<PAGE> 1
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) October 23, 1998
--------------------------------
NATIONSRENT, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 001-14299 31-1570069
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
450 East Las Olas Boulevard, Suite 1400, Ft. Lauderdale, Florida 33301
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (954) 760-6550
------------------------------
N/A
- --------------------------------------------------------------------------------
(Former Name or Former Address; if Changed Since Last Report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 23, 1998, NationsRent, Inc., a Delaware corporation (the
"Company") acquired substantially all of the assets of Ray L. O'Neal, Inc., a
Texas corporation ("RLOI") and Arenco, L.L.C., a Texas limited liability company
("ALLC") (RLOI and ALLC collectively operating as "A-1 Rentals"), pursuant to an
Amended and Restated Asset Purchase Agreement dated as of September 9, 1998,
among the Company, RLOI, ALLC, Don R. O'Neal, Elizabeth M. O'Neal and the O'Neal
Revocable Trust dated December 29, 1987 (the "Purchase Agreement"). The
aggregate consideration paid by the Company for A-1 Rentals consisted of
approximately (i) $100.7 million in cash, (ii) $50 million in six-year six
percent unsecured convertible subordinated promissory notes and (iii) $28.1
million in four-year eight percent unsecured subordinated promissory notes.
Also, upon the satisfaction of certain post-closing earnings targets, the
Company shall pay additional consideration of $10 million in cash and $10
million in shares of the Company's Common Stock. The cash paid for A-1 Rentals
primarily came from the Company's credit facility with a syndicate of lenders
and BankBoston as agent. A-1 Rentals specializes in the rental of construction
and industrial equipment and has 13 locations serving the Dallas/Ft. Worth and
Austin markets in Texas. The Company intends to operate A-1 Rentals under its
NationsRent brand name.
In addition, upon consummation of the transaction, Mr. Don R. O'Neal
was elected to serve as President and Chief Operating Officer of the Company.
This Current Report on Form 8-K is qualified in its entirety by, and
should be read in conjunction with, the Purchase Agreement and other documents
filed as exhibits to this report and incorporated herein by reference.
2
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
The Company undertakes to file applicable historical financial
statements of A-1 Rentals within 60 days from the date this
Current Report on Form 8-K must be filed.
(b) PRO FORMA FINANCIAL INFORMATION.
The Company undertakes to file applicable pro forma financial
information relating to the acquisition of A-1 Rentals within
60 days from the date this Current Report on Form 8-K must be
filed.
(c) EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
No. Description
--- -----------
<S> <C>
10.1 Amended and Restated Purchase Agreement dated as of September
9, 1998, by and among NationsRent, Inc., Ray L. O'Neal, Inc.,
Arenco, L.L.C., Don R. O'Neal, Elizabeth M. O'Neal and the
O'Neal Revocable Trust dated December 29, 1987.
10.2 Unsecured Convertible Subordinated Promissory Note dated as of
October 23, 1998 from NationsRent, Inc. to Ray L. O'Neal, Inc.
</TABLE>
3
<PAGE> 4
SIGNATURE
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.
November 9, 1998 NATIONSRENT, INC.
By: /s/ Joseph H. Izhakoff
----------------------------------
Joseph H. Izhakoff, Vice President and
General Counsel
4
<PAGE> 1
EXHIBIT 10.1
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
This AMENDED AND RESTATED ASSET PURCHASE AGREEMENT (this
"Agreement") is entered into as of September 9, 1998 by and among NATIONSRENT,
INC., a Delaware corporation ("Nations"); RAY L. O'NEAL, INC., a Texas
corporation ("RLOI"); ARENCO, L.L.C., a Texas limited liability company
("ALLC")(RLOI and ALLC may be referred to collectively as the "Company"); and
DON R. O'NEAL, a resident of the State of Texas ("DRO"); ELIZABETH M. O'NEAL, a
resident of the State of Texas ("EMO"); RAY L. O'NEAL, Co-Trustee of the O'Neal
Revocable Trust dated December 29, 1987 and a resident of the State of Texas
("TRLO"); and ELLEN M. O'NEAL, Co-Trustee of the O'Neal Revocable Trust dated
December 29, 1987 and a resident of the State of Texas ("TEMO") (each, a
"Shareholder" and collectively, the "Shareholders"). Certain other capitalized
terms used herein are defined in ARTICLE XI and throughout this Agreement.
Nations, Company and Shareholders, may be referred to collectively as the
"parties."
RECITALS
The Company owns and operates a construction equipment rental business
in the state of Texas (the "Business"). Nations desires to purchase and the
Company desires to sell, all of the assets, properties and business of the
Company (the "Acquisition") on the terms and subject to the conditions set forth
in this Agreement. DRO, EMO, TRLO and TEMO are shareholders of RLOI. DRO and EMO
are shareholders of ALLC.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
1.1 PURCHASED ASSETS. Upon the terms and subject to the conditions of
this Agreement, at the Closing (as defined in ARTICLE III), the Company will
sell, convey, transfer, assign and deliver to Nations (or one or more of its
assignees) all of its right, title and interest in and to its assets, properties
and business of every kind and description, whether real, personal or mixed,
tangible or intangible, wherever located (except those assets of the Company
which are specifically excluded as provided in SECTION 1.2 hereof) as shall
exist on the Closing Date (as defined in ARTICLE III), whether or not appearing
on the Current Balance Sheet (as defined in SECTION 5.7) (collectively, the
"Purchased Assets"), free and clear of any Lien (as defined in SECTION 11.1)
other than as permitted herein. Without limiting the generality of the
foregoing, the Purchased Assets shall include, but not be limited to, the
following:
(a) INVENTORY OF RENTAL EQUIPMENT. All inventory of rental
equipment owned, leased or held under rental purchase options by the Company, as
more particularly described on SCHEDULE 1.1(a) attached hereto;
<PAGE> 2
(b) INVENTORY OF MERCHANDISE. All inventory of merchandise
held for sale and owned by the Company, as set forth on SCHEDULE 1.1(b) attached
hereto;
(c) OTHER TANGIBLE PERSONAL PROPERTY. All machinery,
equipment, tools, supplies, leasehold improvements, construction in progress,
furniture and fixtures, trucks, automobiles, vehicles, computer equipment,
computer software and any other fixed assets owned or leased by the Company, as
more particularly described on SCHEDULE 1.1(c) attached hereto not related to
the Excluded Assets;
(d) CUSTOMER ACCOUNTS. All of the customer accounts and
customer account contracts (the "Customer Contracts") of the Company, as
previously provided to Nations;
(e) ASSUMED CONTRACTS. All of the interest, rights and
benefits accruing to the Company under any dealer, franchise, sales or service
agreements or any other Contracts (as defined in SECTION 12.1) to which the
Company is a party and which are set forth on SCHEDULE 1.1(e) attached hereto
(the "Assumed Contracts");
(f) CASH AND CASH EQUIVALENTS. All cash and cash equivalents
and investments, whether short-term or long-term, of the Company, including
without limitation, bank accounts, certificates of deposit, treasury bills and
securities;
(g) PREPAYMENTS. All prepaid and deferred items of the
Company, including without limitation, prepaid rentals, insurance, taxes and
unbilled charges and deposits relating to the operations of the Company;
(h) RECEIVABLES. All receivables of the Company, including
without limitation all trade accounts receivables, notes receivable, receivables
arising as a result of contracts in transit and receivables from manufacturers,
insurance companies, service contract providers and any other vendors or
suppliers of the Company and not related to the Excluded Assets, as set forth on
SCHEDULE 1.1(h) hereto;
(i) EQUIPMENT LEASES. All of the interest of and the rights
and benefits accruing to the Company as lessee under leases of machinery,
vehicles, equipment, tools, furniture and fixtures and other fixed assets
("Equipment Leases"), as more particularly described on SCHEDULE 1.1(i) attached
hereto;
(j) INTANGIBLE PROPERTY. All of the proprietary rights of the
Company, including without limitation all trademarks, trade names, patents,
patent applications, licenses thereof, trade secrets, computer software,
slogans, copyrights, processes, operating rights, other licenses and
2
<PAGE> 3
permits and other similar intangible property and rights relating to the
Business, and all goodwill developed through the use of such property and rights
(collectively, "Intellectual Property"), as more particularly described on
SCHEDULE 1.1(j) attached hereto;
(k) LICENSES AND PERMITS. To the extent assignable, all
permits, licenses, certificates of authority, franchises, accreditations,
registrations and other authorizations issued or used in connection with the
Business;
(l) BOOKS, RECORDS AND OTHER ASSETS. All operating data and
records of the Company, including without limitation, customer lists and
records, financial, accounting and credit records, correspondence, budgets and
other similar documents and records, and all of the Company's telephone and
telecopier numbers, and post office boxes; and
(m) REAL PROPERTY. All of the interests, rights and benefits
accruing to the Company as lessee under the Real Property Leases (as defined in
SECTION 5.12).
1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary set forth
in SECTION 1.1, the Purchased Assets shall exclude the following assets of the
Company: (i) the Purchase Price (as defined in SECTION 2.1) and other rights of
the Company under this Agreement; (ii) the corporate minute books and stock
records of the Company; (iii) that certain real property and fixtures known as
"Store #2", whose address is 4001 Highway 377 South, Fort Worth, Texas as more
fully set forth on SCHEDULE 1.2(iii); and (iv) the assets listed on SCHEDULE
1.2 (iv) hereto, and (vi) any proceeds or receivables related to the foregoing.
1.3 ASSIGNMENT OF CONTRACTS. Notwithstanding anything in this Agreement
to the contrary, this Agreement shall not constitute an assignment of any claim,
contract, license, franchise, lease, commitment, sales order, sales contract,
supply contract, service agreement, purchase order or purchase commitment 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
Nations thereunder. If such consent is not obtained, or if any attempt at an
assignment thereof would be ineffective or would affect the rights of the
Company thereunder so that Nations would not in fact receive all such rights,
the Company shall reasonably cooperate with Nations to the extent necessary to
provide for Nations the benefits under such claim, contract, license, franchise,
lease, commitment, sales order, sales contract, supply contract, service
agreement, purchase order or purchase commitment, including subcontracting all
rights and obligations thereunder to Nations and enforcement for the benefit of
Nations 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 to
the fullest extent permitted by law or agreement.
3
<PAGE> 4
ARTICLE II
PURCHASE PRICE; ASSUMED LIABILITIES
2.1 PURCHASE PRICE.
(a) The initial consideration that will be paid by Nations to the
Company in exchange for the Purchased Assets (the "Initial Purchase Price")
shall be equal to One Hundred Ninety Million Dollars ($190,000,000.00), MINUS
(i) that number equal to all Indebtedness assumed or paid by Nations at the
Closing , PLUS (ii) Three Million One Hundred Thousand Dollars ($3,100,000.00)
representing increases in Indebtedness resulting from purchases of new equipment
made subsequent to June 30, 1998 and through the Closing Date (collectively
items (i) and (ii) are referred to herein as the "Purchase Price Adjustment.")
The Initial Purchase Price plus the Contingent Payment, as defined in SECTION
2.1(b)(iv), shall be defined as the "Purchase Price."
(b) The Purchase Price shall be payable as follows:
(i) Nations shall pay to the Company at Closing, by wire
transfer of immediately available funds, the Initial
Purchase Price, (A) MINUS Fifty Million Dollars
($50,000,000.00) (the Promissory Note as defined in
SECTION 2.1(b)(ii)), and (B) MINUS Twenty-Eight
Million One Hundred Thousand Dollars ($28,100,000.00)
(the Short Term Promissory Note as defined in SECTION
2.1(b)(iii)) (the "Cash Proceeds"); and
(ii) Nations shall deliver to the Company at Closing a
six-year subordinated, 6% promissory note of Nations,
in the principal amount equal to Fifty Million
Dollars ($50,000,000.00) in the form of EXHIBIT A-1
attached hereto (the "Promissory Note").
(iii) Nations shall deliver to the Company at Closing a
four year subordinated, 8% promissory note of
Nations, in the principal amount equal to
Twenty-Eight Million One Hundred Thousand Dollars
($28,100,000.00), in the form of EXHIBIT A-2 attached
hereto (the "Short Term Promissory Note").
(iv) The Contingent Payment (as defined below) shall be
paid by Nations on February 15, 2000 so long as
A-1/Nations' Earnings (as defined below) for the
year-ended December 31, 1999 (the "Measurement
Period") are equal to or exceed Thirty Million
Dollars ($30,000,000) (the "Threshold Figure");
PROVIDED THAT, when computing the Threshold Figure no
more than Three Million Five Hundred Thousand Dollars
($3,500,000) of net EBITDA earnings from the sale of
used equipment may be included in the Threshold
Figure during the Measurement Period. "A-1/ Nations'
Earnings" shall be
4
<PAGE> 5
defined to mean the earnings before interest, taxes,
depreciation and amortization, calculated in
accordance with GAAP ("EBITDA") of Nations in the
Market Area, EXCLUDING any EBITDA of Nations
associated with operations existing prior to
September 1, 1998 in the Market Area, and INCLUDING
EBITDA from other rental operations acquired by
Nations in the Market Area during the Measurement
Period. The computation of EBITDA shall NOT include
(i) any losses from facilities opened by Nations or
the Company in the Market Area that have been in
operation less than twenty-four (24) months prior to
December 31, 1999, (ii) corporate assessments from
Nations to the Market Area during the Measurement
Period, and (iii) overhead expenses in the Market
Area, if any, attributable to serving as a Nations
regional headquarters during the Measurement Period.
The Contingent Payment shall be defined and payable
as follows:
(a) Ten Million Dollars
($10,000,000.00) paid in cash; and
(b) An aggregate number of shares of
Nations Common Stock determined by
dividing (x) Ten Million Dollars
($10,000,000.00); by (y) the lower
of:
(i) the average closing price
of a share of Nation's
Common Stock on the NYSE
for the ten (10)
consecutive trading days
which precede February 15,
2000, as reported (absent
manifest error in the
printing thereof) by the
Wall Street Journal
(Eastern Edition); or
(ii) the average closing price
of a share of Nations
Common Stock on the NYSE
for the sixty (60)
consecutive trading days
which precede February 15,
2000, as reported (absent
manifest error in the
printing thereof) by the
Wall Street Journal
(Eastern Edition).
2.2 PURCHASE PRICE ADJUSTMENT. At least three (3) days prior to the
Closing, Nations and the Company shall estimate by mutual agreement the amount
of the Purchase Price Adjustment as of the Closing Date (which estimated amount
is referred to herein as the "Estimated Amount"). Within sixty (60) business
days after the Closing Date, Nations shall prepare and deliver to the Company a
determination (the "Determination") of the actual amount of the Purchase Price
Adjustment as of the Closing Date (which actual amount is referred to herein as
the "Actual Amount") including the basis for such Determination. If, within
thirty (30) business days after the date on which a Determination is delivered
to the Company, the Company shall not have given written notice to Nations
setting forth in detail any objection of the Company to such Determination, then
such Determination shall be final and binding on the parties hereto. In the
event the Company
5
<PAGE> 6
had given written notice of any objection to such Determination within such
30-day period, Nations and the Company shall use all reasonable efforts to
resolve the dispute within thirty (30) business days following the receipt by
Nations of the written notice from the Company. If the parties are unable to
reach an agreement within such 30-day period, the matter shall be submitted to a
mutually agreeable "big 5" accounting firm (other than Arthur Andersen) for
determination of the Actual Amount which shall be final and binding upon Nations
and the Company. Nations shall be solely responsible for the fees and expenses
charged by the mutually selected accounting firm in connection with the
resolution of any such dispute. Upon the final determination of the Actual
Amount, if the Actual Amount is (i) greater than the Estimated Amount, the
amount of the difference shall be paid by the Company to Nations within five (5)
business days from the final determination, or (ii) less than the Estimated
Amount, the amount of the difference shall be paid by Nations to the Company
within five (5) business days of the final determination.
2.3 ASSUMED LIABILITIES. As of the Closing, Nations shall assume and
agree to pay, discharge and perform when lawfully due (provided that Nations
reserves all rights to seek indemnification pursuant to ARTICLE X hereof), all
of the obligations, duties and liabilities of the Company (the "Assumed
Liabilities") with respect to the following: (a) all of the obligations, duties
and liabilities of the Company accruing from and after the Closing Date with
respect to the Customer Contracts, the Assumed Contracts and the Indebtedness,
as defined in Section 5.9 below; (b) increases in indebtedness resulting from
incremental purchases of new equipment subsequent to June 30, 1998; (c) current
liabilities of the Company as reflected on the Current Balance Sheet (excluding
all Tax accruals and the current portion of long term Indebtedness) and as
accrued since the date of the Current Balance Sheet until the Closing Date,
which have been incurred in the ordinary course of business (excluding notes
payable not constituting Indebtedness hereunder); and (d) with respect to or
arising out of any employee benefit plans or any other plans or arrangements for
the benefit of any employees of the Company only to the extent set forth on
SCHEDULE 2.3. Notwithstanding the foregoing, Nations will not assume any
Excluded Liabilities as defined below and Nations agrees to pay at Closing those
obligations listed on SCHEDULE 2.3 (the "O'Neal Family Obligations").
2.4 EXCLUDED LIABILITIES. Except for the Assumed Liabilities, the
parties expressly agree that Nations shall not assume or otherwise become liable
for any other obligations or liabilities of the Company or any of the following
liabilities: (a) any liability or obligation relating to Taxes (as defined in
SECTION 12.1) of the Company including the amount of the Tax accruals set forth
in Section 2.3(c); (b) any liability or obligation relating to any default under
any of the Assumed Liabilities to the extent such default existed prior to the
Closing; (c) any liability or obligation (which is not an assumed liability),
whether in tort, contract or for violation of any law, statute, rule or
regulation by the Company or the Shareholders or any officer, director, employee
or agent of the Company, that arises out of or results from any act, omission,
occurrence or state of facts prior to the Closing; (d) any liability or
obligation of the Company and the Shareholders with respect to the Excluded
Assets; and (e) any liability or obligation (which is not an assumed liability)
of the Company, the Shareholders or any of their Affiliates, whether by
contract, pursuant to law, or otherwise. The liabilities not assumed by Nations
hereunder, including the liabilities enumerated above, are referred to herein as
the "Excluded Liabilities".
