Exhibit 2
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
By and Among
IRON MOUNTAIN INCORPORATED,
IM-1 ACQUISITION CORP.
and
SAFESITE RECORDS MANAGEMENT CORPORATION
dated as of
February 19, 1997
TABLE OF CONTENTS
ARTICLE 1.
THE MERGER............................................................2
Section 1.1. The Merger............................................2
Section 1.2. Action by Stockholders................................2
Section 1.3. Closing...............................................2
Section 1.4. Effective Time........................................2
Section 1.5. Effect of the Merger..................................3
Section 1.6. Certificate of Incorporation..........................3
Section 1.7. Bylaws................................................3
Section 1.8. Directors and Officers................................3
Section 1.9. Alternative Transaction...............................3
ARTICLE 2.
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES....................3
Section 2.1. Conversion of Securities..............................3
Section 2.2. Exchange of Certificates; Exchange Agent and
Exchange Procedures...................................4
Section 2.3. Stock Transfer Books..................................6
Section 2.4. Option Securities.....................................6
Section 2.5. Dissenting Shares.....................................7
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................8
Section 3.1. Organization and Business; Power and
Authority; Effect of Transaction......................8
Section 3.2. Financial and Other Information.......................9
Section 3.3. Changes in Condition.................................10
Section 3.4. Liabilities..........................................10
Section 3.5. Title to Properties; Leases..........................10
Section 3.6. Compliance with Private Authorizations...............11
Section 3.7. Compliance with Governmental Authorizations
and Applicable Law...................................12
Section 3.8. Intangible Assets....................................12
Section 3.9. Related Transactions.................................13
Section 3.10. Insurance............................................13
Section 3.11. Tax Matters..........................................13
Section 3.12. ERISA................................................14
Section 3.13. Authorized and Outstanding Capital Stock.............16
Section 3.14. Employment Arrangements..............................17
Section 3.15. Material Agreements..................................18
Section 3.16. Ordinary Course of Business..........................18
Section 3.17. Bank Accounts, Etc...................................20
Section 3.18. Adverse Restrictions.................................20
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Section 3.19. Broker or Finder....................................20
Section 3.20. Environmental Matters...............................20
Section 3.21. Operational Matters.................................22
Section 3.22. Materiality.........................................22
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
AND ACQUIROR MERGER SUBSIDIARY.......................................22
Section 4.1. Organization and Qualification; Power and
Authority; Effect of Transaction....................22
Section 4.2. Capitalization of Acquiror and Acquiror
Merger Subsidiary...................................23
Section 4.3. SEC Filings; Financial Statements...................24
Section 4.4. Registration Statement..............................24
Section 4.5. Brokers.............................................25
ARTICLE 5.
ADDITIONAL COVENANTS.................................................25
Section 5.1. Access to Information; Confidentiality...............25
Section 5.2. Agreement to Cooperate...............................26
Section 5.3. Affiliate Agreements; Registration
Rights Agreement.....................................27
Section 5.4. No Solicitation......................................28
Section 5.5. Directors' and Officers' Indemnification
and Insurance........................................29
Section 5.6. Notification of Certain Matters......................29
Section 5.7. Public Announcements.................................29
Section 5.8. Obligations of Acquiror..............................29
Section 5.9. Employee Benefits; Severance Policy..................29
Section 5.10. Certain Actions Concerning Business Combinations.....30
Section 5.11. Conversion of Option Securities......................30
Section 5.12. Tax Treatment........................................30
Section 5.13. Preparation of the Registration Statement............30
ARTICLE 6.
CLOSING CONDITIONS...................................................32
Section 6.1. Conditions to Obligations of Each Party
to Effect the Merger................................32
Section 6.2. Conditions to Obligations of Acquiror
and Acquiror Merger Subsidiary. ....................33
Section 6.3. Conditions to Obligations of the Company............34
ARTICLE 7.
