
6.1 Further Assurances.................................................. 24
6.2 No Solicitation..................................................... 24
6.3 Disclosure Schedule................................................. 25
6.4 Notification of Certain Matters..................................... 25
6.5 Access to Information............................................... 25
6.6 Conduct of Business................................................. 25
6.7 Employee Matters.................................................... 25
6.8 Environmental Assessments and Remediation........................... 26
6.9 Use of Name and Telephone Numbers................................... 27
6.10 Registration Rights................................................. 27
ARTICLE VII - CONDITIONS TO SELLERS' OBLIGATIONS............................. 27
7.1 Representations, Warranties and Covenants........................... 28
7.2 No Proceedings, Litigation or Laws.................................. 28
7.3 Assumption Document................................................. 28
7.4 New Leases.......................................................... 28
7.5 Plan of Remediation................................................. 28
7.6 RSC Common Stock.................................................... 28
7.7 Opinion of Counsel.................................................. 28
ARTICLE VIII - CONDITIONS TO BUYER'S OBLIGATIONS............................. 28
8.1 Representations, Warranties and Covenants........................... 28
8.2 Consents............................................................ 29
8.3 Disclosure Schedule................................................. 29
8.4 Assumption Agreement................................................ 29
8.5 No Proceedings or Litigation........................................ 29
8.6 Opinion of Counsel.................................................. 29
8.7 Certificates........................................................ 31
8.8 New Leases.......................................................... 31
iii
<PAGE>
8.9 Employment and Non-Competition Agreements........................... 31
8.10 Conveyancing Documents; Release of Encumbrances..................... 31
8.11 Material Changes.................................................... 31
8.12 Corporate Documents................................................. 31
8.13 Due Diligence Review................................................ 31
8.14 Permits............................................................. 31
8.15 Completion of Environmental Remediation............................. 32
8.16 Financing........................................................... 32
ARTICLE IX - RISK OF LOSS; CONSENTS TO ASSIGNMENT............................ 32
9.1 Risk of Loss........................................................ 32
9.2 Consents to Assignment.............................................. 32
ARTICLE X - ACTIONS BY SELLERS AND BUYER AFTER THE CLOSING................... 33
10.1 Books and Records; Payment of Liabilities........................... 33
10.2 Survival of Representations, Etc.................................... 33
10.3 Indemnifications.................................................... 34
10.4 Payment of Holdback Amount.......................................... 37
10.5 Taxes............................................................... 37
10.6 Tax Clearance Certificate........................................... 37
10.7 Further Action...................................................... 37
ARTICLE XI - MISCELLANEOUS................................................... 37
11.1 Termination......................................................... 37
11.2 Assignment.......................................................... 38
11.3 Notices............................................................. 38
11.4 Choice of Law....................................................... 39
11.5 Entire Agreement; Amendments and Waivers............................ 39
11.6 Multiple Counterparts............................................... 40
11.7 Expenses............................................................ 40
11.8 Invalidity.......................................................... 40
11.9 Titles.............................................................. 40
11.10 Publicity; Confidentiality.......................................... 40
11.11 Cumulative Remedies................................................. 40
11.12 Consent of Seller Stockholder....................................... 40
11.13 Arbitration......................................................... 41
iv
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated as of April 26, 1997, is by and
among Walker Jones Equipment Company, a Mississippi corporation ("Buyer"), and
wholly owned subsidiary of Rental Service Corporation, a Delaware corporation
("RSC"), Central States Equipment, Inc., a Kansas corporation ("Central"),
Equipment Lessors, Inc., a Kansas corporation ("EL;" EL and Central, each a
"Seller," and collectively, "Sellers"), and John Cooney (the "Seller
Stockholder").
RECITALS
--------
A. Sellers own certain assets which they use in their conduct of
the Business (as defined below).
B. Buyer desires to purchase from Sellers, and Sellers desire to
sell to Buyer, such assets upon the terms and subject to the conditions of this
Agreement.
AGREEMENT
---------
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Defined Terms. As used herein, the terms below shall have the
-------------
following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.
"Affiliate" shall have the meaning set forth in the Securities
---------
Exchange Act of 1934, as amended, and the rules and regulations thereunder.
"Ancillary Agreements" shall mean the Employment and Non-Competition
--------------------
Agreement entered into, prior to the Closing Date, in the final form mutually
satisfactory to Buyer and Sellers and the New Leases entered into, prior to the
Closing Date, in the final form mutually satisfactory to Buyer and Sellers.
"Assets" shall mean (i) all of the right, title and interest of EL in
------
and to the construction equipment assets listed in Exhibit 2.5.1.1(a) attached
hereto, and (ii) all of the right, title and interest of Central in and to the
business, properties, assets and rights of any kind, whether tangible or
intangible, and
1
<PAGE>
constituting, or used or useful in connection with, or related to, the Business,
including without limitation all of Central's right, title and interest in the
following (but not including, in any case, the Excluded Assets):
1.1.1 all rights of Central under the Assumed Contracts listed on
Schedule 4.6.1;
1.1.2 all rental and non-rental Equipment related to the Business as
listed on Exhibit 2.5.1.1(b);
1.1.3 all Inventory related to the Business;
1.1.4 all Books and Records related to the Business;
1.1.5 all Proprietary Rights related to the Business;
1.1.6 to the extent transferable, all Permits related to the
Business;
1.1.7 all computers and, to the extent transferable, software used in
the Business;
1.1.8 all utility deposits;
1.1.9 all available supplies, sales literature, promotional
literature, customer, supplier and distributor lists, display units, telephone
and facsimile numbers and purchasing records related to the Business;
1.1.10 all rights under or pursuant to all warranties, representations
and guarantees made by suppliers in connection with the Assets or services
furnished to Central pertaining to the Business or affecting the Assets, to the
extent such warranties, representations and guarantees (i) are not required by
Central to fulfill its obligations under this Agreement and (ii) are assignable;
1.1.11 all claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind, against any person or entity,
including without limitation any liens, security interests, pledges or other
rights to payment or to enforce payment in connection with products delivered by
Central on or prior to the Closing Date; provided, however, that all such claims
-------- -------
etc. related to acquired accounts receivable shall be deemed to be reassigned to
Central at the time such accounts receivable are returned to Central pursuant to
Section 2.5.3 hereof;
1.1.12 all accounts receivable as adjusted at the Closing and which
are not Excluded Assets; and
1.1.13 all Open Rental Contracts and customer deposits made in
connection therewith (including, without limitation, deposits made in the form
of cash, check, or a preliminary charge on a credit or debit card).
"Balance Sheet" shall mean the balance sheet of Central at the date
-------------
indicated thereon, together with the notes thereon.
2
<PAGE>
"Books and Records" shall mean (a) all records and lists of Sellers
-----------------
pertaining to the Assets, (b) all records and lists pertaining to the Business,
customers, suppliers or personnel of Sellers, (c) all product, business and
marketing plans of Sellers and (d) all books, ledgers, trial balances, files,
reports, plans, drawings and operating records of every kind maintained by
Sellers, but excluding the originals of Sellers' minute books, stock books, tax
returns and accounting ledgers (provided that Buyer will be provided copies of
tax returns and accounting records if it so requests); provided however, that
----------------
only with regard to the Books and Records and accounts of EL, Buyer shall have
access to said documents which pertain only to the assets of EL listed in
Exhibits 2.5.1.1(a) and 2.5.1.2(a) hereto.
"Business" shall mean Sellers' equipment rental and sales business,
--------
operating under the "Central States Equipment" name, or otherwise.
"Central Rental and Non-Rental Asset Listing" shall mean the asset
-------------------------------------------
listing provided to Buyer by Central and attached as Exhibit 2.5.1.1(b) hereto,
listing all assets as of February 28, 1997, but not including any Excluded
Assets listed therein.
"Central Supplemental Rental and Non-Rental Asset Listing" shall mean
--------------------------------------------------------
the asset listing provided to Buyer by Central and attached as Exhibit
2.5.1.2(b) hereto, listing all assets acquired after February 28, 1997, through
the Closing Date, but not including any Excluded Assets listed therein.
"Closing Date" shall mean May 30, 1997 or such other date as Buyer and
------------
Sellers shall mutually agree upon; provided that either party may elect to defer
the Closing Date to a date on or prior to May 30, 1997 (which date shall be a
date which is reasonably satisfactory to both parties) if necessary to complete
the Closing.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
----
the rules and regulations thereunder.
"Contract" shall mean any agreement, contract, note, loan, evidence of
--------
indebtedness, purchase, order, letter of credit, franchise agreement,
undertaking, covenant not to compete, employment agreement, license, instrument,
obligation or commitment to which either Seller is a party or is bound and which
relates to the Business or the Assets, whether oral or written.
"EL Rental and Non-Rental Asset Listing" shall mean the asset listing
--------------------------------------
provided to Buyer by EL and attached as Exhibit 2.5.1.1(a) hereto, listing all
assets as of February 28, 1997, but not including any Excluded Assets listed
therein.
"EL Supplemental Rental and Non-Rental Asset Listing" shall mean the
---------------------------------------------------
asset listing provided to Buyer by EL and attached as Exhibit 2.5.1.2(a) hereto,
listing all assets acquired after February 28, 1997, through the Closing Date,
but not including any Excluded Assets listed therein.
"Encumbrance" shall mean any claim, lien, pledge, option, charge,
-----------
easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other right of third parties, whether voluntarily incurred or
arising by operation of law, and includes, without limitation, any agreement to
give any of the foregoing in the future, and any contingent sale or other title
retention agreement or lease in the nature thereof.
3
<PAGE>
"Equipment" shall mean (i) all of the furniture, fixtures,
---------
furnishings, machinery, automobiles, trucks, spare parts, tools, supplies,
equipment and other tangible personal property owned by EL and listed on the EL
Rental and Non-Rental Asset Listing and the EL Supplemental Rental and Non-
Rental Asset Listing and (ii) all of the furniture, fixtures, furnishings,
machinery, automobiles, trucks, spare parts, tools, supplies, equipment and
other tangible personal property owned by Central and used in connection with
the Business, including without limitation all items listed on the Central
Rental and Non-Rental Asset Listing and the Supplemental Rental and Non-Rental
Asset Listing (but not including any Excluded Assets listed thereon).
"Excluded Assets," notwithstanding any other provision of this
---------------
Agreement, shall mean the following assets of Central which are not to be
acquired by Buyer hereunder:
1.1.14 all cash and cash equivalents held by Central except customer
deposits on Open Rental Contracts;
1.1.15 prepayments or prepaid expenses except utility deposits
(including all prepaid insurance premiums and prepaid taxes) of Central;
1.1.16 all Permits, to the extent not transferable;
1.1.17 the Owned Real Property;
1.1.18 all claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind against any person or entity arising
out of or relating to the Assets to the extent related to the Excluded
Liabilities; and
1.1.19 the cash surrender value of all life insurance policies.
"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 used (or will be used) in the
conduct of the Business, and which are located at:
- 4100 Raytown, Rd., P.O. Box 300350, Kansas City, MO 64130-0350
- 3140 E. Kearney, Springfield, MO 65803
- 5476 S. 108th East Ave., Tulsa, OK 74146
- 2355 S. Edwards, Suite E, Wichita, KS 67213
"Financial Statements" shall mean the Year-End Financial Statements
--------------------
and the Interim Financial Statements.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
-------
Act of 1976, as amended.
"Interim Balance Sheet" shall mean the Balance Sheet dated the
---------------------
Interim Balance Sheet Date.
4
<PAGE>
"Interim Balance Sheet Date" shall mean February 28, 1997.
--------------------------
"Interim Financial Statements" shall mean the Interim Balance Sheet
----------------------------
and the income statement of Central for the two months ended on the Interim
Balance Sheet Date.
"Inventory" shall mean (i) EL's inventory held for resale, new repair
---------
or replacement parts, supplies and packaging items, listed on the EL Rental and
Non-Rental Asset Listing and the EL Supplemental Rental and Non-Rental Asset
Listing and (ii) all of Central's inventory held for resale and all of Seller'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.
"Material Adverse Effect" or "Material Adverse Change" shall mean with
----------------------- -----------------------
respect to the Business or the Assets any significant and substantial adverse
effect or change in the condition (financial or other), business, results of
operations, prospects, assets, liabilities or operations of the Business and/or
the Assets or on the ability of either Seller to consummate the transactions
contemplated hereby, or any event or condition which would, with the passage of
time, constitute a "Material Adverse Effect" or "Material Adverse Change."
"Open Rental Contracts" shall mean (i) all Contracts pursuant to which
---------------------
Central has rented Equipment and, as of the Closing Date, the rentee under each
such Contract is still in possession of such Equipment and (ii) all Contracts
under which the rentee has returned the Equipment but has not yet been invoiced.
"Owned Real Property" shall mean the real property located at 4100
-------------------
Raytown Road, Kansas City, Missouri 64130 and 5476 S. 108th East Avenue, Tulsa,
Oklahoma 74146 owned in fee by EL and which is used in the conduct of the
Business, including without limitation all rights, easements and privileges
appertaining or relating thereto, all buildings, fixtures, and improvements
located thereon and all Facilities thereon, if any.
"Permits" shall mean all licenses, permits, franchises, approvals,
-------
authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, or any other person,
necessary or desirable for the past, present or anticipated conduct of, or
relating to the operation of, the Business.
"Representative" shall mean any officer, director, principal,
--------------
attorney, agent, employee or other representative.
"Seller Stockholder" shall mean John Cooney who owns all of the
------------------
outstanding capital stock of both Sellers.
"Tax" shall mean any federal, state, local, foreign or other tax,
---
levy, impost, fee, assessment or other government charge, including without
limitation income, estimated income, business, occupation, franchise, property,
payroll, personal property, sales, transfer, use, employment, commercial rent,
occupancy, franchise or withholding taxes, and any premium, including without
limitation interest, penalties and additions in connection therewith.
5
<PAGE>
"Year-End Financial Statements" shall mean the Balance Sheets and
-----------------------------
income statements dated as of Central's fiscal years ended 1996, 1995, and 1994.
