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H&E EQUIPMENT SERVICES LLC
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8-K
Jan 5, 5:58 PM ET
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H&E EQUIPMENT SERVICES LLC 8-K
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Contents
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(a) Except as set forth on the attached Disclosure Schedule 6.11(a):
(i) has not been a United States real property holding corporation within the meaning of Section 897(e)(2) of the Code during the applicable period specified in Section 897(c)(l)(A)(ii) of the Code;
(ii) has not made an election under Section 341(f) of the Code;
(iii) is not liable for the Taxes of another Person (A) under Treasury Regulation Section 1.1502-6 (or comparable provisions of state, local or foreign law), (B) as a transferee or successor, or (C) by contract or indemnity or otherwise; and
(iv) except as described on Disclosure Schedule 6.11(b)(iv), has not in the past 10 years acquired assets from another entity in a transaction in which the Group’s Tax basis for the acquired assets was determined, in whole or in part, by reference to the Tax basis of the acquired assets (or any other property) in the hands of the transferor.
(c) (i) Eagle S-Corp has been a validly electing “S corporation” within the meaning of Sections 1361 and 1362 of the Code at all times since its incorporation and Eagle
S-Corp will be an S corporation up to and including the Closing Date. Eagle S-Corp has been a valid “S” corporation for state tax purposes in the states listed on Disclosure Schedule 6.11(c) for the periods set forth in such Disclosure Schedule.
(a) The Group has complied (where such non-compliance might result in the imposition upon the Group of any Liability) and is in compliance, in all material respects with all Environmental and Safety Requirements. The Group and Sellers have furnished to H&E true and complete copies of all reports of investigations (including without limitation Phase I investigations) with respect to its real property (whether owned or leased) in the possession of, or prepared for, the Group, Sellers or their Affiliates or advisors, except for any earlier reports of investigations to the extent that such reports of investigations are superseded by any reports of investigations so delivered.
(c) The Group has not received any material Environmental Claim against the Group or with respect to the Property; and to Sellers’ Knowledge, no Environmental Claim is threatened against the Group or with respect to real property (whether owned or leased) and no facts or circumstances exist which could reasonably be expected to result in or serve as a basis
for any Environmental Claim against the Group or with respect to real property (whether owned or leased).
(f) Neither this Agreement nor the consummation of the Transaction will result in any obligations for site investigation or cleanup, or notification to or consent of government agencies or third parties, pursuant to any so-called “transaction-triggered” or “responsible transfer” Environmental and Safety Requirement.
(g) Neither the Employee Benefit Plans, the Group, any ERISA Affiliate, nor any employee of the foregoing, nor, to Sellers’ Knowledge, any trusts created thereunder, nor any trustee, administrator or other fiduciary thereof, has engaged in a “prohibited transaction” (as such term is defined in Section 4975 of the Code or Section 406 of ERISA) which could subject any thereof to the tax or penalty on prohibited transactions imposed by such Section 4975 or the sanctions imposed under Title I of ERISA. Except as indicated on Disclosure Schedule 6.14(g), neither the Employee Benefit Plans nor any trust created thereunder have been terminated nor have there been any “reportable events” (as defined in Section 4043 of ERISA and the regulations thereunder) with respect to either thereof.
(h) Neither the Group nor any ERISA Affiliate has incurred any actual or potential liability with respect to any Employee Benefit Plan which is maintained or sponsored by a member of the controlled group of companies (within the meaning of Section 414 of the Code) that includes the Group. The Group has not incurred nor is it reasonably likely to incur any liability with respect to any plan or arrangement that would be included within the definition of “Employee Benefit Plan” but for the fact that such plan or arrangement was terminated before the date of this Agreement.
(b) The Group has, or will have as of immediately following the Closing, good and marketable to all Owned Real Property and owned tangible personal property (“Owned Tangible Personal Property”), and a good and valid leasehold interest in all leased tangible personal property (including without limitation machinery and equipment) other than any Leased Tangible Personal Property leased by Company from H&E under a re-rent agreement for which the Group does not provide any representation or warranty (“Leased Tangible Personal Property”) and all Leased Real Property, in each case free and clear of all Liens, except for (i) statutory liens for current taxes or assessments not yet delinquent, (ii) mechanics’, carriers’, workers’, repairers’ and other similar liens arising or incurred in the ordinary course of business and not yet due or delinquent, and (iii) encumbrances set forth on Disclosure Schedule 6.19(b) and encumbrances of record on the underlying fee interest in the Real Property, none of which (as to such encumbrances set forth on Disclosure Schedule 6.19(b) or such underlying fee interests) materially interfere with the operation of the business of the Group as it is presently conducted or might result in a Material Adverse Effect (“Permitted Liens”).
