e8vk
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): May 15, 2007
H&E EQUIPMENT SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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Delaware
(State or other jurisdiction of
incorporation
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000-51759
(Commission File Number)
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81-0553291
(IRS Employer Identification No.) |
11100 Mead Road, Suite 200, Baton Rouge, Louisiana 70816
(Address of Principal Executive Offices, including Zip Code)
(225) 298-5200
(Registrants Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 1.01 Entry Into a Material Definitive Agreement.
On May 15, 2007, H&E Equipment Services, Inc. (the Company) and HE-JWB Acquisition, Inc, a
wholly owned subsidiary of the Company, entered into an agreement with the shareholders of J.W.
Burress, Incorporated (Burress) and the Burress shareholders representative to acquire Burress.
The acquisition is subject to the completion of Burress 2006 audit, obtaining certain third-party
consents (including from equipment manufacturers and vendors), receipt of financing, closing of the
acquisition no later than July 31, 2007, and other customary closing conditions.
Burress is a privately owned construction equipment distributor serving the mid-Atlantic
markets out of twelve locations. Among others, Burress represents the following manufacturers:
Diamond Z, Doosan, Hitachi, Manitowoc, Grove and Terex. The Company does not anticipate currently
that Burress will continue to represent Hitachi. Accordingly, the acquisition is not conditioned
on continuing the Hitachi distributorship.
The estimated purchase price without Hitachi will be approximately $108.7 million, subject to
adjustments, plus estimated assumed indebtedness of approximately $.4 million and will be financed
through the Companys existing senior secured credit facility. Should Burress continue to
represent Hitachi, the Burress shareholders will have the opportunity to receive additional
purchase price of approximately $12.9 million payable over three years.
The foregoing description of the Burress acquisition agreement does not purport to be complete
and is qualified in its entirety by reference to the agreement. A copy of the Burress acquisition
agreement is attached hereto as Exhibit 2.1 and is incorporated by reference herein.
Item 8.01 Other Events.
On May 16, 2007, the Company issued a press release announcing that it entered into a
definitive agreement to acquire Burress. A copy of the press release is attached hereto as Exhibit
99.1. The information contained in the press release attached as Exhibit 99.1 hereto is being
furnished pursuant to this Item 8.01 and should not be deemed to be filed for the purposes of
Section 18 of the Securities Act of 1934, as amended, and is not incorporated by reference into any
Securities Act registration statements.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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2.1
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Agreement and Plan of Merger, dated May 15, 2007, by and among H&E Equipment
Services, Inc., HE-JWB Acquisition, Inc., J.W. Burress, Incorporated, the shareholders
of J.W. Burress, Incorporated and the Burress shareholders representative. |
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99.1
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Press Release, dated May 16, 2007. |
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SIGNATURES
According 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, thereunto duly authorized.
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H&E EQUIPMENT SERVICES, INC.
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Date: May 17, 2007
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/s/ LESLIE S. MAGEE
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By: Leslie S. Magee |
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Its: Chief Financial Officer |
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3
EXHIBIT INDEX
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2.1
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Agreement and Plan of Merger, dated May 15, 2007, by and among H&E Equipment
Services, Inc., HE-JWB Acquisition, Inc., J.W. Burress, Incorporated, the shareholders
of J.W. Burress, Incorporated and the Burress shareholders representative. |
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99.1
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Press Release, dated May 16, 2007. |
exv2w1
EXHIBIT 2.1
Agreement and Plan of Merger
dated as of May 15, 2007
among
H&E Equipment Services, Inc., HE-JWB Acquisition, Inc., J.W. Burress, Incorporated,
the Persons identified as Burress Shareholders,
and Richard S. Dudley as Burress Shareholders Representative
Table of Contents
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Article I
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Definitions
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2 |
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Section 1.1
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Certain Definitions
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2 |
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Section 1.2
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Interpretation
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2 |
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Article II
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Purchase Price and Other Calculations, Payments and Adjustments |
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Section 2.1
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Certain Definitions
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2 |
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Section 2.2
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Closing and Other Payments
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5 |
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Section 2.3
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Post-Closing Calculations and Payments or Repayments
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8 |
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Section 2.4
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[Reserved]
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9 |
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Section 2.5
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Burress Shareholders Withholding Taxes
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9 |
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Section 2.6
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New Hitachi Fleet
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9 |
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Article III
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Merger
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10 |
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Section 3.1
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General
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Section 3.2
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Effective Time
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10 |
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Section 3.3
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Articles of Incorporation; By-Laws
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10 |
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Section 3.4
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Directors and Officers
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10 |
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Section 3.5
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Effect on Capital Stock
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10 |
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Section 3.6
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Further Assurances
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11 |
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Section 3.7
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Exchange Procedures
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11 |
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Section 3.8
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No Further Ownership Rights in Burress Equity Equivalents
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12 |
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Section 3.9
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Termination of the Exchange Fund
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12 |
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Section 3.10
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No Liability
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13 |
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Section 3.11
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Lost Certificates
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Section 3.12
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Transfer Books
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Article IV
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Closing
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Section 4.1
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Closing Date and Place
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Section 4.2
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Closing Conditions
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Article V
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Representations and Warranties of Burress Shareholders
Regarding Burress
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Section 5.1
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Organization and Qualification; Subsidiaries
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Section 5.2
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Authorization; Enforceability
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Section 5.3
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Non-Contravention
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Section 5.4
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No Consents. Etc.
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Section 5.5
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Capitalization of Burress
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Section 5.6
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Financial Statements
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Section 5.7
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Absence of Certain Developments
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Section 5.8
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Governmental Authorizations; Licenses; Etc.
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Section 5.9
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Orders and Proceedings
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Section 5.10
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Undisclosed Liabilities
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Section 5.11
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Taxes
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Section 5.12
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Environmental Matters
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-i-
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Section 5.13
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Employee Matters
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Section 5.14
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Employee Benefit Plans
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Section 5.15
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Proprietary Rights
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Section 5.16
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Contracts
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Section 5.17
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Books and Records
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Section 5.18
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Insurance
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Section 5.19
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Real Property; Other Tangible Assets
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Section 5.20
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Transactions With Affiliates
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Section 5.21
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Bonus-Severance-Termination Liabilities
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Section 5.22
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Sufficiency of Assets
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Section 5.23
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Brokers
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Section 5.24
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Accuracy of Disclosure Schedules
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Section 5.25
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Burress Management
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Article VI
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Representations and Warranties of Burress Shareholders
Individually
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Section 6.1
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Authorization
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Section 6.2
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Non-Contravention
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Section 6.3
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No Consents. Etc.
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Section 6.4
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Brokers
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Section 6.5
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Orders and Proceedings
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Section 6.6
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Title to Shares
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Article VII
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Representations and Warranties of H&E and HE-JWB
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36 |
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Section 7.1
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Organization
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Section 7.2
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Authorization
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Section 7.3
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Non-Contravention
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Section 7.4
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No Consents; Etc.
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Section 7.5
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Brokers
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Section 7.6
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Structure of HE-JWB for Tax Purposes
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Section 7.7
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Orders and Proceedings
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Article VIII
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Certain Covenants and Agreements
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Section 8.1
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Vote; Release
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Section 8.2
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Access and Information
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38 |
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Section 8.3
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Conduct of Business by Burress
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Section 8.4
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Closing Documents
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Section 8.5
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Commercially Reasonable Efforts; Further Assurances
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Section 8.6
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Public Announcements
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Section 8.7
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Third Party Proposals
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Section 8.8
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No Interference; Confidentiality
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Section 8.9
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HSR Filing
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44 |
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Section 8.10
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Section 338(h)(10) Elections
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44 |
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Section 8.11
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Disclosure Generally
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47 |
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Section 8.12
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Identified Environmental Remediation Costs
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47 |
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Section 8.13
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Permitted D&O Insurance
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47 |
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Section 8.14
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Burress 401(k) Plan
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47 |
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Article IX
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Termination; Amendment
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48 |
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Section 9.1
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Termination
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48 |
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Section 9.2
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Effect of Termination
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48 |
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Section 9.3
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Amendments
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48 |
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Article X
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Indemnification
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49 |
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Section 10.1
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Survival of Representations and Warranties
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49 |
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Section 10.2
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General Indemnification
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49 |
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Section 10.3
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Certain Tax Matters
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56 |
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Section 10.4
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Access to Information and Employees
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58 |
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Section 10.5
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Joint and Several Obligations of Burress Shareholders
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59 |
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Article XI
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Appointment of Burress Shareholders Representative
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59 |
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Section 11.1
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Appointment
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59 |
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Article XII
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Miscellaneous
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62 |
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Section 12.1
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Notices
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62 |
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Section 12.2
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Exhibits and Schedules
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63 |
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Section 12.3
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Time of the Essence; Computation of Time
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63 |
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Section 12.4
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Transfer Taxes; Expenses
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63 |
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Section 12.5
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Governing Law; Consent to Jurisdiction; Arbitration
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Section 12.6
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Assignment; Successors and Assigns; No Third Party Rights
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Section 12.7
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Counterparts
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65 |
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Section 12.8
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Titles and Headings
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65 |
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Section 12.9
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Entire Agreement
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65 |
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Section 12.10
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Severability
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Section 12.11
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No Strict Construction
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65 |
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Section 12.12
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Specific Performance
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65 |
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Section 12.13
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Counsel to Burress, Burress Shareholders Representative and
Burress Shareholders
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-iii-
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Schedules |
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Schedule A
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Certain Definitions |
Schedule B
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Adjustments to Derive Non-Hitachi
Adjusted EBITDA(1) |
Schedule C
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Required Consents(1) |
Schedule D
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Identified Environmental Remediation Costs(1) |
Schedule E-1
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Certain Included Burress Indebtedness(1) |
Schedule E-2
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Certain Floor Plan Financing Notes(1) |
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Exhibits |
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Exhibit A
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Escrow Agreement |
Exhibit B
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Amended and Restated Articles of Incorporation |
Exhibit C-1
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Opinion of Woods Rogers PLC or Special Counsel |
Exhibit C-2
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Opinion of Dechert LLP |
Exhibit D
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Form of Non-Competition Agreement |
Exhibit E
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Estimated Tax Basis Balance Sheet(1) |
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(1) |
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Omitted for Filing. |
-iv-
Agreement and Plan of Merger dated as of May 15, 2007 (this Agreement) among:
(i) H&E Equipment Services, Inc., a Delaware corporation (H&E);
(ii) HE-JWB Acquisition, Inc., a Virginia corporation and wholly-owned subsidiary of
H&E (HE-JWB);
(iii) J.W. Burress, Incorporated, a Virginia corporation (Burress);
(iv) the shareholders of Burress identified as such on the signature page to this
Agreement (Burress Shareholders); and
(v) Richard S. Dudley, in his capacity as Burress Shareholders
Representative.
Each of H&E, HE-JWB, Burress and Burress Shareholders Representative each of Burress
Shareholders is herein each referred to as a Party, and together referred to as the
Parties. Any reference herein to Burress shall mean and include also its Predecessors.
Recitals
A. Burress Shareholders are the record and beneficial owners of 100% of the Burress Equity
Equivalents.
B. The Parties desire that, on the Closing Date, HE-JWB will be merged with and into Burress,
with Burress as the surviving corporation as provided in Article III (the
Merger), and all of the outstanding Burress Equity Equivalents will be converted into the
right to receive the Closing Net Proceeds to Burress Shareholders and the Supplemental Proceeds to
Burress Shareholders in the manner set forth herein. As a result of the Merger, Burress will become
a wholly-owned direct subsidiary of H&E and 100% of the Burress Equity Equivalents will be owned by
H&E; the foregoing, together with the other transactions contemplated by this Agreement and the
other Transaction Documents, being herein together referred to individually and collectively as the
Transaction.
C. The respective Boards of Directors of each of H&E, Burress and HE-JWB, and the holders of
100% of the Burress Equity Equivalents, have approved the Transaction on the terms and subject to
the conditions set forth herein.
Agreement
Now, therefore, in consideration of the mutual covenants contained herein, and intending to be
legally bound hereby, the Parties agree as follows.
2
Article I
Definitions
Section 1.1. Certain Definitions. Capitalized terms used but not otherwise defined
herein shall have the meanings set forth in Schedule A.
Section 1.2. Interpretation. Unless otherwise indicated to the contrary herein by the
context or use thereof: (i) the words, herein, hereto, hereof and words of similar import
refer to this Agreement as a whole and not to any particular Section or paragraph hereof; (ii) the
word including means including, but not limited to and including without limitation; (iii)
masculine gender shall also include the feminine and neutral genders, and vice versa; (iv) words
importing the singular shall also include the plural, and vice versa; and (v) unless otherwise
expressly indicated in the context, all references herein to any Section, Article, clause,
Schedule, Disclosure Schedule or Exhibit refer to Sections, Articles, clauses, Schedules,
Disclosure Schedules and Exhibits contained in, or attached to, this Agreement.
Article II
Purchase Price and Other Calculations, Payments and Adjustments
Section 2.1. Certain Definitions. For purposes of this Agreement, the following terms
shall have the meanings hereinafter specified:
Closing Estimates means an estimate as of the Closing Date, to be made in good faith
by Burress Shareholders Representative and H&E prior to the Closing based on the most recently
available Interim Financial Statements and such additional financial and other information as may
be available to Burress Shareholders Representative and H&E at the time such estimate is made, and
with the assistance of the Accountants, of the Non-Hitachi Adjusted EBITDA and the Hitachi Adjusted
EBITDA, the Burress Tax Liabilities, the Closing Merger Consideration per Burress Share, the
Closing Net Proceeds to Burress Shareholders, the Third Party Payments, the Hitachi Indebtedness
and Payables, the Hitachi Fleet Value, the Merger Consideration per Burress Share, the Included
Burress Indebtedness, the Initial Proceeds to Burress Shareholders, the Purchase Price and the
Supplemental Proceeds to Burress Shareholders, subject (in the case of all of the foregoing) to
adjustment pursuant to Section 2.3.
Closing Merger Consideration per Burress Share means an amount equal to (i) the
Closing Net Proceeds to Burress Shareholders divided by (ii) the number of Burress Equity
Equivalents outstanding as of the Effective Time.
Closing Net Proceeds to Burress Shareholders means (i) the Initial Proceeds to
Burress Shareholders less (ii) the Closing Escrow Amount less (iii) the Third Party
Payments less (iv) the Burress Tax Liabilities.
Hitachi Adjusted EBITDA means the earnings derived solely from operations related to
the sale and leasing of the inventory of vehicles and equipment of Burress manufactured by Hitachi
owned by Burress for the 12-month period ending as of February 28, 2007, before any expense or
charge in respect of interest, Taxes based on income (but Taxes not
based on income of Burress shall be included in the calculation of the Hitachi Adjusted EBITDA),
depreciation and amortization, determined in a manner consistent with the 2006 Audited Financial
Statements. In determining Hitachi Adjusted EBITDA and non-Hitachi Adjusted EBITDA, all costs,
expenses and deductions of Burress which are not clearly related to or identified with earnings
derived from the sale and leasing of vehicles and equipment manufactured by Hitachi or non-Hitachi
vendors shall be allocated with respect to earnings derived from Hitachi and non-Hitachi vendors
pro rata based on the sales and revenue derived from such sales and leasing.
Hitachi Fleet means the inventory of parts, accessories, vehicles and equipment of
Burress manufactured by Hitachi owned by Burress.
Hitachi Fleet Premium means $4.0 million, which represents the agreed net present
value of the revenues of Burress projected to be derived by Burress from the sale and rental of the
Hitachi Fleet (excluding any New Hitachi Fleet) during the three-year period ending February 28,
2010.
Hitachi Fleet Value means the net book value (including after depreciation and
obsolescence reserves) as of the Closing Date of the Hitachi Fleet (excluding any New Hitachi
Fleet, except as provided in Section 2.3(e)) determined in a manner consistent with the
2006 Audited Financial Statements. Solely for purposes of example, the Hitachi Fleet Value
(excluding the New Hitachi Fleet) is currently assumed (subject to confirmation by the Parties in
accordance with this Agreement) to be $21,927,440, subject to adjustment in accordance with
Section 2.3.
Hitachi Indebtedness and Payables means (i) the Indebtedness, payables and other
obligations of Burress owed to the Hitachi Group as of the Closing Date (whether pursuant to floor
plan financings, on open account or otherwise), including under or pursuant to the Hitachi
Agreements, and (ii) the amount of any other Indebtedness outstanding as of the Closing Date which
was incurred by Burress on or after February 28, 2007 and prior to the Closing where the proceeds
of such Indebtedness was used to purchase parts, accessories, vehicles and equipment from the
Hitachi Group. Solely for purposes of example, if the Closing had occurred on February 28, 2007,
the Hitachi Indebtedness and Payables is assumed to be $30,174,614.
Included Burress Indebtedness means:
(i) Burress Indebtedness (excluding Hitachi Indebtedness and Payables) outstanding as
of February 28, 2007, net of cash as of such date and net of the account receivable balance
outstanding on February 28, 2007 owed by Reedrill and Ritchie Accounts Receivables,
plus
(ii) the Hitachi Indebtedness and Payables outstanding as of the Closing Date.
The Parties have no reason currently to believe that Schedule E-1 does not set forth all of
the Included Burress Indebtedness as of February 28, 2007 (as if the Closing had occurred on such
4
date); and the inclusion or exclusion of any items on Schedule E-1 shall not be
determinative of whether such items are classifiable as Included Burress Indebtedness.
Disclosure Schedule 5.16 lists all Contracts of Burress pursuant to which Indebtedness of
Burress may be incurred by Burress subsequent to February 28, 2007 in the Ordinary Course of
Business (Additional Burress Indebtedness and Additional Burress Indebtedness
Contracts).
Initial Escrow Amount means:
(i) an amount equal to 7.5% of the sum of the Closing Estimate of the Initial Proceeds
to Burress Shareholders (such amount to be fixed and not subject to adjustment
notwithstanding any adjustment of the Closing Net Proceeds to Burress Shareholders under
Section 2.3) and any Supplemental Hitachi Fleet Value and New Hitachi Fleet Proceeds
to which Burress Shareholders may be entitled from time to time, to be deposited on the
Closing Date, or in the case of any Supplemental Hitachi Fleet Value and New Hitachi Fleet
Proceeds when otherwise payable to Burress Shareholders, with the Escrow Agent under the
Escrow Agreement (the foregoing being herein referred to as the Closing Escrow
Amount); plus
(ii) if the Hitachi Consent is obtained and the Supplemental Proceeds to Burress
Shareholders is payable hereunder, an amount equal to 7.5% of the Supplemental Proceeds to
Burress Shareholders (to the extent not included in the Closing Escrow Amount pursuant to
clause (i) above), to be deposited on the first anniversary of the Closing Date with
the Escrow Agent under the Escrow Agreement (the foregoing being herein referred to as the
Supplemental Escrow Amount).
Initial Proceeds to Burress Shareholders means (i) an amount equal to the product of
4.5 and the Non-Hitachi Adjusted EBITDA, less (ii) the Included Burress Indebtedness,
plus (iii) the Hitachi Fleet Value and the Hitachi Fleet Premium plus (iv) any
Supplemental Hitachi Fleet Value less (v) the amount by which the Closing Net Worth of
Burress is less than $25.0 million less (vi) $1.0 million. Solely for purposes of example,
the Initial Proceeds to Burress Shareholders is currently assumed (subject to confirmation by the
Parties in accordance with this Agreement) to be $74,540,157.
Merger Consideration per Burress Share means an amount equal to (i) the sum of the
Closing Net Proceeds to Burress Shareholders, any Supplemental Proceeds to Burress Shareholders and
any Escrow Amount Released, divided by (ii) the number of Burress Equity Equivalents
outstanding as of the Effective Time.
New Hitachi Fleet means any new and unused Hitachi parts, accessories, vehicles and
equipment owned by Burress as of the Closing Date.
Non-Hitachi Adjusted EBITDA of Burress means the earnings derived solely from
operations (excluding extraordinary transactions and excluding the Hitachi Adjusted EBITDA) of
Burress for the 12-month period ending as of February 28, 2007, before any expense or charge in
respect of interest, Taxes based on income (but Taxes not based on income of Burress shall be
included in the calculation of the Non-Hitachi Adjusted EBITDA),
depreciation and amortization, determined in a manner consistent with the 2006 Audited Financial
Statements, subject to the adjustments identified on Schedule B. In determining Hitachi
Adjusted EBITDA and non-Hitachi Adjusted EBITDA, all costs, expenses and deductions of Burress
which are not clearly related to or identified with earnings derived from the sale and leasing of
vehicles and equipment manufactured by Hitachi or non-Hitachi vendors shall be allocated with
respect to earnings derived from Hitachi and non-Hitachi vendors pro rata based on the sales and
revenue derived from such sales and leasing.
Purchase Price means an amount equal to (i) the Initial Proceeds to Burress
Shareholders, plus (ii) any Supplemental Proceeds to Burress Shareholders, plus
(iii) any Burress Indebtedness funded by H&E pursuant to Section 2.2(b)(iii) (but without
duplication of any Burress Indebtedness included in the calculation of the Initial Proceeds to
Burress Shareholders) plus (iv) the Hitachi Indebtedness and Payables (but without
duplication of any Burress Indebtedness included in the calculation of the Initial Proceeds to
Burress Shareholders). Solely for purposes of example, the Purchase Price is currently assumed
(subject to confirmation by the Parties in accordance with this Agreement) to be $118,071,157.
Supplemental Proceeds to Burress Shareholders means (i) an amount equal to the
product of 4.5 and the Hitachi Adjusted EBITDA less (ii) the amount of any Hitachi Fleet
Value, Hitachi Fleet Premium and any Supplemental Hitachi Fleet Value included in the Initial
Proceeds to Burress Shareholders.
Third Party Payments means the sum of and includes (i) the cost of settlement of
Burress Equity Equivalents, (ii) an amount equal to Burress Shareholders Expenses net of the
Burress Shareholders Expense Allowance, to the extent such expenses are not paid prior to the
Closing, (iii) any Bonus-Severance-Termination Liabilities, (iv) the cost to unwind swap agreements
to which Burress is a party, (v) prepayment costs and expenses under Burress Indebtedness, (vi)
costs and expenses payable under any Contracts of Burress as a result of or based upon the
Transaction (including any consent fee), (vii) the Identified Environmental Remediation Costs,
(viii) the fees and expenses of Special Counsel, and (ix) Affiliate Obligations, excluding
Liabilities accrued in the Ordinary Course of Business under the Continuing Affiliate Agreements
identified on Disclosure Schedule 5.20, but including Liabilities incurred under such
Continuing Affiliate Agreements outside the Ordinary Course of Business on or prior to the Closing
Date and including Liabilities based on or arising out of any breach by Burress on or prior to the
Closing Date of such Continuing Affiliate Agreements.
Section 2.2. Closing and Other Payments.
(a) On or before the Closing Date, H&E and Burress Shareholders Representative shall mutually
agree as to the Closing Estimates. Such agreed Closing Estimates shall be binding upon the Parties,
subject to adjustment after the Closing in accordance with Section 2.3.
(b) On the Closing Date, but subject to the provisions of Sections 4.2 (including
Section 4.2(a)(iii)):
6
(i) (A) H&E shall cause to be made available to Burress Shareholders Representative, as the
Exchange Agent, an amount in cash equal to the Closing Estimate of the Closing Net Proceeds to
Burress Shareholders, such Closing Estimate of the Closing Net Proceeds to Burress Shareholders to
be used by the Exchange Agent to effect the payment to each of Burress Shareholders the aggregate
Closing Estimate of the Closing Merger Consideration per Burress Share to which each such Burress
Shareholder shall be entitled based on the Burress Equity Equivalents owned by such Burress
Shareholder.
(B) Burress Shareholders Representative shall establish, with proceeds from the Closing
Estimate of the Closing Net Proceeds to Burress Shareholders, a cash reserve account (in a
commercial bank in the United States) registered in the name of Burress Shareholders Representative
(the Reserve Account) in an amount equal to 1.5% of the Closing Estimate of the Initial
Proceeds to Burress Shareholders, which Reserve Account shall be used by the Burress Shareholders
Representative to satisfy any payments owed by Burress Shareholders pursuant to Sections
2.3, 2.5, 8.12 and 10.3 and any Burress Shareholders Retained Closing Obligations. Burress
Shareholders Representative shall retain the Reserve Account (subject to payments actually made
therefrom to H&E or third parties to satisfy any payments owed by Burress Shareholders pursuant to
Sections 2.3, 2.5, 8.12 and 10.3 and any Burress Shareholders Retained Closing
Obligations), and not make distributions therefrom to Burress Shareholders, until the later of (x)
180 days following the Effective Time and (y) the date on which all payment obligations pursuant to
Section 2.3 have been agreed by Burress Shareholders Representative and H&E; however,
Burress Shareholders Representative shall continue to hold funds in the Reserve Account beyond such
release date sufficient to satisfy any payments required to be made by Burress Shareholders under
Sections 2.5, 8.12 and 10.3 to the extent that the amounts of such payments are known as of
such release date. For the avoidance of doubt, the Reserve Account and the provisions of this
Section 2.2(b)(i)(B) are not (x) exclusive of the obligations of Burress Shareholders under
Sections 2.3, 2.5, 8.12 and 10.3 and any Burress Shareholders Retained Closing Obligations,
or (y) to the extent of any deficiency in the Reserve Account, a limitation on the obligations of
Burress Shareholders generally under Article X (including as to the right of H&E
Indemnified Parties to assert indemnification claims against the Escrow Amount or directly against
Burress Shareholders in accordance with Section 10.2(c)(v)).
(ii) H&E shall deliver to the Escrow Agent the Closing Escrow Amount, to be held by the Escrow
Agent pursuant to the Escrow Agreement.
(iii) H&E shall cause to be made available to HE-JWB an aggregate amount in cash (less an
estimate of cash on hand in Burress as the Closing Date) equal to the Closing Estimates (to the
extent included in the Closing Estimate of the Closing Net Proceeds to Burress Shareholders) of the
following: (A) the Burress Tax Liabilities; (B) the Third Party Payments; and (C) the Included
Burress Indebtedness.
(c) Subsequent to the Effective Time, Burress shall, with cash proceeds from H&E made
available to HE-JWB pursuant to Section 2.2(b)(iii), or with cash on hand in Burress at the
time the following is required to be paid, pay the items to which reference is made in clauses (A),
(B) and (C) of Section 2.2(b)(iii) to the extent of the Closing Estimates of the same. For
the avoidance of doubt, to the extent that the amount of any of the items to which reference
7
is made in clauses (A), (B) and (C) of Section 2.2(b)(iii) are not included in the Closing
Estimates of the same, such amounts not so included are herein referred to as Burress
Shareholders Retained Closing Obligations and shall be paid by Burress Shareholders and
subject to the provisions of Section 2.3 and Section 10.2(a).
(d) In the event that the Hitachi Consent is obtained on or before the 120th day
following the Closing Date:
(i) On the first anniversary of the Closing Date, provided that the Hitachi Agreements (as in
effect on the Closing Date and after giving effect to the terms of the Hitachi Consent) have not
been terminated by the Hitachi Group and the Hitachi Group has continued to provide parts,
accessories, vehicles and equipment and service substantially in accordance with such Hitachi
Agreements, H&E shall cause to be made available to Burress Shareholders Representative, as the
Exchange Agent, an amount in cash equal to (A) one-third of an amount equal to the product of 4.5
and the Hitachi Adjusted EBITDA less (B) one-third of the amount of any Hitachi Fleet
Value, Supplemental Hitachi Fleet Value and Hitachi Fleet Premium included in the Initial Proceeds
to Burress Shareholders less (C) one-third of the amount of the New Hitachi Fleet Proceeds
received by Burress Shareholders, less (D) the Supplemental Escrow Amount; such payment to
be used by the Exchange Agent to effect the payment to each of Burress Shareholders additional
Merger Consideration per Burress Share to which each such Burress Shareholder shall be entitled
based on the Burress Equity Equivalents owned by such Burress Shareholder.
(ii) On each of the second and third anniversaries of the Closing Date, provided that the
Hitachi Agreements (as in effect on the Closing Date and after giving effect to the terms of the
Hitachi Consent) have not been terminated by the Hitachi Group and the Hitachi Group has continued
to provide parts, accessories, vehicles and equipment and service substantially in accordance with
such Hitachi Agreements, H&E shall cause to be made available to Burress Shareholders
Representative, as the Exchange Agent, an amount in cash equal to (A) one-third of an amount equal
to the product of 4.5 and the Hitachi Adjusted EBITDA less (B) one-third of the amount of
any Hitachi Fleet Value, Supplemental Hitachi Fleet Value and Hitachi Fleet Premium included in the
Initial Proceeds to Burress Shareholders less (C) one-third of the amount of the New
Hitachi Fleet Proceeds received by Burress Shareholders; such payments to be used by the Exchange
Agent to effect the payment to each of Burress Shareholders additional Merger Consideration per
Burress Share to which each such Burress Shareholder shall be entitled based on the Burress Equity
Equivalents owned by such Burress Shareholder as of immediately prior to the Effective Time.
(e) Burress Shareholders Representative, as the Exchange Agent, shall be solely responsible
for the determination of the holders of the Burress Equity Equivalents and the amount of Burress
Equity Equivalents owned by such holders. In the event that any Person shall claim to be the holder
of Burress Equity Equivalents, none of H&E, HE-JWB or Burress shall have an Liability to such
Person (whether for the payment of any Merger Consideration per Burress Share or otherwise), and
such Person shall be entitled solely to assert claims, if any otherwise exist, against Burress
Shareholders Representative for any payment to which such Person may be entitled in respect of such
Persons Burress Equity Equivalents.
8
Section 2.3. Post-Closing Calculations and Payments or Repayments.
(a) The Closing Estimates shall be determined prior to the Closing Date.
(b) Burress Shareholders Representative and H&E shall, within 60 days (or 120 days if the
Closing Balance Sheet is audited, as hereinafter provided) following the Closing Date, determine
actual amounts of the following (the Post-Closing Calculations): the Non-Hitachi Adjusted
EBITDA and the Hitachi Adjusted EBITDA; the Burress Tax Liabilities (to the extent known); the
Closing Merger Consideration per Burress Share; the Closing Net Proceeds to Burress Shareholders;
the Third Party Payments (to the extent known); the Hitachi Indebtedness and Payables; the Hitachi
Fleet Value; the Hitachi EBITDA; the Short Period Tax Adjustment; the Merger Consideration per
Burress Share; the Included Burress Indebtedness; the Initial Proceeds to Burress Shareholders; and
any Supplemental Proceeds to Burress Shareholders. The determination of the Post-Closing
Calculations pursuant to the procedures of this Section 2.3 shall not be deemed to preclude
claims under Article X in respect of any of the foregoing based on claims asserted or
information discovered following the determination of the Post-Closing Calculations pursuant to the
procedures of this Section 2.3.
(c) In the event that the Post-Closing Calculations indicate that an aggregate net adjustment
to the items included in the Closing Estimates is warranted, then an additional payment by H&E to
Burress Shareholders Representative, or a repayment by Burress Shareholders Representative to H&E
out of the Closing Net Proceeds to Burress Shareholders delivered by H&E to Burress Shareholders on
the Closing Date (or failing any such payment being made, a payment from the Escrow (as defined in
the Escrow Agreement), shall be promptly made. In computing such adjustment, (i) any positive Short
Period Tax Adjustment shall be treated as an amount due by H&E to Burress Shareholders
Representative, and (ii) any negative Short Period Tax Adjustment shall be treated as a repayment
due from Shareholders Representative to H&E out of the Closing Net Proceeds to Burress
Shareholders, such payment to be made promptly from the Reserve Account.
(d) In the event of any dispute between Burress Shareholders Representative and H&E as to the
Post-Closing Calculations which cannot be resolved within 30 days following the preparation of the
Closing Balance Sheet, such dispute shall be referred to the Arbitrator Accountants for
determination. In addition, in the event that claims asserted or information discovered following
the determination of the Post-Closing Calculations pursuant to the procedures of this
Section 2.3 warrant further adjustments to the Post-Closing Calculations, any dispute as to
such further adjustments shall be referred to the Arbitrator Accountants for determination. The
Arbitrator Accountants shall be requested to make a determination regarding any such dispute as
soon as practicable, and in any event within 30 days following the referral of such dispute to the
Arbitrator Accountants. The determination of the Arbitrator Accountants shall be final and binding
on the Parties. The fees and expenses of the Arbitrator Accountants shall be borne 50% by H&E and
50% by Burress Shareholders.
