EXHIBIT 2.1
ASSET PURCHASE AND SALE AGREEMENT
AMONG
IRON MOUNTAIN RECORDS MANAGEMENT, INC.
AS BUYER
DATA STORAGE CENTER, INC.
DSC OF FLORIDA, INC.
AND
DSC OF MASSACHUSETTS, INC.
COLLECTIVELY, AS SELLER
AND
SUDDATH VAN LINES, INC.
as Stockholder
AS OF FEBRUARY 18, 2000
TABLE OF CONTENTS
PAGE
ARTICLE 1. DEFINITIONS.................................................1
Section 1.1. Affiliate..................................................1
Section 1.2. Agreement..................................................1
Section 1.3. Business...................................................1
Section 1.4. Charter Documents..........................................2
Section 1.5. Closing....................................................2
Section 1.6. Closing Date...............................................2
Section 1.7. Contract and Contractual Obligation........................2
Section 1.8. Effective Time.............................................2
Section 1.9. Encumbrances...............................................2
Section 1.10. Event.....................................................2
Section 1.11. Excluded Assets...........................................2
Section 1.12. GAAP......................................................3
Section 1.13. HSR Act...................................................3
Section 1.14. Improvements..............................................3
Section 1.15. Knowledge.................................................3
Section 1.16. Leases....................................................3
Section 1.17. Leased Premises...........................................3
Section 1.18. Material Contract.........................................3
Section 1.19. Owned Premises............................................4
Section 1.20. Permitted Encumbrances....................................4
Section 1.21. Real Property.............................................4
Section 1.22. Seller Accounts Receivable................................4
Section 1.23. Subject Assets............................................4
Section 1.24. Taxes.....................................................4
Section 1.25. Other Definitions.........................................4
ARTICLE 2. SALE AND PURCHASE OF SUBJECT ASSETS.........................5
Section 2.1. Sale and Transfer..........................................5
Section 2.2. Purchase Price; Assumption of Certain Obligations..........6
Section 2.3. Allocation.................................................8
Section 2.4. Post-Closing Adjustment....................................8
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF SELLER AND
STOCKHOLDER.................................................9
Section 3.1. Organization and Good Standing.............................9
Section 3.2. Authorization..............................................9
Section 3.3. Compliance With Other Instruments..........................9
Section 3.4. No Governmental or Other Authorization Required...........10
Section 3.5. Title; Judicial Orders; Sufficiency.......................10
Section 3.6. Contracts and Other Interests.............................10
Section 3.7. Taxes 11
Section 3.8. Litigation; Claims; Defaults..............................11
Section 3.9. Compliance with Laws......................................11
Section 3.10. Certain Environmental Matters............................11
Section 3.11. Real Property............................................12
Section 3.12. Condition of Subject Assets..............................14
TABLE OF CONTENTS
(Continued)
PAGE
Section 3.13. Financial Statements.....................................14
Section 3.14. ERISA Plans..............................................15
Section 3.15. Absence of Certain Changes...............................15
Section 3.16. No Material Undisclosed Liabilities......................16
Section 3.17. Employment Arrangements..................................16
Section 3.18. Patents, Trademarks, Trade Secrets, Etc..................16
Section 3.19. Insurance................................................17
Section 3.20. Transactions with Interested Persons.....................17
Section 3.21. Records Services and Storage.............................17
Section 3.22. Business in Ordinary Course..............................17
Section 3.23. No Material Adverse Change...............................18
Section 3.24. Adverse Restrictions.....................................18
Section 3.25. Disclosure...............................................19
Section 3.26. Brokers..................................................19
Section 3.27. Year 2000 Compliance.....................................19
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER....................19
Section 4.1. Organization and Good Standing............................19
Section 4.2. Authorization.............................................19
Section 4.3. Compliance with Other Instruments.........................19
Section 4.4. Litigation................................................20
Section 4.5. No Governmental or Other Authorization Required...........20
Section 4.6. No Broker.................................................20
Section 4.7. Disclosure................................................20
ARTICLE 5. PRE-CLOSING AGREEMENTS.....................................20
Section 5.1. Access to Information and Facilities......................20
Section 5.2. Confidentiality...........................................21
Section 5.3. Additional Financial Statements...........................22
Section 5.4. Seller's Employees........................................22
Section 5.5. Continued Efforts.........................................23
Section 5.6. Operation of Business Prior to Closing....................23
Section 5.7. Monthly Financial Statements..............................24
Section 5.8. Notice of Developments....................................24
Section 5.9. Public Announcements......................................24
Section 5.10. Exclusivity..............................................24
ARTICLE 6. CONDITIONS PRECEDENT TO OBLIGATION OF BUYER TO CLOSE.......25
Section 6.1. Accuracy of Representations and Performance of Seller.....25
Section 6.2. Absence of Certain Litigation.............................25
Section 6.3. Escrow Agreement..........................................25
Section 6.4. Confidentiality and Non-Competition Agreements............25
Section 6.5. Leases and Subleases of Leased and Owned Premises.........25
Section 6.6. Third Party Consents......................................26
Section 6.7. Corporate Approval........................................26
Section 6.8. Encumbrances..............................................26
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TABLE OF CONTENTS
(Continued)
PAGE
Section 6.9. No Material Adverse Change................................26
Section 6.10. Trademark Assignment.....................................26
Section 6.11. Instruments of Conveyance and Transfer...................27
Section 6.12. Conversion and Removal...................................27
Section 6.13. Opinion of Seller's Counsel..............................27
Section 6.14. Divided Sublease Space...................................27
Section 6.15. Certificates, Etc........................................27
Section 6.16. Further Documents........................................27
Section 6.17. Non-Disturbance and Attornment Agreements................27
ARTICLE 7. CONDITIONS PRECEDENT TO OBLIGATION OF SELLER...............28
Section 7.1. Accuracy of Representations and Performance of Conditions.28
Section 7.2. Corporate Approval........................................28
Section 7.3. Absence of Certain Litigation.............................28
Section 7.4. Third Party Consents......................................28
Section 7.5. Escrow Agreement..........................................29
Section 7.6. Leases and Subleases of Leased and Owned Premises.........29
Section 7.7. Further Documents.........................................29
Section 7.8. Trademark Assignment......................................29
ARTICLE 8. THE CLOSING................................................29
Section 8.1. Closing and Closing Provisions............................29
Section 8.2. Deliveries by Seller and Stockholder......................30
Section 8.3. Deliveries by Buyer.......................................30
ARTICLE 9. POST-CLOSING MATTERS.......................................30
Section 9.1. Records of the Business...................................30
Section 9.2. Employees.................................................30
Section 9.3. Transitional Employee Services............................31
Section 9.4. Reasonable Efforts and Cooperation........................31
ARTICLE 10. TERMINATION................................................32
Section 10.1. Termination of Agreement.................................32
Section 10.2. Effect of Termination....................................32
ARTICLE 11. INDEMNIFICATION............................................32
Section 11.1. Survival.................................................32
Section 11.2. Indemnification..........................................33
Section 11.3. Limitation of Liability; Escrow Amount...................34
Section 11.4. Notice of Claims.........................................35
Section 11.5. Defense of Third Party Claims............................35
Section 11.6. Exclusive Remedy.........................................36
ARTICLE 12. MISCELLANEOUS PROVISIONS...................................36
Section 12.1. Commissions..............................................36
Section 12.2. Expenses.................................................36
Section 12.3. Headings; Schedules......................................36
Section 12.4. Counterparts.............................................37
Section 12.5. Rights of Parties........................................37
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TABLE OF CONTENTS
(Continued)
PAGE
Section 12.6. Assignment...............................................37
Section 12.7. Compliance with Bulk Sales Law...........................37
Section 12.8. Notices..................................................37
Section 12.9. Applicable Law; Jurisdiction and Remedies................38
Section 12.10. Additional Instruments and Assistance...................39
Section 12.11. Severability............................................39
Section 12.12. Pronouns and Terms......................................39
Section 12.13. Entire Agreement, Amendments and Waivers................39
Section 12.14. Construction............................................39
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[The following schedules and exhibits have been omitted and will be
supplementally filed with the Commission upon request.]
SCHEDULES
1.11 Excluded Assets
1.15 Basis for Knowledge
1.16 Leases
1.21 Real Property
2.2(c)(i) Assumed Affiliate Contracts
2.2(c)(ii) Specifically Excluded Contracts
2.2(d) Initial Purchase Price Adjustments
2.3 Allocation of Purchase Price
3.4 Governmental Authorizations
3.5 Encumbrances; Vehicle and Equipment Leases; Excluded Useful Assets
3.6(a) Material Contracts
3.6(c) Significant Customers
3.7 Taxes
3.8 Litigation
3.9 Compliance with Laws/Permits
3.10 Environmental Matters
3.11 Real Property
3.11(a) Owned Premises
3.11(b) Leased Premises
3.13 Financial Statements
3.14 ERISA
3.15 Changes in Business
3.17 Employees
3.18 Intellectual Property Rights
3.20 Transactions with Affiliates
3.21 Records Services
3.22 Extraordinary events
3.24 Adverse Restrictions
4.5 Approvals and Third Party Consents
EXHIBITS
6.4 Form of Confidentiality and Non-Competition Agreement
6.5(a)(i)(A) Form of Lease Assignments
6.5(a)(ii)(A) Form of Sublease Agreements
6.5(b) Form of Lease Agreement
6.5(c) Form of Sublease Agreement for Dallas Location
ASSET PURCHASE AND SALE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 18th day of February,
2000 by and among Iron Mountain Records Management, Inc., a Delaware corporation
("Buyer"), Data Storage Center, Inc., a Florida corporation, DSC of Florida,
Inc., a Florida corporation, and DSC of Massachusetts, Inc., a Massachusetts
corporation (collectively, "Seller"), and Suddath Van Lines, Inc., a Florida
corporation d/b/a Suddath Relocation Systems (the "Stockholder").
RECITALS
A. Seller is engaged, in the business of providing records storage and
management in the greater metropolitan areas of Atlanta, Georgia; Boston,
Massachusetts; Charlotte, North Carolina; Dallas, Texas; Deerfield Beach,
Gainesville, Jacksonville, Melbourne, Miami, Orlando, Pensacola and St.
Petersburg, Florida; Los Angeles, California; Richmond, Virginia; and Waldorf,
Maryland under the trade name "Data Storage Center."
B. Buyer desires to purchase, and Seller desires to sell, substantially
all the assets of the Business (as hereinafter defined) on the terms and subject
to the conditions contained in this Agreement.
C. The Stockholder, which directly or indirectly owns 100% of the
issued and outstanding stock of Seller, joins in this Agreement to confirm
certain representations, warranties and agreements of Seller herein and to
indemnify Buyer in connection with certain matters.
In consideration of the mutual covenants and agreements set forth
herein, and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, Seller, the Stockholder and Buyer,
intending to be legally bound, agree as follows:
ARTICLE 1.
DEFINITIONS
For purposes of this Agreement, certain terms used in this Agreement
and not otherwise defined herein shall have the meanings designated below:
Section 1.1. AFFILIATE. The term "Affiliate" shall mean, with respect
to any party hereto, (a) any individual or entity at the time directly or
indirectly controlling, controlled by or under direct or indirect common control
with such party, (b) any general partner, executive officer or director of such
party, and (c) when used with respect to an individual, shall include any member
of such individual's immediate family or a family trust.
Section 1.2. AGREEMENT. The term "Agreement" shall mean all or any part
of this Agreement, including all schedules, exhibits, and appendices, as any of
the foregoing may be amended, modified or supplemented in writing from time to
time.
Section 1.3. BUSINESS. The term "Business" shall mean the records
management and records storage businesses conducted by Seller in the greater
metropolitan areas of Atlanta,
Georgia; Boston, Massachusetts; Charlotte, North Carolina; Dallas, Texas;
Deerfield Beach, Gainesville, Jacksonville, Melbourne, Miami, Orlando and St.
Petersburg, Florida; Los Angeles, California; Richmond, Virginia; and Waldorf,
Maryland under the trade name "Data Storage Center" (it being understood that
such Business does not include the moving and storage business of Seller's
Affiliates or any records management and storage businesses conducted by Seller
in the greater metropolitan area of Pensacola, Florida).
Section 1.4. CHARTER DOCUMENTS. The term "Charter Documents" shall
mean, with respect to any party hereto its charter or articles of incorporation,
its by-laws and all shareholder agreements, voting trusts and similar
arrangements applicable to any of its capital stock.
Section 1.5. CLOSING. The term "Closing" shall mean the occasion upon
which the transactions contemplated by this Agreement are carried out by the
delivery of documents, payment of funds and other actions contemplated herein,
as described in Article 8.
Section 1.6. CLOSING DATE. The term "Closing Date" shall mean May 1,
2000, unless the conditions to closing in Articles 6 and 7 hereof have not been
satisfied or waived on or before such date (other than those which require
delivery of opinions or other documents at closing), in which case the Closing
Date shall be on the third business day after the last of such conditions is
satisfied or waived (other than those which require delivery of opinions or
other documents at closing), or such other date as the parties may agree.
Section 1.7. CONTRACT AND CONTRACTUAL OBLIGATION. The terms "Contract"
and "Contractual Obligation" shall mean any term, condition, provision,
representation, warranty, agreement, covenant, undertaking, commitment,
indemnity or other obligation which is outstanding or existing under any
instrument, contract, lease or other contractual undertaking, whether written or
oral, to which Seller or by which it or any of the Business is subject or its
property or assets is bound.
Section 1.8. EFFECTIVE TIME. The term "Effective Time" shall mean 12:01
a.m. eastern standard time on the Closing Date.
Section 1.9. ENCUMBRANCES. The term "Encumbrances" shall mean any and
all encumbrances, mortgages, security interests, liens, Taxes, claims,
liabilities, options, commitments, charges, restrictions or other obligations of
whatsoever kind, quantity or nature, whether accrued, absolute, contingent or
otherwise, which affect title to the Subject Assets.
