STOCK PURCHASE AND SALE AGREEMENT
among
Iron Mountain Records Management, Inc.
(Purchaser)
and
the Shareholders of
Data Archive Services of Miami, Inc.
(DAS-Miami)
and
Data Archive Services, Inc.
(DAS-Ft. Lauderdale)
As of August 9, 1996
TABLE OF CONTENTS
1. DEFINITIONS..............................................................1
2. PURCHASE AND SALE OF THE COMPANIES SHARES................................2
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANIES..................4
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION...............16
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER.............................17
6. OTHER COVENANTS AND AGREEMENTS..........................................18
7. CONDITIONS TO CLOSING...................................................26
8. TERMINATION AND ABANDONMENT.............................................29
9. INDEMNIFICATION.........................................................29
10. MISCELLANEOUS..........................................................36
11. PRINCIPAL SHAREHOLDER..................................................40
Disclosure Schedule
Exhibit 6.3 Auditing Agreements
Exhibit 7.1(f) Seller's Opinion - Hodges & Carry
Exhibit 7.1(j) Noncompetition and Confidentiality Agreement
Exhibit 7.2(f) Purchaser's Opinion - Garry B. Watzke, Esq.
STOCK PURCHASE AND SALE AGREEMENT
---------------------------------
This Agreement entered into as of August ____, 1996 by and among Iron
Mountain Records Management, Inc., a Delaware corporation ("Purchaser"), and the
individuals whose signatures appear on the signature page hereof (the
"Shareholders") as stockholders of Data Archive Services of Miami, Inc., a
Florida corporation ("DAS-Miami"), and Data Archive Services, Inc., a Florida
corporation ("DAS-Ft. Lauderdale" and together with DAS-Miami, the "Companies").
R E C I T A L S
The Shareholders in the aggregate constitute the owners of all the
issued and outstanding capital stock of DAS-Miami and DAS-Ft. Lauderdale. Each
Shareholder owns that number of shares of the capital stock of the Companies as
set forth in Section 1 of the Disclosure Schedule (as hereinafter defined).
This Agreement contemplates a transaction in which Purchaser will
purchase from the Shareholders, and the Shareholders will sell to Purchaser, all
of the issued and outstanding capital stock of DAS-Miami and DAS-Ft. Lauderdale
for a price, a portion of which is contingent upon certain matters, as herein
set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
provisions herein made, the parties agree as follows:
1. DEFINITIONS.
1.1 "Closing" shall mean the closing of the transactions
contemplated by this Agreement.
1.2 "Closing Date" shall mean August 9, 1996 or such other date as
the parties may agree.
1.3 "Companies Shares" shall mean the capital stock of DAS-Miami
and DAS-Ft. Lauderdale issued and outstanding on the Closing Date.
1.4 "Disclosure Schedule" shall mean the Disclosure Schedule
annexed hereto and made a part hereof.
1.5 "Eligible Revenues" shall mean all revenues recognized by the
Companies in accordance with generally accepted accounting principles, including
revenues from storage, service and sale of cartons and other materials, but
excluding
(a) permanent removal revenue related to termination of a
customer's relationship with the Companies;
(b) special projects revenue which exceeds the average
percentage of special projects revenue recognized by the Companies on a combined
basis in the months of January through July, 1996; and
(c) product sales revenue which exceeds the average percentage
of product sales revenue recognized by the Companies on a combined basis in the
months of January through July, 1996; and
(d) Storage and service revenues in the month of July in respect
of a terminating customer.
In addition, there shall be excluded from Eligible Revenues amounts
recognized for provision of storage boxes and indexing services related to the
FDMS account unless the pricing for such indexing services is increased to at
least $0.10 per batch (as compared to present pricing of $0.50 per box).
1.6 "The Companies' or Shareholders' Knowledge" or "to the
knowledge of the Companies' or Shareholders'" or phrases of similar import means
information of which either the Principal Shareholder or Christopher Howard is
aware or should be aware after reasonable inquiry of the key personnel who
regularly perform services for the Companies whose responsibilities would make
the information in question within their purview.
1.7 "Principal Shareholder" shall mean P. Douglas McCraw.
1.8 "Purchase Price" shall mean the total sum to be paid for all
the Companies Shares, as described in Section 2.2.
2. PURCHASE AND SALE OF THE COMPANIES SHARES.
2.1 Basic Transaction. On and subject to the terms and conditions
of this Agreement, Purchaser agrees to purchase from each of the Shareholders,
and each of the Shareholders agrees to sell to Purchaser, all of his or her
shares of DAS-Miami and DAS-Ft. Lauderdale for the consideration specified in
Section 2.2.
2.2 Purchase Price. The Purchase Price for all of the issued and
outstanding shares of capital stock of DAS-Miami and DAS-Ft. Lauderdale shall
consist of an initial payment (the "Initial Payment") and, if earned, one or two
contingent payments (each a "Contingent Payment"), as follows:
(a) Initial Payment. Subject to adjustments to the Purchase
Price as provided herein, the Initial Payment shall be equal to (i)
(b) Purchase Price Adjustments. Notwithstanding any provision
herein to the contrary, the Purchase Price shall be subject to adjustment for
the matters described in Sections 2.2(e), 6.3(f) and 6.3(g).
(c) Contingent Payments.
(i) The maximum aggregate amount of the Contingent Payments
(the "Maximum Contingent Payment") shall be .
(ii) A Contingent Payment shall be payable, if at all, only
if aggregate Eligible Revenues received from the existing customer and
prospective customers of the Companies referenced in Section 2.2 of the
Disclosure Schedule (the "Listed Customers") with respect to the months of
October, 1996 and/or January, 1997 exceed the aggregate of Eligible Revenues
received from Listed Customers for the month of July, 1996, and the amount of
each Contingent Payment shall be determined as follows.
(iii) If such aggregate Eligible Revenues in respect of the
Listed Customers in the month of October, 1996 exceed the aggregate Eligible
Revenues from the Listed Customers for July, 1996 as set forth in Section 2.2 of
the Disclosure Schedule, a first Contingent Payment shall be paid not later than
November 29, 1996 equal to (a) the excess of such aggregate Eligible Revenues
from Listed Customers for October, 1996 over the aggregate Eligible Revenues
from Listed Customers for July, 1996 (b) adjusted either to (y), if it is
determined that Eligible Revenues from all customers for July, 1996 (the "July
Eligible Revenues") were more than $148,550, add to Eligible Revenues from the
Listed Customers such excess of July Eligible Revenues over $148,550, or (z), if
it is determined that July Eligible Revenues were less than $148,550, subtract
from Eligible Revenues from the Listed Customers the difference between $148,550
and the July Eligible Revenues, which result shall be multiplied by 34.50. If
aggregate Eligible Revenues from Listed Customers in the month of January, 1997
exceed the aggregate Eligible Revenues from Listed Customers for the month of
October, 1996, a second Contingent Payment shall be paid not later than February
28, 1997 equal to such excess of such aggregate Eligible Revenues for January,
1997 over such aggregate Eligible Revenues for the month of October, 1996
multiplied by 34.50. In no event, however, shall the sum of the first and second
Contingent Payments exceed the Maximum Contingent Payment.
(iv) With each Contingent Payment Purchaser shall deliver to
Principal Shareholder a statement showing the Eligible Revenues received from
the Listed Customers, or from all the customers, as applicable in respect of
July Eligible Revenues, for the relevant month and other details showing how the
amount of the Contingent Payment was calculated. Principal Shareholder shall
have the right during business hours and upon reasonable notice to review and
audit Purchaser's books and records to verify that the calculation of the
Contingent Payment was performed properly; provided that Principal Shareholder
shall have no right of audit if the Maximum Contingent Payment shall have been
paid, and Principal Shareholder's right of audit shall terminate on March 31,
1997
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unless the audit was commenced prior to March 31, 1997 and in good faith
extends beyond such date, but not beyond April 30, 1997. Fees and expenses of
the audit shall be borne by the party whose position is not upheld in the audit.
(d) Miami/Ft. Lauderdale. The Purchase Price shall be allocated
between the Shareholders of DAS-Miami and DAS-Ft. Lauderdale as follows. The sum
of $ shall be allocated to each of DAS-Miami and DAS-Ft. Lauderdale.
There shall be subtracted from the amount so allocated to each Company an amount
equal to the reduction in Purchase Price, if any, to be made in respect of each
Company because of balance sheet adjustments to be made pursuant to Section 2.2
(e). The result of such calculation in respect of DAS-Miami shall be the
"DAS-Miami Purchase Price", and the result of such calculation in respect of
DAS-Ft. Lauderdale shall be the "DAS-Ft. Lauderdale Purchase Price". The
Shareholders of each Company shall share in the Purchase Price of each Company
pro rata in accordance with the number of shares of such Company held of record
on the Closing Date by such Shareholders as set forth in the Disclosure
Schedule. The Initial Payment and each Contingent Payment shall be allocated pro
rata between the Shareholders of DAS-Miami and DAS-Ft. Lauderdale in the same
ratio that the DAS-Miami Purchase Price bears to the DAS-Ft. Lauderdale Purchase
Price.
(e) The Companies' Closing Balance Sheet. As of July 31, 1996,
each of the Companies shall have (i) at least $1.00 of cash and (ii) current
assets (net of doubtful accounts receivable) equal to or greater than total
liabilities of such Company. If total liabilities of either Company exceed its
current assets, the Purchase Price with respect to such Company shall be reduced
dollar-for-dollar by such excess of total liabilities over current assets; and
if current assets of either Company exceed its total liabilities, the Purchase
Price with respect to such Company will be increased dollar-for-dollar. Any such
adjustment is hereinafter referred to as an "Adjustment".
(f) Escrow. An amount equal to the Maximum Contingent Payment
(the "Contingent Payment Escrow") shall be paid on the Closing Date to the law
firm of Alston & Bird (the "Escrow Agent") as escrow agent under an escrow
agreement among Purchaser, Principal Shareholder and Escrow Agent (the "Escrow
Agreement"). The first and second installments of the Contingent Payment shall
be disbursed to the Shareholders in accordance with the terms hereof, or
disbursed to Purchaser on March 31, 1997 (or later in the event of an audit
which extends beyond March 31, 1997 as provided in Section 2.2(c)(iv)) if and to
the extent that the amount of Contingent Payments earned is less than the
Maximum Contingent Payment, all as more fully described in the Escrow Agreement.
Interest accrued on the funds in escrow shall accrue and be paid pro rata to the
parties to whom funds are disbursed as if such funds were the property of the
payees from the date of deposit.
2.3 Procedure for Payment. The Initial Payment shall be paid by wire
transfer of immediately available funds to such account as each Shareholder may
designate in writing not less than two business days prior to the Closing Date;
or, if no such designation is made, by check to such Shareholder at his or her
address as set forth in Section 1 of the Disclosure Schedule. Payment of the
installments of the Contingent Payment, if any, shall be made by regular check
mailed by the Escrow Agent to each Shareholder at such Shareholder's address as
set forth in Section 1 of the Disclosure Schedule.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANIES. The
Shareholders represent and warrant to Purchaser that the statements
contained in this Section 3 are correct and complete in all material respects as
of the date of this Agreement and will be correct and complete in all material
respects as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 3),
except as set forth in the Disclosure Schedule. The Disclosure Schedule, where
relevant, is arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Section 3. Disclosure of a matter in any section or
paragraph of the Disclosure Schedule shall constitute disclosure of such matter
in each other paragraph or section of the Disclosure Schedule.
3.1 Existence; Good Standing; Corporate Authority. Each of the
Companies is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Florida. Neither of the Companies is
required to be licensed or qualified to do business as a foreign corporation in
any jurisdiction. Each of the Companies has all requisite corporate power and
authority to own its properties and carry on its business as now conducted.
Neither of the Companies is in default under or in violation of any provision of
its Articles of Incorporation or Bylaws.
3.2 Governmental Consents. Other than as set forth in the Disclosure
Schedule, neither of the Companies needs to give any notice to, make any filing
with or obtain any authorization, consent or approval of any government or
governmental agency in order for the parties to consummate the transactions
contemplated by this Agreement.
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3.3 Noncontravention. Except as set forth in the Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) require the
consent of any party to any material contract (which term when used in this
Agreement shall mean any contract or agreement described in Section 3.15) with
the Companies, or (ii) result in the breach of any term or provision of, or
constitute a default under, or result in the acceleration of or entitle any
party to accelerate (whether after the giving of notice or the lapse of time or
both) any obligation under, or result in the creation or imposition of any lien,
charge, pledge, security interest or other encumbrance upon any part of the
property of either of the Companies pursuant to any provision of, any order,
judgment, arbitration award, injunction, decree, indenture, mortgage, lease,
license, lien, or other agreement or instrument to which either Company is a
party or by which it is bound and which would have a material adverse effect on
the Companies taken as a whole, or violate or conflict with any provision of any
statute, law, regulation, rule or injunction to which either Company is subject
and which (as to any such violation of or conflict with any statute, law,
registration, rule or injunction) would have a material adverse effect on the
Companies taken as a whole, or the Bylaws or Articles of Incorporation of either
Company as amended to the date of this Agreement.