6
<PAGE> 7
2.5 NO EXPANSION OF THIRD PARTY RIGHTS. The assumption by Nations of
the Assumed Liabilities, and the transfer thereof by the Company, shall in no
way expand the rights or remedies of any third party against Nations or the
Company as compared to the rights and remedies which such third party would have
had against the Company had Nations not assumed such liabilities. Without
limiting the generality of the preceding sentence, the assumption by Nations of
the Assumed Liabilities shall not create any third party beneficiary rights.
2.6 ALLOCATION OF PURCHASE PRICE. The parties hereto intend that the
transactions contemplated by this Agreement shall be treated for tax purposes as
a taxable purchase under the Code. The parties agree that the fair market value
of the Company's fixed assets is, and the allocation of the purchase price to
the Company's fixed assets as reflected on the Company balance sheet dated June
30, 1998 for tax purposes will be $37,440,000.00 and $4,780,000.00, for RLOI and
ALLC, respectively, increased by the cost of fixed assets acquired after June
30, 1998, and decreased by the net book value of fixed assets disposed of after
June 30, 1998, which allocation shall be set forth in SCHEDULE 2.6 to be
attached at Closing. The parties agree to allocate the Purchase Price among such
Purchased Assets in a manner consistent with the requirements set forth in the
Code, including Code Section 1060, and the Treasury regulations promulgated
thereunder. In addition, it is agreed that such allocation will be binding on
both parties for federal income tax purposes in connection with this purchase
and sale of the Purchased Assets, and will be consistently reflected by each
party on their respective federal income tax returns. The parties agree to
prepare and timely file all applicable Internal Revenue Service forms, including
Form 8594 (Asset Acquisition Statement) and other governmental forms, to
cooperate with each other in the preparation of such forms, and to furnish each
other with a copy of such forms prepared in draft, within a reasonable period
prior to the filing due date thereof. The parties agree that the Purchase Price
shall be allocated eighty-five percent (85%) and fifteen percent (15%) to RLOI
and ALLC, respectively.
ARTICLE III
CLOSING
3.1 TIME AND PLACE. Subject to and after fulfillment or waiver of the
conditions set forth in ARTICLE VIII and ARTICLE IX of this Agreement, the
Closing of the purchase and sale of the Purchased Assets (the "Closing") shall
take place on a date selected by Nations within five (5) business days after
satisfaction or waiver of the conditions, at the offices of Nations' counsel in
Ft. Lauderdale, Florida. The date on which the Closing occurs shall be referred
to herein as the "Closing Date". The parties agree to use all reasonable effort
to close the transaction contemplated by this Agreement on or about October 23,
1998. Without affecting the representations and warranties in ARTICLE V hereof,
following the Closing, for financial accounting purposes, all benefits and risks
of ownership of the Purchased Assets and the assumption of the Assumed
Liabilities shall be deemed to have passed to Nations as of 12:01 am, Eastern
Standard Time, on October 1, 1998.
7
<PAGE> 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NATIONS
As a material inducement to the Company and the Shareholders to enter
into this Agreement and to consummate the transactions contemplated hereby,
Nations makes the following representations and warranties to the Company and
the Shareholders:
4.1 CORPORATE STATUS. Nations is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Nations
and/or its wholly owned subsidiary ("Nations Texas Opco") shall be at the time
of Closing, if required by applicable law, legally qualified to transact its
business as a foreign corporation in the state of Texas. Neither Nations nor
Nations Texas Opco shall be a corporation domiciled in the State of Texas.
4.2 PROSPECTUS. The financial statements presented in the Nations'
prospectus dated August 7, 1998, compiled at the time filed in all material
respects with the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder and include a fair representation of the
financial position of Nations in accordance with GAAP.
4.3 CORPORATE POWER AND AUTHORITY. Nations has the corporate power and
authority to execute and deliver this Agreement, the Employment Agreement, the
Registration Rights Agreement, the Leases, and the Assignment and Assumption
Agreement (collectively the "Transaction Documents"), to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. Nations has taken all action necessary to authorize the execution
and delivery of the Transaction Documents, the performance of its respective
obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby.
4.4 ENFORCEABILITY. This Agreement has been and at Closing each of the
remaining Transaction Documents will be duly executed and delivered by Nations
and this Agreement constitutes, and at closing each of the remaining Transaction
Documents will constitute, the legal, valid and binding obligation of Nations,
enforceable against Nations in accordance with its terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
4.5 NO COMMISSIONS. Except with respect to any finder's or broker's or
agent's fees or commissions owed to any Nations' employee or consultant pursuant
to the terms of any contract or agreement, Nations has not incurred any
obligation for any finder's or broker's or agent's fees or commissions or
similar compensation in connection with the transactions contemplated hereby.
4.6 PAYMENT UPON COMPLETION OF PUBLIC OFFERING. Nations has not entered
into any promissory notes as the maker with an Equipment Business (as that term
is defined in SECTION 7.7(a)
8
<PAGE> 9
of this Agreement) as the payee with an obligation similar in form or substance
to that obligation contained in SECTION 1.3 of the Short Term Promissory Note.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE SHAREHOLDERS
As a material inducement to Nations to enter into this Agreement and to
consummate the transactions contemplated hereby, the Company and each of the
Shareholders, jointly and severally, make the following representations and
warranties to Nations:
5.1 CORPORATE STATUS. RLOI and ALLC are a corporation and a limited
liability company, respectively, both duly organized, validly existing and in
good standing under the laws of the State of Texas, and both have the requisite
power and authority to own or lease their respective properties and to carry on
their respective businesses as now being conducted. The Company is not legally
qualified to transact business as a foreign corporation in any jurisdiction, and
the nature of its properties and the conduct of its business does not require
such qualification. The Company has fully complied with all of the requirements
of any statute governing the use and registration of fictitious names, and has
the legal right to use the names under which it operates its business. There is
no pending or threatened proceeding for the dissolution, liquidation, insolvency
or rehabilitation of the Company.
5.2 POWER AND AUTHORITY. The Company has the power and authority to
execute and deliver each of the Transaction Documents, to perform their
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The Company has taken all action necessary to
authorize the execution and delivery of each of the Transaction Documents, the
performance of its obligations hereunder and thereunder and the consummation of
the transactions contemplated hereby and thereby. The Shareholders have the
requisite competence, power and authority to execute and deliver each of the
Transaction Documents, to perform their obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby.
5.3 ENFORCEABILITY. This Agreement has been and each of the remaining
Transaction Documents shall be at Closing duly executed and delivered by the
Company and the Shareholders, and this Agreement constitutes, and at Closing
each of the remaining Transaction Documents will constitute, the legal, valid
and binding obligation of each of them, enforceable against each of them in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and general equitable principles
regardless of whether such enforceability is considered in a proceeding at law
or in equity.
5.4 CAPITALIZATION. SCHEDULE 5.4 sets forth, with respect to the
Company, (i) the number of authorized shares of each class of its capital stock
and ownership interests, as applicable, and (ii)
9
<PAGE> 10
the number of issued and outstanding shares of each class of its capital stock
or ownership interests, as applicable. There are no outstanding or authorized
rights, options, warrants, convertible securities, subscription rights,
conversion rights, exchange rights or other agreements or commitments of any
kind that could require the Company to issue or sell any shares of its capital
stock (or securities convertible into or exchangeable for shares of its capital
stock) or ownership interests, as applicable. There are no outstanding stock
appreciation, phantom stock, profit participation or other similar rights with
respect to the Company. Other than as set forth herein, there are no proxies,
voting rights or other agreements or understandings with respect to the voting
or transfer of the capital stock or ownership interests, as applicable, of the
Company. The Company is not obligated to redeem or otherwise acquire any of its
outstanding shares of capital stock or ownership interests, as applicable. The
Shareholders are the record and beneficial owner of all of such shares or
ownership interests, as applicable, and the Shareholders own such shares and
ownership interests free and clear of all Liens, restrictions and claims of any
kind.
5.5 NO VIOLATION. Except as set forth on SCHEDULE 5.5, the execution
and delivery of the Transaction Documents by the Company and the Shareholders,
the performance by the Company and the Shareholders of their respective
obligations hereunder and thereunder and the consummation by the Company and the
Shareholders of the transactions contemplated hereunder and thereunder will not
(i) contravene any provision of the articles of incorporation or bylaws of the
Company, (ii) violate or conflict with any law, statute, ordinance, rule,
regulation, decree, writ, injunction, judgment or order of any Governmental
Authority or of any arbitration award which is either applicable to, binding
upon or enforceable against, the Company, the Shareholders or the Purchased
Assets, (iii) conflict with, result in any breach of, or constitute a default
(or an event which would, with the passage of time or the giving of notice or
both, constitute a default) under, or give rise to a right to terminate, amend,
modify, abandon or accelerate, any Contract which is applicable to, binding upon
or enforceable against, the Company, the Shareholders or the Purchased Assets,
(iv) result in or require the creation or imposition of any Lien upon or with
respect to any of the Purchased Assets, or (v) require the consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, any court or tribunal or any other Person, except as may be required
under the HSR Act and any SEC and other filings required to be made by Nations.
5.6 SUBSIDIARIES. The Company does not own, directly or indirectly, any
outstanding voting securities of or other interests in, or control, any other
corporation, partnership, joint venture or other business entity.
5.7 FINANCIAL STATEMENTS. RLOI has delivered to Nations (i) the
reviewed financial statements of RLOI for the years ending December 31, 1996 and
1997, including the notes thereto (if applicable), reviewed by Stagg & Bedunah
(the "RLOI Annual Statements'), and (ii) the unaudited interim financial
statements of RLOI for the 6 month period ended June 30, 1998, including the
notes thereto (if applicable) (collectively with the RLOI Annual Statements, the
"RLOI Financial Statements"), copies of which are attached to SCHEDULE 5.7
hereto. ALLC has delivered to Nations (i) the unaudited financial statements of
ALLC for the period ending December 31, 1996 and the year ending December 31,
1997, including the notes thereto (if applicable) prepared internally (the "ALLC
10
<PAGE> 11
Annual Statements"), and (ii) the unaudited interim financial statements of the
ALLC for the six (6) month period ended June 30, 1998, including the notes
thereto (if applicable) (collectively with the ALLC Annual Statements, the "ALLC
Financial Statements"), copies of which are attached to SCHEDULE 5.7 hereto. The
RLOI Financial Statements and the ALLC Financial Statements maybe referred to as
the Financial Statements. The balance sheets dated as of June 30, 1998 of RLOI
and ALLC included in the Financial Statements are referred to herein as the
"Current Balance Sheet." Subject to the limitations and qualifications set forth
in SCHEDULE 5.7, the Financial Statements fairly present the financial position
of the Company at each of the balance sheet dates and the results of operations
for the periods covered thereby, and have been prepared in accordance with GAAP
consistently applied throughout the periods indicated, except that such
Financial Statements may not be accompanied by notes or other textual disclosure
required by GAAP, and in the case of the interim statements for normal year end
adjustments and the absence of footnotes. The books and records of the Company
fully and fairly in all material respects reflect all transactions, properties,
assets and liabilities of the Company. Except as set forth on SCHEDULE 5.7 there
are no material extraordinary or material non-recurring items of income or
expense during the periods covered by the Financial Statements and the balance
sheets included in the Financial Statements do not reflect any writeup or
revaluation increasing the book value of any assets. The Financial Statements
reflect all adjustments necessary for a materially fair presentation of the
financial information contained therein.
5.8 CHANGES SINCE THE CURRENT BALANCE SHEET DATE. Since the date of the
Current Balance Sheet, the Company has operated in the ordinary course of
business and has not: (i) issued any capital stock or other securities; (ii)
made any distribution of or with respect to its capital stock or other
securities or purchased or redeemed any of its securities; (iii) except as set
forth on SCHEDULE 5.8(iii), paid any bonus to or increased the rate of
compensation of any of its officers or salaried employees or amended any other
terms of employment of such persons; (iv) sold, leased or transferred any of its
properties or assets other than in the ordinary course of business consistent
with past practice, except as set forth on SCHEDULE 5.8(iv); (v) made or
obligated itself to make capital expenditures in excess of $50,000 except in the
ordinary course of business consistent with past practice; (vi) made any payment
in respect of its liabilities other than in the ordinary course of business
consistent with past practice; (vii) incurred any obligations or liabilities
(including any indebtedness) other than amounts borrowed after June 30, 1998 to
fund new equipment purchases or entered into any transaction or series of
transactions involving in excess of $10,000.00 in the aggregate out of the
ordinary course of business, except for this Agreement and the transactions
contemplated hereby and as set forth on SCHEDULE 5.9; (viii) suffered any theft,
damage, destruction or casualty loss, not covered by insurance and for which a
timely claim was filed, in excess of $10,000.00 in the aggregate; (ix) suffered
any extraordinary losses (whether or not covered by insurance); (x) waived,
canceled, compromised or released any rights except in the ordinary course
having a value in excess of $10,000.00 in the aggregate; (xi) made or adopted
any change in its accounting practice or policies; (xii) made any adjustment to
its books and records other than in respect of the conduct of its business
activities in the ordinary course consistent with past practice; (xiii) entered
into any transaction with any Affiliate other than intercompany transactions in
the ordinary course of business consistent with past practice; (xiv) entered
into any employment agreement; (xv) terminated, amended or modified any
agreement involving an amount in excess of
11
<PAGE> 12
$10,000.00; (xvi) imposed any security interest or other Lien on any of its
assets other than in the ordinary course of business consistent with past
practice; (xvii) delayed paying any accounts payable which are due and payable
except to the extent being contested in good faith; (xviii) made or pledged any
charitable contribution in excess of $1,000; (xix) entered into any other
transaction or been subject to any event which has or may have a Material
Adverse Effect on the Company; or (xx) agreed to do or authorized any of the
foregoing.
5.9 LIABILITIES OF THE COMPANY; INDEBTEDNESS. The Company does not have
any liabilities or obligations, whether accrued, absolute, contingent or
otherwise, except (a) to the extent reflected or taken into account in the
Current Balance Sheet and not heretofore paid or discharged, (b) liabilities
incurred in the ordinary course of business consistent with past practice since
the date of the Current Balance Sheet (none of which relates to breach of
contract, breach of warranty, tort, infringement or violation of law, or which
arose out of any action, suit, claim, governmental investigation or arbitration
proceeding), and (c) normal accruals, reclassifications, and audit adjustments
which would be reflected on an audited financial statement and which would not
be material in the aggregate. SCHEDULE 5.9 is a true and complete list of all
Indebtedness of the Company, including the name of the lender, payoff amount,
per diem interest and any prepayment penalties or premiums.
5.10 LITIGATION. Except as set forth on SCHEDULE 5.10, there is no
action, suit, or other legal or administrative proceeding or governmental
investigation pending, threatened, anticipated or to the knowledge of the
Company or the Shareholders contemplated against, by or affecting, the Company,
the Shareholders or the Purchased Assets, or which questions the validity or
enforceability of this Agreement or the transactions contemplated hereby, and
there is no basis for any of the foregoing. There are no outstanding orders,
decrees, stipulations or agreements issued by any Governmental Authority in any
proceeding or agreed to by the Company or the Shareholders to which the Company
or the Shareholders are or were a party which have not been complied with in
full which may have a Material Adverse Effect on the Company or the Purchased
Assets.
5.11 ENVIRONMENTAL MATTERS.
(a) The Company (as defined in clause (g) below) is and has at
all times been in full compliance with all Environmental Laws (as defined in
clause (g) below) governing its business, operations, properties and assets,
including, without limitation: (i) all requirements relating to the Discharge
(as defined in clause (g) below) and Handling (as defined in clause (g) below)
of Hazardous Substances (as defined in clause (g) below); (ii) all requirements
relating to notice, record keeping and reporting; (iii) all requirements
relating to obtaining and maintaining Licenses (as defined in clause (g) below)
for the ownership of its properties and assets and the operation of its business
as presently conducted, including Licenses relating to the Handling and
Discharge of Hazardous Substances; and (iv) all applicable writs, orders,
judgements, injunctions, governmental communications, decrees, informational
requests or demands issued pursuant to, or arising under, any Environmental
Laws.
12
<PAGE> 13
(b) There are no (and there is no basis for any)
non-compliance orders, warning letters, notices of violation (collectively
"Notices"), claims, suits, actions, judgments, penalties, fines, or
administrative or judicial investigations or proceedings pending or threatened
against or involving the Company, or its business, operations, properties, or
assets, issued by any Governmental Authority or third party with respect to any
Environmental Laws or Licenses issued to the Company thereunder in connection
with, related to or arising out of the ownership by the Company of its
properties or assets or the operations of its business, which have not been
resolved to the satisfaction of the issuing Governmental Authority or third
party in a manner that would not impose any continuing obligation on Nations or
the Company.
(c) The Company has not Handled or Discharged, nor has it
allowed or arranged for any third party to Handle or Discharge, Hazardous
Substances to, at or upon: (i) any location other than a site lawfully permitted
to receive such Hazardous Substances; (ii) any real property currently or
previously owned or operated by the Company; or (iii) any site which, pursuant
to any Environmental Laws, (x) has been placed on the National Priorities List
or its state equivalent, or (y) the United States Environmental Protection
Agency or the relevant state agency or other Governmental Authority has notified
the Company that such Governmental Authority has proposed or is proposing to
place on the National Priorities List or its state equivalent. There has not
occurred, nor is there presently occurring, a Discharge, or threatened
Discharge, of any Hazardous Substance on, into or beneath the surface of, or
adjacent to, any real property currently or previously owned or operated by the
Company in an amount requiring a notice or report to be made to a Governmental
Authority or in violation of any applicable Environmental Laws.