Section 1.10. EVENT. The term "Event" shall mean the existence or
occurrence of any act, action, activity, circumstance, condition, event, fact,
failure to act, omission, incident or practice, or any set or combination of any
of the foregoing
Section 1.11. EXCLUDED ASSETS. The term "Excluded Assets" shall mean
(i) all cash and cash equivalents of Seller as determined in accordance with
GAAP, (ii) those assets of Seller used exclusively in connection with Seller's
moving and storage business, (iii) those assets of Seller principally devoted,
as of June 30, 1999, to the operation of its records management and storage
business in the greater metropolitan area of Pensacola, Florida, (iv) all real
property, buildings and improvements of Seller (subject to any leasehold
interests to be granted, assigned
2
or demised pursuant to the terms of this Agreement), (v) all rights and
interests of Seller in, and claims of Seller now or hereafter existing under,
any insurance policies of Seller maintained in connection with the operation of
the Business and Seller's records management and storage business in the greater
metropolitan area of Pensacola, Florida, (vi) any rights and claims arising in
connection with or otherwise related to an Excluded Liability, and (vii) those
assets used in connection with or useful to the Business that are set forth on
Schedule 1.11 hereof.
Section 1.12. GAAP. The term "GAAP" shall mean generally accepted
accounting principles in the United States.
Section 1.13. HSR ACT. The term "HSR Act" shall mean the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
Section 1.14. IMPROVEMENTS. The term "Improvements" shall mean all
buildings, fixtures, walls, fences, landscaping and other structures and
improvements situated on, affixed or appurtenant to the Real Property.
Section 1.15. KNOWLEDGE. The term "Knowledge" or the phrases "to the
knowledge of" or "to the best of Seller's knowledge," when used in reference to
Seller or Stockholder, or both, shall mean (except as otherwise stated herein)
matters actually known by James Spinney, Barry Vaughn, Robert Price, Michael
Demont, Stephen Suddath and A. Quinn Bell, after inquiry of the General Managers
of the Business. For purposes of this Section 1.15, the term "inquiry" shall
mean the taking of only those actions set forth on Schedule 1.15.
Section 1.16. LEASES. The term "Leases" shall mean the lease agreements
entered into by Seller with regard to the Leased Premises and listed on Schedule
1.16 hereto, including all of Seller's rights under such lease agreements.
Section 1.17. LEASED PREMISES. The term "Leased Premises" shall mean
the buildings and improvements and land parcels on which they are located, that
are leased by Seller pursuant to a Lease, and all other rights of Seller under
any such Lease.
Section 1.18. MATERIAL CONTRACT. The term "Material Contract" shall
mean, with respect to the Business, any Contract that (a) was not entered into
in the ordinary course of business, (b) was entered into in the ordinary course
of business that (i) involved the purchase, sale or lease of goods or materials,
or purchase of services, aggregating more than $100,000 during any one of the
last three fiscal years, or (ii) is not terminable on sixty (60) days or less
notice without penalty or other payment, (c) involves a capitalized lease
obligation or indebtedness for borrowed money, (d) is or otherwise constitutes a
written agency, broker, dealer, license, distributorship, sales representative
or similar written agreement, (e) accounted for more than three percent (3%) of
the revenues of the Business in any one of the last three fiscal years or is
likely to account for more than three percent (3%) of the revenues of the
Business during fiscal year 1999, (f) is a joint venture or similar Contract,
(g) is a non-disclosure or confidentiality agreement (other than those entered
into in the ordinary course of business with customers, suppliers and
employees), (h) constitutes or contains a power of attorney, or (i) prohibits
Seller from freely engaging in any business or competing anywhere in the world.
3
Section 1.19. OWNED PREMISES. The term "Owned Premises" shall mean,
collectively, all of the Real Property and the Improvements.
Section 1.20. PERMITTED ENCUMBRANCES. The term "Permitted Encumbrances"
shall mean (a) liens for Taxes, assessments and governmental charges with
respect to the Subject Assets not yet due and payable; (b) applicable zoning
regulations and ordinances provided the same do not prohibit or impair in any
material respect use of the Owned Premises or Leased Premises as currently
operated and constructed; and (c) any other non-monetary encumbrances that do
not impair marketability and do not materially interfere with the use of the
Subject Assets or the Business as currently operated and constructed.
Section 1.21. REAL PROPERTY. The term "Real Property" shall mean the
real property owned by Seller and described on Schedule 1.21 attached hereto,
together with all easements, rights of way, privileges, licenses and
appurtenances which Seller may now own or hereafter acquire with respect
thereto.
Section 1.22. SELLER ACCOUNTS RECEIVABLE. The term "Seller Accounts
Receivable" shall mean Seller's billed and unbilled accounts receivable, net of
allowances for doubtful accounts in accordance with GAAP, in connection with the
Business which (a) were generated in the ordinary course of business and
represent fully completed bona fide transactions that require no further act on
the part of Seller, (b) are not subject to any claim or counterclaim, setoff or
deduction, and (c) represent valid obligations owing to Seller by account
debtors.
Section 1.23. SUBJECT ASSETS. The term "Subject Assets" shall mean all
of those assets and properties of Seller used, useful to or held by Seller in
the operation of the Business including, without limitation, all racking,
shelving, warehouse equipment, owned and leased vehicles, office equipment,
telephone systems, security systems, computers, computer programs (including
data security inventory software), customer Contracts, deposits, the right to
use the name "Data Storage Center," non-competition and confidentiality
agreements obtained by Seller for the benefit of the Business, accounts
receivable and security deposits; PROVIDED, HOWEVER, that the Subject Assets
shall not include the Excluded Assets.
Section 1.24. TAXES. The term "Taxes" shall mean any and all taxes,
sums or amounts assessed or assessable, levied and due by any federal, state or
county or other local governmental authority or agency, including without
limitation, real and personal property taxes, income taxes, whether measured by
gross or net income or profit, franchise, excise, sales and use taxes, employee
withholding, social security, unemployment taxes and any other taxes required to
be paid by Seller, including interest and penalties in respect thereof whether
disputed or not, and whether accrued, contingent, due, absolute, deferred,
unknown or other, together with any and all penalties, interests and additions
to all such taxes, sums or amounts.
Section 1.25. OTHER DEFINITIONS. In addition to the foregoing, the
following terms have the meanings given them in the following sections:
TERM: SECTION:
---- -------
Bonus 9.3
Buyer's Documents 4.2
4
Buyer Indemnified Parties 11.2(a)
CERCLA 3.10
COBRA 9.2(b)
Code 3.14(a)
Collateral Documents 11.1
Confidentiality and Non-Competition Agreements 6.4
Dispute Notice 2.4
Environmental Laws and Regulations 3.10
ERISA 3.14(a)
ERISA Affiliate 3.14(a)
Escrow Agent 6.3
Escrow Agreement 6.3
Escrow Amount 6.3
Escrow Deposit 2.2(b)
Escrow Period 11.1
Excluded Liabilities 2.2(c)(ii)
Enforceability Limitations 3.2
FICA 9.2(c)
Final Adjustment Statement 2.4
Financial Statements 3.13
FUTA 9.2(c)
IMI 4.5
Indemnity Period 11.1
Initial Adjustment Statement 2.2(d)
Intellectual Property 3.18
Loss and Expense 11.2(a)
Neutral Auditor 2.4
Non-Competition Parties 2.2(b)
Plans 3.14(a)
Purchase Price 2.2(a)
Representatives 5.2(a)
Resolution Period 2.4
Seller's Documents 3.2
Seller Employees 3.17
Seller Indemnified Parties 11.2(b)
Settlement Proposal 11.5
Transactions 5.5(a)
ARTICLE 2.
SALE AND PURCHASE OF SUBJECT ASSETS
Section 2.1. SALE AND TRANSFER. Subject to the terms and conditions set
forth in this Agreement, Seller shall sell, convey, transfer, assign and deliver
to Buyer, and Buyer shall purchase and receive from Seller at the Closing, free
and clear of all Encumbrances (other than Permitted Encumbrances), all of the
Subject Assets.
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Section 2.2. PURCHASE PRICE; ASSUMPTION OF CERTAIN OBLIGATIONS.
(a) PURCHASE PRICE. The purchase price to be paid by Buyer for all
the Subject Assets and the Confidentiality and Non-Competition Agreements (the
"Purchase Price") shall be Fifty-Four Million Dollars ($54,000,000), subject to
adjustment as provided in Sections 2.2(d), 2.4, 6.3, and 7.5.
(b) PAYMENT OF PURCHASE PRICE. The Purchase Price shall be payable at
the Closing by wire transfer of immediately available funds to Seller and to
those individuals entering into Confidentiality and Non-Competition Agreements
(the "Non-Competition Parties") pursuant to Sections 6.4 to such account as such
parties shall designate in writing not less than two business days prior to the
Closing Date. As described in Sections 6.3 and 7.5, a portion of the Purchase
Price shall be funded by Buyer's delivery of $2,700,000 (the "Escrow Deposit")
to the Escrow Agent at the Closing.
In the event that Seller and the Non-Competition Parties cannot agree
on the allocation of Purchase Price to the Confidentiality and Non-Competition
Agreements, Buyer may at Closing (i) deposit ten percent (10%) of the Purchase
Price with the Escrow Agent, to be held in escrow on behalf of the Seller and
the Non-Competition Parties and released from escrow as mutually agreed by and
among the Seller and the Non-Competition Parties, and (b) pay the remainder of
the Purchase Price to the Seller, which together shall constitute full
satisfaction of Buyer's obligations under this Agreement to pay the Purchase
Price in exchange for the Subject Assets and the Confidentiality and
Non-Competition Agreements.
(c) LIMITED ASSUMPTION OF CONTRACTS AND OBLIGATIONS.
(i) Buyer shall assume no obligations or liabilities of Seller,
except that Buyer shall assume and perform the following:
(a) all post-Effective Time obligations of Seller in
respect of Seller's Contracts and arrangements with its customers providing for
storage of records which Seller has entered into in the ordinary course of
business, including, but not limited to such obligations for which Seller has
received payment prior to Closing;
(b) all post-Effective Time obligations of Seller under (i)
the Leases assumed pursuant to Sections 6.5 and 7.6 (and the subleases entered
into pursuant to such Sections, to the extent that Seller's post-Effective Time
obligations are expressly assumed by Buyer under such subleases), provided that,
the landlord under each such Lease shall have consented to the assignment of
Seller's obligations thereunder to Buyer, and (ii) the Contracts listed on
Schedule 2.2(c)(i) hereto; and
(c) all post-Effective Time obligations of Seller under
Contracts for goods or services to be supplied to the Business after the
Closing, provided that such Contracts do not require the payment of more than
$10,000 per annum and can be canceled by Buyer on not more than 60 days' notice.
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(ii) Buyer shall not assume or become obligated to perform
any debt, liability or obligation of Seller relating to the ownership or
operation of the Subject Assets and the conduct of the Business prior to the
Effective Time or any obligations and liabilities of Seller relating to Events
occurring or existing prior to the Effective Time (collectively, the "Excluded
Liabilities"), including without limitation:
(a) Taxes, un-funded pension costs, any employment
arrangement (including without limitation any obligation to any Seller Employee
for severance, employee benefits, workers' compensation, healthcare, vacation
time or sick leave), and any of the following to the extent they arise from
Events occurring prior to the Effective Time: products liability, products
warranty, legal actions or other claims, and obligations and liabilities
relating to Environmental Laws and Regulations;
(b) any obligations or liabilities under Seller's
Contracts relating to the period prior to the Effective Time, including, without
limitation, Seller's indebtedness for borrowed money and any capitalized leases;
(c) any insurance policies of Seller;
(d) those required to be disclosed in the disclosure
schedule which are not so disclosed or which, if disclosed, Schedule 2.2(c)(ii)
indicates that such obligation or liability will not be assumed;
(e) any obligation or liability relating to any
Excluded Asset;
(f) any Taxes, fees, expenses or other amounts
required to be paid by Seller pursuant to the provisions of this Agreement or
any Collateral Document; and
(g) any Contract with any Affiliate of Seller, other
than those set forth in Schedule 2.2(c)(ii).
(d) PURCHASE PRICE ADJUSTMENTS. The Purchase Price shall be
initially adjusted as set forth in Schedule 2.2(d) hereto (the "Initial
Adjustment Statement"), which shall be agreed upon by Buyer and Seller no later
than the third (3rd) business day prior to the Closing and which shall reflect
the following, to the extent known or then subject to calculation, as of the
Effective Time:
(i) Buyer shall receive a dollar for dollar credit against
the Purchase Price for any deferred revenue recognized in accordance with GAAP
for which Seller has received payment prior to the Effective Time.
(ii) Buyer shall receive a dollar for dollar credit against
the Purchase Price (a) to the extent that the Seller Accounts Receivable as of
the Effective Time are below $1,560,000, and (b) for any Seller Accounts
Receivable which are outstanding more than one hundred and twenty (120) days as
of the Effective Time. Buyer shall make reasonable commercial efforts to collect
any Seller Accounts Receivable that are deducted from the
7
Purchase Price pursuant to clause (b) above, and shall remit any such amounts to
Seller promptly after receipt thereof.
(iii) With respect to ongoing expenses (excluding income
taxes) the billing period for which extends across the Effective Time, Buyer and
Seller shall make adjustments to the Purchase Price as of the Effective Time so
that Seller bears the costs of operating the Business properly accruable under
GAAP in respect of the period prior to the Effective Time and Buyer bears the
cost thereof properly accruable under GAAP in respect of the period commencing
at the Effective Time and thereafter; PROVIDED, HOWEVER, that no purchase price
adjustment shall be made for Seller's failure to accrue lease payments on a
straight line basis in accordance with GAAP.
Section 2.3. ALLOCATION. The Purchase Price shall be allocated among
each of the Subject Assets and to the Confidentiality and Non-Competition
Agreements in the manner set forth in a schedule, which shall be agreed upon by
Buyer and Seller no later than the tenth (10th) business day prior to the
Closing Date. In the event that Seller and the Non-Competition Parties cannot
agree on the allocation of Purchase Price to the Confidentiality and
Non-Competition Agreements on or before the tenth (10th) business day prior to
the Closing Date, the amount allocated to the Confidentiality and
Non-Competition Agreements shall be in accordance with Section 2.2(b).
Section 2.4. POST-CLOSING ADJUSTMENT. Within ninety (90) days after the
Closing Date, Buyer shall (a) review and adjust the Initial Adjustment Statement
(as adjusted, the "Final Adjustment Statement") to reflect any changes from the
adjustments shown on the Initial Adjustment Statement that are necessary to
properly reflect the items set forth in Sections 2.2(d)(i),(ii) and (iii), and
(b) deliver such Final Adjustment Statement to Seller. Seller shall have thirty
(30) days after its receipt to review the Final Adjustment Statement, together
with the work papers used in the preparation thereof. Unless Seller delivers
written notice to Buyer on or before the 30th day after Seller's receipt of the
Final Adjustment Statement, specifying in reasonable detail all disputed items
and the basis therefor (a "Dispute Notice"), Seller shall be deemed to have
accepted and agreed to the Final Adjustment Statement. Thereafter, Buyer or
Seller, as the case may be, shall promptly remit to the other any amounts owed
as reflected on the Final Adjustment Statement.