(e) In the event that the Hitachi Consent is obtained on or before the 120th day
following the Closing Date, an additional Post-Closing Calculation shall be made of the Hitachi
Fleet Value to include an amount equal to the net book value (including after depreciation and
obsolescence reserves) of the New Hitachi Fleet as of the Closing Date less any proceeds received
by Burress Shareholders subsequent to the Closing Date pursuant to Sections 2.6 and
8.3(b)(ii) in respect of New Hitachi Fleet sold subsequent to the Closing Date (such amount being
herein referred to as the Supplemental Hitachi Fleet Value). The Supplemental Hitachi
Fleet Value, less a portion thereof required to be deposited with the Escrow Agent as Initial
Escrow Amount, shall be paid promptly by H&E to Burress Shareholders Representative, but shall
reduce the Supplemental Proceeds to Burress Shareholders as provided in the definition of
Supplemental Proceeds to Burress Shareholders and shall reduce the amounts payable under
Section 2.2(d) as provided in Section 2.2(d).
Section 2.4. [Reserved]
Section 2.5. Burress Shareholders Withholding Taxes. At least five Business Days prior
to the Closing Date (or in the case of any Supplemental Proceeds to Burress Shareholders, at least
five Business Days prior to the date on which such payment is to be made), Burress Shareholders
Representative shall provide to H&E a list and calculation for purposes of Closing of all Taxes
required to be withheld from the Closing Net Proceeds to Burress Shareholders (or Supplemental
Proceeds to Burress Shareholders) or the Bonus-Severance-Termination Liabilities and remitted to
any Governmental Authority by H&E or Burress (either on its own behalf or on behalf of any of
Burress Shareholders) with respect to the Transaction (the Burress Shareholders Withholding
Taxes), which calculation shall be reasonably satisfactory to H&E. H&E and Burress may
withhold and timely remit Burress Shareholders Withholding Taxes to the appropriate Governmental
Authority; and Burress may withhold and timely remit to the appropriate Governmental Authority any
withholding Taxes with respect to the Bonus-Severance-Termination Liabilities.
Section 2.6. New Hitachi Fleet. In the event that, subsequent to the Closing Date, the
Hitachi Group shall purchase from Burress the New Hitachi Fleet, the net proceeds received by
Burress from the Hitachi Group for such New Hitachi Fleet, less the direct out-of-pocket costs
incurred by Burress in connection with effecting the sale and delivery of the New Hitachi Fleet to
the Hitachi Group or its designee and less the direct out-of-pocket costs incurred by Burress to
carry and maintain the New Hitachi Fleet until sold (the New Hitachi Fleet Proceeds),
shall be promptly remitted by Burress to Burress Shareholders Representative. In the event that the
Hitachi Group shall not exercise or shall waive any requirement that Burress sell back to Hitachi
any New Hitachi Fleet and shall not have granted the Hitachi Consent, New Hitachi Fleet Proceeds
shall include also any proceeds from the sale of such New Hitachi Fleet received by Burress
Shareholders in accordance with Section 8.3(b)(ii). For the avoidance of doubt, direct
out-of-pocket costs to which reference is made above shall not include allocations of
administrative costs or overhead (including rent).
10
Article III
Merger
Section 3.1. General. Upon the terms and subject to the conditions of this Agreement,
the Merger shall be effected. Burress shall be the surviving corporation in the Merger. The
separate corporate existence of Burress with all its rights, privileges, powers and franchises
shall continue unaffected by the Merger. The Merger shall have the effects specified in the
Virginia Act. From and after the Effective Time, Burress is sometimes referred to herein as the
Surviving Corporation.
Section 3.2. Effective Time. On the Closing Date, HE-JWB and Burress shall cause
articles of merger, complying with the requirements of the Virginia Act and in form and substance
satisfactory to H&E, Burress and Burress Shareholders Representative (the Articles of
Merger), to be filed with the State Corporation Commission of the Commonwealth of Virginia.
The time at which both the Articles of Merger have been accepted for filing by the State
Corporation Commission of the Commonwealth of Virginia is herein referred to as the Effective
Time.
Section 3.3. Articles of Incorporation; By-Laws. As of the Effective Time, the
Articles of Incorporation of Burress shall be amended and restated in the form attached as
Exhibit B (the Amended and Restated Articles of Incorporation). The Amended and
Restated Articles of Incorporation and the By-laws of Burress shall be the articles of
incorporation and the by-laws of the Surviving Corporation until thereafter amended in accordance
with applicable Laws.
Section 3.4. Directors and Officers. The directors and officers of Burress shall
resign as of immediately following the Effective Time. The directors and officers of Burress as of
immediately following the Effective Time shall be designated by H&E and will serve until their
successors are duly elected or appointed and qualify, or until they are removed, in accordance with
the Amended and Restated Articles of Incorporation and the By-laws of the Surviving Corporation.
Section 3.5. Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the Parties or the holders of any of the following
securities:
(a) Conversion of HE-JWB Common Stock. Each share of the Common Stock, par value $0.01
per share (the HE-JWB Common Stock), of HE-JWB issued and outstanding as of immediately
prior to the Effective Time shall be converted into an equal number of shares of the Burress New
Common Stock.
(b) Conversion of Burress Existing Common Stock. Each share of Burress Existing Common
Stock (without distinction as to class) issued and outstanding as of immediately prior to the
Effective Time shall be converted into the right to receive the Merger Consideration per Burress
Share.
(c) Cancellation of Burress Equity Equivalents. Each Burress Equity Equivalent
(including each share of Burress Existing Common Stock) issued and outstanding as
of immediately prior to the Effective Time shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of a certificate which
immediately prior to the Effective Time represented any Burress Equity Equivalent (each, a
Burress Equity Equivalent Certificate) shall, to the extent such Burress Equity
Equivalent Certificate represents such Equity Equivalents, cease to have any rights with respect
thereto, except in the case of Burress Existing Common Stock the right to receive the Closing
Merger Consideration per Burress Share (and ultimately the full amount of the Merger Consideration
per Burress Share) with respect thereto.
(d) Cancellation of Burress Existing Treasury Stock. Each share of Burress Existing
Common Stock held in the treasury of Burress immediately prior to the Effective Time shall be
canceled and retired without any conversion thereof and no payment of cash or any other
distribution shall be made with respect thereto.
Section 3.6. Further Assurances. From and after the Effective Time, the officers and
directors of the Surviving Corporation will be authorized to execute and deliver, in the name and
on behalf of Burress and HE-JWB, any deeds, bills of sale, assignments or assurances and to take
and do, in the name and on behalf of Burress and HE-JWB, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and
interest in, to and under any of the rights, properties or assets acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger.
Section 3.7. Exchange Procedures.
(a) Burress Shareholders Representative (including any successor Burress Shareholders
Representative appointed in accordance with Section 11.1) shall be the Exchange
Agent for the exchange and payment of the Merger Consideration per Burress Share to the
holders of the Burress Equity Equivalents. Burress Shareholders Representative shall establish,
prior to the Closing, a special account with a commercial bank in the United States to serve as,
and designated as, the Burress Shareholders Exchange Fund (the Exchange Fund). The
Closing Net Proceeds to Burress Shareholders and the Supplemental Proceeds to Burress Shareholders
received from time to time in respect of the aggregate Merger Consideration per Burress Share shall
be held by Burress Shareholders Representative in the Exchange Fund, in trust for the benefit of
the holders of the Burress Equity Equivalents, pending disbursement to the holders of the Burress
Equity Equivalents entitled thereto. None of H&E, HE-JWB or Burress shall have any Liability or
responsibility for the Exchange Fund or the payment of any amounts deposited in the Exchange Fund
to the holders of the Burress Equity Equivalents.
(b) Prior to the Effective Time, Burress shall deliver to each record holder of Burress Equity
Equivalents (i) a letter of transmittal in a form approved by H&E (the Letter of
Transmittal) and (ii) instructions of Burress for effecting the surrender of the Burress
Equity Equivalent Certificates evidencing the Burress Equity Equivalents in exchange for the
Closing Merger Consideration per Burress Share (and any additional Merger Consideration per Burress
Share received from time to time) with respect thereto. Upon surrender of each such
Burress Equity
Equivalent Certificate to the Exchange Agent together with such Letter of Transmittal, duly
executed and completed in accordance with
the instructions thereto, the holder of such Burress Equity Equivalent Certificate shall be
entitled to receive, in accordance with the terms of this Agreement, the Closing Merger
Consideration per Burress Share (and any additional Merger Consideration per Burress Share received
from time to time) with respect thereto. No interest will be paid or will accrue for the benefit of
holders of the Burress Equity Equivalents on the Closing Merger Consideration per Burress Share
(and any additional Merger Consideration per Burress Share received from time to time) with respect
thereto payable upon the surrender of the Burress Equity Equivalent Certificates therefor; however,
the foregoing shall not preclude any investment by Burress Shareholders Representative of funds
held from time to time by Burress Shareholders Representative (but Burress Shareholders
Representative shall not be required to invest such funds) until distribution by Burress
Shareholders Representative of such funds (and any income or interest earned thereon) to Burress
Shareholders. In the event of a transfer of ownership of any Burress Equity Equivalents which is
not registered in the transfer records of Burress, payment of the Closing Merger Consideration per
Burress Share (and any additional Merger Consideration per Burress Share received from time to
time) may be made with respect to such Burress Equity Equivalent to such transferee if the Burress
Equity Equivalent Certificate formerly representing such Burress Equity Equivalents is presented to
the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and
to evidence that any applicable stock transfer taxes have been paid or is not applicable.
Section 3.8. No Further Ownership Rights in Burress Equity Equivalents. The Closing
Merger Consideration per Burress Share (and any additional Merger Consideration per Burress Share
received from time to time) paid upon conversion of shares of Burress Equity Equivalents in
accordance with the terms of this Article III shall be deemed to have been paid in full
satisfaction of all rights pertaining to the Burress Equity Equivalents. If, after the Effective
Time, subject to the terms and conditions of this Agreement, Burress Equity Equivalent Certificates
formerly representing Burress Equity Equivalent are presented to the Surviving Corporation, they
shall be canceled and the Exchange Agent shall cause the Closing Merger Consideration per Burress
Share (and any additional Merger Consideration per Burress Share received from time to time) to be
paid with respect thereto in accordance with this Article III. If any certificates
evidencing Burress Equity Equivalent shall not have been surrendered prior to the first anniversary
of the Effective Time (or immediately prior to such earlier date on which any Merger Consideration
per Burress Share with respect thereto would otherwise escheat to or become the property of any
Governmental Authority), any such Merger Consideration per Burress Share shall become property of
the Surviving Corporation, free and clear of all claims or interest of any Person previously
entitled thereto, and the Exchange Agent shall promptly remit to the Surviving Corporation any such
Merger Consideration per Burress Share.
Section 3.9. Termination of the Exchange Fund. Any portion of the Exchange Fund
constituting Merger Consideration per Burress Share that remains undistributed to the holders of
Burress Equity Equivalents for two years after the Effective Time shall be delivered to the
Surviving Corporation or otherwise on the instruction of the Surviving Corporation, and any holders
of Burress Equity Equivalent who have not theretofore complied with this Article III shall
thereafter cease to have any rights to receive any portion of Merger Consideration per Burress
Share with respect to the Burress Equity Equivalents formerly represented thereby to which such
holders are entitled pursuant to this Article III.
13
Section 3.10. No Liability. None of H&E, HE-JWB, Burress, the Surviving Corporation,
Burress Shareholders Representative or the Exchange Agent shall be liable to any Person in respect
of any Merger Consideration per Burress Share properly delivered to a public official pursuant to
any applicable abandoned property, escheat or similar Law.
Section 3.11. Lost Certificates. If any Burress Equity Equivalent Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such certificate to be lost, stolen or destroyed and, if required by the Surviving
Corporation or the Exchange Agent, the provision of an indemnity against any claim that may be made
against the Surviving Corporation or the Exchange Agent with respect to such certificate, the
Exchange Agent will deliver in exchange for such lost, stolen or destroyed certificate the Merger
Consideration per Burress Share with respect to the Burress Equity Equivalents formerly represented
thereby in accordance with this Article III.
Section 3.12. Transfer Books. As of the Effective Time, the Burress Equity Equivalents
transfer books of Burress shall be closed and there shall be no further registration of transfers
of Burress Equity Equivalents thereafter on the records of Burress. From and after the Effective
Time, the holders of Burress Equity Equivalent Certificates shall cease to have any rights with
respect to such Burress Equity Equivalents formerly represented thereby, except as otherwise
provided herein or by law.
Article IV
Closing
Section 4.1. Closing Date and Place.
The closing of the Transaction (the Closing) shall take place at the offices of
Dechert LLP, 30 Rockefeller Plaza, New York, New York, at 10:00 A.M. (Eastern Standard Time) as
soon as practicable following the satisfaction of the conditions set forth in Section 4.2,
or waiver thereof by the Party for whose benefit such conditions exist, or on such other date and
at such other place and time as the Parties shall mutually agree. The date of the Closing is herein
called the Closing Date.
Section 4.2. Closing Conditions.
(a) Mutual Conditions. The respective obligations of each Party to consummate the
Transaction shall be subject to the fulfillment on or prior to the Closing Date of each of the
following conditions:
(i) No Injunctions, Etc. As of the Effective Time, (A) there shall be no effective
Order of any nature issued by a Governmental Authority of competent jurisdiction to the effect that
the Transaction may not be consummated as herein provided, (B) no Proceeding shall have been
commenced by any Governmental Authority or other Person for the purpose of obtaining any such Order
and no written notice shall have been received from any such Governmental Authority indicating an
intent to restrain, prevent, materially delay or restructure
the Transaction, and (C) no Proceeding shall have been commenced by any Governmental
14
Authority or
other Person for the purpose of obtaining material damages based upon or resulting from the
Transaction.
(ii) Required Consents, Etc. All Consents, Permits and Orders which are required in
connection with the execution and delivery of this Agreement and the other Transaction Documents
and the consummation of the Transaction, which are necessary to permit Burress to conduct its
operations in a manner substantially similar to the manner in which Burress conducts its business
and operations prior to the Effective Time, and which are necessary to eliminate any restrictions
on the ability of H&E to conduct its business (including the Burress business) following the
Closing (including any restriction on the ability of H&E or Burress to do business with any
competitor of any manufacturer, distributor, supplier or vendor with which Burress does business,
shall have been obtained or made and shall be in full force and effect (the foregoing being herein
referred to as the Required Consents). Without limiting the generality of the foregoing,
the Required Consents shall include the Consents, Permits and Orders described on Schedule
C; however, the Hitachi Consent and the Hitachi Termination Agreements shall not be Required
Consents, except that any Hitachi Consent and any Hitachi Termination Agreement actually obtained
shall satisfy the requirements of Section 4.2(b)(ix).
(iii) Financing. H&E shall have obtained the Financing and the closing thereof shall
have occurred on or prior to the Closing Date.
(iv) Merger. The Articles of Merger duly executed by Burress and HE-JWB and the Merger
shall have been effected.
(v) No Change in Law. There shall not have been any change subsequent to the date of
this Agreement, or announced change to be effective subsequent to the date of this Agreement, in
any Law which would adversely affect in a material manner the treatment of the Transaction and the
Transaction Documents or the manner in which Burress is permitted to conduct its business and
operations.
(vi) HSR Act. The waiting period (and any extension thereof) applicable to the
Transaction under the HSR Act shall have been terminated or shall have expired and no Order or
other requirements that would be materially restrictive to the ongoing operations of the business
of H&E or its Subsidiaries or Burress shall have been placed on H&E or its Subsidiaries or Burress
in connection therewith.
(vii) Escrow Agreement. The Escrow Agreement in the form attached as Exhibit A
(the Escrow Agreement) shall have been duly executed by H&E, Burress, Burress
Shareholders Representative and the Escrow Agent
(b) Conditions to the Obligations of H&E and HE-JWB. The obligations of H&E and HE-JWB
to consummate the Transaction shall be subject to the fulfillment prior to or at Closing of each of
the following conditions, any and all of which may be waived, in whole or in part, by H&E and
HE-JWB to the extent permitted by applicable Law:
15
(i) Representations and Warranties; Covenants. All representations and warranties made
by Burress and Burress Shareholders in this Agreement, the Schedules and the Exhibits shall be
true, correct and complete in all material respects on the date hereof and as of the Closing Date
as though such representations and warranties were made as of the Closing Date (or on the date when
made in the case of any representation or warranty which specifically relates to an earlier date),
except that such representations and warranties which are qualified by materiality or the absence
of a Material Adverse Change or Material Adverse Effect shall be true, correct and complete in all
respects on the date hereof and as of the Closing Date as though such representations and
warranties were made as of the Closing Date (or on the date when made in the case of any
representation or warranty which specifically relates to an earlier date). Burress and Burress
Shareholders shall have duly performed or complied with, in all material respects, all of the
covenants, obligations and conditions to be performed or complied with by it under the terms of
this Agreement on or prior to Closing, except that such covenants, obligations and conditions which
are qualified by materiality or the absence of a Material Adverse Change or Material Adverse Effect
shall be performed or complied with in all respects on or prior to the Closing Date.
(ii) No Material Adverse Change or Material Adverse Effect. There shall have been no
Material Adverse Change or Material Adverse Effect since the date of the 2005 Audited Financial
Statements (except as reflected in the December Financial Statements or the February Financial
Statements), and no Material Adverse Change or Material Adverse Effect shall be pending, and no
Material Adverse Change or Material Adverse Effect shall be threatened which can reasonably be
expected to occur.
(iii) Closing Deliveries of Burress and Burress Shareholders. Burress and Burress
Shareholders shall have delivered, or caused to be delivered, the following:
(A) the Interim Financial Statements;
(B) resignations duly executed by all of the directors and officers of Burress, if any,
requested by H&E, such resignations to be effective as of immediately following the
Effective Time;
(C) the minute books and the stock registry of Burress;
(D) a certificate of good standing and existence with respect to Burress issued by
each of the State Corporation Commission of the Commonwealth of Virginia and each state in
which Burress conducts business;
(E) a certificate of the President and the Chief Financial Officer of Burress on behalf
of Burress as to the satisfaction of the Closing Conditions set forth in Sections
4.2(b)(i), (ii), (v), (viii) and (xi);
(F) an opinion of Woods Rogers PLC, as counsel to Burress and Burress Shareholders, or
other counsel designated by H&E (Special Counsel) to the effect of the legal
conclusions set forth in Exhibit C-1, subject to reasonable
16
customary assumptions, limitations, qualifications and exceptions, together with such other
matters relating to the Transaction as may be reasonably requested by H&E; which opinions
shall be addressed to H&E and shall state that counsel to H&E may rely upon such opinions in
connection with any opinion given by such counsel in connection with the Financing and that
H&Es lenders under the Financing may rely upon such opinions as if addressed to H&Es
lenders in connection with the Financing;
(G) the Required Consents described on Schedule C;
(H) a certificate by the Chief Financial Officer of Burress on behalf of Burress as to
the Closing Estimates.
(I) a certificate of the Secretary of Burress, dated the Closing Date, as to the
incumbency of any officer of Burress executing the Transaction Documents and covering such
other matters as H&E may reasonably request;
(J) a copy, certified by the Secretary of Burress, of (A) the resolutions of the Board
of Directors and the shareholders of Burress authorizing the execution, delivery and
consummation of this Agreement, the other Transaction Documents and the Transaction, and (B)
the Constituent Documents of Burress;
(K) certificates, in accordance with Section 1.1445-2(b) of the Treasury Regulations
and in form and substance reasonably satisfactory to H&E, stating that Burress Shareholders
are not foreign persons;
(L) fully executed UCC-3 Termination Statements and other termination, pay-off letters
and/or releases, necessary to terminate or release, as the case may be, all Liens with
respect to the Indebtedness of Burress, if required by H&E to be repaid on the Closing Date,
and to evidence the complete satisfaction in full, as the case may be, of all obligations
for all such Indebtedness of Burress (including all obligations of principal, interest,
fees, premiums, penalties, overdrafts, guarantees, indemnities and breakage, termination and
unwind costs);
(M) non-competition agreements executed by each of Burress Shareholders providing that
Burress Shareholders shall be subject to non-competition and non-solicitation restriction on
substantially the terms set forth on Exhibit D (the Non-Competition
Agreements);
(N) stock certificates evidencing 100% of the Burress Equity Equivalents, free and
clear of all Liens (including the Liens to which reference is made in Disclosure
Schedule 6.6 unless H&E shall have received a payoff letter and Lien release commitment
from the holder of such Liens in form and substance satisfactory to H&E); and
(O) such other documents or instruments as H&E reasonably requests to effect the
Transaction.
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(iv) Affiliate Transactions. Each and every Affiliate Agreement and Affiliate
Obligation, other than the Continuing Affiliate Agreements, shall have been canceled and released
as of the Closing Date. The Lease Agreement dated December 1, 2005 between Financial Acquisitions,
LLC and J.W. Burress, Incorporated (the Warrenton Lease) shall have been modified as to
the economic terms thereof in an manner satisfactory to H&E based on a market valuation of the
Warrenton Lease and the location of the premises in Warrenton, Virginia, such valuation to be
conducted by an appraiser or valuation firm satisfactory to H&E.
(v) Interim Financial Statements. Burress shall have delivered to H&E, within 30 days
following each fiscal month ending after the date hereof, the most recent required Interim
Financial Statements.
(vi) Execution of this Agreement. All holders of Burress Equity Equivalents shall have
executed this Agreement.
(vii) Subchapter S Status. H&E shall not have received, subsequent to the date of
this Agreement, any information relating to the S Corporation status of Burress at all times
prior to the Closing which modifies in any material adverse respect the information which Burress
or Burress Shareholders has heretofore provided to H&E. H&E shall have received such documents,
information, certifications, opinions and other evidence as H&E shall have reasonably requested as
to such S Corporation status.
(viii) Fleet Equipment. H&E shall be satisfied, based on the Interim Financial
Statements and the 2006 Audited Financial Statements, that Burress has fleet equipment (excluding
the Hitachi Fleet) having an aggregate original equipment cost of approximately at least
$42,664,301, and Hitachi Fleet having an aggregate original equipment cost of approximately
at least $21,829,671, which equipment shall be in good operating condition (subject to
ordinary wear and tear, including to the extent out of service for immaterial periods of time) and
suitable for rental by Burress in the Ordinary Course of Business.
(ix) Hitachi Consent or Hitachi Termination Agreements. Any consent to the Transaction
obtained from the Hitachi Group (the Hitachi Consent) shall be in a form and in substance
satisfactory to H&E, shall be unconditional except as H&E shall otherwise agree, shall not impose
upon H&E or Burress any restriction on its business (including with respect to the Persons with
whom H&E or Burress does business or from whom H&E or Burress obtains parts, accessories, vehicles
and equipment and service), and (except as to the foregoing) shall continue the existing Hitachi
Agreements on the same terms and conditions that have applied prior to February 28, 2007. Any
Contract entered into by Burress or Burress Shareholders with the Hitachi Group regarding the
termination of the Hitachi Agreements, any waiver of any right or obligation of the parties to the
Hitachi Agreements, or any settlement of claims or disputes of the parties under the Hitachi
Agreements, shall be in a form and in substance reasonably satisfactory to H&E (the Hitachi
Termination Agreements) and shall be unconditional except as H&E shall otherwise agree. The
Hitachi Termination Agreements will, among other things, request that Hitachi waive the prohibition
on the use of the Hitachi name in
the rental of Hitachi equipment. The provisions of this Section 4.2(b)(ix) regarding the form and
substance of any Hitachi Consent and Hitachi Termination Agreement shall apply also to any Hitachi
Consent and Hitachi Termination Agreement obtained subsequent to the Closing.
(x) 2006 Audited Financial Statements. The 2006 Audited Financial Statements shall
have been prepared and shall contain unqualified auditors report with respect thereto issued by
BDO Seidman, LLP. Solely for purposes of satisfying the provisions of this Section
4.2(b)(x), the 2006 Audited Financial Statements shall be based on the application of GAAP
consistent with the regular audited financial statements of H&E as determined by BDO Seidman, LLP,
and any Post-Closing Calculations shall not be affected by such presentation so long as the 2006
Audited Financial Statements are otherwise prepared in accordance with GAAP consistently applied
with the prior audited financial statements of Burress.
(xi) Closing Net Worth. H&E shall be satisfied, based on the most recently available
Interim Financial Statements and the 2006 Audited Financial Statements, that the Net Worth of
Burress as of immediately prior to the Closing and prior to giving effect to the Transaction (the
Closing Net Worth) is at least $25.0 million.
(xii) Tax Basis Balance Sheet. H&E shall have received a final tax basis balance sheet
showing the tax basis of the assets owned by Burress on December 31, 2006 (the Tax Basis
Balance Sheet), in the same form as the estimated tax basis balance sheet attached as
Exhibit E hereto and in substance reasonably acceptable to H&E (provided that a Tax Basis
Balance Sheet that shows an aggregate tax basis for accounts receivable, inventories, works in
process, rental equipment and other property and equipment at least equal to those reflected in the
form attached as Exhibit E hereto shall be deemed acceptable to H&E).
(xiii) Solvency Opinion. H&E shall have received from Duff & Phelps, LLC an insolvency
opinion, in form and substance satisfactory to H&E, after giving effect to the Transaction.
(xiv) Insurance. Notwithstanding the disclosures of Item 5 of Disclosure
Schedule 5.18, Burress shall not have experienced on or prior to the Closing Date any adverse
change in the amount or scope of coverage of insurance carried by it as of February 28, 2007, and
the representations and warranties of Burress Shareholders contained in Section 5.18 shall
be true in correct in all respects notwithstanding the disclosures of Item 5 of
Disclosure Schedule 5.18.
(c) Condition to the Obligations of Burress and Burress Shareholders. The obligations
of Burress and Burress Shareholders to consummate the Transaction shall be subject to the
fulfillment at or prior to the Closing of each of the following conditions, any and all of which
may be waived in whole or in part by Burress and Burress Shareholders to the extent permitted by
applicable Law:
(i) Representations and Warranties. All representations and warranties made by H&E in
this Agreement shall be true, correct, and complete in all material respects on the date hereof and
as of the Closing Date as though such representations and warranties were
made as of the Closing Date (or on the date when made in the case of any representation or warranty
which specifically relates to an earlier date), except that such representations and warranties
which are qualified by materiality or the absence of a Material Adverse Change or Material Adverse
Effect shall be true, correct and complete in all respects on the date hereof and as of the Closing
Date as though such representations and warranties were made as of the Closing Date (or on the date
when made in the case of any representation or warranty which specifically relates to an earlier
date). H&E shall have duly performed or complied with, in all material respects, all of the
covenants, obligations and conditions to be performed or complied with by it under the terms of
this Agreement on or prior to or at the Closing, except that such covenants, obligations and
conditions which are qualified by materiality or the absence of a Material Adverse Change or
Material Adverse Effect shall be performed or complied with in all respects on or prior to the
Closing Date.
(ii) Closing Deliveries of H&E. H&E shall have delivered, or caused to be delivered,
the following:
(A) to Burress Shareholders Representative, as the Exchange Agent, the Closing Estimate
of the Closing Net Proceeds to Burress Shareholders;
(B) to the Escrow Agent, the Closing Escrow Amount;
(C) to HE-JWB, the Closing Estimates of the amounts to which reference is made in
Section 2.2(b)(iii); and
(D) to Burress Shareholders Representative, an opinion of Dechert LLP, as counsel to
H&E and HE-JWB to the effect of the legal conclusions set forth in Exhibit C-2,
subject to reasonable customary assumptions, limitations, qualifications and exceptions,
together with such other matters relating to the Transaction as may be reasonably requested
by Burress Shareholders Representative.
Article V
Representations and Warranties of Burress Shareholders Regarding Burress
Burress Shareholders, jointly and severally, hereby make to H&E the representations and
warranties set forth in this Article V, and acknowledge that H&E is relying upon such
representations and warranties in connection with the execution of this Agreement and the
consummation of the Transaction, notwithstanding any investigation made or conducted by H&E or on
its behalf.
Section 5.1. Organization and Qualification; Subsidiaries. Burress is a corporation
duly organized, validly existing and in good standing under the Laws of the Commonwealth of
Virginia and has the power and authority and all material Permits necessary to own or lease its
property and assets and to carry on its business as presently conducted, and as presently proposed
to be conducted, and is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction wherein the nature of its business or the ownership of its assets
20
makes such qualification necessary. Burress has previously provided to H&E true and complete copies
of its Constituent Documents. Burress has no, and has never had any, Subsidiaries.
Section 5.2. Authorization; Enforceability. Burress has the power and authority to
execute and deliver this Agreement and each other Transaction Document to be executed in connection
herewith and to perform its obligations hereunder and thereunder, all of which have been, or will
be, duly authorized by all requisite corporate action. To the extent that Burress is a party
thereto, this Agreement and each other Transaction Document to be executed in connection herewith
has been duly authorized, executed and delivered by Burress and constitutes a valid and binding
agreement of Burress, enforceable against Burress in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency or similar Laws affecting
creditors rights generally or the application of general principles of equity (regardless of
whether such enforcement is considered in a Proceeding in equity or at law).
Section 5.3. Non-Contravention. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which Burress is a party will not (i) contravene
any provision contained in the Constituent Documents of Burress, (ii) conflict with, violate or
result in a breach (with or without the lapse of time, the giving of notice, or both) of, or
constitute a default (with or without the lapse of time, the giving of notice, or both) under (A)
except as set forth on Disclosure Schedule 5.3 (subject to obtaining the Required
Consents), any Contract or (B) any Consent, Permit and Order, in each case to which Burress is a
party or by which it is bound or to which any of its assets or properties are subject, (iii) result
in the creation or imposition of any Lien on any of the assets or properties of Burress, including
the Proprietary Rights, or (iv) result in the acceleration of, or permit any Person to terminate,
modify, cancel, accelerate or declare due and payable prior to its stated maturity, any obligation
of Burress.
Section 5.4. No Consents; Etc. Except for (i) filing and recordation of the Articles
of Merger as required by the Virginia Act and the notifications under the HSR Act, (ii) filings or
approvals under federal or state securities Laws, and (iii) the filings and approvals set forth on
Disclosure Schedule 5.4, no Consent, Permit or Order is necessary for the execution,
delivery or performance of this Agreement or the Transaction Documents or the consummation of the
Transaction by Burress and Burress Shareholders.
Section 5.5. Capitalization of Burress. The outstanding Burress Equity Equivalents
consist solely of 8,333 shares of Class A Voting Common Stock, without par value, and 75,000 shares
of Class B Nonvoting Common Stock, without par value; 100% of which Burress Existing Common Stock
is owned beneficially and of record by Burress Shareholders listed on Disclosure Schedule
5.5 and as set forth opposite the names of each Burress Shareholder. Except as listed on
Disclosure Schedule 5.5, there are no outstanding Burress Equity Equivalents. The
outstanding Class A Voting Common Stock, without par value, represents 10% of the outstanding
Burress Equity Equivalents of all classes and series, and there are no outstanding voting Burress
Equity Equivalents other than such outstanding Class A Voting Common Stock, without par value.
Other than conversion of HE-JWB Stock into Burress Existing Common Stock as of the Effective Date,
no Burress Equity Equivalents will be issuable as a result of the Transaction. All of the issued
and outstanding Burress Equity Equivalents in Burress have been duly authorized,
21
validly issued, are fully paid and are nonassessable. Burress has not effected any redemption
or repurchase of any Burress Equity Equivalents subsequent to its formation or incorporation.
Section 5.6. Financial Statements.
(a) The 2004 Audited Financial Statements, the 2005 Audited Financial Statements, the December
Financial Statements and the February Financial Statements are attached hereto as Disclosure
Schedule 5.6(a)(i).
(b) Except as set forth on Disclosure Schedule 5.6(a)(ii) or as explicitly indicated
in the notes to the Financial Statements, the Financial Statements have been (and will be) prepared
from, and are (and will be) in accordance with, the books and records of Burress, and fairly
present (and will fairly present) in all material respects, the transactions, assets and
Liabilities of Burress and, in the case of the Financial Statements, the financial position,
results of operations and cash flows of Burress as of the dates and for the periods indicated, in
each case in accordance with GAAP, except in the case of the December Financial Statements and the
Interim Financial Statements, as set forth on Disclosure Schedule 5.6(a)(ii), and for
normal recurring year-end adjustments which are required in order to conform the December Financial
Statements and such Interim Financial Statements to a GAAP presentation but which would not, except
as set forth on Disclosure Schedule 5.6(a)(ii), materially affect or change the
transactions, assets and Liabilities of Burress and the financial position, results of operations
and cash flows of Burress as presented in the December Financial Statements and the Interim
Financial Statements.
(c) Burress has devised and maintains a system of internal accounting controls for Burress
sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with
managements general or specific authorization; and (ii) transactions are recorded as necessary to
permit preparation of the Financial Statements in accordance with GAAP. The accounting books and
records of Burress during the periods covered by Burress Financial Statements fairly reflect (or
will reflect) in all material respects the items of income and expense and the assets and
Liabilities of Burress, including the nature thereof and the transactions giving rise thereto and
provide (or will provide) a fair basis for the preparation of the Financial Statements in
accordance with GAAP.