3.4 Affiliated Entities. Neither Company owns any equity
securities, or rights to acquire the equity securities, of any corporation,
business trust, joint stock company, partnership or other business organization
or association; and neither Company controls, through voting stock, board of
director seats or any other means, any other corporation, partnership or other
entity.
3.5 Capitalization. The capitalization of each of the Companies
is as set forth in the Disclosure Schedule. No shares of capital stock are held
in treasury by either Company. Except as set forth in the Disclosure Schedule,
there are no outstanding or authorized rights, warrants, options, subscriptions,
agreements or binding commitments giving anyone any right to require the
Companies to sell or issue, or any person the right to buy or acquire, from the
Companies any capital stock of either Company. To the extent any such rights are
outstanding they will be terminated prior to the Closing. All of the issued and
outstanding Companies Shares of each Company are duly authorized, validly
issued, fully paid, nonassessable, and are held of record by the respective
Shareholders as set forth in Section 1 of the Disclosure Schedule. The shares of
capital stock of DAS-Ft. Lauderdale are free of all pre-emptive rights, and the
pre-emptive rights accorded to the shares of capital stock of DAS-Miami have
been fully satisfied and complied with in every respect or waived in writing,
and no person has any claim under such pre-emptive rights. There are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to either Company. There are no voting trusts, proxies or other
agreements or understandings with respect to the voting of any Companies Shares.
All of the issued and outstanding Companies Shares were issued in compliance
with applicable federal and state securities laws.
3.6 Records. The corporate minute books of each of the Companies
to be delivered to Purchaser at the Closing shall contain true and complete
copies of the Articles of Incorporation, as amended to the Closing Date, Bylaws,
as amended to the Closing Date, and, to the extent records exist, the minutes of
all meetings of directors and shareholders and instruments reflecting all
actions taken by the directors or shareholders without a meeting, from the date
of incorporation of each Company to the Closing Date.
3.7 Officers and Directors; Bank Accounts; Powers of Attorney.
The officers and directors of each Company are as set forth in the Disclosure
Schedule. The Disclosure Schedule also sets forth (i) the name of each bank,
savings institution or other person with which each Company has an account or
safe deposit box and the names and identification of all persons authorized to
draw thereon or to have access thereto and (ii) the names of all persons, if
any, holding powers of attorney from either Company.
3.8 Financial Statements. Each Company has furnished to Purchaser
unaudited financial statements of each Company, including balance sheets and
statements of operations, changes in shareholders' deficit and cash flow as of
and for the years ended May 31, 1996 and 1995 and unaudited financial statements
of each Company as of and for the one-month period ended June 30, 1996,
including a balance sheet and statement of operations as of and for the period
then ended.
The financial statements described in the preceding paragraph of
this Section 3.8 are hereinafter referred to as the "Pre-Signing Financial
Statements". The Pre-Signing Financial Statements fairly set forth in all
material respects the financial condition of the Companies as of the dates
indicated, and the results of their operations for the periods indicated on a
tax basis, consistently applied. The Pre-Signing Financial Statements are
included in the Disclosure Schedule.
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3.9 Undisclosed Liabilities. To the best of the Shareholders'
knowledge, neither of the Companies has any material liabilities or material
obligations whatsoever, either accrued, absolute, contingent or otherwise, which
are not reflected or provided for in the Pre-Signing Financial Statements as of
June 30, 1996 except (i) those arising after June 30, 1996 which were incurred
in the ordinary course of business and none of which, individually or in the
aggregate, is materially adverse, and (ii) as and to the extent specifically
described in the Disclosure Schedule.
3.10 Absence of Certain Changes or Events. To the best of the
Shareholders' knowledge, since June 30, 1996, except as set forth in the
Disclosure Schedule, neither of the Companies has:
(a) incurred any material obligation or liability (fixed or
contingent), except normal trade or business obligations incurred in the
ordinary course of business, none of which is materially adverse, and except in
connection with this Agreement and the transactions contemplated hereby;
(b) discharged or satisfied any material lien, security
interest or encumbrance or paid any material obligation or liability (fixed
or contingent), other than in the ordinary course of business, except for
possible accelerated payments of debt;
(c) mortgaged, pledged or subjected to any lien, security
interest or other encumbrance any of its material assets or properties
(other than purchase money security interests arising as a matter of law between
the date of delivery and payment);
(d) transferred, leased or otherwise disposed of any material
part of its assets or properties except for fair consideration in the
ordinary course of business or, except in the ordinary course of business,
acquired any material assets or properties;
(e) cancelled or compromised any material debt or claim owed
to it, except in the ordinary course of business;
(f) waived or released any rights of material value;
(g) transferred or granted any rights under any material
leases, licenses, agreements, patents, inventions, trademarks, trade names,
service marks or copyrights or with respect to any know-how;
(h) made or granted any wage or salary increase applicable to
any group or classification of employees generally or to any officer of either
Company, entered into any employment contract with, or made any material loan
to, or entered into any material transaction of any other nature with, any
officer or employee of either Company;
(i) entered into any material transaction, contract or
commitment, except (i) transactions in the ordinary course of business and
(ii) this Agreement and the transactions contemplated hereby;
(j) suffered any casualty, loss or damage (whether or not
such loss or damage shall have been covered by insurance) which affects in
any material respect such Company's ability to conduct business; or
(k) declared any dividends or bonuses, or authorized or
effected any amendment or restatement of the articles of incorporation or
by-laws of such Company or taken any steps looking toward the dissolution or
liquidation of such Company other than as permitted or contemplated by this
Agreement.
3.11 Taxes. With respect to Taxes (as defined below), except as
set forth in the Disclosure Schedule:
(a) each of the Companies has filed, within the time and in
the manner prescribed by law, all returns, declarations, reports, estimates,
information returns and statements ("Returns") required to be filed under
federal, state or local Tax laws by such Companies, and all such Returns are
true, correct and complete in all material respects;
(b) each of the Companies has within the time and in the
manner prescribed by law, paid (and until the Effective Time will, within
the time and in the manner prescribed by law, pay) all Taxes that are due
5
and payable, except to the extent that the failure to so pay would not have
a material adverse effect on the Companies, taken as a whole;
(c) each of the Companies has established (and until the
Effective Time will maintain) on its books and records reserves that are
adequate for the payment of all Taxes not yet due and payable;
(d) there are no liens for Taxes upon the assets of either
of the Companies except liens for Taxes not yet due;
(e) neither of the Companies has filed (and neither of the
Companies will file prior to the Effective Time) any consent agreement under
Section 341(f) of the Internal Revenue Code of 1986, amended (the "Code") and
none of the assets of either of the Companies are subject to an election under
Section 341(f) of the Code, nor has either of the Companies been a United States
real property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code;
(f) neither of the Companies has consented to any staying or
tolling of the statute of limitations for the assessment of federal income taxes
or the statute of limitations for the assessment of state and local income
taxes, and no deficiency for any Taxes has been proposed, asserted or assessed
against either of the Companies which has not been resolved and paid in full. No
examination or audit of any Returns of either of the Companies by any
governmental entity is currently in progress or, to the knowledge of the
Companies or Shareholders, threatened or contemplated.
(g) there are no outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Returns that have been given by either of the Companies;
(h) no federal, state or local audits or other administrative
proceedings or court proceedings are presently pending with regard to any
Taxes or Returns;
(i) neither of the Companies is a party to any tax-sharing
or allocation agreement, nor do the Companies owe any amount under any
tax-sharing or allocation agreement;
(j) neither of the Companies has any actual or potential
liability for any tax obligation of any taxpayer (including without
limitation any affiliated group of corporations or other entities that included
the Companies during a prior period) other than the Companies;
(k) no amounts payable under any employee benefit plans will
fail to be deductible for federal income tax purposes by virtue of Section
280G of the Code; and
(l) each of the Companies has complied (and until the
Effective Time will comply) in all material respects with all applicable
laws, rules and regulations relating to the payment and withholding of Taxes
(including, without limitation, withholding of Taxes pursuant to Sections 1441
or 1442 of the Code) and has, within the time and in the manner prescribed by
law, withheld from employees' wages and paid over to the proper governmental
authorities all amounts required to be so withheld and paid over under all
applicable laws except to the extent that the failure to so comply or pay over
would not have a material adverse effect on the Companies, taken as a whole and
would not subject the Companies to a fine or penalty in excess of $5,000 in the
aggregate.
For purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies or other assessments of whatever kind or nature,
including, without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, value-added, transfer, franchise, profits, license,
withholding, payroll, employment, excise, stamp, occupancy or property taxes,
customs duties, fees, assessments or charges of any kind whatsoever (together
with any interest and any penalties, additions to tax or additional amounts)
imposed by any taxing authority (domestic or foreign) upon or payable by the
Companies.
Copies of all federal, state and local tax returns,
examinations, reports and statements of deficiencies assessed against or agreed
to by either or both of the Companies for any and all taxable periods with
respect to which the statute of limitations for the collection of any Tax has
not expired have been made available for inspection by Purchaser.
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3.12 Title to Property and Assets. Each of the Companies has good
and marketable title to all of the properties and assets purported to be owned
by it and used by it in the conduct of its business (including, without
limitation, the properties and assets reflected in the June 30, 1996 balance
sheet included in the Pre-Signing Financial Statements) except any thereof since
disposed of in the ordinary course of business and none of such properties or
assets is, except as disclosed in the Pre-Signing Financial Statements or the
Disclosure Schedule, subject to security interests, mortgages, encumbrances,
liens or charges of any kind or character except for purchase money security
interests which arise by law between the date of delivery of goods and the date
of payment, liens for taxes not yet due and payable and inchoate mechanic's
material man's and landlord liens.. The Disclosure Schedule identifies all
leases under which the Companies lease equipment or vehicles used in their
businesses.
3.13 Condition of Personal Property. Except as set forth in the
Disclosure Schedule, tangible personal property, equipment, fixtures and
inventories included within the assets of the Companies or required to be used
in the ordinary course of business, taken as a whole, are in good or reasonably
repairable condition for their age, reasonable wear and tear excepted, and are
suitable for the purposes for which they are currently used except for
miscellaneous items not material to the operation of the Company's business.
3.14 Real Estate.
(a) Neither Company owns any real property. The Disclosure
Schedule contains a list of all real property in which either Company has a
leasehold or other interest and of any material lien, charge or encumbrance on
such Company's interest therein except for purchase money security interests
which arise by law between the date of delivery of goods and the date of
payment, liens for taxes not yet due and payable and inchoate mechanic's,
material man's and landlord liens. The Shareholders have provided Purchaser with
true and correct copies of all such leases or other instruments listed on the
Disclosure Schedule. Neither of the Companies has received written notice to the
effect that the improvements on such properties do not, and to the best of the
Shareholders' knowledge such improvements and use thereof by the Companies do,
conform to all applicable lease restrictions and zoning and other local
ordinances, except where failure to conform to such restrictions and ordinances
does not have a material adverse effect on the Companies taken as a whole.
(b) Subject to the receipt of any consents required thereunder
as disclosed in the Disclosure Schedule, each such lease or sublease will
continue to be legal, valid, binding and enforceable against the Companies
following the Closing in accordance with the terms thereof as in effect prior to
the Closing, subject to the effect of applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance and similar laws of general application
relating to the enforcement of creditors' rights generally and to the discretion
of a court in granting equitable relief (the "Enforceability Exceptions").
Neither of the Companies nor, to the Shareholders' knowledge, any other party to
any such lease or sublease is in breach or default, and no event has occurred
which, with notice or lapse of time, would constitute a breach or default by the
Companies or, to the Shareholders' knowledge, by the other parties thereto, or
permit termination, modification, or acceleration thereunder by the other party
or, to the Shareholders' knowledge, by the Company, other than possible defaults
arising from prohibitions on the transfer of the Companies' capital stock
contained in the provisions of leases. There are no disputes, written agreements
or forbearance programs in effect as to any such lease or sublease. Except as
disclosed in the Disclosure Schedule, no consent is required by the terms of any
such lease or, to the Shareholders' knowledge, by any holder of a mortgage or
deed of trust affecting the leased real property in connection with the
transactions contemplated by this Agreement.