(d) SCHEDULE 5.11(d) identifies the operations and activities,
and locations thereof, which have been conducted or are being conducted by the
Company on any real property currently or previously owned or operated by the
Company which have involved the Handling or Discharge of Hazardous Substances.
(e) Except as set forth on SCHEDULE 5.11(e), the Company does
not use, nor has it used, any Aboveground Storage Tanks (as defined in clause
(g) below) or Underground Storage Tanks (as defined in clause (g) below), and
there are not now nor have there ever been any Underground Storage Tanks beneath
any real property currently or previously owned or operated by the Company that
are required to be registered under applicable Environmental Laws.
(f) SCHEDULE 5.11(f) identifies (i) all environmental audits,
assessments or occupational health studies undertaken by the Company or its
agents or, to the knowledge of the Company, undertaken by any Governmental
Authority, or any third party, relating to or affecting the Company or any real
property currently or previously owned or operated by the Company; (ii) the
results of any ground, water, soil, air or asbestos monitoring undertaken by the
Company or its agents or, to the knowledge of the Company, undertaken by any
Governmental Authority or any third party, relating to or affecting the Company
or any real property currently or previously owned or operated by the Company
which indicate the presence of Hazardous Substances at levels requiring a notice
or report to be made to a Governmental Authority or in violation of any
applicable Environmental Laws;
13
<PAGE> 14
(iii) all material written communications between the Company, Ryder Truck
Rental, Inc. and any Governmental Authority arising under or related to
Environmental Laws; and (iv) all outstanding citations issued under OSHA, or
similar state or local statutes, laws, ordinances, codes, rules, regulations,
orders, rulings, or decrees, relating to or affecting either the Company or any
real property currently or previously owned or operated by the Company.
(g) For purposes of this Agreement, the following terms shall
have the meanings ascribed to them below:
"Aboveground Storage Tank" shall have the meaning ascribed to
such term in Section 6901 ET SEQ., as amended, of RCRA, or any
applicable state or local statute, law, ordinance, code, rule,
regulation, order ruling, or decree governing Aboveground Storage
Tanks.
"Company" means the Company and any of its subsidiaries.
"Discharge" means any manner of spilling, leaking, dumping,
discharging, releasing or emitting, as any of such terms may further be
defined in any Environmental Law, into any medium including, without
limitation, ground water, surface water, soil or air.
"Environmental Laws" means all federal, state, regional or
local statutes, laws, rules, regulations, codes, orders, plans,
injunctions, decrees, rulings, and changes or ordinances or judicial or
administrative interpretations thereof, or similar laws of foreign
jurisdictions where the Company conducts business, whether currently in
existence or hereafter enacted or promulgated, any of which govern (or
purport to govern) or relate to pollution, protection of the
environment, public health and safety, air emissions, water discharges,
hazardous or toxic substances, solid or hazardous waste or occupational
health and safety, as any of these terms are or may be defined in such
statutes, laws, rules, regulations, codes, orders, plans, injunctions,
decrees, rulings and changes or ordinances, or judicial or
administrative interpretations thereof, including, without limitation:
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund Amendment and Reauthorization
Act of 1986, 42 U.S.C. Section 9601, et seq. (collectively "CERCLA");
the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and subsequent Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. Section 6901 et seq. (collectively
"RCRA"); the Hazardous Materials Transportation Act, as amended, 49
U.S.C. Section 1801, et seq.; the Clean Water Act, as amended, 33
U.S.C. Section 1311, et seq.; the Clean Air Act, as amended (42 U.S.C.
Section 7401-7642); the Toxic Substances Control Act, as amended, 15
U.S.C. Section 2601 et seq.; the Federal Insecticide, Fungicide, and
Rodenticide Act as amended, 7 U.S.C. Section 136-136y ("FIFRA"); the
Emergency Planning and Community Right-to-Know Act of 1986 as amended,
42 U.S.C. Section 11001, et seq. (Title III of SARA) ("EPCRA"); and the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C.
Section 651, et seq. ("OSHA").
14
<PAGE> 15
"Handle" means any manner of generating, accumulating,
storing, treating, disposing of, transporting, transferring, labeling,
handling, manufacturing or using, as any of such terms may further be
defined in any Environmental Law, of any Hazardous Substances or Waste.
"Hazardous Substances" shall be construed broadly to include
any toxic or hazardous substance, material, or waste, and any other
contaminant, pollutant or constituent thereof, including without
limitation, chemicals, compounds, by-products, petroleum or petroleum
products, and polychlorinated biphenyls, the presence of which requires
investigation or remediation under any Environmental Laws or which are
or become regulated, listed or controlled by, under or pursuant to any
Environmental Laws.
"Licenses" means all licenses, certificates, permits,
approvals and registrations.
"Underground Storage Tank" shall have the meaning ascribed to
such term in Section 6901 ET SEQ., as amended, of RCRA, or any
applicable state or local statute, law, ordinance, code, rule,
regulation, order ruling, or decree governing Underground Storage
Tanks.
5.12 REAL ESTATE. The Company will not own any parcels of real property
on the Closing Date other than as set forth on SCHEDULE 1.2(iii). SCHEDULE 5.12
sets forth a list of all leases, licenses or similar agreements for the use or
occupancy of real property to which the Company is a party ("Real Property
Leases") copies of which have previously been furnished to Nations, in each
case setting forth: (a) the lessor and lessee thereof and the date and term of
each of such leases, (b) the legal description, if known, including street
address, of each property covered thereby (the "Leased Premises"), and (c) a
brief description (including size and function) of the principal improvements
and buildings thereon. The Real Property Leases are in full force and effect and
have not been amended, and no party thereto is in default or breach under any
such Lease. No event has occurred which, with the passage of time or the giving
of notice or both, would cause a breach of or default by the Company under any
of such leases and there is no breach or anticipated breach by any other party
to such leases. With respect to each of the Leased Premises: (i) the Company has
valid leasehold interests or other rights of use and occupancy in the Leased
Premises, free and clear of any Liens on such leasehold interests or other
rights of use and occupancy, or any covenants, easements or title defects known
to or created by the Company, except as do not affect the occupancy or uses of
such properties; (ii) the portions of the buildings located on the Leased
Premises that are used in the business of the Company are within the property
setback and building lines of the respective property, are in good repair and
condition, normal wear and tear excepted, and are in the aggregate sufficient to
satisfy the Company's respective normal business activities as conducted
thereat; (iii) each of the Leased Premises (a) has direct access to public roads
or access to public roads by means of a perpetual access easement, such access
being sufficient to satisfy the current and reasonably anticipated normal
transportation requirements of the Company' respective business as presently
conducted at such parcel; and (b) is served by all utilities in such quantity
and quality as are sufficient to satisfy the current normal business activities
as conducted at such parcel; and (iv) the Company has not received notice of (a)
any condemnation proceeding with respect to any portion of the Leased Premises
or any access thereto and no such proceeding is contemplated by any Governmental
15
<PAGE> 16
Authority; or (b) any special assessment which may affect any of the Leased
Premises and no such special assessment is contemplated by any Governmental
Authority.
5.13 GOOD TITLE, ADEQUACY AND CONDITION OF ASSETS. The Company has, and
at the Closing will have, good and marketable title to the Purchased Assets with
full power to sell, transfer and assign the same, free and clear of any Liens
other than the Indebtedness. The Purchased Assets constitute, in the aggregate,
all of the assets and properties necessary for the conduct of the Business in
the manner in which and to the extent to which such Business is currently being
conducted. The Purchased Assets are in good operating condition and repair (in
accordance with normal industry practices), normal wear and tear excepted, and
have been maintained in accordance with all applicable material specifications
and warranties, normal industry practice and normal wear and tear excepted. All
inventory of rental equipment set forth on SCHEDULE 1.1(a) hereto shall consist
of a quality and quantity usable, rentable, or saleable in the ordinary course
of business of the Company, except for obsolete items and items of
below-standard quality, all of which have been written off, written down or
adequately reserved against as set forth on SCHEDULE 5.7 hereto to their net
realizable value in the Current Balance Sheet. All inventory of merchandise
shall consist of a quality and quantity usable, rentable, or saleable in the
ordinary course of business of the Company, except for obsolete items and items
of below-standard quality, provided such items shall not exceed One Hundred
Thousand Dollars ($100,000.00) as of the Closing Date, notwithstanding any
reserve against merchandise inventory as set forth on SCHEDULE 5.7. All such
inventory not written off has been recorded at the lower of cost or net
realizable value, and depreciated consistent with the economic life of such
inventory. The quantities of each item of such inventory are reasonable in the
present circumstances of the Company.
5.14 COMPLIANCE WITH LAWS. The Company is and has been in compliance
with all laws, regulations and orders applicable to it, its business and
operations (as conducted by it now and in the past), the Purchased Assets, the
Leased Premises and any other properties and assets (in each case owned or used
by it now or in the past). The Company has not been cited, fined or otherwise
notified of any asserted past or present failure to comply with any laws,
regulations or orders and no proceeding with respect to any such violation is
pending or threatened. Neither the Company, nor any of its employees or agents,
has made any payment of funds in connection with the business of the Company
which is prohibited by law, and no funds have been set aside to be used in
connection with the business of the Company for any payment prohibited by law.
The Company is not subject to any Contract, decree or injunction in which the
Company is a party which restricts the continued operation of the Business or
the expansion thereof to other geographical areas, customers and suppliers or
lines of business.
5.15 LABOR AND EMPLOYMENT MATTERS. SCHEDULE 5.15 sets forth the name,
address, social security number and current rate of compensation of each
employee of the Company. The Company is not a party to or bound by any
collective bargaining agreement or any other agreement with a labor union, and
there has been no effort by any labor union during the twenty-four (24) months
prior to the date hereof to organize any employees of the Company into one or
more collective bargaining units. There is no pending or threatened labor
dispute, strike or work stoppage which affects or which may affect the Business
or which may interfere with its continued operations. Neither the
16
<PAGE> 17
Company nor any agent, representative or employee thereof has within the last
twenty-four (24) months committed any unfair labor practice as defined in the
National Labor Relations Act, as amended, and there is no pending or threatened
charge or complaint against the Company by or with the National Labor Relations
Board or any representative thereof. Neither the Company nor any Shareholders
are aware of any key employee or group of employees that has any plans to
terminate his or their employment with the Company. There has been no strike,
walkout or work stoppage involving any of the employees of the Company during
the twenty-four (24) months prior to the date hereof. Except as set forth on
SCHEDULE 5.15, the Company is not a party or subject to any employment
agreements, noncompete agreements or consulting agreements. The Company has
complied with applicable laws, rules and regulations relating to employment,
civil rights and equal employment opportunities, including but not limited to,
the Civil Rights Act of 1964, the Fair Labor Standards Act, the Americans with
Disabilities Act, as amended and the Immigration Reform and Control Act of 1986,
as amended.
5.16 EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 5.16 sets forth a list of each Employee Benefit
Plan (as defined below) of the Company. With respect to each Employee Benefit
Plan of the Company: (i) each has been administered in compliance with its terms
and with all applicable laws including, without limitation, ERISA and the Code;
(ii) no actions, suits, claims or disputes are pending or threatened; (iii) no
audits, proceedings, claims or demands are pending with any Governmental
Authority; (iv) all reports, returns and similar documents required to be filed
with any Governmental Authority or distributed to any plan participant have been
duly or timely filed or distributed; (v) no "prohibited transaction" has
occurred within the meaning of ERISA or the Code; (vi) no such plan provides
medical or dental benefits for any current or former employees of the Company or
its predecessors after termination of employment other than rights that may be
provided by law; (vii) no such plan obligates the Company to pay separation,
severance, termination or similar benefits as a result of any transaction
contemplated by this Agreement or solely as a result of a "change of control"
(as defined in Section 280G of the Code); (viii) except as set forth on SCHEDULE
5.16(viii), all required or discretionary (in accordance with historical
practices) payments, premiums, contributions, reimbursements or accruals for all
periods ending prior to or as of the Closing shall have been made or properly
accrued on the Current Balance Sheet or will be properly accrued on the books
and records of the Company as of the Closing; (ix) no such plan has any unfunded
liabilities which are not reflected on the Current Balance Sheet or the books
and records of the Company; (x) the Company has complied with the notice and
continuation of coverage requirements of Section 4980B of the Code and the
regulations thereunder with respect to any group health plan within the meaning
of Code Section 5000(b)(1); and (xi) the Company does not participate in, or
have ever participated in, or have any withdrawal liability under ERISA with
respect to, a "multiemployer plan" (as defined in Section 3(37) of ERISA). True
and accurate copies of each Employee Benefit Plan of the Company, together with
the most recent annual reports on Form 5500, all IRS favorable determination
letters and summary plan descriptions for such plans have been furnished to
Nations.
17
<PAGE> 18
(b) With respect to each Employee Benefit Plan of the Company
intended to qualify under Code Section 401(a) or 403(a), (i) the Internal
Revenue Service has issued a favorable determination letter, which has not been
revoked, that any such plan is tax-qualified and exempt from federal income tax;
(ii) no reportable event (within the meaning of Section 4043 of ERISA) has
occurred; and (iii) the present value of all liabilities under any such plan
will not exceed the current fair market value of the assets of such plan
(determined using the actuarial assumption used for the most recent actuarial
valuation for such plan).
(c) Nations will not suffer any loss, cost or liability as a
result of any claim that the Company, or any entity that would be aggregated
with the Company under Code Section 414(b), (c), (m) or (0), has not complied
with the provisions of paragraphs (a) and (b) above with respect to each
Employee Benefit Plan maintained by any such entity.
(d) For purposes hereof, "Employee Benefit Plan" means any:
(i) employee pension benefit plan as defined in Section 3(2) of ERISA; (ii)
multiemployer plan as defined in Section 3(37) of ERISA; (iii) employee welfare
benefit plan as defined in Section 3(1) of ERISA; and (iv) any stock option,
bonus, stock purchase, or insurance plan and any severance or termination pay
plan or policy in which employees, spouses or dependents participate.
5.17 TAX MATTERS. Except as set forth on SCHEDULE 5.17, all Tax Returns
required to be filed prior to the date hereof with respect to the Company or its
respective income, properties, franchises or operations have been timely filed,
each such Tax Return has been prepared in compliance with all applicable laws
and regulations, and all such Tax Returns are true and accurate in all respects.
All Taxes due and payable by or with respect to the Company and the Business
have been paid or are accrued on the Current Balance Sheet. The Company has
withheld and paid all Taxes to the appropriate Governmental Authority required
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party.
With respect to each taxable period of the Company: (i) no deficiency or
proposed adjustment which has not been settled or otherwise resolved for any
amount of Taxes has been asserted or assessed by any taxing authority against
the Company; (ii) the Company has not consented to extend the time in which any
Taxes may be assessed or collected by any taxing authority; (iii) except as set
forth on SCHEDULE 5.17, the Company has not requested or been granted an
extension of the time for filing any Tax Return to a date later than the
Closing; (iv) there is no action, suit, taxing authority proceeding, or audit or
claim for refund now in progress, pending or threatened against or with respect
to the Company regarding Taxes; and (v) there are no Liens for Taxes (other than
for current Taxes not yet due and payable) upon the Assets of the Company. No
sales or use tax (other than sales tax on motor vehicles), non-recurring
intangible tax, documentary stamp tax or other excise tax (or comparable tax
imposed by any governmental entity) will be payable by the Company or Nations by
virtue of the transactions contemplated in this Agreement.
5.18 INSURANCE. The Company is covered by valid, outstanding and
enforceable policies of insurance covering its respective properties, assets and
businesses against risks of the nature normally insured against by corporations
in the same or similar lines of business and in coverage
18
<PAGE> 19
amounts typically and reasonably carried by such corporations (the "Insurance
Policies"). Such Insurance Policies are in full force and effect, and all
premiums due thereon have been paid. As of the Closing, each of the Insurance
Policies will be in full force and effect. None of the Insurance Policies will
lapse or terminate as a result of the transactions contemplated by this
Agreement. The Company has complied with the provisions of such Insurance
Policies. SCHEDULE 5.18 contains a complete and correct list of all Insurance
Policies and all amendments and riders thereto (copies of which have been
provided to Nations), and identifies the insurer, type of coverage and policy
period for each policy. During the three year period prior to the Closing Date,
the Company has not made any claims under any of the Insurance Policies, and has
suffered no losses that would give rise to any such claims, for an amount in
excess of $10,000 except as set forth on SCHEDULE 5.18. The Company has not
failed to give, in a timely manner, any notice required under any of the
Insurance Policies to preserve its rights thereunder.
5.19 RECEIVABLES. All receivables of the Company being transferred to
Nations hereunder are valid and legally binding, represent bona fide
transactions and arose in the ordinary course of business of the Company. All of
the Receivables are good and collectible receivables, and ninety-five percent
(95%) of the Receivables as of the Closing Date (notwithstanding any reserve for
uncollectible receivables provided on SCHEDULE 5.7) will be collected in full in
accordance with the terms of such receivables (and in any event within nine (9)
months following the Closing), without setoff or counterclaims, as set forth on
the Current Balance Sheet as reasonably adjusted since the date of the Current
Balance Sheet in the ordinary course of business consistent with past practice.