1.2 Other Defined Terms. The following terms shall have the meanings
-------------------
defined for such terms in the Sections set forth below:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Action 4.11
Agreed Value 2.5.1
Assumed Contracts 4.6
Assumed Liabilities 2.2
Assumption Document 3.2.2
CERCLA 4.21.2
Claim 10.3.4
Claim Notice 10.3.4
Closing 3.1
Damages 10.3.1
Employee Plans 4.20
Environmental Conditions 4.21.10.1
Environmental Laws 4.21.2
Environmental Assessments 6.8.1
Excluded Liabilities 2.3
Hazardous Substance 4.21.1
Holdback Amount 2.4.3
Inventory Value 2.5.2
New Leases 7.4
Non-Consented Assumed Contracts 4.8
Post-Closing Environmental Liability 10.3.1
Proposed Acquisition Transaction 6.2
Proprietary Rights 4.16.1
Purchase Price 2.4.1
RCRA 4.21.2
Release 4.21.1
Remediation Standard 6.8.2
Rental Ready 2.5.1
Retained Employees 6.7
Union 8.4
</TABLE>
ARTICLE II
PURCHASE AND SALE OF ASSETS
---------------------------
2.1 Transfer of Assets. Upon the terms and subject to the conditions
------------------
contained herein, at the Closing, Sellers will sell, convey, transfer, assign
and deliver to Buyer, and Buyer will acquire from Sellers, the Assets.
6
<PAGE>
2.2 Assumption of Liabilities. Upon the terms and subject to the conditions
-------------------------
contained herein, at the Closing, Buyer shall assume all obligations and
liabilities accruing, arising out of, or relating to events or occurrences
happening after the Closing Date under, and only under, the Assumed Contracts
listed on Schedule 4.6.1, including, without limitation, the rolling stock
leases listed on Schedule 4.6.1, but not including any obligation or liability
for any breach of any Contract occurring on or prior to the Closing Date
(together with the liabilities assumed pursuant to the Assumed Contracts, the
"Assumed Liabilities"), except for any liability for any breach caused by the
assumption of the Non-Consented Assumed Contracts (as defined in Section 4.8
hereunder).
2.3 Excluded Liabilities. Notwithstanding any other provision of this
--------------------
Agreement, except for the Assumed Liabilities expressly specified in Section
2.2, Buyer shall not assume, or otherwise be responsible for, any of Sellers'
liabilities or obligations, whether actual or contingent, matured or unmatured,
liquidated or unliquidated, known or unknown, or related or unrelated to the
Business or the Assets, whether arising out of occurrences prior to, at or after
the date hereof (collectively, "Excluded Liabilities"), which Excluded
Liabilities include, without limitation:
2.3.1 Any liability or obligation to or in respect of any employees or
former employees of Sellers including without limitation (i) any employment
agreement, whether or not written, between either Seller and any person, (ii)
any liability under any Employee Plan at any time maintained, contributed to or
required to be contributed to by or with respect to Sellers or under which
either Seller may incur liability, or any contributions, benefits or liabilities
therefor, or any liability with respect to either Seller's withdrawal or partial
withdrawal from or termination of any Employee Plan and (iii) any claim of an
unfair labor practice, or any claim under any state unemployment compensation or
worker's compensation law or regulation or under any federal or state employment
discrimination law or regulation, which shall have been asserted on or prior to
the Closing Date or is based on acts or omissions which occurred on or prior to
the Closing Date;
2.3.2 Any liability or obligation of either Seller in respect of any
Tax, except those Taxes herein agreed to be paid by Buyer;
2.3.3 Any liability arising from any injury to or death of any person or
damage to or destruction of any property, whether based on negligence, breach of
warranty, strict liability, enterprise liability or any other legal or equitable
theory arising from defects in products sold or services performed by or on
behalf of Sellers or any other person or entity on or prior to the Closing Date,
or arising from any other cause, including without limitation any liabilities
arising (on a date of occurrence basis or otherwise) on or prior to the Closing
Date relating to the use or misuse of Equipment or to traffic accidents;
2.3.4 Any liability or obligation of either Seller arising out of or
related to any Action against such Seller or any Action which adversely affects
the Assets and which shall have been asserted on or prior to the Closing Date or
to the extent the basis of which shall have arisen on or prior to the Closing
Date;
2.3.5 Any liability or obligation of Sellers resulting from entering
into, performing their obligations pursuant to or consummating the transactions
contemplated by, this Agreement (including without limitation any liability or
obligation of Sellers pursuant to Article X hereof);
7
<PAGE>
2.3.6 Any liability or obligation related to the Facilities, except for
those expressly set forth in the New Leases; and
2.3.7 Any liability or obligation arising out of CERCLA, any equivalent
state statute, or any other Environmental Law.
2.4 Purchase Price.
--------------
2.4.1 Purchase Price. At the Closing, upon the terms and subject to the
--------------
conditions set forth herein, Buyer shall pay to Sellers in consideration for the
Assets, by wire transfer of immediately available funds to an account designated
by Sellers, the aggregate amount of Eighteen Million Dollars ($18,025,000) (the
"Cash Portion of the Purchase Price"), and 102,432 shares of RSC Common Stock;
subject, however, to adjustment as set forth in Section 2.5 and less the
- ------- -------
Holdback Amount as described below. In addition, Buyer shall pay an aggregate of
102,435 additional shares of RSC Common Stock, payable in equal installments of
34,145 shares of RSC Common Stock over three years, if certain performance
objectives to be mutually agreed upon by Closing are met; provided however, in
any event, the additional 102,435 shares of RSC Common Stock will be payable in
equal installments of 20,487 shares of RSC Common Stock over five years. Any
RSC Common Stock paid to Sellers will be contributed by RSC to RSC Acquisition
Corp. and by RSC Acquisition Corp. to Buyer in a transaction intended to qualify
under Section 351 of the Code immediately prior to delivery of such RSC Common
Stock to Sellers. The Purchase Price shall be allocated among the Assets in the
manner required by Section 1060 of the Code and regulations thereunder. Exhibit
2.4 attached hereto sets forth the amount of the Purchase Price allocable to the
various Assets; provided that such allocation shall be subject to necessary
adjustments, to be completed and reflected in such allocation within 30 days
following the Closing Date, on account of the final Inventory and Equipment
valuations under Sections 2.5.1 and 2.5.2. Buyer and Sellers agree to each
prepare and file on a timely basis with the Internal Revenue Service
substantially identical initial and supplemental Internal Revenue Service Forms
8594 "Asset Acquisition Statements Under Section 1060" consistent with Exhibit
2.4 and which give effect to any adjustment to the Purchase Price determined in
accordance with Section 2.4 hereof.
2.4.2 Employment and Noncompetition Agreements. At the Closing, upon
----------------------------------------
the terms and subject to the conditions set forth herein, Buyer and John Cooney
shall enter into an Employment and Noncompetition Agreement, prior to the
Closing Date, in the final form mutually satisfactory to Buyer and Sellers.
2.4.3 Holdback. The "Holdback Amount" shall be an amount equal to
--------
$1,000,000 cash, which Buyer, at the Closing, shall retain pending the
determination of the amount of the Equipment adjustment, Inventory adjustment
and Accounts Receivable adjustment pursuant to Sections 2.5.1, 2.5.2 and 2.5.3,
respectively, and Sellers' indemnification obligations, if any, as set forth in
Section 10.3, and pending the completion of any environmental remediation
required under Section 6.8 hereof which is not resolved by the Closing Date. Of
such Holdback Amount, (i) $200,000 will be allocated to the resolution of the
Equipment and inventory adjustments pursuant to Sections 2.5.1 and 2.5.2, (ii)
$200,000 will be allocated to the resolution of the Accounts Receivable
adjustment pursuant to Section 2.5.3, and (iii) $200,000 will be allocated to
the resolution of Seller's indemnification obligations pursuant to Section 10.3.
The remainder of the holdback will be held by Buyer and released after one year,
to the extent not the subject of a pending indemnification claim.
Notwithstanding anything in the foregoing to the contrary, if any portion of the
Holdback Amount specified in this Section 2.4.3 proves to be insufficient for
resolution of the matter subject
8
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to adjustment therein, Buyer may in its sole discretion elect to transfer a
portion of the Holdback Amount allocated to another matter to resolve such
deficiency. Promptly upon the resolution of each of the foregoing adjustments or
indemnification or remediation obligations in accordance with the time periods
provided herein for its resolution, Buyer will remit to Sellers that portion of
the Holdback Amount allocated to the resolution of such item, net of any amount
which Buyer is entitled to retain under the provisions of Sections 2.5 and 10.3
hereof. In the event of any disagreement between Buyer and Sellers regarding the
dollar amount of any such adjustment or indemnification or remediation
obligation, Buyer shall nevertheless be obligated to remit to Sellers any
portion of the Holdback Amount which is allocable to such item and is not in
dispute. Promptly upon resolution of any such disagreement in accordance with
the terms hereof, Buyer shall remit to Sellers any remaining portion of the
Holdback Amount to which Sellers are entitled. Notwithstanding the foregoing,
Buyer shall not be limited to the Holdback Amount (or allocable portion thereof)
as a sole remedy in the event that any purchase price adjustment or
indemnification or remediation obligation exceeds the Holdback Amount (or
allocable portion thereof); rather, in such event, Buyer shall have the right to
collect promptly from Sellers, in cash, the amount of such excess. All Holdback
Amounts, including those amounts in dispute which are eventually paid to
Sellers, remitted to Sellers 121 days or later after the Closing shall include
interest on such unremitted amounts calculated at the annual interest rate of
6.5%.
2.5 Purchase Price Adjustments.
--------------------------
2.5.1 Equipment Adjustment. The EL Rental and Non-Rental Asset Listing
--------------------
and the Central Rental and Non-Rental Asset Listing attached as Exhibits 2.5.1.1
(a) and (b) respectively, set forth the asset description, make, model, original
cost and net book value of all Equipment which, on the Closing Date, will be
fully operable, Rental Ready and available for transfer to Buyer. (The net
book value of each item of Equipment shown on Exhibits 2.5.1.1(a) and (b) is
referred to herein as the "Agreed Value.") On or prior to the 10th business day
following the Closing Date, personnel of Buyer and Sellers jointly shall
complete a physical inventory of each item of Equipment comprising Exhibits
2.5.1.1(a) and (b), including by visiting renters' locations as necessary to
inspect such Equipment. The Purchase Price shall be reduced, except for up to
fifteen (15) pieces of equipment which are used for display or have been
depreciated to zero on Sellers' books and are inoperative (the "Display
Equipment") as provided in Schedule 2.5.1.3, within thirty (30) calendar days
after the Closing, for each item of Equipment contained in Exhibits 2.5.1.1(a)
and (b) which is missing, inoperable, not Rental Ready, or otherwise not
available for transfer to Buyer, provided that such reduction shall apply only
to the extent that the missing, inoperable, non-Rental Ready or unavailable
Equipment exceeds in the aggregate $25,000 in net book value and the cost of
repairs. The reduction in the Purchase Price shall be calculated by the
aggregate Agreed Value of all missing, inoperable, non-Rental Ready or
unavailable Equipment, except for Display Equipment as provided in Schedule
2.5.1.3. The result of the foregoing calculation shall be subtracted from the
Purchase Price. In the event of a Purchase Price reduction as contemplated
hereby, Buyer shall be entitled to retain a portion of the Holdback Amount equal
to such reduction as specified in, or to have the other remedies set forth in,
Section 2.4.3. For purposes of this Agreement, an item of Equipment is "Rental
Ready" only if all required maintenance has been performed and it does not
require any repairs in excess of $200 per item for those items having a net book
value greater than $5000 and $100 per item for those items having a net book
value less than $5000 per item. Any disputes as to the physical count or Rental
Readiness of any item of Equipment will, if possible, be resolved while the
physical inventory of such Equipment is being taken by Buyer and Sellers. Any
disputes regarding the foregoing not resolved by the 10th business day following
the Closing Date will be separately listed and settled as soon as expeditiously
practicable thereafter by the parties or by another independent
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third party mutually acceptable to both parties, and shall not be the subject of
any indemnification claim by Buyer under Section 10.3.
In addition to the foregoing, the Purchase Price shall be increased, on a
dollar-for-dollar basis and with such increase to be payable in immediately
available funds on the Closing Date, by the cost to Sellers of any item of
Equipment which was acquired by Sellers subsequent to February 28, 1997,
including the period of time between the execution of this Agreement and the
Closing Date, which is listed in either the EL Supplemental Rental and Non-
Rental Asset Listing or the Central Supplemental Rental and Non-Rental Asset
Listing attached hereto as Exhibits 2.5.1.2 (a) and (b) respectively and as
amended prior to the Closing Date, net of the net book value on the Interim
Balance Sheet of any item of Equipment sold during the same period.
2.5.2 Inventory Adjustment. The Purchase Price shall be adjusted,
--------------------
thirty (30) calendar days after Closing, on a dollar-for-dollar basis pursuant
to the procedures set forth below, by the amount, if any, by which the Inventory
Value as of the Closing Date is greater or less than $834,000. In the event of a
Purchase Price reduction as contemplated hereby, the cash portion of the
purchase price will be reduced. "Inventory Value" shall mean the lower of (x)
vendor cost as last received (excluding all freight and other charges) and (y)
market value (excluding any non-salable or obsolete merchandise, parts or
supplies) as of the Closing Date, as determined in accordance with generally
accepted accounting principles. Inventory Value shall be determined pursuant to
a physical inventory to be taken on or promptly following the Closing Date, and
shall be finalized within 15 business days following the Closing Date (except to
the extent that particular matters are referred to a third party for resolution
as described below). In connection with such physical inventory, all items of
Inventory will be counted as to quantity, and assessed as to salability, by
personnel of Sellers and Buyer using the same procedures normally used by Buyer
to take inventories of the type of Inventory being counted. Any disputes as to
the physical count, condition, salability or obsolescence of any item of
Inventory will, if possible, be resolved while such physical inventory is being
taken. Any disputes regarding the foregoing not resolved by the 15th business
day following the Closing Date will be separately listed and settled as soon as
expeditiously practicable thereafter by the parties or by another independent
third party mutually acceptable to both parties, and in any event will be
resolved no later than the 30th calendar day following the Closing.