3.15 List of Contracts and Other Data. The Disclosure Schedule
sets forth the following:
(a) all material computer software (except software readily
available from retail vendors), material patents and registrations for material
trademarks, trade names, service marks and copyrights which are used in
connection with the operation of the Companies' business, as well as all
applications pending for material patents or for material trademark, trade name,
service mark or copyright registrations, and all similar intellectual property
rights, owned or held by either Company and which are reasonably necessary to,
or used in connection with, the business of the Companies, and (ii) all material
licenses granted by or to the Companies and all other material agreements to
which either of the Companies is a party and which relate, in whole or in part,
to any items of the categories mentioned in (i) above or to other material
intellectual property rights of either Company which are reasonably necessary
to, or used in connection with, the business of such Company;
(b) all written sales agent agreements and other marketing
agreements to which either Company is a party;
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(c) all written employment and consulting agreements, executive
compensation plans, bonus plans, profit-sharing plans, deferred compensation
agreements, employee pension or retirement plans, employee stock purchase and
stock option plans, group life insurance, hospitalization insurance or other
plans or arrangements providing for benefits to employees of either Company;
(d) any written arrangement (or group of related written
arrangements) for the lease of personal property from or to third parties
providing for lease payments by either Company in excess of $5,000 per annum;
(e) any written arrangement (or group of related written
arrangements) for the purchase by either Company of materials, supplies,
products or other personal property or for the receipt of services, excluding
utility services, which involves more than $5,000, is not terminable on less
than 90 days notice by the Companies or was not entered into in the ordinary
course of business;
(f) any written arrangement establishing a partnership or joint
venture to which either Company is a party;
(g) any written arrangement (or group of related written
arrangements) under which either Company has created, incurred, assumed, or
guaranteed (or may create, incur, assume, or guarantee) indebtedness for
borrowed money in excess of $10,000 or leased property in excess of $10,000
(including capitalized lease obligations) or under which it has granted (or may
grant) a security interest on any of its material assets, tangible or
intangible;
(h) any written arrangement concerning confidentiality or
noncompetition which restricts or protects either Company;
(i) any written arrangement involving Principal Shareholder or
any affiliates of Principal Shareholder to which either Company is a party
and any material written arrangements involving any other Shareholder to which
either Company is a party;
(j) any written arrangement under which the consequences of a
default or termination could reasonably be expected to have a material
adverse effect on the assets, business, financial condition, results of
operations or future prospects of the Companies, taken as a whole;
(k) any other written arrangement (or group of related written
arrangements) to which either Company is a party either involving more than
$10,000 or not entered into in the ordinary course of business; and
(l) the names and current annual compensation rates of all
employees of both Companies.
True and complete copies of all documents and written
descriptions of all understandings, if any, referred to in the Disclosure
Schedule have been provided, or will be provided, to Purchaser upon request.
With respect to each written arrangement so listed, except as
otherwise described in this Agreement or the Disclosure Schedule,: (i) the
written arrangement is legal, valid, binding and enforceable (subject to the
Enforceability Exceptions) and in full force and effect with respect to the
Company, and to the best of Shareholders' knowledge, with respect to the other
party thereto; and (ii) the written arrangement will continue to be legal,
valid, binding and enforceable (subject to the Enforceability Exceptions) and in
full force and effect with respect to the Company, and to the best of
Shareholders' knowledge, with respect to the other party thereto following the
Closing in accordance with the terms thereof as in effect prior to the Closing.
3.16 Business Property Rights. The property referred to in
Section 3.15(a), together with (i) all designs, methods, inventions and know-how
related thereto and (ii) all trademarks, trade names, service marks, and
copyrights claimed or used by either Company which have not been registered
(collectively "Business Property Rights"), constitute all such intellectual
property rights owned or held by such Company and which are reasonably necessary
to, or used in, the conduct of the business of such Company, including all
computer programs necessary to perform the billing, work-order and inventory
operations of such Company.
8
Each item of Business Property Rights owned by or used in the
operation of the business of each Company during the six months ended June 30,
1996 will be owned or available for use by the Companies on identical terms and
conditions immediately following the Closing. Computer software developed by
either Company and all related designs, methods, inventions and know-how are
regarded by such Company as trade secrets of the Company within the meaning of
all applicable laws, and such Company has taken reasonable steps to protect
these trade secrets as such. To the best of Shareholders' knowledge, such
Company owns or has valid rights to use all such Business Property Rights
without conflict with the rights of others. Neither Company has received written
notice from any third party that its Business Property Rights conflict with the
rights of others. To the best of Shareholders' knowledge, no person or
corporation has made or, threatened to make any claims that the operation of the
business of either Company is in violation of or infringes any Business Property
Rights of any third party.
3.17 Governmental Authorizations. Each of the Companies has
obtained all licenses, permits and other authorizations and has taken all
actions required by applicable laws or governmental regulations in connection
with its business as now conducted except for such licenses, permits or
authorizations, and such actions, the absence of which would not have a material
adverse effect on the Companies, taken as a whole. The Disclosure Schedule sets
forth a true and complete list of all material governmental licenses, permits
and authorizations held by the Companies. The Companies are in full compliance
with all such licenses, permits and authorizations, except for such
noncompliance which would not have a material adverse effect on the Companies
taken as a whole.
3.18 No Breach or Default. Neither of the Companies is in default
under any material contract (as defined in Section 3.3) to which it is a party
or by which it is bound, nor to the best of Shareholders' knowledge, has any
event occurred which, after the giving of notice or the passage of time or both,
would constitute a default under any such contract, except for such defaults or
events which, in the aggregate, would not have a material adverse effect on the
business, prospects, financial condition properties, or cash flow of the
Companies taken as a whole.
3.19 Labor Controversies; Employee Benefit Plan Matters. Neither
of the Companies is a party to any collective bargaining agreement. To the best
of Shareholders' knowledge, there are no controversies between either of the
Companies and any of its employees which might reasonably be expected to affect
materially and adversely the conduct of their business taken as a whole, or any
unfair labor practice proceedings pending or, threatened relating to their
business, and, to the best of Shareholders' knowledge, there are no union
organization efforts presently being made or threatened involving any of either
Company's employees. Neither of the Companies has received written notice of any
claim that such Company has not complied with any laws relating to the
employment of labor, including any provisions thereof relating to wages, hours,
collective bargaining, the payment of social security and similar taxes, equal
employment opportunity, employment discrimination and employment safety, or that
such Company is liable for any arrears of wages or any taxes or penalties for
failure to comply with any of the foregoing.
Neither of the Companies maintains or contributes to, and neither
Company is required by agreement to maintain or contribute to, and has no
liability with respect to, any (i) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, as
defined in the Employee Retirement Income Security Act of 1974 ("ERISA")
ss.3(3), (ii) qualified deferred contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (iii) qualified deferred benefit
retirement plan or arrangement which is an Employee Benefit Plan (including any
Multiemployer Plan as defined in ERISA ss.3(37)), or (iv) Employee Welfare
Benefit Plan, as defined in ERISA ss.3(1) (collectively "Employee Benefit
Plans")
3.20 Litigation. Except as set forth in the Disclosure Schedule,
and except for the disputes described in Section 2.4 of this Agreement, there
are no actions, suits or proceedings with respect to either Company involving
claims by or against Principal Shareholder or either Company which are pending
or, to the Shareholders' knowledge, threatened against Principal Shareholder or
either Company, at law or in equity, or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality. To the Shareholders' knowledge, except as set forth in the
Disclosure Schedule, no valid basis for any action, suit or proceeding exists,
and there are no writs, judgments, injunctions or decrees of any court or
governmental agency with respect to which Principal Shareholder or either
Company is a party, which apply, in whole or in part, to the business of either
Company or to any of the assets or properties of either Company or any of the
Companies Shares or which would result in any material adverse change in the
business, financial condition or prospects of the Companies taken as a whole.
3.21 Environmental Matters. To the best of Shareholders'
knowledge, except as to matters which would not have a material adverse
effect on the Companies taken as a whole:
9
(a) each of the Companies and their respective predecessors and
affiliates has complied with all Environmental Laws (as hereinafter defined),
and no action, suit, proceeding, hearing, investigation, charge, complaint,
claim, demand, or notice has been filed or commenced against any of them
alleging any failure so to comply except for minor failures to so comply which
would not have a material adverse effect on the Companies taken as a whole.
Without limiting the generality of the preceding sentence, each of the Companies
and their respective predecessors and affiliates has obtained and been in
compliance with all of the terms and conditions of all permits, licenses, and
other authorizations which are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in, all Environmental
Laws;
(b) neither of the Companies has any liability (and neither of
the Companies and their respective predecessors and affiliates has handled or
disposed of any substance, arranged for the disposal of any substance, exposed
any employee or other individual to any substance or condition, or owned or
operated any property or facility in any manner that could form the basis for
any present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against either of the Companies giving rise to any
liability) for damage to any site, location, or body of water (surface or
subsurface), for any illness of or personal injury to any employee or other
individual, or for any other reason under any Environmental Law; and
(c) all properties and equipment used in the business of the
Companies and their respective predecessors and affiliates are free of asbestos,
PCB's, methylene chloride, trichloroethylene, 1,2-trans-dichloroethylene,
dioxins, dibenzofurans, and Extremely Hazardous Substances (as hereinafter
defined).
For purposes of this Section, "Environmental Laws" means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 and
the Resource Conservation and Recovery Act of 1976, each as amended, together
with all other laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof) concerning pollution
or protection of the environment, including laws relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes into ambient air,
surface water, ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes; and "Extremely Hazardous Substance" has the meaning
set forth in ss.302 of the Emergency Planning and Community Right-to-Know Act of
1986, as amended.
Each of the Companies uses minor amounts of cleaning fluids and
agents, toner and similar chemical substances commonly used in office and
warehouse environments, but only in amounts customary for the records storage
and management businesses operated by the Companies. The Companies have never
operated or participated in any business other than the records storage and
management business. To the best of the Shareholders' knowledge, no facility
owned or operated by either Company (other than the facilities identified as
presently leased facilities in the Disclosure Schedule) have located in, on or
under them any material which is considered a "hazardous substance" or
"hazardous material", as those terms are defined in the Environmental Laws for
which either of the Companies may be responsible for removal or remediation.
Neither of the Companies has accepted for storage any nitrate film.
3.22 No Brokers. Except as set forth in this section and in the
Disclosure Schedule, neither of the Companies has entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of Purchaser or either Company 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 neither Principal Shareholder nor the Companies have 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. Christopher Howard is a financial adviser to the Companies to whom the
Companies have a contractual obligation to pay a fee at Closing, which fee will
either be included as a liability of the Companies on the Interim Closing
Balance Sheet (as hereinafter defined) or satisfied by the Shareholders. In no
event shall Purchaser bear the economic burden of such fee, nor shall any fee or
commission be owed to Mr. Howard by the Companies after the Closing Date.
3.23 Insurance. The assets, properties and operations of both
Companies are insured under various policies of general liability and other
forms of insurance, all of which are listed in the Disclosure Schedule. The
Companies have provided to Purchaser an insurance claims analysis for the period
from January, 1992 through the present. To the best of Shareholder's knowledge,
all policies listed in the Disclosure Schedule as current policies are in full
force and effect in accordance with their terms, no notice of cancellation has
been received, and there is, to the best
10
of Shareholders' knowledge, no existing default or event which, with the
giving of notice or lapse of time or both, would constitute a default
thereunder. Neither Company has been refused any insurance by any insurance
carrier to which it has applied for insurance or with which it has carried
insurance since January 1, 1992. The Disclosure Schedule also contains a true
and complete list of all outstanding bonds and other surety arrangements issued
or entered into in connection with the business, assets and liabilities of
either Company.
3.24 Records Storage Matters.
(a) All items received and stored by each of the Companies on
behalf of customers are held in storage by such Company (except for items
withdrawn or destroyed at the customer's request). Each of the Companies
averages not more than two extended searches (i.e., a search requiring more than
two hours to locate the requested carton) per week. The Companies' invoices to
customers do not charge customers for storage of nonexistent cartons or services
not performed in any material respect.
(b) The Disclosure Schedule lists which of the Companies' fifty
largest customers have executed a contract with such Company, which limits such
Company's liability in the event of loss, damage or destruction of the
customer's records to an amount not greater than the cost of replacing the lost
medium (and not reproduction or restoration of content).
(c) Except as set forth on the Disclosure Schedule, neither of
the Companies has received written notice from any customer to which storage
charges billed in the twelve months ended June 30, 1996 exceed $5,000 that such
customer intends to terminate its business relationship with such Company or
that it intends to reduce materially the volume of records stored with such
Company.
(d) Except as set forth in the Disclosure Schedule,
substantially all items in storage have been bar-coded and logged into the
Companies' computer system.
3.25 Couriers. To the best of Shareholders' knowledge, after
reasonable inquiry, the Companies' contract couriers have not been involved in
any automobile accidents in the three year period prior to the date hereof.
3.26 No Misrepresentation or Omission. To the best of the
Shareholders' knowledge, no representation or warranty by the Shareholders in
this Section 3, the Disclosure Schedule, any other Section of this Agreement, or
in any certificate or other document furnished or to be furnished by the
Companies or Shareholders pursuant hereto, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein and therein, in the light in
which they were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION. Each of the
Shareholders represents and warrants to Purchaser that the statements contained
in this Section 4 are correct and complete in all material respects as of the
date of this Agreement and will be correct and complete in all material respects
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 4) with
respect to himself or herself.
4.1 Authorization of Transaction. Such Shareholder has full power
and authority to execute and deliver this Agreement and to perform his or her
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of such Shareholder, enforceable in accordance with its terms and
conditions (subject to the Enforceability Exceptions). Such Shareholder need not
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
4.2 Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statue, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which such Shareholder is subject or (B)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which such Shareholder is a party or by
which he or she is bound or to which any of his or her assets is subject.
11
4.3 Brokers' Fees. Such Shareholder has no liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which Purchaser
could become liable or obligated.