5.20 LICENSES AND PERMITS. The Company possesses all licenses and
required governmental or official approvals, permits or authorizations
(collectively, the "Permits") for its business and operations, including with
respect to the operation of each of the Leased Premises, and SCHEDULE 5.20
contains a true and complete list of all such Permits. All such Permits are
valid and in full force and effect, the Company is in full compliance with the
respective requirements thereof, and no proceeding is pending or threatened to
revoke or amend any of them. None of such Permits is or will be impaired or in
any way affected by the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
5.21 RELATIONSHIPS WITH CUSTOMERS AND SUPPLIERS; AFFILIATED
TRANSACTIONS. Except as set forth on SCHEDULE 5.21, the Company does not have
any direct or indirect interest in any customer, supplier or competitor of the
Company, or in any person from whom or to whom the Company leases real or
personal property. No officer, director or shareholder of the Company, nor any
person related by blood or marriage to any such person, nor any entity in which
any such person owns any beneficial interest, is a party to any Contract or
transaction with the Company or has any interest in any property used by the
Company.
5.22 INTELLECTUAL PROPERTY. The Company has full legal right, title and
interest in and to all Intellectual Property and has not granted any rights in
or to the same or any third party. The Business as presently conducted, and the
unrestricted conduct and the unrestricted use and exploitation of the
Intellectual Property, does not infringe or misappropriate any rights held or
19
<PAGE> 20
asserted by any Person, and no Person is infringing on the Intellectual
Property. Other than payments under the Assumed Liabilities, no payments are
required for the continued use of the Intellectual Property. None of the
Intellectual Property has ever been declared invalid or unenforceable, or is the
subject of any pending or threatened action for opposition, cancellation,
declaration, infringement, or invalidity, unenforceability or misappropriation
or like claim, action or proceeding. The Company will not acquire any interest
in any trade name or trademark similar to the trade names or trademarks
transferred hereunder.
5.23 CONTRACTS. SCHEDULE 5.23 sets forth a list of each Contract to
which the Company is a party or by which it or its properties and assets are
bound and which is material to its business, assets, properties or prospects
(the "Material Contracts"), true, correct and complete copies (in the case of
written Contracts) and summaries (in the case of oral Contracts) of which have
been provided to Nations. The copy of each written Material Contract or summary
of each oral Material Contract furnished to Nations is a true and complete copy
of the document it purports to represent or summary, as the case may be, and
reflects all amendments thereto made through the date of this Agreement. The
Company has not violated any of the terms or conditions of any Material Contract
or any term or condition which would permit termination or modification of any
Material Contract, and all of the covenants to be performed by any other party
thereto have been fully performed, and there are no claims for breach or
indemnification or notice of default or termination under any Material Contract.
No event has occurred which constitutes, or after notice or the passage of time,
or both, would constitute, a default by the Company under any Material Contract,
and no such event has occurred which constitutes or would constitute a default
by any other party. The Company is not subject to any liability or payment
resulting from renegotiation of amounts paid under any Material Contract. As
used in this SECTION 5.23, Material Contracts shall include, without limitation,
formal or informal, written or oral, in each case which is material to the
business, assets, properties or prospects of the Company: (a) loan agreements,
indentures, mortgages, pledges, hypothecations, deeds of trust, conditional sale
or title retention agreements, security agreements, equipment financing
obligations or guaranties, or other sources of contingent liability in respect
of any indebtedness or obligations to any other Person(s), or letters of intent
or commitment letters with respect to same; (b) contracts obligating the Company
to provide or purchase products or services for a period of one year or more;
(c) leases of real property and leases of personal property not cancelable
without penalty on notice of sixty (60) days or less or calling for payment of
an annual gross rental exceeding $10,000; (d) distribution, sales agency or
franchise or similar agreements, or agreements providing for an independent
contractor's services, or letters of intent with respect to same; (e) employment
agreements, management service agreements, consulting agreements,
confidentiality agreements, non-competition agreements, employee handbooks,
policy statements and any other agreements relating to any employee, officer or
director of any of the Company; (f) licenses, assignments or transfers of
trademarks, trade names, service marks, patents, copyrights, trade secrets or
know how, or other agreements regarding proprietary rights or intellectual
property; (g) any Contract relating to pending capital expenditures by the
Company except in the ordinary course of business; (h) any non-competition
agreements restricting the Company in any manner; and (i) other material
Contracts or understandings, irrespective of subject matter and whether or not
in writing, not entered into in the ordinary course of business by the Company
and not otherwise disclosed on the Schedules.
20
<PAGE> 21
5.24 ACCURACY OF INFORMATION FURNISHED BY THE COMPANY AND THE
SHAREHOLDERS. No statement or information made or furnished by the Company or
the Shareholders to Nations or any of Nations' representatives, including those
contained in this Agreement and the various Schedules attached hereto and the
other information and statements referred to herein and previously furnished by
the Company or the Shareholders, contains or shall contain any untrue statement
of fact or omits or shall omit any fact necessary to make the information
contained therein not misleading. The Company and the Shareholders have provided
Nations with true, accurate and complete copies of all documents listed or
described in the various Schedules attached hereto.
5.25 CUSTOMERS. SCHEDULE 5.25 identifies the top 25 customers of the
Company as of December 31, 1997. True, correct and complete copies of the form
of the Company's standard customer contracts have been furnished by the Company
to Nations. The Company has not violated any of the terms or conditions of any
of its customer contracts, and all of the covenants to be performed by any other
party thereto have been fully performed and there are no claims for breach or
indemnification or notice of default or termination thereunder.
5.26 BANK ACCOUNTS; BUSINESS LOCATIONS. SCHEDULE 5.26 sets forth all
accounts of the Company with any bank, broker or other depository institution,
and the names of all persons authorized to withdraw funds from each such
account, and the locations of all safe deposit boxes of the Company and the
names of all persons authorized to have access to such safe deposit boxes.
5.27 NAMES; PRIOR ACQUISITIONS. All names under which the Company does
business as of the date hereof are specified on SCHEDULE 5.27. The Company has
not changed its name or used any assumed or fictitious name, or been the
surviving entity in a merger, acquired any business except as set forth on
SCHEDULE 5.27 or changed its principal place of business or chief executive
office, within the past three (3) years.
5.28 NO COMMISSIONS. Neither the Company nor any Shareholders has
incurred any obligation for any finder's or broker's or agent's fees or
commissions or similar compensation in connection with the transactions
contemplated hereby.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE CLOSING
6.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE CLOSING. The Company
covenants and agrees that, between the date of this Agreement and the Closing
Date, the Business shall be conducted only in, and shall not take any action
except in, the ordinary course of business consistent with past practice. The
Company shall use its reasonable best efforts to preserve intact its business
organization, to keep available the services of its current officers, employees
and consultants, and to preserve its present relationships with customers,
suppliers and other persons with which it has significant business relations. By
way of amplification and not limitation, except as contemplated
21
<PAGE> 22
by this Agreement, the Company shall not between the date of this Agreement and
the Closing Date, directly or indirectly, do or propose or agree to do any of
the following without the prior written consent of Nations: (a) amend or
otherwise change its articles of incorporation or bylaws or equivalent
organizational documents; (b) issue or authorize the issuance of, any shares of
its capital stock of any class, or any options, warrants, convertible securities
or other rights of any kind to acquire any shares of capital stock or other
ownership interest of the Company or any of its subsidiaries; (c) declare, set
aside, make or pay any dividend or other distribution, payable in cash, stock,
property or otherwise, with respect to any of its capital stock; (d) transfer
any of the outstanding shares of the Company's capital stock; (e) reclassify,
combine, split, subdivide or redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock; (f) acquire (including, without
limitation, for cash, or shares of stock, property or services, by merger,
consolidation or acquisition of stock or assets) any interest in any
corporation, partnership or other business organization or division thereof; (g)
except as set forth on SCHEDULE 5.9, incur any additional Indebtedness other
than for amounts borrowed after June 30 ,1998, to fund incremental equipment
purchases, in the ordinary course of business consistent with past practices;
(h) create Liens on any currently existing assets; (i) make (or commit to make)
any capital expenditures in excess of $10,000 except in the ordinary course of
business; (j) make any loans or advances to any person or entity or guarantee
the indebtedness of any person or entity, except in the ordinary course of
business consistent with past practice; (k) sell or dispose of any of its
assets, other than in the ordinary course of business, consistent with past
practice; (l) enter into, modify or terminate, any contract, other than in the
ordinary course of business consistent with past practice; (m) pay any bonus to
or increase the compensation or benefits payable or to become payable to its
employees, independent contractors or consultants except in the ordinary course
of business; (n) pay, discharge or satisfy any existing claims, liabilities or
obligations other than in the ordinary course of business consistent with past
practice; (o) increase or decrease prices charged to its customers, except for
previously announced price changes, or take any other action which might
reasonably result in any increase in the loss of customers; or (p) agree, in
writing or otherwise, to take or authorize any of the foregoing actions or any
other action which would make any representation or warranty in ARTICLE V untrue
or incorrect. The Company shall give written notice to Nations promptly
following the occurrence of any event which has had (or which is likely to have)
an adverse effect upon its assets, business, operations, prospects, properties
or condition (financial or otherwise).
ARTICLE VII
CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES
7.1 FURTHER ASSURANCES; COMPLIANCE WITH COVENANTS. Each party shall
execute and deliver such additional instruments and other documents and shall
take such further actions as may be necessary or appropriate to effectuate,
carry out and comply with all of the terms of this Agreement and the
transactions contemplated hereby and to satisfy the conditions set forth in
ARTICLE VIII and ARTICLE IX. The Shareholders and the Company shall, and shall
use reasonable efforts to cause the Company's accountants to, cooperate (such
cooperation to include execution and
22
<PAGE> 23
delivery by the Shareholders and the Company of customary audit representation
letters) with Nations accountants from time to time in connection with any audit
of the assets, property and business of the Company acquired hereunder,
including in connection with Nations initial public offering. The Shareholders
shall cause the Company to comply with all of the respective covenants of the
Company under this Agreement. At the Closing, the Company and the Shareholders
covenant and agree to deliver to Nations the certificates, opinions and other
documents required to be delivered to Nations pursuant to ARTICLE VIII, and
Nations covenants and agrees to deliver to the Company and the Shareholders the
certificates and other documents required to be delivered to the Company and the
Shareholders pursuant to ARTICLE IX.
7.2 COOPERATION. Each of the parties agrees to cooperate with the other
in the preparation and filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant to any
law, rule or regulation or the rules of the NYSE (or any exchange on which the
Nations Common Stock may be listed) in connection with the transactions
contemplated by this Agreement and to use their respective best efforts to agree
jointly on a method to overcome any objections by any Governmental Authority to
any such transactions.
7.3 HSR ACT AND OTHER ACTIONS. Each of the parties hereto shall (i)
make promptly (and in no event later than ten (10) days following the date
hereof) its respective filings, if any, and thereafter make any other required
submissions, under the HSR Act, with respect to the transactions contemplated
hereby, and (ii) take all appropriate actions, and do, or cause to be done, all
things necessary, proper or advisable under any applicable laws, regulations and
Contracts to consummate and make effective the transactions contemplated herein,
including, without limitation, obtaining all licenses, permits, consents,
approvals, authorizations, qualifications and orders of any Governmental
Authority and parties to Contracts with the Company as are necessary for the
consummation of the transactions contemplated hereby. Each of the parties agrees
to cooperate with the others in the preparation and filing of all forms,
notifications, reports and information, if any, required or reasonably deemed
advisable pursuant to any law, rule or regulation in connection with the
transactions contemplated by this Agreement, and to use their respective best
efforts to agree jointly on a method to overcome any objections by any
Governmental Authority to any such transactions. The parties also agree to use
best efforts to defend all lawsuits or other legal proceedings challenging this
Agreement or the consummation of the transactions contemplated hereby and to
lift or rescind any injunction or restraining order or other adversely affecting
the ability of the parties to consummate the transactions contemplated hereby.
7.4 NOTIFICATION OF CERTAIN MATTERS. The Company and the Shareholders
shall give prompt notice to Nations of the occurrence or non-occurrence of any
event which would likely cause any representation or warranty contained herein
to be untrue or inaccurate, or any covenant, condition, or agreement contained
herein not to be complied with or satisfied.
7.5 CONFIDENTIALITY; PUBLICITY. Except as may be required by law or as
otherwise permitted or expressly contemplated herein, no party hereto or their
respective Affiliates, employees, agents and representatives shall disclose to
any third party this Agreement or the subject matter or
23
<PAGE> 24
terms hereof without the prior consent of the other parties hereto. No press
release or other public announcement related to this Agreement or the
transactions contemplated hereby shall be issued by any party hereto without the
prior approval of the other parties, except that Nations may make such public
disclosure which it believes in good faith to be required by law or by the terms
of any listing agreement with or requirements of a securities exchange.
7.6 NO OTHER DISCUSSIONS. The Company, the Shareholders, and their
respective Affiliates, employees, agents and representatives will not (i)
initiate, encourage the initiation by others of discussions or negotiations with
third parties or respond to solicitations by third persons relating to any
merger, sale or other disposition of any substantial part of the assets,
business or properties of the Company (whether by merger, consolidation, sale of
stock or otherwise) or (ii) enter into any agreement or commitment (whether or
not binding) with respect to any of the foregoing transactions. The Company and
the Shareholders will immediately notify Nations if any third party attempts to
initiate any solicitation, discussion or negotiation with respect to any of the
foregoing transactions.
7.7 RESTRICTIVE COVENANTS. In order to assure that Nations will realize
the benefits of the transactions contemplated hereby, each of the Company and
the Shareholders agree that it and they, as applicable, will not:
(a) for a period of five (5) years following the Closing Date
(the "Noncompete Period"), directly or indirectly, alone or as a partner, joint
venturer, officer, director, employee, consultant, agent, independent
contractor, or security holder, of any company or business, engage in, or
finance, or provide financial assistance with respect to, any business activity
in the business of renting, selling, leasing, distributing, servicing or
repairing new or used equipment, spare parts and related supplies to industrial,
manufacturing, or construction customers (the "Equipment Business") in the
United States, Puerto Rico or Canada (the "Territory"); PROVIDED, HOWEVER, that
the beneficial ownership of less than five percent (5%) of any class of
securities of any entity having a class of equity securities actively traded on
a national securities exchange or over-the-counter market shall not be deemed,
in and of itself, to violate the prohibitions of this Section;
(b) during the Noncompete Period, directly or indirectly, (i)
induce any customer acquired hereunder or any other customer of Nations or any
of its subsidiaries, successors, or assigns (as used in this Section 7.7, the
"Nations Companies") to patronize any business which is directly or indirectly
in competition with the Equipment Business conducted by any of the Nations
Companies; (ii) canvass, solicit or accept from any Person which is a customer
of the Equipment Business conducted by any of the Nations Companies, any such
competitive business; or (iii) request or advise any customer of the Equipment
Business conducted by any of the Nations Companies to withdraw, curtail or
cancel any such customer's business with the Nations Companies or their
successors;
(c) during the Noncompete Period, directly or indirectly,
employ any person who was employed by the Nations Companies, or in any manner
seek to induce any employee of the Nations Companies to leave his or her
employment; PROVIDED THAT, the Company and the Shareholders
24
<PAGE> 25
shall not be prohibited from employing Mike May, resident of the State of Texas,
or relatives of the Shareholders in any business so long as that business is not
an Equipment Business; and
(d) at any time following the Effective Date, directly or
indirectly, in any way utilize, disclose, copy, reproduce or retain in their
possession any of the Nations Companies' proprietary rights or records acquired
hereunder, including, but not limited to, any customer lists.
The Company and the Shareholders agree and acknowledge that the restrictions
contained in this Section are reasonable in scope and duration, and are
necessary to protect the Nations Companies. The Company and the Shareholders
agree and acknowledge that any breach of this Section will cause irreparable
injury to the Nations Companies and upon any breach or threatened breach of any
provision of this Section, the Nations Companies shall be entitled to injunctive
relief, specific performance or other equitable relief, without the necessity of
posting bond; PROVIDED, HOWEVER, that this shall in no way limit any other
remedies which the Nations Companies may have as a result of such breach,
including the right to seek monetary damages. The parties hereto agree that
Nations may assign, without limitation, the foregoing restrictive covenants to
any successor to Nations' Equipment Business.
7.8 CONTRACTS; CONSENTS. Without the consent of Nations, prior to the
Closing, (i) the Company shall not terminate or otherwise modify or amend any of
its Contracts, and (ii) the Company shall use its reasonable best efforts to
obtain and receive consents to the transactions contemplated hereby and waivers
of rights to terminate or modify any rights or obligations of the Company from
any Person(s) from whom such consent or waiver is required under any Contract to
which the Company or the Purchased Assets are bound (including the Customer
Contracts, the Assumed Contracts, the Equipment Leases and the Real Property
Leases) as of a date not more than ten (10) days prior to the Closing Date, or
who, as a result of the transactions contemplated hereby, would have such rights
to terminate or modify such contracts, either by the terms thereof or as a
matter of law.
7.9 DUE DILIGENCE REVIEW AND ENVIRONMENTAL ASSESSMENT. Nations shall be
entitled to have conducted prior to the Closing a due diligence review of the
assets, properties, books and records of the Company and an environmental
assessment of the Leased Premises (hereinafter referred to as "Environmental
Assessment"). The Company shall (and shall cause its directors, officers,
employees, auditors, counsel and agents to) afford Nations and Nations'
officers, employees, auditors, counsel and agents reasonable access at all
reasonable times to its properties, offices, and other facilities, to its
officers and employees and to all books and records, and shall furnish such
persons with all financial, operating and other data and information as may be
requested. The Environmental Assessment may include, but not be limited to, a
physical examination of the Leased Premises, and any structures, facilities, or
equipment located thereon, soil samples, ground and surface water samples,
storage tank testing, review of pertinent records, documents, and Licenses of
the Company. The Company and the Shareholders shall provide Nations or its
designated agents or consultants with the access to such property which Nations,
its agents or consultants require to conduct the Environmental Assessment. If
the Environmental Assessment identifies environmental
25
<PAGE> 26
conditions which require remediation or further evaluation under the
Environmental Laws or if the results of the Environmental Assessment or due
diligence review are otherwise not satisfactory to Nations in its sole
discretion, then Nations may, in addition to any other remedies available to it,
elect not to close the transactions contemplated by this Agreement and to
terminate this Agreement. Neither the due diligence investigation made by
Nations in connection with the transactions contemplated hereby nor information
provided to or obtained by Nations shall affect any representation or warranty
in this Agreement. Nations' failure or decision not to conduct any such due
diligence review or Environmental Assessment shall not affect any representation
or warranty of the Company or the Shareholders under this Agreement.