2.5.3 Central's Accounts Receivable Adjustment. The cash portion of the
----------------------------------------
Purchase Price shall be adjusted, one hundred twenty (120) calendar days after
the Closing, on a dollar-for-dollar basis, pursuant to the procedures set forth
below, by the amount, if any, by which Central's Accounts Receivable included in
the Assets are greater or have a value that is less than $1,278,000. Any
accounts receivable not collected within ninety (90) calendar days after the
Closing will be returned to the Central and deducted from the Holdback Amount.
All Open Rental Contracts and customer deposits in connection therewith become
the property of Buyer, and Buyer shall be entitled to all proceeds collected by
Central from any contract which would have been an Open Rental Contract but for
Central's failure to operate the Business in the ordinary course of the Business
and substantially in accordance with past practice, as provided in Section 6.6.
2.5.4 Finality of Third Party Determination. The determination of any
-------------------------------------
third party engaged pursuant to the foregoing provisions of this Section 2.5
shall be final and binding on the parties. The engagement of such third party
will be subject to the provisions of Section 11.13, provided that the parties
may retain an independent accounting firm rather than professional arbitrators
to settle a dispute, and may otherwise depart from the procedures specified in
Section 11.13, if they both so agree. No failure to resolve
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any matters described in this Section 2.5 shall prevent the Closing or payment
of the Purchase Price for the Assets.
2.5.5 Adjustment for Permitted Encumbrances. In addition to the
-------------------------------------
foregoing, the Purchase Price shall be decreased, on a dollar-for-dollar basis
and with such decrease to be deducted from the Purchase Price payable on the
Closing Date, by the amount of any Encumbrance on any Asset which Buyer has
specifically accepted pursuant to Section 4.4 hereof, except for vehicular
leases and other leases and liabilities specifically assumed by Buyer.
2.6 Prorations. On the Closing Date, or as promptly as practicable following
----------
the Closing Date, but in no event later than sixty (60) calendar days
thereafter, the personal property taxes, water, gas, electricity and other
utilities, local business or other license fees or taxes, merchants' association
dues and other similar periodic charges payable with respect to the Assets or
the Business shall be prorated between Buyer and Sellers effective as of the
Closing Date. To the extent practicable, utility meter readings for the
Facilities shall be determined as of the Closing Date.
Sellers' prorated share of the personal property taxes shall be payable
notwithstanding the fact that such tax may become payable after the Closing
Date, and such tax shall be paid to Buyer or the appropriate taxing authority on
or prior to the date on which such tax becomes due.
2.7 Closing Costs; Transfer Taxes and Fees. Sellers shall be responsible for
--------------------------------------
any documentary and transfer taxes and any sales or other taxes (excluding (i)
use taxes on equipment constituting registered motor vehicles, which use taxes
will be paid one-half by each of Sellers and Buyer and (ii) any sales tax on
rolling stock listed on Schedule 4.6.1 which tax shall be paid by Buyer) imposed
by reason of the transfers of Assets provided hereunder and any deficiency,
interest or penalty asserted with respect thereto. Sellers shall pay all costs
of obtaining the transfer of existing Permits which may be lawfully transferred.
Sellers shall pay the fees and costs of recording or filing all applicable
conveyancing instruments described in Section 3.2.1, and shall pay the fees and
costs of recording or filing all UCC termination statements and other releases
of Encumbrances.
ARTICLE III
CLOSING
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3.1 Closing. The Closing of the transactions contemplated herein (the
-------
"Closing") shall be held on the Closing Date at a time and place as the parties
shall mutually agree.
3.2 Conveyances at Closing.
----------------------
3.2.1 Instruments and Possession. To effect the sale and transfer
--------------------------
referred to in Section 2.1 hereof, Sellers will, at the Closing, execute and
deliver to Buyer:
3.2.1.1 one or more bills of sale, each in the form of Exhibit
3.2.1.1 attached hereto, conveying in the aggregate all of Sellers' owned
personal property included in the Assets, free and clear of all Encumbrances,
except as otherwise provided in this Agreement;
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3.2.1.2 subject to Section 9.2, Assignments of Contract Rights,
each in the form of Exhibit 3.2.1.2 attached hereto, with respect to the Assumed
Contracts;
3.2.1.3 assignments of Trademarks, Service Marks and other
Proprietary Rights, each in the form of Exhibit 3.2.1.3 attached hereto, in
recordable form to the extent necessary to assign such rights; and
3.2.1.4 such other instruments as shall be requested by Buyer to
vest in Buyer title in and to the Assets in accordance with the provisions
hereof.
3.2.2 Assumption Document. Upon the terms and subject to the conditions
-------------------
contained herein, at the Closing Buyer shall deliver to Central an instrument of
assumption substantially in the form attached hereto as Exhibit 3.2.2,
evidencing Buyer's assumption, pursuant to Section 2.2, of the Assumed
Liabilities (the "Assumption Document").
3.2.3 Form of Instruments. To the extent that a form of any document to
-------------------
be delivered hereunder is not attached as an Exhibit hereto, such documents
shall be in form and substance, and shall be executed and delivered in a manner,
reasonably satisfactory to the recipient.
3.2.4 Certificates; Opinions. Sellers shall deliver to Buyer the
----------------------
certificates, opinions of counsel and other documents described in Article VIII.
3.2.5 Consents. Subject to Section 9.2, Sellers shall deliver all
--------
Permits and any other third party consents required for the valid transfer of
the Assets as contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
Sellers hereby, jointly and severally, represent and warrant to Buyer as
follows, that, except as set forth on the Disclosure Schedule attached hereto
and made a part hereof are incorporated herein by this reference, which
representations and warranties are, as of the date hereof, and will be, as of
the Closing Date, true and correct:
4.1 Organization of Central and EL Seller. Central and EL are each
-------------------------------------
corporations duly organized, validly existing and in good standing under the
laws of the State of Kansas. Copies of the Articles of Incorporation and Bylaws
of each Seller, and all amendments thereto, heretofore delivered to Buyer are
accurate and complete as of the date hereof. Neither Central nor EL have direct
or indirect stock or other equity or ownership interests (whether controlling or
not) in any corporation, association, partnership, joint venture or other
entity.
4.2 Authorization. Each of Central and EL has all requisite corporate power
-------------
and authority, and has taken all corporate action necessary, to own, lease and
operate the Assets, to conduct the Business as it is presently being conducted,
to execute and deliver this Agreement and the New Leases to which it will be a
party, to consummate the transactions contemplated hereby and thereby and to
perform its obligations
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<PAGE>
hereunder and thereunder. A copy of the resolutions of each of Central's and
EL's respective boards of directors authorizing this Agreement and the related
transactions are attached hereto as Schedule 4.2. This Agreement has been duly
executed and delivered by each Seller and is a legal, valid and binding
obligation of each Seller enforceable against each Seller in accordance with its
terms. Following their execution and delivery by Sellers or the Seller
Stockholder, as applicable, and Buyer, each of the New Leases will be a legal,
valid and binding obligation of such Seller or the Seller Stockholder, as
applicable, enforceable against them in accordance with its terms.
4.3 No Changes to the Assets. Since the Interim Balance Sheet Date:
------------------------
4.3.1 there has been no actual or threatened adverse change in the
financial condition or results of operation, the Business or the Assets or any
event, condition or state of facts, in either case that is, or would result in a
Material Adverse Change in the Assets or the Business or the prospects for the
Business, including without limitation the loss of any material customers;
4.3.2 there has not been any sale or other disposition, except in the
ordinary course of either Seller's business, of any of the Assets, or any
Encumbrance placed on the Assets;
4.3.3 Each Seller has operated the Business in the ordinary course
consistent with such Seller's past practice so as to preserve the Business
intact, to keep available to the Business the services of each Seller's
employees, and to preserve the Business and the goodwill of each Seller's
suppliers, customers, distributors and others having business relations with it;
and
4.3.4 Except as set forth on Exhibits 2.5.1.1 (a) and (b) and 2.5.1.2
(a) and (b), Sellers have not purchased, or entered into any agreement to
purchase any item, other than in the ordinary course of business consistent with
past practices, having a cost in excess of $2,000, without the consent of Buyer.
4.4 Assets. Sellers have and will transfer good and marketable fee simple
------
title to the Assets, with the exception of the assets for which leases are being
assumed, and upon the consummation of the transactions contemplated hereby,
Buyer will acquire good title to all of the Assets, free and clear of any
Encumbrances, except for any Encumbrance that Buyer, in its sole discretion,
specifically accepts in writing (in which case the Purchase Price will be
subject to adjustment as set forth in Section 2.5.5). The Assets reflected in
the Interim Balance Sheet and all of the Assets acquired after such date are or
will be valued at the lower of actual cost or market less an adequate and proper
depreciation charge. The Assets include without limitation all assets necessary
for the conduct of the Business as presently conducted.
4.5 Facilities. Each of Central and EL will deliver to Buyer, prior to
----------
Closing, an accurate copy of its respective existing leases and policies of
title insurance as to the Real Property. Each of Central and EL enjoys
peaceful and undisturbed possession of the leased Real Property. Other than the
leases provided, there are no leases, subleases, licenses, occupancy agreements,
options, rights, concessions or other agreements or arrangements, written or
oral, granting to any person the right to purchase, use or occupy the Facilities
or any portion thereof, except as set forth in Schedule 4.5. The Facilities are
supplied with utilities and other services necessary for the operation of the
Business.
4.5.1 Improvements, Fixtures and Equipment. The Facilities and the
------------------------------------
improvements thereon, including without limitation all Equipment (including all
fixtures) and other tangible assets owned, leased
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<PAGE>
or used by Central or EL at the Facilities are (i) adequately insured as of the
Closing Date, (ii) structurally sound with no known material defects, (iii) in
good operating condition and repair, subject to ordinary wear and tear, (iv) not
in need of maintenance or repair except for ordinary routine maintenance and
repair, the cost of which would not be material, (v) sufficient for the
operation of the Business as presently conducted, and (vi) to the best of
Central's and EL's knowledge, as applicable, in conformity, in all material
respects, with all applicable laws, ordinances, orders, regulations and other
requirements relating thereto currently in effect. None of the improvements is
subject to any commitment or other arrangement for their sale or use by any
Affiliate of Sellers or third parties, except as set forth in Schedule 4.5.1.
4.5.2 Conformity. All Facilities have received all required approvals
----------
of governmental authorities (including without limitation Permits and a
certificate of occupancy or other similar certificate permitting lawful
occupancy of the Facilities) required in connection with the operation thereof.
To the best of Central's and EL's knowledge, as applicable, the Facilities are
(and have been) operated and maintained in accordance with applicable laws,
rules, regulations and state, county, municipal or other local ordinances, and
conform to all other conditions necessary for the lawful conduct of the Business
as currently conducted at each such Facility.
4.6 Contracts and Commitments.
-------------------------
4.6.1 Contracts. Schedule 4.6 sets forth a complete and accurate list
---------
of all Contracts of the following categories:
4.6.1.1 Contracts not made in the ordinary course of either
Seller's conduct of the Business;
4.6.1.2 Employment contracts and severance agreements;
4.6.1.3 Distribution, franchise, license, sales or commission
contracts related to the Assets or the Business;
4.6.1.4 Contracts involving expenditures or liabilities, actual or
potential, in excess of $1,000 or otherwise material to the Business or the
Assets, and not cancelable (without liability) within 30 calendar days;
4.6.1.5 Contracts or commitments relating to commission
arrangements with others;
4.6.1.6 Promissory notes, loans, agreements, evidences of
indebtedness, letters of credit, guarantees, or other instruments relating to an
obligation to pay money, whether EL or Central shall be the borrower, lender or
guarantor thereunder or whereby any Assets are pledged (excluding credit
provided by EL or Central in the ordinary course of the Business to its
customers);
4.6.1.7 Leases of personal property not cancelable (without
liability) within 30 calendar days; and
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<PAGE>
4.6.1.8 Contracts containing covenants limiting the freedom of EL
or Central or any officer, director or shareholder of EL or Central to engage in
any line of business or compete with any person.
For purposes of this Agreement, the "Assumed Contracts" are the Contracts listed
as such on Schedule 4.6.1. EL and Central have delivered or will deliver, prior
to the Closing Date, to Buyer true, correct and complete copies of all of the
Contracts listed on Schedule 4.6, including all amendments and supplements
thereto, whether or not such Contracts are Assumed Contracts.
4.6.2 Absence of Breaches or Defaults. All of the Contracts are valid
-------------------------------
and in full force and effect. Each of EL and Central, as applicable, has duly
performed all of its obligations under the Contracts to the extent those
obligations to perform have accrued, and no violation of, or default or breach
under any Contracts by EL or Central or any other party has occurred and neither
Sellers nor any other party has repudiated any provisions thereof.
4.7 Permits and Consents. Sellers have all Permits required to conduct the
--------------------
Business, except where the failure to obtain such Permits would not have a
Material Adverse Effect on the Assets or the Business. All Permits of Sellers
related to the Business are valid and in full force and effect and are listed on
Schedule 4.7. Except as disclosed on Schedule 4.7, no notice to, declaration,
filing or registration with, or authorization, or consent or approval of, or
Permit from, any governmental or regulatory body or authority (including without
limitation the U.S. Small Business Administration), or any other person or
entity, is required to be made or obtained by Sellers or the Seller Stockholder
in connection with the execution, delivery or performance of this Agreement or
the New Leases and the consummation of the transactions contemplated hereby and
thereby. Schedule 4.7 sets forth all consents required for the assignment by
Central to Buyer of the Assumed Contracts. All of the Assumed Contracts will be
enforceable by Buyer after the Closing to the same extent as if the transactions
contemplated by this Agreement had not been consummated. Each of Central and EL
and the Seller Stockholder have legal authority to enter into the New Leases to
which it or they will be parties and to convey to Buyer the leasehold interests
created thereby, and no consent of the lessor under the Existing Lease, of any
lender, or of any other person or entity is required for the execution by
Sellers or the Seller Stockholder of the New Leases.