4.4 Companies Shares. Such Shareholder holds of record and owns
beneficially the number of Companies Shares set forth next to his or her name in
Section 1 of the Disclosure Schedule, free and clear of any restrictions on
transfer (other than any restrictions under the Securities Act of 1933, as
amended, and state securities laws), Taxes, security interests, options,
warrants, purchase rights, contracts, commitments, equities, claims, and
demands. Such Shareholder is not a party to any option, warrant, purchase right,
or other contract or commitment that could require the Shareholder to sell,
transfer, or otherwise dispose of any capital stock of the Companies (other than
this Agreement). Such Shareholder is not a party to any voting trust, proxy, or
other agreement or understanding with respect to the voting of any capital stock
of the Companies.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
warrants to Shareholders that the statements in this Section 5 are true,
correct and complete in all material respects as of the date of this Agreement
and will be correct and complete as of the Closing Date in all material respects
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Section 5).
5.1 Existence; Good Standing; Corporate Authority; Compliance
with Law. Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Purchaser is duly
licensed or qualified to do business as a foreign corporation and is in good
standing under the laws of all other jurisdictions in which the character of the
properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not have a material adverse effect
on Purchaser and its subsidiaries, taken as a whole. Purchaser has all requisite
corporate or other power and authority to own its properties and carry on its
business as now conducted.
Purchaser is not in default with respect to any order of any
court, governmental authority or arbitration board or tribunal to which it is a
party or is subject, and is not in violation of any laws, ordinances,
governmental rules or regulations to which it is subject, except where such
default or violation would not have a material adverse effect on Purchaser and
its subsidiaries, taken as a whole. Purchaser is not in default under or in
violation of any provision of its Certificate of Incorporation or Bylaws.
Purchaser has obtained all licenses, permits or other authorizations and has
taken all actions required by applicable laws or governmental regulations in
connection with its business as now conducted, except where the failure to
obtain such license, permit or other authorization, or to take action, would not
have a material adverse effect on Purchaser and its subsidiaries, taken as a
whole.
5.2 Authorization; Validity and Effect. Purchaser has all
requisite corporate power and authority to own its properties and assets, to
carry on the business in which it is now engaged, and to execute and deliver
this Agreement and all other agreements and documents contemplated hereby and to
perform its respective obligations hereunder and thereunder. The execution and
delivery of this Agreement and all agreements and documents contemplated hereby
by Purchaser, and the consummation by it of the transactions contemplated hereby
and thereby, have been duly authorized by all requisite corporate action. This
Agreement constitutes, and all agreements and documents contemplated hereby when
executed and delivered pursuant hereto for value received will constitute, the
valid and legally binding obligations of Purchaser, enforceable in accordance
with their terms, subject to the Enforceability Exceptions.
5.3 Absence of Conflict. Neither the execution and delivery by
Purchaser of this Agreement and the other documents executed or required to be
executed by each hereunder, nor the consummation by Purchaser of the
transactions contemplated hereby and thereby, will, with or without the giving
of notice or passage of time, or both, (a) be contrary to any provision of the
Certificate of Incorporation or Bylaws of Purchaser, (b) require on the part of
Purchaser any filing with, or permit, authorization or consent or approval of,
any governmental authority, or (c) violate, breach, or constitute a default
under, or permit the termination or acceleration of maturity of, or result in
the imposition of any lien, claim or encumbrance upon any property or asset of
either pursuant to any provision of, any agreement, instrument, judgment, order,
injunction or decree by which Purchaser is bound, to which it is a party, or to
which its assets are subject.
5.4 No Brokers. Purchaser has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of Shareholders 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 the arrangement under which the Companies may be required
12
to pay a fee or commission to Christopher Howard) Purchaser is not aware of
any 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.
6. OTHER COVENANTS AND AGREEMENTS.
6.1 Additional Financial Statements.
(a) Purchaser has requested that the Companies commence
preparation of audited financial statements for certain periods, and if such
audited financial statements have not been completed by the Closing Date, after
the Closing Principal Shareholder shall provide any assistance reasonably
requested by Purchaser therefor. The auditing fees and expenses of the
independent public accountants who audit such statements (which may be the
Companies' current accountants or such other auditors as Purchaser may
designate) shall be paid by Purchaser.
(b) The financial statements delivered pursuant to this Section
6.1 are hereinafter referred to as the "Post-Signing Financial Statements".
The Pre-Signing Financial Statements and the Post-Signing
Financial Statements are herein referred to as the "Financial Statements".
6.2 Certain Transactions; Interim Closing Balance Sheets.
(a) From July 1, 1996 to the Closing Date (i) neither of the
Companies has made or shall make cash payments or other distributions to
shareholders or payments to other persons other than trade creditors of the
Companies and persons holding financial obligations of the Companies if and to
the extent payments to such holders of financial obligations were included as
liabilities on the Interim Closing Balance Sheets. and (ii) neither of the
Companies has incurred liabilities other than trade payables in the ordinary
course of business.
(b) The Companies have prepared interim combined and combining
balance sheets stating the current assets and total liabilities of the Companies
as of June 30, 1996 Such balance sheets are annexed to Exibit 6.2. For purposes
of estimating the current assets and total liabilities of each of the Companies
as of July 31, 1996, Purchaser and Shareholders have agreed upon certain
adjustments to the June 30, 1996 balance sheets to reflect certain changes in
the Companies' balance sheets which have occurred prior to July 31, 1996, which
adjustments are described in Schedule 6.2. The June 30, 1996 balance sheets, as
so adjusted, are herein referred to as the "Interim Closing Balance Sheets".
6.3 Audited Closing Balance Sheet and Adjustments.
(a) As promptly as practicable after the Closing Date Purchaser
and the Companies shall prepare combining and combined statements of current
assets and total liabilities of the Companies as of the close of business on
July 31, 1996 (the "Closing Balance Sheets"). The Closing Balance Sheets shall
be prepared in accordance with GAAP except for departures from GAAP agreed upon
by Purchaser and Principal Shareholder as provided in this section 6 and
Schedule 6.3. The closing balance sheets shall not be in accordance with GAAP in
that the auditors will present only the balance sheets of the Companies and not
income and expense statements, statements of cash flow and other presentations
required for statements in accordance with GAAP; in addition, the audited
Closing Balance Sheets shall omit footnotes which would be required in order to
be in accordance with GAAP.The Closing Balance Sheets shall include as
liabilities, without limitation, (x) all unpaid fees and charges payable by the
Companies to any broker or financial adviser in connection with the transactions
contemplated by this Agreement (if either of the Companies is liable therefor)
and to the Companies' attorneys and auditors (excluding work performed by the
auditors upon Purchaser's request) in connection with the transactions
contemplated by this Agreement (whether or not billed to the Companies as of the
Closing Date) (y) the Companies' obligations as of the close of business on July
31, 1996 in respect of services to be performed for customers after July 31,
1996 which were billed to customers prior to July 31, 1996, and (z) the amount
of any prepayment premium or penalty and accrued interest in respect of
indebtedness of the Companies as of July 31, 1996. The Companies shall confirm
that no cash payments or distributions were made to the Shareholders or others
(other than trade creditors and others as permitted by Section 6.2(a)) during
the period from July 1, 1996 to the Closing Date (the "Cash Distribution
Statement").
(b) The Closing Balance Sheets shall be audited and the Cash
Distribution Statement shall be reviewed by an independent accounting firm
selected by Purchaser at Purchaser's expense. The auditors' review
13
of the Cash Distribution Statement shall consist of preparing a list of all
payments made by the Companies from July, 1996 through the Closing Date,
comparing payments with the check register and testing and verifying the
payments made. Except as Purchaser and Principal Shareholder otherwise agree in
Schedule 6.3, the audit shall be carried out in accordance with generally
accepted auditing standards.
(c) The parties shall cooperate in the preparation of the
Closing Balance Sheets and the Cash Distribution Statement and the audit
thereof, and shall use their respective commercially reasonable best efforts to
cause their respective accountants to make available to each other their
respective work papers with respect to the Closing Balance Sheets. The audited
Closing Balance Sheets shall contain the draft opinion of the preparing
accountants, addressed to Purchaser and Principal Shareholder, which shall be
unqualified except that appropriate qualifications can be stated to reflect
agreed-upon instructions of the parties which vary from GAAP as set forth in
Schedule 6.3.
(d) Purchaser shall use its best efforts to cause the Closing
Balance Sheets and the Cash Distribution Statement to be delivered to
Principal Shareholder no later than 75 days after the Closing Date.
(e) Principal Shareholder shall have forty-five (45) days after
receipt of the Closing Balance Sheets and the Cash Distribution Statement (the
"Dispute Period") to dispute any of the elements of the Closing Balance Sheets
or the Cash Distribution Statement (a "Dispute"). If Principal Shareholder does
not give written notice of a Dispute (a "Dispute Notice") to Purchaser within
the Dispute Period, such Closing Balance Sheets and the Cash Distribution
Statement shall be deemed to have been accepted by Principal Shareholder in the
form in which they were delivered by Purchaser and shall be final and binding
upon the parties in the absence of fraud or manifest error. In the event
Principal Shareholder does not agree with any amount or element reflected on the
Closing Balance Sheets or the Cash Distribution Statement, he may give Purchaser
a Dispute Notice within the Dispute Period, setting forth in reasonable detail
the elements and amounts with which he disagrees, and Purchaser shall, within
thirty (30) days after receipt by Purchaser of such Dispute Notice, attempt to
resolve such Dispute and agree in writing upon the final content of such Closing
Balance Sheets or the Cash Distribution Statement. In the event that Principal
Shareholder and Purchaser are unable to resolve any such Dispute within such
thirty (30) day period, then an independent public accounting firm acceptable to
both parties (the "Arbitrating Accountant") shall be employed as arbitrator
hereunder to settle such Dispute as soon as practicable. In connection with the
resolution of any Dispute, the Arbitrating Accountant shall have access to all
documents and facilities necessary to perform its functions as arbitrator. The
Arbitrating Accountant's function shall be to conform the Closing Balance Sheets
and the Cash Distribution Statement to the standards required by the terms and
provisions of this Section 6.3. The Arbitrating Accountant's determination with
respect to any Dispute shall be final and binding upon the parties hereto.
Principal Shareholder and Purchaser shall each pay one-half of the fees and
expenses of the Arbitrating Accountant; provided that if the Arbitrating
Accountant determines all issues raised in favor of one party or the other, the
party whose positions were not upheld shall pay all of such fees and expenses.
Following the resolution of any Disputes, the Closing Balance Sheets and the
Cash Distribution Statement shall be revised to reflect such resolution.
Following such resolution, or, if there are no Disputes, following the
expiration of the Dispute Period, Purchaser shall cause the Closing Balance
Sheets and the Cash Distribution Statement, containing the signed unqualified
opinion of the preparing accountants, to be issued and delivered to Principal
Shareholder.
(f) In the event that the audited Closing Balance Sheets state
that cash is less than $1.00, Purchaser shall make a written demand on
Shareholders for the amount by which $1.00 exceeds the cash of the Companies at
July 31, 1996, and such amount shall be paid by Principal Shareholder to
Purchaser; and in the event that the Cash Distribution Statement reports that
cash was paid during the period from July 1, 1996 to the Closing Date to the
Shareholders or others in contravention of Section 6.2(a), such amount shall be
paid by Principal Shareholder to Purchaser, in each case within three business
days after the end of the Dispute Period, or if there is a Dispute, within three
business days after the resolution thereof.
(g) In the event that the Closing Balance Sheet for either
Company indicates that the difference between current assets and total
liabilities varies from that reported on the Interim Closing Balance Sheet for
such Company by an amount not previously accounted for as an adjustment in the
Purchase Price, then either (i) the Purchase Price shall be decreased if the
excess of current assets over total liabilities is less than indicated on the
Interim Closing Balance Sheet, or (ii) the Purchase Price shall be increased if
the excess of current assets over total liabilities is greater than indicated on
the Interim Closing Balance Sheet. Either Purchaser or Principal Shareholder
shall make an appropriate adjusting payment within three business days after the
end of the Dispute Period, or if there is a Dispute, after resolution thereof.
14
(h) Principal Shareholder's obligation to make payments
pursuant to this Section 6.3 is independent of, and in addition to, the
indemnity obligations set forth in Section 9 of this Agreement.
(i) The Shareholders shall be severally liable to Principal
Shareholder to pay to Principal Shareholder that part of any distribution
received by each Shareholder which is in excess of the distribution such
Shareholder should have received as determined by the audited Closing Balance
Sheet and audited Cash Distribution Statement.
(j) Notwithstanding any other provision contained herein to the
contrary, in the event Principal Shareholder would be required to make any
payment pursuant to Section 6.3 (g), and there are funds held by the Escrow
Agent in respect of the Contingent Payments, Purchaser shall obtain payment of
the amount due to purchaser from the Contingent Payment Escrow instead of
Principal Shareholder unless Purchaser reasonably believes that the portion of
the Contingent Payment Escrow which will be due and payable as a Contingent
Payment is less than the amount due to Purchaser, in which event Principal
Shareholder shall pay the required amount to Purchaser and shall be entitled to
pro rata reimbursement from the Shareholders.
