ASSET PURCHASE AND SALE AGREEMENT
among
IRON MOUNTAIN RECORDS MANAGEMENT, INC.,
as Buyer
INTERNATIONAL RECORDS STORAGE AND RETRIEVAL SERVICES, INC.
as Seller
and
Lawrence Winnerman and Sanford Winnerman
as stockholders of Seller
August 13, 1996
TABLE OF CONTENTS
ARTICLE I....................................................................1
DEFINITIONS............................................................1
ARTICLE II...................................................................4
SALE AND PURCHASE OF SUBJECT ASSETS....................................4
ARTICLE III..................................................................7
REPRESENTATIONS AND WARRANTIES OF SELLER AND STOCKHOLDERS..............7
ARTICLE IV..................................................................12
REPRESENTATIONS AND WARRANTIES OF BUYER...............................12
ARTICLE V...................................................................13
PRE-CLOSING AGREEMENTS................................................13
ARTICLE VI..................................................................15
CONDITIONS PRECEDENT TO OBLIGATION OF BUYER TO CLOSE..................15
ARTICLE VII.................................................................17
CONDITIONS PRECEDENT TO OBLIGATION OF SELLER..........................17
ARTICLE VIII................................................................18
THE CLOSING...........................................................18
ARTICLE IX..................................................................19
POST-CLOSING MATTERS..................................................19
ARTICLE X...................................................................21
TERMINATION...........................................................21
ARTICLE XI..................................................................22
INDEMNIFICATION.......................................................22
ARTICLE XII.................................................................26
MISCELLANEOUS PROVISIONS..............................................26
TABLE OF CONTENTS
(cont'd)
Schedule 1.11 Owned Tangible Assets
Schedule 2.3 Allocation
Schedule 3.5 Encumbrances
Schedule 3.8 Litigation
Schedule 3.9 Permits, Licenses
Schedule 3.15 Certain Changes; Competitive Bids
Schedule 3.17 Employee Information
Schedule 12.1 Brokers
Exhibit 2.5 Escrow Agreement
Exhibit 6.3 Noncompetition and Confidentiality Agreement
Exhibit 6.8 Seller's Counsel's Opinion
Exhibit 6.9 Software Support Agreement
Exhibit 7.4 Buyer's Counsel's Opinion
ASSET PURCHASE AND SALE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 13th day of August, 1996,
by and among International Records Storage and Retrieval Services, Inc., a New
Jersey corporation ("Seller"), Lawrence Winnerman and Sanford Winnerman,
stockholders of Seller (each a "Stockholder"), and Iron Mountain Records
Management, Inc., a Delaware corporation ("Buyer").
RECITALS
A. Seller is engaged in the business of providing records management and
storage services to customers located in the New York metropolitan area
under the trade name "International Records Storage".
B. Buyer desires to purchase, and Seller desires to sell, substantially all
the assets of the Business (as hereinafter defined) on the terms and
subject to the conditions contained in this Agreement.
C. Stockholders, as the majority stockholders of Seller, join in this
Agreement for purposes of confirming the representations and warranties of
Seller and providing indemnification against breach of warranties.
In consideration of the mutual covenants and agreements set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Seller, Stockholders and Buyer, intending to be legally
bound, agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, certain terms used in this Agreement and not
otherwise defined herein shall have the meanings designated below:
Section 1.1 Agreement means all or any part of this Agreement, including
schedules, exhibits, and appendices, as any of the foregoing may be amended,
modified or supplemented in writing from time to time.
Section 1.2 Business means the records management and storage business conducted
by Seller in metropolitan New York area (with customers in New York and New
Jersey) under the trade name "International Records Storage".
Section 1.3 Closing means the occasion upon which the transactions contemplated
by this Agreement are carried out by the delivery of documents, payment of funds
and other actions contemplated herein, as described in Article VIII.
Section 1.4 Closing Date shall be September 4, 1996, or such other date as the
parties may agree.
Section 1.5 Effective Time means 12:01 a.m. in Boston, Massachusetts on
September 1, 1996.
Section 1.6 Encumbrances means any and all encumbrances, security interests,
liens, Taxes, claims, liabilities, options, commitments, charges, restrictions
or other obligations of whatsoever kind, quantity or nature, whether accrued,
absolute, contingent or otherwise, which affect title to the Subject Assets.
Section 1.7 Excluded Assets means (i) Seller's cash, cash equivalents and sums
in checking and other depository accounts at the Effective Time and (ii)
Seller's minute books, stock records, stock ledger and similar corporate
records, (iii) Seller's interest in a note receivable from Penny Novak, Seller's
right to receive a partial premium refund on insurance carried by the Business,
(v) leased postage meter and two leased copiers (one of which Buyer will lease
from Seller for the rent paid by Seller to its lessor for the remainder of the
lease term), and (vi) a portion of earned accounts receivable, as described in
Section 2.2D(iii).
Section 1.8 Lease means the lease dated October 7, 1993 between Berkowitz
Company, L. P., successor to Central Paper Distribution Services, Inc., as
landlord, and Seller, as tenant, pursuant to which Seller occupies approximately
141,516 square feet of space in the Leased Building.
Section 1.9 Leased Building means the building located at 110 Edison Place,
Newark, New Jersey at which Seller conducts the Business.
Section 1.10 Major Customer means any of Seller's customers which stored in
excess of 5,000 cubic feet of material at any time during the three months ended
March 31, 1996.
Section 1.11 Subject Assets means all of Seller's assets and properties related
to the Business of whatever kind, character and description, and whether
tangible, intangible, real, personal or mixed, and wherever located, except for
the Excluded Assets. The Subject Assets include the following Tangible Assets
and Interests:
A. Tangible Assets means all tangible personal property used in the
Business, such as inventory; computers, computer peripherals and maintenance
manuals; word processors; typewriters and other business machines; automobiles,
trucks and other vehicles; equipment; tools and machines; racking and shelving
currently used in the Business or in the Leased Building; furniture,
furnishings, and office equipment; and supplies. Principal items of Tangible
Assets are listed on Schedule 1.11.
B. Interests means all intangible property used in the Business, including
rights, privileges, benefits and interests under all contracts, agreements,
consents, licenses and files and correspondence related thereto; computer
software used in the Business; permits or certificates; agreements, leases and
other arrangements with respect to intangible or tangible property or interests
therein, including the Lease; confidentiality and non-competition agreements
with present and former employees, whether oral or written; consents; agreements
with suppliers and customers; financial and operating records of the Business;
deposits held by contract parties (including the security deposit held by the
landlord under the Lease); accounts receivable issued in respect of storage to
be provided after the Closing Date and a portion of earned accounts receivable
as described in Section 2.2D(iii); prepaid expenses; the unregistered trade name
"International
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Records Storage"; and any sales agent or sales affiliate agreements used in
connection with the Business.
Section 1.12 Taxes means any and all taxes, sums or amounts assessed or
assessable, levied and due by any federal, state or county or other local
governmental authority or agency, including without limitation, real and
personal property taxes, income taxes, whether measured by gross or net income
or profit, franchise, excise, sales and use taxes, employee withholding, social
security, unemployment taxes and any other taxes required to be paid by Seller,
including interest and penalties in respect thereof whether disputed or not, and
whether accrued, contingent, due, absolute, deferred, unknown or other, together
with any and all penalties, interests and additions to all such taxes, sums or
amounts.
(ARTICLE II COMMENCES ON THE NEXT PAGE)
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ARTICLE II
SALE AND PURCHASE OF SUBJECT ASSETS
Section 2.1 Sale and Transfer.
A. The Sale. Subject to the terms and conditions set forth in
this Agreement, Seller shall sell, convey, transfer, assign and deliver to
Buyer, and Buyer shall purchase and receive from Seller, at the Closing, free
and clear of all Encumbrances, all of the Subject Assets.
Section 2.2 Purchase Price; Assumption of Certain Obligations.
A. Purchase Price. The Purchase Price to be paid by Buyer for all
the Subject Assets shall be . The Purchase Price shall be paid in
United States Dollars.