If Seller so notifies Buyer of its objection to the Final Adjustment
Statement, Seller and Buyer shall, within thirty (30) days following such
Dispute Notice (the "Resolution Period"), attempt in good faith to resolve their
differences and any resolution by them as to any disputed amounts shall be
final, binding and conclusive. Any dispute with regard to the final Purchase
Price adjustment that is not resolved during the Resolution Period shall be
submitted to an independent public accounting firm acceptable to both parties
(the "Neutral Auditor"). Each party agrees to execute, if requested by the
Neutral Auditor, a reasonable engagement letter. All fees and expenses relating
to the work, if any, to be performed by the Neutral Auditor shall be borne
equally by the Buyer and Seller. The Neutral Auditor shall act as an arbitrator
to determine, based solely on presentations by the Buyer and Seller only those
issues still in dispute. In no event may the Neutral Auditor consider any
issues, amounts or matters not disputed under Section 2.2(d). The Neutral
Auditor's determination shall be made within sixty
8
(60) days of its selection, shall be set forth in a written statement delivered
to the Buyer and Seller and shall be final, binding, conclusive and
non-appealable by the parties.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
OF SELLER AND STOCKHOLDER
Seller and Stockholder jointly and severally represent and warrant to
Buyer as follows as of the date hereof:
Section 3.1. ORGANIZATION AND GOOD STANDING. Each Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of either Florida or Massachusetts, as applicable, and has all
requisite corporate power and authority to own, operate, sell and lease its
properties and to carry on its business as presently conducted. Seller has all
requisite corporate power and authority to execute and deliver, and perform its
obligations under, this Agreement. Seller is qualified to do business as a
foreign corporation in each jurisdiction where failure to so qualify would have
a material adverse impact on the Subject Assets or the Business.
Section 3.2. AUTHORIZATION. The execution and delivery of this
Agreement and performance by Seller of its obligations hereunder, and all
transactions contemplated hereby, have been duly and validly authorized by all
necessary corporate action. This Agreement has been, and the other agreements
and documents required to be delivered by Seller or Stockholder in accordance
with the provisions hereof (the "Seller's Documents") will be, duly executed and
delivered by duly authorized officers on behalf of Seller or the Stockholder, as
the case may be; and this Agreement constitutes, and the Seller's Documents when
executed and delivered will constitute, the valid and binding obligations of
Seller and the Stockholder, as the case may be, enforceable in accordance with
their respective terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization or similar laws from time to time in
effect affecting creditors' rights generally and by legal and equitable
limitations on the availability of specific remedies (the "Enforceability
Limitations").
Section 3.3. COMPLIANCE WITH OTHER INSTRUMENTS. Neither the execution
and delivery by Seller or Stockholder of this Agreement and the Seller's
Documents, nor the consummation by Seller or Stockholder of the transactions
contemplated hereby and thereby, will, with or without the giving of notice or
passage of time, or both, (i) conflict with, or result in a breach or violation
of, or constitute a default under any Charter Documents or applicable law or
(ii) except for any records storage Contracts with customers of Seller that are
not assignable by their terms, as to which no representation is made under this
Section 3.3, conflict with or violate, breach, or constitute a default under, or
permit the termination or acceleration of maturity of, or result in the
imposition of any Encumbrance upon any Subject Asset pursuant to any provision
of, any note, bond, indenture, mortgage, deed of trust, evidence of indebtedness
or other Contract or any judgment, order, injunction or decree by which Seller
or Stockholder is bound, to which either of them is a party, or to which the
Subject Assets are subject; nor is the effectiveness or enforceability of this
Agreement or such other documents adversely affected by any provision of the
Charter Documents of Seller.
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Section 3.4. NO GOVERNMENTAL OR OTHER AUTHORIZATION REQUIRED. Except
for any consents or authorizations required under Seller's records storage
Contracts with its customers, as to which no representation is made under this
Section 3.4, no authorization, consent or approval of, or filing with, any
governmental agency, authority or other body or any other third persons will be
required in connection with Seller's or Stockholder's execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby other
than (i) pursuant to the HSR Act, and (ii) as set forth in Schedule 3.4.
Section 3.5. TITLE; JUDICIAL ORDERS; SUFFICIENCY. Seller has, or at
Closing will have, good and marketable title to all the Subject Assets, free and
clear of all Encumbrances except as set forth on Schedule 3.5, which Schedule
identifies leases for vehicles and equipment (if any) as well as Encumbrances.
All Encumbrances (other than Permitted Encumbrances and except for liabilities
and obligations to be assumed by Buyer pursuant to Section 2.2(c)(i)) shall be
satisfied and discharged at or before Closing. Seller is not a party to, nor are
the Subject Assets subject to, any judgment, judicial order, writ, injunction or
decree that adversely affects the Subject Assets or the use thereof by Seller.
The Subject Assets include all assets used, useful to or held by Seller in the
operation of the Business, except as set forth on Schedule 3.5.
Section 3.6. CONTRACTS AND OTHER INTERESTS.
(a) Listed on Schedule 3.6(a) are all Material Contracts (including
all customer contracts which constitute Material Contracts) relating to the
ownership and operation of the Subject Assets or the conduct of Business or to
which the Subject Assets are subject. Subject to the Enforceability Limitations
and except as otherwise set forth on Schedule 3.6(a), all such Material
Contracts are in full force and effect, valid and enforceable in accordance with
their respective terms against Seller and, to Seller's knowledge, against the
other parties thereto; and there are no existing material defaults of Seller or,
to Seller's knowledge, the other party thereto, or events of default that, with
the giving of notice or lapse of time, or both, would constitute material
defaults of Seller or the other party thereto under any such Contracts, nor are
material amendments pending with respect to any such Contracts.
(b) Seller has provided Buyer with copies of (i) the Seller's records
storage contracts with its twenty-five (25) largest customers as measured by
revenue generation during the year ended December 31, 1999 for each geographic
market serviced by the Business, (ii) every records storage contract utilized in
the Business that contains non-standard terms concerning Seller's liability in
the event of the loss or destruction of, or damage to, stored material and (iii)
its standard form of records storage contract.
(c) Schedule 3.6(c) lists Seller's ten largest customers (measured by
storage revenues during the year ended December 31, 1999). Seller has delivered
a copy of each written Contract it has with each such customer to Buyer.
(d) To Seller's knowledge, Seller has no oral agreements with
customers which require Seller to provide storage or services at no charge or at
rates significantly below the average rates for such services set forth in
Seller's written customer contracts, except for immaterial discounts and/or free
services provided as incentives to certain accounts.
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Section 3.7. TAXES. Except as set forth on Schedule 3.7, Seller has
filed all federal, state and local income tax returns, and Seller has filed all
excise or franchise tax returns, real estate and personal property tax returns,
sales and use tax returns and other tax returns (including returns in respect of
withholding and unemployment tax) required to be filed by it and has paid all
taxes owing by it, including any interest and penalties thereon, except taxes
which have not yet accrued or otherwise become due and for which adequate
provision has been made.
Section 3.8. LITIGATION; CLAIMS; DEFAULTS. Except as set forth on
Schedule 3.8, Seller has not been served with any currently effective summons or
complaint and there is no action or suit, equitable or legal, to which Seller is
a party, nor any administrative, arbitration or other proceeding pending or, to
Seller's knowledge, threatened against Seller in respect of the Subject Assets
or the Business, nor, to the Seller's knowledge, is there any valid basis
therefor. Except as set forth on Schedule 3.8, during the past two (2) years
Seller has not received any written assertions from customers of the Business to
the effect that their materials stored with Seller have been lost, damaged or
inappropriately destroyed or that such customers are being or have been billed
inaccurately for storage of materials or records. Seller is not in default with
respect to any currently effective judgment, order, writ, injunction, decree,
demand or assessment issued by any court or any federal, state, municipal or
other governmental agency, board, commission, bureau, instrumentality or
department that relates to Seller's operation of the Business or the Subject
Assets. Except as set forth on Schedule 3.8, to Seller's knowledge, Seller is
not under investigation with respect to any violation of any provision of any
federal, state, municipal or other law or administrative rule or regulation with
respect to the Subject Assets or the Business.
Section 3.9. COMPLIANCE WITH LAWS. Except as set forth on Schedule 3.9,
and except with respect to fire sprinkler and fire suppression systems (as to
which Seller represents that it has received no notice of non-compliance from
any authority), (i) Seller has complied, and through the Closing will continue
to comply, in all material respects with federal, state and local laws, rules
and regulations applicable to the Business and the Subject Assets, and (ii)
Seller possesses such certificates, authorizations or permits issued by the
appropriate local, state or federal regulatory agencies or bodies as are
necessary to conduct the Business in all material respects; and Seller has not
received any written notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit. Schedule 3.9 sets
forth a list of all occupancy, fire inspection and other certificates,
authorities and permits presently held by Seller with respect to the Business.
Section 3.10. CERTAIN ENVIRONMENTAL MATTERS. Except as set forth on
Schedule 3.10:
(a) Seller is operating and has operated the Business and the
Owned and Leased Premises in material compliance with all applicable local,
state and federal environmental, health and safety laws, statutes,
regulations and ordinances relating to or otherwise imposing liability or
standards of conduct concerning pollution, protection of the environment or
human health and safety, including, but not limited to, the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. Sections
9601 ET seq. ("CERCLA"), the Resource Conservation and Recovery Act, 42
U.S.C. Sections 6901 ET seq., the Clean Water Act, 33 U.S.C. Sections 1251 et
seq., and, to the extent they are applicable to any particular portion of the
Business or the Owned or Leased Premises, the environmental laws, statutes
and regulations of the States of California, Florida, Georgia, Maryland,
North Carolina
11
and Texas and the Commonwealths of Massachusetts and Virginia and any other
state in which the Business operates as each such law, statute, regulation or
ordinance has been amended from time to time ("Environmental Laws and
Regulations");
(b) to Seller's knowledge, Seller has not accepted for storage, and
does not store, any nitrate film or any hazardous substance or hazardous
material in the Owned or Leased Premises except for de-minimis amounts of items
such as cleaning supplies used or stored in the ordinary course of business;
(c) neither Seller nor, to Seller's knowledge, any third party has
ever disposed, released or caused the release from, at, under or onto the Owned
or Leased Premises of an amount of any hazardous substance or hazardous material
into the environment which release or disposal would constitute a material
violation of, require a reporting or notification to any governmental agency
pursuant to, or require investigation or clean-up under, any Environmental Laws
and Regulations. To Seller's knowledge, no disposal, release or burial of any
hazardous substance or hazardous material has occurred at any facility or site
to which hazardous substances or hazardous materials from or generated by the
Business may have been taken at any time in the past;
(d) To Seller's knowledge it is not a potentially responsible party
under, nor has it received any notice that it is a potentially responsible
party, notice of responsibility, notice of violation or request for information
from any government agency or other person under any Environmental Laws and
Regulations with respect to the Business or the Owned or Leased Premises. Seller
does not own, lease, rent or otherwise utilize any underground storage tanks in
connection with the Business, and, to the best of Seller's knowledge, there are
no tanks, containers, cylinders, drums or cans buried, stored or deposited in or
at the Owned or Leased Premises;
(e) neither the Owned or Leased Premises contains any (i) friable
asbestos, (ii) polychlorinated biphenyl (PCB) substances or (iii) waste
petroleum products which would have a material adverse impact on the Subject
Assets or the Business;
(f) Seller will, at least ten (10) days prior to Closing, deliver to
Buyer copies of all environmental surveys in Seller's possession related to the
Owned or Leased Premises; and
(g) for purposes of this Section 3.10, "hazardous substance,"
"release" and "environment" shall have the same meanings as such terms are
defined by Section 101 of CERCLA, 42 U.S.C. Section 9601, and "hazardous
material" means any substance (i) the presence of which requires
notification, removal or remediation under any Environmental Laws and
Regulations or (ii) which is defined as a "hazardous waste," "hazardous
material," "dangerous waste," "toxic substance" or similar term under any
Environmental Laws and Regulations, including without limitation, gasoline,
diesel fuel, and other petroleum products.
Section 3.11. REAL PROPERTY. Except as set forth on Schedule 3.11, the
Leased Premises and the Owned Premises constitute all of the real property that
Seller owns or leases in connection with the Business.
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(a) With respect to the Owned Premises, except as disclosed in
Schedule 3.11(a):
(i) Seller has good record and marketable title to the Owned
Premises free and clear of all liens and other Encumbrances (other than
Permitted Encumbrances). There are no parties (other than Seller) in or entitled
to possession of any of the Owned Premises;
(ii) (A) the Improvements are located within the boundary lines
of the described parcels of land, are not in violation of applicable setback
requirements, zoning laws and ordinances (and none of the properties or
buildings or improvements thereon are subject to "permitted non-conforming use"
or "permitted non-conforming structure" classifications), and Seller has
received no written notice of any threatened request, application, proceeding,
plan or study which would materially adversely affect the present zoning of the
Owned Premises or which would modify or realign any adjacent street or highway,
(B) the Improvements do not encroach on any easement which may burden the land,
(C) none of the Owned Premises serve any adjoining property for any purpose that
has a material adverse effect on that property or the portion of the Business
conducted there, and (D) none of the Owned Premises are located within any flood
plain or subject to any similar type restriction for which any permits or
licenses necessary and material to the use thereof have not been obtained, and
Seller has received no contrary notice as to any such matters;
(iii) except as provided in the Collateral Documents, there are
no outstanding options or rights of first refusal to purchase any of the Owned
Premises, or any portion thereof or interest therein;
(iv) to Seller's knowledge, other than the amounts disclosed by
tax bills, no taxes or special assessments of any kind (special, bond or
otherwise) are or have been levied with respect to any of the Owned Premises, or
any portion thereof, which are outstanding or unpaid, other than amounts not yet
due and payable or, if due and payable, not yet delinquent, and, to Seller's
knowledge, no such levies are pending or threatened;
(v) Seller has not received written notice from any insurance
carrier of defects or inadequacies in any of the Owned Premises which, if
uncorrected, would result in a termination of insurance coverage or an increase
in the premiums charged therefor; and
(vi) all facilities located on the Owned Premises are supplied
with utilities and other services necessary for the operation of such
facilities, including gas, electricity, water, telephone, sanitary sewer, and
storm sewer, all of which services are adequate, are in material conformity with
all applicable laws, ordinances, rules, and regulations and are provided via
public roads or via permanent, irrevocable, appurtenant easements benefiting the
parcel of real property, and to Seller's knowledge, no fact, condition or
proceeding exists which would result in the termination or impairment of the
furnishing of such utilities to the Owned Premises.