(d) Except as described on Disclosure Schedule 5.6(c), all accounts and notes
receivable of Burress reflected on the Financial Statements, and all accounts and notes receivable
arising subsequent to the date of the Financial Statements, in each case, have arisen in the
Ordinary Course of Business.
(d) Burress has fleet equipment (excluding the Hitachi Fleet) having an aggregate original
equipment cost of approximately at least $42,667,301, and Hitachi Fleet having an aggregate
original equipment cost of approximately at least $21,829,671, which equipment is in good
operating condition (subject to ordinary wear and tear, including to the extent out of service for
immaterial periods of time) and suitable for rental by Burress in the Ordinary Course of Business.
22
Section 5.7. Absence of Certain Developments. Except as set forth on Disclosure
Schedule 5.7, since the date of the December Balance Sheet, there has not been any Material
Adverse Effect or Material Adverse Change and Burress has operated in the Ordinary Course of
Business. Without limiting the generality of the foregoing, except as set forth on Disclosure
Schedule 5.7 or as expressly contemplated by this Agreement, since the date of the February
Balance Sheet, Burress has not:
(i) experienced any changes in any relationship with its suppliers, customers,
distributors, brokers, lessors or others which would have a Material Adverse Effect;
(ii) sold, leased, transferred, or assigned any of its material assets, tangible or
intangible (including the Proprietary Rights) other than for fair consideration in the
Ordinary Course of Business;
(iii) entered into any Contract (or series of related Contracts) involving more than
$50,000 individually to which it is a party or by which it is bound nor modified the terms
of any such existing contract or agreement, or outside the Ordinary Course of Business;
(iv) (nor has any other party) accelerated, terminated, modified or canceled any permit
or agreement, contract, lease or license involving more than $50,000 individually to which
it is a party or by which it is bound;
(v) entered into, subsequent to February 28, 2007, any Contract in respect of Included
Burress Indebtedness, Additional Indebtedness or Hitachi Indebtedness and Payables, except
as listed on Disclosure Schedule 5.16 or to which H&E shall have consented in
writing;
(vi) adopted, modified, amended or terminated, in any material respect, any bonus,
profit-sharing, incentive, severance, or other similar plan (including any Employee Benefit
Plan), contract, or commitment for the benefit of any of its directors, officers, or
employees, or otherwise made any material change in the employment terms (including any
increase in compensation by more than one percent (1%)) for any of its officers and
employees described in clause (i) of Section 5.13(a);
(vii) made any capital expenditure or any other investment (or series of related
investments) in excess of $50,000 individually and $100,000 in the aggregate, other than in
accordance with the Budget;
(viii) incurred, assumed or guaranteed any Indebtedness, or incurred any Liens,
involving more than $25,000 individually or in the aggregate;
(ix) canceled, compromised, waived, or released any right or claim (or series of
related rights and claims) either involving more than $50,000 individually or in the
aggregate, or outside the Ordinary Course of Business;
23
(x) issued, sold or otherwise disposed of any Burress Equity Equivalents, or granted,
modified or amended any options, warrants, stock appreciation rights, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any Burress Equity
Equivalents or participate in any change in the value thereof;
(xi) made or been subject to any material change in its accounting practices,
procedures or methods or in its cash management practices;
(xii) entered into or become party to any Affiliate Agreement or Affiliate Obligation,
including any (A) loan or advance of funds or other payments to any of its directors,
officers, employees, shareholders, members or Affiliates, or (B) payment or declaration of
any dividend, redemption or other distribution with respect to Burress Equity Equivalents,
or any payment of any kind to Burress Shareholders or their Affiliates or Related Persons,
other than Permitted Distributions and payments in the Ordinary Course of Business pursuant
to Continuing Affiliate Agreements;
(xiii) granted any license or sublicense of any rights under, allowed to lapse,
disposed of, failed to protect or maintain or otherwise experienced any Material Adverse
Changes with respect to the Proprietary Rights;
(xiv) experienced any adverse change in the amount or scope of coverage of insurance
carried by it as of February 28, 2007;
(xv) made or revoked any Tax election or settled or compromised any Tax Liability;
(xvi) paid bonuses to employees of Burress except (A) bonuses to employees to which H&E
shall have consented in writing, and (ii) bonuses paid or payable to salesmen in the
Ordinary Course of Business pursuant to their existing retention arrangements; or
(xv) committed to do any of the foregoing.
Section 5.8. Governmental Authorizations; Licenses; Etc. Except as set forth on
Disclosure Schedule 5.8, the business of Burress has been operated in compliance, in all
material respects, with all applicable Laws, Consents, Permits and Orders and, without limiting the
generality of the foregoing, neither Burress nor, to the Knowledge of Burress Shareholders, any of
its officers, directors, employees or agents or other Persons acting on behalf of any of them have
used any corporate or other funds for unlawful contributions, payments, gifts or entertainment, or
made any unlawful expenditures relating to political activity to government officials or others.
Except as set forth on Disclosure Schedule 5.8, Burress has, and after giving effect to the
Transaction, will continue to have, all permits, licenses, approvals, certificates and other
authorizations from Governmental Authorities, and has made all notifications, registrations,
certifications and filings with all Governmental Authorities, necessary or advisable for the
operation of its business as currently conducted other than in all cases where the failure to have
any permit, license, approval, certification or other authorization, or to make any notification,
registration, certification or filing, would not have a Material Adverse Effect.
24
Except as set forth on Disclosure Schedule 5.8, there is no Proceeding pending or, to
the Knowledge of Burress Shareholders, threatened by any Governmental Authority with respect to (i)
any alleged violation by Burress or its Affiliates of any Law, Consent, Permit or Order, or (ii)
any alleged failure by Burress or its Affiliates to have any Consent or Permit required in
connection with the operation of the business of Burress other than in all cases where the
violation of any Law, or the failure to have any Consent or Permit would not have a Material
Adverse Effect. None of the Proceedings listed on Disclosure Schedule 5.8 would have, if
adversely determined against Burress, a Material Adverse Effect.
Section 5.9. Orders and Proceedings. Except as set forth on Disclosure
Schedule 5.9, there are no Orders or Proceedings pending or, to the Knowledge of Burress
Shareholders, threatened against Burress, (i) relating to Burress, its businesses or properties or
the Proprietary Rights, or (ii) seeking to enjoin the Transaction. None of the Proceedings listed
on Disclosure Schedule 5.9 would have, if adversely determined against Burress, a Material
Adverse Effect.
Section 5.10. Undisclosed Liabilities. Other than those specifically reflected in the
balance sheet included in the February Financial Statements, specifically identified and described
in the notes thereto, or disclosed on Disclosure Schedule 5.10, to the Knowledge of Burress
Shareholders, there are no Liabilities of Burress, absolute, accrued, contingent or otherwise, or
whether due or to become due, other than Liabilities incurred in the Ordinary Course of Business
since the date of the February Balance Sheet (none of which Ordinary Course of Business Liabilities
are material Liabilities for breach of contract, breach of warranty, tort, infringement or
violation of Law).
Section 5.11. Taxes.
(a) Except as set forth on Disclosure Schedule 5.11(a):
(i) Burress has timely filed all Tax Returns which it is required to have filed under
applicable Laws taking into account any extension of the time to file disclosed on
Disclosure Schedule 5.11, and all such Tax Returns are true, complete and correct in
all material respects, have been prepared in compliance with all applicable Laws, and
accurately reflect the taxable income (or other measure of Tax) of Burress;
(ii) Burress has timely paid all Taxes due and owing by it (whether or not shown on any
Tax Return) and has withheld and paid over to the appropriate Governmental Authority all
Taxes which it is required to withhold from amounts paid or owing to any employee,
shareholder, member, creditor or other third party;
(iii) Burress has not waived any statute of limitations with respect to any Taxes or
agreed to any extension of time for filing any Tax Return which has not been filed, and
Burress has not consented to extend to a date later than the date hereof the period in which
any Tax may be assessed or collected by any Governmental Authority;
(iv) the accrual for Taxes on the December Balance Sheet is adequate to pay all Tax
Liabilities of Burress for the 2006 Tax year, and the accrual for Taxes on
25
the February Balance Sheet is adequate to pay all Tax Liabilities of Burress which
Burress would have if its current Tax year were treated as ending on the date of the
February Balance Sheet, excluding any amount recorded which is attributable solely to timing
differences between book and Tax income;
(v) no foreign, federal, state or local Tax audits or Proceedings are pending or being
conducted or, to the Knowledge of Burress Shareholders, are threatened with respect to
Burress, and no notification of an intent to examine Burress has been received by Burress or
Burress Shareholders from any Governmental Authority;
(vi) no claim has been made by any Governmental Authority in a jurisdiction where
Burress does not file Tax Returns that Burress is or may be subject to Taxes assessed by
such jurisdiction and no prior claims are outstanding;
(vii) Burress has not been a member of an Affiliated Group or filed or been included in
a combined, consolidated or unitary income Tax Return.
(viii) Burress has not participated in any transaction that is a reportable
transaction, as that term is defined in Section 1.6011-4 of the Treasury Regulations; and
Burress has not acted as a material advisor (as that term is defined in Section
301.6112-1(c)(2) of the Treasury Regulations) with respect to any reportable transaction;
(ix) Burress is not a party to, or bound by, any Tax allocation or Tax sharing
agreement;
(x) there are no Liens for Taxes upon Burress or its assets, except Liens for current
Taxes not yet due;
(xi) Burress has not granted a power of attorney with respect to any Tax matter that
has continuing effect;
(xii) Burress does not own any interest in an entity characterized as a partnership for
federal income Tax purposes;
(xiii) Burress shall not be required to (A) as a result of a change in method of
accounting for a Tax period ending on or prior to the Closing Date, include any adjustment
in taxable income for any Tax period (or portion thereof) ending after the Closing Date, (B)
as a result of any closing agreement, as described in Section 7121 of the Code (or any
corresponding provision of state, local or foreign income Tax Law), include any item of
income in, or exclude any item of deduction from, taxable income for any Tax period (or
portion thereof) ending after the Closing Date, (C) as a result of any sale reported on the
installment method where such sale occurred on or prior to the Closing Date, include any
item of income in, or exclude any item of deduction from, taxable income for any Tax period
(or portion thereof) ending after the Closing Date, or (D) as a result of any prepaid amount
received on or prior to the Closing Date (other than amounts prepaid in the ordinary course
of business consistent with past custom and
26
practice), include any material item of income in, or exclude any item of
deduction from, taxable income for any Tax period (or portion thereof) ending after the
Closing Date; and
(xiv) Burress has made no distributions from December 31, 2006 through the date hereof.
(b) Burress:
(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 5.11(b)(iv), has not in the
past 10 years acquired assets from another entity in a transaction in which the Tax basis of
Burress 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) Burress 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 Burress will be an S corporation up
to and including the Closing Date. Burress has been a valid S corporation for state Tax purposes
in the states listed on Disclosure Schedule 5.11(c) for the periods set forth in such
Disclosure Schedule.
(d) Disclosure Schedule 5.11(d) sets forth all jurisdictions in which Burress has
filed Tax Returns, in each case identifying the most recent period with respect to which Burress
has been audited or with respect to which the applicable statute of limitations has otherwise
closed. Burress is not, and has not been, required to file Tax Returns in any other jurisdiction.
(e) Disclosure Schedule 5.11(e) sets forth all present and former employees of Burress
that hold or held Burress Equity Equivalents, the dates on which the shares were acquired and (if
applicable) disposed of, and the dates on which elections (if any) were made under Section 83(b) of
the Code with respect to such shares.
Section 5.12. Environmental Matters.
(a) Except as set forth on Disclosure Schedule 5.12, Burress has complied (where such
non-compliance might result in the imposition upon Burress of any Liability) and is
in compliance, in all material respects, with all Environmental and Safety Requirements. Burress
27
and Burress Shareholders have furnished to H&E true and complete copies of all reports of
investigations (including Phase I investigations) with respect to its real property (whether owned
or leased) in the possession of, or prepared for, Burress, Burress Shareholders 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.
(b) Without limiting the generality of the foregoing, except as set forth on Disclosure
Schedule 5.12, Burress has obtained and has complied (where such failure to obtain and such
non-compliance might result in the imposition upon Burress of any Liability) and is in compliance
with, in all material respects, all Consents, Permits and Orders that may be required pursuant to
Environmental and Safety Requirements for the occupation of its facilities and the operation of its
businesses and such Consents, Permits and Orders may be relied upon for continued lawful operation
of the businesses of Burress on and after the Closing Date, without transfer, reissuance, or other
governmental approval or action.
(c) Except as set forth on Disclosure Schedule 5.12, Burress has not received any
material Environmental Claim against Burress or with respect to the Property; and to the Knowledge
of Burress Shareholders, no Environmental Claim is threatened against Burress 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 Burress or with
respect to real property (whether owned or leased).
(d) Burress has not treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled, or released any substance, including any Hazardous Substance, or owned or
operated any property or facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or would give rise to material Liabilities pursuant to
Environmental and Safety Requirements (including CERCLA and RCRA), including any material Liability
for response costs, corrective action costs, personal injury, property damage, natural resources
damages or attorney fees, or any investigative, corrective or remedial obligations.
(e) None of the following exists at any of the Real Property which, under current applicable
Environmental and Safety Requirements, would be required to be removed or with respect to which
remediation or abatement would be required to be taken: (i) underground storage tanks; (ii)
asbestos-containing material in any form or condition; (iii) materials or equipment containing
polychlorinated biphenyls; or (iv) landfills, surface impoundments or disposal areas.
(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) Except for Liability inherent as a matter of law in the ownership or operation of real
property, Burress has not, either expressly or by operation of law, assumed or
undertaken any material Liability, including any obligation for corrective or remedial action,
of any other Person relating to Environmental and Safety Requirements.
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Section 5.13. Employee Matters.
(a) Disclosure Schedule 5.13 contains a true and complete list of (i) the employees
currently employed by Burress having an annual base salary in each of calendar year 2006 and 2007
of $75,000 or more, indicating the title of and a description of any agreements with such employees
and any severance or similar arrangements with such employees, and (ii) the rate of all current
compensation payable by Burress to each such employee, including, without limitation, any bonus,
contingent or deferred compensation.
(b) Except as set forth on Disclosure Schedule 5.13, (i) Burress has not entered into
any collective bargaining agreements with respect to its employees, (ii) there are no written
personnel policies applicable to the employees generally, other than employee manuals, true and
complete copies of which have previously been provided to H&E, (iii) there is no labor strike,
labor dispute, work slowdown or work stoppage or lockout pending or, to the Knowledge of Burress
Shareholders, threatened against or affecting Burress and during the past three years there has
been no such action, (iv) to the Knowledge of Burress Shareholders, no union organization campaign
is in progress with respect to any of the employees, (v) there is no unfair labor practice, charge
or complaint pending or, to the Knowledge of Burress Shareholders, threatened against Burress, (vi)
other than by operation of law, Burress has not entered into any express agreement or arrangement
restricting its ability to terminate the employment of any or all of its employees at any time, for
any lawful or no reason, without penalty or Liability, (vii) there are no discrimination charges or
administrative claims pending or, to the Knowledge of Burress Shareholders, threatened, against
Burress by or before any state, local or federal agencies, (viii) there are no current Occupational
Safety and Health Administration investigations or citations pending or, the Knowledge of Burress
Shareholders, threatened against Burress, (ix) there are no pending grievances or demands for
arbitration against Burress, and (x) Burress is in compliance with all Laws concerning the
employees of Burress except where the failure to be in compliance would not result in a Material
Adverse Effect. Burress has not engaged in any plant closing or employee layoff activities within
the last three years that would violate or in any way implicate the Worker Adjustment Retraining
and Notification Act of 1988, as amended, or any similar state or local plant closing or mass
layoff statute, rule or regulation.
Section 5.14. Employee Benefit Plans.
(a) Disclosure Schedule 5.14(a) lists all Employee Benefit Plans maintained or
contributed to, during the last six years, for the current or future benefit of any current or
former employee of Burress or any ERISA Affiliate or with respect to which Burress or any ERISA
Affiliate has any material Liability or potential material Liability, a true and complete copy of
each of which has been furnished to H&E. No Employee Benefit Plan is or was subject to any
collective bargaining agreement. No Employee Benefit Plan is a Multiemployer Plan or a plan which
is subject to Title IV of ERISA, and no Employee Benefit Plan provides health or other welfare
benefits to former employees other than in compliance with Section 4980B of the Code or similar
State Law (COBRA).
29
(b) Except as set forth on Disclosure Schedule 5.14, each Employee Benefit Plan (and
each related trust or insurance contract) is maintained and administered in compliance in all
material respects with its terms and the applicable requirements of ERISA, the Code and any other
Laws (including compliance with all reporting and disclosure obligations) except for noncompliance
which would not have a Material Adverse Effect. Each Employee Benefit Plan which is intended to be
qualified and exempt from taxation under Sections 401(a) and 501(a) of the Code has received a
favorable determination letter that it is so qualified and exempt from taxation and, to the
Knowledge of Burress Shareholders, there are no facts or circumstances which could be reasonably
expected to adversely affect any of such favorable determination letters.
(c) Neither Burress nor any ERISA Affiliate has any Liability or potential Liability under
Title IV of ERISA.
(d) Burress and each ERISA Affiliate has complied with the notice of continuation coverage
requirements of COBRA with respect to each Employee Benefit Plan that is or was a group health plan
within the meaning of Section 5000(b)(i) of the Code.
(e) Except as may be disclosed in Disclosure Schedule 5.14(e), all contributions to,
and payments from, the Employee Benefit Plans which may have been required to be made in accordance
with the Employee Benefit Plans and, when applicable, Section 302 of ERISA or Section 412 of the
Code, have been timely made. Except as may be disclosed in Disclosure Schedule 5.14(e), all
contributions with respect to the period ending on the Closing Date will have been paid by that
date or accrued and reflected in the Interim Financial Statements, even though not due until a
later date. All payments under the Employee Benefit Plans, except those to be made from a trust
qualified under Section 401(a) of the Code, for any period ending before the Closing Date that are
not yet, but will be, required to be made are properly accrued and reflected on the December
Balance Sheet or are disclosed on Disclosure Schedule 5.14(e). No asset of Burress, and no
asset of any ERISA Affiliate is subject to any Lien under Code Sections 401(a)(29) or 412(n) or
ERISA Sections 302(f) or 4068 or arising out of any action filed under ERISA Section 4301(b).
(f) Neither Burress, any ERISA Affiliate nor, to the Knowledge of Burress Shareholders, any
other Person, has engaged in any transaction with respect to any Employee Benefit Plan which could
be reasonably expected to subject Burress to any material Tax or penalty (civil or otherwise)
imposed by ERISA, the Code or other applicable Law. No actions, suits, investigations or claims
with respect to the Employee Benefit Plans (other than routine claims for benefits) are pending or,
to the Knowledge of Burress Shareholders, threatened; and to the Knowledge of Burress Shareholders,
there are no facts which could be reasonably expected to give rise to any such actions, suits or
claims.
(g) Neither the Employee Benefit Plans, Burress, any ERISA Affiliate, nor any employee of the
foregoing, nor, to the Knowledge of Burress Shareholders, 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 on prohibited transactions imposed by such
30
Section 4975 or the sanctions imposed under Title I of ERISA. Except as indicated on Disclosure
Schedule 5.14(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 Burress 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
Burress. Burress 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.
(i) With respect to each Employee Benefit Plan, Burress has provided to H&E true, complete and
correct copies, to the extent applicable, of (i) all documents pursuant to which such Employee
Benefit Plans are maintained, funded and administered, (ii) the most recent annual report (Form
5500 series) filed with the Internal Revenue Service, (iv) the most recent financial statement, and
(v) all governmental rulings, determinations and opinions (and any pending requests).
(j) No payment which is or may be made by, from or with respect to any Employee Benefit Plan,
to any employee, former employee, director or agent of Burress or any ERISA Affiliate, either alone
or in conjunction with any other payment which Burress has made, or is obligated to make prior to
Closing, will or could properly be characterized as an excess parachute payment under Section
280G of the Code (or any corresponding provision of state, local or foreign Tax Law) in connection
with the Transaction.
(k) To the extent that any Employee Benefit Plan constitutes a non-qualified deferred
compensation plan within the meaning of Section 409A of the Code, such Employee Benefit Plan has
been operated in good faith compliance with Section 409A of the Code.
Section 5.15. Proprietary Rights. Burress owns and possesses all right, title and
interest in, free and clear of all Liens or has a valid, enforceable and effective written license
to use, all material Proprietary Rights. Disclosure Schedule 5.15 contains a complete and
accurate list of (i) all patented and registered Proprietary Rights; (ii) all pending patent
applications and applications for the registration of other Proprietary Rights; (iii) all material
unregistered trademarks and copyrights included among the Proprietary Rights; (iv) all trade and
corporate names owned or used by Burress; (v) material computer software (other than mass-marketed
software having a license fee of less than $10,000) owned or used by Burress, and (vi) all licenses
or other agreements to or from third parties regarding any of the Proprietary Rights. There is not
pending or, to the Knowledge of Burress Shareholders, threatened against Burress any material claim
by any third party contesting the validity, enforceability or the use or ownership by or of Burress
of any Proprietary Right, and, to the Knowledge of Burress Shareholders, no basis exists for the
assertion of any such claim. To the Knowledge of Burress Shareholders, the business and operations
of Burress as currently conducted do not infringe,
dilute, misappropriate or otherwise violate the patents, trademarks, copyrights, trade secrets
or
31
other intellectual property rights of any third party under the Laws of any jurisdiction in a
manner which would have a Material Adverse Effect; and Burress has not received any notice of, nor
is aware of any material infringement or misappropriation by, or conflict with, any third party
with respect to any of the Proprietary Rights. All Proprietary Rights currently owned or used by
Burress prior to the Closing Date will be owned or available for use by Burress on identical terms
and conditions immediately after the Closing Date and will not be affected, impaired or modified by
the Transaction. None of the Proprietary Rights currently owned or used by Burress prior to the
Closing Date are owned by Burress Shareholders or directors, officers or employees of Burress or
their respective Affiliates or Related Persons, and neither Burress Shareholders, directors,
officers or employees of Burress or their respective Affiliates or Related Persons have any
interest in any of such Proprietary Rights.
Section 5.16. Contracts. Disclosure Schedule 5.16 describes all of the
following Contracts: (i) all agreements involving payment or receipt by Burress of more than
$50,000 in the aggregate in any calendar year; and all Contracts for the purchase by Burress of
machinery, equipment or other personal property involving more than $50,000; (ii) all capitalized
leases under which Burress is either lessor or lessee; (iii) all agreements containing commitments
of suretyship, guarantee or indemnification by Burress having a contract value of more than
$50,000; (iv) all non-competition agreements or nondisclosure covenants relating to Burress, any
Burress Shareholder or any director, officer or employee of Burress, including any of the foregoing
which purports to restrict any of the foregoing in the conduct of the business and operations of
Burress, any investment in Burress or any services rendered by any of the foregoing to Burress; (v)
all mortgages, indentures, notes, bonds or other agreements relating to indebtedness incurred or
provided by Burress; (vi) all agreements involving a Governmental Authority and Burress or its
business, operations, properties, assets or employees; (vii) all partnership agreements and joint
venture agreements relating to Burress; and (viii) any commitment to do any of the foregoing
described in clauses (i) through (vii) above. Except as set forth on Disclosure
Schedule 5.16, none of the other parties to any Contracts have given notice to Burress that it
intends to terminate or materially alter the provisions of such Contracts either as a result of the
Transaction or otherwise, and Burress has not received notice from any other party to any Contract
that it intends to terminate or materially alter the provisions of any such Contract. Burress is
not in material default, and has not given notice of any default or claimed, purported or alleged
default, and, to the Knowledge of Burress Shareholders, there are no facts that, with notice or
lapse of time, or both, would constitute a material default (or give rise to a termination right)
on the part of any party in the performance of any obligation to be performed under any of the
Contracts. True and complete copies of all written Contracts involving payment or receipt of more
than $50,000, including any amendments thereto, have been delivered to H&E and such Contracts
constitute the legal, valid and binding obligation of Burress, except as such enforcement may be
limited by applicable bankruptcy, insolvency or similar Laws affecting creditors rights generally
or the application of general principles of equity (regardless of whether such enforcement is
considered in a Proceeding in equity or at law). Except as specifically set forth on Disclosure
Schedule 5.16, Burress is not a party to any contract, agreement or understanding which
contains a change in control, potential change in control or similar provision, which would be
triggered by the Transaction.
32
Section 5.17. Books and Records. The stock and membership interest records of Burress
fairly and accurately reflect the record ownership of all of the outstanding Burress Equity
Equivalents. The other books and records of Burress, including financial records, minute books and
books of account, are complete and accurate in all material respects and have been maintained in
accordance with sound business practices.
Section 5.18. Insurance. Disclosure Schedule 5.18 contains an accurate, in all
material respects, summary of all policies of fire, liability, workmens compensation, property,
casualty and other forms of insurance owned or held by Burress, including all director and officer
insurance policies maintained by Burress and covering the past three years. All such policies are
in full force and effect, all premiums with respect thereto covering all periods up to and
including the Effective Time will have been paid, and no notice of cancellation or termination has
been received with respect to any such policy. All known claims, if any, made against Burress that
are covered by insurance have been disclosed to and accepted by the appropriate insurance companies
and are being defended by such appropriate insurance companies and are described on Disclosure
Schedule 5.18 and, except as disclosed on Disclosure Schedule 5.18, no claims have been
denied coverage during the last two years. To the Knowledge of Burress Shareholders, no basis
exists for any claim (including any potential claim) for indemnification of any Burress Shareholder
or any director, officer, employee, agent or consultant of Burress.
Section 5.19. Real Property; Other Tangible Assets.
(a) Disclosure Schedule 5.19(a) sets forth a complete and correct list and description
of all real property owned by Burress (Owned Real Property) and all leases, master leases
and subleases or other agreements for occupancy, including all amendments, extensions and other
modifications (the Real Property Leases), for or relating to real property or premises
utilized, leased or sublet by Burress (the Leased Real Property) to which Burress is, or
will be on the Closing Date, the tenant, subtenant, sublessor, or other lessor or lessee
party. The Owned Real Property and the Leased Real Property is herein together referred to as the
Real Property. Complete and correct copies of all deeds, mortgages (including leasehold
mortgages), deeds of trust (including leasehold deeds of trust), leases, subleases, guaranties of
leases, guaranties of subleases and other material documents concerning the ownership or use by
Burress of the Real Property and the interests of Burress therein have been delivered or made
available to H&E.
(b) Burress has, or will have as of immediately following the Closing, good and marketable
title 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 machinery and equipment) (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,
(iii) Liens on inventory incurred in the Ordinary Course of Business as a part of inventory
financing set forth on Disclosure Schedule 5.19(b), (iv) rights of lessors under Tangible
Personal Property Leases set forth on Disclosure Schedule 5.19(b), (v) rights of lessors
of Leased Tangible Personal Property set forth on Disclosure Schedule 5.19(b), and (vi)
33
encumbrances set forth on Disclosure Schedule 5.19(b) and encumbrances of record on the
underlying fee interest in the Real Property; none of which Liens (including as to such Liens set
forth on Disclosure Schedule 5.19(b) or such underlying lessee interests) materially
interfere with the operation of the business of Burress as it is presently conducted or might
result in a Material Adverse Effect (Permitted Liens).
(c) Except as set forth in Disclosure Schedule 5.19(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 the Knowledge of Burress Shareholders, enforceable against the
Landlord which is a party thereto in accordance with its terms. Except as set forth in
Disclosure Schedule 5.19(c), Burress has not received any notice of material default or
event of default and, to the Knowledge of Burress Shareholders, 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 Burress and other than as set forth on Disclosure Schedule 5.19(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.
(d) (i) The Real Property described in Disclosure Schedule 5.19(a) constitute all of
the real property owned, leased, occupied, sublet or otherwise utilized by Burress. To the
Knowledge of Burress Shareholders, other than Burress and other than as set forth on Disclosure
Schedule 5.19(d), there are no parties in possession or parties having any current or future
right to occupy any of the Leased Real Property.
(ii) Except as set forth on Disclosure Schedule 5.19(d), to the Knowledge of Burress
Shareholders, the Real Property is in good condition and repair (subject to ordinary wear and tear
the cost of which to remedy, so as to bring the Real Property into good condition and repair, is
not in excess of $50,000 in the aggregate per facility of Burress or is otherwise included in the
Budget) and is sufficient and appropriate for the conduct of the business of Burress in the manner
conducted currently and since January 1, 2006.
(iii) The Real Property conforms in all material respects to all zoning Laws applicable to
such Real Property and, to the Knowledge of Burress Shareholders, the Real Property conforms in all
material respects to all building and other Laws applicable to such Real Property. All material
Consents and Permits necessary to the current occupancy and use of the Real Property have been
obtained, are in full force and effect and have not been violated in any material respect. To the
Knowledge of Burress Shareholders, there exists no violation by Burress of any Contract, Lien or
Order materially and adversely affecting any portion of the Real Property. There is no pending or,
to the Knowledge of Burress Shareholders, threatened condemnation Proceeding materially and
adversely affecting any portion of the Real Property. Except as described on Disclosure
Schedule 5.19(d), the execution and delivery of this Agreement and the consummation of the
Transaction will not (i) result in any increase in rent required under the current terms of the
Real Property Leases or (ii) constitute an assignment, sublease or change of control or similar
event under the Real Property Leases.
34
(e) Burress does not have, and will not have, any Liability or obligation under the Real
Property Leases for all periods (or partial periods) ending on or before the Closing Date for the
payment or reimbursement to Landlords and other Persons for common area maintenance (the
Maximum CAM Liability). No disputes with any Landlord or Real Property Lease Defaults are
pending or, to the Knowledge of Burress Shareholders, threatened with respect to any charges under
the Leases for common area maintenance which will result in common area maintenance for all periods
(or partial periods) ending on or before the Closing Date in an aggregate amount in excess of the
Maximum CAM Liability.
Section 5.20. Transactions With Affiliates. Except as set forth on Disclosure
Schedule 5.20, there exist no Affiliate Agreements or Affiliate Obligations. Disclosure
Schedule 5.20 identifies separately those Affiliate Agreements which will be deemed to be
Continuing Affiliate Agreements.
Section 5.21. Bonus-Severance-Termination Liabilities. All Bonus-Severance-Termination
Liabilities are set forth on Disclosure Schedule 5.21, except (i) bonuses to employees to
which H&E shall have consented pursuant to clause (xvi) of Section 5.7 and
clause (xvi) of Section 8.3(a), and (ii) bonuses paid or payable to salesmen in the
Ordinary Course of Business pursuant to their existing retention arrangements.
Section 5.22. Sufficiency of Assets. The assets (whether tangible or intangible)
currently owned by Burress, or leased or licensed by Burress pursuant to any lease or license
agreement entered into in the Ordinary Course of Business or otherwise disclosed to H&E, constitute
all of the assets necessary to conduct the businesses of Burress as conducted since January 1, 2006
and as currently conducted. Burress holds all such assets free and clear of all Liens except for
Permitted Liens or as otherwise set forth on Disclosure Schedule 5.22.
Section 5.23. Brokers. Except as set forth on Disclosure Schedule 5.23, no
Person is or will be entitled to a brokers, finders, investment bankers, financial advisers or
similar fee from Burress in connection with this Agreement or the Transaction.
Section 5.24. Accuracy of Disclosure Schedules. No Disclosure Schedule nor any other
schedule which modifies any of the representations and warranties contained in this Article
V contains or, as of the Closing Date, will contain any untrue statement of a material fact or
omits or, as of the Closing Date, will omit to state a material fact necessary to make the
statements contained herein or therein not misleading.
Section 5.25. Burress Management. The management of Burress consists of the
individuals identified, including as to their titles and general areas of responsibility, on
Disclosure Schedule 5.25(a) (Burress Management). No other individual exercises
management, supervisory, reporting or compliance responsibilities for the business and operations
of Burress and its segments and departments and which relate to matters which are the subject of
the representations and warranties contained in this Article V. The individuals identified
on Disclosure Schedule 5.25(b) (Senior Burress Management) exercise senior level
management, supervisory, reporting or compliance responsibilities for the business and
35
operations of Burress and its segments and departments and which relate to matters which are the
subject of the representations and warranties contained in this Article V.