B. Payment of Purchase Price. The Purchase Price shall be payable to
Seller at the Closing by wire transfer of immediately available funds in the
amount of $ to the Escrow Agent under the Escrow Agreement described in
Section 2.5 hereof, and the remainder to such account as Seller shall designate
in writing not less than two business days prior to the Closing Date.
C. Limited Assumption of Contracts and Obligations. Buyer shall
assume no obligations or liabilities of Seller other than the following:
Buyer shall assume and perform:
(i) all obligations of Seller arising or accruing after the
Effective Time in respect of Seller's contracts, agreements and arrangements
with its customers providing for storage of business records; and
(ii) Seller's obligations arising or accruing after the Effective
Time under the Lease.
The obligations described in clauses(i) and (ii) are hereinafter referred
to as the Assumed Liabilities.
D. Adjustments.
(i) All expenses (including salaries, wages, commissions,
vacation and other benefit liabilities and so-called compensatory time)
attributable to the operation of the Business during the period on or prior to
the Effective Time are for the account of, and shall be paid by, Seller. All
expenses attributable to the operation of the Business during the period after
the Effective Time are for the account of, and shall be paid by, Buyer.
(ii) Buyer shall receive a credit against the purchase price
for prepaid services to be performed after the Effective Time for which Seller
has received payment prior to the Closing Date.
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(iii) Buyer and Seller have agreed to split as hereinafter
provided Earned Accounts Receivable, which are accounts receivable arising from
invoices issued prior to the Effective Time for storage or service provided or
performed prior to the Effective Time. Buyer and Seller shall identify and agree
on the Earned Accounts Receivable at the closing and the aggregate amount
thereof. As payments are received by Buyer from account debtors a portion of
whose accounts are Earned Accounts Receivable ("EAR account debtors"), Buyer
shall record such payments against Earned Accounts Receivable derived from such
EAR account debtor. Buyer will not allocate payments from any EAR account debtor
to "unearned" accounts receivable owed by such account debtor until all of such
EAR account debtor's Earned Accounts Receivable have been paid unless such EAR
account debtor specifically directs that a payment be so applied. If an EAR
account debtor makes such specific request (with an indication that such EAR
account debtor intends not to pay all or part of its Earned Accounts
Receivable), or if an EAR account debtor contests the appropriateness of any
invoice included in the Earned Accounts Receivable, Buyer shall promptly notify
Seller, and Seller shall have a right to participate with Buyer in attempting to
resolve the applicable EAR account debtor's objection.
Buyer shall retain for its own account collections from Earned Accounts
Receivable until the aggregate so collected equals one-half of the total Earned
Accounts Receivable. Thereafter, all remaining Earned Accounts Receivable
collected shall be paid over to Seller. Buyer shall provide a monthly accounting
to Seller of collections from EAR account debtors, identifying the invoices
against which collections are credited, and providing such other information as
Seller may reasonably request. Seller shall have the right during normal
business hours to audit and review Buyer's books and records in respect of
collection of Earned Accounts Receivable.
Buyer's obligation to remit portions of the Earned Accounts Receivable to
Seller shall terminate with respect to amounts received after the sixth month
after the Closing Date.
(iv) All such adjustments shall be calculated as of the
Effective Time and shall be paid or credited, as the case may be, on the Closing
Date, to the extent known, or on the date which is forty-five days after the
Closing Date to the extent they are not determinable on the Closing Date.
If Buyer agrees to pay any Seller obligations (other than the
Assumed Liabilities) in exchange for a credit against the Purchase Price, Buyer
shall not be deemed to have assumed any Seller obligations with respect thereto
other than payment of such assumed amount. Seller shall pay all pre-Closing
accruals and expenses other than the Assumed Liabilities at the scheduled time
of payment except to the extent (other than with respect to Assumed Liabilities)
Buyer has agreed to make such payment in exchange for a credit against the
Purchase Price. Buyer will promptly forward to Seller for payment any invoices
which Buyer receives related to obligations of Seller which were not assumed by
Buyer.
Section 2.3 Allocation. The Purchase Price shall be allocated among the Subject
Assets as described in Schedule 2.3; or, if Schedule 2.3 has not been completed
on the date hereof, on or prior to the Closing Date. The parties shall for tax
purposes report the transactions contemplated by this Agreement in accordance
with such allocation.
Section 2.4 Seller's Employees. Buyer shall not be obligated to offer employment
to any employee of Seller in connection with its acquisition of the Subject
Assets, and such acquisition
5
shall not grant any employee of Seller a right of continued employment with
Buyer. Buyer shall have the right to offer employment to such of Seller's
employees as it chooses, and Seller shall not offer conflicting employment to
any person to whom Buyer offers employment for a period of two years after the
Closing Date.
Section 2.5 Escrow Agreement. The performance by Seller and Stockholders of
their covenants, indemnities and obligations under this Agreement shall be
secured by $250,000 (together with interest thereon, the "Escrow Fund") to be
held and disbursed by Brach, Eichler, Rosenberg, Silver, Bernstein, Hammer &
Gladstone (the "Escrow Agent") pursuant to an Escrow Agreement in the form set
forth as Exhibit 2.5 hereto, which shall be executed and delivered by Seller,
Stockholders, Buyer and the Escrow Agent at the Closing.
(ARTICLE III COMMENCES ON THE NEXT PAGE)
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND STOCKHOLDERS
Seller and Stockholders hereby jointly and severally represent and warrant to
Buyer as follows, except as otherwise stated in Schedules hereto, as of the date
hereof:
Section 3.1 Organization and Good Standing. Seller is a corporation duly
organized, under the laws of the State of New Jersey, and has all requisite
power and authority to own and operate the Subject Assets, to carry on the
Business as presently conducted and to execute and deliver, and perform its
obligations under, this Agreement.
Section 3.2 Authorization. The execution and delivery of this Agreement and
performance by Seller of its obligations hereunder has been, and all the other
agreements and documents required to be delivered by Seller in accordance with
the provisions hereof (the Seller's Documents) have been duly and validly
authorized by all necessary corporate actions on the part of Seller. This
Agreement has been, and the Seller's Documents upon execution will be, duly
executed and delivered on behalf of Seller, by duly authorized officers of
Seller; and this Agreement constitutes, and Seller's Documents when executed and
delivered will constitute, the valid and binding obligations of Seller,
enforceable in accordance with their respective terms.
Section 3.3 Compliance With Other Instruments. Neither the execution and
delivery by Seller of this Agreement and the Seller's Documents, nor the
consummation by Seller of the transactions contemplated hereby and thereby,
will, with or without the giving of notice or passage of time, or both, be
contrary to or 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 on any property or asset of Seller pursuant to any
provision of, any note, bond, indenture, mortgage, deed of trust, evidence of
indebtedness or lease agreement, other agreement or instrument (or, to Seller's
knowledge, any judgment, order, injunction or decree) by which Seller is bound,
to which Seller is a party, or to which the assets of Seller are subject; nor is
the effectiveness or enforceability of this Agreement or such other documents
adversely affected by any provision of the Articles of Organization or Bylaw of
Seller.
Section 3.4 No Governmental or Other Authorization Required. No authorization or
approval of, or filing with, any governmental agency, authority or other body or
any other third persons will be required in connection with Seller's execution
and delivery of this Agreement or its consummation of the transactions
contemplated hereby.
Section 3.5 Title to Subject Assets. Except as set forth in Schedule 3.5, Seller
has good title to all the Subject Assets, free and clear of all Encumbrances.
Seller is not a party to, nor are the Subject Assets subject to, any judgment,
judicial order, writ, injunction or decree of which Seller has knowledge that
materially adversely affects the Subject Assets or the use thereof by Seller.
Section 3.6 Contracts and Other Interests. All material contracts (including all
Major Customer contracts) and all other material Interests are in full force and
effect, valid and enforceable in accordance with their respective terms, and
there are no existing defaults of Seller or events of default that, with the
giving of notice or lapse of time, or both, would constitute defaults of Seller
under any material contracts or other Interests, nor are material amendments
pending with respect to
7
any material contracts or other Interests. Seller has no oral agreements with
customers which require Seller to provide storage or services at no charge or at
rates significantly below the average rates for such services set forth in
Seller's written customer contracts, except for immaterial discounts and/or free
services provided as incentives to certain accounts.