TERMINATION, AMENDMENT AND WAIVER....................................35
Section 7.1. Termination..........................................35
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Section 7.2. Effect of Termination................................36
Section 7.3. Amendment............................................36
Section 7.4. Waiver...............................................36
Section 7.5. Fees, Expenses and Other Payments....................37
Section 7.6. Effect of Investigation..............................37
ARTICLE 8.
INDEMNIFICATION .....................................................38
Section 8.1. Survival.............................................38
Section 8.2. Escrow; Indemnification..............................38
Section 8.3. Limitation of Liability; Disposition
of Escrow Indemnity .................................39
Section 8.4. Notice of Claims.....................................39
Section 8.5. Defense of Third Party Claims........................40
Section 8.6. Balance Sheet Adjustment.............................40
Section 8.7. Exclusive Remedy.....................................40
ARTICLE 9.
GENERAL PROVISIONS ...................................................40
Section 9.1. Notices..............................................40
Section 9.2. Headings.............................................41
Section 9.3. Severability.........................................41
Section 9.4. Entire Agreement.....................................42
Section 9.5. Assignment...........................................42
Section 9.6. Parties in Interest..................................42
Section 9.7. Governing Law........................................42
Section 9.8. Enforcement of the Agreement.........................42
Section 9.9. Counterparts.........................................43
Section 9.10. Mutual Drafting......................................43
Section 9.11. Continuation of Covenants............................43
ARTICLE 10.
DEFINITIONS.........................................................43
EXHIBITS
5.3 Form of Affiliate Agreement
6.2(c) Form of Opinion of Xxxxx, Oviatt, Gilman, Xxxxxxx & Xxxxxx LLP
6.3(a) Form of Opinion of Xxxxxxxx & Worcester LLP
8.3 Form of Escrow Agreement
SCHEDULES
Disclosure Schedule
Acquiror Disclosure Schedule
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 19, 1997, among
Iron Mountain Incorporated, a Delaware corporation ("Acquiror"), IM-1
Acquisition Corp., a Delaware corporation and a wholly owned Subsidiary of
Acquiror ("Acquiror Merger Subsidiary"), and Safesite Records Management
Corporation, a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of this
Agreement (this and other capitalized terms used herein are either defined in
Section 10 below or in another Section of this Agreement and, in such case,
Article 10 includes a reference to such Section), in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), the Company and Acquiror
Merger Subsidiary will carry out a business combination transaction pursuant to
which Acquiror Merger Subsidiary will merge with and into the Company (the
"Merger") and the stockholders of the Company (the "Stockholders") will convert
their holdings into a combination of cash and shares of the Voting Common Stock,
par value $.01 per share, of Acquiror ("Acquiror Stock");
WHEREAS, the Board of Directors of the Company has unanimously
determined that the Merger is fair to, and in the best interests of, the Company
and the Stockholders and has approved and adopted this Agreement as a tax-free
plan of reorganization within the provisions of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), has approved this Agreement, the
Merger and the Transactions and has recommended approval and adoption of this
Agreement, the Merger and the Transactions by the Stockholders; and
WHEREAS, the Board of Directors of Acquiror has unanimously approved
and adopted this Agreement, the Merger and the Transactions, and Acquiror has
approved and adopted this Agreement, the Merger and the Transactions as the sole
stockholder of Acquiror Merger Subsidiary;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto, intending to be legally bound, agree as follows:
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ARTICLE 1.
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL at the Effective
Time, Acquiror Merger Subsidiary shall be merged with and into the Company. As a
result of the Merger, the separate existence of Acquiror Merger Subsidiary shall
cease and the Company shall continue as the surviving corporation of the Merger
(the "Surviving Corporation").
Section 1.2. Action by Stockholders.