4.8 No Conflict or Violation. After giving effect to consents and lien
------------------------
releases described in Schedule 4.7 that have been obtained from third parties or
will be so obtained prior to the Closing Date, neither the execution and
delivery of this Agreement or the New Leases by Central and EL or the Seller
Stockholder, as applicable, nor the consummation of the transactions
contemplated hereby or thereby, nor compliance by Central and EL or the Seller
Stockholder with any of the provisions hereof or thereof, will (a) violate or
conflict with any provision of the Articles of Incorporation or Bylaws of
Central and EL, (b) violate, conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any Encumbrance
upon any of the Assets under, any of the terms, conditions or provisions of any
Contract, Permit, agreement, or other instrument or obligation (i) to which
Central and EL or the Seller Stockholder are parties or (ii) by which the Assets
are bound, violate any statute, rule, regulation, ordinance, code, order,
judgment, ruling, writ, injunction, decree or award or (d) impose any
Encumbrance, restriction or charge on the Assets, the Facilities or the
Business. Any breach caused by the assignment or other transfer to Buyer of
vehicle leases which constitute Assumed Contracts and other Assumed Contracts
which by their
15
<PAGE>
terms are cancellable without penalty on no more than thirty (30) days notice
(collectively, the "Non-Consented Assumed Contracts") will not be a breach of
said representations and warranties of this Section 4.8.
4.9 Financial Statements. Central has heretofore delivered to Buyer the
--------------------
Financial Statements. The Financial Statements (a) are in accordance with the
underlying books and records of Central, (b) have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods covered thereby (except as otherwise described in Schedule 4.9) and
(c) fairly and accurately present the assets, liabilities (including all
reserves) and financial position of the Business as of the respective dates
thereof and the results of operations and changes in cash flows for the periods
then ended (subject, in the case of the Interim Financial Statements, to normal
year-end adjustments). At the respective dates of the Financial Statements,
there were no liabilities of Central, which, in accordance with generally
accepted accounting principles, should have been shown or reflected in the
Financial Statements or the notes thereto, which are not shown or reflected in
the Financial Statements or the notes thereto.
4.10 Books and Records. Sellers have made and kept (and given Buyer access
-----------------
to) Books and Records and accounts, which, in reasonable detail, accurately and
fairly reflect the activities of Sellers; provided however, that only with
----------------
regard to the Books and Records and accounts of EL, Buyer shall have access to
said documents which pertain only to the assets of EL listed in Exhibits
2.5.1.1(a) and 2.5.1.2(a) hereto. The minute books of Sellers, which will be
delivered to Buyer prior to the Closing Date, accurately and adequately reflect
all action previously taken by the shareholders, board of directors and
committees of the board of directors of Sellers. The copies of the stock book
records of Sellers, which will be delivered to Buyer prior to the Closing Date,
are true, correct and complete, and accurately reflect all transactions effected
in Sellers' stock through and including the date hereof.
4.11 Litigation. Except as set forth on Schedule 4.11, there is no action,
----------
order, writ, injunction, judgment or decree outstanding or any claim, suit,
litigation, proceeding, labor dispute, arbitral action, governmental audit or
investigation (collectively, "Actions") pending, or to the best of Central's and
EL's knowledge, as applicable, threatened or anticipated (a) against, related to
or affecting Sellers, the Business or the Assets or (b) seeking to delay, limit
or enjoin the transactions contemplated by this Agreement. Sellers are not in
default with respect to or subject to any judgment, order, writ, injunction or
decree of any court or governmental agency, and there are no unsatisfied
judgments against Sellers, the Business or the Assets.
4.12 Labor Matters. Except as stated in Schedule 4.12, neither Seller is a
-------------
party to a labor agreement with respect to its employees with any labor
organization, union, group or association and there are no employee unions (nor
any other similar labor or employee organizations) under local statutes, custom
or practice. Sellers have not experienced any attempt by organized labor or its
representatives to make Seller conform to demands of organized labor relating to
its employees or to enter into a binding agreement with organized labor that
would cover the employees of Sellers.
4.13 Compliance with Law. Except as otherwise limited herein, Sellers, the
-------------------
conduct of the Business and the operation of the Facilities have not violated
and are in compliance with all laws, statutes, ordinances, regulations, rules
and orders of any foreign, federal, state or local government and any other
governmental department or agency, and any judgment, decision, decree or order
of any court or governmental agency, department or authority, including without
limitation Environmental Laws, relating to the Assets, Facilities
16
<PAGE>
or Business or operations of Sellers, except where the violation or failure to
comply, individually or in the aggregate, would not have a Material Adverse
Effect on the Facilities, the Assets or the Business. Except as otherwise
limited herein, Sellers and the conduct of the Business and the operation of the
Facilities are in conformity with all energy, public utility, zoning, building
and health codes, regulations and ordinances, OSHA and Environmental Laws and
all other foreign, federal, state, and local governmental and regulatory
requirements, except where any nonconformity would not have a Material Adverse
Effect on the Facilities, the Assets or the Business. Sellers have not received
any notice to the effect that, or otherwise been advised that, it is not in
compliance with any such statutes, regulations, rules, judgments, decrees,
orders, ordinances or other laws, and Sellers have no reason to anticipate that
any existing circumstances are likely to result in violations of any of the
foregoing, which non-compliance or violation could, in any one case or in the
aggregate, have a Material Adverse Effect on the Facilities, the Assets or the
Business.
4.14 No Brokers. Neither Sellers nor any of their respective officers,
----------
directors, employees, shareholders or Affiliates has employed or made any
agreement with any broker, finder or similar agent or any person or firm which
will result in an obligation to pay any finder's fee, brokerage fees or
commission or similar payment in connection with the transactions contemplated
hereby.
4.15 No Other Agreements to Sell the Assets. Neither Sellers nor any of
--------------------------------------
their respective officers, directors, shareholders or Affiliates have any
commitment or legal obligation, absolute or contingent, to any other person or
firm other than the Buyer to sell, assign, transfer or effect a sale of any of
the Assets (other than inventory in the ordinary course of business), to sell or
effect a sale of a majority of the capital stock of Sellers or to effect any
merger, consolidation, liquidation, dissolution or other reorganization of
Sellers.
4.16 Proprietary Rights.
------------------
4.16.1 Proprietary Rights. Schedule 4.16 lists all of Central's
------------------
federal, state and foreign registrations of trademarks, service marks and other
marks, trade names or other trade rights, and all pending applications for any
such registrations, all other trademarks and other marks, trade names and other
trade rights or in which Central has any interest whatsoever, and all other
trade secrets and other proprietary rights, whether or not registered, created
or used by or on behalf of Central, in each case relating to the Business
(collectively, "Proprietary Rights"). The Proprietary Rights listed in Schedule
4.16 are all those used by Central in connection with the Business.
4.16.2 Royalties and Licenses. No person has a right to receive a
----------------------
royalty or similar payment in respect of any Proprietary Rights. Central has no
licenses granted, sold or otherwise transferred by or to it or other agreements
to which it is a party, relating in whole or in part to any of the Proprietary
Rights.
4.16.3 Ownership and Protection of Proprietary Rights. Central owns
----------------------------------------------
and has the sole right to use each of the Proprietary Rights. None of the
Proprietary Rights is involved in any pending or threatened litigation. Central
has not received any notice of invalidity or infringement of any rights of
others with respect to such Proprietary Rights. Central has taken all
reasonable and prudent steps to protect the Proprietary Rights from infringement
by any other firm, corporation, association or person. Central's use of the
Proprietary Rights is not infringing upon or otherwise violating the rights of
any third party in or to such Proprietary Rights, nor has such infringement been
alleged by any third party. All of the Proprietary Rights are valid and
enforceable rights of Seller, will be quit-claimed to Buyer and will not cease
to be valid
17
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and in full force and effect by reason of the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated by this Agreement.
4.17 Tax Matters.
-----------
4.17.1 Filing of Tax Returns. Sellers have timely filed with the
---------------------
appropriate taxing authorities all returns in respect of Taxes required to be
filed through the date hereof and will timely file any such returns required to
be filed on or prior to the Closing Date.
4.17.2 Payment of Taxes. All Taxes, in respect of periods beginning
----------------
before the Closing Date, have been timely paid, or will be timely paid, or an
adequate reserve has been established therefor, as set forth in Schedule 4.17 or
the Financial Statements, and Sellers do not have any material liability for
Taxes in excess of the amounts so paid or reserves so established.
4.17.3 Lien. There are no liens for Taxes (other than as could be
----
asserted for current Taxes not yet due and payable) on the Assets.
4.17.4 No Withholding. The transaction contemplated herein is not
--------------
subject to the tax withholding provisions of Section 3406 of the Code, or of
Subchapter A of Chapter 3 of the Code or of any other provision of law.
4.17.5 Tax-Exempt Use Property. None of the Assets is a "tax-exempt
-----------------------
use property" within the meaning of Section 168(h) of the Code.
4.18 Accounts Receivable. The accounts receivable reflected in the Interim
-------------------
Balance Sheet, and all accounts receivable arising since the Interim Balance
Sheet Date, represent bona fide claims of Central 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
were delivered or performed in accordance with the applicable orders, Contracts
or customer requirements.
4.19 Inventory. All the Inventory is located at the Facilities. The values
---------
at which the Inventory is shown on the Interim Balance Sheet have been
determined in accordance with generally accepted accounting principles, each
consistently applied throughout the periods covered by the Financial Statements,
with adequate provisions or adjustments for excess Inventory, slow-moving
Inventory and Inventory obsolescence and shrinkage. Schedule 4.19 sets forth a
complete and accurate list of all Inventory as of the date hereof, subject to
adjustment on and after the Closing Date in accordance with Section 2.4.2.
4.20 Employees. Schedule 4.20 (i) contains a list of all employees of
---------
Central, and their wage rates or salaries, as of the date of this Agreement,
(ii) sets forth the dates of employment for such employees, and (iii) contains a
list of each contract, plan, arrangement, policy, program or commitment, whether
oral or written, providing for insurance coverage (including without limitation
any self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
life, health, disability or accident benefits or for deferred compensation,
pension, profit-sharing, bonuses, stock options, stock appreciation rights,
stock purchases or other forms of incentive compensation or post-retirement
insurance, compensation or benefits (collectively, "Employee Plans"). Central
has paid all benefits due to its employees at any time under its Employee Plans,
including without
18
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limitation all severance, accrued vacation, health care continuation coverage
and other benefits to which its employees may be entitled as a result of the
transactions contemplated hereby.
4.21 Compliance With Environmental Laws.
----------------------------------
4.21.1 Definitions. The following terms, when used in this Section
-----------
4.21, shall have the following meanings. Unless the context otherwise requires,
any of these terms may be used in the singular or the plural depending on the
reference.
4.21.1.1 "Sellers". For purposes of this Section 4.21 only,
-------
the term "Sellers" shall include (i) all Affiliates of Sellers, including
without limitation the Seller Stockholder, (ii) all partnerships, joint ventures
and other entities or organizations in which Sellers were at any time or are a
partner, joint venturer, member or participant and (iii) all predecessor or
former corporations, partnerships, joint ventures, organizations, businesses or
other entities, whether in existence as of the date hereof or at any time prior
to the date hereof, the assets or obligations of which have been acquired or
assumed by Sellers or to which Sellers have succeeded.
4.21.1.2 "Release" shall mean and include any spilling,
-------
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
migrating, leaching, dumping or disposing into the environment or the workplace
of any Hazardous Substance, and otherwise as defined in any Environmental Law.
4.21.1.3 "Hazardous Substance" shall mean any quantity of
-------------------
asbestos in any form, urea formaldehyde, PCBs, radon gas, crude oil or any
fraction thereof, all forms of natural gas, petroleum products or by-products,
any radioactive substance, any toxic, infectious, reactive, corrosive, ignitible
or flammable chemical or chemical compound and any other hazardous substance,
material or waste (as defined in or for purposes of any Environmental Law),
whether solid, liquid or gas.
4.21.2 Compliance With Environmental Laws. Except as set forth on
----------------------------------
Schedule 4.20, the Facilities have been owned, leased, operated and maintained
in compliance with all federal, state, local or foreign laws, statutes,
ordinances, regulations, rules, judgments, orders, notice requirements, court
decisions, agency guidelines or principles of law, restrictions or licenses,
which (i) regulate or relate to the protection or clean-up of the environment,
the use, treatment, storage, transportation, handling or disposal of hazardous,
toxic or otherwise dangerous substances, wastes or materials (whether gas,
liquid or solid), the preservation or protection of waterways, groundwater,
drinking water, air, wildlife, plants or other natural resources, or the health
and safety of persons or property, including without limitation protection of
the health and safety of employees or (ii) impose liability with respect to any
of the foregoing, including without limitation the Federal Water Pollution
Control Act (33 U.S.C. (S) 1251 et seq.), Resource Conservation & Recovery Act
-- ---
(42 U.S.C. (S) 6901 et seq.) ("RCRA"), Safe Drinking Water Act (21 U.S.C. (S)
-- ---
349, 42 U.S.C. (S)(S) 201, 300f), Toxic Substances Control Act (15 U.S.C. (S)
2601 et seq.), Clean Air Act (42 U.S.C. (S) 7401 et seq.), the Comprehensive
-- --- -- ---
Environmental Response, Compensation, and Liability Act (42 U.S.C. (S) 9601 et
--
seq.) ("CERCLA"), or any other similar federal, state or local law of similar
- ---
effect, each as amended (collectively, "Environmental Laws").
19
<PAGE>
4.21.3 Facilities. The Facilities are, and at all times have been,
----------
owned, leased and operated in compliance with all Environmental Laws and in a
manner that will not give rise to any liability under any Environmental Laws.
4.21.4 Permits. Sellers have, and at all times has had, all Permits
-------
required under any Environmental Law and the Facilities are, and at all times
have been, in compliance with all such Permits.
4.21.5 Permits Required. The consummation of any of the transactions
----------------
contemplated by this Agreement will not require an application for issuance,
renewal, transfer or extension of, or any other administrative action regarding,
any Permit required under any Environmental Law.
4.21.6 Notice of Violation. Sellers have not received any notice at
-------------------
any time that it or the Facilities is or were claimed to be in violation of the
provisions of any Environmental Law or in non-compliance with the conditions of
any Permit, and there is no pending or threatened lawsuit, governmental or other
legal action to that effect.