Section 3.7 Taxes. Seller has filed all federal, state and local income, excise
or franchise tax returns, real estate and personal property tax returns, sales
and use tax returns and other tax returns (including returns in respect of
withholding and unemployment tax) required to be filed by it or has timely filed
extensions related thereto and has paid all taxes owing by it, including any
interest and penalties thereon, except taxes which have not yet accrued or
otherwise become due for which adequate provision has been made, or which Seller
is contesting in good faith. Neither the Internal Revenue Service nor any other
taxing authority is now asserting or, to the knowledge of Seller, threatening to
assert against Seller any deficiency or claim for additional taxes or interest
thereon or penalties.
Section 3.8 Litigation; Claims; Defaults. Except as set forth in Schedule 3.8,
Seller has not been served with any currently effective summons or complaint and
there is no action or suit, equitable or legal, to which Seller is a party, nor
any administrative, arbitration or other proceeding pending or threatened
against Seller in respect of the Subject Assets or the Business. Seller has not
received any written or oral assertions from customers of the Business to the
effect that their materials stored with Seller have been lost, damaged or
inappropriately destroyed or that such customers are being billed inaccurately
for storage of materials or records. Seller is not in default with respect to
any currently effective judgment, order, writ, injunction, decree of which
Seller has knowledge, demand or assessment issued by any court or of any
federal, state, municipal or other governmental agency, board, commission,
bureau, instrumentality or department and applicable to Seller. Seller is not
charged or threatened with or under investigation with respect to, any violation
of any provision of any federal, state, municipal or other law or administrative
rule or regulation.
Section 3.9 Compliance with Laws; Permits, Etc. Seller has complied in all
material respects with applicable federal, state and local laws, rules and
regulations. Seller possesses such certificates, authorities or permits issued
by the appropriate local, state or federal regulatory agencies or bodies as are
necessary to conduct the Business, all of which are listed on Schedule 3.9; and
Seller has not received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit.
Section 3.10 Certain Environmental Matters. Except as set forth in Schedule
3.10, Seller is operating and has operated the Business in compliance with all
applicable local, state and federal environmental laws, regulations and
ordinances, including, but not limited to, the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. ss.ss.9601 et seq.
(CERCLA), the Resource Conservation and Recovery Act, 42 U.S.C. ss.ss.6901 et
seq., the Clean Water Act, 33 U.S.C. ss.ss.1251 et seq., and the environmental
laws and regulations of the State of New Jersey as each such statute or
regulation has been amended from time to time (Environmental Laws and
Regulations). Seller has not accepted for storage, and to the best of its
knowledge does not store, any nitrate film or any Hazardous Material. Seller has
never knowingly caused the release of an amount of any Hazardous Material to the
environment which release would constitute a violation of any Environmental Laws
and Regulations. For purposes of this Agreement Hazardous Material shall have
the same meaning as that term is defined by Environmental Laws and Regulations,
and shall in any event include (i) any asbestos, (ii) polychlorinated biphenyl
substances and
8
(iii) petroleum waste products. Seller does not own, lease, rent or otherwise
utilize any underground storage tanks.
Section 3.11 No Inconsistent Agreements. Seller has not entered into any letter
of intent, preliminary agreement or other agreement, written or oral, with any
other party which would be inconsistent with the terms of this Agreement.
Section 3.12 Financial Statements. Seller has previously delivered to Buyer
Seller's balance sheets and income and expense statements as of and for the
years ended December 31, 1994 and December 31, 1995, reviewed by Rothstein, Kass
& Company, P. C., independent public accountant (the Financial Statements) and
the three-month period ended March 31, 1996. The Financial Statements are true,
correct and complete for the periods covered in all material respects, have been
prepared in accordance with generally accepted accounting principles on an
income tax reporting basis, applied on a consistent basis, and fairly present
the results of the operation of the Business for the periods then ended. Seller
shall deliver to Buyer, as they become available, unaudited monthly income and
expense statements until the Closing, which statements will be true, correct and
complete for such periods and prepared on a consistent basis with the Financial
Statements.
Section 3.13 No ERISA Plans. Seller has not established and does not maintain
any employee pension benefit plans which are subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended, other than a 401(k)
profit sharing plan which will be terminated by Seller at or prior to the
Closing Date. Assets in such plan will be distributed to the beneficiaries.
Section 3.14 Condition of Subject Assets; Sufficiency. All the material tangible
Subject Assets are in good operating condition, ordinary wear and tear excepted,
and are in compliance with all applicable statutes, ordinances, rules and
regulations. The tangible Subject Assets constitute all of the tangible assets
required to operate the Business in the manner operated by Seller during the six
months prior to the date hereof.
Section 3.15 Absence of Certain Changes. Except as set forth in Schedule 3.15,
since January 1, 1996, none of Seller's Major Customers has terminated or
indicated in writing an intention to terminate its business with, or reduce the
volume of its business with, Seller. Seller has no Major Customers whose storage
business is or has within 90 days prior to the date hereof, been the subject of
competitive bidding procedures.
Section 3.16 No Material Undisclosed Liabilities. Except as described in this
Agreement or reflected in the Financial Statements, to Seller's knowledge, there
is no liability or obligation of Seller related to the operation of the
Business, whether accrued, absolute or contingent, other than liabilities and
obligations that have been incurred in the ordinary course of business since
December 31, 1995 and are not material in the aggregate to the Subject Assets,
the Business or the, operations or financial condition of Seller.
Section 3.17 Personnel Information. Schedule 3.17 lists the names of all full-
and part-time employees of Seller (or leased employees utilized by Seller) and
sets forth a job description or title and compensation for each such person.
Schedule 3.17 also sets forth a list of all written and oral employment and
noncompetition agreements with Seller's employees.
9
Section 3.18 Patents, Trademarks, Etc. Except for the trade name "International
Records Storage", which is an unregistered trade name used by Seller, and
proprietary software programs identified in Section 3.18, Seller has no patents,
trademarks, service marks, other trade names, copyrights, computer programs or
programs rights, licenses or other similar intangible property rights and
interest which it uses in connection with the Business.
Section 3.19 Labor Relations. During the past three years there has not been,
and there is not now, any strike, labor dispute, slow down, stoppage, or other
material interference with or impairment by labor of the business of Seller
pending or threatened or contemplated against or directly affecting the
Business. Seller's employees are not represented by any labor or trade union,
nor to Seller's knowledge has there been any attempt to organize Seller's
employees during the 90 day period prior to the date hereof.
Section 3.20 Insurance. There is in force comprehensive general liability and
casualty insurance for the Subject Assets and the Business which, in the
reasonable opinion of Seller, is appropriate and adequate coverage for such
assets and operations.
Section 3.21 Trade Secrets and Customer Lists. Seller has the right to use, free
and clear of any claims or rights of others, all trade secrets, customer lists,
computer software, intellectual property and operating methods required for or
incident to the operation of the Business. Seller is not using or in any way
making use of any confidential information or trade secrets of any third party,
including without limitation any confidential information claimed to be the
property of a former employer of any present or past employee of Seller.
Section 3.22 Transactions with Interested Persons. Seller does not own directly
or indirectly, on an individual or joint basis, any material interest in any
customer, competitor or supplier of the Business, or any organization which has
a material contract or arrangement with the Business.
Section 3.23 Records Services and Storage Arrangements. Substantially all items
received and stored by Seller on behalf of customers (singly or in the
aggregate) are held in storage by Seller and are locatable and accessible
without extraordinary effort except for items withdrawn or destroyed at the
respective customer's request. The stored items for which customers are billed
exist and can be accounted for.
Section 3.24 Business in Ordinary Course. From December 31, 1995 until the date
hereof, the Business has been conducted in the ordinary course in accordance
with past practice. Seller has used its best efforts to maintain and service the
Business, and to keep available the services of present employees and agents and
maintain existing business relationships. Without limiting the generality of the
foregoing, Seller has not:
(i) mortgaged or pledged any of its property or assets;
(ii) sold, assigned, transferred or waived rights with respect
to any of the Subject Assets (except for items of personal property sold because
they had reached the end of their useful life and replaced with similar personal
property);
(iii) entered into or adopted any employee benefit plan or any
employment or severance agreement, or increased in any manner the compensation
or fringe
10
benefits of its officers or employees (except in the ordinary course of business
and consistent with past practice);
(iv) changed its billing, accounts payable, accounts
receivable collection, accounts receivable write-off or other cash management
practices; or
(v) agreed to take any of the foregoing actions.