7.10 TRADING IN NATIONS COMMON STOCK. From the date of this Agreement
until the Closing Date, the Company and the Shareholders (and any Affiliates
thereof) shall not directly or indirectly purchase or sell (including short
sales) any shares of Nations Common Stock in any transactions effected on NYSE
or otherwise.
7.11 SHAREHOLDERS VOTE. Each of the Shareholders, in executing this
Agreement, consents as a shareholder of the Company to the actions of the
Company, and to the transactions, contemplated hereby, and waives notice of any
meeting in connection therewith.
7.12 PAYOFF AND ESTOPPEL LETTERS. Prior to the Closing, the Company
shall request and deliver to Nations payoff and estoppel letters from all
holders of any Indebtedness of the Company to be paid off on or prior to the
Closing, which letters shall contain payoff amounts, per diem interest, wire
transfer instructions and an agreement to deliver to Nations, upon full payment
of any such Indebtedness, UCC-3 termination statements, satisfactions of
mortgage or other appropriate releases and any original promissory notes or
other evidences of indebtedness marked canceled.
7.13 RECEIVABLES. At or prior to the Closing Date, the Company shall
deliver to Nations a true, complete and correct list of all receivables to be
transferred to Nations pursuant to Section 1.1(h). From and after the Closing,
the Company shall cooperate with Nations upon Nations' request to notify each
payor of any receivables of such transfer to Nations. The Company and the
Shareholders hereby agree and acknowledge that any and all payments in respect
of such receivables that are received by the Company or any Shareholders after
the Closing shall be held in trust for the benefit of Nations and delivered to
Nations as soon as practicable.
7.14 TRANSACTION DOCUMENTS. DRO shall enter into a two (2) year
employment agreement, the form of which is attached as EXHIBIT B-1, Ray L.
O'Neal shall enter into a two (2) year employment agreement, the form of which
is attached as EXHIBIT B-2, and the Company shall enter into the Assignment and
Assumption Agreement, the form of which is attached as EXHIBIT C, and such other
closing documents requested by Nations.
7.15 AWARD OF OPTIONS. Nations shall grant to those individual
employees of the Company listed on EXHIBIT D the number of options as provided
therein, to purchase Nations common stock $.01 par value (the "Common Stock") at
an exercise price equal to the closing price of the Common
26
<PAGE> 27
Stock on the NYSE prior to the day of the grant which shall be the Closing Date.
The options shall be issued in accordance with the terms of the Nations Stock
Option Plan in effect at the time. The options shall vest during a four (4) year
period after issuance, at a rate of twenty-five (25%) percent per year on each
anniversary of the date of issuance.
7.16 LEASES. Nations, the Company and the Shareholders (as applicable)
shall at Closing enter into leases, the form of which is attached as EXHIBIT E,
for each of the facilities of the Company together with that certain facility
currently under construction in Waco, Texas and as set forth on SCHEDULE 7.16.
Nations (or its designee) shall enter into the leases for an initial term of
five (5) years at each facility listed on SCHEDULE 7.16, at lease rates for each
premises to be mutually agreed to by the parties prior to Closing, with three,
five year renewal options. The leases will be triple net leases and contain
cross default provisions. The leases will also provide for a purchase option by
Nations at the fair market value five years from inception of each lease and at
the end of each renewal period. If during the term or any renewal term of the
leases the Company or affiliate shall have received a bona fide arm's length
offer to purchase the property which is acceptable to landlord from any third
party the Company or affiliate shall send a notice to Nations. Nations shall
have ten (10) business days to accept the offer in writing on the exact terms
made by such third party. Any decision not to exercise such right shall not
affect its right to purchase as provided in each lease.
7.17 POST-CLOSING ACTIONS OF THE COMPANY. Within ten (10) days
following the Closing, the Company shall change its name to a name that does not
include the words "associate", "rental", "A-1 Rental", or "equipment" or any
derivation thereof.
7.18 EXECUTION OF FURTHER DOCUMENTS. From and after the Closing, upon
the reasonable request of Nations, the Company shall execute, acknowledge and
deliver all such further deeds, bills of sale, assignments, transfers,
conveyances, powers of attorney and assurance as may be required or appropriate
to convey and transfer to and vest in Nations and protect its right, title and
interest in all of the Purchased Assets and to carry out the transactions
contemplated by this Agreement.
7.19 EMPLOYEES. Nations agrees on the Closing Date to: (a) offer
employment to substantially all of the Company's employees at the same wages
with substantially similar benefits; PROVIDED, HOWEVER, that no third party
beneficiary rights are meant to be created by the parties hereby which shall
obligate Nations to employ, to pay a certain wage or to provide a specific
benefit to any employee of the Company; (b) not to close a facility of the
Company for 60 days after the Closing Date; (c) grant employees full credit for
prior service with the Company for purposes of vesting only and not benefit
accrual for all benefit plans, medical plans and severance plans; (d) grant
employees accrued vacations and accrued sick leave, these benefits to remain
consistent with the Company's past practices; (e) pay employees in fiscal year
1998 bonuses consistent with past practices of the Company; and (f) fund a 1998
contribution consistent with past practices of the Company to the "A-1 Rental
Inc. 401(k) Profit Sharing Plan" and to the "A-1 Rental LLC 401(k) Profit
Sharing Plan".
7.20 UNDERGROUND STORAGE TANKS. The Company and/or the Shareholders
agree to cause on or before December 31, 1998 all of the Underground Storage
Tanks on SCHEDULE 5.11(e) which
27
<PAGE> 28
are located on premises listed on SCHEDULE 7.16 (collectively referred to as the
"Company's Tanks") to be in compliance with any federal, state, local statute,
law, ordinance, code, rule, regulation, order, ruling, or degree governing
corrosion protection for Underground Storage Tanks (the "Post Closing Compliance
Program"), including but not limited to: (i) 40 Code of Federal Regulations
("CFR") Section 280 (Underground Storage Tanks) Subpart B-UST Systems; (ii) 40
CFR 280.21 (items (i) and (ii) have an effective date of December 22, 1998),
(iii) 30 Texas Administrative Code Chapter 334 (including specifically but
without limitation Section 334.44 TAC); and (iv) Texas Water Code 26 ((i), (ii),
(iii) and (iv) may be referred to collectively as the "Underground Storage Tank
Laws"); PROVIDED THAT, in the event one or more Underground Storage Tanks fails
where such failure was precipitated by the Post Closing Compliance Program, the
Company and/or the Shareholders agree to pay for fifty percent (50%) of all
costs associated with the removal and/or replacement of any Underground Storage
Tanks. The Company and/or the Shareholders agree to pay Twenty-Five Thousand
Dollars ($25,000.00) to Nations (upon Nations' written request) which will be
applied by Nations towards those expenses incurred by Nations after the Closing
to bring the Company's Tanks in compliance with the leak protection requirements
contained in the Underground Storage Tank Laws. Notwithstanding anything
contained in this Agreement, the provisions of Section 7.20 shall not be subject
to the Indemnification Threshold.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF NATIONS
The obligation of Nations to effect the transactions contemplated
hereby shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions, any or all of which may be waived in whole or in part
in writing by Nations:
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Company and the
Shareholders contained in this Agreement shall be true and correct at and as of
the Closing Date with the same force and effect as though made at and as of that
time except (i) for matters specifically permitted by or disclosed on any
Schedule to this Agreement, and (ii) that those representations and warranties
which address matters only as of a particular date shall remain true and correct
as of such date. The Company and the Shareholders shall have performed and
complied with all of their respective obligations required by this Agreement to
be performed or complied with at or prior to the Closing Date. The Company and
the Shareholders shall have delivered to Nations a certificate, dated as of the
Closing Date, duly signed (in the case of the Company, by its President),
certifying that such representations and warranties are true and correct and
that all such obligations have been complied with and performed.
8.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY. Between the
date hereof and the Closing Date, (i) there shall have been no Material Adverse
Change in the Purchased Assets or the Business, (ii) there shall have been no
adverse federal, state or local legislative or regulatory change affecting in
any material respect the Purchased Assets or the Business, and (iii) none of the
Purchased Assets shall have been damaged by fire, flood, casualty, act of God or
the public enemy or other cause (regardless of insurance coverage for such
damage) and there shall have been delivered
28
<PAGE> 29
to Nations a certificate to that effect, dated the Closing Date and signed by or
on behalf of the Company and the Shareholders.
8.3 CORPORATE CERTIFICATE. The Company shall have delivered to Nations
(i) copies of the articles of incorporation and bylaws of the Company as in
effect immediately prior to the Closing Date, (ii) copies of resolutions adopted
by the Board of Directors and the Shareholders of the Company authorizing the
transactions contemplated by this Agreement, and (iii) a certificate of good
standing of the Company issued by the Secretary of State of the State of Texas
as of a date not more than ten (10) days prior to the Closing Date, certified in
the case of subsections (i) and (ii) of this Section as of the Closing Date by
the Secretary of the Company as being true, correct and complete.
8.4 DELIVERY OF PURCHASED ASSETS. At the Closing, the Company shall
duly execute and deliver to Nations (or its assignee) the Assignment and
Assumption Agreement in the form attached hereto as EXHIBIT C, and such other
instruments of transfer of title as are necessary to transfer to Nations (or its
assignee) good and marketable title to the Purchased Assets free and clear of
any Liens other than the Assumed Liabilities and Permitted Liens, and shall
deliver to Nations (or its assignee) immediate possession of the Purchased
Assets.
8.5 OPINION OF COUNSEL. Nations shall have received an opinion dated as
of the Closing Date from counsel for the Company and the Shareholders, in form
and substance acceptable to Nations, to the effect that:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas and is
authorized to carry on the business now conducted by it and to own or lease the
properties now owned or leased by it;
(b) The Company has obtained all necessary authorizations and
consents of its Board of Directors and the Shareholders to consummate the
Acquisition and the other transactions contemplated hereby;
(c) Such counsel does not know or have reason to believe that
there is any litigation, proceeding or investigation pending or threatened which
might result in any Material Adverse Effect on the Company, or which questions
the validity of this Agreement;
(d) Such counsel does not know or have reason to believe that
any event has occurred or state of facts exists which would constitute a breach
of any of the representations and warranties made by the Company or the
Shareholders pursuant to ARTICLE V of this Agreement;
(e) The execution and delivery of the Transaction Documents by
the Company and the Shareholders, the performance by the Company and the
Shareholders of their respective obligations hereunder and thereunder and the
consummation by the Company and the Shareholders of the transactions
contemplated by this Agreement will not, to the best of our knowledge (a)
29
<PAGE> 30
contravene any provision of the articles of incorporation or bylaws of the
Company, (b) violate or conflict with any law, statute, ordinance, rule,
regulation, decree, writ, injunction, judgment or order of any Governmental
Authority or of any arbitration award which is either applicable to, binding
upon or enforceable against the Company, the Shareholders or the Purchased
Assets; or (c) breach or result in a default of any Contract;
(f) Each of the Transaction Documents is a valid and binding
obligation of the Company and the Shareholders, and enforceable against each of
them in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally or general equitable principles.
Such opinion shall state that it may be relied upon by Nations' lending
institutions.
8.6 CONSENTS. The Company shall have received consents to the
transactions contemplated hereby and waivers of rights to terminate or modify
any material rights or obligations of the Company from any Person from whom such
consent or waiver is required under any Contract or instrument as of a date not
more than ten (10) days prior to the Closing Date, or who, as a result of the
transactions contemplated hereby, would have such rights to terminate or modify
such Contracts or instruments, either by the terms thereof or as a matter of
law.
8.7 NO ADVERSE LITIGATION. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the transaction contemplated hereby, and which, in the judgment of Nations,
makes it inadvisable to proceed with the transactions contemplated hereby.
8.8 BOARD APPROVAL. The Board of Directors of Nations shall have
authorized and approved this Agreement, and the transactions contemplated
hereby.
8.9 DUE DILIGENCE REVIEW. Nations shall have completed its due
diligence review of the Company, the Purchased Assets and the Business and its
Environmental Assessment of the Company, and in each such case shall be
satisfied with the results of such review, audit and assessment.
8.10 APPROVALS. Nations or the Company shall have received all
necessary and material permits, licenses, franchises, consents and approvals of
all governmental authorities, lenders, lessors and other third parties,
including under the HSR Act. Any applicable HSR Act waiting period shall have
expired or been terminated.
8.11 CLOSING DOCUMENTS. The Company and Shareholders and the other
applicable parties shall have executed and delivered the Transaction Documents
and such other closing documents necessary to consummate the Acquisition.
30
<PAGE> 31
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF
THE COMPANY AND THE SHAREHOLDERS
The obligations of the Company and the Shareholders to effect the
transactions contemplated hereby shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions, any or all of which may be
waived in whole or in part in writing by the Company and the Shareholders:
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Nations contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date with the same force and effect as though made at and as of that
time except (i) for changes specifically permitted by or disclosed pursuant to
this Agreement, and (ii) that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of such
date. Nations shall have performed and complied with all of its obligations
required by this Agreement to be performed or complied with at or prior to the
Closing. Nations shall have delivered to the Company and the Shareholders a
certificate, dated as of the Closing Date, and signed by an officer, certifying
that such representations and warranties are true and correct and that all such
obligations have been complied with and performed in all material respects.
9.2 CORPORATE CERTIFICATE. Nations shall have delivered to the Company
(i) copies of the articles of incorporation and bylaws of Nations as in effect
immediately prior to the Closing Date, (ii) copies of resolutions adopted by the
Board of Directors of Nations authorizing the transactions contemplated by this
Agreement, and (iii) a certificate of good standing of Nations issued by the
Secretary of State of the State of Delaware as of a date not more than ten (10)
days prior to the Closing Date, certified in the case of subsections (i) and
(ii) of this Section as of the Closing Date by the Secretary of Nations as being
true, correct and complete.
9.3 PURCHASE PRICE. At the Closing, Nations shall pay to the Company
the Cash Proceeds, the Short Term Promissory Note, the Promissory Note and
assume the Assumed Liabilities.
9.4 OPINION OF COUNSEL. Company shall have received an opinion dated as
of the Closing Date from counsel for Nations, in form and substance acceptable
to Company, to the effect that:
(a) Nations is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and is authorized
to carry on the business now conducted by it and to own or lease the properties
now owned or leased by it;
(b) Nations has obtained all necessary authorizations and
consents of its Board of Directors to consummate the Acquisition and the other
transactions contemplated hereby;
31
<PAGE> 32
(c) Such counsel does not know or have reason to believe that
any event has occurred or state of facts exists which would constitute a breach
of any of the representations and warranties made by Nations pursuant to ARTICLE
IV of this Agreement;
(d) The execution and delivery of the Transaction Documents by
Nations, the performance by Nations of its obligations hereunder and thereunder
and the consummation by Nations' of the transactions contemplated by this
Agreement will not, to the best of our knowledge (a) contravene any provision of
the articles of incorporation or bylaws of Nations, (b) violate or conflict with
any law, statute, ordinance, rule, regulation, decree, writ, injunction,
judgment or order of any Governmental Authority or of any arbitration award
which is either applicable to, binding upon or enforceable against Nations or
(c) breach or result in a default of any Contract;
(e) Each of the Transaction Documents is a valid and binding
obligation of Nations, and enforceable against each of them in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally or general equitable principles.
9.5 NO ORDER OR INJUNCTION. There shall not be pending by or before any
court or other governmental body an order or injunction restraining or
prohibiting the transactions contemplated hereby.
9.6 APPROVALS. Nations or the Company shall have received approval
under the HSR Act. Any applicable HSR Act waiting period shall have expired or
been terminated.
9.7 CLOSING DOCUMENTS. Nations shall have executed and delivered the
Transaction Documents and such other closing documents necessary to consummate
the Acquisition.
ARTICLE X
INDEMNIFICATION
10.1 AGREEMENT BY THE COMPANY AND THE SHAREHOLDERS TO INDEMNIFY. The
Company and the Shareholders, jointly and severally, agree to indemnify and hold
Nations and each of its officers, directors, employees, Affiliates, successors
and assigns (collectively, for the purpose of this Section 10.1, "Nations")
harmless from and against the aggregate of all expenses, losses, costs,
deficiencies, liabilities and damages (including, without limitation, related
counsel and paralegal fees and expenses) incurred or suffered by Nations arising
out of or resulting from (i) any breach of a representation or warranty made by
the Company or any of the Shareholders in or pursuant to this Agreement, (ii)
any breach of the covenants or agreements made by the Company or any of the
Shareholders in or pursuant to this Agreement, (iii) any inaccuracy in any
certificate delivered by the Company or any of the Shareholders pursuant to this
Agreement, or (iv) the Company's ownership or operation of the Purchased Assets,
the Company's Tanks or the Business prior to Closing, the
32
<PAGE> 33
Excluded Assets or the Excluded Liabilities, (collectively, "Indemnifiable
Damages"). Without limiting the generality of the foregoing, with respect to the
measurement of Indemnifiable Damages, Nations shall have the right to be put in
the same pre-tax consolidated financial position as it would have been in had
each of the representations and warranties of the Company and the Shareholders
hereunder been true and correct and had the covenants and agreements of the
Company and the Shareholders hereunder been performed in full. Notwithstanding
the foregoing, Nations shall not be entitled to any Indemnifiable Damages unless
the aggregate of all Indemnifiable Damages exceeds that amount as set forth on
SCHEDULE 10.1 (the "Indemnification Threshold"), in which case Nations shall be
entitled to the full amount of such Indemnifiable Damages which exceed the
Indemnification Threshold.