4.21.7 Pending Actions. There is not now pending or threatened, nor
---------------
any basis for, nor has there ever been, any Action against Sellers, nor any
basis for any Action, under any Environmental Law or otherwise with respect to
any Release or handling of any Hazardous Substance.
4.21.8 Judgments. There are no consent decrees, judgments, judicial
---------
or administrative orders or agreements with, or liens by, any governmental
authority or quasi-governmental entity relating to any Environmental Law which
regulate, obligate, bind or in any way affect Sellers or the Facilities.
4.21.9 Hazardous Substances. There is not and has not been any
--------------------
Hazardous Substance used, generated, treated, stored, transported, disposed of,
handled or otherwise existing on, under, about or from any Facility, except for
quantities of any such Hazardous Substances stored or otherwise held on, under
or about any such Facility in full compliance with all Environmental Laws and
necessary for the operation of the Business.
4.21.10 Handling of Hazardous Substances. Sellers have at all times
--------------------------------
used, generated, treated, stored, transported, disposed of or otherwise handled
its Hazardous Substances in compliance with all Environmental Laws and in a
manner that will not result in liability of Sellers or Buyer under any
Environmental Law. Schedule 4.21 sets forth a complete list of all contractors
and other third parties who at any time have hauled, handled, stored,
transported or disposed of any Hazardous Substance (i) on behalf of Sellers or
the Business, or (ii) generated by Sellers or the Business, together with a
complete list of all dumpsites and other off-site locations at which such
Hazardous Substances have been disposed of.
4.21.10.1 Environmental Conditions. There are no present or past
------------------------
Environmental Conditions (as defined below) in any way relating to the Business
or Facilities. "Environmental Conditions" means the introduction into the soil,
groundwater or environment of the Facilities (through leak, spill, release,
discharge, escape, emission, dumping, disposal or otherwise) of any pollution,
including without limitation any contaminant, irritant or pollutant or Hazardous
Substance (whether or not upon the property of the Business and whether or not
such pollution constituted at the time thereof a violation of any Environmental
Law) as a result of which either Seller or, after the Closing, Buyer has or may
become liable
20
<PAGE>
to any person or federal, state, or local government or agency or
by reason of which any of the Assets may suffer or be subjected to any lien.
4.21.11 CERCLA or RCRA. No current or past use, generation, treatment,
--------------
transportation, storage, disposal or handling practice of Sellers with respect
to any Hazardous Substance has or will result in any liability under the CERCLA
or RCRA or any state or local law of similar effect.
4.21.12 Storage Tank or Pipeline. Except as set forth on Schedule 4.21,
------------------------
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.
4.21.13 Environmental Audits or Assessments. True, complete and correct
-----------------------------------
copies of the written reports, and all parts thereof, including any drafts of
such reports if such drafts are in the possession or control of Sellers, of all
environmental audits or assessments which have been conducted at any Facility
within the past five years, either by Sellers or any attorney, environmental
consultant or engineer engaged for such purpose, have been delivered to Buyer
and a list of all such reports, audits and assessments and any other similar
report, audit or assessment of which Seller has knowledge is included on
Schedule 4.21.
4.21.14 Indemnification Agreements. Sellers are not a party, whether as
--------------------------
a direct signatory or as successor, assign or third party beneficiary, or
otherwise bound, to any lease or other Contract under which Sellers are
obligated by or entitled to the benefits of, directly or indirectly, any
representation, warranty, indemnification, covenant, restriction or other
undertaking concerning Environmental Conditions.
4.21.15 Releases or Waivers. Sellers have not released any other person
-------------------
from any claim under any Environmental Law or waived any rights concerning any
Environmental Condition.
4.21.16 Notices, Warnings and Records. Sellers have given all notices
-----------------------------
and warnings, made all reports, and has kept and maintained all records required
by and in compliance with all Environmental Laws.
4.22 Liabilities. Neither Seller has any liabilities or obligations
-----------
(absolute, accrued, contingent or otherwise) except (i) liabilities which are
reflected on the Interim Balance Sheet or which are not required under generally
accepted accounting principles to be reflected on the Interim Balance Sheet,
(ii) liabilities incurred in the ordinary course of the Business and consistent
with past practice since the Interim Balance Sheet Date, (iii) liabilities
arising under Contracts identified in Schedule 4.6 to which either Seller is a
party and (iv) liabilities unknown and unasserted as of the Closing Date.
4.23 Securities Law Matters.
----------------------
4.23.1 Each Seller confirms that it is acquiring the RSC Common Stock
for its own account as principal, for investment purposes only, and not with a
view to, or for, resale or distribution thereof, and no other person has or will
have a direct or indirect beneficial interest in such RSC Common Stock;
21
<PAGE>
4.23.2 Each Seller understands that the offering and sale of the RSC
Common Stock is intended to be a transaction by an issuer not involving any
public offering exempt from registration under the Securities Act of 1933, as
amended (the "Securities Act"), by virtue of Section 4(2) of the Securities Act
and the rules and regulations of the Securities and Exchange Commission (the
"Commission") thereunder;
4.23.3 Each Seller represents that it is an "accredited investor" as
such term is defined in Rule 501 under the Securities Act;
4.23.4 Each Seller understands and acknowledges that there are
substantial risks of loss of investment involved in an investment in the RSC
Common Stock, and that the investment in the RSC Common Stock is an illiquid
investment subject to transfer restrictions, and Sellers represent and warrant
that they have the financial ability to bear the economic risk of such
investment;
4.23.5 Each Seller has such knowledge and experience in financial and
business matters, including investments of the type represented by the RSC
Common Stock, as to be capable of evaluating the merits of investment in
therein;
4.23.6 Each Seller has been furnished with a copy of the recent periodic
reports filed by RSC with the Commission and any documents that may have been
made available otherwise or upon its request, have carefully read and understand
such materials and have evaluated the risks of an acquisition of the RSC Common
Stock;
4.23.7 Each Seller has been given the opportunity to ask questions of,
and receive answers from, representatives of RSC in order for it to evaluate the
merits and risks of investment in the RSC Common Stock; and
4.23.8 No Seller has been furnished with or has relied upon any oral or
written representation, warranty or information in connection with the offering
of the RSC Common Stock except for that set forth in this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Sellers as follows, which
representations and warranties are, as of the date hereof, and will be, as of
the Closing Date, true and correct:
5.1 Organization of Buyer. Buyer is a corporation duly organized, validly
---------------------
existing and in good standing under the laws of the State of Mississippi.
5.2 Authorization. Buyer has all requisite corporate power and authority,
-------------
and has taken all corporate action necessary, to execute and deliver this
Agreement and the New Leases, to consummate the transactions contemplated hereby
and thereby and to perform its obligations hereunder and thereunder and RSC has
authorized the issuance of the RSC Common Stock. This Agreement has been duly
executed and delivered by Buyer and is (and following their execution and
delivery by Buyer and Sellers or the Seller Stockholder,
22
<PAGE>
as applicable, each of the New Leases and Ancillary Agreements will be) a legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms. The RSC Common Stock, when issued, will be duly authorized,
validly issued, fully paid and non-assessable.
5.3 No Conflict or Violation. Neither the execution, delivery or performance
------------------------
of this Agreement or the New Leases nor the consummation of the transactions
contemplated hereby or thereby, nor compliance by Buyer with any of the
provisions hereof or thereof, will (a) violate or conflict with any provision of
the Certificate of Incorporation or Bylaws of Buyer, or (b) violate any statute,
rule, regulation, ordinance, code, order, judgment, ruling, writ, injunction,
decree or award binding upon Buyer.
5.4 Consents and Approvals. No notice to, declaration, filing or
----------------------
registration with, or authorization, consent or approval of, or permit from, any
governmental or regulatory body or authority, or any other person or entity, is
required to be made or obtained by Buyer in connection with the execution,
delivery and performance of this Agreement or the New Leases and the
consummation of the transactions contemplated hereby or thereby, except (a) as
may be required by Buyer to operate the Business after the Closing, (b) as has
been obtained on or prior to the date hereof or (c) as set forth in Schedule
4.7.
5.5 No Brokers. Neither Buyer, nor any of its respective officers,
----------
directors, employees, shareholders or Affiliates has employed or made any
agreement with any broker, finder or similar agent or any person or firm which
will result in an obligation to pay any finder's fee, brokerage fees or
commission or similar payment in connection with the transactions contemplated
hereby.
ARTICLE VI
COVENANTS OF SELLERS AND BUYER
------------------------------
Buyer, Sellers and the Seller Stockholder each covenant with the others
as follows:
6.1 Further Assurances. Upon the terms and subject to the conditions
------------------
contained herein, each of the parties hereto agrees, both before and after the
Closing, (i) to use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, (ii) to execute any documents, instruments or conveyances of any kind
which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder, and (iii) to cooperate with each other in
connection with the foregoing, including using their respective best efforts (A)
to obtain all necessary waivers, consents and approvals from other parties to
the Contracts to be assumed by Buyer; provided, however, that Buyer shall not be
required to make any payments, commence litigation or agree to modifications of
the terms thereof in order to obtain any such waivers, consents or approvals,
(B) to obtain all necessary Permits as are required to be obtained under any
federal, state, local or foreign law or regulations, (C) to effect all necessary
registrations and filings, including without limitation submissions of
information requested by governmental authorities, and (D) to fulfill all
conditions to this Agreement.
6.2 No Solicitation. From the date hereof through the Closing or the earlier
---------------
termination of this Agreement, each Seller and the Seller Stockholder shall not,
and shall cause their Representatives (including without limitation investment
bankers, attorneys and accountants) not to, directly or indirectly, enter into,
23
<PAGE>
solicit, initiate or continue any discussions or negotiations with, or encourage
or respond to any inquiries or proposals by, or participate in any negotiations
with, or provide any information to, or otherwise cooperate in any other way
with, any corporation, partnership, person or other entity or group, other than
Buyer and its Representatives concerning any sale of all or a portion of the
Assets or the Business, or of any shares of capital stock of Sellers, or any
merger, consolidation, liquidation, dissolution or similar transaction involving
Sellers (each such transaction collectively being referred to herein as a
"Proposed Acquisition Transaction"). Sellers and the Seller Stockholder shall
not, directly or indirectly, through any Representative or otherwise, solicit,
initiate or encourage the submission of any proposal or offer from any person or
entity relating to any Proposed Acquisition Transaction or participate in any
negotiations regarding, or furnish to any other person any information with
respect to the other party for the purposes of, or otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person to seek or effect a Proposed Acquisition
Transaction. Sellers and the Seller Stockholder each hereby represents that it
is not now engaged in discussions or negotiations with any party (other than
Buyer) with respect to any of the foregoing. Sellers shall promptly notify
Buyer (orally and in writing) of any offer, inquiry or contact with any person
with respect to a Proposed Acquisition Transaction, including the terms thereof
and the identity of the prospective purchaser or soliciting party.
6.3 Disclosure Schedule. Within five (5) days from the date hereof, Sellers
-------------------
shall provide to Buyer the Disclosure Schedule, subject to Section 8.3
hereunder.
6.4 Notification of Certain Matters. From the date hereof through the
-------------------------------
Closing, Sellers shall give prompt notice to Buyer of (a) the occurrence, or
failure to occur, of any event which occurrence or failure would be likely to
cause any representation or warranty contained in this Agreement or in any
exhibit or schedule hereto to be untrue or inaccurate in any material respect
and (b) any failure of Sellers, or any of their respective Affiliates,
shareholders or Representatives, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement or any exhibit or schedule hereto; provided, however, that such
disclosure shall not be deemed to cure any breach of a representation, warranty,
covenant or agreement or to satisfy any condition.
6.5 Access to Information. From the date hereof through the Closing, Sellers
---------------------
shall, and shall cause their Representatives to, afford the Representatives of
Buyer and its Affiliates complete access at all reasonable times to the Assets
and the Facilities for the purpose of inspecting and conducting appropriate
tests upon the same, and to the officers, employees, agents, attorneys,
accountants, properties, Books and Records and Contracts of Sellers, and shall
furnish Buyer and its Representatives all financial, operating and other data
and information as Buyer or its Affiliates, through their respective
Representatives, may reasonably request, including but not limited to data
relating to operating procedures, workers' compensation history, legal, tax and
environmental, zoning and other legal compliance provided, however, that such
diligence activities of Buyer shall not materially disrupt Sellers' Business.
6.6 Conduct of Business. From the date hereof through the Closing, Sellers
-------------------
shall, except as contemplated by this Agreement or as consented to by Buyer in
writing, operate the Business in the ordinary course of the Business and
substantially in accordance with past practice and will not take any action
inconsistent with this Agreement or with the consummation of the Closing.
Without limiting the generality of the foregoing, Sellers shall not, except as
specifically contemplated by this Agreement:
24
<PAGE>
6.6.1 enter into, extend, materially modify, terminate, renew, or fail
to renew any Contract, including any contract pursuant to which either Seller
has rented Equipment, except in the ordinary course of the Business and
substantially in accordance with past practice;
6.6.2 sell, assign, transfer, convey, lease, mortgage, pledge or
otherwise dispose of or encumber any of the Assets, or any interests therein,
except in the ordinary course of the Business; or
6.6.3 fail to pay its accounts payable and any debts owed or
obligations due by it, or pay or discharge when due any liabilities, in the
ordinary course of the Business.
6.7 Employee Matters. Buyer shall offer to employ all employees of Central
----------------
who pass a physical examination and drug and alcohol abuse screening by a
licensed laboratory chosen by Buyer, and who otherwise meet Buyer's customary
criteria for employment, and Central shall reasonably cooperate with Buyer in
retaining all such employees (the "Retained Employees"). Buyer agrees to give
Retained Employees credit for their time of employment with Central with respect
to their seniority as an employee of Buyer. Central shall be and remain solely
responsible for the payment of all benefits due to its employees at any time
under its Employee Plans, including without limitation all severance, accrued
vacation, health care continuation coverage and other benefits to which its
employees may be entitled as a result of the transactions contemplated hereby,
whether or not such employees are hired by Buyer. All Retained Employees will
be at-will employees of Buyer and may be terminated by Buyer in its sole
discretion, subject to the requirements of applicable laws governing employers
and employees, and will receive substantially the same total compensation and
benefits as they did when employed by Central.