(a) The Company, acting through its Board of Directors, shall, in
accordance with and subject to Applicable Law and its Organic Documents: as soon
as practicable, duly call, give notice of, convene and hold a special meeting of
the Stockholders for the purpose of adopting and approving this Agreement, the
Merger and the Transactions (the "Special Meeting"); include in any proxy
statement related to the Special Meeting the conclusion and recommendation of
the Board of Directors to the effect that the Board of Directors, having
determined that this Agreement, the Merger and the Transactions are in the best
interests of the Company and the Stockholders, has approved this Agreement, the
Merger and the Transactions and recommends that the Stockholders vote in favor
of the approval and adoption of this Agreement, the Merger and the Transactions;
and use its best efforts to obtain the necessary approval and adoption of this
Agreement, the Merger and the Transactions by the Stockholders.
(b) Acquiror hereby represents that Acquiror, as sole stockholder of
Acquiror Merger Subsidiary, has approved and adopted this Agreement, the Merger
and the Transactions. Acquiror shall take all additional actions as sole
stockholder of Acquiror Merger Subsidiary necessary to adopt and approve and
effectuate the provisions of this Agreement, the Merger and the Transactions.
Section 1.3. Closing. Unless this Agreement shall have been
terminated pursuant to Section 7.1 hereof and the Merger and the Transactions
shall have been abandoned, the closing of the Merger (the "Closing") will take
place at 10:00 A.M., local time, on the fifth business day (the "Closing Date")
after the date on which the last of the conditions set forth in Article 6 is
satisfied or waived (other than conditions requiring deliveries at the Closing),
at the offices of Xxxxxxxx & Worcester LLP, Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx, unless another date, time or place is agreed to in writing by the
Company and Acquiror.
Section 1.4. Effective Time. As promptly as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article 6
(but subject to Section 1.3 hereof), the Parties shall cause the Merger to be
consummated by filing a certificate of merger with the Secretary of State of the
State of Delaware, and by making any related filings required under the DGCL.
The Merger shall become effective at such time (but not prior to the Closing
Date) as such certificate is duly filed with the Secretary of State of the State
of Delaware, or at such later time as is specified in such certificate (the
"Effective Time").
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Section 1.5. Effect of the Merger. From and after the Effective Time,
the Surviving Corporation shall possess all the rights, privileges, powers and
franchises and be subject to all of the restrictions, disabilities and duties of
the Company and Acquiror Merger Subsidiary, and the Merger shall otherwise have
the effects, all as provided under the DGCL.
Section 1.6. Certificate of Incorporation. From and after the
Effective Time, the Certificate of Incorporation of Acquiror Merger Subsidiary
as in effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation, until amended in accordance with
Applicable Law, and the name of the Surviving Corporation shall be such name as
Acquiror may elect.
Section 1.7. Bylaws. From and after the Effective Time, the bylaws of
Acquiror Merger Subsidiary as in effect immediately prior to the Effective Time
shall be the bylaws of the Surviving Corporation, until amended in accordance
with Applicable Law.
Section 1.8. Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed and qualified (or their
earlier resignation or removal) in accordance with Applicable Law the directors
of Acquiror Merger Subsidiary at the Effective Time shall be the directors of
the Surviving Corporation and the officers of Acquiror Merger Subsidiary at the
Effective Time shall be the officers of the Surviving Corporation.
Section 1.9. Alternative Transaction. Acquiror shall have the right,
by giving written notice thereof to the Company, to restructure the Merger such
that the Company merges with and into Acquiror Merger Subsidiary (such merger
being referred to as the "Alternative Transaction"). In the event that the
Merger is structured as the Alternative Transaction, the separate corporate
existence of the Company shall cease upon consummation of the Alternative
Transaction and each reference in this Agreement to the Surviving Corporation
and to the Merger shall be deemed to refer to Acquiror Merger Subsidiary, as in
existence following the Alternative Transaction, and the merger of the Company
with and into Acquiror Merger Subsidiary, respectively.
ARTICLE 2.