(c) Except as set forth in Disclosure Schedule 6.19(c), each Real Property Lease and each lease of Leased Tangible Personal Property (a “Tangible Personal Property Lease”) is in full force and effect and is, to Sellers’ Knowledge, enforceable against the Landlord which is a party thereto in accordance with its terms. Except as set forth in Disclosure Schedule 6.19(c), the Group has not received any notice of material default or event of default and, to Sellers’ Knowledge, there exists no condition which, with the giving of notice, the passage of time or both could be reasonably expected to result in a material default or event of default under any Real Property Lease or Tangible Personal Property Lease. Other than the Group and other than as set forth on Disclosure Schedule 6.19(c), there are no parties in possession or parties having any rights to occupy or use any of the Leased Real Property or the Leased Tangible Personal Property.
(a) From the date hereof, H&E shall be entitled to make or cause to be made such reasonable investigation of the Group, and the financial and legal condition thereof, as H&E deems reasonably necessary or advisable, and the Group shall, and shall cause and each Company Subsidiary to, cooperate with any such investigation. In furtherance of the foregoing, but not in limitation thereof, the Group will, and cause and each Company Subsidiary to, provide H&E and its financing sources and their respective agents and representatives or cause them to be provided with reasonable access to any and all of its management personnel, representatives,
premises, properties, contracts, commitments, books, records and other information of the Group upon reasonable notice during regular business hours and shall furnish such financial and operating data, projections, forecasts, business plans, strategic plans and other data relating to the Group and its business as H&E, its financing sources and their respective agents and representatives shall reasonably request from time to time, including all information necessary to satisfy closing conditions for obtaining financing for the Transaction. No investigation by H&E heretofore or hereafter made shall modify or otherwise affect any representations and warranties of the Sellers, which shall survive any such investigation, or the conditions to the obligation of H&E to consummate the Transaction.
(b) All information disclosed in writing, whether before or after the date hereof, pursuant to this Agreement or in connection with the Transaction, or the discussions and negotiations preceding, this Agreement to any other party (or its representatives) shall be kept confidential by such other party and its representatives and shall not be used by any Person, other than in connection with the Transaction on terms and conditions set forth in Paragraph 4 of the Letter of Intent dated as of September 26, 2005, between the Company and H&E (the “Letter of Intent”), and the provisions of Paragraph 4 of the Letter of Intent shall survive the Closing.
(vii) not enter into any contract, agreement or commitment or take another action which, if entered into or taken prior to the date of this Agreement, would cause any representation or warranty of Sellers to be untrue in any material respect or be required to be disclosed on one or more Disclosure Schedules referred to in Articles VI and VII;
(viii) not incur, create or suffer to exist any Lien on (A) the Eagle LLC Membership Interests or the Eagle S-Corp Common Stock or (B) any material assets of the Group (other than Permitted Liens);
(ix) not incur any Indebtedness (other than Excluded Indebtedness which is included in the calculation of the Adjusted Purchase Price), pay any amount on any Affiliate Obligation (other than regular management fees in the Ordinary Course of Business due SBN Eagle or consulting fees due Gary Bagley or WaCon, Inc. under their respective existing management and consulting services agreements disclosed to H&E; which agreements shall be terminated and released as of the Closing Date), or in any way amend or otherwise alter any Affiliate Obligation;
(x) comply with all applicable provisions of state and federal securities law as may be required to consummate the Transaction;
(xiii) not (A) declare or pay, any dividends on or make other distributions in respect of any Equity Equivalents of the Group, other than Permitted Distributions; (ii) split, combine, or reclassify any of the Equity Equivalents of the Group or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution therefor; or (iii) repurchase or otherwise acquire any of the Equity Equivalents of the Group;
(a) Subject to the terms and conditions herein provided, each of the Parties shall use its commercially reasonable best efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable laws and regulations to consummate and make effective the Transaction. Each of the Parties shall use their respective commercially reasonable best efforts to obtain the Required Consents; however, no Party shall be obligated to make any payments to obtain such authorizations, consents, waivers and approvals or to cause such actions to be taken other than, in connection with obtaining such authorizations, consents, waivers and approvals and the taking of such actions, (x) the payment of its or their own expenses, (y) the reimbursement of the out-of-pocket expenses of other parties to Contracts under which such authorizations, consents, waivers and approvals and the taking of such actions are necessary, or (z) the payment of document review fees, processing fees and charges, legal fees and other amounts required under the terms of any Contract.