(b) With respect to the Leased Premises, except as disclosed in
Schedule 3.11(b):
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(i) Seller has delivered to Buyer a complete and correct copy of
the Leases related to such Leased Premises;
(ii) each of the Leases is legal, valid and binding upon Seller
(and to its knowledge, the Lessor), enforceable (subject to the Enforceability
Limits), and in full force and effect;
(iii) upon obtaining the consents described in Schedule 3.4, the
Leases (including any option to extend, expand or purchase, and any right of
first refusal or right of first offer) will continue to be legal, valid,
binding, enforceable, and in full force and effect to the extent represented in
the immediately preceding subparagraph (ii) on identical terms following the
consummation of the transactions contemplated hereby, except to the extent they
are modified by the Collateral Documents;
(iv) Seller is not and, to Seller's knowledge, no other party to
any Lease is, in breach or default of any Lease, and no event has occurred
which, with notice or lapse of time, would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(v) to Seller's knowledge, no party to any of the Leases has
repudiated any provision thereof;
(vi) to Seller's knowledge, there are no disputes, oral
agreements or forbearance programs in effect as to the Leases;
(vii) Seller has not assigned, transferred, conveyed, mortgaged,
deeded in trust, or Encumbered any such leasehold interest;
(viii) to the best of Seller's knowledge, all facilities leased
thereunder (including alterations constructed by Seller and shelving installed
by Seller) have received all approvals of governmental authorities (including
licenses and permits) required in connection with the operation thereof and have
been operated and maintained in accordance with applicable laws, rules, and
regulations; and
(ix) all facilities leased thereunder are supplied with utilities
and other services necessary for the operation of said facilities.
Section 3.12. CONDITION OF SUBJECT ASSETS. Except for any immaterial
exceptions, all the tangible Subject Assets are at present, and will be as of
the Effective Time, in good operating condition, normal wear and tear excepted,
and Seller has not received written notice of any violation of the Occupational
Safety and Health Act with respect thereto, or rules and regulations issued
thereunder with respect to the Business or the Subject Assets.
Section 3.13. FINANCIAL STATEMENTS. Seller has heretofore made
available to Buyer the financial statements listed in Schedule 3.13 (the
"Financial Statements"). The Financial Statements, including in each case the
notes thereto, have been prepared in accordance with GAAP, except as disclosed
on Schedule 3.13, applied on a consistent basis throughout the
14
periods covered thereby, except as otherwise noted therein, are true, accurate
and complete in all material respects, and fairly present the financial
condition and the results of operations and cash flow of the Business (together
with the results of operation of Seller's records storage business in the
greater metropolitan area of Pensacola, Florida, and the effect of Seller's
ownership of the Owned Premises), on the bases therein stated, as of the
respective dates thereof, and for the respective periods covered thereby
subject, in the case of unaudited financial statements, to normal nonmaterial
year-end audit adjustments and accruals.
Section 3.14. ERISA PLANS.
(a) Schedule 3.14 sets forth a complete and correct list of each Plan
that provides or may provide benefits in respect of any employee or former
employee of the Seller or an ERISA Affiliate (or the beneficiaries or dependents
of any such employee or former employee of the Seller or an ERISA Affiliate) who
works or worked in the operations of the Business to the extent such person has
any present or future right to benefits under any Plan or under which Seller or
an ERISA Affiliate has any present or future liability with respect to such
person. For purposes of this Agreement, the term "Plan" shall include each
"employee benefit plan," as such term is defined in section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and each bonus,
incentive or deferred compensation, severance, termination, retention, change of
control, stock option, stock appreciation, stock purchase, phantom stock or
other equity-based, performance or other employee or retiree benefit or
compensation plan, program, arrangement, agreement, policy or understanding,
whether written or unwritten. For purposes of this Agreement, the term "ERISA
Affiliate" shall include any organization that is or has ever been treated as a
single employer with Seller under Sections 414(b), (c), (m) or (o) of the
Internal Revenue Code of 1986, as amended (the "Code").
(b) With respect to each Plan, Seller has delivered or will upon
request deliver to Buyer a true and complete copy of such plan document,
including any amendments, and a copy of any related trust agreement, the most
recent summary plan description, together with any summaries of material
modifications, and the most recently filed Form 5500, as applicable, and other
material related documents.
(c) Except as set forth on Schedule 3.14, neither Seller nor any
ERISA Affiliate maintains or has ever maintained a "defined benefit plan" within
the meaning of Section 3(35) of ERISA or Section 414(j) of the Code or is a
party to a multiemployer plan within the meaning of Sections 3(37) or 4001(a)(3)
of ERISA or Section 414(f) of the Code.
Section 3.15. ABSENCE OF CERTAIN CHANGES. Except as disclosed on
Schedule 3.15, since December 31, 1998, none of Seller's largest twenty-five
(25) customers measured by revenue generation during the year ended December 31,
1999 in each geographic market serviced by the Business has terminated or
indicated in writing (or, to the best of Seller's knowledge, orally) an
intention to terminate its business with, or substantially reduce the volume of
its business with, Seller. Except as otherwise stated in Schedule 3.15, to
Seller's knowledge, Seller has no customers whose storage business is or has
within 90 days prior to the date of this Agreement been the subject of
competitive bidding procedures.
15
Section 3.16. NO MATERIAL UNDISCLOSED LIABILITIES. Except as described
in this Agreement or reflected in the Financial Statements, (a) there are no
liabilities or obligations of Seller related to the operation of the Business,
whether accrued, absolute or contingent, which in the aggregate are material to
the Business, other than liabilities and obligations that have been incurred in
the ordinary course of business consistent with past practice since December 31,
1998, and (b) to Seller's knowledge, there do not exist any circumstances,
conditions, events or arrangements which may hereafter give rise to any
liabilities of Seller or any successor of Seller, other than the liabilities
which would exist in the ordinary course of business.
Section 3.17. EMPLOYMENT ARRANGEMENTS. Schedule 3.17 lists the name of
all full and part time employees and consultants of Seller (or leased employees
utilized by Seller) who perform services primarily for the Business and sets
forth a brief job description or title and compensation for each such person
(collectively, the "Seller Employees"). Schedule 3.17 also sets forth a list of
all written employment, non-competition and confidentiality agreements with all
Seller Employees. Seller has no obligation or liability, contingent or other,
under any employment arrangement with any Seller Employee, other than (i) those
listed or described in Schedule 3.17, or (ii) those incurred in the ordinary and
usual course of business. Except as described in Schedule 3.17, (A) none of the
Seller Employees is now, or since Seller's organization has been, represented by
any labor union or other employee collective bargaining organization, and Seller
is not, and never has been, a party to any labor or other collective bargaining
agreement with respect to any of the Seller Employees, (B) there are no pending
grievances, disputes or controversies with any union or any other employee or
collective bargaining organization of such employees, or threats of strikes,
work stoppages or slowdowns or any pending demands for collective bargaining by
any such union or other organization, and (C) neither Seller nor any of such
employees is now, or has since its organization been, subject to or involved in
or, to Seller's knowledge, threatened with, any union elections, petitions
therefor or other organizational or recruiting activities, in each case with
respect to the Seller.
Section 3.18. PATENTS, TRADEMARKS, TRADE SECRETS, ETC.
(a) Except for the trade names "DSC Data Storage Centers" and "DSC"
and the designs related thereto and as set forth on Schedule 3.18, Seller has no
trademarks, service marks, trade names, copyrights, computer programs or rights,
patents, licenses or other similar intangible property rights and interests
("Intellectual Property") which it uses in connection with the Business. Except
as set forth on Schedule 3.18, Seller's records adequately document its
ownership of all software listed thereon. Seller has not received written notice
from any third party that its use of the name "Data Storage Center" or any other
Intellectual Property conflicts with the intellectual property rights of any
third party. No person has made or, to the Seller's knowledge, threatened to
make any claims that the operation of the Business is in violation of or
infringes any intellectual property rights of any third party.
(b) Seller has received no written claims challenging its right to
use any trade secrets, customer lists or operating methods required for or
incident to the operation of the Business. To the best of its knowledge, Seller
is not using or in any way making use of any confidential information or trade
secrets of any third party, including without limitation, a former employer of
any present or past employee or Seller.
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Section 3.19. INSURANCE. There is in force, and will be until the
Closing, comprehensive general liability and casualty insurance for the Subject
Assets and the Business which, to Seller's knowledge, is appropriate and
adequate coverage for such assets and operations.
Section 3.20. TRANSACTIONS WITH INTERESTED PERSONS. Except as set forth
on Schedule 3.20, none of Seller, Stockholder or, to Seller's knowledge, any of
the other Affiliate of Seller or Stockholder has a Material Contract with
respect to the Business or is an Affiliate of any customer, competitor or
supplier of the Business, or any organization which has a Material Contract with
the Business (other than Material Contracts with Seller, which shall be
terminated prior to the Closing).
Section 3.21. RECORDS SERVICES AND STORAGE. Except as set forth on
Schedule 3.21;
(a) All items received and stored by Seller on behalf of each of
Seller's customers are held in storage by Seller and are locatable and
accessible without extraordinary effort except for items withdrawn or destroyed
at the respective customer's request;
(b) Seller's invoices to customers are accurate in respect of storage
and services provided except for matters which are immaterial as to each
customer and in the aggregate;
(c) The stored items for which customers are billed exist and can be
accounted for;
(d) Absent delays attributable to unique circumstances resulting from
significant workload variations, Seller invoices its customers for special
projects, such as purges and re-boxing programs, only with respect to completed
work, and has completed all destructions and other inventory and special-service
projects for which Seller has invoiced customers or for which it has been paid;
(e) Absent delays attributable to unique circumstances resulting from
significant workload variations, Seller logs customer storage materials (both
hard copy and magnetic media) into its computer system within twenty-four (24)
hours after receipt at Seller's premises, and places (i) magnetic media in
permanent storage locations within two (2) days after such receipt, and (ii)
hard-copy media in permanent storage locations within seven (7)days after such
receipt. Subject to immaterial exceptions, all customer storage materials can be
located with the use of Seller's computer system; and
(f) Since December 31, 1998, no customer records in storage have
suffered material damage (including damage from water) or been lost or
improperly destroyed.
Section 3.22. BUSINESS IN ORDINARY COURSE. From September 30, 1999 (or
the most recent balance sheet included in the Financial Statements) until the
date hereof, the Business has been conducted in the ordinary course in
accordance with past practice. Without limiting the generality of the foregoing,
except as set forth on Schedule 3.22, Seller has not, since such date:
17
(a) mortgaged, pledged or otherwise Encumbered any of the Subject
Assets (except in the ordinary course of business);
(b) sold, assigned, transferred or waived any material rights with
respect to any part of the Subject Assets (except in the ordinary course of
business);
(c) suffered any material damage, destruction or loss (whether or not
covered by insurance) relating to the Subject Assets or the Business or any
acquisition or taking of material property relating to the Subject Assets or the
Business by any governmental authority;
(d) excluding this Agreement and any documents related thereto,
entered into, amended or terminated any Material Contract relating to the
Subject Assets or the Business, any governmental authorization relating to the
Subject Assets or the Business, any Material Contract or other transaction with
any Affiliate except for terminations in the ordinary course of business,
consistent with prior practice, in accordance with the terms thereof;
(e) entered into or adopted any employee benefit plan or any
employment or severance agreement, or increased in any manner the compensation
or fringe benefits of its officers or employees (except in the ordinary course
of business and consistent with past practice or pursuant to pre-existing
agreements or as required by law);
(f) materially changed its billing, accounts payable, accounts
receivable, collections or other cash management practices relating to the
Business;
(g) materially and adversely changed its building or vehicle
maintenance practices relating to the Business;
(h) entered into any contracts with customers providing for storage
or services at rates substantially lower than the storage and service rates
generally charged by Seller at such time; or
(i) agreed to take any of the foregoing actions.
Section 3.23. NO MATERIAL ADVERSE CHANGE. Since December 31, 1998,
there has been no material adverse change in the Subject Assets (including,
without limitation, loss of or damage to a material amount or part of the
Subject Assets) or the Business (including without limitation the operations,
management, properties or the condition (financial or other), or results of
operation (including without limitation, earnings before interest, taxes,
depreciation and amortization) of the Business), other than possible
industry-wide changes.
Section 3.24. ADVERSE RESTRICTIONS. Except to the extent that customer
service Contracts of Seller included within the Subject Assets or the Business
are not assignable by their terms, to Seller's knowledge, neither it nor any
Subject Asset is a party to or subject to, any applicable law, governmental
license, order, permit or other authorization, Contract, or any other obligation
or restriction of any kind or character, or any aggregation thereof, which
impairs or will impair in any material respect the ability of Seller or, after
the Closing, Buyer to conduct the Business in
18
substantially the same manner as it is being conducted as of the date hereof,
except as set forth in Schedule 3.24.
Section 3.25. DISCLOSURE. No representation or warranty made by Seller
or Stockholder in this Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statement of facts
contained within it not materially misleading.
Section 3.26. BROKERS. Seller has not entered into any Contract,
arrangement or understanding (including any such Contract, arrangement or
understanding with Heritage Capital Group, Inc.) with any person or firm
regarding finder's fees, brokerage or agent's commissions or other like payments
in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby which will result in the
obligation of Buyer to pay any such fees, commissions or other like payments.
Seller shall be solely responsible to pay, and shall indemnify Buyer from any
claims for, any such fees or commissions of Heritage Capital Group, Inc.
Section 3.27. YEAR 2000 COMPLIANCE. The "Year 2000 Problem" (that is,
the risk that computer applications used by Seller may be unable to recognize
and perform properly date-sensitive functions involving certain dates prior to
and any date on or after December 31, 1999) has not had a material adverse
effect on the Subject Assets or the Business.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows as of the
date hereof:
Section 4.1. ORGANIZATION AND GOOD STANDING. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and is qualified to do business and in good standing as a
foreign corporation in the States of California, Florida, Georgia, Maryland,
North Carolina and Texas and the Commonwealths of Massachusetts and Virginia.