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.1. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Acquiror Merger
Subsidiary, the Company or the holders of any of the following securities:
(a) Each share of Common Stock, par value $.01 per share, of the
Company (the "Company Stock") issued and outstanding immediately prior to the
Effective Time (other than any shares of Company Stock to be cancelled pursuant
to Section 2.1(b) and any Dissenting Shares), shall be converted into the right
to receive, subject to the indemnification provisions of Article 8 hereof, (i)
that number equal to the Stock Conversion Number of fully paid and nonassessable
shares of Acquiror Stock (the "Stock Merger Consideration") and (ii) cash in an
amount equal to
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the Cash Conversion Number (the "Cash Merger Consideration", and together with
the Stock Merger Consideration, the "Merger Consideration"). At the Effective
Time, all shares of Company Stock (the "Shares") shall no longer be outstanding
and shall automatically be cancelled and retired and shall cease to exist, and
certificates previously evidencing any such Shares (each, a "Certificate") shall
thereafter represent the right to receive, upon the surrender of such
Certificate in accordance with the provisions of Section 2.2, but subject to the
indemnification provisions of Article 8 hereof, the Stock Merger Consideration
and Cash Merger Consideration multiplied by the number of Shares represented by
such Certificate, and a holder of more than one Certificate shall have the right
to receive the Stock Merger Consideration and Cash Merger Consideration
multiplied by the number of Shares represented by all such Certificates (the
"Exchange Merger Consideration"). The holders of such Certificates previously
evidencing such Shares outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Shares except as otherwise
provided herein or by Applicable Law. Notwithstanding anything to the contrary
herein, the Cash Merger Consideration to be received by any Stockholder prior to
the termination of the Escrow Indemnity Period shall be adjusted to give full
effect to the indemnification provisions in Article 8 hereof.
(b) Each Share held in the treasury of the Company and each Share
owned by Acquiror or any direct or indirect Subsidiary of Acquiror immediately
prior to the Effective Time shall automatically be cancelled and extinguished
without any conversion thereof and no payment shall be made with respect
thereto.
(c) Each share of common stock of Acquiror Merger Subsidiary
outstanding immediately prior to the Effective Time shall be converted into and
become one share of common stock of the Surviving Corporation with the same
rights, powers and privileges as the shares so converted and shall constitute
the only outstanding shares of capital stock of the Surviving Corporation.
(d) In lieu of issuing fractional shares, Acquiror shall convert a
holder's right to receive shares of Acquiror Stock pursuant to Section 2.1(a)
into a right to receive the highest whole number of shares of Acquiror Stock
constituting the non-cash portion of the Exchange Merger Consideration plus cash
equal to the fraction of a share of Acquiror Stock to which the holder would
otherwise be entitled multiplied by the Determination Price, and the Exchange
Merger Consideration to which a holder is entitled shall be deemed to be such
number of shares of Acquiror Stock plus such cash in lieu of fractional shares
plus the cash portion of the Exchange Merger Consideration. For purposes of
carrying out the intent of this Section 2.1(d), Acquiror may aggregate
Certificates so that fractional shares of Acquiror Stock due in exchange for
multiple Certificates may be combined to yield a number of whole shares thereof
plus a single fraction.
Section 2.2. Exchange of Certificates; Exchange Agent and Exchange
Procedures.
(a) As soon as reasonably practicable after the Effective Time,
Acquiror shall deposit or cause to be deposited with a bank or trust company
designated by Acquiror (the "Exchange Agent"), for the benefit of the holders of
Shares (other than Dissenting Shares), for exchange in accordance with this
Article, through the Exchange Agent, (i) cash (by wire transfer of federal funds
pursuant to instructions reasonably satisfactory to the Exchange Agent) in an
amount equal
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to the Cash Merger Consideration multiplied by the number of all Shares issued
and outstanding immediately prior to the Effective Time (other than Shares to be
cancelled pursuant to Section 2.1(b) and any Dissenting Shares) (said number of
Shares less said Shares to be cancelled and less said Dissenting Shares
hereafter to be referred to as the "Net Shares"), less the amount of cash
constituting the Escrow Indemnity Funds, and (ii) the Stock Merger Consideration
multiplied by the Net Shares, plus cash in an amount sufficient to make payment
for fractional shares, in exchange for all of the outstanding Shares
(collectively, the "Exchange Fund"). Subject to Article 8 hereof, the Exchange
Agent shall, pursuant to irrevocable instructions from Acquiror, deliver the
Exchange Merger Consideration to be issued pursuant to Section 2.1(a) out of the
Exchange Fund to holders of Shares upon transmittal of Certificates for exchange
as provided therein and in Section 2.2(b). The Exchange Fund shall not be used
for any other purpose. Any interest, dividends or other income earned by the
Exchange Fund shall be for the account of Acquiror.