6.8 Environmental Assessments and Remediation.
-----------------------------------------
6.8.1 Buyer has retained Dames & Moore (the "Consultant") to perform
Phase I environmental site assessments with respect to each of the Facilities.
Upon its availability, Buyer will deliver the final report of such assessments
to Sellers. In the event any such assessment recommends the performance of
additional investigation (including, without limitation, Phase II environmental
site assessments), such additional investigation shall, if requested by Buyer,
be undertaken promptly and delivered to each of Sellers and Buyer. The
environmental assessments and investigations undertaken pursuant to this Section
6.8.1 are collectively referred to herein as the "Environmental Assessments."
Buyer shall be solely responsible for the cost of the Environmental Assessments.
6.8.2 In the event any of the Environmental Assessments reveals any
remediation work or other actions which must be completed in order to bring the
Facilities into compliance with applicable Environmental Laws or to eliminate
any potential environmental liability, the Consultant shall be directed to
prepare and to deliver to each of Sellers and Buyer a written proposal setting
forth in reasonable detail the scope of required remediation and an estimate of
the cost of completing such remediation. For the purposes of Section 6.8,
"required remediation" shall mean any action necessary to (i) comply with any
governmental order, (ii) comply with any Environmental Law effective at the
Closing or (iii) eliminate a potential environmental liability (collectively the
"Remediation Standard"), as applicable to the Facilities or the operation
thereof by Sellers as of the Closing Date. For the purposes of Section 6.8 and
with respect to any underground storage tanks at the Facility, "necessary
remediation" also shall include obtaining a closure letter from the governing
state agency confirming that the state agency has approved closure of the
25
<PAGE>
underground storage tanks and will not take any further action related to any
liability associated with any underground storage tank at the Facilities.
6.8.3 Promptly upon completion of the Consultant's proposal referred to
in Section 6.8.2, Sellers shall engage a reliable environmental engineering firm
reasonably acceptable to Buyer and authorized by any applicable federal, state,
or local law, policy, or regulation to perform any required remediation. Sellers
shall use their best efforts to cause such required remediation to be completed
on or before the Closing Date, and Sellers shall bear all costs of such required
remediation; provided that the completion of all such required remediation shall
be a condition to Buyer's obligations to consummate the transactions
contemplated by this Agreement. Buyer may, in its sole discretion, authorize
Sellers to defer any portion of the required remediation which Sellers and their
contractors are unable to complete prior to Closing, in which case Sellers shall
cause the portion of the required remediation so deferred to be completed as
promptly as practicable, but in no event later than 60 days following Closing,
at Sellers' sole expense. Buyer may monitor the performance of the required
remediation and application of the Remediation Standard, and at its election may
cause the Consultant to review the performance of the required remediation. If
Buyer directs the Consultant to undertake such review, the required remediation
shall be deemed completed only upon certification of its completion by the
Consultant. If, however, there is a dispute as to the performance of the
required remediation or the application of the Remediation Standard, any such
dispute shall be settled by a mutually agreed-upon environmental expert not
otherwise involved in the required remediation, whose determination shall be
final and binding on the parties.
6.8.4 Notwithstanding the foregoing, if Sellers believe the "necessary
remediation" is uneconomic, Sellers may elect instead (i) to obtain a lease on,
and relocate the applicable portion of Sellers' business to, a comparable site
reasonably acceptable to Buyer on substantially comparable economic terms to the
site being eliminated, all at Sellers' sole expense or (ii) if the remediation
costs exceed $200,000 in aggregate, Buyer may agree to waive clause (i) above in
this Section 6.8.4 or, if Buyer does not waive clause (i) under such
circumstances, Sellers may terminate this Agreement.
6.9 Use of Name and Telephone Numbers. From and after Closing, Sellers will
---------------------------------
relinquish to Buyer Sellers' right to use the name "Central States Equipment" or
variations thereof in its operation of the Business. Upon Closing, Central
shall assign to Buyer all of the telephone and facsimile numbers currently used
in the Business.
6.10 Registration Rights. In the event that, at any time prior to the first
-------------------
anniversary of the Closing Date, RSC files a registration statement under the
Securities Act covering shares of RSC Common Stock, other than a registration
statement on Form S-4 or Form S-8, or a registration statement filed pursuant to
"demand" or similar contractual registration rights of any other stockholders of
RSC, then Sellers shall have the right to include in such registration statement
(on a "piggyback" basis) any or all of their shares of RSC Common Stock, and to
receive the benefit of any representations, indemnities, opinions or comfort
letters given by RSC (or its counsel or underwriters) to any underwriter in
connection with such registration, subject to the obligations of the
stockholders of the Sellers to (i) cooperate with Buyer in preparing each such
registration and executing all such agreements as any representative of the
underwriters may deem reasonably necessary in favor of the underwriters, (ii)
promptly supply Buyer with all information, documents, representations and
agreements as the underwriters or Buyer may deem reasonably necessary in
connection with such registration and (iii) agree in writing not to sell or
transfer any shares of the capital stock of Buyer not included in such
registration during the period beginning ten (10) days prior to the filing
26
<PAGE>
and ending ninety (90) days after the effective date of such registration
without the underwriters' or the Company's consent; provided, however, that if
-----------------
the managing underwriter or underwriters in the registered offering advise RSC
that the inclusion in the offering of shares of RSC Common Stock owned by
Sellers would have a material adverse effect on the marketability or price of
the offering, then the number of shares of RSC Common Stock to be included by
Sellers shall be reduced on a pro rata basis in proportion to the number of
shares of RSC Common Stock requested to be included by each Seller and by any
other stockholder of the Company.
ARTICLE VII
CONDITIONS TO SELLERS' OBLIGATIONS
----------------------------------
The obligations of Sellers to consummate the transactions provided for
hereby are subject, in the discretion of Sellers, to the satisfaction, on or
prior to the Closing Date, of each of the following conditions, any of which may
be waived by Sellers:
7.1 Representations, Warranties and Covenants. All representations and
-----------------------------------------
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects at and as of the date of this Agreement and at and as of the
Closing Date, except as and to the extent that the facts and conditions upon
which such representations and warranties are based are expressly required or
permitted to be changed by the terms hereof, and Buyer shall have performed and
satisfied all agreements and covenants required hereby to be performed by it
prior to or on the Closing Date.
7.2 No Proceedings, Litigation or Laws. No Action by any governmental
----------------------------------
authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby and
which could reasonably be expected to materially damage Sellers if the
transactions contemplated hereunder are consummated.
7.3 Assumption Document. Buyer shall have executed the Assumption Document.
-------------------
7.4 New Leases. Sellers or the Seller Stockholder (as applicable) as lessor,
----------
and Buyer as lessee, will have entered into, prior to the Closing Date, leases
(the "New Leases") with respect to the Facilities, in the final form mutually
satisfactory to Buyer and Sellers.
7.5 Plan of Remediation. To the extent that any environmental remediation
-------------------
required pursuant to Section 6.8 has not been completed prior to Closing,
Sellers shall approve of and proceed with any plan of remediation.
7.6 RSC Common Stock. There shall have been no cessation of trading of
----------------
RSC's Common Stock on NASDAQ or a national securities exchange.
7.7 Opinion of Counsel. Buyer and RSC shall have delivered to Sellers an
------------------
opinion of Latham & Watkins, counsel to Buyer and RSC, dated as of the Closing
Date, to the effect that the RSC Common Stock has been duly authorized, validly
issued, fully paid and non-assessable.
27
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ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
---------------------------------
The obligations of Buyer to consummate the transactions provided for
hereby are subject, in the discretion of Buyer, to the satisfaction, on or prior
to the Closing Date, of each of the following conditions, any of which may be
waived by Buyer:
8.1 Representations, Warranties and Covenants. All representations and
-----------------------------------------
warranties of Sellers contained in this Agreement shall be true and correct in
all material respects at and as of the date of this Agreement and at and as of
the Closing Date, except as and to the extent that the facts and conditions upon
which such representations and warranties are based are expressly required or
permitted to be changed by the terms hereof, and Sellers shall have performed
and satisfied all agreements and covenants required hereby to be performed by it
prior to or on the Closing Date.
8.2 Consents. All Permits and waivers necessary to the consummation of the
--------
transactions contemplated hereby and for the operation of the Business by Buyer
(including, without limitation, (a) all required third party consents to the
assignment of the Assumed Contracts to be assumed by Buyer and (b) all required
approvals of Buyer's lenders) shall have been obtained.
8.3 Disclosure Schedule. Pursuant to Section 6.3 hereof, Buyer shall have
-------------------
the right to approve, in its sole discretion, any portion of the Disclosure
Schedule not delivered prior to the execution of this Agreement.
8.4 Assumption Agreement. In connection with collective bargaining agreement
--------------------
by and between Sellers and Teamsters Local Union 541 (the "Union"), dated
December 2, 1996 through December 15, 1999, an Assumption Agreement shall have
been executed by and between Buyer and the Union, which contains provisions (i)
allowing Buyer to change benefits providers so long as benefits remain
substantially the same, (ii) allowing Buyer not to offer employment to Union
members who do not pass the physical examination, drug and alcohol abuse
screening and otherwise fail to meet the criteria set forth in Section 6.7
hereof, and (iii) making other agreements reasonably requested by Buyer.
8.5 No Proceedings or Litigation. No Action by any governmental authority or
----------------------------
other person shall have been instituted or threatened which questions the
validity or legality of the transactions contemplated hereby and which could
reasonably be expected to damage Buyer materially if the transactions
contemplated hereby are consummated, including without limitation any Material
Adverse Effect on the right or ability of Buyer to own, operate, possess or
transfer the Assets after the Closing. There shall not be any statute, rule or
regulation that makes the purchase and sale of the Business or the Assets
contemplated hereby illegal or otherwise prohibited.
8.6 Opinion of Counsel. Sellers shall have delivered to Buyer an opinion of
------------------
Slagle, Bernard & Gorman, counsel to Sellers and the Seller Stockholder, dated
as of the Closing Date, in form and substance reasonably satisfactory to Buyer,
to the effect that:
8.6.1 Incorporation. Sellers have been duly incorporated and are
-------------
validly existing and in good standing under the laws of the State of Kansas;
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8.6.2 Corporate Power and Authority. Sellers have the necessary
-----------------------------
corporate power and authority to enter into this Agreement and the Ancillary
Agreements to which they are a party and to consummate the transactions
contemplated hereby and thereby and to own, lease and operate the Assets and its
other properties and to conduct the Business as presently conducted;
8.6.3 Corporate Action. The execution, delivery and performance of
----------------
this Agreement, the Ancillary Agreements and the New Leases to which Sellers are
a party have been duly authorized by all necessary corporate action of Sellers,
and this Agreement and the New Leases have been duly executed and delivered by
Sellers or the Seller Stockholder, as applicable; the approval of this Agreement
by the stockholders of Sellers have been duly obtained in accordance with the
provisions of Sellers' Articles of Incorporation and Bylaws and applicable law;
8.6.4 Obligation of Sellers or Seller Stockholder. This Agreement,
-------------------------------------------
each Ancillary Agreement and each New Lease constitutes a legally valid and
binding obligation of Sellers or the Seller Stockholder, as applicable,
enforceable against Sellers or the Seller Stockholder in accordance with their
terms, except as limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally or by
equitable principles (whether considered in an action at law or in equity), (ii)
limitations imposed by federal or applicable state law or equitable principles
upon the availability of specific performance, injunctive relief or other
equitable remedies, or (iii) other customary limitations reasonably satisfactory
to Buyer's counsel;
8.6.5 No Breach. Neither the execution and delivery of this Agreement,
---------
the Ancillary Agreements or the New Leases by Sellers or the Seller Stockholder,
as applicable, nor the consummation of the transactions contemplated hereby or
thereby will (i) violate or conflict with any provision of the Articles of
Incorporation or Bylaws of Sellers, (ii) breach, or cause a default under, any
term or provision of any material contract listed on a schedule to such opinion
to which contract Sellers or the Seller Stockholder are a party or by which the
Assets are bound, or (iii) violate any judgment, decree, injunction, writ or
order applicable to Sellers or the Seller Stockholder;
8.6.6 No Permits Required. No Permit of, or filing with, any
-------------------
governmental authority or, to the best knowledge of such counsel, any other
person, is required for the execution and delivery of this Agreement, the
Ancillary Agreements or the New Leases by Sellers or the Seller Stockholder, as
applicable, or the consummation by Sellers or the Seller Stockholder of the
transactions contemplated hereby or thereby, except as set forth in this
Agreement or the schedules or exhibits hereto;
8.6.7 No Actions Pending. Except as set forth in this Agreement or the
------------------
schedules hereto, to the best knowledge of such counsel, no Action is pending or
threatened (i) against Sellers or the Assets or the Business, (ii) against any
of the officers or directors of Sellers as such, (iii) in which Sellers are a
plaintiff, or (iv) which questions the validity or legality of the transactions
contemplated hereby;
8.6.8 No Violation of Law. Neither the execution and delivery of this
-------------------
Agreement, the Ancillary Agreements or the New Leases by Sellers or the Seller
Stockholder, as applicable, nor the consummation of the transactions
contemplated hereby or thereby will violate or result in a failure to comply
with any statute, law, ordinance, regulation, rule or order of any federal,
state or local government or any other governmental department or agency, or any
judgment, decree or order of any court, applicable to
29
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Sellers, the Seller Stockholder or the Business; and, to the best knowledge of
such counsel, Sellers have all licenses, franchises and other authority required
to conduct the Business as it is now being conducted;
8.6.9 Transfer and Assignment. The documents to be delivered by
-----------------------
Sellers at the Closing to effect the transfer and assignment to Buyer of all
right, title and interest in and to the Assets are effective to do so, subject
to (i) the effects of bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to creditors' rights generally and equitable
principles (whether considered in an action at law or in equity), (ii)
limitations imposed by federal or state law or equitable principles upon the
availability of specific performance, injunctive relief or other equitable
remedies, or (iii) other customary limitations reasonably satisfactory to
Buyer's counsel;
8.6.10 Other Opinions. Such other opinions as any lender to Buyer may
--------------
reasonably request.