10.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by Nations, the Company and the Shareholders
in this Agreement or pursuant hereto shall survive for a period of two (2) years
after the Closing Date, provided that the representations and warranties
concerning environmental matters, Taxes and any claim for fraud shall survive
until expiration of the applicable statute of limitations. Notwithstanding any
knowledge of facts determined or determinable by any party by investigation,
each party shall have the right to fully rely on the representations,
warranties, covenants and agreements of the other parties contained in this
Agreement or in any other documents or papers delivered in connection herewith.
10.3 THIRD PARTY ACTIONS. Promptly after receipt by Nations of notice
of commencement of any action by a third party which could give rise to
Indemnifiable Damages, Nations will, if a claim thereof is to be made against
the Company or the Shareholders, notify the Company and the Shareholders of the
commencement thereof; PROVIDED, HOWEVER, that the omission to so notify the
Company or the Shareholders will not relieve them from any liability which they
may have hereunder unless the Company or the Shareholders have been materially
prejudiced thereby. The parties agree that with respect to any such third party
action Nations shall (i) assume the defense thereof with its own legal counsel,
(ii) provide the Company and the Shareholders with all material information that
they request relating to the handling of such claim, (iii) confer with the
Company and the Shareholders as to the most cost-effective manner in which to
handle such claim, and (iv) use its reasonable efforts to minimize the cost of
handling such claim.
10.4 SET OFF FOR INDEMNIFICATION OBLIGATIONS. Prior to seeking recovery
of Indemnifiable Damages from the Company or the Shareholders, Nations shall set
off against the Promissory Note the Indemnifiable Damages (the "Set Off
Amount"), subject, however, to the following terms and conditions:
(a) Nations shall give written notice to the Company and the
Shareholders of any claim for Indemnifiable Damages or any other
damages hereunder, which notice shall set forth (i) the amount of
Indemnifiable Damages or other loss, damage, cost or expense which
Nations claims to have sustained by reason thereof, and (ii) the basis
of the claim therefor.
33
<PAGE> 34
(b) Such set off or recoupment shall be effected on the later
to occur on the expiration of ten (10) days from the date of such
notice (the "Notice of Contest Period") or, if such claim is contested,
the date the dispute is resolved.
(c) If, prior to the expiration of the Notice of Contest
Period, the Company or its Shareholders shall notify Nations in writing
of an intention to dispute the claim and if such dispute is not
resolved within thirty (30) days after expiration of such period (the
"Resolution Period"), then such dispute shall be resolved in accordance
with the arbitration provisions contained in SECTION 10.6.
(d) All set offs, recoupments and payments of Indemnifiable
Damages pursuant to this Section shall be treated as adjustments to the
Purchase Price.
10.5 NO BAR; WAIVER. If the Set Off Amount is insufficient to set off
any claim for Indemnifiable Damages made hereunder (or has been delivered to the
Company prior to the making or resolution of such claim), then Nations may take
any action or exercise any remedy available to it by appropriate legal
proceedings to collect the Indemnifiable Damages.
10.6 ARBITRATION. Notwithstanding anything to the contrary in this
Agreement, all claims relating in any way to the Set Off Amount which is in
dispute shall be referred to final and binding arbitration, before a committee
of three (3) arbitrators (one appointed by the Company, one appointed by Nations
and one appointed by the two arbitrators so appointed), under the commercial
arbitration rules of the American Arbitration Association and their decision
shall be made within forty-five (45) days of being appointed. If the two
arbitrators selected by the Company and Nations are unable to reach agreement on
selection of the third arbitrator within sixty (60) days after the notice of
arbitration is served, then the third arbitrator will be selected by the
American Arbitration Association. All documents, materials, and information in
the possession of a party to this Agreement and in any way relevant to the
claims or disputes shall be made available to the other parties for review and
copying not later than sixty (60) days after the notice of arbitration is
served. The arbitrators shall NOT have subject matter jurisdiction to decide any
issues relating to the statute of limitations, fraud, specific performance and
other equitable remedies, and the parties hereby stipulate to stay the
arbitration proceeding (without the need of a bond) until any such issues in
dispute are resolved. Judgment upon the award rendered by the arbitrator shall
be final, binding and conclusive upon the parties and their respective
administrators, executors, legal representatives, heirs, successors and
permitted assigns, and may be entered in any court of competent jurisdiction.
ARTICLE XI
SECURITIES LAW MATTERS
In addition to the other representations, warranties and covenants set
forth herein, as a material inducement to Nations to enter into this Agreement
and to consummate the transactions
34
<PAGE> 35
contemplated hereby, the Company and the Shareholders make the following
representations, warranties and covenants, as applicable:
11.1 INVESTMENT INTENT; INFORMATION. The Company and the Shareholders
have had the opportunity to discuss the transactions contemplated hereby with
Nations and have had the opportunity to obtain such information pertaining to
Nations as have been requested, including but not limited to filings made by
Nations with the SEC under the Exchange Act. The Company and each Shareholder is
an "accredited investor" within the meaning of Regulation D promulgated under
the Securities Act, and has such knowledge and experience in business or
financial matters that he is capable of evaluating the merits and risks of an
investment in the Nations Shares, the Promissory Note and the Short Term
Promissory Note. The Nations Shares, Promissory Note and Short Term Promissory
Note are collectively referred to in this ARTICLE XI as "Nations Securities".
11.2 DISPOSITION OF SHARES. The Company and the Shareholders represent
and warrant that the Nations Securities being acquired by the Company and the
Shareholders hereunder are being acquired and will be acquired for their own
respective accounts, and may not be and will not be sold or otherwise disposed
of, except pursuant to (a) an exemption from the registration requirements under
the Securities Act, which does not require the filing by Nations with the SEC of
any registration statement, offering circular or other document, in which case,
the Company and/or the Shareholders shall first supply to Nations an opinion of
counsel (which counsel and opinions shall be satisfactory to Nations) that such
exception is available, or (b) an effective registration statement filed by
Nations with the SEC under the Securities Act. Accordingly, the Company and/or
the Shareholders may be required to bear the economic risk of an investment in
Nations Securities indefinitely.
11.3 LEGEND. The Notes and certificates representing the Nations Shares
shall bear the following legend:
THE SHARES [SECURITIES] REPRESENTED BY THIS CERTIFICATE [NOTE] MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND IN COMPLIANCE WITH APPLICABLE
SECURITIES LAWS OF ANY STATE WITH RESPECT THERETO, OR IN ACCORDANCE
WITH AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
Nations may, unless a registration statement is in effect covering such shares,
place stop transfer orders with its transfer agents with respect to such
certificates in accordance with federal securities laws.
35
<PAGE> 36
11.4 REGISTRATION RIGHTS FOR NATIONS SHARES; FILING OF REGISTRATION
STATEMENT. Nations will cause, within three hundred sixty-five (365) days from
the Closing Date, a registration statement to be filed under the Securities Act
or an existing registration statement to be amended for the purpose of
registering the Nations Shares for resale by a Holder thereof (the "Registration
Statement"). For purposes of this Article, a person is deemed to be a "Holder"
of Nations Shares whenever such person is the record owner of Nations Shares.
Nations will use reasonable efforts to have the Registration Statement become
effective and cause the Nations Shares to be registered under the Securities
Act, and registered, qualified or exempted under the state securities laws of
such jurisdictions as any Holder reasonably requests, as soon as is reasonably
practicable following the filing; provided, however, that Nations shall not be
required to qualify to do business in any state or to consent to be subject to
general service of process in any state where it is not otherwise required to be
so qualified or subject.
11.5 EXPENSES OF REGISTRATION. Nations shall pay all expenses incurred
by Nations in connection with the registration, qualification and/or exemption
of the Nations Shares, including any SEC and state securities law registration
and filing fees, printing expenses, fees and disbursements of Nations counsel
and accountants, transfer agents' and registrars' fees, fees and disbursements
of experts used by Nations in connection with such registration, qualification
and/or exemption, and expenses incidental to any amendment or supplement to the
Registration Statement or prospectuses contained therein. Nations shall not,
however, be liable for any sales, broker's or underwriting commissions or other
selling expenses incurred upon sale by any Holder of any of the Nations Shares.
11.6 FURNISHING OF DOCUMENTS. Nations shall furnish to the Holders such
reasonable number of copies of the Registration Statement, such prospectuses as
are contained in the Registration Statement and such other documents as the
Holders may reasonably request in order to facilitate the offering of the
Nations Shares.
11.7 AMENDMENTS AND SUPPLEMENTS. Nations shall prepare and promptly
file with the SEC and promptly notify the Holders of the filing of such
amendments or supplements to the Registration Statement or prospectuses
contained therein as may be necessary to correct any statements or omissions if,
at the time when a prospectus relating to the Nations Shares is required to be
delivered under the Securities Act, any event shall have occurred as a result of
which any such prospectus or any other prospectus as then in effect would
include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. Nations shall also advise the
Holders promptly after it shall receive notice or obtain knowledge thereof, of
the issuance of any stop order by the SEC suspending the effectiveness of the
Registration Statement or the initiation or threatening of any proceeding for
that purpose and promptly use its reasonable best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop order should
be issued. If, after a Registration Statement becomes effective, the Holders
desire to make sales of Nations Shares, the Holders shall advise Nations in
writing and Nations shall advise the Holders whether it considers it appropriate
that the Registration Statement be amended, and if so the Holders shall suspend
any
36
<PAGE> 37
further sales of the Nations Shares until Nations advises the Holders that the
Registration Statement has been amended.
11.8 DURATION. Nations shall maintain the effectiveness of the
Registration Statement until such time as Nations reasonably determines, based
on an opinion of counsel, that the Holders will be eligible to sell all of the
Nations Shares then owned by the Holders without the need for continued
registration of the shares, in the three month period immediately following the
termination of the effectiveness of the Registration Statement.
11.9 FURTHER INFORMATION. If the Nations Shares owned by a Holder are
included in any registration, such Holder shall furnish Nations such information
regarding itself as Nations may reasonably request and as shall be required in
connection with any registration, qualification or compliance referred to in
this Agreement. Nothing herein stated shall give any Holder the right to cause
any such registration to be for an underwritten public offering, and in the
event that Nations consents to an underwritten public offering, then Nations
shall have the right to approve, in its sole discretion, the selection of any
such underwriter by the Holder.
11.10 SALE OF NATIONS SHARES - LOCKUP. During the period commencing
upon the Closing Date and ending twelve (12) months following the Closing Date
(the "Registration Effective Date"), no Holder shall directly or indirectly
offer for sale, sell, including a short sale or sale against the box, transfer,
pledge, assign, hypothecate or otherwise encumber or dispose of any Nations
Common Stock without Nations' prior written consent.
ARTICLE XII
DEFINITIONS
12.1 DEFINED TERMS. As used herein, the following terms shall have the
following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, as in effect on the date hereof.
"Assignment and Assumption Agreement" shall mean the Bill of Sale,
Assignment and Assumption Agreement, the form of which is attached as EXHIBIT B
hereto.
"Code" means the Internal Revenue Code of 1986, as amended, and
treasury regulations promulgated thereunder.
37
<PAGE> 38
"Contract" means any agreement, contract, lease, note, mortgage,
indenture, loan agreement, franchise agreement, covenant, employment agreement,
license, instrument, purchase and sales order, commitment, undertaking,
obligation, whether written or oral, express or implied.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time.
"Governmental Authority" means any nation or government, any state,
regional, local or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Indebtedness" of any entity means all obligations (excluding any
obligation related to real property) of such entity, as follows: (i) which in
accordance with GAAP should be classified upon a balance sheet of such entity as
indebtedness, (ii) for borrowed money or purchase money financing which has been
incurred in connection with the acquisition of property or services, guaranties,
letters of credit, or deferred purchase price, including without limitation,
accrued and unpaid interest, and prepayment or early termination penalties
associated with any of the foregoing, (iii) secured by any lien or other charge
upon property or assets owned by such entity, even though such entity has not
assumed or become liable for the payment of such obligations, (iv) created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such entity, whether or not the rights and
remedies of the lender or lessor under such agreement in the event of default
are limited to repossession or sale of the property, (v) the O'Neal Family
Obligations, and/or (vi) for remaining payments under any leases (including, but
not limited to, equipment leases), or rental purchase options.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien, restriction on transfer, right of refusal, preemptive right, claim or
charge of any kind (including, but not limited to, any conditional sale or other
title retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code or
comparable law or any jurisdiction
38
<PAGE> 39
in connection with such mortgage, pledge, security interest, encumbrance, lien
or charge).
"Market Area" shall include those counties in the State of Texas, as
set forth on the map attached as SCHEDULE 12.1 with dots in the counties.
"Material Adverse Change (or Effect)" means a change (or effect), in
the condition (financial or otherwise), properties, assets, liabilities, rights,
obligations, operations, business or prospects which change (or effect)
individually or in the aggregate, is materially adverse to such condition,
properties, assets, liabilities, rights, obligations, operations, business or
prospects.
"NYSE" means the New York Stock Exchange.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, estate, trust, unincorporated association, joint venture,
Governmental Authority or other entity, of whatever nature.
"Permitted Liens" means (i) those consisting of zoning or planning
restrictions, easements, permits and other restrictions or limitations on the
use of such property, (ii) Liens for current taxes, assessments or governmental
charges or levies on property not yet due and delinquent, and (iii)
warehousemen's, mechanics', carriers', landlords', repairmen's or other similar
Liens relating to the Purchased Assets or Assumed Liabilities arising in the
ordinary course of business and securing obligations of the Company.
"SEC" means the Securities and Exchange Commission of the United
States.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Tax Return" means any tax return, filing or information statement
required to be filed in connection with or with respect to any Taxes.
"Taxes" means all taxes (other than sales taxes for (i) the month
within which the Closing Date occurs, and (ii) the month immediately preceding
the month in which the Closing Date occurs), fees or other assessments,
including, but not limited to, income, excise, property, franchise, intangible,
withholding, social security and unemployment taxes imposed by any federal,
state, local or foreign governmental agency, and any interest or penalties
related thereto.
12.2 OTHER DEFINITIONAL PROVISIONS. All terms defined in this Agreement
shall have the defined meanings when used in any certificates, reports or other
documents made or delivered
39
<PAGE> 40
pursuant hereto or thereto, unless the context otherwise requires. Terms defined
in the singular shall have a comparable meaning when used in the plural, and
vice versa. All matters of an accounting nature in connection with this
Agreement and the transactions contemplated hereby shall be determined in
accordance with GAAP applied on a basis consistent with prior periods, where
applicable. As used herein, the neuter gender shall also denote the masculine
and feminine, and the masculine gender shall also denote the neuter and
feminine, where the context so permits.
ARTICLE XIII
TERMINATION
13.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing Date: (a) by mutual written consent of the parties hereto at any
time prior to the Closing; or (b) by Nations in the event of a material breach
by the Company or any of the Shareholders of any provision of this Agreement; or
(c) by the Company in the event of a material breach by Nations of any provision
of this Agreement; or (d) by Nations in accordance with Section 7.9 if it is not
satisfied with its investigation, audit or assessment; or (e) by either Nations
or the Company if the Closing shall not have occurred on or before October 30,
1998.
13.2 EFFECT OF TERMINATION. Except for the provisions of SECTION 7.5,
ARTICLE X, and SECTION 14.3 hereof, which shall survive any termination of this
Agreement, in the event of termination of this Agreement pursuant to SECTION
13.1, this Agreement shall forthwith become void and of no further force and
effect and the parties shall be released from any and all obligations hereunder;
PROVIDED, HOWEVER, that nothing herein shall relieve any party from liability
for the willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
ARTICLE XIV
GENERAL PROVISIONS
14.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid), guaranteed overnight
delivery, or facsimile transmission if such transmission is confirmed by
delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall designate
in writing to the other party):
40
<PAGE> 41
(a) IF TO NATIONS TO:
NationsRent, Inc.
450 East Las Olas Blvd. - Suite 1400
Ft. Lauderdale, FL 33301
Attn: Gene Ostrow
Telephone: 954-760-6550
Telecopy: 954-760-6565
WITH A COPY TO:
Akerman, Senterfitt & Eidson, P.A.
One S.E. Third Avenue
Miami, FL 33131
Attn: Stephen K. Roddenberry, Esq.
Telephone: 305-374-5600
Telecopy: 305-374-5095
(b) IF TO THE COMPANY OR THE SHAREHOLDERS TO:
Don R. O'Neal
5310 Normandy
Colleyville, Texas 76021
Telephone: 817-283-6397
Telecopy: 817-831-3618
WITH A COPY TO:
Law, Snakard & Gambill
3200 Bank One Tower
500 Throckmorton Street
Suite 3200
Ft. Worth, Texas 76102
Attn: Rice Tilley, Jr., Esq.
Telephone: 817-878-6350
Telecopy: 817-878-6335
Notice shall be deemed given on the date sent if sent by facsimile
transmission and on the date delivered (or the date of refusal of delivery) if
sent by overnight delivery or certified or registered mail.
14.2 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(including the exhibits and schedules attached hereto) and other documents
delivered at the Closing pursuant hereto, contain the entire understanding of
the parties in respect of its subject matter, amends, restates in
41
<PAGE> 42
its entirety and supersedes all prior agreements and understandings (oral or
written) between or among the parties with respect to such subject matter
including (i) that certain letter of agreement dated August 24, 1998 between the
parties and (ii) that certain asset purchase agreement entered into by the
parties as of September 9, 1998. The parties agree that prior drafts of this
Agreement shall not be deemed to provide any evidence as to the meaning of any
provision hereof or the intent of the parties with respect thereto. The Exhibits
and Schedules constitute a part hereof as though set forth in full above. Except
for the Nations Companies which are intended to be third party beneficiaries of
this Agreement, this Agreement is not intended to confer upon any Person, other
than the parties hereto, any rights or remedies hereunder.