(b) As soon as reasonably practicable after the Effective Time,
Acquiror will instruct the Exchange Agent to issue (pursuant to instructions
from each holder of record reasonably satisfactory to Acquiror and the Exchange
Agent, and otherwise by mail to the most recent address of such holder as shown
on the Company's books and records) to such holder of a Certificate or
Certificates which immediately prior to the Effective Time evidenced outstanding
Shares (other than Shares to be cancelled pursuant to Section 2.1(b) and any
Dissenting Shares), a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as Acquiror and the Company may
reasonably specify) and instructions to effect the surrender of the Certificates
in exchange for the Exchange Merger Consideration. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Acquiror together with such letter of transmittal,
duly executed, and such other customary documents as may be reasonably required
pursuant to such instructions (collectively, the "Transmittal Documents"), the
holder of such Certificate shall be entitled to receive in exchange therefor the
Exchange Merger Consideration which such holder has the right to receive,
subject to Article 8 hereof, pursuant to Sections 2.1(a) and 2.1(d) hereof, and
the Certificate so surrendered shall forthwith be cancelled. In the event of a
transfer of ownership of Shares which is not registered in the transfer records
of the Company, the Exchange Merger Consideration may be issued and paid in
accordance with this Article to a transferee if the Certificate evidencing such
Shares is presented to the Exchange Agent, accompanied by all documents
reasonably required to evidence and effect such transfer and by evidence that
any applicable stock transfer taxes have been paid. The Exchange Merger
Consideration will be delivered by the Exchange Agent promptly following
surrender of a Certificate and the related Transmittal Documents, and cash
payments for fractional shares and the cash portion of the Exchange Merger
Consideration may be made by check (or, pursuant to instructions reasonably
satisfactory to the Exchange Agent, by wire transfer). No interest will be
payable on the Exchange Merger Consideration regardless of any delay in making
payments. Until surrendered as contemplated by this Section, each Certificate
shall be deemed at any time after the Effective Time to evidence only the right
to receive, upon such surrender, the Exchange Merger Consideration, without
interest.
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or
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destroyed and subject to such other conditions as Acquiror reasonably may
impose, the Surviving Corporation shall issue in exchange for such lost, stolen
or destroyed Certificate the Exchange Merger Consideration deliverable in
respect thereof as determined in accordance with Sections 2.1(a) and 2.1(d).
Acquiror may, in its discretion and as a condition precedent to authorizing the
issuance thereof by the Surviving Corporation, require the owner of such lost,
stolen or destroyed Certificate to provide a bond or other surety to Acquiror
and the Surviving Corporation in such sum as Acquiror may reasonably direct as
indemnity against any claim that may be made against Acquiror or the Surviving
Corporation (and their Affiliates) with respect to the Certificate alleged to
have been lost, stolen or destroyed.
(d) Any portion of the Exchange Fund which remains undistributed to
the holders of the Company Stock for ninety (90) days after the Effective Time
shall be delivered to Acquiror upon demand by Acquiror, and any holders of
Certificates who have not theretofore complied with this Article shall
thereafter look only to Acquiror for the Exchange Merger Consideration to which
they are entitled pursuant to this Article.