Section 3.25 Shelving of Cartons; Filing. Seller has completed the shelving and
filing of substantially all cartons and files received from its customers
(including refiles) and all internal move cartons on or prior to the date which
is two days prior to the date hereof, including permanent filing of all files
deposited temporarily in shelving row end bins. Cartons which are received from
new customers will be filed to the extent that shelving is available.
Section 3.26 No Material Adverse Change. There has been no material adverse
change in the Subject Assets (including, without limitation, loss of or damage
to a material amount or part of the Subject Assets) or the Business between
December 31, 1995 and the date hereof.
Section 3.27 Software. The computers included in the Subject Assets contain all
programs, software and information required by Buyer to operate the Business,
including customer, billing and inventory information, in the manner that Seller
has operated the Business prior to the Closing Date, and adequate support
therefor is available so that Buyer may operate the Business in the normal
course without use of software or computer programs provided by or licensed from
any person other than persons with whom there are written agreements.
(ARTICLE IV COMMENCES ON THE NEXT PAGE)
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
Section 4.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer possesses all requisite corporate power and authority to own,
operate and lease its properties and carry on its business, and to enter into
this Agreement and complete the transactions contemplated by it.
Section 4.2 Authorization. Buyer has all requisite power and authority to
execute and deliver, and perform its obligations under, this Agreement. The
execution and delivery of this Agreement and performance by Buyer of its
obligations hereunder, and all transactions contemplated hereby, have been duly
and validly authorized by all necessary corporate action. This Agreement has
been, and the other agreements and documents required to be delivered by Buyer
in accordance with the provisions hereof (the Buyer's Documents) will be, duly
executed and delivered on behalf of Buyer by duly authorized officers of Buyer;
and this Agreement constitutes, and Buyer's Documents when executed and
delivered will constitute, the valid and binding obligations of Buyer,
enforceable in accordance with their respective terms.
Section 4.3 Compliance with Other Instruments. Neither the execution and
delivery by Buyer of this Agreement and the Buyer's Documents, nor the
consummation by Buyer of the transactions contemplated hereby and thereby, will,
with or without the giving of notice or passage of time, or both, be contrary to
or 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 Buyer pursuant to any provision of,
any note, bond, indenture, mortgage, deed of trust, evidence of indebtedness or
lease agreement, other agreement or instrument or any judgment, order,
injunction or decree by which Buyer is bound, to which Buyer is a party, or to
which the assets of Buyer are subject; nor is the effectiveness or
enforceability of this Agreement or such other documents adversely affected by
any provision of the certificate of incorporation or by-laws of Buyer.
Section 4.4 Litigation. There is no action, suit or proceeding pending or, to
the knowledge of Buyer, threatened against Buyer which might interfere with its
ability to consummate the transactions contemplated hereunder.
Section 4.5 No Governmental Authorization Required. No authorization or approval
of, or filing with, any governmental agency, authority or other body or any
other third persons will be required in connection with Buyer's execution and
delivery of this Agreement or its consummation of the transactions contemplated
hereby and thereby.
(ARTICLE V COMMENCES ON THE NEXT PAGE)
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ARTICLE V
PRE-CLOSING AGREEMENTS
Section 5.1 Access to Information and Facilities. Seller shall afford Buyer and
its representatives full access during normal business hours to all facilities,
properties, books, accounts, records, contracts and documents of or relating to
the Business in Seller's or Stockholders' possession or control, subject to
reasonable requirements that Buyer not interfere with the operations and
activity of the Business. Such access shall include access to confirm the truth
and correctness of representations and warranties as of the date hereof and as
of the Closing Date. In addition, Buyer's representative shall have an
opportunity to meet with Seller's office manager, operations manager and
sales/customer service manager, to ensure a smooth transition. Seller has
furnished or caused to be furnished to Buyer and its representatives all data
and information concerning the Business reasonably requested by Buyer. Without
limiting the generality of its obligations hereunder, Buyer agrees that
information obtained solely through such sources is subject to the
confidentiality provisions of Section 5.2.
Section 5.2 Confidentiality. Seller and Buyer shall keep confidential any and
all information furnished by each to the other (including confidential
information transmitted by each to their representatives, accountants, counsel,
advisors or bankers) in the course of negotiations relating to this Agreement
and the business and financial reviews and investigations referred to in this
Agreement, except to the extent that any such information is or was generally
available to the public through no action on the part of the recipient or was
known to the recipient prior to receipt. Buyer shall use such confidential
information only for purposes of evaluating the transaction contemplated by this
Agreement, and not for any other purposes.
Notwithstanding the foregoing, disclosure of such information may be made to the
extent required by applicable law or regulation, judicial or regulatory process,
and reviews by financial institutions which are lenders to either party; and
such information may be used as evidence in or in connection with any pending or
threatened litigation between the parties relating to this Agreement or any
transaction contemplated hereby.
In the event that the sale contemplated by this Agreement is not consummated for
any reason, each party agrees to return to the other party all materials
containing such information immediately on request, except that each party may
keep one set of such information for its legal file, where it will remain
subject to the confidentiality provisions of this Agreement.
Section 5.3 Public Announcement. No party shall issue any press release or make
any public announcement relating to the subject matter of this Agreement without
the prior written approval of the other party; provided, however, that either
party may disclose the transfer of the Business to its customers in the ordinary
course of business, or make any public disclosure it believes is necessary as a
part of its quarterly press release procedure or in good faith is required by
applicable law or any listing or trading agreement concerning the
publicly-traded securities of the party or its affiliates.
Section 5.4 Communications to Seller's Employees. Buyer and Seller shall
mutually agree on the timing and content of a program of communications to
employees of the Business (other than the three persons mentioned in Section
5.1) in respect of the transactions contemplated hereby.
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Section 5.5 Continued Efforts. Seller shall use its reasonable best efforts to
(a) cause to be fulfilled and satisfied all of the conditions to the Closing
which are the responsibility of Seller; (b) cause to be performed all of the
matters required upon the Closing which are the responsibility of Seller; and
(c) take such steps and do such acts as may be necessary to make all of its
warranties and representations materially true and correct as of the Closing
Date with the same effect as if the same had been made, and this Agreement had
been dated, as of the Closing Date.
Buyer shall use its reasonable best efforts to (a) cause to be fulfilled all of
the conditions to the Closing to be satisfied by it; (b) cause to be performed
all of the matters required of it upon the Closing; and (c) take such steps and
do such acts as may be necessary to make all of its warranties and
representations materially true and correct as of the Closing with the same
effect as if the same had been made, and this Agreement had been dated, as of
the Closing Date.
Section 5.6 Operation of Business Prior to Closing. From the date hereof until
the Closing Date, Seller shall conduct the Business in the ordinary course
consistent with past practice, and shall use its reasonable best efforts to
maintain, preserve and develop the Business, to keep available the services of
present employees and agents and to maintain existing business relationships.
Without limiting the generality of the foregoing, Seller shall not take any of
the actions described in clauses (i) through (v) of Section 3.24.
Section 5.7 Fire Inspection. Seller has advised Buyer that the Newark Fire
Department inspected the Leased Building in June, 1995. Seller has provided
Buyer with a copy of the Fire Department's report in respect of that portion of
the Leased Building occupied by Seller, and Seller has notified Buyer of actions
Seller has taken (and actions Seller does not intend to take) in respect of such
report, a copy of which is annexed hereto as Schedule 3.10.