Article VI
Representations and Warranties of Burress Shareholders Individually
Each of Burress Shareholders hereby represents and warrants to H&E, on a several basis and
solely as to such Burress Shareholder, and acknowledges that H&E is relying upon such
representations and warranties in connection with the execution of this Agreement and the
consummation of the Transaction, notwithstanding any investigation made or conducted by H&E or on
its behalf, as follows:
Section 6.1. Authorization. Such Burress Shareholder has the power and authority to
execute and deliver this Agreement and each other agreement or instrument to be executed in
connection herewith and to perform his obligations hereunder and thereunder. This Agreement and the
other Transaction Documents have been duly authorized, executed and delivered by such Burress
Shareholder and constitutes a valid and binding agreement of such Burress Shareholder, enforceable
against such Burress Shareholder in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency or similar Laws affecting creditors rights generally
or the application of general principles of equity (regardless of whether such enforcement is
considered in a Proceeding in equity or at law).
Section 6.2. Non-Contravention. The execution, delivery and performance by such
Burress Shareholder of this Agreement and the other Transaction Documents to which such Burress
Shareholder is a party will not (i) conflict with, violate or result in a breach (with or without
the lapse of time, the giving of notice or both) of or constitute a default (with or without the
lapse of time, the giving of notice or both) under (A) except as set forth on Disclosure
Schedule 6.2 (subject to obtaining the Required Consents), any Contract, Consent or Permit, or
(B) any Order, Law or Permit, in each case to which such Burress Shareholder is a party or by which
such Burress Shareholder is bound or to which any of the assets or properties of such Burress
Shareholder are subject, or (ii) result in the acceleration of, or permit any Person to terminate,
modify, cancel, accelerate or declare due and payable any obligation of such Burress Shareholder
prior to its stated maturity except in all cases, for such violations, conflicts, defaults,
breaches, terminations, modifications, cancellations or accelerations which would not result in a
Material Adverse Effect or such Burress Shareholders ability to consummate the Transaction.
Section 6.3. No Consents, Etc. Except for the filing and recordation of the Articles
of Merger as required by the Virginia Act and the filing notifications under the HSR Act, no
Consent or Permit is necessary for the execution, delivery or performance of this Agreement or the
Transaction Documents or the consummation of the Transaction by such Burress Shareholder.
Section 6.4. Brokers. Except as set forth on Disclosure Schedule 5.23, no
Person is or will be entitled to a brokers, finders, investment bankers, financial advisers or
similar fee from such Burress Shareholder in connection with this Agreement or the Transaction.
36
Section 6.5. Orders and Proceedings. There are no Orders or Proceedings pending or, to
the Knowledge of Burress Shareholders, threatened against or affecting such Burress Shareholder,
including any of the foregoing which seeks to restrain or prohibit, to obtain material damages or
to obtain other relief in connection with, the Transaction or which might impose or result in the
imposition of any Lien on the Burress Equity Equivalents or any consideration received by the
holders thereof pursuant to this Agreement.
Section 6.6. Title to Shares. Immediately prior to the Effective Time, the Burress
Equity Equivalents set forth on Disclosure Schedule 5.5 will be owned of record and
beneficially by the Burress Shareholder free and clear of all Liens and restrictions on transfer
other than under applicable securities Laws, except for Liens described on Disclosure
Schedule 6.6 which will be satisfied in full by Burress Shareholders on the Closing Date.
Article VII
Representations and Warranties of H&E and HE-JWB
H&E and HE-JWB jointly and severally represent and warrant to Burress Shareholders and
acknowledge that Burress Shareholders are relying upon such representations and warranties in
connection with the execution of this Agreement and the consummation of the Transaction,
notwithstanding any investigation made or conducted by any Burress Shareholder or on his, her or
its behalf, as follows:
Section 7.1. Organization. H&E is a corporation validly existing and in good standing
under the Laws of the State of Delaware, and HE-JWB is a corporation validly existing and in good
standing under the Laws of the Commonwealth of Virginia. Each of H&E and HE-JWB has the corporate
power and authority to own or lease its property and assets and to carry on its business as
presently conducted.
Section 7.2. Authorization. Each of H&E and HE-JWB has the corporate power and
authority to execute and deliver this Agreement and each other Transaction Document and to perform
its obligations hereunder and thereunder, all of which have been duly authorized by all requisite
corporate action. This Agreement and each other Transaction Document has been duly authorized,
executed and delivered by each of H&E and HE-JWB and constitutes a valid and binding agreement of
each of H&E and HE-JWB, enforceable against each of H&E and HE-JWB in accordance with its terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency or similar Laws
affecting creditors rights generally or the application of general principles of equity
(regardless of whether such enforcement is considered in a Proceeding in equity or at law).
Section 7.3. Non-Contravention. The execution, delivery and performance by each of H&E
and HE-JWB of this Agreement and the other Transaction Documents to which H&E and HE-JWB are
parties will not (i) contravene any provision contained in its Constituent Documents, (ii) conflict
with, violate or result in a material breach (with or without the lapse of time, the giving of
notice or both) of or constitute a material default (with or without the lapse of time, the giving
of notice or both) under (A) any Contract, Consent or Permit, or (B) any Order, Law or Permit, in
each case to which it is a party or by which it is bound or to which any of its
37
material assets or properties are subject, or (iii) result in the acceleration of, or permit
any Person to terminate, modify, cancel, accelerate or declare due and payable prior to its stated
maturity any obligation of H&E or HE-JWB except, in the cases of clauses (ii) and (iii), for such
violations, conflicts, defaults, terminations or accelerations which would not result in a Material
Adverse Effect on H&E or HE-JWB or its ability to consummate the Transaction.
Section 7.4. No Consents; Etc. Except for filing and recordation of the Articles of
Merger as required by the Virginia Act and filing of notifications under the HSR Act, no Consent,
Permit or Order is necessary for the execution, delivery or performance of this Agreement or the
Transaction Documents or the consummation of the Transaction by H&E or HE-JWB.
Section 7.5. Brokers. No Person is or will be entitled to a brokers, finders,
investment bankers, financial advisers or similar fee from H&E or HE-JWB in connection with this
Agreement or the Transaction.
Section 7.6. Structure of HE-JWB for Tax Purposes. HE-JWB is a newly formed transitory
corporation formed specifically to facilitate the Merger. HE-JWBs only asset will be cash obtained
through the purchase of certain securities by H&E in anticipation of the Merger. The sole purpose
of the formation of HE-JWB is to facilitate a formalistic merger transaction with Burress. The
Parties to the Merger will treat the transaction as a taxable stock purchase.
Section 7.7. Orders and Proceedings. There are no Orders or Proceedings by or before
any Governmental Authority pending or, to the Knowledge of H&E, threatened against H&E or HE-JWB
seeking to enjoin the Transaction.
Article VIII
Certain Covenants and Agreements
Section 8.1. Vote; Release.
(a) Burress Shareholders, as the record and beneficial owners of 100% of the Burress Equity
Equivalents of all classes and series, and by execution of this Agreement, hereby consent to and
vote in favor of the Transaction. All of Burress Shareholders and Burress hereby waive all rights
of first refusal, rights of first offer, all purchase and repurchase rights and other Liens, if
any, which they may have on, with respect to or arising out of the Burress Equity Equivalents and
the Transaction, including under the Stock Buy-Sell Agreement dated June 18, 2003, by and between
Burress and Burress Shareholders, as amended and in effect on the date hereof and on the Closing
Date.
(b) As of the Effective Time, each Burress Shareholder, on its own behalf and on behalf of the
Affiliates and Related Persons of such Burress Shareholder, including without limitation
derivatively, to the fullest extent legally possible, hereby completely and forever release, waive
and discharge, and shall be forever precluded from asserting (all of the following being herein
together referred to as the Burress Shareholders Released Claims), any and all claims,
obligations, suits, judgments, damages, demands, debts, rights, causes of action and
38
Liabilities, of any kind or nature, whether liquidated or unliquidated, fixed or contingent,
matured or unmatured, known or unknown, foreseen or unforeseen, then existing or thereafter arising
in law, equity or otherwise, that such Burress Shareholder and its Affiliates and Related Persons,
including without limitation derivatively, has, had or may have against Burress and the respective
present or former directors, officers, employees, management, predecessors, successors, members,
attorneys, accountants, underwriters, investment bankers, financial advisors, appraisers,
representatives and agents of Burress acting in such capacity, that are based in whole or in part
on any act, omission, transaction or other occurrence taking place on or prior to the Closing Date.
Burress Shareholders Released Claims shall include without limitation (i) any claims which any of
Burress Shareholders may have in their capacity as directors, officers or employees of Burress,
including claims for indemnification under the provisions of the Constituent Documents of Burress;
however, any such claims which are covered by the Permitted D&O Insurance (if obtained) shall be
preserved solely to allow Burress Shareholders to assert claims under the Permitted D&O Insurance,
but only to the extent of such coverage, and (ii) any claims described in Section 12.13.
However, the provisions of this Section 8.1(b) shall be inapplicable to the right of
Burress Shareholders to receive the Merger Consideration per Burress Share or the other benefits of
the Transaction Documents to which Burress Shareholders are expressly entitled.
Section 8.2. Access and Information.
(a) From the date hereof, H&E shall be entitled to make or cause to be made such reasonable
investigation of Burress, and the financial and legal condition thereof, as H&E deems reasonably
necessary or advisable, and Burress shall cooperate with any such investigation. In furtherance of
the foregoing, but not in limitation thereof, Burress will 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 Burress 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 Burress 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 Burress Shareholders, which shall survive
any such investigation, or the conditions to the obligations of H&E and HE-JWB 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, except (i) as may be required by applicable Law or otherwise
advisable after consultation with counsel, (ii) in connection with any financing transaction by
H&E, (iii) to lenders or other providers of the Financing, and (iv) except as necessary to enforce
the rights of a Party under this Agreement. The foregoing restriction shall
39
survive any termination of this Agreement; however, the foregoing restriction shall be
inapplicable to H&E following the Closing.
Section 8.3. Conduct of Business by Burress.
(a) From the date hereof to the Effective Time, Burress shall, and Burress Shareholders (in
each case as to Burress Shareholders, to the extent within their several or mutual, direct or
indirect control) shall cause Burress to, except as otherwise expressly provided herein or as set
forth on Disclosure Schedule 8.3(a), or consented to in writing by H&E:
(i) conduct its business and operations only in the Ordinary Course of Business;
(ii) use its commercially reasonable efforts to take all such actions as H&E may
reasonably request in connection with satisfying the conditions necessary for H&E to obtain
the financing necessary to consummate the Transaction;
(iii) use its commercially reasonable efforts to keep in full force and effect its
corporate existence and all material rights, franchises, Proprietary Rights and goodwill
relating or pertaining to its business;
(iv) use its commercially reasonable efforts to retain its employees and preserve its
present relationships with customers, suppliers, contractors, distributors and such
employees, and continue to compensate such employees consistent with past practices;
(v) use its commercially reasonable efforts to obtain all Required Consents;
(vi) timely pay all Taxes and prepare and file all Tax Returns and other Tax reports,
filings and amendments thereto required to be filed by it, on a timely basis and in a manner
consistent with past practice; provided, that Burress will not file or amend any income Tax
returns without the prior written consent of H&E, which consent shall not be unreasonably
withheld or delayed;
(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 intentionally
cause any representation or warranty of Burress Shareholders to be untrue in any material
respect or be required to be disclosed on one or more Disclosure Schedules referred to in
Articles V and VI;
(viii) not incur, create or suffer to exist any Lien on (A) the Burress Existing Common
Stock or (B) any material assets of Burress (other than Permitted Liens);
(ix) not (A) incur any Indebtedness, other than Indebtedness which is included in the
calculation of the Included Burress Indebtedness, and Additional Burress
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Indebtedness disclosed on Disclosure Schedule 5.16, provided that such Included
Burress Indebtedness and Additional Burress Indebtedness is incurred in the Ordinary Course
of Business, (B) pay any amount on any Affiliate Obligation (except in the Ordinary Course
of Business under the terms of the Continuing Affiliate Agreements), or (C) in any way amend
or otherwise alter any Affiliate Obligation, except pursuant to Section 4.2(b)(iv);
(x) comply with all applicable provisions of state and federal securities Laws as may
be required to consummate the Transaction;
(xi) not take any action resulting in any change to its accounting or cash management
policies, procedures, or practices (including delaying and/or accelerating accounts payable
or accounts receivable);
(xii) not incur any capital expenditures other than in accordance with the Budget or
immaterial capital expenditures in the Ordinary Course of Business which were not foreseen
in the Budget;
(xiii) not (A) declare or pay, any dividends on or make other distributions in respect
of any Burress Equity Equivalents, or make any payment of any kind to Burress Shareholders
or their Affiliates or Related Persons, other than Permitted Distributions and payments in
the Ordinary Course of Business pursuant to Continuing Affiliate Agreements; (ii) split,
combine, or reclassify any of the Burress Equity Equivalents 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 Burress Equity Equivalents;
(xiv) not amend any of the Constituent Documents or any Continuing Affiliate Agreement
as heretofore delivered to H&E;
(xv) not make or revoke any Tax election or settle or compromise any Tax Liability; and
(xvi) not pay bonuses to employees of Burress except (A) bonuses to employees to which
H&E shall have consented in writing, and (ii) bonuses paid or payable to salesmen in the
Ordinary Course of Business pursuant to their existing retention arrangements.
(b) (i) In the event that the Hitachi Consent shall not have been obtained, Burress shall be
permitted to take the actions required under the Hitachi Agreements regarding the sale to Hitachi
of any New Hitachi Fleet.
(ii) In the event that the Hitachi Group shall not exercise or shall waive any right to
require Burress to sell back to Hitachi any New Hitachi Fleet and shall not have granted the
Hitachi Consent, Burress Shareholders shall be permitted to sell from time to time subsequent to
the Closing any of such New Hitachi Fleet, provided that (i) none of such New Hitachi Fleet shall
be sold in any territory where Burress or H&E sells or rents competing
41
vehicles and equipment, or where Burress or H&E represents a vendor or manufacturer of vehicles and
equipment that competes with Hitachi, and sales to Hitachi dealers shall be at a price no less than
normal dealer cost, and (ii) the terms of any such sales shall be without recourse to Burress and
shall expressly state that Burress shall not have any warranty obligations (including repair and
replacement obligations) to the purchasers of the New Hitachi Fleet with respect to the New Hitachi
Fleet, it being understood that the New Hitachi Fleet will have the benefit solely of any
manufacturer warranty that may exist and be transferable. Alternatively, Burress shall be permitted
to sell the New Hitachi Fleet in the Ordinary Course of Business, subject to the provisions of
Section 8.3(c). The proceeds of the sale of the New Hitachi Fleet pursuant to this
Section 8.3(b)(ii) shall be remitted to or retained by Burress Shareholders Representative
or Burress as follows in the case of the sale of each item sold: (A) to Burress Shareholders
Representative, an amount equal to the lesser of the net book value of the item or the net proceeds
(less the out-of-pocket costs incurred in connection with effecting the sale and delivery of the
New Hitachi Fleet as aforesaid) from the sale of the item; and (B) to Burress, any remaining
proceeds from the sale of the item.
(c) No revenues of Burress during the period from and after February 28, 2007 until the
Closing Date shall be used, and no proceeds of any Indebtedness incurred by Burress during such
period shall be used, to repay any Hitachi Indebtedness and Payables, except that, in connection
with the sale of any item of the Hitachi Fleet or the New Hitachi Fleet during such period which
secures Hitachi Indebtedness and Payables, the proceeds from such sale in an amount equal to the
lesser of the original book value of the item or the Hitachi Indebtedness and Payables which is
secured by such item (less the out-of-pocket costs incurred in connection with effecting the sale
and delivery of the item of Hitachi Fleet or New Hitachi Fleet as aforesaid) from the sale of the
item may be used to repay such Hitachi Indebtedness and Payables which is secured by such item.
Section 8.4. Closing Documents. Burress Shareholders (in each case as to Burress
Shareholders, respectively, to the extent within their several or mutual, direct or indirect
control) shall, and shall cause Burress to, and Burress shall, prior to or on the Closing Date,
execute and deliver, or cause to be executed and delivered to H&E, the documents or instruments
described in Sections 4.2(a) and 4.2(c). H&E shall, prior to or on the Closing Date,
execute and deliver, or cause to be executed and delivered, to Burress Shareholders, the documents
or instruments described in Sections 4.2(b) and 4.2(c).
Section 8.5. Commercially Reasonable Efforts; Further Assurances.
(a) Subject to the terms and conditions herein provided, each of the Parties shall use its
commercially reasonable 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, including to cause (to the extent within the
control of such Party) any condition to the obligations of the other Parties to consummate the
Transaction set forth in Section 4.2 to be satisfied. Each of the Parties shall use their
respective commercially reasonable 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
42
Consents 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 Consents
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.
(b) Each Party shall give prompt written notice to the other Parties of (i) the occurrence, or
failure to occur, of any event which occurrence or failure would cause any representation or
warranty of such Party, as the case may be, contained herein or in the Transaction Documents to be
untrue or inaccurate in any material respect at any time from the date hereof to the Effective Time
or that will result in the failure to satisfy any of the conditions specified in Section
4.2 (provided that such written notice (x) shall specify the representation or warranty so breached
and (y) in the case of the representations and warranties of Burress Shareholders, will not be
deemed to amend the Disclosure Schedules attached hereto unless so accepted as such by H&E in
writing prior to the Effective Time, but any such written acceptance shall be deemed to cure the
breach of any such representation or warranty and amend and/or supplement the Disclosure Schedule
related to such representation or warranty), and (ii) any failure of such Party to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder or
under the Transaction Documents. Burress and Burress Shareholders shall give prompt written notice
to H&E of any development which could reasonably be expected to have a Material Adverse Effect.
Section 8.6. Public Announcements. The timing and content of all announcements
regarding any aspect of this Agreement or the Transaction to the financial community, government
agencies, employees or the general public shall be mutually agreed upon in advance by Burress
Shareholders Representative and H&E; provided, that each Party hereto may make any such
announcement which it in good faith believes, based on advice of counsel, is necessary or advisable
in connection with any requirement of Law, it being understood and agreed that each Party shall
promptly provide the other Parties with copies of any such announcement prior to such announcement
to the extent reasonably possible.
Section 8.7. Third Party Proposals. From the date hereof until the earlier of the
termination of this Agreement pursuant to the terms and conditions of Article IX or the
Effective Time, neither Burress Shareholders nor Burress shall, and Burress Shareholders and
Burress shall cause their respective officers, directors, shareholders, members, managers,
employees, agents, representatives or Affiliates not to, initiate, solicit, negotiate, accept or
discuss, directly or indirectly or encourage inquiries or proposals (each, an Acquisition
Proposal) with respect to, or furnish any information relating to, or otherwise facilitate or
participate in any negotiations or discussions concerning, or enter into any agreement with respect
to, any acquisition or purchase of all or a substantial portion of the assets of, or of a
substantial equity interest in, Burress or any business combination with Burress (a Third
Party Acquisition) other than as contemplated by this Agreement, or enter into any agreement,
arrangement or understanding requiring it or them to abandon, terminate or fail to consummate the
Transaction. Burress and Burress Shareholders shall notify H&E immediately if any Acquisition
Proposal is received by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated with, any member of Burress. Burress and Burress
Shareholders shall, and shall cause
43
each other member of Burress to, immediately cease and cause to be terminated any existing
activities, including discussions or negotiations with any parties, conducted prior to the date
hereof with respect to any Acquisition Proposal. Each of Burress Shareholders and Burress
represents that neither it nor any other member of Burress (in each case as to Burress Shareholders
to the extent within their several or mutual, direct or indirect control) is party to or bound by
any agreement with respect to an Acquisition Proposal other than under this Agreement. Each of
Burress Shareholders and Burress shall cause each other member of Burress (in each case as to
Burress Shareholders to the extent within their several or mutual, direct or indirect control) to
comply with the provisions of this Section 8.7.
Section 8.8. No Interference; Confidentiality.
(a) After the Closing, Burress Shareholders shall not in any manner take or cause to be taken
any action designed or intended to disparage Burress with customers, contractors, suppliers,
referral sources, Governmental Authority, insurance companies, lessors, consultants, advisors or
any other business associates who maintained business relationships with Burress on or prior to the
Closing and shall not tortuously interfere with any such contractual relations.
(b) Burress Shareholders shall not at any time from and after the date of this Agreement for
any reason, in any fashion, form or manner, either directly or indirectly, (i) divulge, disclose or
communicate to any Person, in any manner whatsoever, any confidential information or trade secrets
concerning the business of Burress, including the techniques, methods or systems of its operation
or management, any information regarding its financial matters, or any other material information
concerning the business of Burress, its manner of operation, its plans or other material data,
including any Proprietary Rights (together, Proprietary Information), or (ii) use the
Proprietary Information for any purpose other than for the exclusive benefit of Burress. The
provisions of this Section 8.8(b) shall not apply to (i) information that is public
knowledge other than as a result of disclosure by Burress Shareholders or their Affiliates or
Related Persons in breach of this Section 8.8(b); (ii) information disseminated by Burress
to third parties in the ordinary course of business of Burress; (iii) information lawfully received
by Burress Shareholders from a third party who is not known by Burress Shareholders be bound by a
confidential relationship to Burress, or (iv) information disclosed under a requirement of Law or
as directed by applicable legal authority having jurisdiction over Burress Shareholders.
(c) The Parties specifically acknowledge and agree that the remedy at law for any breach of
the foregoing provisions of this Section 8.8 will be inadequate and that the non-breaching
Party, in addition to any other relief available to it, shall be entitled to temporary and
permanent injunctive relief without the necessity of posting a bond or proving actual damages
resulting from any breach of the provisions of
Section 8.8(a).
(d) In the event that the provisions of this Section 8.8 should ever be deemed to
exceed the limitations provided by applicable Law, the Parties agree that such provisions shall be
reformed to the maximum extent permitted under applicable Law.
44
Section 8.9. HSR Filing. Each Party shall file or cause to be filed with the Federal
Trade Commission and the Antitrust Division of the Department of Justice any notification required
to be filed by their respective ultimate parent entities under the HSR Act with respect to the
Transaction. The Parties shall use commercially reasonable efforts to make such filings promptly
after the date hereof and to respond on a timely basis to any requests for additional information
made by either of such agencies. Each Party shall furnish the others with such necessary
information and reasonable assistance as such other Parties and their respective representatives
may reasonably request in connection with their preparation of necessary filings, registrations, or
submissions of information to any Governmental Authority. Burress shall reimburse H&E for all
filing fees paid by them to the Federal Trade Commission and the Antitrust Division of the
Department of Justice in connection with any notification filed by them under the HSR Act with
respect to the Transaction in the event that this Agreement shall be terminated pursuant to the
following provisions of Section 9.1:
(i) clause (iii) of Section 9.1; or
(ii) clause (v) of Section 9.1, if the Closing shall not have occurred
because Burress Shareholders shall be in breach of Section 8.5.
Section 8.10. Section 338(h)(10) Elections. If the Elections are requested to be made
by H&E, in its sole discretion:
(a) Burress Shareholders shall make elections provided for by Section 338(g) and Section
338(h)(10) of the Code (and any corresponding elections under any Tax Law) (the
Elections) with respect to Burress and shall provide to one another with such information
as is reasonably necessary to permit the Elections to be made. Original, executed forms for such
Elections shall be delivered by Burress Shareholders to H&E on the Closing Date. Burress
Shareholders and H&E shall, as promptly as practicable following the Closing Date, take all actions
reasonably necessary and appropriate (including filing such forms, returns, elections, schedules
and other documents as may be required) to effect and preserve timely Elections, and Burress
Shareholders and H&E shall not take any position inconsistent with such Elections.
(b) In connection with the Elections, no later than 90 days after the Closing Date, Burress
Shareholders and H&E shall act together in good faith to (i) determine and agree upon the amount of
the adjusted grossed-up basis and aggregate deemed sales price of the assets of Burress (within
the meaning of Treas. Reg. § 1.338(h)(10)-1(d)(2),(3)), which adjusted grossed-up basis and
aggregate deemed sales price shall be determined in a manner consistent with the Closing Estimate
of the Purchase Price. Not later that 120 days following the Closing Date, H&E shall provided to
Burress Shareholders Representative allocations (the Tax Election Allocations) of the
adjusted grossed-up basis and aggregate deemed sales price of Burress assets among the assets
of Burress in accordance with Section 338(a) and Section 338(b)(5) of the Code and the Treasury
regulations promulgated thereunder. The Accountants shall prepare the Tax Return of Burress for the
Pre-Closing Partial Period and the consolidated Tax Return of H&E for the Post-Closing Partial
Period on such basis (the First Post-Closing Tax Return). Burress will calculate gain or
loss, if any, resulting from the Elections in a manner consistent with the Tax Election Allocations
applicable under this Section 8.10(b) and will not take any
45
position inconsistent with the Tax Election Allocations in any Tax Return or otherwise; provided,
however, that Burress will be entitled to take into account its respective expenses when
calculating such gain or loss. H&E will allocate the adjusted grossed-up basis of Burress assets
among the assets of Burress in a manner consistent with the Tax Election Allocations and will not
take any position inconsistent with the Tax Election Allocations in any Tax Return or otherwise;
provided, however, that H&E will be entitled to add its expenses to such adjusted grossed-up
basis for purposes of Tax Election Allocations among the assets of Burress made pursuant to this
Section 8.10(b). H&E, Burress and Burress Shareholders shall file all Tax Returns
(including Forms 8883 and any comparable state and local forms) consistently with such Tax Election
Allocations.
(c) (i) If, as a result of the Elections, Burress Shareholders are required to pay more cash
income Taxes than they would have been required to pay if the Elections were not made (the Tax
Shortfall Amount), then Burress Shareholders shall provide a detailed calculation of the Tax
Shortfall Amount, together with a detailed calculation of the Taxes included in the Tax Shortfall
Amount that are payable with respect to the year including the Closing Date (the Initial Tax
Shortfall Amount), and a computation of the Tentative Gross-Up Amount, which shall
equal an amount such that, after Burress Shareholders pay Taxes on the amounts paid to them
pursuant to this Section 8.10(c), the net amount received equals the Tax Shortfall Amount.
The computations of the Tax Shortfall Amount, the Initial Tax Shortfall Amount and the Tentative
Gross-Up Amount shall be based upon the Tax Election Allocations, shall assume that Burress
Shareholders are subject to at least the same rate of tax on their net income as they would be if
they remained resident at the same address they occupied on the date hereof, and shall take into
account all deductions and credits available to Burress Shareholders. The Tax Shortfall Amount, the
Initial Tax Shortfall Amount and the Tentative Gross-Up Amount shall be computed using a tax basis
balance sheet as of the Closing Date, computed using the same principles used to determine the Tax
Basis Balance Sheet (the Closing Date Tax Basis Balance Sheet). To the extent the Closing
Date Tax Basis Balance Sheet differs from the Tax Basis Balance Sheet other than by reason of
adjustments arising from the ordinary course of the Burress business, and such difference would
increase the Tentative Gross-Up Amount by more than $500,000, the Tentative Gross-Up Amount shall
not include any such excess, and the Initial Tax Shortfall Amount shall be limited to ensure that
the Tentative Gross-Up Amount does not include such excess. Burress Shareholders shall provide
their draft computation of the Tax Shortfall Amount, the Initial Tax Shortfall Amount and the
Tentative Gross-Up Amount to H&E and Burress not later than February 15th of the year
following the Closing Date. H&E and Burress shall review and comment on the calculation of such
amounts not later than February 28th of the year following the Closing Date, and H&E,
Burress and Burress Shareholders shall work diligently to resolve any dispute as to such amounts.
In the event that H&E, Burress and Burress Shareholders cannot reach agreement, they shall refer
the matter to the Arbitrator Accountants for resolution. Burress shall pay the Initial Tax
Shortfall Amount to Burress Shareholders Representative (for the account of Burress Shareholders)
not later than April 8th of the year following the Closing Date or five business days
after the Arbitrator Accountant resolves any dispute as to such amount.
(ii) Not later than February 15th of the second year following the Closing Date
(such year, the Final Tax Payment Year), Burress Shareholders shall compute a revised Tax
Shortfall Amount based on the amounts actually paid or required to be paid pursuant
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to this Agreement and the Escrow Agreement, together with a revised Tentative Gross-Up Amount, and
a computation of the Final Gross-Up Amount, as defined below, all prepared using the assumptions
and conventions discussed above. To the extent that any Taxes reflected in the revised computation
of the Tentative Gross-Up Amount are payable after April 15th of the Final Tax Payment
Year, such payments shall be discounted from April 15th of the year following the year
with respect to which they are required to be paid to April 15th of the Final Tax
Payment Year, using a discount rate equal to the short-term applicable federal rate in effect on
April 15th of the Final Tax Payment Year. The sum of(A) all Taxes paid or payable not
later than April 15th of the Final Tax Payment year plus (B) all Taxes payable after
April 15th of the Final Tax Payment year, discounted as noted above, minus (C) the
Initial Tax Shortfall Amount, shall equal the Final Gross-Up Amount.. H&E and Burress
shall review and comment on the calculation of such amounts not later than February 28th
of the Final Tax Payment Year, and H&E, Burress and Burress Shareholders shall work diligently to
resolve any dispute as to such amounts. In the event that H&E, Burress and Burress Shareholders
cannot reach agreement, they shall refer the matter to the Arbitrator Accountants for resolution.
Burress shall pay the Final Gross-Up Amount to Burress Shareholders Representative (for the account
of Burress Shareholders) (or, if the Final Gross-Up Amount is a negative number, Burress
Shareholders shall pay such amount to Burress) not later than April 8th of the Final Tax
Payment Year or five business days after the Arbitrator Accountant resolves any dispute as to such
amount.
(iii) In the event that the Hitachi Consent is obtained on or before the 120th day following
the Closing Date, but at any time on or before the third anniversary of the Closing Date the
Hitachi Agreements are terminated by the Hitachi Group or the Hitachi Group fails to provide parts,
accessories, vehicles and equipment and service substantially in accordance with such Hitachi
Agreements, such that H&E will have no obligation to not make any of the payments under
Section 2.2(d)(ii), then not later than 30 days after the date on which it is determined
that such payments shall not be made, Burress Shareholders Representative shall provide a revised
computation of the Final Gross-Up Amount, taking into account such non-payment (such recomputed
amount, the Recomputed Gross-Up Amount , and the difference between (x) the Recomputed
Gross-Up Amount minus (y) the Final Gross-Up Amount as originally computed, the Tax Adjustment
Amount). H&E and Burress shall review and comment on the calculation of such amounts not later
than 30 days after receiving such computations of the Recomputed Gross-Up Amount, and H&E, Burress
and Burress Shareholders Representative shall work diligently to resolve any dispute as to such
amounts. In the event that H&E, Burress and Burress Shareholders Representative cannot reach
agreement, they shall refer the matter to the Arbitrator Accountants for resolution. Burress shall
pay the Tax Adjustment Amount to Burress Shareholders (or, if the Tax Adjustment Amount is a
negative number, Burress Shareholders shall pay such amount to Burress) not later than five
business days after the date on which H&E, Burress and Burress Shareholders Representative reach
agreement or, if applicable, the Arbitrator Accountant resolves any dispute as to such amount.
Similarly, if there was a balance in the Escrow Account at the time that the Final Gross-Up Amount
was determined, and amounts are paid from the Escrow Account that differ from the amounts that, in
computing the Final Gross-Up Amount, were assumed would be paid, then there shall be a further
recomputation of the Gross-Up Amount and payment of adjustments using the procedures set forth
earlier in this Section 8.10(c)(iii).
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(iv) In the event that any Election is determined by an applicable taxing authority to be
invalid (other than solely by reason of any action or failure to act by the Burress after the
Closing Date or by H&E), then Burress Shareholders shall promptly repay to H&E a portion of the
Initial Tax Shortfall Amount, the Final Gross-Up Amount, or the Tax Adjustment Amount (as the case
may be) equal to the difference between such amount as originally determined and such amount
computed as if the applicable Election had not been made. If any Burress Shareholder receives a
refund of Taxes attributable to any portion of the Tax Shortfall Amount or the Final Gross-Up
Amount, then that Burress Shareholder shall pay such refund to H&E promptly after receipt thereof.
(v) In the event that as a result of any audit of any Tax Return of Burress for the taxable
year including the Closing Date, the allocation of the aggregate deemed sale price (ADSP) and the
adjusted grossed up basis (AGUB) is required to be adjusted from the amounts reflected in the Tax
Election Allocations, then the Tax Shortfall Amount and Final Gross-Up Amount or, if applicable,
the Recomputed Gross-Up Amount shall be recomputed as a result of such adjustments, and Burress and
H&E shall pay Burress Shareholders, or Burress Shareholders shall pay to Burress and H&E (as the
case may be) the amount of such adjustment; provided that Burress and H&E shall be entitled
to participate in and jointly control such proceeding with Burress Shareholders Representative.
Section 8.11. Disclosure Generally. The inclusion of any information in a Disclosure
Schedule shall not be deemed to be adequate unless full and complete in all material respects for
the purpose of identify or describing an exception or the requested information, and no knowledge
of the materiality of any information shall be imputed to H&E or HE-JWB.