(e) None of Acquiror, Acquiror Merger Subsidiary, the Company or the
Surviving Corporation shall be liable to any holder of Shares for any shares of
Acquiror Stock or cash from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(f) Each of Acquiror, the Surviving Corporation and the Exchange
Agent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Shares such amounts as
Acquiror, the Surviving Corporation or the Exchange Agent is required to deduct
and withhold with respect to the making of such payment under the Code, or any
provision of federal, state, local or foreign tax law. To the extent that
amounts are so withheld by Acquiror, the Surviving Corporation or the Exchange
Agent, such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the Shares in respect of which such
deduction and withholding was made by Acquiror, the Surviving Corporation or the
Exchange Agent.
Section 2.3. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of Shares thereafter on the records of the Company
other than to Acquiror. On or after the Effective Time, any Certificate
presented to the Exchange Agent or the Surviving Corporation shall be converted
into the Exchange Merger Consideration.
Section 2.4. Option Securities. As soon as reasonably practicable
after the Effective Time, each holder of an Option Security shall receive (i)
subject to clause (ii) below, in respect of any such Option Security or portion
thereof which is exercisable at the Effective Time (including those which will
become exercisable by virtue of the consummation of the Merger) (1) a
non-qualified option to acquire shares of Acquiror Stock under Acquiror's 1995
Stock Incentive Plan, which option for Acquiror Stock shall (A) have an exercise
price per share determined by dividing the exercise price per share of the
applicable Option Security by the Stock Conversion Number and (B) entitle the
holder to purchase that number of shares equal to the product of (x) the number
of shares subject to such Option Security which as of the Effective Time is
exercisable
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and (y) the Stock Conversion Number, and (2) cash in the amount of the product
of (x) the number of shares subject to such Option Security which as of the
Effective Time is exercisable and (y) the Cash Conversion Number, and (ii) in
respect of any such Option Security or portion thereof which is not exercisable
at the Effective Time and in respect of those Option Securities to acquire
17,500 shares of Company Stock recently granted to the five individuals
identified in Section 3.13(b) of the Disclosure Schedule, a non-qualified option
to acquire shares of Acquiror Stock under Acquiror's 1995 Stock Incentive Plan
at an exercise price and in an amount affording the holder equivalent value for
the Option Security being exchanged, which option for Acquiror Stock shall (1)
have an exercise price per share determined by dividing (x) the exercise price
per share of the applicable Option Security by (y) the quotient of the Share
Price divided by the Determination Price, and (2) entitle the holder to purchase
that number of shares as equals product of (x) the number of shares subject to
such Option Security which as of the Effective Time is not exercisable and (y)
the quotient of the Share Price divided by the Determination Price. In addition,
each option to acquire Acquiror Stock issued in accordance with this Section 2.4
shall be exercisable (subject to the terms of such Option Security and
Acquiror's 1995 Stock Incentive Plan) on the date the applicable Option Security
would have been exercisable and otherwise be subject to the terms and conditions
of the Acquiror 1995 Stock Incentive Plan. Notwithstanding the foregoing, in
lieu of issuing cash in respect of exercisable Option Securities, Acquiror
reserves the right, in its sole discretion, subject to notification to the
Company not less than ten (10) days prior to the Closing Date, to exchange each
vested and exercisable Option Security solely for an option to acquire Acquiror
Stock, the terms and conditions (including, without limitation, the amount and
exercise price per share) of which will be determined in accordance with clause
(ii) above.
Section 2.5. Dissenting Shares.
(a) Notwithstanding any other provision of this Agreement to the
contrary, Shares that are outstanding immediately prior to the Effective Time
and which are held by Stockholders who shall have not voted in favor of the
Merger or consented thereto in writing and who shall be entitled to and shall
have demanded properly in writing appraisal for such Shares in accordance with
the DGCL, and who shall not have withdrawn such demand or otherwise have
forfeited appraisal rights (collectively, the "Dissenting Shares") shall not be
converted into or represent the right to receive the Merger Consideration. Such
Stockholders shall be entitled to receive payment of the appraised value of such
Shares held by them in accordance with the provisions of the DGCL, except that
all Dissenting Shares held by Stockholders who shall have failed to perfect or
who effectively shall have withdrawn, forfeited or lost their rights to
appraisal of such Shares under the DGCL shall thereupon be deemed to have been
converted into and to have become exchangeable for, as of the Effective Time,
the right to receive, without any interest thereon, the Exchange Merger
Consideration, upon surrender, in the manner provided in Section 2.2, of the
Certificate or Certificates that formerly evidenced such Shares.