In rendering such opinions, such counsel may rely as to factual matters
upon certificates and assurances of public officials and officers of Sellers.
In addition, such opinions may be subject to such additional qualifications and
exceptions as are reasonably acceptable to counsel to Buyer.
8.7 Certificates. Sellers shall furnish Buyer with such certificates of its
------------
officers and others to evidence compliance with the conditions set forth in this
Article VIII as may be reasonably requested by Buyer.
8.8 New Leases. EL, Central, lessor, as applicable and Buyer, as lessee,
----------
will have entered into, prior to the Closing Date, the New Leases with respect
to the Facilities in the final form mutually satisfactory to Buyer and Sellers.
8.9 Employment and Noncompetition Agreements. Buyer and John Cooney will
----------------------------------------
have entered into, prior to the Closing Date, an Employment and Noncompetition
Agreement in the final form mutually satisfactory to Buyer and Sellers.
8.10 Conveyancing Documents; Release of Encumbrances. Sellers will have
-----------------------------------------------
executed and delivered prior to the Closing Date each of documents described in
Section 3.2 hereof so as to effect the transfer and assignment to Buyer of all
right, title and interest in and to the Assets and Sellers shall have filed
(where necessary) and delivered to Buyer all documents necessary to release the
Assets from all Encumbrances (except for Encumbrances specifically accepted by
Buyer under Section 4.4), which documents shall be in a form reasonably
satisfactory to Buyer's counsel.
8.11 Material Changes. Since the Interim Balance Sheet Date, there shall not
----------------
have been any Material Adverse Change with respect to the Business or the
Assets.
8.12 Corporate Documents. Buyer will have received from Sellers, prior to
-------------------
the Closing Date, resolutions adopted by their respective boards of directors
and shareholders approving this Agreement, the Ancillary Agreements and the New
Leases to which they will be a party, and the transactions contemplated hereby
and thereby. Buyer's board of directors shall have approved this Agreement and
the transactions and agreements contemplated hereby.
30
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8.13 Due Diligence Review. Buyer and its Representatives shall have
--------------------
conducted a due diligence review of Sellers' Books and Records, Financial
Statements, and other records and accounts of the Business, and in the sole
discretion of Buyer, Buyer shall be satisfied on the basis of such review that
there has been no breach of the representations and warranties or the
pre-closing covenants of Sellers made pursuant to this Agreement. Such review
shall have no effect whatsoever on the liability of Sellers to Buyer under this
Agreement or otherwise for breach of any representations, warranties, or
covenants of Seller or hereunder.
8.14 Permits. Buyer shall have obtained or been granted the right to use all
-------
Permits necessary to its operation of the Business.
8.15 Completion of Environmental Remediation. Sellers or their agents shall
---------------------------------------
have completed any "required remediation" or shall have approved any plan of
remediation within the meaning of Section 6.8, subject to the procedures set
forth in Section 6.8 with respect to the certification of such completion and
the resolution of any disputes relating thereto.
8.16 Financing. Buyer shall have obtained by May 30, 1997 all lender
---------
approvals and financing to pay the cash portion of the purchase price.
ARTICLE IX
RISK OF LOSS; CONSENTS TO ASSIGNMENT
------------------------------------
9.1 Risk of Loss. From the date hereof through the Closing, all risk of loss
------------
or damage to the property included in the Assets shall be borne by Sellers, and
thereafter shall be borne by Buyer. If any portion of the Assets is destroyed
or damaged by fire or any other cause on or prior to the Closing, other than
use, wear or loss in the ordinary course of the Business, Sellers shall give
written notice to Buyer as soon as practicable after discovery of such damage or
destruction, the amount of insurance, if any, covering such Assets and the
amount, if any, which Sellers are otherwise entitled to receive as a
consequence. Prior to the Closing, Buyer shall have the option, which shall be
exercised by written notice to Sellers within ten (10) calendar days after
receipt of Sellers' notice or if there is not ten (10) calendar days prior to
the Closing, as soon as practicable prior to the Closing, of (a) accepting such
Assets in their destroyed or damaged condition in which event Buyer shall be
entitled to the proceeds of any insurance or other proceeds payable with respect
to such loss and to such indemnification for any uninsured portion of such loss
pursuant to Section 10.3, and the full Purchase Price shall be paid for such
Assets, (b) excluding such Assets from this Agreement, in which event the
Purchase Price shall be reduced by the amount allocated to such Assets, as
mutually agreed between the parties or (c) terminating this Agreement in
accordance with Section 11.1. If Buyer accepts such Assets, then after the
Closing, any insurance or other proceeds shall belong, and shall be assigned to,
Buyer without any reduction in the Purchase Price; otherwise, such insurance
proceeds shall belong to Sellers.
9.2 Consents to Assignment. Anything in this Agreement to the contrary
----------------------
notwithstanding, this Agreement shall not constitute an agreement to assign any
Contract, lease, license, sales order, purchase order or any claim or right or
any benefit arising thereunder or resulting therefrom if an attempted assignment
thereof, without the consent of a third party thereto, would constitute a breach
thereof or in any way adversely affect the rights of Buyer thereunder. If such
consent is not obtained, or if an attempted assignment thereof would be
ineffective or would affect the rights thereunder so that Buyer would not
31
<PAGE>
receive all such rights, Sellers will cooperate with Buyer, in all reasonable
respects, to provide to Buyer the benefits under any such Contract, lease,
license, sales order, purchase order, claim or right including without
limitation enforcement for the benefit of Buyer of any and all rights of Seller
against a third party thereto arising out of the breach or cancellation by such
third party or otherwise.
ARTICLE X
ACTIONS BY SELLERS AND BUYER
----------------------------
AFTER THE CLOSING
-----------------
10.1 Books and Records; Payment of Liabilities.
-----------------------------------------
10.1.1 Books and Records. Each party agrees that it will cooperate
-----------------
with and make available to the other party, during normal business hours, all
Books and Records, information and employees (without substantial disruption of
employment) retained and remaining in existence after the Closing which are
necessary or useful in connection with any tax inquiry, audit, investigation or
dispute, any litigation or investigation or any other matter requiring any such
Books and Records, information or employees for any reasonable business purpose.
10.1.2 Cooperation and Records Retention. Sellers and Buyer shall
---------------------------------
(I) each provide the other with such assistance as may reasonably be requested
by any of them in connection with the preparation of any return, audit, or other
examination by any taxing authority or judicial or administrative proceedings
relating to liability for Taxes, (ii) each retain and provide the other with any
records or other information that may be relevant to such return, audit or
examination, proceeding or determination, and (iii) each provide the other with
any final determination of any such audit or examination, proceeding, or
determination that affects any amount required to be shown on any tax return of
the other for any period. Without limiting the generality of the foregoing,
Buyer and Sellers shall each retain, until the applicable statutes of
limitations (including any extensions) have expired, copies of all tax returns,
supporting work schedules, and other records or information that may be relevant
to such returns for all tax periods or portions thereof ending on or before the
Closing Date and shall not destroy or otherwise dispose of any such records
without first providing the other party with a reasonable opportunity to review
and copy the same.
10.1.3 Payment of Liabilities. Following the Closing Date, Sellers
----------------------
shall pay promptly when due all of the debts and liabilities of Sellers relating
to the Business, other than Assumed Liabilities, including without limitation
any accounts payable not assumed by Buyer and any liability of Sellers for
Taxes; provided, however, this covenant shall not apply to that portion (or all)
of any debt that Sellers are disputing in good faith and gives prompt notice to
Buyer of such dispute.
10.2 Survival of Representations, Etc. All statements contained in any
---------------------------------
certificate, schedule, exhibit, instrument or conveyance delivered by or on
behalf of the parties pursuant to this Agreement or in connection with the
transactions contemplated hereby shall be deemed to be representations and
warranties by the parties hereunder. The representations, warranties, covenants
and agreements of Sellers and Buyer contained herein shall survive the
consummation of the transactions contemplated hereby and the Closing Date,
without regard to any investigation made by any of the parties hereto. Except as
provided in this sentence, all such representations and warranties and all
claims and causes of action with respect thereto
32
<PAGE>
(other than the provisions of Sections 4.17, 4.21 and this Section 10.2, and all
claims and causes of action with respect thereto) shall terminate upon
expiration of two years after the Closing Date. The representations and
warranties in Sections 4.17 shall survive until the expiration of the applicable
statute of limitations (with extensions) with respect to the matters addressed
in such section. The representations and warranties in Section 4.21 shall
survive upon expiration of four years after the Closing Date. The termination of
the representations and warranties provided herein shall not affect the rights
of a party in respect of any Claim made by such party in a writing received by
the other party prior to the expiration of the applicable survival period
provided herein.
10.3 Indemnifications.
----------------
10.3.1 By Sellers. Regardless of Sellers' or Seller Stockholders'
----------
knowledge of the existence of an Indemnifiable Event, as defined below, Sellers
and Seller Stockholder shall indemnify, defend, save and hold harmless Buyer,
its Affiliates and subsidiaries, and its respective Representatives, from and
against any and all claims, damages, costs, losses (including without limitation
diminution in value), Taxes, liabilities, judgments, penalties, fines,
obligations, lawsuits, deficiencies, demands and expenses (whether or not
arising out of third-party claims), including without limitation interest,
penalties, costs of mitigation, losses in connection with any Environmental Law
(including without limitation any clean-up or remedial action), lost profits and
other losses resulting from any shutdown or curtailment of operations, damages
to the environment, attorneys' fees, experts' fees and all amounts paid in
investigation, defense or settlement of any of the foregoing (herein,
"Damages"), incurred in connection with, arising out of, resulting from or
incident to (i) any breach of any representation or warranty, or the inaccuracy
of any representation or warranty, made by Sellers or Seller Stockholder in or
pursuant to this Agreement; (ii) any breach of any covenant or agreement made by
Sellers or Seller Stockholder in or pursuant to this Agreement; (iii) any
Excluded Liability; (iv) any liability imposed upon Buyer by reason of Buyer's
status as transferee of the Business or the Assets; (v) any liability arising
under any Environmental Law on account of the conduct of Sellers or prior owners
or users of the Facilities or other persons, or on account of the operation of
the Business or the Facilities, or related to any Environmental Condition
existing, in each case on or at any time prior to the Closing Date; or (vi) any
Post-Closing Environmental Liability (collectively, the "Indemnifiable Events").
Without limiting the generality of the foregoing, the indemnification provided
herein, insofar as it relates to any Environmental Law or Environmental
Condition, shall specifically cover costs incurred in connection with any
investigation of site conditions (excepting the cost of the Environmental
Assessments) or any clean-up, remedial, removal or restoration work required by
any federal, state or local governmental agency or political subdivision or by
the provisions of Section 6.8 hereof. For purposes of this Section 10.3.1,
"Post-Closing Environmental Liability" shall mean any liability imposed on Buyer
arising out of or related to events occurring on or after the Closing Date and
prior to the completion of all required remediation in accordance with Section
6.8 hereof, and resulting from any Environmental Condition described in the
Environmental Assessments, including without limitation those Environmental
Conditions described therein but not identified as being in violation of any
Environmental Law and those related to the absence of any Permits, but excluding
any liability to the extent such liability results from the negligent acts or
willful misconduct of Buyer or its Representatives. In addition to Sellers'
obligations pursuant to Sections 6.8.3 and 6.8.4 of this Agreement, and without
limiting the generality of the foregoing, Sellers shall specifically indemnify
Buyer, and Sellers shall assume and discharge all Damages arising out of the
pre-Closing activities that are associated with: (i) any Release or threatened
Release of any Hazardous Substance that occurred or was in existence on the
Facilities on or before the Closing Date; (ii) any offsite disposal, migration
or Release of any Hazardous Substance that has resulted or will result in the
future as a result of
33
<PAGE>
activities that occurred on or before the Closing Date; and (iii) any removal,
remediation or other activities taken with respect to the soil, surface water or
groundwater. Without limiting the foregoing, Sellers shall also specifically
indemnify Buyer, and Seller shall assume and discharge all Damages arising out
of the pre-Closing operation, ownership, and use of the underground storage
tanks ("USTs") and aboveground storage tanks ("ASTs") (defined below), including
but not limited to: (i) any Release or threatened Release of any Hazardous
Substance that occurred or was in existence on the Facilities on or before the
closing date; (ii) any offsite disposal, migration or Release of any Hazardous
Substance that has resulted or will result in the future as a result of
activities that occurred on or before the closing date; and (iii) any removal,
remediation or other activities taken with respect to the soil, surface water or
groundwater.
10.3.2 By Buyer. Buyer shall indemnify and save and hold harmless
--------
Sellers, their Affiliates and Representatives from and against any and all
Damages incurred in connection with, arising out of, resulting from or incident
to (i) any breach of any representation or warranty, or the inaccuracy of any
representation or warranty, made by Buyer in or pursuant to this Agreement; (ii)
any breach of any covenant or agreement made by Buyer in or pursuant to this
Agreement; or (iii) any Assumed Liability insofar as such Assumed Liability
arises from and after the Closing.
10.3.3 Cooperation. The indemnified party shall cooperate in all
-----------
reasonable respects with the indemnifying party and such attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom; provided, however, that the indemnified party may, at its own
cost, participate in the investigation, trial and defense of such lawsuit or
action and any appeal arising therefrom. The parties shall cooperate with each
other in any notifications to insurers.