Section 8.12. Identified Environmental Remediation Costs. Schedule D sets
forth certain remedial actions that the Parties have determined should be taken (the
Identified Environmental Remediation) with respect to the Environmental Conditions
described on Schedule D (the Identified Environmental Conditions) and an estimate
of the cost to effect such remedial actions (the actual cost to effect such remedial actions being
herein referred to as the Identified Environmental Remediation Costs).
Section 8.13. Permitted D&O Insurance. Burress shall be permitted to obtain prior to
the Closing Date an insurance tail policy for the directors and officers of Burress serving in
such capacities as of immediately prior to the Closing (Covered Director(s) and (or)
Officer(s)), such insurance to be in amounts and for periods as Burress Shareholders
Representative and H&E shall agree (the Permitted D&O Insurance). However, the cost of
the Permitted D&O Insurance shall not exceed a one time premium of $18,000, the Permitted D&O
Insurance shall not include any deductible or reimbursement amount or obligation payable by or of
Burress, and the Permitted D&O Insurance shall not cover any claims other than Permitted Insured
D&O Claims. Neither Burress nor H&E shall have any Liability to Burress Shareholders, Burress
Shareholders Representative or any Covered Director and Officer in the event Burress shall be
unable to obtain Permitted D&O Insurance on the terms set forth in this Section 8.13.
Section 8.14. Burress 401(k) Plan. Effective as of the Closing Date, active
participation by all employees in the J. W. Burress 401(k) Plan (Burress 401(k) Plan) shall
cease and the
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employees shall become fully vested in their account balances under Burress 401(k) Plan, and
Burress will take all necessary steps as needed to terminate the Burress 401(k) Plan.
Article IX
Termination, Amendment, and Waiver
Section 9.1. Termination. This Agreement may be terminated and the Transaction may be
abandoned at any time, notwithstanding the approval thereof by the holders of Burress Equity
Equivalents, at any time prior to Closing:
(i) by mutual consent of Burress Shareholders Representative and H&E;
(ii) by H&E or Burress Shareholders Representative, if any Governmental Authority shall
have issued an Order or taken any other action restraining, enjoining or otherwise
prohibiting the Transaction and such Order or other action shall have become final and
nonappealable;
(iii) by H&E, if Burress or Burress Shareholders shall be in material breach of its or
their obligations under this Agreement which breach is not promptly remedied;
(iv) by Burress Shareholders Representative, if H&E shall be in material breach of its
obligations under this Agreement which breach is not promptly remedied; or.
(v) by Burress Shareholders Representative or H&E, if the Closing shall not have
occurred on or before July 31, 2007, provided that such Party (including Burress and Burress
Shareholders, in the case of any termination by Burress Shareholders Representative) is not
in material breach of its obligations under this Agreement.
Section 9.2. Effect of Termination. If this Agreement is terminated pursuant to
Section 9.1, 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
8.2(b), 8.6, 8.9 and 12.4(b), 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.
Section 9.3. Amendments. This Agreement may be amended, at any time prior to the
Effective Time, by H&E and Burress Shareholders Representative. This Agreement (including the
provisions of this Section 9.3) may not be amended or modified except by an instrument in
writing signed on behalf of all of the Parties required pursuant to the preceding sentence.
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Article X
Indemnification
Section 10.1. Survival of Representations and Warranties. The representations and
warranties in this Agreement shall survive the Closing until the last day of the 15-calendar month
period commencing with the first calendar month immediately following the Closing Date (such date
being herein referred to as the Minimum Survival Date), except that:
(i) claims for breaches of any of the representations and warranties based on any claim
asserted by any third party (including any Governmental Authority) (other than violations of
law) shall survive until the later of (A) the Minimum Survival Date or (B) the shorter of
the applicable statute of limitations or three years;
(ii) claims for breaches of the representations and warranties set forth in
Sections 5.2, 5.5, 6.1 and 6.5, and claims based on any fraud, willful or grossly
negligent violations of Laws, or intentional misrepresentation by Burress Shareholders under
any of the representations and warranties, shall survive the Closing without limitation;
(iii) claims for breaches of the representations and warranties set forth in
Section 5.11 shall survive until the later of (A) the Minimum Survival Date, (B) the
applicable statute of limitations, or (C) if no statute of limitations applies, without
limitation;
(iv) claims for breaches of representations and warranties in Sections 5.12 and
5.14 shall survive until the later of (A) the Minimum Survival Date or (B) the shorter of
the applicable statute of limitations or five years; and
(v) claims for breaches of representations and warranties in respect of violations of
Laws (other than willful or grossly negligent violations of Law) shall survive until the
later of (A) the Minimum Survival Date or (B) the shorter of the applicable statute of
limitations or six years;
provided that any representation or warranty in respect of which indemnity may be sought under this
Section 10.1 and the indemnity with respect thereto shall survive the time at which it
would otherwise terminate pursuant to this Section 10.1 if reasonably detailed notice of
the inaccuracy or breach or potential inaccuracy or breach thereof giving rise to such right or
potential right of indemnity shall have been given to the Party against whom such indemnity may be
sought prior to such time or on such date.
Section 10.2. General Indemnification.
(a) Indemnification Obligations of Burress Shareholders. Burress Shareholders shall
indemnify, on a joint and several basis, H&E, Burress and their respective Affiliates,
shareholders, partners, officers, directors, employees, agents, representatives, successors and
permitted assigns (other than Burress Shareholders and their Affiliates) (collectively, the
H&E Indemnified Parties) and save and hold each of them harmless against
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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 (x) punitive, incidental, consequential, special or indirect damages,
including business interruption, loss of future revenue, profits or income, or loss of business
reputation or opportunity of H&E Indemnified Parties in the event of Special Circumstances, (y)
interest, penalties, reasonable attorneys, consultants and experts fees and expenses, and (z)
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:
(i) any facts or circumstances which constitute a breach of any representation or
warranty of such Burress Shareholders (as applicable) under this Agreement, or in any of the
certificates or other instruments or documents furnished by such Burress Shareholders (as
applicable) pursuant to this Agreement; however, the indemnification obligations of Burress
Shareholders in respect of representations and warranties made by each such Burress
Shareholder in Article VI shall be several and not joint, and no Burress Shareholder
shall be liable for any breach by any other Burress Shareholder of such other Burress
Shareholders breach of its Article VI representations and warranties;
(ii) any breach of any covenant or agreement (other than any representation or
warranty) by Burress (prior to the Closing) or such Burress Shareholders (as applicable)
under this Agreement; and
(iii) any of the following matters and any Liability with respect thereto (without
duplication):
(A) Burress Shareholders Retained Closing Obligations, including (x) all Burress
Indebtedness to the extent not included in the calculation of the Included Burress
Indebtedness or in the Additional Burress Indebtedness, and (y) all Liabilities in respect
of Burress Tax Liabilities or Third Party Payments to the extent not included in the
calculation of the Closing Net Proceeds to Burress Shareholders;
(B) all Liabilities of Burress which are required to be included in the calculation of
the Closing Net Worth but which have not been so included;
(C) all Affiliate Obligations (other than Liabilities (1) accrued in the Ordinary
Course of Business under the terms of the Continuing Affiliate Agreements provided that such
accruals are included in the calculation of the Closing Net Proceeds to Burress Shareholders
or the Closing Net Worth, and are unrelated to any breach of contract, breach of warranty,
tort, infringement or violation of Law occurring prior to the Closing Date, or (2) arising
under Continuing Affiliate Agreements based on the operations of Burress subsequent to the
Closing);
(D) any guarantee, financial accommodation or similar arrangement given, extended or
entered into by Burress with respect to any Liability,
51
obligation, commitment, agreement, lease, license, document or instrument of Burress
Shareholders or their Affiliates;
(E) the existence of any Burress Equity Equivalents other than the Burress Equity
Equivalents described on Disclosure Schedule 5.5; any claim by any Person to be the
holder of Burress Equity Equivalents which are not described on Disclosure Schedule
5.5; and any claim by any Person arising out of any redemption, repurchase or sale of any
Burress Equity Equivalents previously owned by such Person;
(F) any Liability based on the violation of any Law by Burress or Burress Shareholders
in connection with the matters described on Disclosure Schedules 5.8 or 5.9; and any
fraud or intentional misrepresentation by Burress or any of Burress Shareholders in
connection with this Agreement or any other Transaction Document or any fraud by Burress or
any of Burress Shareholders in connection with any business transaction with any customer or
supplier of Burress;
(G) any Liability of Burress arising as of or prior to the Effective Time to indemnify
any director, officer or other Person in connection with their service to, employment by or
retention by Burress or Burress Shareholders;
(H) the Identified Environmental Remediation, the Identified Environmental Remediation
Costs and any Environmental Claim based on or arising out of the Identified Environmental
Conditions or the Identified Environmental Remediation (including if such Identified
Environmental Remediation is not correctly accomplished); and any fraud or intentional
misrepresentation by Burress or Burress Shareholders relating to any Environmental Claim;
(I) Taxes attributable to a determination that Burress did not qualify as an S
corporation at all times from its formation through to the Closing Date, including the
present value (determined using the mid-term applicable federal rate in effect at the time
of such a determination) of future Tax savings attributable to depreciation and amortization
deductions attributable to the Election, assuming that all such deductions are used at the
first available opportunity;
(J) any Liability arising out of, based upon, resulting from or which is the subject of
the action entitled Daniel Benton vs. Reedrill, Inc., ZHRI Texas Corporation,
Gardner-Denver Company, Svedala Industries, Inc., aka Svedala Drilling, Metso Minerals (USA)
Inc., Metso Minerals Industries, Inc. and J.W. Burress, Incorporated pending in the
Circuit Court for the City of Roanoke, Virginia Case Number CL03000544-00, together with all
ancillary proceedings that may be pending or which may be commenced, and all claims,
counterclaims and cross-claims which may be asserted or assertable by any party to such
litigation or other Person (whether or not currently party to such litigation) based on or
arising out of causes of action, facts, events, occurrences, actions, failures to act,
misfeasance, malfeasances and other related matters which are or could have been the subject
of such litigation;
52
(K) any Liability relating to the purchase by Riverside Equipment Co. from J.W.
Burress, Incorporated of a crane in 2001, as set forth in the letter, dated August 1, 2005,
from Clement & Wheatley to J.W. Burress, Incorporated;
(L) any Liability of Burress or its Predecessors relating to the Phillip Services site
in South Carolina (including any Liability incurred in connection with asserting an
indemnity claim against BOW, Inc, American Equipment Company or any other party); and
(M) any Liability of Burress relating to (1) William Gieders accident and ear injury
on March 7, 2005 (referred to as the South Carolina Employment Matter in Item 3 of
Disclosure Schedule 5.13), (2) the traffic accident on October 10, 2005 in
Greensboro, North Carolina involving a Finn Bark Blower described in Item 3 of
Disclosure Schedule 5.18, and (3) the Taylor Employment Matter referred to in Item
3 of Disclosure Schedule 5.13.
If and to the extent any provision of this Section 10.2 is unenforceable for any reason,
each of Burress Shareholders hereby agrees to make, on a joint and several basis, the maximum
contribution to the payment and satisfaction of any Loss for which indemnification is provided in
this Section 10.2 which is permissible under applicable Laws. Notwithstanding anything
contained herein, in no event shall Burress be required to provide indemnification or contribution
for any obligation of Burress Shareholders under this Section 10.2(a).
(b) Indemnification Obligations of H&E. H&E shall indemnify each of Burress
Shareholders (the Burress Shareholders Indemnified Parties) and save and hold each of
them harmless against and pay on behalf of or reimburse such Burress Shareholders Indemnified
Parties as and when incurred for any Losses which any such Burress Shareholders Indemnified Party
may suffer, sustain or become subject to, as a result of, in connection with, relating or
incidental to or by virtue of:
(i) any facts or circumstances which constitute a breach of any representation or warranty of
H&E under this Agreement, or in any of the certificates or other instruments or documents furnished
by H&E pursuant to this Agreement; and
(ii) any breach of any covenant, agreement or other provision by H&E under this
Agreement.
If and to the extent any provision of this Section 10.2 is unenforceable for any reason,
H&E hereby agrees to make the maximum contribution to the payment and satisfaction of any Loss for
which indemnification is provided for in this Section 10.2 which is permissible under
applicable Laws.
(c) Limitations on Indemnification.
(i) Subject to Section 10.2(c)(iii), the maximum Liability of the indemnifying Party
(an Indemnitor) to any Person making a claim for indemnification under
53
this Section 10.2 (an Indemnitee) in respect of Losses suffered by an
Indemnitee solely as a result of any facts or circumstances which constitute a breach of any
representation or warranty listed in Articles V, VII or VIII shall be an amount equal to
the following: (A) prior to the Minimum Survival Date, 25% of the aggregate of the Initial Net
Proceeds to Burress Shareholders and any Supplemental Proceeds to Burress Shareholders; and (B)
subsequent to the Minimum Survival Date, the Escrow Amount.
(ii) Subject to Section 10.2(c)(iii), the Indemnitor shall not be required to
indemnify an Indemnitee in respect of any Losses suffered by such Indemnitee solely as a result of
any facts or circumstances which constitute a breach of any representation or warranty contained in
Articles V, VI or VII until the aggregate of all Losses suffered by the Indemnitee exceeds
$500,000 (the Basket Amount); and then only for the amount by which the Losses exceed the
Basket Amount. In measuring the amount of Losses suffered by the Indemnitee in respect of a matter
which is the subject of any representation or warranty for purposes of determining whether the
Basket Amount has been exceeded, any qualification of a representation and warranty by reference to
materiality or the absence of any Material Adverse Effect or Material Adverse Change shall be
disregarded.
(iii) The limitations of Sections 10.2(c)(i) and 10.2(c)(ii) shall not apply to Losses
described in or based upon clauses (ii) and (iii) of Section 10.1, clause
(i), (iv) and (v) of Section 10.1 to the extent that such claims are based on claims of any
Governmental Authority or violations of Laws (except claims based on violations of Laws required to
be disclosed under Section 5.12, other than (and for the avoidance of doubt the following
are not subject to the limitations of Sections 10.2(c)(i) and 10.2(c)(ii)) in respect of
claims under subclause (H) of clause (iii) of Section 10.2(a) and claims
based on any fraud or intentional misrepresentation by Burress Shareholders) or would have affected
the calculation of the Closing Net Worth, clauses (ii) and (iii) of Section
10.2(a), or clause (ii) of Section 10.2(b), or arising out of or based upon
Sections 5.2, 5.5, 5.11, 5.23, 6.1, 6.4, 6.5, 7.2, 7.5, 10.3 or 12.4, or Section
5.24 to the extent that Section 5.24 relates to the foregoing Sections, or to claims based
on any fraud or intentional misrepresentation by Burress Shareholders.
(iv) In the event that any condition to the obligations of any Party contained in
Section 4.2 shall be expressly waived (a Waived Closing Condition) by such Party
(a Waiving Party), such waiver shall be effective only if contained in a writing executed
by the Waiving Party and the provision of Section 4.2 that is waived is expressly stated in
such writing (a Waiver of Closing Condition). Any Waiver of Closing Condition shall
constitute a waiver of any claim for indemnification under this Article X (other than
claims for indemnification under clauses (ii) and (iii) of Section 10.2(a), or
clause (ii) of Section 10.2(b), or arising out of or based upon Sections
10.3 or 12.4) provided that all material facts and circumstances which relate to the Waived Closing
Condition, or which are material to a decision by the Waiving Party to execute the Waiver of
Closing Condition, have been disclosed to the Waiving Party and described in the Waiver of Closing
Condition. For the avoidance of doubt, nothing contained in this Section 10.2(c)(iv) shall
be construed to establish any claim for indemnification of any Party based on any condition to the
obligations of any Party contained in Section 4.2 not being satisfied independent of any
claim for indemnification otherwise arising or permitted under this Article X.
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(v) Subject to the provisions of Section 2.2(b)(i)(B) and the application of the
Reserve Account as provided in Section 2.2(b)(i)(B), any indemnification of Losses of H&E
Indemnified Parties (including under Section 10.3) shall be satisfied first with the Escrow
Amount. For the avoidance of doubt, H&E Indemnified Parties may obtain payment of indemnification
claims also directly from Burress Shareholders (x) for any amounts intended to be paid from the
Reserve Account to the extent of any deficiency in the Reserve Account, and (y) any indemnification
of Losses to the extent of any deficiency in the Escrow Account or if Burress Shareholders
Representative shall unreasonably withhold consent to any disbursement from the Escrow Account or
refuse to make a payment from the Reserve Account.
(d) Manner of Payment. Any indemnification pursuant to this Section 10.2 or
Section 10.3 shall be effected by wire transfer of immediately available funds from the
Indemnitor (or where applicable, from the Escrow Amount ) to an account designated in writing by
the Indemnitee within ten (10) calendar days after the final determination thereof; provided that
an Indemnitee, at its option, may setoff any such indemnification claim finally determined,
pursuant to a final, non-appealable judgment of a court of competent jurisdiction, to be due and
payable from the Indemnitor against any payment obligation owing from the Indemnitee or its
Affiliates to such Indemnitor or its Affiliates. Any indemnification payments shall be made
together with interest accruing thereon from the date on which such claim is finally determined to
be due and payable to the date of payment at a fluctuating per annum rate of interest equal to the
Interest Rate.
(e) Insurance. Notwithstanding any term or provision of this Section 10.2 to
the contrary, any indemnification payments owed by one Party to another Party pursuant to this
Section 10.2 shall be reduced by the aggregate of any amounts actually received by the
Indemnitee under insurance policies and similar arrangements and from third parties by the Party
claiming indemnity hereunder. In the event that an Indemnitor has paid any indemnification claim
hereunder and the Indemnitee subsequently receives the proceeds of insurance which may cover the
indemnification claim, then such proceeds shall be paid over to the Indemnitor to the extent of
such prior indemnification payment. However, neither the foregoing nor any other provision of this
Agreement shall (i) release or relieve any Party from any indemnification obligation hereunder
(unless and until such obligation is satisfied by the payment of insurance proceeds or other
indemnity as aforesaid), (ii) impose upon any Party any obligation to seek or obtain insurance
coverage or other indemnity for any indemnification claim that might be asserted under this
Article X, or (iii) impose upon any Party seeking indemnification the obligation to pursue
or recover any insurance proceeds or other indemnity to pay any indemnification claim, except that
H&E and Burress will use their commercially reasonable efforts to make appropriate claims under any
then available insurance coverage (however, H&E and Burress shall have no obligation to commence
litigation against any insurance carrier or undertake any extraordinary efforts to recover under
any insurance claim, and Burress Shareholders shall not delay in satisfying any indemnification
obligation pending, and notwithstanding the processing of, any insurance claim). In the event that
H&E or Burress shall elect to obtain insurance coverage or other indemnity as aforesaid, H&E or
Burress shall use reasonable efforts to provide, under the terms of such insurance coverage or
other indemnity, that any insurer thereunder shall not have the right to assert claims (whether by
subrogation or
55
otherwise) against any Indemnitor; provided that such provision does not materially increase
the cost of obtaining such insurance coverage or other indemnity.
(f) Third Party Claims. Any Indemnitee shall notify the Indemnitor of the claim in
writing promptly after receiving written notice of any Proceeding 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 Indemnitees claim for indemnification at such
Indemnitors 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; (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
(iii) if the Indemnitor shall control the defense of any such claim, the Indemnitor
shall obtain the prior written consent of the Indemnitee before entering into any settlement
of a Proceeding or ceasing to defend such Proceeding if, pursuant to or as a result of such
settlement or cessation, injunctive or other equitable relief will be imposed against the
Indemnitee or if such settlement does not expressly and unconditionally release the
Indemnitee from all Liabilities and obligations with respect to such claim, without
prejudice.
(g) Sole Remedy. The sole and exclusive remedy of each of H&E and Burress Shareholders
for any and all claims or Losses relating to or arising out of or in connection with this Agreement
shall be an action for indemnity pursuant to this Article X; except that the foregoing
restriction shall be inapplicable to claims based on any fraud or intentional misrepresentation by
Burress Shareholders.
56
(h) Tax Effect. Notwithstanding any term or provision of this Section
10.2 to the contrary, for the purpose of determining the amount of any Loss related to a breach of
a representation or warranty, any indemnification payment owed by one Party to another Party
pursuant to this Section 10.2 shall be reduced by the amount of any Tax benefits actually
received, and increased by any Tax Liability incurred in respect of such indemnification payment,
by the indemnified Party or its Affiliate.
Section 10.3. Certain Tax Matters.
(a) Notwithstanding and without regard to the limitations set forth elsewhere in this
Article X, Burress Shareholders shall, jointly and severally, indemnify, defend and hold
harmless H&E and Burress from and against any and all claims for Losses in connection with,
relating to or arising out of (all of the following being herein referred to as Burress Tax
Liabilities):
(i) (A) any breach of any representation or warranty given or made by Burress
Shareholders in Section 5.11;
(B) all Taxes with respect to all Tax periods of Burress ending on or prior to the
Closing Date (including the Tax period commencing January 1, 2007 and ending on the Closing
Date);
(C) all Taxes with respect to any Tax period beginning before the Closing Date and
ending after the Closing Date, but only with respect to the portion of such Tax period up to
and including the Closing Date (such portion shall be referred to herein as the
Pre-Closing Partial Period; and the portion of such period after the Closing Date
shall be referred to herein as the Post-Closing Partial Period);
(D) any Tax Liability arising as a result of any failure by Burress to have been an S
Corporation within the meaning of Section 1361(a)(1) of the Code for federal income Tax
purposes and under the Laws of each state in which Burress has conducted business since the
time of its incorporation; and
(v) any Tax Liability of Burress Shareholders required to be withheld and remitted by
Burress to any Governmental Authority.
Burress Shareholders shall not be required to indemnify H&E for (i) Taxes with respect to any
Post-Closing Partial Period or (ii) Taxes to the extent included in the calculation of the Closing
Net Proceeds to Burress Shareholders.
(b) Any Taxes for a period including a Pre-Closing Partial Period and a Post-Closing Partial
Period shall be apportioned between such Pre-Closing Partial Period and such Post-Closing Partial
Period based, in the case of real and personal property Taxes, on a per diem basis and, in the case
of other Taxes, on the actual activities, taxable income or taxable loss of Burress during such
Pre-Closing Partial Period and Post-Closing Partial Period.
57
(c) Burress Shareholders shall be responsible for the preparation and filing of all returns in
respect of Taxes of Burress for Tax periods ending prior to or on December 31, 2006. Burress
Shareholders Representative, H&E and Burress shall jointly prepare and file returns of Burress for
Tax periods ending prior to or on the Closing Date (including the federal return for the Tax period
commencing January 1, 2007 and ending on the Closing Date) if such returns are not filed before the
Closing Date. Such Tax Returns shall be prepared in a manner consistent with the manner in which
Tax Returns have been prepared for prior periods, except as otherwise required by applicable Laws.
Burress Shareholders shall be responsible for the payment of all amounts due on such returns which
have not included in the calculation of the Closing Net Proceeds to Burress Shareholders. Unless
required pursuant to the resolution of any Tax audit or dispute, no Party shall file any amended
Tax Return with respect to any Tax period or portion of any Tax period ending on or prior to the
Closing Date if such amended Tax Return would increase the Tax Liabilities of any other Party
without the affected Partys written consent, which shall not be unreasonably withheld.
Notwithstanding the foregoing, if H&E so elects in its sole and absolute discretion, Burress shall
make an election under Section 754 of the Code with respect to its Tax period including the Closing
Date.
(d) H&E shall cause Burress to prepare and file all returns in respect of Taxes for periods
ending after the Closing Date. Except for Taxes attributable to a Pre-Closing Partial Period as
determined under Section 10.3(b), H&E and Burress shall be responsible for the payment of
all amounts due on such returns.
(e) Burress Shareholders Representative shall have control over the conduct of any Proceeding
involving Taxes for which Burress Shareholders may be obligated to indemnify H&E or Burress
pursuant to this Section 10.3 with respect to any Tax period ending on or prior to the
Closing Date including any federal audit for the Tax period beginning January 1, 2007 and ending on
the Closing Date, provided that Burress Shareholders have provided reasonably adequate assurances
to H&E that they will pay any Liability resulting therefrom. In the event that Burress Shareholders
receive notice of a claim against Burress with regard to such Tax period from any Governmental
Authority, Burress Shareholders shall promptly notify H&E and Burress of such claim. Burress
Shareholders shall keep H&E reasonably informed of the progress of any audit, and H&E may
participate in such audit if it so wishes. Burress will provide, as promptly as practicable, such
information and assistance that is necessary in defense of the claim.
(f) H&E or Burress shall have control over the conduct of any audit or other Proceeding with
respect to Taxes of Burress other than the Taxes over which Burress Shareholders shall have control
under Section 10.3(e); provided that if Burress Shareholders, on the one hand, and H&E or
Burress, on the other hand, are both responsible for Taxes, all such Parties (or Burress
Shareholders Representative in the case of Burress Shareholders) shall jointly control the conduct
of any audit or other Proceeding with respect to such Taxes, provided that Burress Shareholders
Representative shall only be entitled to participate in such audit to the extent that they may be
required to indemnify H&E and shall not take any position that might cause H&E to incur additional
Taxes for which it will not be indemnified without H&Es prior written consent, which shall not be
unreasonably withheld. H&E or Burress shall promptly notify Burress Shareholders in writing of any
claim or dispute with respect to any Taxes as to which
58
Burress Shareholders may be obligated to indemnify H&E or Burress pursuant to this
Section 10.3 and with respect to any issue raised in an audit of any Tax period ending
after the Closing Date if the disposition of such issue could affect the treatment of any Taxes for
which Burress Shareholders may be obligated to indemnify Burress or H&E pursuant to this
Section 10.3. H&E and Burress, on the one hand, and Burress Shareholders, on the other
hand, agree not to enter into any agreement or settlement with a Tax jurisdiction with respect to
any audit or dispute with respect to any Tax as to which Burress Shareholders are required to
indemnify H&E or any of Burress pursuant to this Section 10.3 without consent from the
other Party, which shall not be unreasonably withheld. For the avoidance of doubt, it shall not be
unreasonable for H&E or Burress to withhold its consent if it may be required to pay additional
Taxes as a result of such settlement, unless Burress Shareholders fully indemnify H&E and Burress
for any such additional Taxes (including any Taxes attributable to the receipt of such payment by
H&E or Burress).
(g) Burress shall pay to Burress Shareholders the amount of all refunds of Taxes received by
Burress after the Closing Date attributable to Taxes paid by Burress Shareholders or Burress with
respect to Tax periods ending on or prior to the Closing Date (but excluding any Tax refunds or
credits for estimated Taxes paid by Burress which have been included in the calculation of the
Closing Net Proceeds to Burress Shareholders, within 45 days after receiving such refunds.
(h) Burress Shareholders, Burress and H&E agree to furnish or cause to be furnished to each
other, upon request, as promptly as practicable, such information and assistance (including,
without limitation, access to books and records) relating to Burress as is necessary for the
preparation of any Tax Return, claim for refund or audit, and the prosecution or defense of any
claim relating to any proposed adjustment with respect to Taxes, so long as there is no material
expense incurred in satisfying such request. The Parties shall retain all Tax Returns, schedules,
and work papers, and all material records and other documents relating thereto, until the
expiration of the applicable statute of limitations (including, to the extent noticed by any Party,
any extensions thereof) of the Tax period to which such Tax Returns and other documents and
information relate. Each of the Parties shall also make available to the other Parties, as
reasonably requested and available, personnel (including officers, directors, employees, and
agents) responsible for preparing, maintaining, and interpreting information and documents relevant
to Taxes, and personnel reasonably required as witnessed or for purposes of providing information
or documents in connection with any Proceeding relating to Taxes. Any information or documents
provided under this Agreement shall be kept confidential by the Party receiving such information or
documents, except as may otherwise be necessary in connection with the filing of Tax Returns,
Proceedings relating to Taxes or claims for indemnification under this Agreement.
Section 10.4. Access to Information and Employees. After the Closing, Burress shall
afford to Burress Shareholders Representative and its counsel and accountants reasonable access to
the books, records, files, personnel and documents related to the business conducted by Burress
prior to the Closing Date in the possession of Burress or under the control of Burress as may be
reasonably requested by Burress Shareholders Representative in order to permit Burress Shareholders
(at their cost and expense) to prepare and file federal, state and local Tax returns
59
and to prepare for and participate in any Proceeding with respect thereto, to prepare for,
participate in, assert or defend any other Proceeding relating to or involving Burress
Shareholders, and to discharge the obligations of Burress Shareholders or to contest and defend any
claims made under this Agreement and any other agreements contemplated hereby. After the Closing,
Burress Shareholders Representative shall have the right, at its cost and expense, to copy such
books, records, files and documents related to Burress as may be reasonably useful to Burress
Shareholders in connection with any of the matters described in the preceding provisions of this
Section 10.4; however, Burress Shareholders shall maintain the confidentiality of such
books, records, files and documents and shall use such books, records, files and documents solely
for the purposes contemplated in this Section 10.4. If the originals of any such books,
records, files and documents related to Burress are required in connection with any Proceeding or
similar matter, Burress Shareholders shall have the right to use such originals; provided that
Burress Shareholders shall use their respective commercially reasonable efforts to have such
originals released from any such Proceeding or other matter and returned to Burress as soon as
reasonably possible under the circumstances. Burress shall use its commercially reasonable efforts
to maintain the material books, records, files and documents related to Burress in original form
with respect to legal documents and photographic, micrographic or other storage form with respect
to other books, records, files and documents (to the extent consistent with requirements of Laws
applicable to Burress Shareholders and Burress) for not less than six years from the Closing Date
and in any case Burress shall not intentionally destroy the same without providing to Burress
Shareholders Representative a reasonable opportunity to take possession thereof.
Section 10.5. Joint and Several Obligations of Burress Shareholders. Except as
otherwise expressly provided in this Agreement (including in Article VI or any other
provision of this Agreement which is tied to Article VI), the representations, warranties,
covenants and indemnities of Burress Shareholders contained in this Agreement or any other
Transaction Document, and the Liabilities of Burress Shareholders in respect thereof, are joint and
several.
Article XI
Appointment of Burress Shareholders Representative
Section 11.1. Appointment.
(a) Richard S. Dudley is hereby appointed as Burress Shareholders Representative and
Exchange Agent for purposes of this Agreement. Burress Shareholders Representative shall serve as
Exchange Agent, and all references herein to
Agent shall mean Burress
Shareholders Representative in his capacity as such and as the Exchange Agent in his capacity as
such. Further, reference in this
Article XI to Burress Shareholders shall also mean any
other holders of Burress Equity Equivalents. All references in this Agreement to Burress
Shareholders Representative, Exchange Agent or Agent shall refer to Richard S. Dudley or his
successor in his representative capacity only and not in any individual or personal capacity and,
other than as set forth in
Section 11.1(d)(ii), shall not impose any Liability upon him
which is greater than his Liability as a Burress Shareholder if he were not Burress Shareholders
Representative, the Exchange Agent or Agent; however, Burress Shareholders Representative shall
have Liability in his personal capacity for any distribution made by Burress Shareholders
Representative from the Reserve Account in violation of
Section 2.2(b)(i)(B) with gross
60
negligence or willful misconduct (otherwise, solely in his representative capacity only as provided
herein), but not to the exclusion of Burress Shareholders, who shall be liable for the return of
any distribution made by Burress Shareholders Representative from the Reserve Account in violation
of Section 2.2(b)(i)(B).
(b) Agent shall perform such duties and shall have such powers and authority as shall be
expressly granted to Agent under this Agreement and the other Transaction Documents. Without
limiting the generality of the foregoing, Burress Shareholders authorize Agent to: (i) receive and
hold the Closing Net Proceeds to Burress Shareholders and the Supplemental Proceeds to Burress
Shareholders for the benefit of the holders of the Burress Equity Equivalents; (ii) determine the
portion and amount of the Closing Net Proceeds to Burress Shareholders and the Supplemental
Proceeds to Burress Shareholders to which Burress Shareholders and other holders of Burress Equity
Equivalents shall be entitled based on their Burress Equity Equivalents; (iii) give such consents
and to enter into such amendments, modifications and supplements to and under this Agreement and
the other Transaction Documents, in the name and on behalf of the holders of Burress Equity
Equivalents, and any such consent given by Agent, and any amendment, modification or supplement
entered into the by Agent, in the name and on behalf of the holders of Burress Equity Equivalents
shall be binding upon the holders of Burress Equity Equivalents; (iv) assert any claims of the
holders of Burress Equity Equivalents under this Agreement and the other Transaction Documents; (v)
take all action necessary or desirable in connection with the defense and/or settlement of any
claim for which Burress Shareholders may be required to indemnify any other Party under this
Agreement; and (vi) effect payments to H&E from the Reserve Account pursuant to Section
2.2(b)(i)(B). Agent is hereby appointed as agent for service of process for Burress Shareholders
and the other holders of Burress Equity Equivalents.