(b) The Company shall give Acquiror prompt notice of any demands for
appraisal received by it, withdrawals of such demands, and any other instruments
served pursuant to the DGCL and received by the Company and relating thereto.
The Company and Acquiror shall jointly direct all negotiations and proceedings
with respect to demands for appraisal under Applicable Law. The Company shall
not, except with the prior written consent of Acquiror, make
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any payment with respect to any demands for appraisal, or offer to settle, or
settle, any such demands.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to, and for Section 3.16
represents, warrants and covenants to, and agrees with, Acquiror and Acquiror
Merger Subsidiary as follows:
Section 3.1. Organization and Business; Power and Authority; Effect
of Transaction.
(a) The Company:
(i) is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware,
(ii) has all requisite power and corporate authority to own
or hold under lease its properties and to conduct its business as now
conducted and as presently proposed to be conducted, and, to the
Company's knowledge, except as set forth in Section 3.1(a)(ii) to the
Disclosure Schedule, has in full force and effect all Governmental
Authorizations and Private Authorizations and has made all
Governmental Filings, to the extent required for such ownership and
lease of its property and conduct of its business, and
(iii) is, to the Company's knowledge, duly qualified and
authorized to do business and is in good standing as a foreign
corporation in each jurisdiction (a true and correct list of which is
set forth in Section 3.1(a) of the Disclosure Schedule) in which the
character of its property or the nature of its business or operations
requires such qualification or authorization, except to the extent
the failure to so qualify or to maintain such authorizations would
not have an Adverse Effect.
(b) The Company has all requisite power and corporate authority and
has in full force and effect all Governmental Authorizations and Private
Authorizations in order to enable it to execute and deliver, and to perform its
obligations under, this Agreement and each Collateral Document executed or
required to be executed by it pursuant hereto or thereto and to consummate the
Merger and the Transactions, and the execution, delivery and performance of this
Agreement and each Collateral Document executed or required to be executed
pursuant hereto or thereto have been duly authorized by all requisite corporate
or other action (other than that of the Stockholders). This Agreement has been
duly executed and delivered by the Company and, subject to the affirmative vote
of the Stockholders referred to below, constitutes, and each Collateral Document
executed or required to be executed pursuant hereto or thereto or to consummate
the Merger and the Transactions, when executed and delivered by the Company or
an Affiliate of the Company will constitute, legal, valid and binding
obligations of the Company or such Affiliate, enforceable in accordance with
their respective terms, except as such enforceability may be subject to
bankruptcy, moratorium, insolvency, reorganization,
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arrangement, voidable preference, fraudulent conveyance and other similar laws
relating to or affecting the rights of creditors and except as the same may be
subject to the effect of general principles of equity (the "Enforceability
Exceptions"). The affirmative vote or action by written consent of the holders
of a majority of the outstanding Shares is the only vote of the holders of any
class or series of the capital stock of the Company necessary to approve this
Agreement, the Merger and the Transactions under Applicable Law and the
Company's Organic Documents. The provisions of Section 203 of the DGCL will not
apply to this Agreement, the Merger or the Transactions.