6.4 Taxes and Expenses.
(a) Shareholders hereby covenant and agree to pay all stamp and
transfer taxes on the transactions contemplated hereby. Except to the extent
such costs and liabilities are included in total liabilities of the Companies
for purposes of the Closing Balance Sheets, Shareholders shall be responsible
for and shall pay all costs, liabilities and other obligations incurred by the
Companies in connection with the performance of and compliance with all
transactions, agreements and conditions contained in this Agreement to be
performed or complied with by each of them, including legal and accounting fees
(except those incurred at Purchaser's request).
(b) Except as otherwise specifically provided for in this
Agreement, Purchaser will assume and pay all costs, liabilities and other
obligations incurred by Purchaser in connection with the performance of and
compliance with all transactions, agreements and conditions contained in this
Agreement to be performed or complied with by Purchaser.
6.5 Proprietary Information.
(a) Shareholders covenant and represent that (except as
shareholders of the Companies) none of them has any interest in, or claim to,
any of the procedures, written technical data, customer lists, computer software
and related documentation, patents, copyrights, formulas, methods, practices,
statistics, trade secrets, trademarks, service marks or trade names relating to
any processes or procedures used by the Companies, or related to their business
or operations or in the current possession of the Companies; and all knowledge
or information of a confidential nature acquired at or before the Closing Date
with respect to the business and operations of the Companies, including customer
lists, customer names and pricing information, will be held in confidence by
Shareholders and will not be disclosed or made public or, except for the benefit
of Purchaser or the Companies, made use of, by or through Shareholders, directly
or indirectly, for a period of five years after the Closing Date.
Notwithstanding the foregoing, Principal Shareholder shall have the
non-exclusive right to use software programs known as "Easy Box" and "Easy File"
(i) in business applications other than management and storage of hard copy and
magnetic media records and (ii) in records management and storage businesses
which serve customers outside Dade, Broward and Palm Beach Counties, Florida.
(b) Each Shareholder acknowledges that a breach of Section
6.5(a) would cause irreparable damage to Purchaser and/or the Companies, and in
the event of any Shareholder's actual or threatened breach of the provisions of
Section 6.5(a), Purchaser shall be entitled to a temporary restraining order and
an injunction restraining such Shareholder from breaching such covenants without
the necessity of posting bond or proving irreparable harm, such being
conclusively admitted by such Shareholder. Nothing shall be construed as
prohibiting Purchaser from pursuing any other available remedies for such breach
or threatened breach, including the recovery of damages from such Shareholder.
6.6 Agreements of Shareholders Pending Closing. The Companies
shall agree that, pending the Closing, and except as agreed by Purchaser:
(a) Business in Ordinary Cases. The business of such Company
shall be conducted solely in the ordinary course in accordance with past
practice except as otherwise contemplated herein. The Companies
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shall use their commercially reasonable best efforts to maintain and
preserve their business, and to keep available the services of present employees
and agents and maintain existing business relationships, insurance and licenses.
Without limiting the generality of the foregoing, prior to the Closing Date,
neither of the Companies shall, without the written consent of Purchaser, except
as permitted herein:
(i) issue, sell, deliver or agree or commit to issue, sell or
deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) or authorize the
issuance, sale or delivery of any stock of any class or any other securities or
any rights, warrants or options to acquire any such stock or other securities;
(ii) split, combine or reclassify any shares of its capital
stock; or, except as permitted by this Agreement, declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, or redeem, purchase or
otherwise acquire any securities of either of the Companies.
(iii) create, incur or assume any debt for borrowed money or any
obligations in respect of capital leases not currently outstanding other than
minor items not exceeding $2,500 in the aggregate, assume, guarantee, endorse
(other than checks in the ordinary course of business) or otherwise become
liable or responsible (whether directly, contingently or otherwise) for the
material obligations of any other person, or make any material loans, advances
(other than to employees for travel expenses incurred in the ordinary course of
business) or capital contributions to, or investments in, any other person or
entity;
(iv) enter into, adopt or amend any employee benefit plan or any
employment or severance agreement or arrangement or increase in any manner the
compensation or fringe benefits of its directors, officers or employees,
generally or individually, other than ordinary increases in accordance with past
practice in compensation or benefits to non-officer employees, or pay any
benefit not required by the terms in effect on the date hereof of any existing
employee benefit plan;
(v) acquire, sell, lease, encumber or dispose of any shares or
other equity interests in or securities of any corporation, partnership,
association or other business organization or division thereof or any material
assets, other than purchases and sales of assets in the ordinary course of
business (and in no event shall any leases of equipment be capital leases);
(vi) amend its charter or By-laws;
(vii) change in any material respect its accounting methods,
principles or practices, except insofar as may be required by a generally
applicable change in GAAP;
(viii) mortgage or pledge any of its property or assets or
subject any such assets to any security interest;
(ix) sell, assign, transfer or license any Business Property
Rights, other than in the ordinary course of business;
(x) enter into, amend, take or omit to take any action that
would constitute a violation of or default under, or waive any rights under, any
material contract or agreement any of which would have a material adverse effect
on the Companies, taken as a whole;
(xi) make or commit to make any capital expenditure in excess
of $5,000 per item or $15,000 in the aggregate;
(xii) disclose any material confidential information of the
Companies to any third party not subject to a confidentiality agreement
with the Companies (and then only to the extent that such third party has a need
to know the disclosed information);
(xiii) hire any new employee whose annual compensation is
expected to exceed $30,000 without the consent of Purchaser;
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(xiv) make any changes in its cash management practices or
accelerate its collection of accounts payable; or
(xv) agree in writing or otherwise to take any of the
foregoing actions.
(b) Update Schedules. The Companies shall promptly disclose to
Purchaser any information contained in its representations and warranties or the
Disclosure Schedule which, because of an event occurring after the date hereof,
becomes incomplete or is no longer correct as of all times after the date hereof
until the Closing Date. Purchaser's sole remedy in respect of updated disclosure
items which Purchaser finds unacceptable shall be to elect not to close the
transactions contemplated hereby, unless the information in such schedules which
is unacceptable to Purchaser has resulted from the Company's breach of any other
agreement or covenant on the part of the Companies hereunder.
(c) Notice of Breaches. The Shareholders shall promptly deliver
to Purchaser written notice of any event or development subsequent to the date
of this Agreement known to Shareholders that would (i) render any statement,
representation or warranty made by the Companies in this Agreement (including
the Disclosure Schedule) inaccurate or incomplete in any material respect, or
(ii) constitute or result in a breach by Shareholders of, or a failure by the
Shareholders to comply with, any agreement or covenant in this Agreement
applicable to such party.
(d) Best Efforts. The Companies and Shareholders shall
cooperate with Purchaser and use their commercially reasonable best efforts
to cause all of the conditions to the obligations of the parties under this
Agreement to be satisfied on or prior to the Closing Date.
(e) Inconsistent Negotiations. Until the closing of the
transactions contemplated hereby or the earlier termination of this Agreement
pursuant to Article 8, the Companies and Shareholders shall not, directly or
indirectly, initiate, solicit or encourage the submission of a proposal from, or
negotiate with, any person related to the sale of any of the Companies Shares or
substantially all the assets of the Companies other than pursuant to this
Agreement, or initiate or participate in any discussions or negotiations or
enter into any agreement to do any of the foregoing. Except as set forth in this
Agreement, Shareholders shall not provide any confidential information
concerning the Companies or their properties or assets to any third party.
(f) Access. The Companies shall give to Purchaser's officers,
employees, counsel, accountants and other representatives free and full access
to, and the right to inspect, during normal business hours, all of the premises,
properties, assets, records, contracts and other documents relating to the
Companies and shall permit them to consult with the officers, employees,
accountants, counsel and agents of the Companies for the purpose of making such
investigation of the Companies as Purchaser shall desire to make, provided that
such investigation shall not unreasonably interfere with the Company's business
operations and shall be coordinated with Christopher Howard. The Companies and
Shareholders shall furnish to Purchaser all such documents and copies of
documents and records and information with respect to the affairs of the
Companies and copies of any working papers relating thereto as Purchaser shall
from time to time reasonably request.
(g) Disclosure. Except as required by applicable law, the
Companies and Shareholders shall not disclose to third parties (other than to
advisers, the Companies' lenders, management personnel and others who have a
need to know of the pending transaction for purposes of the Closing, who shall
be informed that the information is strictly confidential) any information
about, or issue any public statement or press release concerning, this Agreement
or the transactions contemplated hereby except for such written information as
shall have been approved in writing as to form and content by Purchaser.
Purchaser acknowledges that a competitor of the Companies has learned that
Purchaser is negotiating to acquire the Companies, and Purchaser agrees that
such disclosure (not done with the knowledge of the Companies or Principal
Shareholder) does not constitute a breach of the Companies' and Shareholders'
obligations hereunder.
The Companies and Purchaser shall coordinate disclosure of the
transactions contemplated by this Agreement to employees of the Companies.
(h) Additional Financial Statements. In the event Purchaser or
its parent is required either before or after the Closing Date by any law
(including securities laws), regulation or securities listing agreement to file
or disclose financial information related to the Companies (including audited
financial information) which is in addition to information prepared by the
Companies or Shareholder and previously delivered to Purchaser, the Companies
and Shareholders shall make available to Purchaser any relevant information
related to the Companies not
17
previously delivered to Purchaser and otherwise cooperate with Purchaser,
at Purchaser's expense, in preparing such information. The Companies and
Shareholders shall not object to the Companies' accountants consenting to
Purchaser's use of financial statements which they have prepared, and/or
agreeing to assist Purchaser in preparing required financial statements and/or
audits; and Purchaser shall have the right to file and disclose such information
as required by any such law, statute or regulation.
Prior to the Closing, Purchaser shall not file any information
related to the Companies with the SEC or any other government agency without the
prior written consent of Principal Shareholder unless (i) such information
related to the Companies is incorporated into other information so that a third
party reading the filed information could not recognize that information
concerning the Companies is included in such filing, or (ii) such filing is made
on a confidential basis and will not be available to persons other than SEC
personnel for the purposes of examining Purchaser's filing.
6.7 Agreements of Purchaser Pending the Closing. Purchaser
covenants and agrees that, pending the Closing and except as otherwise
agreed to in writing by Principal Shareholder:
(a) Best Efforts. Purchaser shall cooperate with the Companies
and use its commercially reasonable best efforts to cause all of the
conditions to the obligations of the parties under this Agreement to be
satisfied on or prior to the Closing Date.
(b) Confidentiality. Unless and until the Closing has been
consummated, Purchaser shall hold, and shall cause its counsel, accountants,
appraisers and agents to hold, in confidence any confidential data or
information made available to Purchaser in connection with this Agreement with
respect to the Companies. Purchaser shall use the same standard of care to
protect such confidential data or information as is used to protect Purchaser's
confidential information. If the transactions contemplated by this Agreement are
not consummated, Purchaser shall not disclose or use and, upon request, shall
return or cause to be returned to the Companies all written materials and other
tangible media and all copies thereof that were supplied to Purchaser by the
Companies and that contain any such confidential data or information and all
written materials and other tangible media that contain summaries of or notes of
the Company's confidential data or information. Purchaser may, however, keep one
copy thereof for its legal files, subject to the foregoing confidentiality
requirements (and excluding any information which identifies customers). In the
event the transactions contemplated hereby do not close, Purchaser shall not
solicit the Companies' existing customers for a period of eighteen months after
the termination of this Agreement.
(c) Disclosure. Purchaser shall not disclose to third parties
any information about, or issue any public statement or press release
concerning, this Agreement or the transactions contemplated hereby except that:
(i) Purchaser may disclose to its lenders and others who
have a need to know of the pending transaction for purposes of Purchaser's
conduct of its business and the Closing, all of which persons shall be
bound by this provision;
(ii) After the Closing, Purchaser may disclose information
as required by law (including the Securities Act of 1933 or the Securities
Exchange Act of 1934) or any listing or trading agreements related to
Purchaser's parent's publicly traded securities, provided that the price paid by
the Purchaser for the Companies shall not be specifically disclosed unless
required by law or any such agreement; and
(iii) After the Closing Purchaser may make customary trade
announcements.
(iv) Except as required by law, Purchaser shall not
disclose the price or other terms of this transaction.
(d) Purchaser has no knowledge that any representation or
warranty made by the Companies or the Shareholders herein is incorrect or
incomplete in any respect, or that the Companies or Shareholders are in material
breach of any covenant or agreement made by the Companies or Shareholders in
this Agreement; and Purchaser shall promptly notify Principal Shareholder in the
event that prior to Closing Purchaser becomes aware of information to the effect
that any representation or warranty made by the Companies or Shareholders herein
is incorrect or incomplete in any respect or that the Companies or Shareholders
are in breach of any covenant or agreement made by the Companies or Shareholders
herein.
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6.8 Forecasts, Projections. The parties acknowledge that any
forecasts, projections, or other information delivered by one party to another
but not contained in this Agreement shall not be considered a representation or
warranty, or guaranty of future performance, and no claim shall be made based
upon such forecast, statement or other information.
6.9 Principal Shareholder Agreements. Principal Shareholder's
execution hereof constitutes the termination, effective as of the Closing,
of any written or oral agreement between the Companies and Principal
Shareholder.