Buyer possesses all requisite corporate power and authority to own, operate and
lease its properties and carry on its business as presently conducted, and to
execute and deliver, and perform its obligations under, this Agreement.
Section 4.2. AUTHORIZATION. The execution and delivery of this
Agreement and performance by Buyer of its obligations hereunder, and all
transactions contemplated hereby, have been duly and validly authorized by all
necessary corporate action. This Agreement has been, and the other agreements
and documents required to be delivered by Buyer in accordance with the
provisions hereof (the "Buyer's Documents") will be, duly executed and delivered
on behalf of Buyer by duly authorized officers of Buyer; and this Agreement
constitutes, and the Buyer's Documents when executed and delivered will
constitute, the valid and binding obligations of Buyer, enforceable in
accordance with their respective terms, except as enforcement may be limited by
the Enforceability Limitations.
Section 4.3. COMPLIANCE WITH OTHER INSTRUMENTS. Neither the execution
and delivery by Buyer of this Agreement and the Buyer's Documents, nor the
consummation by Buyer of the transactions contemplated hereby and thereby, will,
with or without the giving of notice or
19
passage of time, or both, (i) conflict with, or result in a breach or violation
of, or constitute a default under, any Charter Documents or applicable law or
(ii) conflict with or violate, breach, or constitute a default under, or permit
the termination or acceleration of maturity of, or result in the imposition of
any Encumbrance upon any property or asset of Buyer pursuant to any provision
of, any note, bond, indenture, mortgage, deed of trust, evidence of indebtedness
or other Contract or any judgment, order, injunction or decree by which Buyer is
bound or to which the assets of Buyer are subject; nor is the effectiveness or
enforceability of this Agreement or such other documents adversely affected by
any provision of the Charter Documents of Buyer.
Section 4.4. LITIGATION. There is no currently effective summons,
complaint, order, injunction, decree, judgment, writ or assessment, and no
action, suit or proceeding of any kind pending or, to the knowledge of Buyer,
threatened, against Buyer that might interfere with Buyer's ability to
consummate the transactions contemplated hereunder.
Section 4.5. NO GOVERNMENTAL OR OTHER AUTHORIZATION REQUIRED. Except as
required by the HSR Act, filings required of Iron Mountain Incorporated ("IMI"),
the parent of Buyer, under federal and state securities laws, or otherwise set
forth on Schedule 4.5, no authorization or approval of, or filing with, any
governmental agency, authority or other body or any other third persons will be
required in connection with Buyer's execution and delivery of this Agreement and
Buyer's Documents or its consummation of the transactions contemplated hereby
and thereby.
Section 4.6. NO BROKER. Buyer has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of Buyer or Seller to pay any finder's fees, brokerage or agent's
commissions or other like payments in connection with the negotiations leading
to this Agreement or the consummation of the transactions contemplated hereby,
and, except for Seller's arrangement with Heritage Capital Group, Inc., Buyer
has no knowledge of any claim or basis for any claim for payment of any finder's
fees, brokers or agent's commissions or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby.
Section 4.7. DISCLOSURE. No representation or warranty made by Buyer in
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statement of facts contained within
it not materially misleading.
ARTICLE 5.
PRE-CLOSING AGREEMENTS
Section 5.1. ACCESS TO INFORMATION AND FACILITIES. Seller shall afford
Buyer and its representatives full access during normal business hours to all
facilities, properties, books, accounts, records, contracts and documents of or
relating to the Business in Seller's possession or control, subject to
reasonable requirements that Buyer not interfere with the operations and
activity of the Business. Such access shall include inspections by Buyer and its
representatives of the Owned Premises and the Leased Premises (including,
without limitation, all roofs, electric, mechanical and structural elements, and
HVAC systems), soil analysis and environmental investigations, and examination
of the records of Seller with respect thereto. Except as provided in the second
paragraph of Section 11.2(a) hereof, no investigation pursuant to this Section
5.1
20
shall affect any representation or warranty in this Agreement of any party
hereto or any condition to the obligations of the parties hereto.
Section 5.2. CONFIDENTIALITY.
(a) Seller, Stockholder and their Affiliates, on the one hand, and
Buyer and its Affiliates, on the other hand, shall not use or disclose to
others, or permit the use or disclosure of, any and all non-public information
furnished by each to the other (including confidential information transmitted
by each to its representatives, accountants, counsel, advisors or bankers
("Representatives")) in the course of negotiations relating to this Agreement
and the business and financial reviews and investigations referred to in this
Agreement, except to their respective officers, directors, employees and
Representatives who need to know such information (and who will each be subject
to confidentiality as provided herein) in connection with this Agreement.
(b) Each of Buyer, Seller and Stockholder agrees that at no time
shall it or its Representatives use or knowingly permit any other person or
entity to examine, use or derive benefit from any non-public information of the
other without the other's express written consent. None of Buyer, Seller or
Stockholder shall disclose any such non-public information to anyone other than
its Representatives and to those third parties who have a reasonable need for
such information, which third parties have been advised of the confidential
nature of the information and, other than those persons or entities to whom
disclosure is made pursuant to Section 5.2(c), have agreed in writing to be
bound by the terms of this Section 5.2 or a similar confidentiality agreement.
The duty of non-disclosure shall not apply to information which: (i) was in the
public domain at the time it was communicated to Buyer, Seller or Stockholder or
subsequently enters the public domain through no fault of Buyer, Seller or
Stockholder; (ii) Buyer, Seller or Stockholder can prove was already known to
such party at the time of receipt; (iii) was rightfully communicated to Buyer,
Seller or Stockholder free of any obligation of non-disclosure and without
restriction as to use; or (iv) is disclosed by Buyer, Seller or Stockholder
pursuant to judicial order or other compulsion of law, provided that each party
shall give the others prompt notice of any such order and shall comply with any
protective order (or equivalent) imposed on such disclosure.
(c) Notwithstanding the foregoing, (i) Buyer's parent, IMI, shall
have the right to include disclosure regarding the transactions contemplated by
this Agreement in any registration statement, filing or other report which IMI,
Buyer or any of their respective Affiliates files with the Securities and
Exchange Commission or the New York Stock Exchange, including in each case any
financial and other information concerning Seller and the transactions
contemplated hereby, required in connection therewith; (ii) disclosure of such
information may be made to the extent required by judicial or regulatory
process, and reviews by financial institutions which are lenders to either party
so long as such lenders have been advised of the confidential nature of such
information; (iii) such information may be used to the extent necessary as
evidence in or in connection with any pending or threatened litigation relating
to this Agreement or any transaction contemplated hereby; and (iv) Seller may
disclose the existence of this Agreement to customers, landlords, lenders,
employees or others to the extent reasonably necessary for the consummation of
the transactions contemplated hereby.
21
(d) In the event that the sale contemplated by this Agreement is not
consummated for any reason, each party agrees to return to the other party all
materials containing nonpublic information provided by the other immediately
with or without request. The confidentiality obligation set forth in this
Section 5.2 shall survive termination of this Agreement.
(e) Each party agrees that the confidential information of the other
party is unique and that its release or misuse in contravention of the terms of
this Agreement may not be compensable in monetary damages and that the
non-breaching party shall be entitled to seek appropriate injunctive relief
therefor. In connection therewith the parties waive the claim or defense that an
adequate remedy exists at law.
Section 5.3. ADDITIONAL FINANCIAL STATEMENTS. Without intending to
limit the generality of Section 5.2, Seller (i) shall use its reasonable best
efforts to supply financial statements for the Business (and any and all
documents and consents related thereto) which comply with Regulation S-X under
the Securities Act of 1933, as amended, and the applicable published rules and
regulations thereunder for inclusion in any registration statement or other
public filing of IMI under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, and the applicable published rules
and regulations thereunder, and any other offering circular or document used by
IMI in any other offering of securities, whether public or private, (ii) shall
use its reasonable best efforts to cause Seller's independent accountants to
cooperate with IMI in connection with the foregoing (including, without
limitation, using reasonable best efforts to cause such independent accountants
to deliver so-called "comfort letters," written consents and representation
letters relating to the foregoing), and (iii) shall engage its independent
accountants to perform a quarterly review of the Seller's financial statements
for the first quarter of fiscal 2000 in accordance with Statements on Auditing
Standards No. 71; PROVIDED, HOWEVER, that Buyer shall reimburse Seller for its
reasonable out-of-pocket expenses incurred in connection with its compliance
with this Section 5.3; PROVIDED FURTHER that such reimbursement obligation shall
not extend to any services that would ordinarily be provided by such accountants
to Seller. The Seller shall complete and deliver its December 31, 1999 audited
financial statements to the Buyer on or before April 15, 2000. Without limiting
the generality of the foregoing, Seller agrees that it will (i) consent to the
use of such audited financial statements in any such registration statement,
document or circular and (ii) execute and deliver, and cause its officers to
execute and deliver, such "representation" letters as are customarily delivered
in connection with audits and as Seller's and IMI's independent accountants may
reasonably request under the circumstances.
Section 5.4 SELLER'S EMPLOYEES. Buyer shall not be obligated to offer
employment to any Seller Employee in connection with the acquisition of the
Subject Assets, and such acquisition shall not grant any Seller Employee a right
of continued employment with Buyer. Buyer shall notify Seller in writing no
later than the close of business on the tenth (10th) business day prior to the
Closing of the names of those Seller Employees to whom Buyer intends to offer
employment at Closing. Such notification shall reflect Buyer's good faith
intentions at such time, but shall not constitute an obligation of Buyer to
offer initial or continued employment to any such employee. Without limiting the
generality of the foregoing, in no event shall Buyer be obligated to hire or
otherwise employ any Seller Employee or former employee of Seller who is
22
reinstated under, or who voluntarily returns to any previous employment position
pursuant to, any settlement agreement or any arbitration, judicial or
administrative action, order, decree or other process to which Buyer is not a
party. Buyer and Seller shall mutually agree on the timing and content of a
program of communications to employees and customers of the Business in respect
of the transactions contemplated hereby; provided that Seller may elect to
inform its employees of the pending transaction if it determines such disclosure
is necessary or desirable.
Section 5.5. CONTINUED EFFORTS.
(a) Each of the parties hereto shall use reasonable business efforts
(i) to take, or cause to be taken, all actions and to do, or cause to be done,
all things necessary, proper or advisable under applicable law to consummate the
transactions contemplated hereby (the "Transactions"), and (ii) to refrain from
taking, or cause to be refrained from taking, any action and to refrain from
doing or causing to be done, anything which could impede or impair the
consummation of the Transactions, including, in all cases, without limitation
using its reasonable business efforts (A) to prepare and file with the
applicable governmental authorities as promptly as practicable after the
execution of this Agreement all requisite applications and amendments thereto,
together with related information, data and exhibits, necessary to request
issuance of orders approving the Transactions by all such applicable
authorities, (B) to obtain all necessary or appropriate waivers, consents and
approvals, (C) to effect all necessary registrations, filings and submissions
(including without limitation filings within three (3) business days of the date
of this Agreement under the HSR Act), (D) to lift any injunction or other legal
bar to the Transactions (and, in such case, to proceed therewith as
expeditiously as possible), (E) to obtain the satisfaction of the conditions
specified in Articles 6 and 7, and (F) to advise the other of any disclosure
schedule changes that would be required if the applicable representations and
warranties set forth in Articles 3 and 4 did not refer to the date of this
Agreement. Notwithstanding anything to the contrary contained in this Agreement,
in connection with or as a condition to receiving the consent or approval of any
governmental authority or otherwise, IMI shall not be required to divest,
abandon, license or take similar action with respect to any assets (tangible or
intangible) of it or any of its subsidiaries (including, without limitation, the
Subject Assets after the Closing).
(b) The parties hereto shall cooperate with one another in the
preparation of all tax returns, questionnaires, applications or other documents
regarding any Taxes or transfer, recording, registration or other fees which
become payable in connection with the Transactions and which are required to be
filed on or before the Closing Date.
Section 5.6. OPERATION OF BUSINESS PRIOR TO CLOSING. From the date
hereof until the Effective Time, Seller shall conduct the Business in the
ordinary course consistent with past practice, including, without limitation, by
acquiring and erecting racking and making other customary capital expenditures,
and shall use its commercially reasonable efforts to maintain and service the
Business, to keep available the services of present employees and agents and to
maintain existing business relationships. Without limiting the generality of the
foregoing, Seller shall not take any of the actions described in Section 3.22
and Seller (a) shall comply with (i) all material laws, regulations and other
requirements from time to time applicable of every governmental body having
jurisdiction of the Owned and Leased Premises or the use or occupancy of the
Improvements located thereon consistent with Seller's conduct of the Business
23
prior to the date of this Agreement and (ii) all terms, covenants and conditions
of all instruments of record and other agreements affecting the Owned and Leased
Premises, (b) shall continue to operate the Owned and Leased Premises as
currently operated in a good and businesslike fashion consistent with its past
practices and cause the Owned and Leased Premises to be maintained in good
working order and condition in a manner consistent with its past practice, and
(c) shall not take any action to accelerate the collection of any accounts
receivable.
Section 5.7. MONTHLY FINANCIAL STATEMENTS. From the date hereof until
the Closing Date, Seller shall provide to Buyer monthly financial statements
related to the Business promptly after they become available.
Section 5.8. NOTICE OF DEVELOPMENTS. Each party shall give prompt
notice to the other of the occurrence or non-occurrence of any Event the
occurrence or non-occurrence of which would be likely to cause (i) any
representation or warranty made by it contained in this Agreement to be untrue
or inaccurate, (ii) any change to be made in its disclosure schedules, or (iii)
any failure of Seller or Buyer, as the case may be, to comply with or satisfy,
or be able to comply with or satisfy, any material covenant, condition or
agreement to be complied with or satisfied by it hereunder. No disclosure by
Seller or Buyer pursuant to this Section 5.8 which constitutes a material change
in information originally presented in this Agreement or in its schedules shall
constitute a waiver by the party receiving such disclosure of any condition to
such party's obligation to close the transactions contemplated hereby unless the
party to which such disclosure is made agrees in writing to waive such condition
(it being understood that the delivery of any notice pursuant to this Section
5.8 shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice).