14.3 EXPENSES. Except as otherwise provided herein, Nations and the
Shareholders shall pay their own fees and expenses, including their own counsel
fees, incurred in connection with this Agreement or any transaction contemplated
hereby. The Company shall pay all legal, accounting, tax consulting, financial
advisory and other fees and expenses, including any transfer fees, government
filing fees and the cost of title insurance and surveys, incurred by the Company
in connection with the transactions contemplated by this Agreement. Nations and
the Shareholders shall each be responsible for their respective HSR filing fees.
14.4 AMENDMENT; WAIVER. This Agreement may not be modified, amended,
supplemented, canceled or discharged, except by written instrument executed by
all parties. No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege. No waiver of any breach of
any provision shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision, nor shall any waiver be implied from
any course of dealing between the parties. No extension of time for performance
of any obligations or other acts hereunder or under any other agreement shall be
deemed to be an extension of the time for performance of any other obligations
or any other acts. The rights and remedies of the parties under this Agreement
are in addition to all other rights and remedies, at law or equity, that they
may have against each other.
14.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. The rights and obligations of this Agreement
may be assigned by Nations to any successor or subsidiary. Except as expressly
provided herein, the rights and obligations of this Agreement may not be
assigned by the Company or any of the Shareholders without the prior written
consent of Nations.
14.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument. A telecopy signature of any party shall
be considered to have the same binding legal effect as an original signature.
14.7 INTERPRETATION. When a reference is made in this Agreement to an
article, section, paragraph, clause, schedule or exhibit, such reference shall
be deemed to be to this Agreement unless otherwise indicated. The headings
contained herein and on the schedules are for reference purposes
42
<PAGE> 43
only and shall not affect in any way the meaning or interpretation of this
Agreement or the schedules. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." Time shall be of the essence in this Agreement.
14.8 CONSTRUCTION. The parties agree and acknowledge that they have
jointly participated in the negotiation and drafting of this Agreement. In the
event of an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumptions or burdens of proof shall arise favoring any party by virtue of the
authorship of any of the provisions of this Agreement. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to refer
to all rules and regulations promulgated thereunder, unless the context requires
otherwise. If any party has breached any representation, warranty, or covenant
contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the party has not
breached shall not detract from or mitigate the fact that the party is in breach
of the first representation, warranty, or covenant. The mere listing (or
inclusion of copy) of a document or other item shall not be deemed adequate to
disclose an exception to a representation or warranty made herein (unless the
representation or warranty relates solely to the existence of the document or
other items itself).
14.9 GOVERNING LAW; SEVERABILITY. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
Florida. If any word, phrase, sentence, clause, section, subsection or provision
of this Agreement as applied to any party or to any circumstance is adjudged by
a court to be invalid or unenforceable, the same will in no way affect any other
circumstance or the validity or enforceability of any other word, phrase,
sentence, clause, section, subsection or provision of this Agreement. If any
provision of this Agreement, or any part thereof, is held to be unenforceable
because of the duration of such provision or the area covered thereby, the
parties agree that the court making such determination shall have the power to
reduce the duration and/or area of such provision, and/or to delete specific
words or phrases, and in its reduced form, such provision shall then be
enforceable and shall be enforced.
14.10 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly represents
and warrants to all other parties hereto that (a) before executing this
Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party has
had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
14.11 WAIVER OF JURY TRIAL. IN ANY CIVIL ACTION, COUNTERCLAIM, OR
PROCEEDING, WHETHER AT LAW OR IN EQUITY, WHICH ARISES OUT OF, CONCERNS
OR RELATES TO THIS AGREEMENT, ANY TRANSACTIONS CONTEMPLATED
43
<PAGE> 44
HEREUNDER, THE PERFORMANCE HEREOF OR THE RELATIONSHIP CREATED HEREBY, WHETHER
SOUNDING IN CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, TRIAL SHALL BE TO A
COURT OF COMPETENT JURISDICTION AND NOT TO A JURY. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT (STATUTORY, CONSTITUTIONAL, COMMON LAW OR OTHERWISE) IT MAY
HAVE TO A TRIAL BY JURY. ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE WAIVER OF THE OTHER
PARTIES' RIGHT TO TRIAL BY JURY. NO PARTY HAS MADE OR RELIED UPON ANY ORAL
REPRESENTATIONS BY ANY OTHER PARTY REGARDING THE ENFORCEABILITY OF THIS
PROVISION. EACH PARTY HAS READ AND UNDERSTANDS THE EFFECT OF THIS JURY WAIVER
PROVISION.
[Signatures On Following Page]
44
<PAGE> 45
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
NATIONSRENT, INC., a Delaware corporation
By: /s/ Fred Whaley
--------------------------------------------
Name: FRED WHALEY
Title: VICE PRESIDENT
RAY L. O'NEAL, INC., a Texas corporation
By: /s/ Don R. O'Neal
--------------------------------------------
Name: DON R. O'NEAL
Title: PRESIDENT
ARENCO, L.L.C., a Texas limited liability company
By: /s/ Don R. O'Neal
--------------------------------------------
Name: DON R. O'NEAL
Title: SOLE MANAGER AND PRESIDENT
/s/ Don R. O'Neal
--------------------------------------------
Don R. O'Neal, individually, as Shareholder
/s/ Elizabeth M. O'Neal
--------------------------------------------
Elizabeth M. O'Neal, individually, as Shareholder
O'NEAL REVOCABLE TRUST DATED DECEMBER 29, 1987
By: /s/ Ray L. O'Neal
--------------------------------------------
Ray L. O'Neal, as Co-Trustee
By: /s/ Ellen M. O'Neal
--------------------------------------------
Ellen M. O'Neal, as Co-Trustee
45
<PAGE> 46
LIST OF EXHIBITS AND SCHEDULES
<TABLE>
<S> <C>
EXHIBIT A-1 Promissory Note
EXHIBIT A-2 Short Term Promissory Note
EXHIBIT B-1 Form of Employment Agreement
EXHIBIT B-2 Form of Employment Agreement
EXHIBIT C Form of Bill of Sale, Assignment and Assumption Agreement
EXHIBIT D List of Employees - Options
EXHIBIT E Form of Lease
Schedule 1.1(a) Inventory of Rental Equipment
Schedule 1.1(b) Inventory of Merchandise
Schedule 1.1(c) Other Tangible Personal Property
Schedule 1.1(e) Assumed Contracts
Schedule 1.1(h) Receivables
Schedule 1.1(i) Equipment Leases
Schedule 1.1(j) Intangible Property
Schedule 1.2(iii) Excluded Assets-Store #2
Schedule 1.2(iv) Excluded Assets
Schedule 2.3 O'Neal Family Obligations
Schedule 2.6 Allocation of Purchase Price
Schedule 5.4 Capitalization
Schedule 5.5 No Violation
Schedule 5.7 Financial Statements
Schedule 5.8(iii) Changes Since the Current Balance Sheet Date - Bonuses and Employee
Compensation
Schedule 5.8(iv) Changes Since the Current Balance Sheet Date - Sale of Assets
Schedule 5.9 Liabilities of the Company, Indebtedness
Schedule 5.10 Litigation
Schedule 5.11 Environmental Matters
Schedule 5.12 Real Estate
Schedule 5.15 Labor and Employment Matters
Schedule 5.16 Employee Benefit Plans
Schedule 5.16(viii) Employee Benefit Plans - Exceptions to Proper Accounting and Accruals
on Company's Books
Schedule 5.17 Tax Matters
Schedule 5.18 Insurance Policies
Schedule 5.20 Permits
Schedule 5.21 Affiliated Transactions
Schedule 5.23 Material Contracts
Schedule 5.25 Top 25 Customers
Schedule 5.26 Bank Accounts
Schedule 5.27 Names
Schedule 7.16 Leases
Schedule 10.1 Indemnification Threshold
Schedule 12.1 Market Area
</TABLE>
46
<PAGE> 1
EXHIBIT 10.2
PROMISSORY NOTE
NEITHER THIS PROMISSORY NOTE NOR THE SHARES ISSUABLE UPON CONVERSION OF THIS
PROMISSORY NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND THIS PROMISSORY NOTE CANNOT BE
SOLD OR TRANSFERRED, AND THE SHARES ISSUABLE UPON CONVERSION OF THIS PROMISSORY
NOTE CANNOT BE SOLD OR TRANSFERRED, UNLESS AND UNTIL THEY ARE SO REGISTERED OR
UPON RECEIPT OF AN OPINION OF COUNSEL, SATISFACTORY TO THE MAKER, THAT SUCH
REGISTRATION IS NOT THEN REQUIRED UNDER THE CIRCUMSTANCES OF SUCH SALE OR
TRANSFER.
UNSECURED CONVERTIBLE SUBORDINATED PROMISSORY NOTE
COLUMBUS, OHIO
$42,500,000 AS OF October 23, 1998
FOR VALUE RECEIVED, NATIONSRENT, INC., a Delaware corporation
("Maker"), promises to pay to Ray L. O'Neal, Inc., a Texas corporation, its
successors and assigns ("Payee"), in lawful money of the United States of
America, the principal sum of FORTY TWO MILLION FIVE HUNDRED THOUSAND DOLLARS
($42,500,000), together with interest (calculated on the basis of a year of
365 or 366 days, as applicable, and charged for the actual number of days
elapsed) in arrears on the unpaid principal balance in the manner provided
below. This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of that certain Amended and Restated Asset
Purchase Agreement, dated as of September 9, 1998 (the "Agreement"), between the
Payee and Maker, and is subject to the terms and conditions of the Agreement,
which are, by this reference, incorporated herein and made a part hereof.
Capitalized terms used in this Note without definition shall have the respective
meanings set forth in the Agreement.
ARTICLE I
PAYMENTS
--------
1.1 PAYMENTS OF INTEREST.
(a) This Note shall bear interest at the rate of Six Percent
(6%) per annum, commencing on the date hereof, subject to adjustment as
provided in Section 1.1(b) below. Accrued and unpaid interest shall be
payable quarterly on each March 31, June 30, September 30, and December
31, commencing on December 31, 1998, until all principal and accrued
and unpaid interest shall have been paid in full.
<PAGE> 2
(b) Notwithstanding anything to the contrary contained herein,
on or after an Event of Default (defined below) resulting from the
failure to timely pay principal of or interest on this Note or on or
after another Event of Default for which Payee has accelerated the
maturity date (subject to any notice, grace and cure provisions
provided herein), this Note shall bear interest at a rate per annum
equal to Ten Percent (10%) from the date of such Event of Default until
paid in full.
1.2 REPAYMENT OF PRINCIPAL. The principal amount of this Note shall be
due and payable on October 23, 2004 (the "Maturity Date"). This Note may be
fully or partially prepaid without penalty or premium.
1.3 MANNER OF PAYMENT. All payments of principal and interest on this
Note shall be made by check at such place in the United States of America as
Payee shall designate to Maker in writing or, at Maker's option, by wire
transfer of immediately available funds to an account designated by Payee in
writing. If any payment of principal or interest on this Note is due on a day
which is not a Business Day (defined below), such payment shall be due on the
next succeeding Business Day, and such extension of time shall be taken into
account in calculating the amount of interest payable under this Note. "Business
Day" means any day other than a Saturday, Sunday or legal holiday in the State
of Florida.
1.4 CONVERSION. Subject to and upon compliance with the provisions of
the Agreement, Payee shall be entitled, at its option, at any time prior to the
Maturity Date, to convert the outstanding principal amount of this Note (or any
portion of the principal amount hereof which is $1,000 or any integral multiple
thereof) into fully paid and nonassessable shares (calculated as to each
conversion to the nearest 1/1000 of a share) of Common Stock, $0.01 par value
per share of Maker ("Common Stock") at a conversion price equal to Eight Dollars
($8.00) per share (the "Conversion Price"). If Maker is merged into or otherwise
acquired by a publicly held entity (the "New Entity"), the Payee shall be
entitled, similarly, to convert such principal amount into shares of New Entity,
the number of which shares shall be that number of shares of New Entity which
the Payee would have received if it had exercised its option of conversion into
shares of Maker immediately prior to such merger. The Payee shall surrender this
Note, duly endorsed or assigned to Maker or in blank, to Maker at its office or
agency at the address provided in writing by maker, accompanied by written
notice to Maker that the holder hereof elects to convert this Note, or if less
than the entire principal amount hereof is to be converted, the portion hereof
to be converted. Except with respect to a conversion made pursuant to clause
(ii) of the first sentence of Section 1.5, no payment or adjustment is to be
made on conversion for interest accrued hereon or for dividends on the common
stock issued on conversion. No fractions of shares or scrip representing
fractions of shares will be issued on conversion, but instead of any fractional
interest the Maker shall pay a cash adjustment. In addition, in case of certain
consolidations or mergers to which Maker is a party or the transfer of
substantially all of the assets of Maker, this Note, if then outstanding, will
be convertible thereafter, during the period this Note shall be convertible as
specified above, only into the kind and amount of securities, cash and other
property receivable upon the consolidation, merger or transfer by a holder of
the
2
<PAGE> 3
number of shares of common stock into which this Note might have been converted
immediately prior to such consolidation, merger or transfer (assuming such
holder of common stock failed to exercise any rights of election and received
per share the kind and amount received per share by a plurality of non-electing
shares).
1.5 PREPAYMENT; MANDATORY CONVERSION. Maker shall have the right, at
any time and from time to time, upon ten (10) business days prior written notice
to Payee (such ten-day period being referred to as the "Waiting Period" and such
written notice being referred to as the "Notice"), without penalty or premium,
to: (i) prepay the outstanding principal of this Note (or any portion of the
principal amount hereof which is $1,000 or any integral multiple thereof),
together with all accrued and unpaid interest on the amount so prepaid, or (ii)
convert the outstanding principal amount of this Note (or any portion of the
principal amount hereof which is $1,000 or any integral multiple thereof), into
Common Stock of Maker at the Mandatory Conversion Price (as defined below);
PROVIDED, HOWEVER, that Payee shall have the right to exercise its conversion
right pursuant to Section 1.4 hereof during the Waiting Period. The Mandatory
Conversion Price shall mean the price per share equal to the closing price of a
share of Maker's Common Stock as reported (absent manifest error in the printing
thereof) by the Wall Street Journal (Eastern Edition) on the day immediately
preceding the date of the Notice. Upon such conversion Maker shall pay to Payee
in cash accrued and unpaid interest on the outstanding principal of the Note
being converted calculated to the date of such conversion.
1.6 RIGHT OF SET-OFF. Maker shall have the right to withhold and
set-off against any amount due hereunder, pursuant to Article X of the
Agreement, the amount of any claim for Indemnifiable Damages to which Maker may
be entitled under the Agreement and for which an arbitration decision or
judgment by a court of competent jurisdiction has been rendered.
ARTICLE II
DEFAULTS
--------
2.1 EVENTS OF DEFAULT. The occurrence and continuance of any one or
more of the following events with respect to Maker shall constitute an event of
default hereunder ("Event of Default"):
(a) If Maker shall fail to pay when due any payment of
principal or interest on this Note and such failure continues for ten
(10) days after Payee notifies Maker thereof in writing;
(b) If, pursuant to or within the meaning of the United States
Bankruptcy Code or any other federal or state law relating to
insolvency or relief of debtors (a "Bankruptcy Law"), Maker shall (i)
commence a voluntary case or proceeding; (ii) consent to the entry of
an order for relief against it in an involuntary case; (iii) consent to
the appointment of a trustee, receiver, assignee, liquidator or similar
official; (iv) make an assignment for the
3
<PAGE> 4
benefit of its creditors; or (v) admit in writing its inability to pay
its debts as they become due; or
(c) If a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that (i) is for relief against Maker in
an involuntary case, (ii) appoints a trustee, receiver, assignee,
liquidator or similar official for Maker or substantially all of
Maker's properties, or (iii) orders the liquidation of Maker, and in
each case the order or decree is not dismissed within one hundred
twenty (120) days.
2.2 NOTICE BY MAKER. Upon the occurrence of an Event of
Default hereunder (unless all Events of Default have been waived by Payee or
cured), Payee may, at its option, (i) by written notice to Maker, declare the
entire unpaid principal balance of this Note, together with all accrued interest
thereon, immediately due and payable regardless of any prior forbearance, and
(ii) exercise any and all rights and remedies available to it under applicable
law, including, without limitation, the right to collect from Maker all sums due
under this Note. Maker shall pay all reasonable costs and expenses incurred by
or on behalf of Payee in connection with Payee's exercise of any or all of its
rights and remedies under this Note, including, without limitation, reasonable
attorneys' fees.
Notwithstanding the above, if an Event of Default has occurred
under this Note and such Event of Default results in a default under the Senior
Indebtedness (defined in Section 3.1 below) or a default under the Senior
Indebtedness otherwise exists, then for so long as any Senior Indebtedness
remains unpaid, the Payee shall not commence or join with any creditor of Maker
in commencing any proceedings to collect or enforce its rights hereunder until
the earlier of (x) one hundred eighty (180) days from the occurrence of such
Event of Default, and (y) the date, if any, on which such default is cured or
waived by the holder or holders of the Senior Indebtedness to which such default
relates; provided, however, that notwithstanding such forbearance of the
commencement of proceedings with respect to an Event of Default, such Event of
Default shall nevertheless be an Event of Default for all other purposes of this
Note and Payee shall be entitled to pursue all other remedies other than the
commencement of proceedings under the circumstances set forth in this paragraph.