(ARTICLE VI COMMENCES ON THE NEXT PAGE)
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ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATION OF BUYER TO CLOSE
The obligation of Buyer to purchase the Subject Assets and carry out the other
transactions contemplated hereby are, unless waived in writing by Buyer, subject
to the satisfaction, on the Closing Date, of the following conditions:
Section 6.1 Accuracy of Representations and Performance of Seller and
Stockholders. The representations and warranties of Seller and Stockholders
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date with the same force and effect as though made on
and as of such date, except to the extent that such representations and
warranties shall be incorrect as of the Closing Date because of events or
changes occurring in the ordinary course of business of Seller or as otherwise
permitted by this Agreement, none of which, singly or in the aggregate,
constitutes a material adverse change; each and all of the conditions and
covenants to be performed or satisfied by Seller and/or Stockholders hereunder
at or prior to the Closing Date shall have been duly performed or satisfied in
all material respects; and Seller and Stockholders shall have furnished Buyer
with a certificate to that effect.
Section 6.2 Absence of Certain Litigation. On the Closing Date, no suit, action
or other proceeding, or injunction or final judgment relating thereto, shall be
threatened or pending before any court or governmental or regulatory official or
agency, in which it is sought to restrain or prohibit or to obtain damages or
other relief in connection with this Agreement or the consummation of the
transactions contemplated hereby, and no investigation that might result in any
such suit, action or proceeding shall be pending.
Section 6.3 Noncompetition and Nondisclosure Agreement. Seller and each of the
Stockholders shall have executed and delivered a Noncompetition and
Confidentiality Agreement in the form of Exhibit 6.3.
Section 6.4 Leased Building. Buyer and Berkowitz Company shall be parties to a
legal, valid and binding lease pursuant to which Buyer (or an affiliate) shall
have leased the entire Leased Building (subject to existing leases), , and
Berkowitz Company shall not have taken any actions or made any statements that
it intends not to carry out the transactions contemplated by such lease.
Section 6.5 Documents of Transfer. Seller shall be prepared to deliver to Buyer
all deeds, bills of sale, assignments and other instruments of transfer and
assignment necessary or appropriate to transfer to Buyer good and marketable
title in and to the Subject Assets, free of any and all Encumbrances, all of
which shall be in form and substance satisfactory to Buyer's counsel.
Section 6.6 Evidence of Board and Stockholders Action. Seller shall have
delivered certified copies of resolutions of the actions taken by Board of
Directors and the stockholders of Seller pertaining to the authorization of this
Agreement and the consummation of the transactions contemplated hereby, and a
certificate executed by the secretary of Seller as to the due election,
qualification and incumbency and valid signature of the person or persons
authorized to sign this Agreement and the Seller's Documents.
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Section 6.7 Secured Indebtedness. Seller shall have delivered evidence
reasonably satisfactory to Buyer of the satisfaction and release of any
Encumbrances affecting, or security interests or liens encumbering, the Subject
Assets.
Section 6.8 Seller's Counsel's Opinion. Buyer shall have received the opinion of
Seller's counsel, Brach, Eichler, Rosenberg, Silver, Bernstein, Hammer &
Gladstone, in the form of Exhibit 6.8.
Section 6.9 Software Support Agreement. Buyer shall have entered a software
support agreement with Integra Services, current supporter of Seller's inventory
software system in the form of Exhibit 6.9, or shall otherwise be satisfied that
adequate support for such system, and any other software used by Seller (other
than off-the-shelf commercially available software) is available to Buyer.
Section 6.10 Meetings with Certain Customers. Buyer's representative shall have
met with at least five of Seller's ten largest customers (together with Seller)
to discuss the proposed transaction, and Buyer shall be satisfied that none of
such customers is likely to discontinue its relationship with the Business after
the Closing Date.
Section 6.10 No Material Adverse Change. There shall have been no material
adverse change in the Subject Assets (including, without limitation, loss of or
damage to a material amount or part of the Subject Assets) or the Business
between December 31, 1995 and the Closing Date.
Section 6.11 Further Documents. Seller shall have executed and delivered to
Buyer such documents, instruments, agreements, and certificates as may
reasonably be needed to carry out the transactions contemplated by this
Agreement, and shall have provided to Buyer's General Counsel such documents
related to authorization by, and consent of Stockholders as such General Counsel
may reasonably require.
Section 6.12 Escrow Agreement. The Escrow Agreement shall have been executed
by the parties thereto.
Section 6.13 Release of Encumbrances on Leased Building. Seller shall have
released any lis pendensor similar lien or encumbrances on the Leased Building
filed by Seller or Stockholders or any affiliate thereof.
(ARTICLE VII COMMENCES ON THE NEXT PAGE)
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ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATION OF SELLER
The obligation of Seller to sell, assign, transfer and deliver the Subject
Assets to Buyer hereunder and to carry out the other transactions contemplated
hereby are, unless waived in writing by Seller, subject to the satisfaction at
or prior to the Closing Date of the following conditions:
Section 7.1 Accuracy of Representations and Performance of Conditions. The
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects at and as of the Closing Date with the
same force and effect as though made on and as of such Date; each and all of the
conditions and covenants to be performed or satisfied by Buyer hereunder at or
prior to the Closing Date shall have been duly performed or satisfied in all
material respects; and Buyer shall have furnished Seller with Buyer's
certificate to that effect.
Section 7.2 Approval. Buyer shall deliver certified copies of resolutions
adopted by Buyer's Board of Directors pertaining to the authorization of this
Agreement and the consummation of the transactions contemplated herein, and a
certificate executed by the secretary or assistant secretary of Buyer as to the
due election, qualification and incumbency and valid signatures of its officers
authorized to sign this Agreement or any document or certificates to be
delivered under it.
Section 7.3 Absence of Certain Litigation. On the Closing Date, no suit, action
or other proceeding, or injunction or final judgment relating thereto, shall be
threatened or pending before any court or governmental or regulatory official or
agency, in which it is sought to restrain or prohibit or to obtain damages or
other relief in connection with this Agreement or the consummation of the
transactions contemplated hereby, and no investigation that might result in any
such suit, action or proceeding shall be pending.
Section 7.4 Opinion of Buyer's Counsel. Seller shall have received the opinion
of Buyer's General Counsel in the form of Exhibit 7.4.
Section 7.5 Escrow Agreement. The Escrow Agreement shall have been executed
by the parties thereto.
(ARTICLE VIII COMMENCES ON THE NEXT PAGE)
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ARTICLE VIII
THE CLOSING
Section 8.1 Closing and Closing Provisions. The Closing Date shall be August 4,
1996, or such other date as the parties may agree. The Closing shall be effected
by delivery of documents at the office of Brach, Eichler, Rosenberg, Silver,
Bernstein, Hammer & Gladstone, 101 Eisenhower Parkway, Roseland, New Jersey
07068-1067, and payment of the Purchase Price as provided herein or in such
other manner and at such other place as the parties may agree.
Section 8.2 Deliveries by Seller. At or prior to the Closing, Seller shall
execute and deliver to Buyer all of the matters, certificates and other
documents designated as conditions precedent and deliveries precedent to Buyer's
obligation to close under this Agreement.
Section 8.3 Deliveries by Buyer. At the Closing Buyer shall deliver to Seller
the Purchase Price, subject to adjustments as permitted by this Agreement, in
the manner and form provided for in this Agreement, and all the certificates and
other documents designated as conditions precedent and deliveries precedent to
Seller's obligation to close under this Agreement.
(ARTICLE IX COMMENCES ON NEXT PAGE)
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ARTICLE IX
POST-CLOSING MATTERS
Section 9.1 Records of the Business. For a period of four years following the
Closing Date or for such longer period as the statute of limitations applicable
to claims for taxes relating to the Business for any period through the Closing
Date shall be extended (through voluntary extension or otherwise), Buyer shall
grant to Seller and its representatives, at Seller's request, access to and the
right to make copies of those records and documents which report the conduct of
the Business or the results thereof as may be necessary in connection with
Seller's affairs or the Business, at Buyer's customary fees therefor. If Seller
notifies Buyer that Seller requires retention of such records beyond four years,
Seller shall pay Buyer's customary storage charges for such post-four-year
period.
Seller shall, for at least two years after the Closing Date, retain copies of
all records of the Business retained by Seller, and shall grant access thereto
to Buyer upon reasonable request for proper purposes.
Section 9.2 Use of "International Records Storage" Name. Buyer shall have the
right to use the name International Records Storage in connection with the
Business. Seller shall change its name to a name which is not similar to
"International Records Storage" or any diminutive or abbreviation thereof within
three business days after the Closing.