(ii) by each of Eagle S-Corp Shareholders Representative, SBN Eagle or H&E, if (A) the Transaction shall not have been consummated on or before February 28, 2006 (or such other date, if any, as Eagle S-Corp Shareholders Representative, SBN Eagle and H&E shall have mutually agreed in writing) and (B) the failure to consummate the Transaction on or before such date is not caused by any breach of this Agreement or the failure to satisfy a condition set forth in Section 5.3 in a manner which constitutes a breach of this Agreement by the Party electing to terminate pursuant to this clause (ii) of this Section 10.1;
(iv) by H&E, if the Group or Sellers shall be in material breach of its or their obligations under this Agreement which breach is not promptly remedied; or
(v) by Eagle S-Corp Shareholders Representative or SBN Eagle, if H&E shall be in material breach of its obligations under this Agreement which breach is not promptly remedied.
10.2. Effect of Termination. If this Agreement is terminated pursuant to Section 10.1, all rights and obligations of the Parties shall terminate and no party shall have any liability to any other Party, except for obligations of the Parties in Sections 9.2(b) and 9.6 and except for any right of the Company to receive the Deposit pursuant to Section 2.2(a) and the Transaction Escrow Agreement, which shall survive the termination of this Agreement; provided that if such termination shall result from the willful failure of a Party to fulfill a condition to the performance of any other Party or to perform a covenant of this Agreement, or from a willful breach by a
Party to this Agreement, or in circumstances involving fraud, such Party shall be fully liable for any and all damages, costs and expenses (including, but not limited to, reasonable counsel fees) sustained or incurred by the other parties.
11.2. General Indemnification.
(a) Indemnification Obligations of Sellers. Sellers shall indemnify, on a joint and several basis, H&E, the Group and their respective Affiliates, shareholders, partners, officers, directors, employees, agents, representatives, successors and permitted assigns (other than the Sellers and their Affiliates) and, for purposes of subclause (iii)(K) below, H&E Delaware (collectively, the “H&E Indemnified Parties”) and save and hold each of them harmless against and pay on behalf of or reimburse such H&E Indemnified Parties as and when incurred for any loss, liability, action, cause of action, cost, damage or expense, whether or not arising out of third party claims (including without limitation interest, penalties, reasonable attorneys’, consultants’ and experts’ fees and expenses and all amounts paid in investigation,
defense or settlement of any of the foregoing) (collectively, “Losses”), which any such H&E Indemnified Party may suffer, sustain or become subject to, arising out of, as a result of, in connection with, relating or incidental to or by virtue of:
(ii) any breach of any covenant, agreement or other provision (other than any representation or warranty) by the Group (prior to the Closing) or such Sellers (as applicable) under this Agreement; and
(f) Third Party Claims. Any Indemnitee shall notify the Indemnitor of the claim in writing promptly after receiving written notice of any action, lawsuit, proceeding, investigation or other claim against it by a third party (a “Third Party Claim”), describing the claim, the amount thereof (if known and quantifiable) and the basis thereof; provided that the failure to so notify an Indemnitor shall not relieve the Indemnitor of its obligations hereunder except to the extent that the Indemnitor shall be actually prejudiced by such failure to so notify. Any Indemnitor shall be entitled to participate in the defense of such Third Party Claim giving rise to an Indemnitee’s claim for indemnification at such Indemnitor’s expense, and at its option (subject to the limitations set forth below) shall be entitled to assume the defense thereof by appointing a reputable counsel reasonably acceptable to the Indemnitee to be the lead counsel in connection with such defense; provided that:
(i) the Indemnitee shall be entitled to participate in the defense of such Third Party Claim and to employ counsel of its choice for such purpose; provided that the fees and expenses of such separate counsel shall be borne by the Indemnitee (other than any fees and expenses of such separate counsel that are incurred prior to the date the Indemnitor effectively assumes control of such defense which, notwithstanding the foregoing, shall be borne by the Indemnitor);