Section 5.9. PUBLIC ANNOUNCEMENTS. Until the Closing, or in the event
of termination of this Agreement, each party shall consult with the other before
issuing any press release or otherwise making any public statements with respect
to this Agreement or any of the transactions contemplated hereby, and shall not
issue any such press release or make any such public statement without the prior
consent of the other, which consent shall not be unreasonably withheld or
delayed. Notwithstanding the foregoing, Seller acknowledges and agrees that
Buyer or IMI may, without the prior consent of Seller, issue such press releases
or make such public statements as may be required by applicable law or the
listing requirements of The New York Stock Exchange, in which case, to the
extent practicable, IMI and Buyer will consult with, and exercise in good faith
all reasonable business efforts to agree with, Seller regarding the nature,
extent and form of such press release or public statement, and in any event with
prior notice to Seller.
Section 5.10. EXCLUSIVITY. Unless this Agreement has been terminated in
accordance with Article 10, neither Seller nor Stockholder will solicit,
initiate or encourage the submission of any proposal or offer from any person or
entity relating to the acquisition of the Business or any portion of the Subject
Assets, and none of Seller's directors, officers or agents shall be permitted to
take any such action.
24
ARTICLE 6.
CONDITIONS PRECEDENT TO OBLIGATION OF BUYER TO CLOSE
The obligations of Buyer to purchase the Subject Assets and carry out
the other transactions contemplated hereby are, unless waived in writing by
Buyer, subject to the satisfaction, on or prior to the Closing Date, of the
following conditions:
Section 6.1. ACCURACY OF REPRESENTATIONS AND PERFORMANCE OF SELLER. The
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects at and as of the Closing Date with the
same force and effect as though made on and as of such date; each and all of the
conditions and covenants to be performed or satisfied by Seller hereunder at or
prior to the Closing Date shall have been duly performed or satisfied in all
material respects; and Seller shall have furnished Buyer with a certificate to
that effect.
Section 6.2. ABSENCE OF CERTAIN LITIGATION. On the Closing Date, no
suit, action or other proceeding, or injunction or judgment relating thereto,
shall be pending or threatened before any court or governmental or regulatory
official or agency, in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the consummation of
the transactions contemplated hereby, or which might materially and adversely
affect the Business or the Subject Assets, and no investigation that might
result in any such suit, action or proceeding shall be pending.
Section 6.3. ESCROW AGREEMENT. Buyer, Seller and First Union National
Bank (the "Escrow Agent") shall have entered into an escrow agreement which is
reasonably satisfactory in form, scope and substance to both Buyer and Seller
(the "Escrow Agreement"), pursuant to which Buyer shall deliver to the Escrow
Agent an amount equal to $2,700,000, which delivery shall constitute payment of
a portion of the Purchase Price. Subject to any payments made therefrom pursuant
to Section 11.3(b) hereof, the amounts held by the Escrow Agent pursuant to the
terms of the Escrow Agreement, including any interest earned thereon
(collectively, the "Escrow Amount") shall be delivered to Seller at the
termination of the Escrow Period as payment in full of the remaining Purchase
Price due Seller under this Agreement.
Section 6.4. CONFIDENTIALITY AND NON-COMPETITION AGREEMENTS. Seller,
Stockholder, James Spinney, Barry Vaughn, Robert Price, Michael Demont, Stephen
Suddath and A. Quinn Bell shall have each executed and delivered a
Confidentiality and Non-Competition Agreement substantially in the form attached
as Exhibit 6.4 hereto (the "Confidentiality and Non-Competition Agreements").
Section 6.5. LEASES AND SUBLEASES OF LEASED AND OWNED PREMISES.
(a) With regard to (i) each of the Leased Premises included in
Section A of Schedule 1.16, Seller and Buyer shall have entered into lease
assignments substantially in the forms attached hereto as Exhibits 6.5(a)(i)(A)
(including full execution of all exhibits by all parties thereto) whereby Seller
shall assign to Buyer its interest as tenant in the Lease for such Leased
Premises, and (ii) each of the Leased Premises included in Section B of Schedule
1.16, Seller and Buyer shall have entered into sublease agreements substantially
in the forms attached hereto as Exhibits 6.5(a)(ii)(A) whereby Seller or its
Affiliate, as applicable, shall sublease to
25
Buyer space at the Leased Premises, and the landlord under each such Lease shall
have consented thereto in writing. In the event that such landlord does not
consent to assignment of the Lease, but grants both its consent to sublease and
a Non-Disturbance and Attornment Agreement with regard to the Leased Premises,
Seller and Buyer agree to enter into a sublease, the terms of which shall
include the requirement that Buyer pay to Seller monthly the full rent due to
the landlord with respect to the portion of the Leased Premises subleased
thereunder.
(b) With regard to each of the Owned Premises, Seller and Buyer shall
have entered into lease agreements substantially in the forms attached hereto as
Exhibits 6.5(b) (together with statutory form memoranda of lease suitable for
recording) whereby Seller shall lease to Buyer space at the Owned Premises.
(c) With regard to the premises located at 1990 E. North Highway 360
Dallas Texas, Seller and Buyer shall have entered into a sublease agreement
substantially in the form of the lease attached hereto (except options to extend
thereunder shall coincide with Seller's extension options contained in the prime
lease) as Exhibit 6.5(c) (together with a statutory form memorandum of sublease
suitable for recording) whereby Seller subleases to Buyer space at such
premises.
Section 6.6. THIRD PARTY CONSENTS. All waiting periods (and any
extension thereof) applicable under the HSR Act shall have expired or been
terminated, and Seller shall have procured all of the third party consents
identified in Schedule 3.4, except for those consents relating to licenses for
commercially available, retail, off-the shelf software.
Section 6.7. CORPORATE APPROVAL. Seller shall deliver certified copies
of resolutions of its Board of Directors and stockholder pertaining to the
authorization of this Agreement and the consummation of the transactions
contemplated hereby, and a certificate executed by its secretary or assistant
secretary as to the due election, qualification and incumbency and valid
signature of the officers authorized to sign this Agreement and any document,
instrument or certificate to be delivered hereunder, and Seller's articles of
incorporation and by-laws.
Section 6.8. ENCUMBRANCES. Seller shall have delivered evidence
reasonably satisfactory to Buyer of the satisfaction and release of any
Encumbrances affecting, or security interests or liens encumbering, the Subject
Assets (other than Permitted Encumbrances).
Section 6.9. NO MATERIAL ADVERSE CHANGE. There shall not have occurred
and be continuing any material adverse change in the Subject Assets (including,
without limitation, loss of or damage to a material amount or part of the
Subject Assets, whether or not insured) or the Business (including without
limitation the operations, management, properties or the condition, (financial
or other), or results of operation (including without limitation, earnings
before interest, taxes, depreciation and amortization)), of the Business between
September 30, 1999 and the Closing Date.
Section 6.10. TRADEMARK ASSIGNMENT. Seller shall have executed and
delivered to Buyer an Assignment of Trademarks, regarding the trademarks and
related designs forming part of the Subject Assets, reasonably satisfactory in
form, scope and substance to both Buyer and Seller.
26
Section 6.11. INSTRUMENTS OF CONVEYANCE AND TRANSFER. Seller shall have
delivered to Buyer all bills of sale, endorsements, assignments and other
instruments of conveyance and transfer reasonably satisfactory in form and
substance to Buyer and its counsel, effecting the sale, transfer, assignment and
conveyance of Seller's right, title and interest in and to the Subject Assets to
Buyer.
Section 6.12. CONVERSION AND REMOVAL. Seller shall have completed (a)
the removal of all cartons and other materials which do not constitute Subject
Assets from its facilities located at 315 East Bay Street, Jacksonville, Florida
and 1470 North Gate Boulevard, Sarasota, Florida, and (b) all conversions of the
computerized hard copy inventory system to the Andrews inventory system at the
Seller's facilities.
Section 6.13. OPINION OF SELLER'S COUNSEL. Seller's counsel, Smith
Hulsey & Busey, shall have delivered its opinion which shall be reasonably
satisfactory in form, scope and substance to Buyer and its counsel.
Section 6.14. DIVIDED SUBLEASE SPACE. Seller, at its sole cost and
expense, shall have completed the construction of a permanent demising wall
dividing the portion of the leased space at Seller's Grand Prairie, Texas
location which is to be subleased at Closing pursuant to the terms of this
Agreement.
Section 6.15. CERTIFICATES, ETC. Seller shall have delivered to Buyer
copies of all certificates, authorities and permits set forth on Schedule 3.9.
Section 6.16. FURTHER DOCUMENTS. Seller shall have executed and
delivered to Buyer such documents, instruments, agreements, and certificates as
may reasonably be needed to carry out the transactions contemplated by this
Agreement, including such documents, instruments and agreements as Buyer's
counsel may reasonably request in connection therewith.
Section 6.17. NON-DISTURBANCE AND ATTORNMENT AGREEMENTS. Seller shall
have Non-Disturbance and Attornment Agreements, reasonably satisfactory in form,
scope and substance to Buyer and its counsel, from any person holding a mortgage
or other obligation secured by any Owned Premises to be leased by Buyer pursuant
to Section 6.5 and 7.6; and Seller shall use reasonable efforts to obtain
Non-Disturbance and Attornment Agreements from any landlord of Leased Premises
which Buyer is to sublease in whole or in part pursuant to Section 6.5 and 7.6.
If Seller shall fail to obtain a Non-Disturbance and Attornment Agreement for
the sublease at 1990 North Highway 360 Dallas, Texas from the prime landlord,
then Seller (i) shall use best efforts to obtain an agreement from such prime
landlord whereby the prime landlord shall agree to lease directly to Buyer the
entire premises demised to Seller following termination of the lease to Seller
(the "Dallas Lease") for a term to commence on the date of such termination and
to expire on the same date as the Dallas Lease would have expired if it had
otherwise continued uninterrupted until its scheduled date of termination, and
containing all of the same rights, terms, covenants, considerations, un-expired
options and obligations as set forth in the Dallas Lease or (ii) shall enter
into an assignment of the Dallas Lease with Buyer by a lease assignment
substantially in the form attached hereto as Exhibit 6.5(a)(i)(A) (including,
without limitation, full execution of all exhibits by all parties thereto),
whereupon, if consented to by the prime landlord, Seller (as subtenant) and
Buyer (as sublessor) shall enter into a sublease for the portion
27
of the premises currently occupied by Stockholder, such sublease to be
substantially in the form attached hereto as Exhibit 6.5(c) with the same per
square foot rental rate and pro-rata additional rent as provided in the Dallas
Lease.
For purposes of this Sections 6.5, 7.6, and 6.17, the term
"Non-Disturbance and Attornment Agreement" shall mean an agreement from any
person holding a mortgage or other obligation secured by any Owned Premises to
be leased by Buyer pursuant to Section 6.5 and 7.6, or from any lessor of Leased
Premises to be subleased pursuant to Section 6.5(c), providing Buyer the right
to occupy the premises demised by any Lease or sublease and to continue to enjoy
all of the rights granted to Buyer under such Lease or sublease (notwithstanding
any breach by the landlord as borrower, tenant or other obligor), provided Buyer
is not in breach of its obligations under such Lease or sublease beyond the
expiration of any applicable cure period following notice.
ARTICLE 7.
CONDITIONS PRECEDENT TO OBLIGATION OF SELLER
The obligations of Seller to sell, assign, transfer and deliver the
Subject Assets to Buyer hereunder and to carry out the other transactions
contemplated hereby are, unless waived in writing by Seller, subject to the
satisfaction on or prior to the Closing Date of the following conditions:
Section 7.1. ACCURACY OF REPRESENTATIONS AND PERFORMANCE OF CONDITIONS.
The representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects at and as of the Closing Date with the
same force and effect as though made on and as of such date; each and all of the
conditions and covenants to be performed or satisfied by Buyer hereunder at or
prior to the Closing Date shall have been duly performed or satisfied in all
material respects; and Buyer shall have furnished Seller with Buyer's
certificate to that effect.
Section 7.2. CORPORATE APPROVAL. Buyer shall deliver certified copies
of resolutions adopted by Buyer's Board of Directors pertaining to the
authorization of this Agreement and the consummation of the transactions
contemplated herein, and a certificate executed by the secretary or assistant
secretary of Buyer as to the due election, qualification and incumbency and
valid signatures of its officers authorized to sign this Agreement and any
documents or certificates to be delivered hereunder, and Buyer's corporate
charter and by-laws.
Section 7.3. ABSENCE OF CERTAIN LITIGATION. On the Closing Date, no
suit, action or other proceeding, or injunction or judgment relating thereto,
shall be pending or threatened before any court or governmental or regulatory
official or agency, in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the consummation of
the transactions contemplated hereby, and no investigation that might result in
any such suit, action or proceeding shall be pending.
Section 7.4. THIRD PARTY CONSENTS. All waiting periods applicable under
the HSR Act shall have expired or been terminated, and Buyer shall have procured
all third party consents, authorizations and approvals identified on Schedule
4.5.
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Section 7.5. ESCROW AGREEMENT. Buyer, Seller and the Escrow Agent shall
have entered into the Escrow Agreement.
Section 7.6. LEASES AND SUBLEASES OF LEASED AND OWNED PREMISES.
(a) With regard to (i) each of the Leased Premises included in
Section A of Schedule 1.16, Seller and Buyer shall have entered into lease
assignments substantially in the forms attached hereto as Exhibits 6.5(a)(i)(A)
(including full execution of all exhibits by all parties thereto) whereby Seller
shall assign to Buyer its interest as tenant in the Lease for such Leased
Premises, and (ii) each of the Leased Premises included in Section B of Schedule
1.16, Seller and Buyer shall have entered into sublease agreements substantially
in the forms attached hereto as Exhibits 6.5(a)(ii)(A) whereby Seller or its
Affiliate shall sublease to Buyer space at the Leased Premises, and the landlord
under each such Lease shall have consented thereto in writing. In the event that
such landlord does not consent to assignment of the Lease, but grants both its
consent to sublease and a Non-Disturbance and Attornment Agreement with regard
to the Leased Premises, Seller and Buyer agree to enter into a sublease, the
terms of which shall include the requirement that Buyer pay to Seller monthly
the full rent due to the landlord with respect to the portion of the Leased
Premises subleased thereunder.