7. CONDITIONS TO CLOSING.
7.1 Purchaser's Conditions to Closing. The obligation of
Purchaser to consummate the transactions to be performed by it in connection
with the Closing shall be subject to and conditioned upon the satisfaction at
the Closing of each of the following conditions:
(a) All representations and warranties of Shareholders contained
in this Agreement, including the Disclosure Schedule, shall be true and correct
at and as of the Closing Date in all material respects, as if restated on the
Closing Date, the Companies and Shareholders shall have performed in all
material respects all agreements and covenants and satisfied in all material
respects all conditions on their part to be performed or satisfied by the
Closing Date pursuant to the terms of this Agreement, and Purchaser shall have
received a certificate of the Principal Shareholder dated the Closing Date to
such effect.
(b) There shall have been no material adverse change since June
30, 1996 in the business, prospects, properties, financial condition (including
operating cash flow), or affairs of the Companies taken as a whole, and the
Companies shall not have suffered any material loss (whether or not insured) by
reason of physical damage caused by fire, earthquake, accident or other calamity
which substantially affects the value of its assets, properties or business, and
Purchaser shall have received a certificate of Principal Shareholder dated the
Closing Date to such effect.
(c) Each of the Companies shall have delivered to Purchaser
certificates of the Secretary of State (or other authorized officer) of the
State of Florida certifying as of a date reasonably close to the Closing Date
that each of the Companies is, as of such date, in good standing and authorized
to transact business as a domestic corporation.
(d) Each of the Companies shall have delivered to Purchaser a
copy of such Company's Articles of Incorporation, certified by the
Secretary of State (or other authorized officer) of the State of Florida.
(e) Each of the Companies shall have delivered the written
resignations, effective on the Closing Date, of all members of the Board of
Directors and all officers of such Company.
(f) Purchaser shall have received from Hodges & Carry, P.A. an
opinion, dated the Closing Date, in the form attached hereto as Exhibit 7.1(f).
(g) Each person who holds indebtedness of the Companies shall
have confirmed to Purchaser the amount of such indebtedness (including accrued
interest and any prepayment premium as of a date not more than ten (10) days
prior to the Closing Date) as of the Closing Date, and that such Company is not
in default under such indebtedness.
(h) All approvals and consents from third parties and
governmental agencies (other than approvals or consents the absence of which
would not have a material adverse effect on the ability of the Companies, taken
as a whole, to operate their business after the Closing) required to consummate
the transactions contemplated hereby shall have been obtained, and any such
governmental approvals or consents shall have become final and not subject to
appeal.
(i) No suit, action, investigation, inquiry or other proceeding
by any governmental body or other third person or legal or administrative
proceeding shall have been instituted or threatened which questions the validity
or legality of the transactions contemplated hereby, and there shall be no
effective injunction, writ, preliminary restraining order or any order of any
nature issued by a court of competent jurisdiction directing that the
19
transactions provided for herein or any of them not be consummated as so
provided or imposing any conditions on the consummation of the transactions
contemplated hereby which is unduly burdensome on Purchaser.
(j) Principal Shareholder shall have executed a Noncompetition
and Confidentiality Agreement in the form of Exhibit 7.1(j)
(k) No information shall have come to the attention of Purchaser
which reasonably causes Purchaser to believe that the information received by
Purchaser from the Companies or Shareholders prior to the date of this Agreement
or information developed or discussed by Purchaser in the course of its due
diligence investigation was materially incorrect with respect to the Companies,
taken as a whole.
(l) The Companies and Shareholders shall have executed and
delivered to Purchaser stock powers, stock certificates representing the Shares,
and such additional documents, certificates and agreements as may be reasonably
needed, in the opinion of Purchaser's counsel, to carry out the transactions
contemplated hereby.
(m) Purchaser (or an affiliate) shall simultaneously purchase
the real property located at 20 and 30 NE 11th Street, Miami, Florida from P.
Douglas McCraw pursuant to a Purchase Agreement and Escrow Instructions for such
transactions dated the date hereof;
(n) The present lease for the property at 3821 SW 47th Avenue,
Ft. Lauderdale shall have been terminated and a new lease shall have been
executed between P. Douglas McCraw and Purchaser; and
(o) DAS-Ft. Lauderdale shall have completed relocation of all
records from the "Moy" building to 3821 SW 47th Avenue.
7.2 The Shareholders' Conditions to Closing. The obligation of
Shareholders to consummate the transactions to be performed by them in
connection with the Closing shall be subject to and conditioned upon the
satisfaction at the Closing of each of the following conditions:
(a) All representations and warranties of Purchaser contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing Date and Purchaser shall have performed in all material respects all
agreements and covenants and satisfied in all material respects all conditions
on its part to be performed or satisfied by the Closing Date pursuant to the
terms of this Agreement, and Shareholders shall have received a certificate of
Purchaser dated the Closing Date to such effect.
(b) No suit, action, investigation, inquiry or other proceeding
by any governmental body or other third person or legal or administrative
proceeding shall have been instituted or threatened which questions the validity
or legality of the transactions contemplated hereby, and there shall be no
effective injunction, writ, preliminary restraining order or any order of any
nature issued by a court of competent jurisdiction directing that the
transactions provided for herein or any of them not be consummated as so
provided or imposing any conditions on the consummation of the transactions
contemplated hereby which is unduly burdensome on the shareholders of the
Companies.
(c) Purchaser shall have delivered to Principal Shareholder a
certificate of the Secretary of State of the State of Delaware, as of a date
reasonably close to the Closing Date, that as of such date Purchaser is in good
standing as a domestic corporation.
(d) Purchaser shall have delivered to Shareholders a certificate
of its corporate Secretary certifying:
(i) Resolutions adopted by its Board of Directors
authorizing execution of this Agreement and the execution, performance and
delivery of all agreements, documents and transactions contemplated hereby; and
(ii) The incumbency of its officers executing this Agreement
and all agreements and documents contemplated hereby.
(e) Purchaser shall have delivered to Shareholders the
additional certificates and documents required of it hereby, which shall be
satisfactory in form and substance to Shareholders' counsel.
20
(f) Shareholders shall have received from Garry B. Watzke,
counsel to Purchaser, an opinion in the form attached hereto as Exhibit 7.2(f).
(g) Purchaser (or an affiliate) shall simultaneously purchase
the real property located at 20 and 30 NE 11th Street, Miami, Florida as
described in Section 7.1(m).
(h) P. Douglas McCraw and Purchaser shall be parties to a new
lease for 3821 S.W. 47th Avenue, Ft. Lauderdale, and the existing lease
shall have been terminated.
7.3 Post-Closing Payments. Immediately after the Closing Date,
Purchaser shall discharge, or cause the Companies to discharge and pay in full,
the liabilities of the Companies, including interest accrued thereon and
prepayment penalties related thereto reflected on the Interim Closing Balance
Sheets, other than accounts payable, accrued expenses, sales taxes, bonuses
payable to employees and other current liabilities (which Purchaser shall cause
the Companies to pay in the ordinary course).
8. TERMINATION AND ABANDONMENT.
8.1 Termination of Agreement. The parties may terminate
this Agreement as provided below:
(a) Purchaser and Shareholders may terminate this Agreement
by mutual written consent at any time prior to the Closing;
(b) Purchaser may terminate this Agreement by giving written
notice to Principal Shareholder at any time prior to the Closing (i) in the
event the Companies or Shareholders have breached any material representation,
warranty or covenant contained in this Agreement in any material respect,
Purchaser has notified Principal Shareholder of the breach, and the breach has
continued without cure for a period of 20 days after the notice of breach or
(ii) if the Closing shall not have occurred on or before September 1, 1996; and
(c) Shareholders may terminate this Agreement by Principal
Shareholder; giving written notice to Purchaser at any time prior to the Closing
(i) in the event Purchaser has breached any material representation, warranty,
or covenant contained in this Agreement in any material respect, Principal
Shareholder has notified Purchaser of the breach, and the breach has continued
without cure for a period of 20 days after the notice of breach or (ii) if the
Closing shall not have occurred on or before September 1, 1996.
8.2 Effect of Termination. If any party terminates this Agreement
pursuant to Section 8.1 above, all rights and obligations of the parties
hereunder shall terminate, and no party shall have any liability for damages to
any other party.
9. INDEMNIFICATION.
9.1 General Indemnification Covenants.
(a) Subject to the provisions of Sections 9.3, 9.4 and 9.1(d),
Principal Shareholder shall indemnify, save and keep Purchaser, and its
affiliates, successors and permitted assigns, including the Companies (the
"Purchaser Indemnitees"), harmless against and from all direct liability,
demands, claims, actions or causes of action, assessments, losses, fines,
penalties, costs, damages and expenses, including reasonable attorneys' fees,
disbursements and expenses (collectively, "Damages"), sustained or incurred by
any of the Purchaser Indemnitees as a result of, arising out of or by virtue of
any misrepresentation, breach of any warranty or representation, or
non-fulfillment of any agreement or covenant on the part of Shareholders,
whether contained in this Agreement or the Disclosure Schedule or any written
statement or certificate furnished or to be furnished to Purchaser pursuant
hereto or in any closing document delivered by the Companies or Shareholders to
Purchaser in connection herewith.
(b) Subject to the provisions of Sections 9.3 and 9.4, Principal
Shareholder shall indemnify, save and keep Purchaser Indemnitees harmless
against and from any direct cost, claim, expense or liability (including legal
fees and costs of litigation) which Purchaser Indemnitees may incur by a
customer in excess of $1.00 per carton, linear foot of open-shelf files, disk
pack or other storage unit in connection with lost, damaged or destroyed records
of any customer with which such Company did not, as of the Closing Date, have a
contract which limited Company's liability in the event of loss, damage or
destruction to such amount; provided that Principal Shareholder shall
21
not be required to indemnify Purchaser Indemnitees in respect of any loss,
damage or destruction which (i) relates to new cartons moved into the Companies'
premises after the Closing Date, or (ii) Purchaser is unable to demonstrate
occurred before the Closing Date. Notwithstanding the foregoing, with respect to
loss, damage or destruction the date of which cannot be determined, Principal
Shareholder's indemnification obligation shall be equal to 50% of Purchaser
Indemnitees' direct costs, expenses and liability (including legal fees and
costs of litigation) provided that (i) Purchaser shall use its commercially
reasonable best efforts to determine when the loss, destruction or damage
ocurred, (ii) if Purchaser shall be unable to make such determination, Purchaser
shall afford Principal Shareholder access to relevent books and records of the
Companies so that Principal Shareholder can attempt to determine when the loss,
damage or destruction occurred, and (iii) if neither Purchaser nor Principal
Shareholder is able to determine the date of such loss, destruction or damage
(or if Purchaser and Principal Shareholder disagree as to whether such date can
be, or has been, determined), the parties shall submit such dispute to
arbitration as provided in Section 10.15 hereof. The sole decision in such
arbitration shall be the date of loss, destruction or damage. If such date is
not determinable, Principal Shareholder's indemnification obligation shall be as
set forth above.
(c) Principal Shareholder shall indemnify the Purchaser
Indemnitees from and against any cost, expense, liability or obligation
related to those certain disputes between DAS-Ft. Lauderdale and Bekins Moving &
Storage, Bentson Electric and DAS-Ft. Lauderdale's former landlord under the
lease for 5300 Powerline Rd., Ft. Lauderdale described in the Disclosure
Statement.
(d) Each Shareholder, including Principal Shareholder, shall
severally, and not jointly indemnify, save, keep and hold Purchaser Indemnitees
harmless against and from any direct cost, claim, expense or liability
(including legal fees and costs of litigation) which Purchaser Indemnitees may
incur as a result of, arising out of or by virtue of any misrepresentation,
breach of any warranty or representation, or non-fulfillment of any agreement or
covenant on the part of such Shareholder (i) contained in Section 4 of this
Agreement and (ii) with respect to any breach of such Shareholder's obligations
in respect of Sections 6.5, 6.6(c), 6.6(d), 6.6(e) and 6.6(g) of this Agreement.
(e) Shareholders other than Principal Shareholder shall have no
liability to Purchaser Indemnitees under Sections 9.1(a), 9.1(b) and 9.1(c).
9.2 Tax Indemnity.
(a) Principal Shareholder hereby agrees to pay, indemnify,
defend and hold Purchaser and the Companies harmless from and against any and
all Taxes of the Companies with respect to any period (or any portion thereof)
up to and including the July 31, 1996, except for Taxes of the Companies which
are reflected as liabilities for Taxes that exist as of July 31, 1996 ("Tax
Liabilities") on the Closing Balance Sheets, together with all reasonable legal
fees, disbursements and expenses incurred by Purchaser in connection therewith.