(c) The appointment of Burress Shareholders Representative is irrevocable and coupled with an
interest. In the event of: (i) the death or disability of Burress Shareholders Representative (or
any successor Agent duly appointed in accordance with this Article XI), (ii) the
resignation of Burress Shareholders Representative (or any successor Agent duly appointed in
accordance with this Article XI), or (iii) the holders of a majority of the Burress
Existing Common Stock as of immediately prior to the Effective Time advise H&E that they intend to
replace Richard S. Dudley or his successor as Agent, then another Burress Shareholder reasonably
acceptable to H&E shall be appointed to act as Burress Shareholders Representative by the holders
(or, in the event of the death or disability of any such Burress Shareholder, the executor or
personal representative of such Burress Shareholder) of a majority of the Burress Existing Common
Stock as of immediately prior to the Effective Time. However, any action taken by any Persons
appointed according to this Article XI and serving as Agent prior to such Persons
replacement as Agent shall be effective and irrevocable.
(d) By their execution of this Agreement or the acceptance of any Merger Consideration per
Burress Share, Burress Shareholders and the other holders of Burress Equity Equivalents agree that:
(i) Notwithstanding any other provision herein to the contrary, the other Parties shall be
able to rely conclusively on the instructions and decisions of Agent as to
61
the settlement of any claims for indemnification by another Party pursuant to this Agreement or any
other actions taken by Agent hereunder, and no Party hereunder shall have any cause of action
against H&E, HE-JWB and Burress for any action taken by H&E, HE-JWB or Burress in reliance upon the
instructions or decisions of Agent.
(ii) Agent shall have no Liability to any Burress Shareholder or other holder of Burress
Equity Equivalents except for any gross negligence or willful misconduct by Agent in the
performance of the duties of Agent. H&E, HE-JWB and Burress shall have no Liability for any action
taken by Agent or any failure by Agent to perform the duties of Agent under this Agreement or any
other Transaction Document.
(iii) The provisions of this Section 11.1 are independent and severable, are
irrevocable and shall be enforceable notwithstanding any rights or remedies that any Burress
Shareholder may have in connection with the transactions contemplated by this Agreement.
(iv) All fees and expenses incurred by Agent in connection with this Agreement and any
Transaction Document shall be paid by Burress Shareholders. However, H&E, HE-JWB and Burress shall
have no Liability to Agent in respect of the foregoing and Agent shall not have any Lien on any
Closing Net Proceeds to Burress Shareholders, any Supplemental Proceeds to Burress Shareholders or
the Escrow Amount, and all claims of Agent against Burress Shareholders for the reimbursement of
such expenses shall be junior and subordinate to all claims of H&E, HE-JWB and Burress against
Burress Shareholders under this Agreement. However, Agent may (with the consent of a majority of
the Burress Existing Common Stock as of immediately prior to the Effective Time) establish cash
reserves, with the proceeds of the Closing Net Proceeds to Burress Shareholders or the Supplemental
Proceeds to Burress Shareholders received by Agent, for the funding of fees and expenses incurred
by Agent or, in addition to the Reserve Account, to fund claims for payment or indemnification
asserted or assertable by H&E Indemnified Parties under Sections 2.3, 2.5 and 8.12 and
Article X, any Burress Shareholders Retained Closing Obligations or under clause
(v) below.
(v) In acting as Agent hereunder, Agent may rely upon, and shall not be liable to any Burress
Shareholder or any other holder of Burress Equity Equivalents (or any such Persons successor in
interest) for acting or refraining from acting upon, an opinion of counsel, certificate of auditors
or other certificate, statement, instrument, opinion, report, notice, request, Consent, Order,
appraisal, bond or other paper or document reasonably believed by him to be genuine and to have
been signed or presented by the proper Party or Parties. Agent shall incur no Liability to any
Burress Shareholder or any other holder of Burress Equity Equivalents (or any such Persons
successor in interest) with respect to any action taken or suffered by him in his capacity as Agent
in reliance upon any note, direction, instruction, consent, statement or other documents believed
by him to be genuinely and duly authorized, nor for other action or inaction except his own willful
misconduct or gross negligence and Agent shall be indemnified and held harmless by Burress
Shareholders and any other holder of Burress Equity Equivalents from all losses, costs and
expenses, including reasonable attorneys fees, which Agent may incur as a result of involvement in
any legal Proceedings arising from the performance of his duties hereunder. Agent may perform his
duties as Agent either directly or by or through his agents or attorneys and Agent shall not be
responsible to the other Burress Shareholders or any other
62
holder of Burress Equity Equivalents for any misconduct or negligence on the part of any agent or
attorney appointed with reasonable care by him hereunder.
Article XII
Miscellaneous
Section 12.1. 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 recipients 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:
|
|
|
If to Burress or Burress
Shareholders prior to the Closing:
|
|
With a copy to (which shall not
constitute notice to Burress): |
|
|
|
J.W. Burress, Incorporated
P.O. Box 719
Roanoke, Virginia 24004
Attention: President
Facsimile No.: (540) 777-4408
|
|
Woods Rogers, PLC
10 South Jefferson Street, Suite 1400
Roanoke, Virginia 24011
Attention: Talfourd Kemper, Jr., Esq.
Facsimile No.: (540) 983-7711 |
|
|
|
If to Burress Shareholders
subsequent to the Closing:
|
|
With a copy to (which shall not
constitute notice to Burress
Shareholders): |
|
|
|
Richard S. Dudley, as
Burress Shareholders Representative
Confidential
1301 Rockland Avenue, NW
Roanoke, Virginia 24012
Facsimile No.: (540) 777-4408
|
|
Woods Rogers, PLC
10 South Jefferson Street, Suite 1400
Roanoke, Virginia 24011
Attention: Talfourd Kemper, Jr., Esq.
Facsimile No.: (540) 983-7711 |
|
|
|
If to H&E or HE-JWB or, subsequent
to the Closing, to Burress:
|
|
With a copy to (which shall not
constitute notice to H&E, HE-JWB or
Burress): |
|
|
|
H&E Equipment Services, Inc.
11100 Mead Road, Suite 200
Baton Rouge, Louisiana 70816
Attention: President
Facsimile No.: (225) 298-5382
|
|
Dechert LLP
30 Rockefeller Plaza
New York, New York 10112-2200
Attention: Ronald R. Jewell, Esq.
Facsimile No.: (212) 314-0089 |
or to such other address as any Party shall notify the other Parties (as provided above) from time
to time.
63
Section 12.2. Exhibits and Schedules. All Exhibits, Schedules and Disclosure Schedules
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.
Section 12.3. 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.
Section 12.4. Transfer Taxes; Expenses.
(a) Burress Shareholders 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 Burress Shareholders shall, at their 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 shall pay its own expenses incident to this Agreement and the Transaction. All Burress
Shareholders Expenses shall be paid in full by Burress Shareholders; however, (i) if the Closing
shall have occurred, Burress shall pay up to $125,000 of the out-of-pocket fees and expenses
incurred by Burress and Burress Shareholders in connection with the Transaction (the Burress
Shareholders Expense Allowance), and (ii) H&E shall pay up to $125,000 of the reasonable
out-of-pocket fees and expenses incurred by Burress and Burress Shareholders in connection with the
Transaction in the event the Transaction is abandoned by H&E for any reason other than (A) a breach
by Burress or Burress Shareholders of any of their obligations under this Agreement, (B) the
failure of the conditions to the obligations of H&E and HE-JWB to consummate the Transaction
contained in Section 4.2(a) (other than Section 4.2(a)(iii)) or Section 4.2(b) to be satisfied, or
(C) a termination of this Agreement pursuant to clause (i), (ii), (iii) or (v) of
Section 9.1.
Section 12.5. 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
principles thereof, except to the extent that the transactions under
Article III are
governed by the Virginia Act. 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 Proceeding
arising out of or relating to this Agreement and the Transaction Documents; provided, that
equitable relief sought by any Party may be sought in any court having appropriate jurisdiction.
Each of the Parties hereby irrevocably waives, to the fullest extent permitted or not prohibited by
applicable Laws, any objection which such Party may now or hereafter have to the
laying of the venue of any such Proceeding brought in such a court and any claim that any such
64
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 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 12.1. Any pre-trial depositions of Burress Shareholders, and any
pre-trial inspection of documents of Burress and Burress Shareholders which pre-date the Closing
Date, in connection with any Proceeding arising out of or relating to this Agreement or the
Transaction Documents shall be conducted in Roanoke, Virginia or Winston-Salem, North Carolina,
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 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.
(b) At the election of any Party prior to the commencement of any Proceeding pursuant to
Section 12.5(a), any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be finally settled by binding arbitration in accordance with the Rules of
the American Arbitration Association (the AAA) before one neutral arbitrator (the
Arbitrator) selected by agreement of H&E, on the one hand, and Burress Shareholders
Representative on the other, not later than ten (10) business days after delivery of a Partys
election for arbitration hereunder, failing such agreement, appointed from the New York or Virginia
statewide panel of full-time neutral arbitrators of the American Arbitration Association, and
pursuant to the commercial arbitration rules of the American Arbitration Association (including the
supplementary procedures for large complex disputes), as amended from time to time (the AAA
Rules). If an arbitrator so selected becomes unable to serve, his or her successor shall be
similarly selected or appointed. Arbitration shall be held in such location as the Parties shall
agree after consideration of the availability of acceptable arbitrators or such other site as is
mutually agreed, with a preference given to Roanoke, Virginia. The award of the arbitrators shall
be final and enforceable, and judgment upon any award rendered thereby may be entered in any court
having jurisdiction, or application may be made to such court for a judicial acceptance of the
award and an Order of enforcement, as the case may be. Notwithstanding the foregoing, the
provisions of this Section 12.5(b) shall be inapplicable to (i) matters which are to be
decided by the Accountants or the Arbitrator Accountants in accordance with the express terms of
this Agreement, or (ii) any action for equitable relief (including any Proceeding seeking specific
performance and any Proceeding seeking injunctive relief (whether a temporary restraining order or
a preliminary or permanent injunction), including pursuant to Section 12.12 or to enforce
the provisions of Section 8.8 or the Non-Competition Agreements, in which case all ancillary and
related claims and causes of action shall also be subject to the provisions of this clause
(ii).
Section 12.6. Assignment; Successors and Assigns; No Third Party Rights. Except as
otherwise provided herein, this Agreement may not be assigned by operation of law or otherwise, and
any attempted assignment shall be null and void; except that H&E may, without such written consent,
assign, directly or indirectly, any or all of its rights and obligations hereunder to any of its
Affiliates (provided that such Affiliate executes a joinder to this Agreement agreeing to be
legally bound by this Agreement as if an original Party hereto and provided that H&E shall
remain primarily liable hereunder), or to any Person which provides debt financing to H&E or
65
Burress as collateral for such debt financing. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the Parties and their respective heirs, successors,
permitted assigns and legal representatives. This Agreement shall be for the sole benefit of the
Parties and their respective heirs, successors, permitted assigns and legal representatives and is
not intended, nor shall be construed, to give any Person, other than the Parties and their
respective heirs, successors, assigns and legal representatives, any legal or equitable right,
remedy or claim hereunder.
Section 12.7. Counterparts. This Agreement may be executed in counterparts, any one of
which may be by facsimile or other electronic transmission followed by the originally executed
document forwarded immediately thereafter to the other Parties, each of which shall be deemed an
original agreement, but all of which together shall constitute one and the same instrument.
Section 12.8. Titles and Heading. The titles, captions and table of contents in this
Agreement are for reference purposes only, and shall not in any way define, limit, extend or
describe the scope of this Agreement or otherwise affect the meaning or interpretation of this
Agreement.
Section 12.9. Entire Agreement. This Agreement, including the Schedules and Disclosure
Schedules attached thereto, constitute the entire agreement among the Parties with respect to the
matters covered hereby and supersedes all previous written, oral or implied understandings among
them with respect to such matters.
Section 12.10. Severability. The invalidity of any portion hereof shall not affect the
validity, force or effect of the remaining portions hereof. If it is ever held that any restriction
hereunder is too broad to permit enforcement of such restriction to its fullest extent, such
restriction shall be enforced to the maximum extent permitted by applicable Laws.
Section 12.11. No Strict Construction. Each of the Parties acknowledge that this
Agreement has been prepared jointly by the Parties, and shall not be strictly construed against any
Party.
Section 12.12. Specific Performance. Each Party acknowledges that the rights of each
Party to consummate the Transaction are unique and recognizes and affirms that in the event of a
breach of this Agreement by any Party, money damages may be inadequate and the non-breaching Party
may have no adequate remedy at law. Accordingly, the Parties agree that such non-breaching Party
shall have the right, in addition to any other rights and remedies existing in its or their favor
at law or in equity, to enforce its or their rights and the other Partys obligations hereunder not
only by an action or actions for damages but also by an action or actions for specific performance,
injunctive and/or other equitable relief (without posting of bond or other security).
Section 12.13. Counsel to Burress, Burress Shareholders Representative and Burress
Shareholders. Burress, Burress Shareholders Representative and each of Burress Shareholders
acknowledge that Woods Rogers, PLC has represented Burress, Burress Shareholders
66
Representative and
Burress Shareholders in connection with Transaction and the negotiation and preparation of the
Transaction Documents. Woods Rogers, PLC has also represented several limited liability companies
whose members include Burress Shareholders and which are parties with Burress to certain of the
Continuing Affiliate Agreements. Burress, Burress Shareholders Representative and Burress
Shareholders hereby waive any conflict of interest that may exist as a result of such multiple
representation by Woods Rogers, PLC and any defense based on such conflict of interest to any claim
asserted by Burress against Burress Shareholders Representative and Burress Shareholders under this
Agreement. Burress Shareholders Representative and each Burress Shareholder has had the opportunity
to consult independent legal counsel in the foregoing regard and has either done so or chosen not
to do so.
[Signature Pages Follow]
67
In witness whereof, the Parties have caused this Agreement to
be duly executed as of the day and year first above written.
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H&E Equipment Services, Inc. |
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HE-JWB Acquisition, Inc. |
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By:
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/s/ John Engquist
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By:
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/s/ John Engquist |
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John Engquist
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John Engquist |
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President
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President |
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J.W. Burress, Incorporated |
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By:
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/s/ Richard S. Dudley
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Richard S. Dudley |
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President |
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Burress Shareholders
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/s/ Richard S. Dudley
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/s/ Richard D. Graves |
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Richard S. Dudley
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Richard D. Graves |
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/s/ Leroy W. Perry III
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/s/ William I. Daly |
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Leroy W. Perry III
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William I. Daly |
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/s/ Steven M. Reynolds
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/s/ David R. Nash |
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Steven M. Reynolds
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David R. Nash |
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/s/ Michael R. Craver |
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Michael R. Craver |
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/s/ Richard S. Dudley |
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Richard S. Dudley, |
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in his capacity as Burress Shareholders Representative and Exchange Agent |
Agreement and Plan of Merger dated as of May 15, 2007
Schedule A to Agreement and Plan of Merger
Certain Definitions
1. Certain Definitions. For purposes of this Agreement, the following terms shall have
the meanings hereinafter specified:
Arbitrator Accountants means a nationally recognized public accounting firm, other
than any accounting firm that has provided services to H&E, Burress Shareholders Representative or
any of Burress Shareholders during the preceding five years, mutually selected by Burress
Shareholders Representative and H&E. In the event that Burress Shareholders Representative and H&E
shall be unable to agree on the selection of the Arbitrator Accountants, then each of Burress
Shareholders Representative and H&E shall recommend two nationally recognized public accounting
firms, and one of such firms shall be selected lottery until one of such firms shall agree to be
retained to serve as the Arbitrator Accountants.
Accountants means BDO Seidman, LLP or such other nationally recognized public
accounting firm retain from time to time by H&E to certify the audit of its financial statements
filed with the U.S. Securities and Exchange Commission.
Affiliate means, with respect to any Person, any other Person who directly or
indirectly, through one or more intermediaries, controls, is controlled by, or is under common
control with, such Person; and with respect to any Burress Shareholder or other holder of Burress
Equity Equivalents also includes any Related Person thereof. The term control means the
possession, directly or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities by contract or
otherwise, and the terms controlled and controlling have meanings correlative thereto.
Affiliate Agreements means all Contracts (other than this Agreement and the other
Transaction Document) between Burress and any of Burress Shareholders, the current or past
directors, officers or employees of Burress, any current or past holder of Burress Equity
Equivalents, or their respective Affiliates or Related Persons, including the ownership of any
property or right by Burress or any such Person which is used by the other of any such Person or
Burress.
Affiliate Obligations means all Liabilities or obligations of Burress under all
Affiliate Agreements and all other Liabilities of Burress to any of Burress Shareholders, the
current or past directors, officers or employees of Burress, any current or past holder of Burress
Equity Equivalents, or their respective Affiliates or Related Persons or of any such Person to
Burress, including the Liabilities under the Continuing Affiliate Agreements identified on
Disclosure Schedule 5.20.
Affiliated Group shall have the meaning ascribed thereto in Section 1504(a)(1) of
the Code.
Audited Financial Statements means the following, including the notes thereto,
together with the relevant auditors report with respect thereto: the audited consolidated balance
sheets of Burress as of December 31, 2004, 2005 and 2006, and the related audited consolidated
statements of income, stockholders equity, and cash flows for the fiscal years ended December 31,
2004, 2005 and 2006. The Audited Financial Statements for the fiscal years ended December 31, 2004,
2005 and 2006 are herein referred to as the 2004 Audited Financial Statements, the
2005 Audited Financial Statements and the 2006 Audited Financial Statements,
respectively.
Bonus-Severance-Termination Liabilities means any Liability of Burress Shareholders
or Burress to any holder of Burress Equity Equivalents, director, officer, employee, agent or
consultant of Burress Shareholders or Burress (including withholding Taxes owed to any Governmental
Authority), whether accrued on or prior to the Closing Date or accruing subsequent to the Closing,
(i) in respect of bonuses or severance obligations relating to any period or partial period ending
on or before the Closing Date, (ii) based on any sale of Burress or any change or control or
similar event relating to Burress, including the Transaction, (iii) in respect of any obligation to
make any payment as a result of the Transaction, (iv) in respect of any Burress Equity Equivalents,
and (v) in respect of bonuses to employees to which H&E shall have consented pursuant to
clause (xvi) of Section 5.7 and clause (xvi) of Section 8.3(a)
(excluding bonuses paid or payable to salesmen in the Ordinary Course of Business pursuant to their
existing retention arrangements). Without limiting the generality of the foregoing,
Bonus-Severance-Termination Liabilities includes also the cost of terminating all existing
consulting, management and similar agreements with Burress Shareholders or their Affiliates or
Related Persons.
Budget means the capital expenditures budget dated as of May 4, 2007 heretofore
delivered by Burress to H&E.
Burress Equity Equivalents means (i) any capital stock or equity interests, as
applicable, in Burress, (ii) any outstanding or authorized option, warrant, right, call or
commitment relating to Burress Equity Equivalents, or any outstanding securities or obligations
convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire
from it, any Burress Equity Equivalent, (iii) obligations of Burress to repurchase, redeem or
otherwise acquire any Burress Equity Equivalents, (iv) authorized or outstanding stock
appreciation, phantom stock, profit participation or similar rights with respect to Burress, (v)
voting trusts, proxies or other agreements among the holders of Equity Equivalents in Burress with
respect to the voting or transfer of Burress Equity Equivalents, and (vi) preemptive or other
subscription rights with respect to any Burress Equity Equivalents.
Burress Existing Common Stock means the Class A Voting Common Stock, without par
value, and the Class B Nonvoting Common Stock, without par value, of Burress prior to the amendment
and restatement of the articles of incorporation of Burress pursuant to the Amended and Restated
Articles of Incorporation.
Burress Indebtedness means (without duplication) all (i) indebtedness of Burress for
money borrowed from others, reimbursement obligations of Burress with respect to letters of credit,
and overdraws in respect of facilities or agreements for borrowed money
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(including the amount of any negative cash), excluding notes evidencing payables under floor plan
financings, unless such notes are classified as Burress Indebtedness under clause (vi)
below, (ii) Liabilities of Burress evidenced by notes, bonds, debentures or similar instruments
(excluding notes evidencing payables under floor plan financings, unless such notes are classified
as Burress Indebtedness under clause (vi) below), (iii) indebtedness of the type described
in clauses (i) and (ii) above guaranteed in any manner by Burress, (iv) all indebtedness of
the type described in clauses (i), (ii) and (iii) above secured by any Lien upon property
owned by Burress, even though Burress has not in any manner become liable for the payment of such
indebtedness, provided that such amount included in Burress Indebtedness shall not exceed the fair
market value of such property as of the date of such determination if Burress has not in any manner
become liable for the payment of such indebtedness, (v) all capitalized lease obligations of
Burress, (vi) payables of Burress (whether pursuant to floor plan financings, on open account or
otherwise and whether or not evidenced by notes) on which interest was accruing or payable as of
February 28, 2007, and (vii) all interest expense accrued but unpaid, and all prepayment premiums
and penalties, on or relating to any of such indebtedness; provided, however, that Burress
Indebtedness shall not include any accounts payable (except as provided in clause (vi)
above) and other similar current obligations of Burress incurred in the Ordinary Course of
Business, but Burress Indebtedness shall include the current portion of any Burress Indebtedness
described in the preceding clauses (i) through (vii). The Parties have no reason currently
to believe that the list of floor plan financing notes on Schedule E-2 is Burress
Indebtedness for purposes of clause (vi) of the preceding sentence; however, the inclusion
or exclusion of such floor plan financing notes on Schedule E-2 shall not be determinative
of whether such floor plan financing notes are classifiable as Burress Indebtedness under
clause (vi) of the preceding sentence.
Burress New Common Stock means the Common Stock, without par value, of Burress after
giving effect to the amendment and restatement of the articles of incorporation of Burress pursuant
to the Amended and Restated Articles of Incorporation.
Burress Shareholders has the meaning set forth at the beginning of this Agreement,
and in the case of any Burress Shareholder which is not an individual includes also any successor
to any such Burress Shareholder whether by merger, the acquisition of substantially all of the
assets of such Burress Shareholder or any similar transaction.
Burress Shareholders Expenses means all expenses and charges incurred by Burress
Shareholders or Burress in connection with the negotiation, execution and delivery of this
Agreement and the other Transaction Documents and the consummation of the Transaction which are
chargeable or invoiced to, or which may be Liabilities of, Burress but which have not been paid by
Burress Shareholders on or prior to the Closing (including the fees and expenses described in
Sections 5.23 and 6.4).
Business Day means a day, other than a Saturday or Sunday, on which commercial banks
in the City of New York and the City of Roanoke are open for the general transaction of business.
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CERCLA means the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. §19601, et seq. and the regulations promulgated thereunder, as
amended, or any successor thereto.
Closing Balance Sheet means a balance sheet for Burress as of immediately following
the Effective Time, to be prepared by H&E following the Closing.
Code means the Internal Revenue Code of 1986, as amended.
Consent means any consent, approval, authorization, license, approval, notice,
registration or filing, including under any applicable Law, Order, Permit or any Contract to which
Burress or any Burress Shareholder is a party.
Constituent Documents means the articles or certificate of incorporation and
by-laws, as applicable, of Burress or H&E, and all amendments thereto or restatements thereof, as
currently in effect.
Continuing Affiliate Agreements means those Affiliate Agreements identified on
Disclosure Schedule 5.20 as Continuing Affiliate Agreements.
Contracts means all contracts, agreements, settlements, stipulations, leases,
indenture, mortgage, lease, pledge, note, bond, orders, invoices, commitments, arrangements,
understandings, instruments, permits or licenses, whether written or oral, to which Burress is a
party or is otherwise bound or which affects any of the property or assets of Burress.
December Balance Sheet means the unaudited balance sheet of Burress included in the
December Financial Statements.
December Financial Statements means the Interim Financial Statements of Burress as
of, and for the 12-month period ended, December 31, 2006.
Employee Benefit Plan means any employee benefit plan as such term is defined in
Section 3(3) of ERISA, any bonus, stock purchase, stock ownership, stock option, deferred
compensation, incentive severance, termination or other compensation plan or arrangement, and any
other material employee fringe benefit plan, program or arrangement.
Environmental Claim means any Liability or potential Liability and any Proceeding
regarding any Liability or potential Liability arising under Environmental and Safety Requirements
arising out of, as a result of, in connection with, relating to or incidental to or by virtue of
any Environmental Condition, including any investigatory, remedial, response or corrective
obligations and response costs, corrective action costs, personal injury, property damage, natural
resources damages or related attorney fees and claims of any Governmental Authority.
A-4
Environmental Condition means:
(i) the presence (regardless of its source), generation, discharge, emission, release
or threatened release into the environment, spill, receiving, handling, use, storage,
containment, treatment, deposit, disposal, keeping, encapsulation, removal, management,
transmission or manufacture, transportation, shipment or disposition of any Hazardous
Substance affecting or relating to Burress or its business, operations, properties or assets
(including the Real Property), or effected or caused by Burress or the Burress Shareholders
or any third party, which presently is or which is from time to time after the date hereof
or which has been governed or regulated by any Environmental and Safety Requirement;
(ii) the presence of any underground storage tank;
(iii) any soil, groundwater or surface water contamination in existence in, on or under
the Real Property;
(iv) the failure of Burress or the business or assets of Burress to be in compliance
with any Environmental and Safety Requirements;
(v) noise, nuisance, defective premises, or health and safety at work or elsewhere;
(vi) pollution, conservation or protection of the environment; and
(vii) the state of facts or the conditions described on Disclosure Schedule
5.12 and any clean-up or remediation costs associated therewith (including the Identified
Environmental Remediation and the Identified Environmental Remediation Costs);
whether caused or effected by Burress or the Burress Shareholders on or prior to the Closing Date
or resulting from any act of God occurring on or prior to the Closing Date, or caused or effected
by any other Person on or prior to the Closing Date, so far as they affect or arise from, relate
to, migrate from or to, or are in connection with Burress or its business, operations, properties
or assets (including the Real Property).
Environmental and Safety Requirements shall mean all applicable federal, state,
local and foreign Laws, Consents, Permits and Orders concerning public health and safety, worker
health and safety, and pollution or protection of the environment, including all those relating to
the presence, use, production, generation, handling, transport, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened release, control, or
cleanup of any hazardous or otherwise regulated materials, substances or wastes, chemical
substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products
or byproducts, asbestos, polychlorinated biphenyls or radiation.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
A-5
ERISA Affiliate means any employer that is, or at any relevant time was together
with Burress treated as a single employer under Section 414(b), 414 (c) or 414(m) of the Code.
Escrow Agent has the meaning assigned thereto in the Escrow Agreement.
Escrow Amount has the meaning assigned thereto in the Escrow Agreement, including
(i) the Closing Escrow Amount, and (ii) interest and income accrued or earned thereon.
Escrow Amount Released means any portion of the Escrow Amount which, in accordance
with the terms of the Escrow Agreement may be released from time to time after the Closing Date
from the Escrow for the account of the holders of Burress Equity Equivalents. Escrow Amount
Released does not mean and include any portion of the Escrow Amount released from time to time
after the Closing Date for the account of H&E.
February Balance Sheet means the unaudited balance sheet of Burress included in the
February Financial Statements.
February Financial Statements means the Interim Financial Statements of Burress as
of, and for the two-month period ended, February 28, 2007.
Financial Statements means and includes the Audited Financial Statements and the
Interim Financial Statements.
Financing means financing or lending arrangements by H&E in a net amount sufficient
to fund its obligations on the Closing Date under Section 2.2.
GAAP means generally accepted accounting principles as in effect in the United
States on the date of this Agreement, applied on a basis consistent with prior audited financial
statements.
Governmental Authority means any national, federal, state, provincial, county,
municipal or local government, foreign or domestic, or the government of any political subdivision
of any of the foregoing, or any entity, authority, agency, ministry or other similar body
exercising executive, legislative, judicial (including any court), regulatory, or administrative
authority or functions of or pertaining to government, including any authority or other
quasi-governmental entity established to perform any of such functions.
H&E has the meaning set forth at the beginning of this Agreement, and includes also
any successor to H&E whether by merger, the acquisition of substantially all of the assets of H&E
or any similar transaction.
HE-JWB has the meaning set forth at the beginning of this Agreement, and includes
also any successor to HE-JWB whether by merger, the acquisition of substantially all of the assets
of HE-JWB or any similar transaction.
A-6
Hazardous Substance means any substance that is a hazardous substance under CERCLA
and any comparable state Law, any substance that is a solid waste or hazardous waste under RCRA
and any comparable state Law, any pesticide, pollutant, contaminant, toxic chemical, petroleum
product or byproduct, asbestos, polychlorinated biphenyl, odor or radiation.
Hitachi Agreements means and includes each and all of the following (as amended and
in effect on the date of this Agreement): (i) the Dealer Agreement dated September 1, 1995 by and
between J.W. Burress, Inc. and Hitachi Construction Machinery (America) Corporation; (ii) the
Security Agreement dated September 1, 1995 by and between J.W. Burress, Inc. and Hitachi
Construction Machinery (America) Corporation; (iii) the Authorized Construction Dealer Agreement
dated November 13, 2001 by and between J.W. Burress, Inc. and Hitachi Construction Machinery
(America) Corporation; (iv) the Security Agreement dated November 13, 2001 by and between J.W.
Burress, Inc. and Hitachi Construction Machinery (America) Corporation; (v) the Dealer Security
Agreement for Hitachi or Euclid Equipment dated May 7, 2002 by and between J.W. Burress, Inc. and
John Deere Construction & Forestry Company; (vi) the Hitachi Plan for Retail and Lease Financing
dated July 10, 2002 by and between J.W. Burress, Inc. and John Deere Construction & Forestry
Company and Deere Credit, Inc.; (vii) the Floorplan and Security Agreement dated September 19, 2003
by and between J.W. Burress, Inc. and Hitachi Credit America Corp.; and (viii) the Authorized
Hitachi Dealer Agreement dated June 20, 2003 by and between J.W. Acquisition, Inc. and John Deere
Construction & Forestry Company.
Hitachi Group means each and all of the following: (i) Hitachi Construction
Machinery (America) Corporation; (ii) Hitachi Credit America Corp.; (iii) John Deere Construction &
Forestry Company; (iv) Deere Credit, Inc.; and (v) the respective Affiliates of each of the
foregoing.
HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
Indebtedness of any Person means (without duplication) all (i) indebtedness of such
Person for money borrowed from others, reimbursement obligations of such Person with respect to
letters of credit, and overdraws in respect of facilities or agreements for borrowed money
(including the amount of any negative cash), (ii) Liabilities of such Person evidenced by notes,
bonds, debentures or similar instruments, (iii) indebtedness of the type described in
clauses (i) and (ii) above guaranteed in any manner by such Person, (iv) all indebtedness
of the type described in clauses (i), (ii) and (iii) above secured by any Lien upon
property owned by such Person, even though such Person has not in any manner become liable for the
payment of such indebtedness, provided that such amount included in such Indebtedness shall not
exceed the fair market value of such property as of the date of such determination if such Person
has not in any manner become liable for the payment of such indebtedness, (v) all capitalized lease
obligations of such Person, and (vi) all interest expense accrued but unpaid, and all prepayment
premiums and penalties, on or relating to any of such indebtedness; provided, however, that
Indebtedness shall not include any accounts payable and other similar current obligations of such
A-7
Person incurred in the Ordinary Course of Business, but Indebtedness shall include the current
portion of any Indebtedness described in the preceding clauses (i) through (vi).
Interest Rate means the highest rate at which interest accrues on indebtedness
incurred by H&E under the Financing and in effect from time to time.
Interim Financial Statements means the following:
(i) the unaudited consolidated balance sheet of Burress as of December 31, 2006, and
the related unaudited consolidated statements of income, stockholders equity, and cash
flows for the 12-month period ended on such date, including any notes thereto;
(ii) the unaudited consolidated balance sheet of Burress as of February 28, 2007, and
the related unaudited consolidated statements of income, stockholders equity, and cash
flows for the two-month period ended on such date, including any notes thereto; and
(ii) the unaudited consolidated balance sheets of Burress as of the end of each other
fiscal month subsequent to December 31, 2006, and the related unaudited consolidated
statements of income, stockholders equity, and cash flows for the fiscal period commencing
January 1, 2007 ended on such date, including any notes thereto.
Knowledge of Burress Shareholders means the knowledge of Burress, Burress
Shareholders or Senior Burress Management, in each case after reasonable investigation by Burress
and such individuals.
Knowledge of H&E means the knowledge of H&E or any director, officer, employee or
agent of H&E who exercises management, supervisory, reporting or compliance responsibilities for
the business and operations of H&E and its segments and departments and which relate to matters
which are the subject of the representations and warranties contained in Article VII, in
each case after reasonable investigation by H&E and such individuals.