(ii) the Indemnitor shall not be entitled to assume control of such defense and shall pay the reasonable fees and expenses of counsel retained by the Indemnitee if: (A) the claim for indemnification relates to or arises in connection with any criminal proceeding, action, indictment, allegation or investigation (provided that in such event (x) the Indemnitee shall not enter into any settlement of a claim without the prior written consent of the Indemnitor (which shall not be unreasonably withheld), (y) the Indemnitor shall be entitled to participate in the defense of such claim and to employ counsel of its choice for such purpose (provided that the fees and expenses of such separate counsel shall be borne by the Indemnitor), and (z) the Indemnitor shall be entitled to review the files and record relating to such defense upon request of the Indemnitor); (B) the Third Party Claim seeks an injunction or equitable relief against the Indemnitee; (C) a conflict of interest exists between the Indemnitor and the Indemnitee; (D) the Indemnitor failed or is failing to vigorously prosecute or defend such Third Party Claim; or (E) the Third Party Claim, if adversely determined against the Indemnitee, would have a Material Adverse Effect; and
13.1. Notices. Any notice, request, demand or other communication which is required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given (a) when received if personally delivered, (b) when transmitted if transmitted by telex or telecopy transmission only during the recipient’s normal business hours unless arrangements have otherwise been made to receive such notice by telex or telecopy outside of normal business hours, with confirmation of successful transmission received by the sender, (c) the day after it is sent, if sent for next day delivery to a domestic address by recognized overnight delivery service (e.g., DHL, UPS or Federal Express); and (d) upon receipt, if sent by certified or registered mail, return receipt requested. In each case notice shall be sent as indicated below:
13.2. Exhibits and Schedules. All Exhibits, Schedules and Disclosure Schedule hereto, or documents expressly incorporated into this Agreement, are hereby incorporated into this Agreement and are hereby made a part hereof as if set out in full in this Agreement.
13.3. Time of the Essence; Computation of Time. Time is of the essence for each and every provision of this Agreement. Whenever the last day for the exercise of any privilege or the discharge of any duty hereunder shall fall upon a Saturday, Sunday, or any date on which commercial banks in the City of New York are authorized to be closed, the party having such privilege or duty may exercise such privilege or discharge such duty on the next succeeding day which is a regular business day.
13.4. Transfer Taxes; Expenses.
(a) Sellers shall be liable for, and shall pay when due, any transfer, gains, documentary, sales, use, registration, value added or other similar Taxes payable by reason of the Transaction (the “Transfer Taxes”), and Sellers shall, at its own expense, file necessary Tax Returns and other documentation with respect to all such Transfer Taxes.
(b) Regardless of whether the Transaction is consummated, except as otherwise provided herein, each party hereto shall pay its own expenses incident to this Agreement and the Transaction. The Parties acknowledge and agree that all out-of-pocket fees and expenses (except as hereinafter provided) incurred or to be incurred by the Group or Sellers in connection with the Transaction (including without limitation the fees and expenses described in Sections 6.23 and 7.4) will be paid in full by Sellers; however, if the Closing shall have occurred, the Group shall pay up to $100,000 of the out-of-pocket fees and expenses incurred by the Group and Sellers in connection with the Transaction (the “Sellers’ Expense Allowance”).
13.5. Governing Law; Consent to Jurisdiction; Arbitration.
(a) This Agreement and the Transaction Documents and the rights and obligations of the Parties hereunder and thereunder shall be governed by, and construed and interpreted in accordance with, the internal laws of the State of New York, without giving effect to the conflict of laws principals thereof. Each of the Parties hereby irrevocably submits to the exclusive jurisdiction of any Federal or state court sitting in the City of New York over any suit, action or proceeding arising out of or relating to this Agreement and the Transaction Documents. Each of the Parties hereby irrevocably waives, to the fullest extent permitted or not prohibited by law, any objection which such Party may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in such a court and any claim that any such suit, action or proceeding brought in such a court has been brought in an inconvenient forum. Each of the Parties hereby irrevocably consents to the service of process in any suit, action or proceeding by sending the same by certified mail, return receipt requested or by overnight courier service, to the address of such party set forth in Section 13.1. Any pre-trial depositions of Sellers, and any pre-trial inspection of documents of the Group and Sellers which pre-date the Closing Date, in connection with any suit, action or proceeding arising out of or relating to this Agreement or the Transaction Documents shall be conducted in the City of Los Angeles, California, unless the Parties otherwise agree; however, the Parties shall cooperate in furnishing via mail or courier any documents to which any party is entitled by law or legal process. EACH PARTY HERETO WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY ACTION BROUGHT HEREUNDER OR ARISING OUT OF THE TRANSACTION AND THE TRANSACTION DOCUMENTS.
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