(b) Principal Shareholder shall provide any assistance which is
within his powers reasonably to provide (subject to commercial reasonableness)
to assist the Companies in preparing and filing any Return of the Companies
which is required to be filed after the Closing Date. The cost of preparing such
Return which is due after the Closing Date notwithstanding the fact that all or
a portion of the period covered thereby includes periods prior to July 31, 1996
(but not of any tax proceeding related thereto) shall be borne by the Purchaser
as a post-Closing expense. Purchaser shall within forty-five (45) days prior to
the due date of any such Return (or any interim filing and payment in the event
filing of a return is postponed as permitted by law), deliver a draft copy to
Principal Shareholder. Within thirty (30) days of the receipt of any such
Return, Principal Shareholder may reasonably request changes, in which event
Purchaser and Principal Shareholder shall attempt to agree on a mutually
acceptable resolution of the issues in dispute. If a resolution is reached, such
Return shall be filed in accordance therewith. If resolution is not reached,
then at the expense of Purchaser and Principal Shareholder (such expense to be
shared equally unless all issues are decided in favor of one party, in which
event the other party shall bear all such expense), such Return shall be
submitted to a firm of independent certified public accountants selected by
Principal Shareholder and reasonably acceptable to Purchaser, which shall be
directed to resolve the issues in dispute and prepare the Return for filing. As
soon as is practicable after notice from Purchaser to Principal Shareholder at
any time prior to the date any payment for Taxes attributable to any such Return
is due (but in any event not less than thirty days after such notice), provided
such Return is prepared for filing in accordance with the foregoing, an amount
equal to the excess, if any, of (i) the net amount of Taxes that are due from
the Companies with respect to any taxable period ending on or before July 31,
1996, or Taxes that would have been due with respect to a taxable period
beginning before and ending after July 31, 1996 if such period had ended on such
date over (ii) the amount of such Taxes of the Companies with respect to such
taxable period which are reflected as Tax Liabilities on the Closing Balance
Sheets shall be paid by Principal Shareholder to Purchaser; provided that
Principal Shareholder shall not be required to make such payment if the excess
is less than $10,000. The
22
foregoing threshold shall not be applied to any adjustment which the
auditors of the Closing Balance Sheet determine are appropriate in respect of
liabilities of the Companies as of July 31, 1996 in accordance with Section 6.3.
(c) The indemnity provided for in this Section 9.2 shall be
independent of any other indemnity provision hereof and anything in this
Agreement to the contrary notwithstanding, shall survive until the expiration of
the applicable statute of limitation for the Taxes referred to herein, and any
Taxes subject to the indemnification for Taxes set forth in this Section 9.2
shall not be subject to the provisions of Sections 9.3 and 9.4 hereof.
(d) Purchaser shall provide any assistance to Principal
Shareholder which is within its power (subject to commercial reasonableness) to
assist Principal Shareholder in respect of any Return of the Companies filed
prior to the Closing Date , including giving reasonable access to Principal
Shareholder of any books and records related thereto.
9.3 Limitations on Indemnification. The obligations of Principal
Shareholder pursuant to Section 9.1 are subject to the following limitations:
(a) Notwithstanding any other provision contained in this
Agreement, Principal Shareholder shall not have any indemnification obligation
with respect to the first $35,000of total claims incurred under Section 9.1(a);
if total claims exceed such amount, the indemnification obligations of Principal
Shareholder shall include all liabilities incurred, without regard to such
threshold. Principal Shareholder's indemnification obligation in respect of
Section 9.1(a) shall not exceed one-half of the Purchase Price, minus any
payments made under Section 9.1(b) in the aggregate; provided that there shall
be no limit on the Principal Shareholder's liability hereunder for matters which
constitute fraud by the Principal Shareholder.
(b) Notwithstanding any other provision contained in this
Agreement, Shareholders shall not have any indemnification obligation with
respect to the first $35,000 of total claims under Section 9.1(b); if total
claims exceed such amount, the indemnification obligations of Shareholders shall
include all liabilities incurred, without regard to such threshold. In no event
shall Shareholders' indemnification obligation in respect of Section 9.1(b)
exceed one-half of the Purchase Price, minus any payments made under Section
9.1(a) in the aggregate.
(c) There shall be no threshold in respect of the Shareholders'
indemnification provisions under Section 9.1(c), and the maximum aggregate
liability of each Shareholder thereunder shall be equal to the portion of the
Purchase Price allocable to such Shareholder in accordance with his or her
shares of the Companies.
(d) Any claims made under e Section 9.1, shall be made within
six months after the Closing Date in respect of matters arising under Section
9.1(a) and (c), and twelve months after the Closing Date in respect of matters
arising under Section 9.1(b). The applicable statute of limitations shall be the
claim period under Section 9.1(d)
9.4 Conditions of Indemnification Pursuant to Section 9.1.
(a) Promptly following the receipt by a Purchaser Indemnitee of
notice of a demand, claim, action, assessment or proceeding made or brought by a
third party, including a governmental agency (a "Third Party Claim"), the
Purchaser Indemnitee receiving the notice of the Third Party Claim (i) shall
notify Principal Shareholder (or, if the indemnification obligation arises under
Section 9.1(c), the relevant Shareholder) of its existence in writing, setting
forth the facts and circumstances of which such Purchaser Indemnitee has
received notice, and (ii) if the Purchaser Indemnitee giving such notice is a
person entitled to indemnification under this Section 9 (an "Indemnified
Party"), specifying the basis hereunder upon which the Indemnified Party's claim
for indemnification is asserted. The Principal Shareholder or other Shareholder
who is obligated to indemnify the Purchaser Indemnities under the particular
circumstances is herein referred to as the "Indemnifying Shareholder").
(b) The Indemnified Party shall, upon reasonable notice by
Indemnifying Shareholder, tender by written instrument the defense of a Third
Party Claim to Indemnifying Shareholder. If Indemnifying Shareholder accepts
responsibility for the defense of a Third Party Claim, then Indemnifying
Shareholder shall have the exclusive right to contest, defend and litigate the
Third Party Claim and shall have the exclusive right, in his discretion
exercised in good faith and upon the advice of counsel, to settle any such
matter, either before or after the initiation of litigation, at such time and
upon such terms as he deems fair and reasonable, provided that at least ten (10)
days prior to any such settlement, Indemnifying Shareholder shall give written
notice of his or her intention to settle to the
23
Indemnified Party. The Indemnified Party shall have the right to be
represented by counsel at its own expense in any defense conducted by
Indemnifying Shareholder.
(c) Notwithstanding the foregoing, in connection with any
settlement negotiated by Indemnifying Shareholder, no Indemnified Party shall be
required to (x) enter into any settlement (i) that does not include the delivery
by the claimant or plaintiff to the Indemnified Party of a release from all
liability in respect of such claim or litigation, (ii) if the Indemnified Party
shall, in writing to Indemnifying Shareholder within the ten (10) day period
prior to such proposed settlement, disapprove of such settlement proposal and
desire to have Indemnifying Shareholder tender the defense of such matter back
to the Indemnified Party, or (iii) that requires an Indemnified Party to take
any unreasonable affirmative actions as a condition of such settlement, or (y)
consent to the entry of any judgment that does not include a full dismissal of
the litigation or proceeding against the Indemnified Party with prejudice;
provided, however, that should the Indemnified Party disapprove of a settlement
proposal pursuant to clause (ii) above, the Indemnified Party shall thereafter
have all of the responsibility for defending, contesting and settling such Third
Party Claim but shall not be entitled to indemnification by Shareholder to the
extent that, upon final resolution of such Third Party Claim, Shareholder's
liability to the Indemnified Party but for this proviso exceeds what
Shareholder's liability to the Indemnified Party would have been if Indemnifying
Shareholder were permitted to settle such Third Party Claim in the absence of
the Indemnified Party exercising its right under clause (ii) above.
(d) If, in accordance with the foregoing provisions of this
Section 9.4, an Indemnified Party shall be entitled to indemnification against a
Third Party Claim, and if Indemnifying Shareholder shall fail to accept the
defense of a Third Party Claim which has been tendered in accordance with this
Section 9.4, the Indemnified Party shall have the right, without prejudice to
its right of indemnification hereunder, in its discretion exercised in good
faith and upon the advice of counsel, to contest, defend and litigate such Third
Party Claim, and may settle such Third Party Claim, either before or after the
initiation of litigation, at such time and upon such terms as the Indemnified
Party deems fair and reasonable, provided at least ten (10) days prior to any
such settlement, written notice of its intention to settle is given to
Indemnifying Shareholder. Indemnifying Shareholder shall not be required by such
proposed settlement to consent to the entering of any judgment that does not
include a full dismissal of the litigation or proceeding against Indemnifying
Shareholder with prejudice or a full release of Indemnifying Shareholder. If,
pursuant to this Section 9.4, the Indemnified Party so defends or settles a
Third Party Claim for which it is entitled to indemnification hereunder, as
hereinabove provided, the Indemnified Party shall be reimbursed by the
Indemnifying Shareholder for the reasonable attorneys' fees and other expenses
of defending the Third Party Claim which are incurred from time to time,
forthwith following the presentation to Indemnifying Shareholder of itemized
bills for said attorneys' fees and other expenses. No failure by Indemnifying
Shareholder to acknowledge in writing the Indemnifying Shareholder's
indemnification obligations under this Section 9 shall relieve the Indemnifying
Shareholder of such obligations to the extent they exist.
(e) If an Indemnified Party shall have a claim for damages which
does not involve a Third Party Claim, the Indemnified Party shall deliver a
Claim Notice with respect thereto to Indemnifying Shareholder or, if the
indemnification obligation arises under Section 9.1(c), the relevant Shareholder
(the "Indemnifying Shareholder"). If Indemnifying Shareholder disputes his or
her liability with respect to such claim or demand within twenty days after
receipt of such Claim Notice, such dispute shall be settled by arbitration. If
Indemnifying Shareholder does not dispute such liability within twenty days
after receipt of the Claim Notice, the amount of such claim shall be
conclusively deemed a liability of Indemnifying Shareholder.
9.5 Certain Tax and Other Matters.
(a) If, in connection with the audit of any Return, a proposed
adjustment is asserted in writing with respect to any Taxes of the Companies for
which Principal Shareholder is required to indemnify Purchaser pursuant to
Section 9.2(a) hereof, Purchaser shall notify Principal Shareholder of such
proposed adjustment within twenty (20) days after the receipt thereof. Upon
notice to Purchaser within twenty (20) days after receipt of the notice of such
proposed adjustment from Purchaser, Principal Shareholder may assume (at
Principal Shareholder's own cost and expense) complete control of and contest
such proposed adjustment and may agree to settle such contest in its sole
discretion, provided that such settlement does not materially and adversely
affect Taxes of the Companies in subsequent periods.
(b) Alternatively, if Principal Shareholder requests within
twenty (20) days after receipt of notice of such proposed adjustment from
Purchaser, Purchaser shall contest such proposed adjustment. Principal
Shareholder shall be obligated to pay all reasonable out-of-pocket costs and
expenses (including legal fees and expenses) which Purchaser may incur in so
contesting such proposed adjustment as such costs and expenses are
24
incurred, and Purchaser shall have the full right to contest such proposed
adjustment and shall be entitled to settle or agree to pay in full such proposed
adjustment (in its sole discretion) and thereafter pursue its rights under this
Agreement. Principal Shareholder shall pay to Purchaser all indemnity amounts in
respect of any such proposed adjustment within thirty (30) days after written
demand to Principal Shareholder therefor. If (i) Principal Shareholder has not
assumed control of the proposed adjustment, and has not requested Purchaser to
contest the proposed adjustment, or (ii) Principal Shareholder has assumed
control of the contest of such proposed adjustment as provided above (or has
requested Purchaser to contest such proposed adjustment within the time provided
above), Principal Shareholder shall pay to Purchaser all indemnity amounts
within thirty (30) days after such proposed adjustment is settled or a Final
Determination has been made with respect to such proposed adjustment.
(c) For purposes of this Section 9.5, a "Final Determination"
shall mean (i) the entry of a decision of a court of competent jurisdiction at
such time as an appeal may no longer be taken from such decision or (ii) the
execution of a closing agreement or its equivalent between the particular
taxpayer and the Internal Revenue Service, as provided in Section 7121 and
Section 7122, respectively, of the Code, or a corresponding agreement between
the particular taxpayer and the particular state or local taxing authority. The
obligation of Principal Shareholder to make any indemnity payment pursuant to
Section 9.2 shall be premised on the receipt by Principal Shareholder from
Purchaser of a written notice setting forth the relevant portion of any Final
Determination, and in cases where the amount of the indemnity payment exceeds
$25,000, a certified statement by a nationally recognized accounting firm
setting forth the amount of the indemnity payment (and in all other cases, a
similar statement certified by the chief financial officer of Purchaser) and
describing in reasonable detail the calculation thereof.
9.6 Certain Information. Purchaser, Principal Shareholder and the
Companies shall furnish or cause to be furnished to each other (at reasonable
times and at no charge) upon request as promptly as practicable such information
(including access to books and records) pertinent to the Companies and
assistance relating to the Companies as is reasonably necessary for the
preparation, review and audit of financial statements, the preparation, review,
audit and filing of any Return, the preparation for any audit or the prosecution
or defense of any claim, suit or proceeding relating to any proposed adjustment
or which may result in Principal Shareholder's being liable under the
indemnification provisions of this Section 9, provided that access shall be
limited to items pertaining solely to the Companies. Principal Shareholder shall
grant to Purchaser access to all Returns filed by him with respect to the
Companies and in his custody if the Companies do not have custody thereof.