(b) With regard to each of the Owned Premises, Seller and Buyer shall
have entered into lease agreements substantially in the form attached hereto as
Exhibits 6.5(b)(i) (together with statutory form memoranda of lease suitable for
recording) whereby Seller shall lease to Buyer space at the Owned Premises.
(c) With regard to the premises located at 1990 E. North Highway 360
Dallas Texas, Seller and Buyer shall have entered into a sublease agreement
substantially in the form attached hereto (except options to extend thereunder
shall coincide with Seller's extension options contained in the prime lease) as
Exhibits 6.5(c) (together with statutory form memoranda of lease suitable for
recording) whereby Seller subleases to Buyer space at such premises.
Section 7.7. FURTHER DOCUMENTS. Buyer shall have executed and delivered
to Seller such documents, instruments, agreements, and certificates as may
reasonably be needed to carry out the transactions contemplated by this
Agreement, including such documents, instruments and agreements as Seller's
counsel may reasonably request in connection therewith.
Section 7.8. TRADEMARK ASSIGNMENT. Buyer shall have executed and
delivered to Seller an Assignment of Trademarks, regarding the trademarks and
related designs forming part of the Subject Assets, reasonably satisfactory in
form, scope and substance to both Buyer and Seller.
ARTICLE 8.
THE CLOSING
Section 8.1. CLOSING AND CLOSING PROVISIONS. The Closing shall be
effected by delivery of documents at the office of Sullivan & Worcester LLP,
Boston, Massachusetts, and payment of the Purchase Price each as provided herein
or in such other manner and at such place as the parties may agree.
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Section 8.2. DELIVERIES BY SELLER AND STOCKHOLDER. At or prior to the
Closing, Seller and Stockholder shall execute and deliver to Buyer all of the
certificates and other documents designated as conditions precedent and
deliveries precedent to Buyer's obligation to close under this Agreement or to
carry out the transactions contemplated hereby.
Section 8.3. DELIVERIES BY BUYER. At the Closing Buyer shall deliver to
Seller the Purchase Price, subject to adjustments as permitted by this
Agreement, in the manner and form provided for in this Agreement, and all the
certificates and other documents designated as conditions precedent and
deliveries precedent to Seller's obligation to close under this Agreement or to
carry out the transactions contemplated hereby.
ARTICLE 9.
POST-CLOSING MATTERS
Section 9.1. RECORDS OF THE BUSINESS. For a period of four years
following the Closing Date or for such longer period as the statute of
limitations applicable to claims for Taxes relating to the Business for any
period through the Closing Date shall be extended (through voluntary extension
or otherwise), Buyer shall grant to Seller and its representatives, at Seller's
request, reasonable access to and the right to make copies of those records and
documents which report the conduct of the Business or the results thereof as may
be necessary in connection with Seller's affairs or the Business, at Buyer's
customary fees therefor. If Seller notifies Buyer that Seller requires retention
of such records beyond four years, Seller shall have the right to take such
records or pay Buyer's customary storage charges for such post-four-year period.
Seller shall, for at least two years after the Closing Date, retain copies of
all records of the Business retained by Seller, and shall grant access thereto
to Buyer upon reasonable request.
Section 9.2. EMPLOYEES.
(a) Seller shall assume and remain responsible for the payment of any
and all retention, change in control or other similar compensation or benefits
that are or may become payable to or in respect of any current or former
employee of the Business in connection with the consummation of the transactions
contemplated by this Agreement.
(b) Employees of the Business, and their spouses and dependents, who
participate in Plans that are subject to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), shall be entitled to elect
continuation coverage pursuant to COBRA as of the Closing Date. Seller, rather
than Buyer, shall satisfy and be fully responsible for any and all COBRA
obligations that arise as a result of the transactions contemplated herein and
Buyer shall have no responsibility with respect to any individual entitled to
elect continuation coverage pursuant to COBRA as a result of a "qualifying
event" that occurred on or prior to the Closing Date.
(c) If permitted by applicable law, Seller and Buyer agree to treat
Buyer as a "successor employer" and Seller as a "predecessor employer," within
the meaning of Sections 3121(a)(1) and 3306(b)(1) of the Code, with respect to
employees of the Business that are hired by Buyer for purposes of the taxes
imposed under the United States Federal Unemployment Tax Act ("FUTA") or the
United States Federal Insurance Contributions Act ("FICA"). At the
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request of Buyer with respect to any particular applicable law relating to
employment, unemployment insurance, social security, disability, workers'
compensation, payroll, health care or other similar tax other than taxes imposed
under FICA and FUTA, Seller and Buyer will, if permitted under applicable law,
treat Buyer as a successor employer and Seller as a predecessor employer, within
the meaning of the relevant provisions of such tax law, with respect to retained
employees.
(d) Seller shall treat the transactions contemplated by this
Agreement as a disposition of assets in accordance with Section 401(k)(10) of
the Code and shall take such actions as shall be necessary to permit employees
of the Business to elect to receive a distribution of benefits from any Plan
that is intended to be qualified under Section 401(a) of the Code.
Section 9.3. TRANSITIONAL EMPLOYEE SERVICES. Buyer shall notify Seller
in writing no later than the close of business on the tenth (10th) business day
prior to the Closing of the names of those Seller Employees (i) to whom Buyer
does not intend to offer employment at Closing pursuant to Section 5.4 hereof,
and (ii) who Buyer determines will be necessary to assist with the transition of
the Business and the Subject Assets to Buyer for a period not to exceed sixty
(60) days following the Closing Date. Seller shall use reasonable commercial
efforts to continue the employment of such Seller Employees (on the terms and
conditions of employment existing at the Effective Time, unless otherwise
approved by Buyer) and Seller shall use reasonable commercial efforts to make
such continuing Seller Employees available to Buyer. Any COBRA or severance
payments for such continuing Seller Employees shall be paid by Seller. The
salary and other expenses of such continuing Seller Employees, including the
special bonus payments required to retain such Seller Employees' services (the
"Bonuses") shall also be paid by Seller, PROVIDED, HOWEVER, that Buyer shall
reimburse Seller for such salary, expenses and Bonuses promptly upon receipt of
documentation of payment of such amounts. Such salary, expenses and Bonuses to
be reimbursed by Buyer, including the timing of any such payments, shall be set
forth in a schedule which shall be provided by Buyer to Seller no later than the
tenth (10th) business day prior to the Closing Date.
Section 9.4. REASONABLE EFFORTS AND COOPERATION. For a period of
thirty-six (36) months after the Closing, each of Buyer and Seller shall notify
the other promptly after it becomes aware of any lost, damaged or improperly
destroyed customer records which may give rise to an indemnification Claim under
Article 11. Buyer shall utilize all commercially reasonable efforts to locate
any missing or misplaced storage boxes or other containers for which it may seek
indemnification under Article 11. In addition, Buyer shall provide Seller with
reasonable access during normal business hours to its facilities and records
(including electronic records and related computers) in order to permit Seller
to locate such missing or misplaced boxes or other storage containers, PROVIDED,
HOWEVER, that Seller shall not unreasonably disrupt Buyer's business operations
in connection with such efforts.
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ARTICLE 10.
TERMINATION
Section 10.1. TERMINATION OF AGREEMENT. The parties may terminate this
Agreement as provided below:
(a) Buyer and Seller may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(b) Buyer may terminate this Agreement by giving written notice to
Seller at any time prior to the Closing (i) in the event Seller has breached any
representation, warranty, or covenant contained in this Agreement in any
material respect, Buyer has notified Seller of the breach, and the breach has
continued without cure for a period of 30 days after the notice of breach or
(ii) if the Closing shall not have occurred on or before May 1, 2000, by reason
of the failure of any condition precedent under Article 6 hereof (unless the
failure results primarily from Buyer itself breaching any representation,
warranty, or covenant contained in this Agreement); and
(c) Seller may terminate this Agreement by giving written notice to
Buyer at any time prior to the Closing (i) in the event Buyer has breached any
representation, warranty, or covenant contained in this Agreement in any
material respect, Seller has notified Buyer of the breach, and the breach has
continued without cure for a period of 30 days after the notice of breach or
(ii) if the Closing shall not have occurred on or before May 1, 2000, by reason
of the failure of any condition precedent under Article 7 hereof (unless the
failure results primarily from Seller itself breaching any representation,
warranty, or covenant contained in this Agreement).
Section 10.2. EFFECT OF TERMINATION. If either party terminates this
Agreement pursuant to Section 10.1, all rights and obligations of the parties
hereunder, other than the confidentiality obligation set forth in Section 5.2,
shall terminate without any liability of any party to any other party; PROVIDED,
HOWEVER, that such termination shall not relieve any party from liability for
breach of any representation, warranty, covenant or agreement set forth in this
Agreement.
ARTICLE 11.
INDEMNIFICATION
Section 11.1. SURVIVAL. The representations and warranties of the
parties contained in or made pursuant to this Agreement, any Seller's Document
or any Buyer's Document (collectively, the "Collateral Documents") shall survive
the Closing and shall remain operative and in full force and effect for a period
of eighteen (18) months after the Closing Date (the "Escrow Period"), except
that in the case of title to the Subject Assets, matters relating to
Environmental Laws and Regulations and matters of a nature referred to in
Sections 3.7 and 3.10, which shall survive and remain operative and in full
force and effect for the applicable statute of limitations, regardless of any
investigation or statement as to the results thereof made by or on behalf of any
party hereto, except as provided in Section 11.2. The covenants and agreements
of the parties contained in or made pursuant to this Agreement that by their
terms do not survive the Closing shall also remain operative and in full force
and effect for the Escrow
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Period. All other covenants and agreements of the parties contained in or made
pursuant to this Agreement or any Collateral Document shall survive the Closing
and shall remain operative and in full force and effect until fully performed or
until termination of the statute of limitations applicable to contractual
obligations, whichever occurs first. The term "Indemnity Period" shall mean the
applicable period with respect to which a representation, warranty, covenant or
agreement survives the Closing as provided in this Section 11.1; PROVIDED,
HOWEVER, that the "Indemnity Period" for any Excluded Liability resulting from a
lost, damaged or improperly destroyed record of a customer shall be thirty-six
(36) months after the Closing Date. No claim for indemnification, other than
with respect to fraud or intentional and willful breach or willful
misrepresentation, may be asserted after the expiration of the Indemnity Period.
Notwithstanding anything herein to the contrary, any breach of a representation,
warranty, covenant or agreement which arises and is the subject of a claim that
is asserted in writing prior to the expiration of the applicable Indemnity
Period shall survive with respect to such claim or any dispute with respect
thereto until the final resolution thereof.
Section 11.2. INDEMNIFICATION
(a) Seller and Stockholder agree, jointly and severally, that on and after the
Closing they shall indemnify and hold harmless Buyer and its Affiliates,
stockholders, directors, officers, employees, agents and representatives
(collectively, the "Buyer Indemnified Parties") from and against any and all
damages, claims, losses, expenses, costs, obligations, and liabilities
including, without limiting the generality of the foregoing, liabilities for all
reasonable attorneys', accountants' and experts' fees and expenses actually
paid, including those incurred to enforce the terms of this Agreement or any
Collateral Document (excluding consequential damages, lost profits, lost
business opportunities and incidental damages) (collectively, "Loss and
Expense"), suffered by the Buyer Indemnified Parties by reason of or arising out
of (i) any breach of representation or warranty made by Seller or Stockholder
pursuant to this Agreement or any Collateral Document, (ii) any failure by
Seller or Stockholder to perform or fulfill any of its covenants or agreements
set forth in this Agreement or any Collateral Document, (iii) any Excluded
Liability (including, without limitation, any such Loss and Expense suffered by
the Buyer Indemnified Parties by reason of or arising out of the rack collapses
at Seller's Miami, Florida facilities in 1995 and at Seller's Dallas, Texas
facilities in August 1999, and the computerized inventory tracking server and
backup failure at Seller's Charlotte, North Carolina facilities in 1997), (iv)
for a period of twenty-four (24) months after the Closing Date, without limiting
anything contained in Section 11.2(a)(iii), any lost, damaged or improperly
destroyed records of customers with which Seller did not, as of the Effective
Time, have a contract which limited Seller's liability in the event of loss,
damage or destruction to $3.00 or less per standard letter legal carton, if it
cannot be determined with reasonable certainty whether the date of such loss,
damage or destruction occurred prior to or after the Effective Time, provided
that, with respect to any loss, damage or destruction described in this Section
11.2(a)(iv), Seller shall indemnify Buyer for only fifty percent (50%) of any
such Loss and Expense, and (v) any hazardous substance, hazardous material or
other environmental condition existing on, in or under the Owned or Leased
Premises on or before the Effective Time.
Notwithstanding anything in this Section 11.2(a) to the contrary, in
the event that (i) Buyer (A) on or prior to the date hereof, has actual
knowledge of any breach, untruth or
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inaccuracy of any representation or warranty of Seller or Seller's failure to
perform any pre-Closing covenant or agreement set forth in this Agreement or any
Collateral Document, or (B) between the date hereof and the Closing Date,
obtains actual knowledge of any breach, untruth or inaccuracy of any
representation or warranty of Seller or Seller's failure to perform any any
pre-Closing covenant or agreement set forth in this Agreement or any Collateral
Document which, in either case, would reasonably be expected to cause the Seller
to fail to satisfy any condition precedent contained in Article 6, and (ii)
Buyer elects to proceed with the Closing, it shall be deemed to have waived any
right thereafter to assert any claim with respect to such breach, untruth,
inaccuracy or failure of performance so known. For purposes of the preceding
sentence, Buyer shall have actual knowledge of a breach, untruth, inaccuracy or
failure of performance only if actual knowledge thereof is possessed by any one
or more of the following individuals: C. Richard Reese, Sean Slade and Robert
Miller.
(b) Buyer agrees that on and after the Closing it will indemnify
Seller and its Affiliates, stockholders, directors, officers, employees, agents
and representatives (collectively, the "Seller Indemnified Parties") and hold
them harmless from and against all Loss and Expense suffered by the Seller
Indemnified Parties by reason of or arising out of (i) any breach of
representation or warranty made by Buyer pursuant to this Agreement or any
Collateral Document, (ii) any failure by Buyer to perform or fulfill any of its
covenants or agreements set forth in this Agreement or any Collateral Document,
(iii) any liabilities or obligations assumed by Buyer under Section 2.2(c)
hereof, and (iv) for a period of twenty-four (24) months after the Closing Date,
any lost, damaged or destroyed records of customers described in Section
11.2(a)(iv), provided that, with respect to any such loss, damage or
destruction, Buyer shall indemnify Seller for only fifty percent (50%) of any
such Loss and Expense.