Section 9.3 Audited Financial Statements. In the event that Buyer requires
audited financial statements for the Business in connection with reporting
requirements under federal or state securities laws, Seller shall make available
any relevant information not included in the Subject Assets and otherwise
cooperate with Buyer in preparing such information, at Buyer's expense. Seller
shall use its reasonable best efforts, if requested by Buyer, to have seller's
auditors prepare such audits, at Buyer's expense. Seller hereby consents to its
auditors' performing any such work for Buyer. Buyer shall have the right to file
with the Securities and Exchange Commission any financial statements related to
the Business (audited or otherwise) required to be filed by Buyer pursuant to
federal securities laws.
Section 9.4 Storage of Seller's Records. After the Closing, Buyer will store
Seller's records in the Leased Building pursuant to a standard Buyer printed
contract. Storage rates will be $0.30 per month per standard carton, and
services will be charged at Buyer's customary rates. Prices will be fixed for
two years after the Closing Date. Seller may terminate the records storage
arrangement at any time on thirty days' notice.
Section 9.5 Office Space/Personnel Services. Seller may continue to occupy the
office area in the Leased Building presently occupied by personnel of Seller's
affiliate, International Management Services, until December 31, 1996; provided
that Seller may by written notice elect to extend such occupancy period to March
31, 1997 for purposes of administration and accounting services for
International Management Services' business and completing the sale thereof.
Seller shall not be required to pay any rent or other charges for the use of
such space. Seller shall have the status of a sublessee of such space from
Buyer; and Seller shall be responsible for the obligations of the tenant under
the Lease with respect to matters such as conduct, indemnification, landlord's
being absolved
19
from liability for loss of or damage to tenant's property, as such apply to the
space occupied by Seller.
Seller shall make its personnel, including Penny Novak, Sanford Winnerman,
Jeff Schwartz and Matt Ashbrook, available to consult with Buyer and assist
Buyer's personnel in learning the operation of the Business during the period
from the Closing Date until December 31, 1996; provided that Seller's obligation
to make Penny Novak available shall terminate at such earlier time as she moves
from New Jersey. In addition, Seller will be responsible for preparing invoices
for customers for the month immediately prior to the Closing Date, which
invoices will be scheduled to be sent out one or two days after the Closing
Date.
Section 9.6 Sublease of Copier. After the Closing, Buyer shall sublease from
Seller the copier which Seller used primarily in connection with the Business
prior to the Closing Date. Rent under such sublease shall be equal to rent paid
by Seller to the lessor of the copier for its use under the terms of its lease.
The sublease shall continue for the remaining term of Seller's equipment lease
with the lessor. If the lease provides that Seller may purchase the copier upon
expiration of the lease, Seller shall offer Buyer the right to purchase the
copier at such price; and if Buyer declines, Seller may purchase the copier or
return it to the equipment lessor.
(ARTICLE X COMMENCES ON THE NEXT PAGE)
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ARTICLE X
TERMINATION
Section 10.1 Non Performance. Seller or Buyer each shall have the right to
terminate this Agreement on or prior to Closing in the event that
(i) the Closing shall not have occurred prior to September 20 ,
1996;
(ii) the other party is in default in the performance of any of
its material obligations to be performed hereunder; or
(iii)should any covenant, warranty or representation made by the
other party in this Agreement prove to be materially incorrect;
provided, however, that the party against whom such termination is to be
exercised shall have the right, for a period of ten (10) days following receipt
of written notice from the other specifying the alleged default and the basis
therefor, to correct or satisfy any such condition or covenant necessary to the
consummation of this Agreement.
Section 10.2 Termination Due to Default. (a) If Seller rightfully terminates
this Agreement pursuant to Section 10.1(ii) or (iii) when (i) Seller is not in
default of any of its material covenants, (ii) no material representation and
warranty of Seller has been determined to be materially incorrect, and (iii) all
conditions to Buyer's obligation to close the transaction contemplated have been
satisfied, then Buyer shall be liable to Seller for such damages as may be
provable, including out-of-pocket expenses incurred in connection with this
transaction.
(b) If Buyer rightfully terminates this Agreement pursuant to Section
10.1(ii) or (iii) when (i) Buyer is not in default of any of its material
covenants, (ii) no material representation or warranty of Buyer has been
determined to be materially incorrect, and (iii) all conditions to Seller's
obligation to close the transactions contemplated by this Agreement have been
satisfied, then Seller shall be liable to Buyer for such damages as may be
provable, including out-of-pocket expenses incurred in connection with this
transaction.
Section 10.3 Risk of Loss. Prior to Closing the risk of loss, damage or
destruction with respect to the Subject Assets shall be borne solely by Seller.
If at the Closing Date the Subject Assets shall have suffered loss, damage or
destruction to an extent which materially affects the value thereof, Buyer shall
have the right at its election to terminate this Agreement, or complete the
transactions with such adjustment of the Purchase Price as may be agreed in good
faith between Buyer and Seller in advance.
(ARTICLE XI COMMENCES ON THE NEXT PAGE)
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ARTICLE XI
INDEMNIFICATION
Section 11.1 General Indemnification Obligation of Seller and Stockholders. From
and after the Closing, Seller and Stockholders shall jointly and severally
reimburse, indemnify and hold harmless Buyer and its successors and assigns
(each an Indemnified Buyer Party) against and in respect of:
(a) any and all damages, losses, deficiencies, liabilities, costs
and expenses incurred or suffered by any Indemnified Buyer Party that result
from, relate to or arise out of:
(i) any and all liabilities and obligations of Seller to third
parties of any nature whatsoever (including liabilities for Taxes), except for
those liabilities and obligations of Seller which Buyer specifically assumes
pursuant to this Agreement;
(ii) any and all actions, suits, claims, or legal,
administrative, arbitration, governmental or other proceedings or investigations
against any Indemnified Buyer Party that relate to Seller or the Business in
which the principal event giving rise thereto occurred prior to the Closing Date
or which result from or arise out of any action or inaction prior to the Closing
Date of Seller or any partner, employee, agent, representative or subcontractor
of Seller, except for those which Buyer specifically assumes pursuant to this
Agreement;
(iii) any cost, claim, expense or liability (including legal
fees and costs of litigation) which Buyer may incur or with which Buyer may be
threatened in excess of an amount equal to the monthly storage charge per
container (or such higher amounts as may be specified in a contract as a limit
of Seller's liability) in connection with any claim by a business or entity
which was a customer of the Business prior to the Closing Date for monetary
damages arising from lost, damaged or destroyed records of such customers if
Seller did not, as of the Closing Date, have a contract with such customer which
limited Seller's liability in the event of loss, damage or destruction to such
amount; provided, that Seller shall not be required to indemnify Buyer in
respect of any loss, damage or destruction which (i) relates to new cartons
moved into the Leased Premises after the Closing Date, (ii) Seller is able to
demonstrate occurred after the Closing Date or (iii) relates to a record which
any Indemnified Buyer Party has picked up, retrieved, moved or otherwise
physically dealt with; or
(iv) any misrepresentation, breach of warranty or
nonfulfillment of any agreement or covenant on the part of Seller or
Stockholders under this Agreement, or from any misrepresentation in or omission
from any certificate, schedule, statement, document or instrument furnished by
Seller or Stockholders to Buyer pursuant hereto or in connection with the
negotiation, execution or performance of this Agreement, all of which
statements, documents and instruments (other than Schedules annexed hereto) are
listed or identified on Schedule 11.1; and
(b) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs and other
expenses (including, without limitation, reasonable legal fees and expenses)
incident to any of the foregoing or to the enforcement of this Section 11.1.
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Notwithstanding anything herein contained to the contrary, Seller
shall have no obligations to Buyer under Section 11.1(a)(iii) or (iv) with
respect to any claim of which Buyer gives notice to Seller later than the first
anniversary of the Closing Date.