10.3.4 Defense of Claims. If a claim for Damages (a "Claim") is to be
-----------------
made by a party entitled to indemnification hereunder against the indemnifying
party, the party claiming such indemnification shall, subject to Section 10.2,
give written notice (a "Claim Notice") to the indemnifying party as soon as
practicable after the party entitled to indemnification becomes aware of any
fact, condition or event which may give rise to Damages for which
indemnification may be sought under this Section 10.3. If any lawsuit or
enforcement action is filed against any party entitled to the benefit of
indemnity hereunder, written notice thereof shall be given to the indemnifying
party as promptly as practicable (and in any event within fifteen (15) calendar
days after the service of the citation or summons). The failure of any
indemnified party to give timely notice hereunder shall not affect rights to
indemnification hereunder, except to the extent that the indemnifying party
demonstrates prejudice caused by such failure. After such notice, if the
indemnifying party shall acknowledge in writing to the indemnified party that
the indemnifying party shall be obligated under the terms of its indemnity
hereunder in connection with such lawsuit or action, then the indemnifying party
shall be entitled, if it so elects, (i) to take control of the defense and
investigation of such lawsuit or action, (ii) to employ and engage attorneys of
its own choice (which shall be reasonably acceptable to the indemnified party)
to handle and defend the same, at the indemnifying party's cost, risk and
expense unless the named parties to such action or proceeding include both the
indemnifying party and the indemnified party and the indemnified party has been
advised in writing by counsel that there may be one or more legal defenses
available to such indemnified party that are different from or additional to
those available to the indemnifying party, in which case the indemnifying party
shall engage separate counsel (reasonably acceptable to the indemnified party)
to represent the indemnified party, and (iii) to compromise or settle such
claim, which compromise or settlement shall be made only with the written
consent of the indemnified party, such consent not to be unreasonably withheld;
provided, however, if the remediation or resolution of any such Claim will occur
on or at any Facility or is reasonably expected to have a Material Adverse
Effect on
34
<PAGE>
the indemnified party's business operations, then, notwithstanding the
foregoing, the indemnified party shall be entitled to control such remediation
or resolution, including without limitation to take control of the defense and
investigation of such lawsuit or action, to employ and engage attorneys of its
own choice to handle and defend the same, at the indemnifying party's cost, risk
and expense, and to compromise or settle such Claim. If the indemnifying party
fails to assume the defense of such claim within fifteen (15) calendar days
after receipt of the Claim Notice, the indemnified party against which such
claim has been asserted will (upon delivering notice to such effect to the
indemnifying party) have the right to undertake, at the indemnifying party's
cost and expense, the defense, compromise or settlement of such claim on behalf
of and for the account and risk of the indemnifying party. In the event the
indemnified party assumes the defense of the claim, the indemnified party will
keep the indemnifying party reasonably informed of the progress of any such
defense, compromise or settlement. The indemnifying party shall be liable for
any settlement of any action effected pursuant to and in accordance with this
Section 10.3 and for any final judgment (subject to any right of appeal), and
the indemnifying party agrees to indemnify and hold harmless an indemnified
party from and against any Damages by reason of such settlement or judgment.
10.3.5 Buyer's Right of Offset. Anything in this Agreement to the
-----------------------
contrary notwithstanding, Buyer may withhold and set off any amount as to which
Sellers are obligated to indemnify Buyer pursuant to this Section 10.3 against
(i) the portion of the Holdback Amount allocable to the resolution of Sellers'
indemnification obligations under this Section 10.3 and (ii) any other amounts
otherwise due Sellers or Seller Stockholder.
10.3.6 Limitations. Neither Buyer nor Sellers shall be liable to the
-----------
other under this Section 10.3 for any Damages until the amount otherwise due the
party being indemnified exceeds $75,000 in the aggregate, in which case such
indemnifying party will be liable to the indemnified party for all amounts above
the first $25,000 of Damages. Notwithstanding the preceding sentence, this
limitation shall not apply with respect to Damages arising out of a breach of a
representation or warranty contained in Sections 4.17 or 4.21 or the covenants
contained in Section 10.1.3. In addition, neither Buyer nor Seller shall be
liable to the other under this Section 10.3 for any Damages for an aggregate
amount in excess of $3,100,000.
10.3.7 Liability and Remedies, etc. Except as set forth below, no
----------------------------
individual Representative of any party shall be personally liable for any
Damages under the provisions contained in this Section 10.3. Nothing herein
shall relieve either party of any liability to make any payment expressly
required to be made by such party pursuant to this Agreement. The term
"Damages" as used in this Section 10.3 is not limited to matters asserted by
third parties against Seller or Buyer, but includes Damages incurred or
sustained by Sellers or Buyer in the absence of third party claims. Payments by
Buyer of amounts for which Buyer is indemnified hereunder, and payments by
Sellers of amounts for which Seller is indemnified, shall not be a condition
precedent to recovery. Sellers' obligation to indemnify Buyer, and Buyer's
obligation to indemnify Sellers, shall not limit any other rights, including
without limitation rights of contribution which either party may have under
statute or common law. Buyer and Sellers agree and acknowledge that offset
against the Holdback Amount shall not be Buyer's exclusive method of receiving
indemnification from Sellers pursuant to Section 10.3; rather, Buyer will have
all other remedies provided by law or in this Agreement. The Seller Stockholder
shall be liable with Sellers with respect to all indemnification obligations of
Sellers under this Section 10.3.
10.4 Payment of Holdback Amount. On the first anniversary of the Closing
--------------------------
Date, if Buyer has not delivered a Claim Notice to Seller, the remaining portion
of the Holdback Amount allocable to the resolution
35
<PAGE>
of Seller's indemnification obligations under Section 10.3 shall be paid
promptly to Sellers. Subject to Section 2.4.3, if Buyer has delivered one or
more Claim Notices to Sellers on or before the first anniversary of the Closing
Date and has exercised its right of offset pursuant to Section 10.3.5, or has
not then determined the appropriate amount to be offset, Buyer shall pay to
Sellers promptly after the first anniversary of the Closing Date an amount equal
to remaining allocable portion of the Holdback Amount less any amounts offset
against it pursuant to Section 10.3.5 and an amount reasonably estimated by
Buyer to cover any unresolved claims. As promptly as practicable after the first
anniversary of the Closing Date, Buyer shall determine the amount to be retained
by it in satisfaction of any such unresolved claims and submit the balance, if
any, to Seller.
10.5 Taxes. Subject to Section 2.7, Sellers shall pay, or cause to be paid,
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when due all Taxes for which Sellers are or may be liable or that are or may
become payable with respect to all taxable periods ending on or prior to the
Closing Date.
10.6 Tax Clearance Certificate. Within five business days after the Closing
-------------------------
Date, Sellers shall provide to Buyer with a clearance certificate or similar
document(s) that may be required by any state taxing authority in order to
relieve Buyer of any obligation to withhold any portion of the Purchase Price.
10.7 Further Action. After the Closing, Sellers shall take all actions
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reasonably necessary to effect the conveyance of the Assets to Buyer free and
clear of all Encumbrances (except for Encumbrances specifically accepted by
Buyer under Sections 2.2 and 4.4) and otherwise required by Buyer's lenders.
ARTICLE XI
MISCELLANEOUS
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11. Termination.
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11.1.1 Termination. This Agreement may be terminated at any time prior
-----------
to Closing:
11.1.1.1 By mutual written consent of Buyer and Sellers;
11.1.1.2 By Buyer or Sellers if the Closing shall not have
occurred on or before May 30, 1997; provided, however, that this provision shall
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not be available to Buyer if Sellers have the right to terminate this Agreement
under Section 11.1.1.4, and this provision shall not be available to Seller if
Buyer has the right to terminate this Agreement under Section 11.1.1.3;
11.1.1.3 By Buyer if there is a material breach of any
representation or warranty set forth in Article IV hereof or any covenant or
agreement to be complied with or performed by Sellers pursuant to the terms of
this Agreement or the failure of a condition set forth in Article VIII to be
satisfied (and such condition is not waived in writing by Buyer) on or prior to
the Closing Date, or the occurrence of any event which results or would result
in the failure of a condition set forth in Article VIII to be satisfied on or
prior to the Closing Date, provided that Buyer may not terminate this Agreement
prior to the Closing if Sellers have not had an adequate opportunity to cure
such failure; or
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11.1.1.4 By Sellers if there is a material breach of any
representation or warranty set forth in Article V hereof or of any covenant or
agreement to be complied with or performed by Buyer pursuant to the terms of
this Agreement or the failure of a condition set forth in Article VII to be
satisfied (and such condition is not waived in writing by Sellers) on or prior
to the Closing Date, or the occurrence of any event which results or would
result in the failure of a condition set forth in Article VII to be satisfied on
or prior to the Closing Date; provided that Seller may not terminate this
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Agreement prior to the Closing Date if Buyer has not had an adequate opportunity
to cure such failure.
11.1.2 In the Event of Termination. In the event of termination of this
---------------------------
Agreement:
11.1.2.1 Each party will redeliver all documents, work papers and
other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same; and
11.1.2.2 No party hereto shall have any liability or further
obligation to any other party to this Agreement, except as stated in Sections
11.7, 11.10, 11.1.2.1 or this Section 11.1.2.2, and except for any willful
breach of this Agreement occurring prior to the proper termination of this
Agreement. The foregoing provisions shall not limit or restrict the
availability of specific performance or other injunctive relief to the extent
that specific performance or such other relief would otherwise be available to a
party hereunder.
11.2 Assignment. Neither this Agreement nor any of the rights or obligations
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hereunder may be assigned by any party without the prior written consent of the
other parties; except that Buyer may, without such consent, assign all such
rights to any lender as collateral security and assign all such rights and
obligations to a wholly-owned subsidiary (or a partnership controlled by Buyer)
or subsidiaries of Buyer or to a successor in interest to Buyer or to any entity
to whom the Business may be sold by Buyer which shall assume all obligations and
liabilities of Buyer under this Agreement. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns, and no other person shall
have any right, benefit or obligation under this Agreement as a third party
beneficiary or otherwise.
11.3 Notices. All notices, requests, demands and other communications which
-------
are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given when received if personally delivered; upon
receipt of facsimile confirmation if transmitted by telecopy, electronic or
digital transmission method; the day after it is sent, if sent for next day
delivery to a domestic address by recognized overnight delivery service (e.g.,
----
Federal Express); and upon receipt, if sent by certified or registered mail,
return receipt requested. In each case notice shall be sent to:
If to Sellers or the Seller Stockholder, addressed to:
Mr. John Cooney
4100 Raytown Rd.
P.O. Box 300350
Kansas City, Missouri 64130-0350
Fax (816) 921-3888
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with a copy to:
Vincent L. Gualtier, Esq.
Slagle, Bernard & Gorman
4600 Madison Avenue, Suite 600
Kansas City, Missouri 64112
Fax (816) 561-4498
If to Buyer, addressed to:
Walker Jones Equipment Company
Rental Service Corporation
14505 N. Hayden Road, Suite 322
Scottsdale, AZ 85260
Attention: Chief Executive Officer
Fax (602) 905-3402
with a copy to:
Richard D. Strulson, Esq.
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
Fax (213) 891-8763
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
11.4 Choice of Law. This Agreement shall be construed, interpreted and the
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rights of the parties determined in accordance with the laws of the State of
Missouri (without reference to the choice of law provisions thereof), except
with respect to matters of law concerning the internal corporate affairs of any
corporate entity which is a party to or the subject of this Agreement, and as to
those matters the law of the jurisdiction under which the respective entity
derives its powers shall govern.
11.5 Entire Agreement; Amendments and Waivers. This Agreement, together with
----------------------------------------
all exhibits and schedules hereto, constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. No
amendment, supplement, modification or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
11.6 Multiple Counterparts. This Agreement may be executed in one or more
---------------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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11.7 Expenses. Except for the filing fee associated with filings required
--------
pursuant to the HSR Act, accounting fees associated with the audit of EL to be
paid by Buyer and as otherwise specified in this Agreement, each party hereto
shall pay its own legal, accounting, out-of-pocket and other expenses incident
to this Agreement and to any action taken by such party in preparation for
carrying this Agreement into effect.
11.8 Invalidity. In the event that any one or more of the provisions
----------
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
11.9 Titles. The titles, captions or headings of the Articles, Sections and
------
subsections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
11.10 Publicity; Confidentiality. Neither Buyer nor Seller shall issue any
--------------------------
press release or make any public statement regarding, or disclose to any third
party (except as required by law or legal process, and except to each party's
lenders if such lenders so require) any of the terms of, the transactions
contemplated hereby, without prior written approval of the other party, provided
that Buyer and Sellers may, if they mutually agree, issue or make an appropriate
press release or public announcement after the Closing Date. In the event that
this Agreement is terminated prior to Closing, Buyer agrees to return to Sellers
all correspondence and documents furnished by Seller or its Representatives, and
agrees not to disclose or use for its own purposes any confidential or
proprietary information of Seller that has been furnished to it by Sellers or
their Representatives.
11.11 Cumulative Remedies. All rights and remedies of either party hereto
-------------------
are cumulative of each other and of every other right or remedy such party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
11.12 Consent of Seller Stockholder. Seller Stockholder by executing this
-----------------------------
Agreement waives the notice of the meeting and the right to receive any
materials otherwise required to be furnished at a meeting consents to the
transfer of the Assets to Buyer and the execution, delivery and consummation of
this Agreement. Seller Stockholder additionally agrees to execute and deliver
such separate certificates or instruments as may be requested by Sellers or
Buyer to give effect to the waivers and consents given herein.
11.13 Arbitration. Any controversy arising after the Closing out of or
-----------
relating to this Agreement (including, without limitation, pursuant to Section
2.4 or 10.3, but excluding for purposes of this Section 11.13, the leases, and
the employment and noncompetition agreement attached as Exhibits hereto), or
relating to the breach hereof, shall be settled by arbitration conducted in
Kansas City, Missouri 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
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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.
(Signature Page Follows)
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IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be duly executed on their respective behalf, by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
WALKER JONES EQUIPMENT COMPANY
By: /s/ Douglas A. Waugaman
-------------------------------
Name: Douglas A. Waugaman
---------------------------
Its: V.P. & Secretary
----------------------------
CENTRAL STATES EQUIPMENT, INC.
By: /s/ John Cooney
--------------------------------
Name: John Cooney
----------------------------
Its: President
-----------------------------
SELLER STOCKHOLDER:
/s/ John Cooney
- --------------------------------------------
John Cooney (Shareholder)
EQUIPMENT LESSORS, INC.
By: /s/ John Cooney
--------------------------------
Name: John Cooney
----------------------------
Its: President
-----------------------------
SELLER STOCKHOLDER:
/s/ John Cooney
- ----------------------------------------------------------
John Cooney (Shareholder)
41