Landlord means a landlord under any Lease, including any landlord under any master
lease and any sublessor under any sublease.
Law means the following: statutes; laws; ordinances; regulations, rules, written
policy and resolutions; judicial decisions and precedent; Orders; and the common law; applicable as
to the foregoing to the specified Persons and to the businesses and assets thereof.
Liability means any Indebtedness, liability or obligation, whether known or unknown,
asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated
and whether due or to become due, regardless of when asserted. Without limiting the generality of
the foregoing, in the case of any Contract, Liability shall mean also any obligation of Burress
to render any performance or to make any payment under such Contract,
A-8
including any Liability arising out of or based upon any breach by Burress, whether before or after
the Closing, of any provision of such Contract.
Lien means any mortgage, pledge, assessment, security interest, lease, lien, adverse
claim, levy, charge or other encumbrance, or right of first refusal, right of first offer, proxy,
voting trust, or voting Contract, including with respect to the sale, issuance or voting of any
Burress Equity Equivalent (whether outstanding or issuable upon the conversion, exchange or
exercise of outstanding securities).
Material Adverse Effect or Material Adverse Change means any circumstance,
event, change in or effect on Burress or its business or operations, or any restriction, limitation
or impairment, that has a material adverse effect upon or change in (whether such material adverse
effect or change occurs before or after the Closing) (i) the financial condition, business, assets,
Liabilities (including the imposition of any material Liability) or results of operations of
Burress, (ii) the ability of Burress or any Burress Shareholder to consummate the Transaction and
to perform their respective obligations hereunder, or (iii) the ability of Burress to conduct,
following the Closing, its business and operations in a manner substantially the same as conducted
since January 1, 2006 and prior to the Closing, including to achieve comparable revenues or
profitability. However, the failure of Burress and Burress Shareholders to obtain the Hitachi
Consent or any Hitachi Termination Agreement shall not constitute a Material Adverse Effect or
Material Adverse Change.
Multiemployer Plan has the meaning set forth in ERISA Section 3(37).
Net Worth of Burress means the net worth of Burress as shown in the internal
financial statements of Burress prepared in a manner consistent with the Audited Financial
Statements. Solely for purposes of example, the Net Worth of Burress as of February 28, 2007 is
currently assumed to be $25,210,150.
Order means any judgment, award, determination, finding, writ, decree, claim,
injunction, order, compliance agreement or settlement agreement by or before any Governmental
Authority and any arbitrator.
Ordinary Course of Business means the ordinary course of business of Burress in a
manner materially consistent with past practices of Burress and customary business operations of
Burress in compliance with applicable Laws. The making of Permitted Distributions to the extent
allowed by this Agreement will be deemed to be in the Ordinary Course of Business.
Permits means consents, permits, licenses, franchises, approvals, certificates,
waivers, concessions, exemptions, variances, orders, registrations, filings, notices or other
authorizations issued by a Governmental Authority, and all filings and registrations with any
Governmental Authority or other Person.
Permitted Insured D&O Claims means claims for indemnification of Covered Directors
and Officers, solely in their capacity as directors and officers of
Burress under the
A-9
provisions of the Constituent Documents of Burress, provided that such claims for indemnification
satisfy all of the following conditions:
(i) such claims for indemnification relate solely to third party claims asserted after
the Closing Date based on any act, omission, transaction or other occurrence by Burress
taking place prior to the Effective Time;
(ii) such claims for indemnification are not based on any act, omission, transaction or
other occurrence by Burress or any such Covered Director or Officer which constitutes a
violation of applicable Laws;
(iii) such claims for indemnification do not, and such act, omission, transaction or
other occurrence which serves as the basis for the third party claim or such claims for
indemnification does not, serve as a basis for indemnification of H&E Indemnified Parties
under Sections 10.2 or 10.3 of this Agreement; and
(iv) such claims for indemnification are based solely on the inclusion of such Covered
Director or Officer as a named party defendant to such third party claim solely in his
capacity as a Covered Director or Officer and do not involve any personal culpability for
any action or omission by such Covered Director or Officer.
Permitted Distributions means, if the Closing has not occurred by June 11,
2007, $1,248,000 and $12,000 for second-quarter 2007 federal estimated tax payments and 2007
Maryland state estimated tax payments, respectively, to be paid to the Burress Shareholders
as were the payments shown on Disclosure Schedule 5.11(a)(xiv) as for the first
quarter.
Person means an individual, partnership, corporation, limited liability company,
joint stock company, unincorporated organization or association, trust, joint venture, association
or other organization, any division, segment or other unincorporated business, whether or not a
legal entity, or a Governmental Authority.
Predecessor, when used with respect to Burress, means any Person which, prior to the
Effective Time, was merged with or into Burress, was consolidated with Burress, or transferred
substantially all of its assets to Burress.
Proceeding means any action, suit, proceeding (including any arbitration
proceeding), complaint, charge, hearing, inquiry, subpoena, audit or investigation before or by any
Governmental Authority, including indictments, applications, petitions, complaints, investigations,
notices of violations, letters of inquiry, notices of apparent Liability, forfeitures or other
actions from or before any Governmental Authority relating to Burress.
Proprietary Rights means all patents, patent disclosures, patent applications,
trademarks, service marks, trademark and service mark registrations and applications therefor, and
all goodwill associated therewith, copyrights, copyright registrations and applications, mask
works, trade names, corporate names, trade dress, internet domain
registrations, web site designs,
A-10
website content and underlying computer code, technology, inventions (whether or not patentable and
whether or not reduced to practice), computer software, data and documentation (including
electronic media), specifications, product drawings, training materials (including films, brochures
and printed materials), catalogs and other advertising and promotional materials, trade secrets,
know-how, confidential information, financial business and marketing plans, customer and supplier
lists, and all other material intellectual property and proprietary information or rights used in
or necessary for the operation of the business of Burress as presently conducted.
RCRA means the Resource Conservation and Recovery Act of 1976, 42 U.S.C. §16901
et sec, and the regulations promulgated thereunder, as amended, or any successor
thereto.
Real Property Lease Default means and includes with respect to any Real Property
Lease: (i) the failure of Burress Shareholders or Burress to obtain a valid and enforceable
(including enforceable against the Landlord under any Real Property Lease) consent under any
transfer and assignment restrictions or change of control provisions under any Real Property Lease
or otherwise with respect to the Transaction (such assignment and transfer, change of control and
other provisions or requirements being herein together referred to as Real Property Lease
Transfer Transactions) of any Landlord or sublessor required under any Real Property Lease, or
of any third party whose consent is required under any contract, agreement, document, instrument,
mortgage or security or similar agreement to which Burress Shareholders or Burress are parties or
which is a Lien on the Real Property Lease or the leasehold interests under the Real Property Lease
(Related Real Property Lease Documents); (ii) the failure of Burress Shareholders and
Burress to obtain a valid and enforceable consent to any Real Property Lease Transfer Transaction
in accordance with the terms of the Real Property Lease, or to comply with any provision of any
Real Property Lease or Related Real Property Lease Document in connection with, or necessary to
duly and validly effect, any Real Property Lease Transfer Transaction (including any notice and
documentation requirements under the Real Property Lease and any net worth requirements); and (iii)
the existence of any breach, violation, default or event of default (including any condition, fact
or circumstance which, with the giving of notice, the passage of time or both, could be reasonably
expected to result in a default or event of default) under any Real Property Lease or Related Real
Property Lease Document (any breach, violation, default or event of default in connection with or
occurring as a result of the Real Property Lease Transfer Transactions or continuing thereafter
being covered in clauses (i) and (ii) above).
Real Property Lease Transfer Transactions has the meaning set forth in the
definition of Real Property Lease Default.
Related Real Property Lease Documents has the meaning set forth in the definition of
Real Property Lease Default.
Related Persons of any other Person means and includes the directors, officers,
employees, agents and advisers of such Person and any family member (including any spouse,
A-11
ancestor, descendant or sibling of the individual specified) of such Person or of such directors,
officers, employees, agents and advisers.
Reedrill and Ritchie Accounts Receivables means (i) the accounts receivables at the
end of February and March 2007 from Ritchie Bros. Auctioneers, in the respective amounts of
approximately $2.1 million and approximately $1.42 million, arising from its auction of equipment,
and (ii) the accounts receivables related to selling equipment back to Dynapac and Reedrill in the
respective amounts of approximately $374,000 and approximately $1.244 million.
Short Period Tax Adjustment means an amount equal to (x) the product of (i) the net
taxable income of Burress for the period beginning on March 1, 2007 and ending at the close of the
Closing Date and (ii) 41%, minus (y) the sum of (i) all distributions identified on Disclosure
Schedule 5.11(a)(xiv) as relating to such period plus (ii) any distributions made by Burress to
the Burress Shareholders during such period that are not shown on Disclosure Schedule
5.11(a)(xiv).
Special Circumstances, when used with respect to indemnification claims of H&E
Indemnified Parties, means (i) claims arising out of or based upon any of Sections 5.5 or
6.6, (ii) claims for breaches of representations and warranties in respect of violations of Laws or
Third Party Claims, (iii) claims for breaches of representations and warranties by Burress
Shareholders involving any fraud or intentional misrepresentation by Burress Shareholders, and (iv)
claims based on any fraud or intentional misrepresentation by Burress or Burress Shareholders in
obtaining any Required Consent.
Subsidiary means, with respect to any Person, any corporation, partnership,
association or other business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a
combination thereof, or (ii) if a partnership, association or other business entity, a majority of
the partnership or other similar ownership interests thereof is at the time owned or controlled,
directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination
thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership
interest in a partnership, association or other business entity if such Person or Persons shall be
allocated a majority of partnership, association or other business entity gains or losses or shall
be or control the managing director, managing member, general partner or other managing Person of
such partnership, association or other business entity.
Tax means any federal, state, local or foreign income, gross receipts, franchise,
estimated, alternative minimum, add-on minimum, sales, use, transfer, real property gains,
registration, value added, excise, natural resources, severance, stamp, occupation, windfall
profits, environmental (under Section 59A of the Code), customs, duties, real property, personal
property, capital stock, Equity Equivalents, social security (or similar), unemployment,
disability, payroll, license, employee or other withholding, or other tax, of any kind whatsoever,
including any interest, penalties or additions to tax or similar items in respect of the foregoing
(whether disputed or not).
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Tax Liability means any Liability for Taxes.
Tax Return means any return, report, declaration, claim for refund, information
return or other document (including any related or supporting schedule, statement or information)
filed or required to be filed in connection with the determination, assessment or collection of any
Tax of any Party or the administration of any Laws relating to any Tax (including any amendment
thereof).
Transaction has the meaning set forth in the Recitals to this Agreement.
Transaction Documents means this Agreement, the Escrow Agreement, the
Non-Competition Agreements and the Amended and Restated Articles of Incorporation; the documents,
agreements, instruments, acknowledgments, certificates and releases executed and delivered by the
Parties pursuant to any of the foregoing; and such other documents, agreements, instruments,
acknowledgments, certificates and releases entered into by the Parties which is expressly stated
therein to be a Transaction Document under this Agreement.
Virginia Act means the Virginia Stock Corporation Act, as amended and in effect from
time to time.
A-13
2. Terms Defined Elsewhere in this Agreement. For purposes of this Agreement, the
following terms shall have the meanings specified where indicated below:
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Term |
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Location |
AAA |
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Section 12.5(b) |
AAA Rules |
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Section 12.5(b) |
Acquisition Proposal |
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Section 8.7 |
Additional Burress Indebtedness |
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Section 2.1 |
A-14
|
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Term |
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Location |
Agent |
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Section 11.1(a) |
Agreement |
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Preamble |
Amended and Restated Articles of Incorporation |
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Section 3.3 |
Arbitrator |
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Section 12.5(b) |
Articles of Merger |
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Section 3.2 |
Basket Amount |
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Section 10.2(c)(ii) |
Burress |
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Preamble |
Burress 401(k) Plan |
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Section 8.14 |
Burress Equity Equivalent Certificate |
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Section 3.5(c) |
Burress Management |
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Section 5.25 |
Burress Shareholders |
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Preamble |
Burress Shareholders Expense Allowance |
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Section 12.4(b) |
Burress Shareholders Indemnified Parties |
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Section 10.2(b) |
Burress Shareholders Retained Closing Obligations |
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Section 2.2(c) |
Burress Shareholders Released Claims |
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Section 8.1(a) |
Burress Shareholders Representative |
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Preamble |
Burress Shareholders Withholding Taxes |
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Section 2.5 |
Burress Tax Liabilities |
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Section 10.3(a) |
Business |
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Section 8.8(a) |
Closing; Closing Date |
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Section 4.1 |
Closing Date Tax Basis Balance Sheet |
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Section 8.10(c)(i) |
Closing Escrow Amount |
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Section 2.1 |
Closing Estimates |
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Section 2.1 |
Closing Merger Consideration per Burress Share |
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Section 2.1 |
Closing Net Proceeds to Burress Shareholders |
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Section 2.1 |
Closing Net Worth |
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Section 4.2(b)(xi) |
COBRA |
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Section 5.14(a) |
Covered Director(s) and (or) Officer(s) |
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Section 8.13 |
Effective Time |
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Section 3.2 |
Elections |
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Section 8.10(a) |
Employees Release |
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Section 9.10(c) |
Escrow Agreement |
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Section 4.2(c) |
Exchange Agent |
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Sections 3.7(a) |
Exchange Fund |
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Section 3.7(a) |
Extended Payables Contracts |
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Section 2.1 |
Final Gross-Up Amount |
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Section 8.10(c)(ii) |
Final Tax Payment Year |
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Section 8.10(c)(ii) |
First Post-Closing Tax Return |
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Section 8.10(a) |
H&E |
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Preamble |
H&E Indemnified Parties |
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Section 10.2(a) |
HE-JWB |
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Preamble |
HE-JWB Common Stock |
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Section 3.5(a) |
Hitachi Consent |
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Section 4.2(b)(ix) |
Hitachi Adjusted EBITDA |
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Section 2.1 |
Hitachi Fleet |
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Section 2.1 |
Hitachi Fleet Premium |
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Section 2.1 |
Hitachi Fleet Value |
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Section 2.1 |
Hitachi Indebtedness and Payables |
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Section 2.1 |
Hitachi Termination Agreements |
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Section 4.2(b)(ix) |
Indemnitee; Indemnitor |
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Section 10.2(c)(i) |
Identified Environmental Remediation |
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Section 8.12 |
Identified Environmental Remediation Costs |
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Section 8.12 |
Initial Proceeds to Burress Shareholders |
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Section 2.1 |
Initial Tax Shortfall Amount |
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Section 8.10(c)(i) |
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Term |
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Location |
Leased Real Property |
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Section 5.19(a) |
Leased Tangible Personal Property |
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Section 5.19(b) |
Letter of Transmittal |
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Section 3.7(b) |
Loss; Losses |
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Section 10.2(a) |
Maximum CAM Liability |
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Section 5.19(e) |
Merger |
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Recitals |
Merger Consideration per Burress Share |
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Section 2.1 |
Minimum Survival Date |
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Section 10.1 |
New Hitachi Fleet |
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Section 2.1 |
New Hitachi Fleet Proceeds |
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Section 2.6 |
Non-Competition Agreements |
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Section 4.2(a)(xiii) |
Non-Hitachi Adjusted EBITDA |
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Section 2.1 |
Owned Real Property |
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Section 5.19(a) |
Owned Tangible Personal Property |
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Section 5.19(b) |
Parties |
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Preamble |
Permitted D&O Insurance |
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Section 8.13 |
Permitted Liens |
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Section 5.19(b) |
Post-Closing Calculations |
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Section 2.3(b) |
Post-Closing Partial Period |
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Section 10.3(a) |
Pre-Closing Partial Period |
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Section 10.3(a) |
Real Property |
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Section 5.19(a) |
Real Property Leases |
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Section 5.19(a) |
Recomputed Gross-Up Amount |
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Section 8.10(c)(ii) |
Purchase Price |
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Section 2.1 |
Reserve Account |
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Section 2.2(b)(i)(B) |
Required Consents |
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Section 4.2(a)(ii) |
Senior Burress Management |
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Section 5.25 |
Special Counsel |
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Section 4.2(b)(iii)(F) |
Supplemental Escrow Amount |
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Section 2.1 |
Supplemental Hitachi Fleet Value |
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Section 2.3(e) |
Supplemental Proceeds to Burress Shareholders |
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Section 2.1 |
Surviving Corporation |
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Section 3.1 |
Tangible Personal Property Lease |
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Section 5.19(c) |
Tax Adjustment Amount |
|
Section 8.10(c)(ii) |
Tax Basis Balance Sheet |
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4.2(b)(xii) |
Tax Election Allocations |
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Section 8.10(b) |
Tax Shortfall Amount |
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Section 8.10(c)(i) |
Tentative Gross-Up Amount |
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Section 8.10(c) |
Third Party Acquisition |
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Section 8.7 |
Third Party Claim |
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Section 10.2(f) |
Third Party Payments |
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Section 2.1 |
Transaction |
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Recitals |
Transfer Taxes p |
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Section 12.4(a) |
Waived Closing Condition; Waiver of Closing
Condition; Waiving Party |
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Section 10.2(c)(ii) |
A-2
Exhibit A to Agreement and Plan of Merger
Escrow Agreement;
Attached
Escrow Agreement dated as of [Closing Date], 2007 (this Escrow Agreement) among:
(i) H&E Equipment Services, Inc., a Delaware corporation (H&E);
(ii) HE-JWB Acquisition, Inc., a Virginia corporation and wholly-owned subsidiary of
H&E (HE-JWB);
(iii) J.W. Burress, Inc., a Virginia corporation (Burress);
(iv) the shareholders of Burress identified as such on the signature page to this Agreement (
Burress Shareholders);
(v) Richard S. Dudley, in his capacity as Burress Shareholders Representative under
the Agreement and Plan of Merger (as defined herein) (Burress Shareholders
Representative); and
(vi) The Bank of New York, a corporation duly organized and existing under the laws of
the State of New York, as escrow agent ( Escrow Agent).
H&E, HE-JWB, Burress, Burress Shareholders, Burress Shareholders Representative and Escrow
Agent are herein together referred to as the Parties.
Recitals
A. This Escrow Agreement is entered into by the Parties pursuant to the Agreement and Plan of
Merger dated as of May 15, 2007 (the Agreement and Plan of Merger) among H&E, HE-JWB,
Burress, Burress Shareholders and Burress Shareholders Representative; and this Escrow Agreement is
the Escrow Agreement to which reference is made in the Agreement and Plan of Merger.
B. Burress Shareholders have agreed to indemnify H&E Indemnified Parties (as defined in the
Agreement and Plan of Merger) as provided in the Agreement and Plan of Merger and the Transaction
Documents.
In consideration of the mutual covenants and agreements of the Parties contained herein, the
Parties agree as follows:
1. Capitalized Terms. Capitalized terms appearing herein and not otherwise defined
shall have the respective meanings given such terms in the Agreement and Plan of Merger.
2. Appointment of Escrow Agent. The Bank of New York is hereby appointed to act as
Escrow Agent in accordance with the terms and provisions of this Escrow Agreement. The Bank of
New York hereby accepts such appointment in accordance with the terms and provisions of this Escrow
Agreement.
3. Escrow Funds.
(a) On the Closing Date, H&E shall deposit, pursuant to Section 2.2(b) of the Agreement and
Plan of Merger, $ (the Closing Escrow Amount) in immediately available funds
with Escrow Agent for purposes of securing the indemnification obligations of Burress Shareholders
under and in accordance with the terms of the Agreement and Plan of Merger and the Transaction
Documents. The Closing Escrow Amount is the Closing Escrow Amount to which reference is made in
the Agreement and Plan of Merger. The Closing Escrow Amount, together with any Additional Escrow
Amounts deposited from time to time with Escrow Agent, and any interest and income earned thereon
are herein together referred to as Escrow Funds.
(b) For purposes of this Escrow Agreement, the following terms shall have the following
meanings:
(i) Determination in Favor of Burress Shareholders, with respect to any Pending
Claim or Pending Claim Amount, shall be a determination that H&E Indemnified Parties are not
entitled to payment of such Pending Claim Amount (A) by a court of competent jurisdiction, after
all rights of appeal and rehearing have been expired or terminated, or (B) pursuant to a written
agreement between Burress Shareholders Representative and H&E to the extent that H&E has agreed
that the Pending Claim Amount shall be released in favor of Burress Shareholders. No Determination
in Favor of Burress Shareholders pursuant to clause (A) of the preceding sentence shall
provide for any release and delivery to Burress Shareholders Representative or Burress Shareholders
of the applicable Escrow Funds if and to the extent that the applicable Escrow Funds remaining
after such release and delivery would be less than the amount of the applicable Escrow Funds
required to be retained by Escrow Agent pursuant to the provisions of Section 4(a) hereof.
(ii) Determination in Favor of H&E, with respect to any Pending Claim or Pending
Claim Amount, shall be a determination that H&E Indemnified Parties are entitled to payment of such
Pending Claim Amount (A) by a court of competent jurisdiction, after all rights of appeal and
rehearing have been expired or terminated, or (B) pursuant to a written agreement between Burress
Shareholders Representative and H&E to the extent that Burress Shareholders Representative has
agreed that the Pending Claim Amount shall be paid to H&E Indemnified Parties.
(iii) Pending Claim or Pending Claim Amount shall mean any Indemnification
Claim and the amount thereof asserted by a H&E Indemnified Party, in good faith, against Burress
Shareholders pursuant to the provisions of Article X of the Agreement and Plan of Merger or under
the Transaction Documents, even though such Indemnification Claim, or any third-party claim which
serves as the basis for any Indemnification Claim, has not yet been finally determined, unless and
until such Pending Claim Amount is paid to H&E Indemnified Parties or such Pending Claim or Pending
Claim Amount is the subject of a Determination in Favor of Burress Shareholders.
A-3
(c) Escrow Agent shall have notice of any Pending Claim Amount upon the receipt by Escrow
Agent from any H&E Indemnified Party of a copy of any written notice thereof given by a H&E
Indemnified Party to Burress Shareholders Representative and Escrow Agent in accordance with
Section 9 hereof.
(d) The Escrow Funds shall constitute collateral security for the indemnification obligations
of Burress Shareholders under Article X of the Agreement and Plan of Merger and the indemnification
obligations of Burress Shareholders under the other Transaction Documents; and Escrow Agent hereby
agrees to act as collateral agent on behalf of both H&E and Burress Shareholders.
4. Disbursement of Escrow Funds. Escrow Agent shall release and disburse the Escrow
Funds in accordance with the provisions of this Section 4.
(a) To Burress Shareholders Representative.
(i) On
, 20___,1 (the First Scheduled Escrow Release Date),
Escrow Agent shall deliver to Burress Shareholders Representative, in immediately available funds,
the Closing Escrow Amount, together with any interest and income earned thereon, less the aggregate
amount of all Pending Claim Amounts under Article X of the Agreement and Plan of Merger or under
the other Transaction Documents made prior to such date. On
, 20___,2 (the
Second Scheduled Escrow Release Date), Escrow Agent shall deliver to Burress Shareholders
Representative, in immediately available funds, the remaining Closing Escrow Amount and the
Supplemental Escrow Amount, together with any interest and income earned thereon, less the
aggregate amount of all Pending Claim Amounts under Article X of the Agreement and Plan of Merger
or under the other Transaction Documents made prior to such date. The First Scheduled Escrow
Release Date and the Second Scheduled Escrow Release Date are herein each, and together, referred
to as the Scheduled Escrow Release Date. Escrow Agent shall not release or deliver to
Burress Shareholders Representative any such Escrow Funds prior to the Scheduled Escrow Release
Date unless otherwise agreed in writing by H&E or, subsequent to the Scheduled Escrow Release Date,
in accordance with a Determination in Favor of Burress Shareholders.
(ii) Escrow Agent shall give to Burress Shareholders Representative and to H&E not less than
15, and not more than 30, days prior written notice of the amount of Escrow Funds which Escrow
Agent proposes to release on the Scheduled Escrow Release Date and a statement which sets forth
Escrow Agents calculation of the amount of Escrow Funds proposed to be released, the aggregate
Pending Claim Amounts under the Agreement and Plan of Merger or under the other Transaction
Documents of which Escrow Agent has received notice, and the amount of the Escrow Funds that will
remain after the delivery of Escrow Funds on the Scheduled Escrow Release Date. In the event that
H&E shall object in writing to Escrow Agent and Burress Shareholders Representative, on or before
the first Business Day immediately
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1 |
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The Minimum Survival Date under the Agreement
and Plan of Merger. |
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2 |
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The first anniversary of the Minimum Survival
Date. |
A-4
preceding the Scheduled Escrow Release Date, to the delivery of all or part of such Escrow Funds
proposed to be released on the Scheduled Escrow Release Date (an Escrow Release
Objection), then Escrow Agent shall not release the amount of Escrow Funds as to which H&E
shall have objected unless, until and except in accordance with a Determination in Favor of Burress
Shareholders or a Determination in Favor of H&E or pursuant to joint written instructions of H&E
and Burress Shareholders Representative. Any Escrow Release Objection shall state in reasonable
detail the reasons therefor.
(b) To H&E Indemnified Parties. Escrow Agent shall deliver to H&E Indemnified Parties
any Escrow Funds in accordance with any Determination in Favor of H&E Indemnified Parties.
(c) Any disbursements of the Escrow Funds to be made by Escrow Agent pursuant to this
Section 4 shall be made by wire transfer of immediately available funds to an account
designated by Burress Shareholders Representative or H&E, as applicable.
5. Investment of Escrow Funds; Interest.
(a) Upon written directions from Burress Shareholders Representative and H&E, the Escrow Agent
shall invest or reinvest the Escrow Funds, without distinction between principal and income, in (i)
marketable obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, (ii) money market funds sponsored by the Escrow Agent subject to the
requirements of the Investment Company Act of 1940, as amended, invested in any one or more of
marketable obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, or (iii) upon the mutual written instructions of Burress Shareholders
Representative and H&E, in one or more short-term market instruments, including without limitation
bank instruments, corporate debt securities issued by U.S. or foreign companies, commercial paper
with a maturity of not more than thirty days rated at least P-1 by Moodys Investor Service, Inc.
and A-1 by Standard & Poors Corporation, demand instruments, adjustable rate obligations,
asset-backed securities, restricted securities, fully collateralized repurchase agreements or other
money market funds subject to the requirements of the Investment Company Act of 1940, as amended,
invested in any one or more of the aforementioned types of instruments.
(b) Escrow Agent shall be under no duty to give the property held in escrow by it hereunder
any greater degree of care than it gives its own similar property, but Escrow Agent shall not
exercise less than a reasonable degree of care.
(c) The Parties acknowledge that non-deposit investment products are not obligations of, or
guaranteed by, Escrow Agent or any of its affiliates, are not FDIC insured, and are subject to
investment risks, including the possible loss of principal amount invested. Only deposits in the
United States are subject to FDIC insurance.
(d) Escrow Agent is authorized, for any securities at any time held hereunder, to register
such securities in the name of its nominees(s) or the nominees of any securities depository, and
such nominee(s) may sign the name of any of the parties hereto to whom or to
A-5
which such securities belong and guarantee such signature in order to transfer securities or
certify ownership thereof to tax or other governmental authorities.
(e) All interest earned or other income on any funds held by Escrow Agent pursuant to this
Escrow Agreement shall be considered the currently reportable income of Burress Shareholders for
federal income tax purposes. Escrow Agent shall file annually information returns with the United
States Internal Revenue Service and payee statements with Burress Shareholders Representative
documenting such earnings. Burress Shareholders Representative shall provide Escrow Agent with all
forms and information (including appropriate W-9 Forms) necessary to complete such information
returns and payee statements. Should Escrow Agent become liable for the payment of taxes, including
withholding taxes, relating to income derived from any funds held by it pursuant to this Escrow
Agreement or any payment made hereunder, Escrow Agent may pay such taxes from such funds.
(f) Any such investments shall be held by or under the control of Escrow Agent and shall be
deemed at all times a part of Escrow Funds, and the interest accruing thereon and any profit
realized from such investment shall be credited to and held in (and any loss shall be charged to)
Escrow Funds and to the extent that profits are not the subject of a Determination in Favor of H&E,
such profits shall be for the account of Burress Shareholders Representative.
(g) Subject to the provisions of Sections 5(b) and 6, Escrow Agent shall not be liable
for any depreciation in the value of any investment made pursuant to this Section 5 or for
any loss arising from any such investment.
6. Agreement with Escrow Agent. To induce Escrow Agent to act hereunder, it is agreed
by the Parties that:
(a) Escrow Agent may act in reliance upon any instrument or signature furnished to it
hereunder and which it, in good faith, believed to be genuine and may assume that any person
purporting to give any writing, notice, advice or instruction in connection with the provisions
hereof has been duly authorized to do so.
(b) Escrow Agent may consult with and act relative hereto upon advice of counsel of its own
selection in reference to any matter connected herewith, and shall not be liable to any of the
parties hereto, or their respective legal representatives, heirs, successors and assigns, for any
action taken in good faith on the advice of counsel or for any mistake of fact or error of
judgment, or for any acts or omissions of any kind taken or made in good faith unless caused by its
willful misconduct or gross negligence.
(c) This Escrow Agreement sets forth exclusively the duties of Escrow Agent with respect to
any and all matters pertinent hereto and no implied duties or obligations shall be read into this
Escrow Agreement against Escrow Agent.
(d) Escrow Agent makes no representation as to the validity, value, genuineness or
collectability of any portion or all of Escrow Funds held by or delivered to it.
A-6
(e) In the event of any disagreement between or among the Parties other than Escrow Agent, or
between or among them or either or any of them and any other person, resulting in adverse claims or
demands being made in connection with the subject matter of the escrow, or in the event that Escrow
Agent, in good faith, be in doubt as to what action it should take hereunder, Escrow Agent may
refuse, at its option, to comply with any claims or demands on it, or refuse to take any other
action hereunder, so long as such disagreement continues or such doubt exists, and in any such
event, Escrow Agent shall not become liable in any way or to any person for its failure or refusal
to act. Escrow Agent shall be entitled to continue so to refrain from acting until (i) the rights
of all Parties shall have been fully and finally adjudicated in accordance with Article X of the
Agreement and Plan of Merger or under the other Transaction Documents, or (ii) all differences
shall have been adjusted and all doubt resolved by agreement among all of the interested persons,
and Escrow Agent shall have been notified thereof in a writing signed by all such persons. Escrow
Agent shall have the option, after 30 days notice to the other Parties of its intention to do so,
to file an action in interpleader requiring the other Parties to answer and litigate any claims and
rights among themselves. The rights of Escrow Agent under this Section 6(e) are cumulative
of all other rights which it may have by law or otherwise.
(f) Escrow Agent does not have and will not have any interest in the Escrow Funds but is
serving only as escrow holder and has only possession thereof.
(g) Escrow Agents duties and responsibilities shall be determined only with reference to this
Escrow Agreement. Escrow Agent is not charged with any duties or responsibilities in connection
with any other document or agreement.
(h) Escrow Agent may execute any of its powers or responsibilities hereunder either directly
or by or through its agents or attorneys and Escrow Agent shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed with due care by it
hereunder, provided that privity has been established between Burress Shareholders and such agents
or attorneys or Burress Shareholders is made a third party beneficiary of Escrow Agents rights
under its Escrow Agreement therewith (and such rights shall be no less expansive than the rights of
Burress Shareholders hereunder).
(i) Burress Shareholders, Burress Shareholders Representative and H&E hereby release Escrow
Agent from any act done or omitted to be done by Escrow Agent in good faith in the performance of
its duties hereunder, and Burress Shareholders and H&E, jointly and severally as to Escrow Agent,
hereby agree to fully indemnify Escrow Agent and its directors, officers, employees and agents
(
Escrow Agent Indemnified Parties) for, and to hold each of them harmless against, any
loss, liability, claim, damage or reasonable expense (including reasonable attorneys fees and
expenses) incurred by Escrow Agent Indemnified Parties, arising out of or in connection with Escrow
Agent entering into this Escrow Agreement and carrying out its duties hereunder, including the
reasonable costs and expenses of defending itself from any claim or liability; provided, however,
that Escrow Agent Indemnified Parties shall not be entitled to indemnification hereunder for
losses, liabilities and expenses found by a court of competent jurisdiction to have been caused by
the willful misconduct or gross negligence of Escrow Agent Indemnified Parties. Any payments made
to Escrow Agent Indemnified Parties under the
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indemnification obligation in the immediately preceding sentence, whether made by Burress
Shareholders or H&E, are to be borne in equal amounts by Burress Shareholders on the one hand and
H&E on the other hand, and each hereby grants to the other a right of contribution to effect the
same. The agreements contained in the two immediately preceding sentences shall survive despite any
termination of this Escrow Agreement or the resignation or removal of Escrow Agent.