9.7 Release by Shareholders. Shareholders, as of the Closing
Date, hereby release and discharge the Companies and each of their officers and
directors from, and agree and covenant that in no event will Shareholders
commence any litigation or other legal or administrative proceeding against, the
Companies, or any of their officers or directors, whether in law or equity,
relating to any and all claims and demands, known and unknown, suspected and
unsuspected, disclosed and undisclosed, for damages, actual or consequential,
past, present and future, arising out of or in any way connected with his or her
ownership of the Companies Shares prior to the Closing Date, other than claims
or demands arising out of the transactions contemplated by this Agreement.
9.8 Indemnification by Purchaser. Upon the terms and subject to
the conditions set forth in Section 9.4 hereof in respect of notice, opportunity
to defend, right to be represented, right to disapprove settlement and similar
matters and this Section 9.8, Purchaser agrees to indemnify and hold
Shareholders harmless against, and will reimburse Shareholders on demand by
Principal Shareholder for, any Damages (as defined in Section 9.1) sustained or
incurred by any such person as a result of, arising out of or by virtue of any
misrepresentation, breach of any warranty or representation, or non-fulfillment
of any agreement or covenant on the part of Purchaser, whether contained in this
Agreement or any written statement or certificate furnished or to be furnished
by Purchaser to Shareholders pursuant hereto or in any closing document
delivered by the Purchaser to Shareholders in connection herewith.
Purchaser shall further indemnify and hold Shareholders harmless
against claims, costs or expenses arising from operation of the Companies in
respect of periods after the Closing Date.
9.9 Exclusive Remedy. The remedies provided in this Section 9
are, to the extent permitted by law, the sole and exclusive remedies, exclusive
of any other remedies that might otherwise be available to any of the parties,
for any claim by one party against any other party under this Agreement or with
respect to the transactions contemplated by it. No party shall make any claim
under any theory, in tort, contract, under statute or otherwise.
9.10 Tax Effect. In case any event shall occur which would
otherwise entitle either party to assert a claim for indemnification hereunder,
no loss shall be deemed to have been sustained by such party to the extent of
any tax savings realized by such party with respect thereto.
25
9.11 Right of Set-Off. Purchaser shall have the right to set off
any amounts owing to Shareholders in respect of the Contingent Payments against
any claim for indemnification against the Shareholders hereunder. Disbursement
of amounts held in the Contingent Payment Escrow may be suspended in respect of
indemnification claims until settled or resolved, as provided in the Escrow
Agreement.
10. MISCELLANEOUS.
10.1 Notice. Any notice required or permitted hereunder shall be
in writing and shall be sufficiently given if personally delivered or mailed by
certified or registered mail, return receipt requested, addressed as follows:
If to Purchaser or (after the Closing Date) the Companies:
Iron Mountain Records Management, Inc.
745 Atlantic Avenue
Boston, Massachusetts 02111
Attn: Eugene B. Doggett
Telecopy: (617) 350-7881
Copy to:
Garry B. Watzke, Esq.
745 Atlantic Avenue, 10th Floor
Boston, Massachusetts 02111
Telecopy: (617) 350-7881
If to Shareholders or the Companies (prior to the Closing Date) :
Douglas McCraw
Data Archive Services, Inc.
3821 SW 47th Avenue
Ft. Lauderdale, Florida 33314
Telecopy: (954) 584-0098
If to Shareholders after the Closing Date:
Douglas McCraw
4800 Bayview Drive
Ft. Lauderdale, Florida 33308
Telecopy: (954) 491-3888
Copy to:
Stephen Opler, Esq.
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Telecopy: (404) 881-7777
and to
John W. Carry, Esq.
Hodges & Carry, P. A.
644 S. E. 4th Avenue
Fort Lauderdale, Florida 33301
Telecopy: (954) 764-6789
(or to such other address as any party shall specify by written notice so
given), and shall be deemed to have been delivered as of the date so personally
delivered or mailed.
10.2 Execution of Additional Documents. The parties hereto will
at any time, and from time to time after the Closing Date, upon reasonable
request of the other party, execute, acknowledge and deliver all such
26
further acts, deeds, assignments, transfers, conveyances, powers of
attorney and assurances as may be required to carry out the intent of this
Agreement.
10.3 Binding Effect; Benefits. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, successors, executors, administrators and assigns. Notwithstanding
anything contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
10.4 Entire Agreement. This Agreement, together with the
Exhibits, the Disclosure Schedule and other documents contemplated hereby,
constitute the final written expression of all of the agreements between the
parties, and is a complete and exclusive statement of those terms. It supersedes
all understandings and negotiations concerning the matters specified herein. Any
representations, promises, warranties or statements made by either party that
differ in any way from the terms of this written Agreement and the Exhibits, the
Disclosure Schedule and other documents contemplated hereby, shall be given no
force or effect. The parties specifically represent, each to the other, that
there are no additional or supplemental agreements between them related in any
way to the matters herein contained unless specifically included or referred to
herein. No addition to or modification of any provision of this Agreement shall
be binding upon any party unless made in writing and signed by all parties.
10.5 Governing Law; Consent to Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State
of Florida exclusive of the conflict of law provisions thereof.
The Companies and Shareholders, to the extent they may lawfully
do so, hereby consent to the jurisdiction of the courts of the State of Florida
and the United States District Court for the South District of Florida, as well
as to the jurisdiction of all courts from which an appeal may be taken from such
courts, for the purpose of any suit, action or other proceeding arising out of
any of their obligations arising hereunder or with respect to the transactions
contemplated hereby and expressly waive any and all objections they may have as
to venue in any of such courts.
10.6 Survival. All of the terms, conditions, warranties and
representations contained in this Agreement shall survive, in accordance with
their terms, delivery by Purchaser of the consideration to be given by him
hereunder and delivery by Shareholders of the consideration to be given by them
hereunder, and shall survive the execution hereof and the Closing hereunder.
10.7 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument.
10.8 Headings. Headings of the Sections of this Agreement are for
the convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
10.9 Waivers. Either Purchaser or Principal Shareholder may, by
written notice to the other, (i) extend the time for the performance of any of
the obligations or other actions of the other under this Agreement; (ii) waive
any inaccuracies in the representations or warranties of the other contained in
this Agreement or in any document delivered pursuant to this Agreement; (iii)
waive compliance with any of the conditions or covenants of the other contained
in this Agreement; or (iv) waive performance of any of the obligations of the
other under this Agreement. Except as provided in the preceding sentence, no
action taken pursuant to this Agreement, including without limitation any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
10.10 Merger of Documents. This Agreement and all agreements and
documents contemplated hereby constitute one agreement and are interdependent
upon each other in all respects.
10.11 Incorporation of Exhibits and Schedules. All Exhibits and
the Disclosure Schedule are by this reference incorporated herein and made a
part hereof for all purposes as if fully set forth herein.
10.12 Severability. If for any reason whatsoever, any one or more
of the provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid as applied to any particular case or in all
27
cases, such circumstances shall not have the effect of rendering such
provision invalid in any other case or of rendering any of the other provisions
of this Agreement inoperative, unenforceable or invalid.
10.13 Assignability. Neither this Agreement nor any of the
parties' rights hereunder shall be assignable by any party hereto without the
prior written consent of the other parties hereto.
10.14 Records of the Companies. For a period of three years
following the Closing Date or for such longer period as the statute of
limitations applicable to claims for Taxes relating to the Companies for any
period through the Closing Date shall be extended (through voluntary extension
or otherwise), Purchaser shall grant to Shareholders and their representatives,
at Shareholders' reasonable request, access to and the right to make copies of
records and documents of the Companies related to the period prior to the
Closing Date as may be necessary in connection with Shareholder's affairs. If
Principal Shareholder notifies Purchaser that Shareholders require retention of
such records beyond three years, Shareholders shall pay Purchaser's storage
charges for such post-three-year period.
10.15 Arbitration.
(a) All disputes arising under this Agreement shall be settled
by arbitration in Miami, Florida, before a single arbitrator pursuant to
the rules of the American Arbitration Association. Arbitration may be commenced
at any time by any party hereto giving written notice to each other party to a
dispute that such dispute has been referred to arbitration under this Section
10.15.
(i) Within 10 business days after receipt of such notice,
Principal Shareholder and Purchaser shall designate in writing one
arbitrator to resolve the dispute; provided, that if the parties cannot agree on
an arbitrator within such 10-day period, the arbitrator shall be selected by the
American Arbitration Association. The arbitrator so designated shall not be an
employee, consultant, officer, director, stockholder or an affiliate of any
party hereto.
(ii) Within 15 business days after the designation of the
arbitrator, the arbitrator, Principal Shareholder and Purchaser shall meet,
at which time Principal Shareholder and Purchaser shall submit in writing all
disputed issues and a proposed ruling on each such issue.
(iii) The arbitrator shall set a date for a hearing, which
shall be no later than 20 business days after the submission of written
proposals pursuant to clause (ii), to discuss each of the issues identified by
Shareholder and Purchaser. Each such party shall have the right to be
represented by counsel. The arbitration shall be governed by the rules of the
American Arbitration Association; provided, that the arbitrator shall have sole
discretion with regard to the admissibility of evidence.
(iv) The arbitrator shall use his or her best efforts to
rule on each disputed issue within 20 business days after the completion of
the hearings described in clause (iii). The arbitrator shall rule in favor of
the position of one party or the other in the matter, and shall not "split" or
compromise the position of the parties. The determination of the arbitrator to
the resolution of any dispute shall be binding and conclusive upon all parties
hereto. All rulings of the arbitrator shall be in writing and shall be delivered
to the parties hereto.
(v) The prevailing party in any arbitration shall be
entitled to an award of reasonable attorneys' fees incurred in connection
with the arbitration. The non-prevailing party shall pay such fees, together
with the fees of the arbitrator and the costs and expenses of the arbitration.
(vi) Any arbitration award may be entered in and enforced
by any court having jurisdiction thereover and shall be final and binding
upon the parties.
(b) To the extent that arbitration is not legally permitted,
any party may commence a civil action in a court of appropriate
jurisdiction to solve disputes hereunder. Nothing contained in this Section
10.15 shall prevent the parties from settling any dispute by mutual agreement at
any time.
11. PRINCIPAL SHAREHOLDER.
11.1 Shareholders other than Principal Shareholder hereby appoint
Principal Shareholder as their representative for purposes of this Agreement and
as their attorney-in-fact and agent for and on behalf of each such Shareholder,
and authorize Principal Shareholder to take any and all actions and make any
decisions required or
28
permitted to be taken or made by Principal Shareholder under this
Agreement, including receipt and giving of notices. Principal Shareholder shall
have full power and authority to represent Shareholders, and their successors,
with respect to all matters arising under this Agreement and all action taken by
Principal Shareholder hereunder shall be binding upon Shareholders, and their
successors, as if expressly confirmed and ratified in writing by each of them.
Without limiting the generality of the foregoing, Principal Shareholder shall
have full power and authority to interpret all of the terms and provisions of
this Agreement, and to authorize payments to be made with respect thereto, on
behalf of Shareholders and their successors.
11.2 Principal Shareholder shall incur no liability with respect
to any action taken or suffered by him in reliance upon any notice, direction,
instruction, consent, statement or other documents believed by him to be
genuinely and duly authorized, nor for other action or inaction except his own
willful misconduct or gross negligence. Principal Shareholder shall be
indemnified and held harmless by Shareholders other than Principal Shareholder
from all losses, costs and expenses which he may incur as a result of
involvement in any legal proceedings arising from the performance of his duties
hereunder.
11.3 In the event of the death or permanent disability of
Principal Shareholder, or his resignation hereunder, a successor shall be
appointed by the remaining Shareholders. Each successor shall have the power,
authority, rights and privileges conferred by this Agreement upon Principal
Shareholder, and the term "Principal Shareholder" as used herein shall be deemed
to include such successor.
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf on the day and year
hereinabove first set forth.
PURCHASER: STOCKHOLDERS OF
Iron Mountain Records Management, Inc. DAS-FT. LAUDERDALE
By /s/ By /s/
------------------------------- -------------------------------
Name __________________________ P. Douglas McCraw
Title ___________________________
STOCKHOLDERS OF DAS-MIAMI
-------------------------------
Alisa Jo Heyman Zecker
/s/ /s/
- ---------------------------------- -------------------------------
P. Douglas McCraw Sylvia Heyman
/s/ /s/
- ---------------------------------- -------------------------------
Fonda B. Furnish Lucretia Saraceno
/s/ /s/
- ---------------------------------- -------------------------------
Anthony S. Cushenberry Lorraine Saraceno
/s/
- ---------------------------------- -------------------------------
Lawrence T. Einbinder Fred Saraceno
29
/s/ /s/
- ---------------------------------- -------------------------------
Roslyn D. Smith Burt and Mitzi Jones
/s/ /s/
- ---------------------------------- -------------------------------
David H. Mundy Fonda B. Furnish
/s/
-------------------------------
Anthony S. Cushenberry
/s/
-------------------------------
Lawrence T. Einbinder
/s/
-------------------------------
Roslyn D. Smith
/s/
-------------------------------
David H. Mundy
30