Notwithstanding anything in this Section 11.2(b) to the contrary, in
the event that (i) Seller (A) on or prior to the date hereof, has actual
knowledge of any breach, untruth or inaccuracy of any representation or warranty
of Buyer or Buyer's failure to perform any pre-Closing covenant or agreement set
forth in this Agreement or any Collateral Document, or (B) between the date
hereof and the Closing Date, obtains actual knowledge of any breach, untruth or
inaccuracy of any representation or warranty of Buyer or Buyer's failure to
perform any pre-Closing covenant or agreement set forth in this Agreement or any
Collateral Document which, in either case, would reasonably be expected to cause
the Buyer to fail to satisfy any condition precedent contained in Article 7, and
(ii) Seller elects to proceed with the Closing, it shall be deemed to have
waived any right thereafter to assert any claim with respect to such breach,
untruth, inaccuracy or failure of performance so known. For purposes of the
preceding sentence, Seller shall have actual knowledge of a breach, untruth,
inaccuracy or failure of performance only if actual knowledge thereof is
possessed by any one or more of the following individuals: James Spinney, Barry
Vaughn, Robert Price, Michael Demont, Stephen Suddath and A. Quinn Bell.
Section 11.3. LIMITATION OF LIABILITY; ESCROW AMOUNT.
(a) Notwithstanding the provisions of Section 11.2, after the
Closing, the Buyer Indemnified Parties shall be entitled to recover their Loss
and Expense in respect of (i) any Claim under Section 11.2(a)(i) (other than as
a result of any breach of the representation or
34
warranty contained in Section 3.26 or that relates to lost, damaged or
improperly destroyed records of customers) only in the event that the aggregate
Loss and Expense for all Claims exceed, in the aggregate, $250,000, in which
event the indemnified party shall be entitled to recover all such Loss and
Expense including such $250,000; and (ii) any Claim (A) under Section 11.2(a)(i)
(other than as a result of any breach of the representation or warranty
contained in Section 3.26), (B) under Section 11.2(a)(iv) or (C) relating to
lost, damaged or improperly destroyed records of customers (including, without
limitation, any such event that also constitutes an Excluded Liability) only to
the extent that the aggregate Loss and Expense for all Claims do not exceed
$5,400,000. Notwithstanding anything contained herein, the limitations on
recovery of Loss and Expense described in this Section 11.3(a) shall not apply
to any Claim relating to lost, damaged or improperly destroyed records of
customers described in the parenthetical clause contained in Section
11.2(a)(iii).
(b) Notwithstanding any other provision herein contained, Buyer may
(but shall not be required to), at any time during the Escrow Period, set-off
against the Escrow Amount any amounts for which the Seller or Stockholder is
required to indemnify the Buyer if and to the extent the Seller or Stockholder
has not previously paid any such amount. In no event shall such right to set-off
against the Escrow Amount be deemed to constitute a limitation on the liability
of Seller or the Stockholders under the provisions of this Article 11.
Section 11.4. NOTICE OF CLAIMS. If an indemnified party believes that
it has suffered or incurred any Loss and Expense, it shall notify the
indemnifying party promptly in writing, and in any event within the applicable
Indemnity Period specified in Section 11.1, describing such Loss and Expense,
all with reasonable particularity and containing a reference to the provisions
of this Agreement in respect of which such Loss and Expense shall have occurred.
If any litigation, arbitration or other proceeding is instituted by a third
party with respect to which an indemnified party intends to claim any liability
or expense as Loss and Expense under this Article, such indemnified party shall
promptly notify the indemnifying party of such legal action. In no event shall
the failure to notify the indemnifying party under this Section relieve the
indemnifying party of its obligations under this Article, except to the extent
such failure to notify prejudices such indemnifying party (including, without
limitation, its ability to defend against such claim).
Section 11.5. DEFENSE OF THIRD PARTY CLAIMS. The indemnifying party
shall have the right to conduct and control, through counsel of its own
choosing, reasonably acceptable to the indemnified party, any third party legal
action or other claim, but the indemnified party may, at its election,
participate in the defense thereof at its sole cost and expense; PROVIDED,
HOWEVER, that if the indemnifying party shall fail to defend any such legal
action or other claim, then the indemnified party may defend, through counsel of
its own choosing, such legal action or other claim, and (so long as it gives the
indemnifying party at least fifteen (15) days' notice of the terms of the
proposed settlement thereof and permits the indemnifying party to then undertake
the defense thereof) settle such legal action or other claim and to recover the
amount of such settlement or of any judgment and the reasonable costs and
expenses of such defense. The indemnifying party shall not compromise or settle
any such legal action or other claim without the prior written consent of the
indemnified party, which consent shall not unreasonably be withheld, delayed or
conditioned if the terms and conditions of such compromise or settlement
proposed by the indemnifying party and agreed to in writing by the claimant in
such legal action
35
or other claim (the "Settlement Proposal") (a) include a full release of the
indemnified party from the legal action or other claim which is the subject of
the Settlement Proposal, and (b) if the indemnified party is a Buyer Indemnified
Party, do not include any term or condition which would restrict in any material
manner the continued ownership or operations of the Subject Assets or the
conduct of the Business in substantially the manner previously owned, operated
and conducted by Seller. No matter whether an indemnifying party defends or
prosecutes any third party legal action or claim, the indemnified and
indemnifying parties shall cooperate in the defense or prosecution thereof. Such
cooperation shall include access during normal business hours afforded to the
indemnifying party to, and reasonable retention by the indemnified party of,
records and information which are reasonably relevant to such third party legal
action or claim, and making employees available on a mutually convenient basis
to provide additional information and explanation of any material provided
hereunder, and the indemnifying party shall reimburse the indemnified party for
all its reasonable out-of-pocket expenses in connection therewith.
Section 11.6. EXCLUSIVE REMEDY. Except for fraud, willful and
intentional misrepresentation or willful and intentional breach of warranty,
covenant or agreement, the indemnification provided in this Article shall be the
sole and exclusive post-Closing remedy available to any party against any other
party for any claim relating to this Agreement.
ARTICLE 12.
MISCELLANEOUS PROVISIONS
Section 12.1. COMMISSIONS. Each party represents and warrants that,
except for Seller's engagement of Heritage Capital Group, Inc. and as disclosed
pursuant to its representations and warranties, it has dealt with no broker or
finder in connection with this Agreement and, insofar as it knows, no broker or
other person is entitled to any commission or finder's fee in connection with
the consummation of the transactions contemplated by this Agreement. If either
party has retained or been represented by a broker or finder in this
transaction, such party shall be solely responsible to pay, and shall indemnify
the other from any claims for, any fees or commissions of such person.
Section 12.2. EXPENSES. Except as otherwise provided herein, each of
the parties shall pay all costs and expenses incurred or to be incurred by it in
the negotiation and preparation of this Agreement and in closing and carrying
out the transactions contemplated by this Agreement. Except for any costs, fees
and expenses associated with compliance with federal and state securities laws,
which shall be the sole responsibility of Buyer, Buyer and Seller shall split
equally all costs, fees and expenses associated with state, city, county,
municipal and other regulatory filings, licenses and notices required in
connection with this Agreement or the Closing, including, without limitation,
any fees payable in connection with the HSR Act.
Section 12.3. HEADINGS; SCHEDULES. The subject headings of the sections
and subsections of this Agreement are included only for purposes of convenience,
and shall not affect the construction or interpretation of any of its
provisions. Any disclosure made by Seller in a Schedule hereto shall be deemed a
disclosure on all Schedules hereto.
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Section 12.4. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Signatures on this
Agreement delivered by fax or telecopier shall be considered original signatures
for purposes of effectiveness of this Agreement.
Section 12.5. RIGHTS OF PARTIES. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties to it and their
respective successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third person to any
party to this Agreement, nor shall any provision give any third persons any
right of subrogation or action against any party to this Agreement.
Section 12.6. ASSIGNMENT. Except as provided in the following
paragraph, the rights and obligations of the parties to this Agreement and any
interest in this Agreement shall not be assigned, transferred, hypothecated,
pledged or otherwise disposed of without the prior written consent of the
nonassigning party which consent may be withheld in such party's sole
discretion.
Buyer shall have the right to assign to a wholly-owned subsidiary of
Buyer its rights and obligations under this Agreement; provided that such
assignment shall not release Buyer from its obligations hereunder, and Buyer
shall remain fully liable for all of Buyer's obligations hereunder, including
without limitation the payment of the entire Purchase Price (including
indemnification obligations).
Section 12.7. COMPLIANCE WITH BULK SALES LAW. Buyer and Seller hereby
waive compliance by Seller with the bulk sales law, if any, and any other
similar laws in any applicable jurisdiction in respect of the transactions
contemplated by this Agreement. Seller and Stockholder shall jointly and
severally indemnify Buyer from, and hold it harmless against, any liabilities,
damages, costs and expenses resulting from or arising out of (a) the parties'
failure to comply with any of such laws in respect of the transactions
contemplated by this Agreement, or (b) any action brought or levy made as a
result thereof, other than those liabilities which have been expressly assumed,
on such terms as expressly assumed, by Buyer pursuant to this Agreement.
Section 12.8. NOTICES. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if delivered by telecopier (with
notice of receipt provided that a copy is delivered to the recipient by
overnight private carrier), or if served personally on the party to whom notice
is to be given; or if delivered by overnight private carrier, on the date of
delivery; or on the third day after mailing if mailed to the party to whom
notice is to be given by first class mail, certified, postage prepaid, and
properly addressed as following:
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To Seller or the Stockholder:
Suddath Van Lines, Inc.
815 South Main Street, 6th Floor
Jacksonville, Florida 32207
Attention: Robert J. Price
Telecopier: (904) 390-7117
With a copy (which shall not constitute notice but which is nonetheless
required for notice) to:
Smith Hulsey & Busey
225 Water Street, Suite 1800
Jacksonville, Florida 32202
Attention: John R. Smith, Jr.
Telecopier: (904) 359-7708
To Buyer:
Iron Mountain Records Management, Inc.
745 Atlantic Avenue, 10th Floor
Boston, Massachusetts 02111-2735
Attention: John F. Kenny, Jr.
Telecopier: (617) 350-7881
With a copy (which shall not constitute notice but which is nonetheless
required for notice) to:
William J. Curry, Esq.
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02111-2735
Telecopier: (617) 338-2880
Any party may change its address for purposes of this paragraph by giving the
other parties written notice of the new address in the manner set for above.
Section 12.9. APPLICABLE LAW; JURISDICTION AND REMEDIES. This Agreement
shall take effect as a sealed instrument, and is governed by and shall be
construed and enforced in accordance with the internal laws of the State of
Florida (without reference to principles of conflicts or choice of law that
would cause the application of the internal laws of any other jurisdiction),
except that matters of law concerning the internal corporate affairs of any
corporate entity which is a party to or the subject of this Agreement shall be
governed by the jurisdiction under which such entity derives its powers. The
parties hereto expressly consent and agree that any dispute, controversy, legal
action or other proceeding that arises under, results from, concerns or relates
to this Agreement shall be brought in the federal and state courts in and of the
State of Florida and acknowledge that they will accept service of process by
registered or certified mail or the equivalent directed to their last known
address as determined by the other
38
party in accordance with this Agreement or by whatever other means are permitted
by such courts. The parties hereto hereby acknowledge that said courts have
jurisdiction over any such dispute or controversy, and that they hereby waive
any objection to personal jurisdiction or venue in these courts or that such
courts are an inconvenient forum. All remedies at law, in equity, by statute or
otherwise shall be cumulative and may be enforced concurrently or from time to
time and, subject to the express terms of this Agreement, the election of any
remedy or remedies shall not constitute a waiver of the right to pursue any
other available remedies.
Section 12.10. ADDITIONAL INSTRUMENTS AND ASSISTANCE. Each party hereto
shall at any time, and from time to time after the Closing Date, upon reasonable
request of the other party or its counsel, execute, acknowledge and deliver all
such further acts, deeds, assignments, transfers, conveyances, powers of
attorney and assurances as may be required to carry out the intent of this
Agreement, at the expense of the requesting party, unless the requesting party
is entitled to indemnification with respect to such matter.
Section 12.11. SEVERABILITY. If any provision of this Agreement is held
or deemed to be invalid or unenforceable to any extent when applied to any
person or circumstance, such invalidity or unenforceability shall not affect the
remaining provisions of this Agreement; the remaining provisions hereof and the
enforcement of such provision with respect to other persons or circumstances, or
to another extent, shall not be affected thereby and each provision hereof shall
be enforced to the fullest extent allowed by law. Moreover, the invalid or
inoperative provision shall be reformed and construed so that it shall be valid
and enforceable to the maximum extent permitted.
Section 12.12. PRONOUNS AND TERMS. In this Agreement, the singular
shall include the plural, the plural the singular, and the use of any gender
shall include all genders.
Section 12.13. ENTIRE AGREEMENT, AMENDMENTS AND WAIVERS. This
Agreement, together with all Exhibits and Schedules hereto, constitutes the
entire agreement among the parties pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties, and there
are no representations, warranties or other agreements among the parties in
connection with the subject matter hereof except as set forth specifically
herein or contemplated hereby. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
Section 12.14. CONSTRUCTION. The language in this Agreement will be
deemed the language chosen by the parties to express their mutual intent and no
rule of strict construction will be applied against any party.
[Signatures appear on following page.]
39
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it
on the date first above written.
DATA STORAGE CENTER, INC. IRON MOUNTAIN RECORDS
MANAGEMENT, INC.
By: /s/ MICHAEL E. DEMONT By: /s/ JOHN F. KENNY JR.
-------------------------------- -----------------------------
Michael E. Demont Name: John F. Kenny, Jr.
Chief Executive Officer Title: EVP & CFO
DSC OF FLORIDA, INC.
By /s/ MICHAEL E. DEMONT
--------------------------------
Michael E. Demont
Chief Executive Officer
DSC OF MASSACHUSETTS, INC.
By /s/ MICHAEL E. DEMONT
--------------------------------
Michael E. Demont
Chief Executive Officer
SUDDATH VAN LINES, INC.
By /s/ BARRY S. VAUGHN
--------------------------------
Barry S. Vaughn
Chief Operating Officer
40