ARTICLE III
NOTE SUBORDINATE TO SENIOR INDEBTEDNESS
---------------------------------------
3.1 SENIOR INDEBTEDNESS. Anything in this Note to the contrary
notwithstanding, Maker covenants and agrees, and Payee likewise covenants and
agrees, that, to the extent and in the manner hereinafter set forth in this
Article III, the indebtedness represented by this Note and the payment of
principal of and interest on this Note and other amounts owed by Maker under
this Note are hereby expressly made subordinate and subject in right of payment
to the prior payment in full in cash of all Senior Indebtedness (defined below),
including any interest accruing after the occurrence of an Event of Default,
whether or not such interest is an allowed claim enforceable against the debtor
in a case
4
<PAGE> 5
brought under the United States Bankruptcy Code (the "Bankruptcy Code"). "Senior
Indebtedness" means the principal of (and premium, if any) and interest on (i)
all indebtedness, public or private, of Maker for money borrowed, whether
outstanding on the date of this Note or thereafter created, assumed or incurred,
EXCEPT (A) such indebtedness as is by its terms expressly stated to be not
superior in right of payment to this Note or to rank pari passu with this Note,
(B) all notes issued in connection with the acquisition of any business,
properties, stock or assets to the seller of such business, properties, stock or
assets, which shall rank pari passu with this Note unless otherwise expressly
stated to be not superior and (C) this Note, and (ii) any deferrals, renewals,
increases or extensions of any such Senior Indebtedness, and (iii) any fees,
costs, enforcement expenses (including legal fees and disbursements), collateral
protection expenses and other reimbursement or indemnity obligations relating to
Senior Indebtedness. The term "indebtedness of Maker for money borrowed" means
any obligation of, or any obligation guaranteed by, Maker for the repayment of
money borrowed, whether or not evidenced by bonds, debentures, notes or other
written instruments, any capitalized lease obligation and any deferred
obligation for payment of the purchase price of any property or assets. Payee
agrees to furnish any holder of Senior Indebtedness upon request a subordination
agreement that contains reasonably customary subordination provisions, including
the priority rights of Payee and the holder of the Senior Indebtedness and
prohibits payments to Payee that would cause a default under the Senior
Indebtedness.
3.2 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC. In the event of (i)
any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection
therewith, relative to maker or to its creditors, as such, or to its assets, or
(ii) any liquidation, dissolution or other winding up of Maker, whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy,
or (iii) any assignment for the benefit of creditors or any other marshaling of
assets and liabilities of Maker, whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy, THEN and in any such event:
(a) the holders of Senior Indebtedness shall be entitled to
receive payment in full in cash of all amounts due or to become due on
or in respect of all Senior Indebtedness, or provision shall be made
for such payment in accordance with the instruments governing such
Senior Indebtedness, before Payee is entitled to receive any payment on
account of principal of (or premium, if any) or interest on this Note
or other amounts owed by Maker under this Note;
(b) any payment or distribution of assets or securities of
Maker of any kind or character, whether in cash, property or
securities, to which Payee would be entitled but for the provisions of
this Article III, including any such payment or distribution which may
be payable or deliverable by reason of the payment of any other
indebtedness of Maker being subordinated to the payment of this Note
(except for any such payment or distribution (x) authorized by an order
or decree giving effect, and stating in such order or decree that
effect is given, to the subordination of this Note to the Senior
Indebtedness, and made by a court of competent jurisdiction in a
reorganization proceeding under any applicable bankruptcy law, or (y)
of securities that are subordinated, to at least the same extent as
this Note, to the
5
<PAGE> 6
payment in full in cash of all Senior Indebtedness then outstanding),
shall be paid by the liquidating trustee or agent or other person
making such payment or distribution, whether a trustee in bankruptcy, a
receiver of liquidating trustee or otherwise, directly to the holders
of the Senior Indebtedness or their representative or representatives,
ratably according to the aggregate amounts remaining unpaid on the
Senior Indebtedness, for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all
Senior Indebtedness in full in cash, after giving effect to any
concurrent payment or distribution to or for the holders of such Senior
Indebtedness; and
(c) in the event that, notwithstanding the foregoing
provisions of Article III, Payee shall have received any such payment
or distribution of assets or securities of Maker of any kind or
character, whether in cash, property or securities (other than payments
or distributions (x) authorized by an order or decree giving effect to
the subordination of this Note to the Senior Indebtedness, or (y) of
securities that are subordinated to the payment in full in cash of all
Senior Indebtedness, all as described in Section 3.2(b) above),
including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of Maker
being subordinated to the payment of this Note, before all Senior
Indebtedness is paid in full in cash or payment thereof provided for,
then and in such event such payment or distribution shall be received
and held in trust for the benefit of, and shall be paid over or
delivered to, the holders of the Senior Indebtedness or their
representative or representatives, ratably according to the aggregate
amount remaining unpaid on the Senior Indebtedness, for application to
the payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all Senior Indebtedness in full in cash, after giving
effect to any concurrent payment or distribution to or for the holders
of such Senior Indebtedness.
(d) in the event that Payee fails to, in a timely manner and
to the fullest extent possible, (i) file or cause to be filed such
proofs of claim and other papers or documents as may be necessary or
advisable to have the claims under this Note allowed at any meeting of
creditors or in any proceeding referred to in this Section 3.2 or (ii)
enforce claims under this Note, by proof of debt, proof of claim, or
otherwise, the holders of the Senior Indebtedness shall be entitled and
are authorized to so file and/or enforce either in Payee's name or in
the name or names of any holder of the Senior Indebtedness.
(e) Payee shall retain the right to vote and otherwise act
with respect to the claims under this Note (including, without
limitation, the right to vote to accept or reject any plan of partial
or complete liquidation, reorganization, arrangement, composition or
extension), PROVIDED that Payee shall not vote with respect to any such
plan or take any other action in any way so as to (i) contest the
validity of any Senior Indebtedness or any collateral therefor or
guaranties thereof, (ii) contest the relative rights and duties of any
holders of any Senior Indebtedness established in any instruments or
agreements creating or evidencing any of the Senior Indebtedness with
respect to any of such collateral or guaranties, or (iii) contest
Payee's obligations and agreements set forth in this Article III.
6
<PAGE> 7
The consolidation of Maker with, or the merger of Maker into,
another corporation or the liquidation or dissolution of Maker following the
conveyance, transfer or lease of its properties and assets substantially as an
entirety to another corporation shall not be deemed a dissolution, winding up,
liquidation, reorganization, assignment for the benefit of creditors or
marshaling of assets and liabilities of Maker for the purposes of this Article
III.
3.3 NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT.
(a) In the event of and during the continuation of any default
in the payment of any Senior Indebtedness beyond any applicable grace
period with respect thereto ("payment default"), then no payment shall
be made by or on behalf of Maker on this Note until the date, if any,
on which such default or event of default is waived by the holders of
such Senior Indebtedness or otherwise cured or has ceased to exist or
the Senior Indebtedness to which such default or event of default
relates is discharged by payment in full in cash.
(b) In the event that any other event of default with respect
to any Senior Indebtedness shall have occurred and be continuing that
permits the holders of such Senior Indebtedness (or a trustee on behalf
of such holders) to declare such Senior Indebtedness due and payable
prior to the date on which it would otherwise have become due and
payable, and upon receipt by Maker and Payee of written notice (the
"Payment Notice") from a representative for, or the holder of, any
Senior Indebtedness, then no payment shall be made by or on behalf of
Maker on this Note until the earlier of (x) one hundred seventy nine
(179) days after the date on which such Payment Notice shall have been
received and (y) the date, if any, on which such default or event of
default is cured or waived by the holders of the Senior Indebtedness to
which such default or event of default relates is discharged by payment
in full in cash (a "Blockage Period"). Not more than two (2) Blockage
Periods may be commenced during any period of three hundred sixty (360)
consecutive days. No event of default that existed or was continuing
(it being acknowledged that any subsequent action that would give rise
to an event of default pursuant to any provision under which an event
of default previously existed or was continuing shall constitute a new
event of default for this purpose) on the date of the commencement of
any Blockage Period with respect to the Senior Indebtedness initiating
such Blockage Period shall be, or shall be made, the basis for the
commencement of a second Blockage Period by the representative for, or
the holders of, such Senior Indebtedness whether or not within a period
of three hundred sixty (360) consecutive days, unless such event of
default shall have been cured or waived for a period of not less than
ninety (90) consecutive days. Any such failure to make a payment on
this Note shall not be construed as preventing the occurrence of an
Event of Default under this Note. Any payment permitted hereunder after
a Blockage Period of amounts owed to Payee during a Blockage Period
shall be deemed a cure of any Event of Default caused by any such
delayed payment. Notwithstanding any other provision contained herein,
during all times in which Maker's senior credit facility, dated as of
September 24, 1998, as amended, with BankBoston, N.A., as
administrative agent and LaSalle National Bank, as documentation agent,
with Fleet Bank N. A. and NationsBank, N.A., as co-agents and the
lenders identified therein, or any
7
<PAGE> 8
restatement, amendment, supplement or modification thereof or any
replacement facility thereof (the "Senior Bank Facility") is in effect
or the lenders thereunder have any obligations to make loans or extend
credit to Maker or its subsidiaries, the only holder of Senior
Indebtedness entitled to exercise its rights under Section 3.2(d) and
this Section 3.3(b) shall be the agent under the Senior Bank Facility.
In the event that, notwithstanding the foregoing, any payment or
distribution shall be received by Payee in contravention of the provisions of
this Article III, then and in such event such payment or distribution shall be
received and held in trust for the benefit of, and shall be paid over or
delivered to, the holders of the Senior Indebtedness or their representative or
representatives, ratably according to the aggregate amounts remaining unpaid on
account of the Senior Indebtedness, for application to the Senior Indebtedness
or to be held as collateral for, the payment of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay all Senior Indebtedness in full
in cash, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Indebtedness.
The provisions of this Section 3.3 shall not apply to any payment with
respect to which Section 3.2 would be applicable.
3.4 PAYMENT PERMITTED IF NO DEFAULT. Nothing contained in this Article
III or elsewhere in this Note shall prevent Maker, at any time except under the
circumstances described in Section 3.2 or under the conditions described in
Section 3.3, from making regularly scheduled payments at any time of principal
or interest on this Note or other amounts owed by Maker under this Note.
3.5 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS;
MARSHALING. No payment or distributions to the holders of Senior Indebtedness or
their representatives pursuant to the provisions of this Article III shall
entitle Payee to exercise any right of subrogation in respect thereof until the
Senior Indebtedness shall have been paid in full. Payee further waives any and
all rights with respect to marshaling.
3.6 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. The provisions of this
Article III are intended solely for the purpose of defining the relative rights
of Payee on the one hand and the holders of Senior Indebtedness on the other
hand. Nothing contained in this Note is intended to or shall (a) impair, as
among Maker, its creditors other than holders of Senior Indebtedness and Payee,
the obligation of Maker, which is absolute and unconditional, to pay to Payee
the principal of (and premium, if any) and interest on this Note as and when the
same shall become due and payable in accordance with its terms; or (b) affect
the relative rights against Maker of Payee and creditors of Maker other than the
holders of Senior Indebtedness; or (c) prevent Payee from exercising all
remedies otherwise permitted by applicable law or this Note upon default under
this Note, subject to the rights, if any, under this Article III and Section 2.1
of the holders of the Senior Indebtedness.
3.7 NO WAIVER OF SUBORDINATION PROVISIONS. No right of any present or
future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of Maker or by any act or failure to
8
<PAGE> 9
act, in good faith, by any such holder, or by noncompliance by Maker with the
terms, provisions of and covenants of this Note, regardless of any knowledge
thereof any such holder may have or be otherwise charged with.
3.8 NOTICE TO PAYEE. Maker shall give prompt written notice to Payee of
any fact known to Maker which would prohibit the making of any payment to or by
Payee in respect of this Note. Notwithstanding the provisions of this Article
III or any other provision of this Note, Payee shall not be charged with the
knowledge of the existence of any facts which would prohibit the making of any
payment to or by Payee in respect of this Note, unless and until Payee shall
have received written notice thereof from Maker or holder of Senior Indebtedness
or from any trustee, fiduciary or agent therefor.
3.9 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.
Upon any payment or distribution of assets or securities of Maker referred to in
Section 3.2, Payee shall be entitled to rely upon any order or decree entered by
any court of competent jurisdiction in which such insolvency, bankruptcy,
receivership, liquidation, reorganization, dissolution, winding up or similar
case or proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of creditors,
agent or other person making such payment or distribution, delivered to Payee,
for the purpose of ascertaining the persons entitled to participate in such
payment or distribution, the holders of Senior Indebtedness and other
indebtedness of Maker, the amount thereof or payment thereof, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Article III.
3.10 FREEDOM OF DEALING. Payee agrees, with respect to the Senior
Indebtedness and any and all collateral therefor or guaranties thereof, that
Maker and the holders of the Senior Indebtedness may agree to increase the
amount of the Senior Indebtedness or otherwise modify the terms of any of the
Senior Indebtedness, and the holders of the Senior Indebtedness may grant
extensions of the time of payment or performance to and make compromises,
including releases of collateral or guaranties, and settlements with Maker and
all other persons, in each case without the consent of Payee or Maker and
without affecting the agreements of Payee or Maker contained in this Note;
PROVIDED, HOWEVER, that nothing contained in this Section 3.10 shall constitute
a waiver of the right of Maker itself to agree or consent to a settlement or
compromise of a claim which any holder of the Senior Indebtedness may have
against Maker.
3.11 DEFENSE TO ENFORCEMENT. If Payee, in contravention of the terms of
this Note, shall commence, prosecute or participate in any suit, action or
proceeding against Maker, then Maker may interpose as a defense or plea the
provisions of this Article III, and any holder of the Senior Indebtedness may
intervene and interpose such defense or plea in its name or in the name of
Maker. If Payee, in contravention of the terms of this Article III, or the last
paragraph of Section 2.2, shall attempt to collect under this Note or enforce
any provisions of this Note, then any holder of the Senior Indebtedness or Maker
may restrain the enforcement thereof in the name of such holder of the Senior
Indebtedness or in the name of Maker.
9
<PAGE> 10
3.12 REINSTATEMENT OF SUBORDINATION. To the extent that Maker or any
guarantor of or provider of collateral for the Senior Indebtedness makes any
payment on the Senior Indebtedness that is subsequently invalidated, declared to
be fraudulent or preferential or set aside or is required to be repaid to a
trustee, receiver or any other party under any bankruptcy, insolvency or
reorganization act, state or federal law, common law or equitable cause (such
payment being hereinafter referred to as a "Voided Payment"), then to the extent
of such Voided Payment, that portion of the Senior Indebtedness that had been
previously satisfied by such Voided Payment shall be revived and continue in
full force and effect as if such Voided Payment had never been made. In the
event that a Voided Payment is recovered from any holder of the Senior
Indebtedness, a default in the payment of the relevant Senior Indebtedness shall
be deemed to have existed and to be continuing from the date of such holder of
the Senior Indebtedness' initial receipt of such Voided Payment until the full
amount of such Voided Payment is restored to such holder of the Senior
Indebtedness. During any continuance of any such payment default, this Article
III and the last paragraph of Section 2.2 shall be in full force and effect with
respect to the obligations hereunder.
3.13 AMENDMENTS; LIENS. The provisions of this Article III and the last
paragraph of Section 2.2 may not be amended or waived without the written
agreement of Maker, the agent under the Senior Bank Facility and Payee. Payee
will not, without the prior written consent of all the holders of the Senior
Indebtedness, take or receive any security interest, lien, mortgage or other
encumbrance on any assets of Maker or its subsidiaries.
ARTICLE IV
MISCELLANEOUS
-------------
4.1 WAIVER. The rights and remedies of Payee under this Note shall be
cumulative and not alternative. No waiver by Payee of any right or remedy under
this Note shall be effective unless in a writing signed by Payee. Neither the
failure nor any delay in exercising any right, power or privilege under this
Note will operate as a waiver of such right, power or privilege and no single or
partial exercise of any such right, power or privilege by Payee will preclude
any other or further exercise of such right, power or privilege or the exercise
of any other right, power or privilege. To the maximum extent permitted by
applicable law: (a) no claim or right of Payee arising out of this Note can be
discharged by Payee, in whole or in part, by a waiver or renunciation of the
claim or right unless in a writing, signed by Payee; (b) no waiver that may be
given by Payee will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on Maker will be deemed to be a waiver
of any obligation of Maker or of the right of Payee to take further action
without notice or demand as provided in this Note. Maker hereby waives
presentment, demand, protest and notice of dishonor and protest.
4.2 NOTICES. Any notice required or permitted to be given hereunder
shall be given in accordance with Section 14.1 of the Agreement.
10
<PAGE> 11
4.3 SEVERABILITY. If any provision in this Note is held invalid or
unenforceable by any court of competent jurisdiction, then the other provisions
of this Note shall remain in full force and effect. Any provision of this Note
held invalid or unenforceable only in part or degree shall remain in full force
and effect to the extent not held invalid or unenforceable.
4.4 GOVERNING LAW. This Note shall be governed by the laws of the State
of Florida without regard to conflicts of laws principles.
4.5 PARTIES IN INTEREST. This Note shall bind Maker and its successors
and assigns. This Note shall not be assigned or transferred by Payee without the
express prior written consent of Maker, except by Will or, in default thereof,
by operation of law.
4.6 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Note are provided for convenience only and shall not affect its construction or
interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Note unless otherwise specified. All
words used in this Note shall be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the words "hereof"
and "hereunder" and similar references refer to this Note in its entirety and
not to any specific section or subsection hereof.
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of
the date first stated above.
NATIONSRENT, INC.,
a Delaware corporation
By: /s/ Thomas C. Richardson
-------------------------------------
Name: Thomas C. Richardson
----------------------------------
Title: Vice President and Ass't Secretary
----------------------------------
11