Notwithstanding any other provision herein contained, Seller and
Stockholders shall not have any indemnification obligation with respect to the
first $25,000 of total claims incurred under Section 11.1 unless total aggregate
claims exceed such amount, in which case the indemnification obligations of
Seller and Stockholders shall include all liabilities incurred, without regard
to the $25,000 threshold. The maximum aggregate liability of Seller and
Stockholders hereunder shall be $2,450,000.
Section 11.2 General Indemnification Obligation of Buyer. From and after the
Closing, Buyer will reimburse, indemnify and hold harmless Seller and the
Stockholders and its successors or assigns (an Indemnified Seller Party) against
and in respect of:
(a) any and all damages, losses, deficiencies, liabilities, costs
and expenses incurred or suffered by any Indemnified Seller Party that result
from, relate to or arise out of:
(i) any and all liabilities and obligations of Seller
which have been specifically assumed by Buyer pursuant to this Agreement;
(ii) any and all actions, suits, claims, or legal,
administrative, arbitration, governmental or other proceedings or investigations
against any Indemnified Seller Party that relate to the Business or the Subject
Assets in which the principal event giving rise thereto occurred after the
Effective Time or which result from or arise out of any action or inaction after
the Effective Time on the part of Buyer or any partner, employee, agent,
representative or subcontractor of Buyer;
(iii) any misrepresentation, breach of warranty or
non-fulfillment of any agreement or covenant on the part of Buyer under this
Agreement, or from any misrepresentation in or omission from any certificate,
schedule, statement, document or instrument furnished to Seller pursuant hereto
or in connection with the negotiation, execution or performance of this
Agreement; and
(b) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs and other
expenses (including, without limitation, reasonable legal fees and expenses)
incident to any of the foregoing or to the enforcement of this Section 11.2.
Notwithstanding anything herein contained to the contrary, Buyer
shall have no obligations to Seller under Section 11.2(a)(iii) with respect to
any claim of which Seller gives notice to Buyer later than the first anniversary
of the Closing Date.
Section 11.3 Method of Asserting Claims, Etc. In the event that any claim or
demand for which Seller or Stockholders (collectively, the Indemnifying Party)
would be liable to an Indemnified Buyer Party hereunder is asserted against or
sought to be collected from an Indemnified Buyer Party by a third party, the
Indemnified Buyer Party shall promptly notify Stockholders, as representative of
the Indemnifying Party, of such claim or demand, specifying the nature of such
claim or demand
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and the amount or the estimated amount thereof to the extent then feasible,
which estimate shall not be conclusive of the final amount of such claim and
demand (the Claim Notice). Indemnifying Party shall have ten business days from
the personal delivery or mailing of the Claim Notice (the Notice Period) to
notify the Indemnified Buyer Party (A) whether or not it disputes its liability
to the Indemnified Buyer Party hereunder with respect to such claim or demand
and (B) notwithstanding any such dispute, whether or not it desires, at its sole
cost and expense, to defend the Indemnified Buyer Party against any such claim
or demand.
(a) If Indemnifying Party disputes its obligation to indemnify
Buyer with respect to such claim or demand or the amount thereof (whether or not
Indemnifying Party desires to defend the Indemnified Buyer Party against such
claim or demand as provided in paragraphs (b) and (c) below), such dispute shall
be resolved in accordance with Section 11.5 hereof.
(b) In the event that Indemnifying Party notifies the Indemnified
Buyer Party within the Notice Period that it desires to defend the Indemnified
Buyer Party against such claim or demand then, except as hereinafter provided,
Indemnifying Party shall have the right to defend the Indemnified Buyer Party,
at the Indemnifying Party's sole cost and expense, by appropriate proceedings,
which proceedings shall be promptly settled or prosecuted by it to a final
conclusion in such a manner as to avoid any risk of Indemnified Buyer Party
becoming subject to further liability in respect of such matter; provided,
however, Indemnifying Party shall not, without the prior written consent of the
Indemnified Buyer Party, consent to the entry of any judgment against the
Indemnified Buyer Party or enter into any settlement or compromise which does
not include, as an unconditional term thereof, the giving by the claimant or
plaintiff to the Indemnified Buyer Party of a release, in form and substance
reasonably satisfactory to the Indemnified Buyer Party, as the case may be, from
all liability in respect of such claim or litigation. If any Indemnified Buyer
Party desires to participate in, but not control, any such defense or
settlement, it may do so at its sole cost and expense.
(c) (i) If Indemnifying Party elects not to defend the Indemnified
Buyer Party against such claim or demand, whether by not giving the Indemnified
Buyer Party timely notice as provided above or otherwise, then the amount of any
such claim or demand as reduced to judgment or settlement, or if the same be
defended by Indemnifying Party or by the Indemnified Buyer Party (but none of
the Indemnified Buyer Party shall have any obligation to defend any such claim
or demand), then that portion thereof as to which such defense is unsuccessful,
in each case, shall be conclusively deemed to be a liability of Indemnifying
Party hereunder, unless Indemnifying Party shall have disputed its liability to
the Indemnified Buyer Party hereunder, as provided in Section 11.5(a) hereof.
(ii) In the event an Indemnified Buyer Party should have a
claim against Indemnifying Party hereunder that does not involve a claim or
demand being asserted against or sought to be collected from it by a third
party, the Indemnified Buyer Party shall promptly send a Claim Notice with
respect to such claim to Indemnifying Party. If Indemnifying Party disputes its
liability with respect to such claim or demand, such dispute shall be resolved
in accordance with Section 11.5 hereof; if Indemnifying Party does not notify
the Indemnified Buyer Party within the Notice Period that it disputes such
claim, the amount of such claim shall be conclusively deemed a liability of
Indemnifying Party hereunder.
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(d) All claims for indemnification by an Indemnified Seller Party
under this Agreement shall be asserted and resolved under the procedures set
forth above substituting in the appropriate place Indemnified Seller Party for
Indemnified Buyer Party and variations thereof.
Section 11.4 Payment. Upon the determination of liability under Section 11.3 or
11.5 hereof, the appropriate party shall pay to the other, as the case may be,
within ten days after such determination, the amount of any claim for
indemnification made hereunder; provided that an Indemnified Purchaser Party may
make initial demand to, and receive payment from, the Escrow Agent in accordance
with the terms of the Escrow Agreement. In the event that the indemnified party
is not paid in full for any such claim pursuant to the foregoing provisions
promptly after the other party's obligation to indemnify has been determined in
accordance herewith, it shall have the right, notwithstanding any other rights
that it may have against any other person, firm or corporation, to set off the
unpaid amount of any such claim against any amounts owed by it under any
agreements entered into pursuant to this Agreement or the Seller's Documents.
Upon the payment in full of any claim, either by setoff or otherwise, the entity
making payment shall be subrogated to the rights of the indemnified party
against any person, firm or corporation with respect to the subject matter of
such claim.
Section 11.5 Arbitration. (a) All disputes under this Article XI shall be
settled by arbitration in Newark, New Jersey, before a single arbitrator
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association pursuant to the procedures described in the Escrow Agreement.
(b) To the extent that arbitration may not be legally permitted
hereunder and the parties to any dispute hereunder may not at the time of such
dispute mutually agree to submit such dispute to arbitration any party may
commence a civil action in a court of appropriate jurisdiction to solve disputes
hereunder. Nothing contained in this Section 11.5 shall prevent the parties from
settling any dispute by mutual agreement at any time.
Section 11.6 Compliance with Bulk Sales Laws. Buyer and Seller hereby waive
compliance by Seller with the bulk sales law and any other similar laws in any
applicable jurisdiction in respect of the transactions contemplated by this
Agreement. Seller shall indemnify Buyer from, and hold it harmless against, any
liabilities, damages, costs and expenses resulting from or arising out of (i)
the parties' failure to comply with any of such laws in respect of the
transactions contemplated by this Agreement, or (ii) any action brought or levy
made as a result thereof, other than those related to liabilities which have
been expressly assumed, by Buyer pursuant to this Agreement.
Section 11.7 Other Rights and Remedies Not Affected. The indemnification rights
of the parties under this Article XI are independent of and in addition to such
rights and remedies as the parties may have at law or in equity or otherwise for
any misrepresentation, breach of warranty or failure to fulfill any agreement or
covenant hereunder on the part of any party hereto, including without limitation
the right to seek specific performance, rescission or restitution, none of which
rights or remedies shall be affected or diminished hereby.