(j) Escrow Agent shall not incur any liability for not performing any act or fulfilling any
duty, obligation or responsibility hereunder by reason of any occurrence beyond the reasonable
control of Escrow Agent (including without limitation any act or provision of any present or future
law or regulation or governmental authority, any act of God or war, or the unavailability of the
Federal Reserve Bank wire or telex or other wire or communication facility).
7. Resignation and Removal of Escrow Agent; Successors.
(a) Escrow Agent may resign at any time or be removed by the mutual consent of Burress
Shareholders Representative and H&E. No resignation or removal of Escrow Agent and no appointment
of a successor Escrow Agent, however, shall be effective until the acceptance or removal of Escrow
Agent in the manner herein provided. In the event of the resignation or removal of Escrow Agent,
Burress Shareholders Representative and H&E shall in good faith agree upon a successor Escrow
Agent. If Burress Shareholders Representative and H&E are unable to agree upon a successor Escrow
Agent within fourteen (14) days after receipt of a notice of resignation or removal is given,
Escrow Agent may deposit the Escrow Funds with a court of competent jurisdiction and may petition,
at the joint expense of Burress Shareholders and H&E, a court of competent jurisdiction for the
appointment of a successor Escrow Agent. Any successor Escrow Agent shall execute and deliver to
the predecessor Escrow Agent, Burress Shareholders Representative and H&E an instrument accepting
such appointment and the transfer of the Escrow Funds and agreeing to the terms of this Escrow
Agreement, and thereupon such successor Escrow Agent shall, without further act, become vested with
all the estates, properties, rights, powers and duties of the predecessor Escrow Agent as if
originally named herein. The predecessor Escrow Agent shall remain liable for its acts or omissions
prior to its effective resignation or removal.
(b) Any commercial banking institution with whom Escrow Agent may merge or consolidate, and
any commercial banking institution to whom Escrow Agent transfers all or substantially all of its
corporate trust business, shall be the successor Escrow Agent without further act.
8. Termination Date. This Escrow Agreement shall terminate on the first to occur of
(i) the mutual agreement of Burress Shareholders Representative and H&E and (ii) the date on which
the last of the Escrow Funds are distributed to Burress Shareholders Representative or H&E under
and in accordance with this Escrow Agreement.
9. Notices. All notices and other communications given under this Escrow Agreement
shall be in writing and shall be deemed duly given (i) on the date of delivery, if
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delivered personally, (ii) on the date of transmission, if sent via facsimile transmission to the
facsimile number given below, and telephonic or written confirmation of receipt is obtained
promptly after completion of transmission, (iii) the Business Day after the date of delivery to a
reputable and recognized next-day express courier service, or (iv) three Business Days after being
mailed by registered or certified mail (return receipt requested), postage prepaid, to the parties
at the following addresses (or at such other address for a party as shall be specified by like
notice):
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If to Burress Shareholders or
Burress Shareholders
Representative:
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With a copy (which shall not constitute notice) to: |
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Richard S. Dudley, as |
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Woods Rogers, PLC |
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Burress Shareholders Representative
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10 South Jefferson Street, Suite 1400 |
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Confidential
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Roanoke, Virginia 24011 |
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1301 Rockland Avenue, NW
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Attention: Talfourd Kemper, Jr., Esq. |
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Roanoke, Virginia 24012
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Facsimile No.: (540) 983-7711 |
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Facsimile No.: (540) 777-4408
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If to H&E, HE-JWB or Burress:
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With a copy (which shall not constitute notice) to: |
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H&E Equipment Services, Inc.
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Dechert LLP |
11100 Mead Road, Suite 200
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30 Rockefeller Plaza |
Baton Rouge, Louisiana 70816
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New York, New York 10112 |
Attention: President
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Attention: Ronald R. Jewell |
Facsimile No.: (225) 298-5382
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Facsimile: (212) 698-3599 |
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The Bank of New York |
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101 Barclay Street, 8W |
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New York, New York 10286 |
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Attention: Ilona Kandarova |
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Facsimile: (212) 815-5707 |
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Such addresses may be changed, from time to time, by means of a notice given in the manner
provided in this Section 9 (provided that no such notice shall be effective until it is
received by the other parties hereto). For purposes of this Escrow Agreement, Business
Day shall mean: (i) in the case of delivery of any notice, a day on which mail is delivery by
the United States Postal Service; or (ii) in the case of any date on which payment of money is to
be made, a day on which banks in the City of New York are open for business.
10. Governing Law. This Escrow Agreement shall be construed in accordance with and
governed by the laws of the State of New York, without regard to the conflict of law principles
thereof. EACH PARTY HERETO WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY ACTION BROUGHT
HEREUNDER OR ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY. Any controversy, dispute or claim
arising under this Escrow Agreement shall be resolved in accordance with Article X and Section 12.5
of the Agreement and Plan of Merger and under applicable provisions of the other Transaction
Documents.
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11. Successors and Assigns. This Escrow Agreement shall be binding upon and inure to
the benefit of the Parties and their successors and assigns.
12. Escrow Agent Fees. The fees and expenses of Escrow Agent under this Escrow
Agreement, of the type and amount set forth on Schedule A hereto, shall be shared equally
by Burress Shareholders and H&E, and, if not paid on a timely basis after 30 days written notice
thereof, out of the interest and income earned from time to time on the Escrow Funds.
13. Counterparts. This Escrow Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, and all such counterparts shall constitute a single
instrument.
14. Further Assurances. Burress Shareholders Representative and H&E will cooperate
with Escrow Agent and deliver to Escrow Agent such additional information and documents as the
Escrow Agent shall reasonably request in the performance of its obligations hereunder.
15. Miscellaneous.
(a) Any modification of this Escrow Agreement or any additional obligations assumed by any
Party shall be binding only if evidenced by a writing signed by each of Burress Shareholders
Representative, H&E and Escrow Agent.
(b) In the event funds transfer instructions are given (other than in writing at the time of
execution of this Escrow Agreement), whether in writing, by telecopier or otherwise, Escrow Agent
shall seek confirmation of such instructions by telephone call back to the person or persons
designated on Schedule B annexed hereto, and Escrow Agent may rely upon the confirmations
of anyone purporting to be the person or persons so designated. To assure accuracy of the
instructions it receives, Escrow Agent may record such call backs. If Escrow Agent is unable to
verify the instructions, or is not reasonably satisfied with the verification it receives, it will
not execute the instruction until all issues have been resolved. The persons and telephone numbers
for call backs may be changed only in writing actually received and acknowledged by Escrow Agent.
The parties agree to notify Escrow Agent of any errors, delays or other problems within 30 days
after receiving notification that a transaction has been executed. If it is determined that the
transaction was delayed or erroneously executed as a result of Escrow Agents error, unless such
error was due to the Escrow Agents gross negligence or willful misconduct, its sole obligation
shall be to pay or refund such amounts. Unless the Escrow Agent engages in willful misconduct or
gross negligence, in no event shall Escrow Agent be responsible for any incidental or consequential
damages or expenses in connection with the instruction. Any claim for interest payable will be at
Escrow Agents published savings account rate in effect in New York, New York.
(c) Escrow Agent hereby waives any and all rights to offset that it may have against Escrow
Funds, including without limitation, claims arising as a result of any claims, amounts,
liabilities, costs, expenses, damages or other losses that Escrow Agent may otherwise be entitled
to collect from any party to this Escrow Agreement.
A-10
(d) Burress Shareholders Representative are acting as agent for the Burress Shareholders, and
all references herein to Burress Shareholders Representative are references to Burress Shareholders
Representative acting in such capacity.
[Signature Page Follows]
A-11
In witness whereof, the Parties have executed this Escrow Agreement, by their duly authorized
officers, on and as of the date and year first above written.
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H&E Equipment Services, Inc.. |
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HE-JWB Acquisition, Inc. |
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By:
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By: |
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John Engquist
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John Engquist |
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President
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President |
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J.W. Burress, Inc. |
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By: |
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Richard S. Dudley |
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President |
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Burress Shareholders
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Richard S. Dudley
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Richard D. Graves |
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Leroy W. Perry III
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William I. Daly |
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Steven M. Reynolds
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David R. Nash |
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Michael R. Craver
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Richard S. Dudley, |
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in his capacity as Burress Shareholders |
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Representative |
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The Bank of New York, as Escrow Agent |
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Print name: |
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Escrow Agreement dated as of [Closing Date], 2007
Schedule A to Escrow Agreement
Fees and Expenses of Escrow Agent
Attached
Schedule B to Escrow Agreement
Persons Authorized to Confirm Instructions
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1. For H&E, HE-JWB or Burress: |
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Leslie S. Magee |
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(225) 298-5261 |
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2. For Burress Shareholders Representative: |
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Richard S. Dudley |
Telephone: |
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(540) 362-3600, ext. 232 |
Exhibit B to Agreement and Plan of Merger
Amended and Restated Articles of Incorporation
Attached
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
J. W. BURRESS, INCORPORATED
ARTICLE I NAME
The name of the Corporation (the Corporation) is .
ARTICLE II PURPOSE
The purpose of this Corporation is to transact any or all lawful business not required to be
specifically stated in these Articles of Incorporation for which corporations may be incorporated
under the Virginia Stock Corporation Act.
ARTICLE III AUTHORIZED STOCK
The Corporation shall have authority to issue shares of stock, without par value, as follows:
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No. of Shares |
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Common Stock |
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5,000 |
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No holder of any class of stock of the Corporation shall have any statutory or common law
preemptive rights to acquire unissued shares of the Corporation or securities convertible into
shares of the Corporation.
ARTICLE IV INDEMNIFICATION OF DIRECTORS AND OFFICERS
A. Each Director and Officer who is or was a party to any proceeding (including a proceeding
by or in the right of the Corporation) shall be indemnified by the Corporation against any
liability imposed upon or asserted against him (including amounts paid in settlement) arising out
of conduct in his official capacity with the Corporation or otherwise by reason of the fact that he
is or was such a Director or Officer or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, except there shall be no indemnification in relation to
matters as to which he shall have been finally adjudged to be liable by reason of having been
guilty of (i) willful misconduct or (ii) a knowing violation of criminal law in the performance of
his duty as such Director or Officer.
B. In addition to the indemnification provided under Section A, to the full extent permitted
by the Virginia Stock Corporation Act and any other applicable law, as they exist on the date
hereof or may hereafter be amended, the Corporation shall indemnify a Director or
Officer of the Corporation who is or was a party to any proceeding (including a proceeding by or in
the right of the corporation) by reason of the fact that he is or was such a Director or Officer or
is or was serving at the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.
C. The Corporation is empowered to contract in advance to indemnify any Director or Officer to
the extent indemnification is granted under Sections A and B. The Board of Directors is also
empowered to cause the Corporation to indemnify or contract in advance to indemnify any other
person not covered by Sections A and B who was or is a party to any proceeding, by reason of the
fact that he is or was an employee or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise to the same extent as if such
person were specified as one to whom indemnification is granted under Sections A and B.
D. The Corporation may advance, pay for and/or reimburse the reasonable expenses incurred by
an Officer or Director who is a party to any proceeding in advance of the final disposition
thereof.
E. The foregoing provisions are intended to provide indemnification with respect to those
monetary damages for which the Virginia Stock Corporation Act permits the limitation or elimination
of liability. In addition, to the full extent, if any, that the Virginia Stock Corporation Act, as
it exists on the date hereof or may hereafter be amended, permits the limitation or elimination of
the liability of directors, a Director of the Corporation shall not be liable to the Corporation or
its stockholders for monetary damages arising out of a single transaction, occurrence or course of
conduct in excess of the amount of cash consideration received by the Director from the Corporation
for services as a director during the twelve months immediately preceding the act or omission for
which liability was imposed.
F. The Corporation may purchase and maintain insurance to indemnify it against the whole or
any portion of the liability assumed by it in accordance with this Article and may also procure
insurance, in such amounts as the Board of Directors may determine, on behalf of any person who is
or was a Director, Officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise, against any liability
asserted against or incurred by such person in any such capacity or arising from his status as
such, whether or not the Corporation would have power to indemnify him against such liability under
the provisions of this Article.
G. The provisions of this Article shall be applicable to all actions, claims, suits or
proceedings commenced after the adoption hereof, whether arising from any action taken or failure
to act before or after such adoption. No amendment, modification or repeal of this Article shall
diminish the rights provided hereby or diminish the right to indemnification with respect to any
claim, issue or matter in any then pending or subsequent proceeding that is based in any material
respect on any alleged action or failure to act prior to such amendment, modification or repeal.
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H. Except to the extent inconsistent with this Article, terms used herein shall have the same
meanings assigned them in the Indemnification Article of the Virginia Stock Corporation Act, as now
in effect or hereafter amended. Without limitation, it is expressly understood that reference
herein to Directors, Officers, employees or agents shall include former Directors, Officers,
employees and agents and their respective heirs, executors and administrators.
ARTICLE V VOTING REQUIREMENTS
Each of the shareholder actions set forth below shall require, and shall be adopted upon, the
approval by more than 50% of all the votes entitled to be cast by the shareholders at a meeting at
which a quorum of shareholders exists:
A. A plan of merger or share exchange;
B. An amendment to the Articles of Incorporation;
C. The sale, lease, exchange or other disposition of all, or substantially all, of the
Corporations property other than in the usual and regular course of business;
D. Dissolution of the Corporation; and/or
E. Termination of corporate existence.
A-3
Exhibit C-1 to Agreement and Plan of Merger
Form of Opinion of Wood Rogers or Special Counsel
As to Burress
1. Burress is a corporation duly organized, validly existing and in good standing under the
Laws of the Commonwealth of Virginia and has the corporate power and authority necessary to own or
lease its property and assets and to carry on its business as presently conducted.
2. Burress has the corporate power and authority to execute and deliver the Agreement and Plan
of Merger and each other Transaction Document to be executed by Burress in connection therewith and
to perform its obligations thereunder, all of which have been duly authorized by all requisite
corporate action of Burress. The Agreement and Plan of Merger and each other Transaction Document
to be executed by Burress in connection therewith have been duly authorized, executed and delivered
by Burress and constitute a valid and binding agreements of Burress, enforceable against Burress in
accordance with their terms, except as such enforcement may be limited by (w) applicable
bankruptcy, reorganization, insolvency, liquidation, fraudulent conveyance, moratorium or other
similar laws relating to or affecting the enforcement of creditors rights and remedies generally,
(x) applicable laws, court decisions and general principles of equity (regardless of whether such
enforceability is adjudicated in proceeding in equity or at law), (y) procedural requirements of
law applicable to the exercise of creditors rights and remedies generally, and (z) matters of
public policy.
3. The execution, delivery and performance by Burress of the Agreement and Plan of Merger and
the other Transaction Documents to which Burress is a party will not (i) contravene any provision
contained in the Constituent Documents of Burress, or (ii) conflict with, violate or result in a
breach (with or without the lapse of time, the giving of notice, or both) of, or constitute a
default (with or without the lapse of time, the giving of notice, or both) under any Order or
Permit listed on Disclosure Schedule 5.9.
4. Based solely on a review of the stock register and the minute book of Burress, the
outstanding Burress Equity Equivalents consist solely of (A) 8,333 shares of Class A Voting Common
Stock, without par value, and 75,000 shares of Class B Nonvoting Common Stock, without par value,
all of which is owned beneficially and of record by Burress Shareholders listed on Disclosure
Schedule 5.5 and as set forth opposite the names of each Burress Shareholder, and (B) the other
Burress Equity Equivalents listed on Disclosure Schedule 5.5. Except as listed on
Disclosure Schedule 5.5, to our knowledge, (i) there are no outstanding Burress Equity Equivalents,
and (ii) other than conversion of HE-JWB Stock into Burress New Common Stock as of the Effective
Date, no Burress Equity Equivalents will be issuable as a result of the Transaction. Based solely
on a review of the stock register, the minute book and the Constituent Documents of Burress, (i)
all of the issued and outstanding shares of capital stock of Burress have been duly authorized,
validly issued, are fully paid and are nonassessable, and (ii) Burress has not redeemed or
repurchased any Burress Equity Equivalents subsequent to its incorporation.
5. The Articles of Merger, in the form attached as an exhibit hereto, have been duly
authorized by all necessary corporate action of Burress and, upon the filing thereof with and the
acceptance thereof by the State Corporation Commission of the Commonwealth of Virginia, the Merger
will become effective in accordance with the terms of the Articles of Merger. The Amended and
Restated Articles of Incorporation, in the form attached as Exhibit A hereto, have been duly
authorized by all necessary corporate action of Burress and, upon the filing thereof along with of
Articles of Restatement with and the acceptance thereof by the State Corporation Commission of the
Commonwealth of Virginia, will amend and restate the articles of incorporation of Burress into the
form of such Amended and Restated Articles of Incorporation.
6. No fees or taxes, including without limitation intangible, documentary, stamp, mortgage,
transfer or recording taxes or similar fees or taxes, are required to be paid by Burress to the
Commonwealth of Virginia on account of the Transaction, except (i) for required filing or recording
fees with respect to the Articles of Merger, (ii) we express no opinion as to the federal, local or
state income tax obligations (including capital gains) of Burress or the Burress Shareholders
arising out of the Transaction, and (iii) we express no opinion as to local law, including without
limitation any local fees payable with respect to assets of Burress being secured as a part of any
financing arranged by H&E to take effect on or after Closing.
As to Burress Shareholders
1. Each of Burress Shareholders has the power and authority to execute and deliver the
Agreement and Plan of Merger and each other Transaction Document to be executed by Burress
Shareholders in connection therewith and to perform his obligations thereunder. The Agreement and
Plan of Merger and each other agreement or instrument to be executed in connection herewith has
been duly authorized, executed and delivered by such Burress Shareholder and constitutes a valid
and binding agreement of such Burress Shareholder, enforceable against such Burress Shareholder in
accordance with its terms, except as such enforcement may be limited by (w) applicable
bankruptcy, reorganization, insolvency, liquidation, fraudulent conveyance, moratorium or other
similar laws relating to or affecting the enforcement of creditors rights and remedies generally,
(x) applicable laws, court decisions and general principles of equity (regardless of whether such
enforceability is adjudicated in proceeding in equity or at law), (y) procedural requirements of
law applicable to the exercise of creditors rights and remedies generally, and (z) matters of
public policy.
2. The execution, delivery and performance by such Burress Shareholder of the Agreement and
Plan of Merger and the other Transaction Documents to which such Burress Shareholder is a party
will not (i) contravene any provision contained in the Constituent Documents of Burress, or (ii)
conflict with, violate or result in a breach (with or without the lapse of time, the giving of
notice, or both) of, or constitute a default (with or without the lapse of time, the giving of
notice, or both) under any Order or Permit listed on Disclosure Schedule 6.5.
A-2
Exhibit C-1 to Agreement and Plan of Merger
Form of Opinion of Dechert LLP
1. Based solely on a certificate of good standing issued by the Secretary of State of the
State of Delaware, H&E is a corporation duly organized, validly existing and in good standing under
the Laws of the State of Delaware.
2. H&E has the corporate power and authority to execute and deliver the Agreement and Plan of
Merger and each other Transaction Document to be executed by H&E in connection therewith and to
perform its obligations thereunder, all of which have been duly authorized by all requisite
corporate action of H&E. The Agreement and Plan of Merger and each other Transaction Document to be
executed by H&E in connection therewith has been duly authorized, executed and delivered by H&E and
constitutes a valid and binding agreement of H&E, enforceable against H&E in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy, insolvency or similar
Laws affecting creditors rights generally or the application of general principles of equity
(regardless of whether such enforcement is considered in a Proceeding in equity or at law).
3. The execution, delivery and performance by H&E of the Agreement and Plan of Merger and the
other Transaction Documents to which H&E is a party will not (i) contravene any provision contained
in the Constituent Documents of H&E, or (ii) conflict with, violate or result in a breach (with or
without the lapse of time, the giving of notice, or both) of, or constitute a default (with or
without the lapse of time, the giving of notice, or both) under any Order or Permit, in each case
to which H&E is a party or by which it is bound or to which any of its assets or properties are
subject, of which we have knowledge.
Exhibit D to Agreement and Plan of Merger
Form of Non-Competition Agreement
Attached
Non-Competition Agreement dated as of [Closing Date], 2007 (this Agreement) between
(i) J.W. Burress, Incorporated, a Virginia corporation (the Company), and (ii) ___
(Burress Shareholder).
The Company and Burress Shareholder are herein together referred to as the Parties.
Recitals
A. This Agreement is being entered into pursuant to and as a condition of that certain
Agreement and Plan of Merger dated as of May 15, 2007 (the Agreement and Plan of Merger)
among H&E Equipment Services, Inc. (H&E), HE-JWB Acquisition, Inc., the Company, the
shareholders of the Company identified therein as the Burress Shareholders, and Richard
S. Dudley as the Burress Shareholders Representative (as defined therein). Capitalized
terms used herein which are not otherwise defined herein shall have the meanings assigned thereto
in the Agreement and Plan of Merger.
B. Burress Shareholder is one of the Burress Shareholders to which reference is made in the
Agreement and Plan of Merger.
C. This Agreement is entered into by Burress Shareholder pursuant to the Agreement and Plan of
Merger and as a condition to the obligations of H&E and HE-JWB Acquisition, Inc. to consummate the
Transaction under the Agreement and Plan of Merger. Burress Shareholder will derive substantial
economic and other benefits pursuant to the Transaction, and such economic and other benefits
pursuant to the Transaction constitute consideration for the covenants of Burress Shareholder
contained herein.
Now, therefore, in consideration of the mutual covenants contained herein, and for other good
and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties
agree as follows:
Agreement
1. Burress Shareholder covenants and agrees that, for the Restricted Period (as defined
below), Burress Shareholder shall not, either directly or indirectly, through an affiliated or
controlled entity or person, on Burress Shareholder s own behalf or as a partner, consultant,
proprietor, principal, agent, trustee, lender, investor, shareholder, director, officer, employee
or advisor or otherwise (except by ownership by all of the Burress Shareholders and their
Affiliates and Related Persons of an aggregate of one percent (1%) or less of the outstanding stock
of any publicly held corporation) or in any other capacity, (i) own, manage, operate, control,
participate or engage in, render services or advice to, or devote any material endeavor or effort
to, an entity engaged in the Restricted Business (as defined below) in the Restricted Territory (as
defined below), or (ii) solicit or offer employment to or contract the services of any Person who
was an employee of Burress or employed by Burress engaged in skilled or managerial work at any time
in the period of 12 months prior to the Closing Date. The term Restricted Business shall
mean a business which is the same as, or substantially similar to, the business conducted by the
Company as of the Closing Date under the Agreement and Plan of Merger. The Restricted
Territory shall mean any state in the United States of America and the District of
Columbia in which H&E or its Subsidiaries or Burress engages in business as of the date hereof. The
term Restricted Period shall mean the period commencing on the Closing Date and ending
five (5) years3 after the Closing Date.
2. The covenants contained herein shall be construed as if each covenant is divided into
separate and distinct covenants with respect to the Restricted Business, each capacity in which
Burress Shareholder is prohibited from competing and each part of the Restricted Territory. Each
such covenant shall constitute separate and several covenants distinct from all other such
covenants.
3. The Parties recognize that the territorial restrictions contained in this Agreement are
properly required for the adequate protection of the Restricted Business and that in the event any
covenant or other provision contained herein shall be deemed to be illegal, unenforceable or
unreasonable by a court or other tribunal of competent jurisdiction with respect to any part of the
Restricted Territory, such covenant or provision shall not be affected with respect to any other
part of the Restricted Territory, and each of the Parties agrees and submits to the reduction of
said territorial restriction to such an area as said court shall deem reasonable.
4. All notices, requests, demands and other communications which are required or may be given
under this Agreement shall be in writing and shall be deemed to have been duly given if delivered
to:
(i) the Company, with a copy to H&E, in the fashion and at the addresses as specified
in Section 12.1 of the Agreement and Plan of Merger; and
(ii) Burress Shareholder at the following address: ;
or to such other address as any Party may specify as to such Party by notice in writing to the
other Party.
5. This Agreement constitutes a Transaction Document under the Agreement and Plan of Merger.
Without limiting the generality of the forgoing, any dispute arising under or related to this
Agreement or the transactions contemplated herein shall be subject to the provisions of Section
12.5 of the Agreement and Plan of Merger.
6. This Agreement shall inure to the benefit of the Parties and their respective successors
and assigns. Burress Shareholder acknowledges and agrees that H&E shall be a third party
beneficiary of this Agreement and shall be entitled to enforce this Agreement independent of any
enforcement action which may be taken separately by the Company.
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In the case of David R. Nash and Michael R.
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7. This Agreement may be executed in any number of counterparts and any Party may execute any
such counterpart, each of which when executed and delivered shall be deemed to be an original and
all of which counterparts taken together shall constitute but one and the same instrument. This
Agreement shall become binding when one or more counterparts taken together shall have been
executed and delivered by the Parties by facsimile transmission or otherwise.
8. Except for the Agreement and Plan of Merger, this Agreement constitutes the entire
agreement between the Parties with respect to the subject matter of this Agreement and supersedes
all prior written and oral agreements and understandings between the Parties with respect to the
subject matter of this Agreement. This Agreement may not be amended except by a written agreement
executed by all Parties.
9. Whenever possible each provision and term of this Agreement will be interpreted in a manner
to be effective and valid, but if any provision or term of this Agreement is held to be prohibited
by law or invalid then such provision or term will be ineffective only to the extent of such
prohibition or invalidity without invalidating or affecting in any manner whatsoever the remainder
of such provision or term or the remaining provisions or terms of this Agreement. If any of the
covenants set forth in this Agreement are held to be unreasonable, arbitrary or against public
policy, such covenants will be considered divisible with respect to scope, time and geographic
area, and in such lesser scope, time and geographic area, will be effective, binding and
enforceable against Burress Shareholder.
10. The rights and remedies of the Parties are cumulative and not alternative. Neither the
failure nor any delay by any Party in exercising any right, power or privilege under this Agreement
will operate as a waiver of such right, power or privilege, and no single or partial exercise of
any such right, power or privilege 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: (i) no claim or right arising out of this Agreement can be discharged
by one Party, in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other Party; (ii) no waiver that may be given by a Party will be applicable
except in the specific instance for which it is given; and (iii) no notice to or demand on one
Party will be deemed to be a waiver of any obligation of such Party or of the right of the Party
giving such notice or demand to take further action without notice or demand as provided in this
Agreement.
11. In the event of any litigation between the Parties, relating to this Agreement, the
prevailing party shall be entitled to recover attorneys fees and costs.
12. Burress Shareholder specifically acknowledges and agrees that the remedy at law for any
breach of the foregoing provisions of this Agreement will be inadequate and that H&E and the Group,
in addition to any other relief available to it, shall be entitled to temporary and permanent
injunctive relief without the necessity of posting a bond or proving actual damages resulting from
any breach of the provisions of this Agreement. In the event that the provisions of this Agreement
should ever be deemed to exceed the limitations provided by applicable law, the
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Parties agree that such provisions shall be reformed to the maximum extent permitted under
applicable law.
[Signature Page Follows]
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In witness whereof, the Parties have duly executed this Non-Competition Agreement as of the
date first above written.
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Burress Shareholder: |
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[Name]
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exv99w1
EXHIBIT
99.1
News Release
Contacts:
Leslie S. Magee
Chief Financial Officer
225-298-5261
lmagee@he-equipment.com
Kevin S. Inda
Corporate Communications, Inc.
407-566-1180
kevin.Inda@cci-ir.com
H&E Equipment Services, Inc. Announces Definitive Agreement to
Acquire J.W. Burress, Incorporated
BATON ROUGE, Louisiana May 16, 2007 H&E Equipment Services, Inc. (NASDAQ: HEES) (the
Company) announced today a definitive agreement to acquire J.W. Burress, Incorporated
(Burress). The acquisition is subject to the completion of Burress 2006 audit, obtaining certain
third-party consents (including from equipment manufacturers and vendors), receipt of financing,
closing of the acquisition no later than July 31, 2007, and other customary closing conditions.
Burress is a privately owned construction equipment distributor serving the mid-Atlantic markets
out of twelve locations. Burress principal business activity is sales of new and used equipment,
which represents approximately 60% of the companys revenues. Among others, Burress represents the
following manufacturers: Diamond Z, Doosan, Hitachi, Manitowoc, Grove and Terex. The Company does
not anticipate currently that Burress will continue to represent Hitachi. The Company believes
that it will be able, through Burress, to expand and grow its relationship with other manufacturers
with whom Burress currently does business and other manufacturers with whom the Company has had
discussions. Accordingly, the acquisition is not conditioned on continuing the Hitachi
distributorship.
The estimated purchase price without Hitachi will be approximately $108.7 million, subject to
adjustments, plus estimated assumed indebtedness of approximately $.4 million and will be financed
through the Companys existing senior secured credit facility. Should Burress continue to
represent Hitachi, the Burress shareholders will have the opportunity to receive additional
purchase price of approximately $12.9 million payable over three years. Burress had unaudited
revenues of approximately $178.0 million for the year ended December 31, 2006. The sale, rental
and service of Hitachi products accounted for approximately 28% of unaudited revenues. The
transaction is expected to be accretive in 2007.
John Engquist, President and Chief Executive Officer stated, Burress is one of the premier
distributors of heavy construction equipment in the U.S. and has an outstanding reputation with the
manufacturers they represent and the end users they serve. This acquisition will expand our
footprint contiguously throughout the mid-Atlantic region and affords us significant growth
- MORE -
H&E Equipment Services, Inc. Announces Definitive Agreement to Acquire
J.W. Burress, Incorporated
Page 2
May 16, 2007
opportunities. Our ideal acquisition target is a distributor with strong retail sales and product
support capabilities and a rental component that we can improve and grow significantly. Burress
certainly fits this profile.
The Companys management will hold a conference call Wednesday, May 16, 2007 at 10:00 a.m. (Eastern
Time) to discuss the acquisition. To listen to the call, participants should dial 913-981-4915
approximately 10 minutes prior to the start of the call. A telephonic replay will become available
after 1:00 p.m. (Eastern Time) on Wednesday, May 16, 2007, and will continue through May 23, 2007,
by dialing 719-457-0820 and entering confirmation code 8452252.
The live broadcast of the Companys conference call will be available online at
www.he-equipment.com on May 16, 2007, beginning at 10:00 a.m. (Eastern Time) and will continue to
be available for 30 days.
The Orr Group represented J.W. Burress in the transaction. The Orr Group is an investment banking
firm that provides merger & acquisition, financing, strategic advisory and valuation services to
publicly traded and privately held companies. Since 1996, The Orr Group has successfully completed
merger transactions valued at more than $3 billion and is located in Winston-Salem, North Carolina.
About H&E Equipment Services, Inc.
The Company is one of the largest integrated equipment services companies in the United States with
47 full-service facilities throughout the West Coast, Intermountain, Southwest, Gulf Coast, and
Southeast regions of the United States. The Company is focused on heavy construction and industrial
equipment and rents, sells and provides parts and service support for four core categories of
specialized equipment: (1) hi-lift or aerial platform equipment; (2) cranes; (3) earthmoving
equipment; and (4) industrial lift trucks. By providing equipment rental, sales, and on-site parts,
repair and maintenance functions under one roof, the Company is a one-stop provider for its
customers varied equipment needs. This full service approach provides the Company with multiple
points of customer contact, enabling it to maintain a high quality rental fleet, as well as an
effective distribution channel for fleet disposal and provides cross-selling opportunities among
its new and used equipment sales, rental, parts sales and service operations.
Forward-Looking Statements
Certain statements in this press release are forward-looking statements within the meaning of the
federal securities laws. Statements about our beliefs and expectations and statements containing
the words may, could, would, should, believe, expect, anticipate, plan, estimate,
target, project, intend and similar expressions constitute forward-looking statements.
Forward-looking statements involve known and unknown risks and uncertainties, which could cause
actual results that differ materially from those contained in any forward-looking statement. Such
factors include, but are not limited to, the following: (1) general economic conditions and
construction activity in the markets where we operate in North America; (2) relationships with new
equipment suppliers; (3) increased maintenance and repair costs; (4) our substantial leverage; (5)
the risks associated with the expansion of our business; (6) our possible inability to integrate
any businesses we acquire, including Burress; (7) competitive pressures; (8) compliance with laws
and regulations, including those relating to environmental matters; and (9) other factors discussed
in our public filings, including the risk factors included in the Companys Annual Report on Form
10-K for the year ended December 31, 2006. In addition, there can be no assurance that the
transaction with Burress will close. Investors, potential investors and other readers are urged to
consider these factors carefully in evaluating the forward-looking statements and are cautioned not
to place undue reliance on such forward-looking statements. Except as required by applicable law,
including the securities laws of the United States and the rules and regulations of the SEC, we are
under no obligation to publicly update or revise any forward-looking statements after the date of
this release.
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