(ARTICLE XII COMMENCES ON THE NEXT PAGE)
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ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1 Commissions. Except as set forth in Schedule 12.1, each party
represents and warrants that it has dealt with no broker or finder in connection
with this Agreement and, insofar as it knows, no broker or other person is
entitled to any commission or finder's fee in connection with the consummation
of the transactions contemplated by this Agreement.
Section 12.2 Expenses. Except as otherwise provided herein, each of the parties
shall pay all costs and expenses incurred or to be incurred by it in the
negotiation and preparation of this Agreement and in closing and carrying out
the transactions contemplated by this Agreement.
Section 12.3 Headings. The subject headings of the sections and subsections of
this Agreement are included only for purposes of convenience, and shall not
affect the construction or interpretation of any of its provisions.
Section 12.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Signatures on this
Agreement delivered by fax or telecopier shall be considered original signatures
for purposes of effectiveness of this Agreement.
Section 12.5 Rights of Parties. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third person to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action against any party to this Agreement.
Section 12.6 Assignment. Except as provided in the following paragraph, the
rights and obligations of the parties to this Agreement or any interest in this
Agreement shall not be assigned, transferred, hypothecated, pledged or otherwise
disposed of without the prior written consent of the nonassigning party which
consent may be withheld in such party's sole discretion.
This Agreement and all rights and obligations of Buyer hereunder may be assigned
or transferred by Buyer to any affiliate of Buyer, in which event all
instruments, documents and agreements required to be delivered to Buyer
hereunder shall be delivered to and run for the benefit of such entity, and such
entity (rather than Buyer) shall execute and deliver any instruments, documents
or arguments required to be executed and delivered by Buyer hereunder. Buyer
shall be not relieved of any of its obligations hereunder by reason of such
assignment.
Section 12.7 Binding Agreement. This Agreement constitutes, and all other
documents to be executed by each party shall, when executed and delivered,
constitute, the legal, valid and binding obligation of each party enforceable in
accordance with their respective terms and shall be binding upon and inure to
the benefit of its respective successors and assigns.
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Section 12.8 Survival of Representations and Warranties. All representations,
warranties, covenants and agreements shall survive the Closing the first
anniversary of the Closing Date, except for ongoing agreements to indemnify the
other party for post-Closing actions.
Section 12.9 Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if delivered by telecopier (with notice of
receipt), or if served personally on the party to whom notice is to be given; or
if delivered by overnightcarrier, on the date of delivery; or on the third day
after mailing if mailed to the party to whom notice is to be given by first
class mail, certified, postage prepaid, and properly addressed as following:
To Seller:
International Records Storage and Retrieval Services, Inc.
110 Edison Place
Newark, New Jersey 07102
Attn: Sanford Winnerman
Telecopier: (201) 623-9145
With a copy (which shall not be required for effective notice) to:
Paul Rosenberg, Esq.
Brach, Eichler, Rosenberg, Silver, Bernstein, Hammer & Gladstone
101 Eisenhower Parkway
Roseland, New Jersey 07068-1067
Telecopier: (201) 228-7852
To Buyer:
Iron Mountain Records Management, Inc.
745 Atlantic Avenue, 10th Floor
Boston, Massachusetts 02111-2735
Attention: John F. Kenny, Jr.
Telecopier: (617) 350-7881
With a copy (which shall not be required for notice) to:
Garry B. Watzke, Esq.
745 Atlantic Avenue, 10th Floor
Boston, Massachusetts 02111-2735
Telecopier: (617) 350-7881
Any party may change its address for purposes of this paragraph by giving the
other parties written notice of the new address in the manner set for above.
Section 12.10 Applicable Law and Remedies. The terms, conditions and other
provisions of this Agreement and any documents or instruments delivered in
connection with it shall be governed and construed according to the internal
laws of the Commonwealth of Massachusetts (other than the choice of law rules
thereof) except as to matters of law concerning the internal corporate affairs
of any corporate or partnership entity which is a party to or the subject of
this Agreement, and as to those matters, the jurisdiction under which such
entity derives its powers shall govern. All remedies at law, in equity, by
statute or otherwise shall be cumulative and may be enforced
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concurrently or from time to time and, subject to the express terms of this
Agreement, the election of any remedy or remedies shall not constitute a waiver
of the right to pursue any other available remedies.
Section 12.11 Expenses of Enforcement. If either party initiates an action to
enforce a provision of this Agreement or any agreement, instrument or document
made or delivered in connection herewith, or for damages by reason of an alleged
breach of any provision, except as otherwise provided in Section 11.5, the
prevailing party shall be entitled to receive from the other party all costs and
expenses, including, without limitation, reasonable attorneys' fees and costs,
incurred in connection with such action.
Section 12.12 Additional Instruments and Assistance. Each party hereto shall
from time to time execute and deliver such further instruments, provide
additional information and render such further assistance as the other party or
its counsel may reasonably request in order to complete and perfect the
transactions contemplated herein.
Section 12.13 Severability. If any provision of this Agreement is held or deemed
to be invalid or unenforceable to any extent when applied to any person or
circumstance, such invalidity or unenforceability shall not affect the remaining
provisions of this Agreement; the remaining provisions hereof and the
enforcement of such provision with respect to other persons or circumstances, or
to another extent, shall not be affected thereby and each provision hereof shall
be enforced to the fullest extent allowed by law. Moreover, the invalid or
inoperative provision shall be reformed and construed so that it shall be valid
and enforceable to the maximum extent permitted.
Section 12.14 Pronouns and Terms. In this Agreement, the singular shall include
the plural, the plural the singular, and the use of any gender shall include all
genders.
Section 12.15 Taxes. The party upon whom state law imposes the economic burden
shall pay any New Jersey sales taxes imposed on the sale of personal property in
the transaction. Seller shall pay all transfer and conveyance taxes and
recording, transfer and similar fees payable or assessable in connection with
the sale and transfer contemplated by this Agreement. Buyer shall pay the
premium for the Owner's Title Policies. Buyer and Seller shall each pay its
portion prorated as of the Closing Date of state and local personal property
taxes on the Business.
Section 12.16 Disclosure. No representation or warranty made by either party in
this Agreement contains any untrue statement of a material fact or to the
knowledge of Seller and Stockholders omits to state a material fact necessary to
make the statement of facts contained within it not misleading.
Section 12.17 Entire Agreement, Amendments and Waivers. This Agreement, together
with all Exhibits and Schedules hereto, constitutes the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, and there are no representations,
warranties or other agreements among the parties in connection with the subject
matter hereof except as set forth specifically herein or contemplated hereby. No
supplement, modification or wavier of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall
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constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
(ARTICLE XIII COMMENCES ON THE NEXT PAGE)
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ARTICLE XIII
BUYER'S ELECTION TO CLOSE
Notwithstanding any other provision in this Agreement to the contrary, Buyer
shall not be required to carry out the transactions contemplated by this
Agreement unless and until Buyer delivers to Seller a written "Notice of
Election to Close". Such Notice of Election to Close may be delivered by the
method of delivery of notice set forth in Section 12.9, and shall be delivered
to the office of Paul Rosenberg, Esq., Brach, Eichler, Rosenberg, Silver, Hammer
& Gladstone on or before 5:00 p.m. on Monday, August 26, 1996.
In the event Buyer elects not to, or fails to deliver, the Notice of Election to
Close, this Agreement shall be null and void and the parties shall have no
further obligations to each other except with respect to confidentiality as
provided in Section 5.2.
Prior to the date Buyer delivers the Notice of Election to Close, Buyer shall
not make any filing with the Securities and Exchange Commission in which Seller
is identified as an acquisition candidate or potential acquisition candidate of
Buyer.
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IN WITNESS WHEREOF, the parties to this Agreement have duly executed it on
the date first above written.
International Records Storage Iron Mountain Records Management, Inc.
and Retrieval Services, Inc.
By: By:
------------------------------ -----------------------------------
--------------------------- John F. Kenny, Jr.
President Vice President
Stockholders:
- -------------------------------
Lawrence Winnerman
- -------------------------------
Sanford Winnerman