(c) Except as set forth in Section 3.1(c) of the Disclosure Schedule,
neither the execution and delivery of this Agreement or any Collateral Document
executed or required to be executed pursuant hereto or thereto, nor the
consummation of the Transactions, nor compliance with the terms, conditions and
provisions hereof or thereof by the Company or any of the other parties hereto
or thereto which is Affiliated with the Company:
(i) will conflict with, or result in a breach or violation
of, or constitute a default under, any Applicable Law on the part of
the Company or will conflict with, or result in a breach or violation
of, or constitute a default under, or permit the acceleration of any
obligation or liability in, or but for any requirement of giving of
notice or passage of time or both would constitute such a conflict
with, breach or violation of, or default under, or permit any such
acceleration in, any Contractual Obligation of the Company,
(ii) will result in or permit the creation or imposition of
any Lien upon any property now owned or leased by the Company or any
such other party, or
(iii) will require any Governmental Authorization or
Governmental Filing or Private Authorization, except for the
certificate of merger and related filings under the DGCL in
connection with the Merger and the Transactions and except pursuant
to the HSR Act.
(d) The Company does not have any Subsidiaries.
Section 3.2. Financial and Other Information.
(a) The Company has heretofore furnished to Acquiror copies of the
financial statements of the Company listed in Section 3.2(a) of the Disclosure
Schedule (the "Financial Statements"). The Financial Statements, including in
each case the notes thereto, have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby, except as
otherwise noted therein or in Section 3.2(a) of the Disclosure Schedule, are
true, correct and complete, do not contain any untrue statement of a material
fact or omit to state a material fact required by GAAP to be stated therein or
necessary in order to make the statements contained therein not misleading,
subject to normal year-end audit adjustments which adjustments, in the
aggregate, shall not be material, and fairly present the financial condition and
results of operations of the Company, on the bases therein stated, as of the
respective dates thereof, and for the respective periods covered thereby
subject, in the case of unaudited financial statements to normal nonmaterial
year-end audit adjustments and accruals.
10
(b) To the Company's knowledge, neither the Disclosure Schedule, the Financial
Statements, this Agreement nor any Collateral Document furnished or to be
furnished by or on behalf of the Company or any of the Stockholders pursuant to
this Agreement or any Collateral Document executed or required to be executed by
or on behalf of the Company or the Stockholders pursuant hereto or thereto or to
consummate the Merger and the Transactions, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
required to be stated in such document by its terms or necessary in order to
make the statements contained herein or therein not misleading and, to the
Company's knowledge, all such Collateral Documents are and will be true, correct
and complete.
(c) The Company does not own any capital stock or equity or other
interest in any other Entity or enterprise, however organized and however such
interest may be denominated or evidenced, except as set forth in Section 3.2(c)
of the Disclosure Schedule.
Section 3.3. Changes in Condition. Since the date of the most recent
financial statements forming part of the Financial Statements, except to the
extent specifically described in Section 3.3 of the Disclosure Schedule, there
has been no Adverse Change in the Company. To the Company's knowledge, there is
no Event known to the Company which Adversely Affects, or in the future might
(so far as the Company can now reasonably foresee) Adversely Affect, the Company
or the ability of the Company to perform any of the obligations set forth in
this Agreement or any Collateral Document executed or required to be executed
pursuant hereto or thereto except for changes in general economic conditions or
the industry in general and to the extent set forth in Section 3.3 of the
Disclosure Schedule.
Section 3.4. Liabilities. At the date of the most recent balance
sheet forming part of the Financial Statements, the Company had no obligations
or liabilities, past, present or deferred, accrued or unaccrued, fixed,
absolute, contingent or other, except as disclosed in such balance sheet, or the
notes thereto, and since such date the Company has not incurred any such
obligations or liabilities, other than obligations and liabilities incurred in
the ordinary course of business consistent with past practice of the Company,
which do not and, to the Company's knowledge, will not, in the aggregate,
Adversely Affect the Company, except to the extent set forth in Section 3.4 of
the Disclosure Schedule. The Company has not Guaranteed and is not otherwise
primarily or secondarily liable in respect of any obligation or liability of any
other Person, except for endorsements of negotiable instruments for deposit in
the ordinary course of business, consistent with prior practice, or as disclosed
in the most recent balance sheet, or the notes thereto, forming part of the
Financial Statements or in Section 3.4 of the Disclosure Schedule.
Section 3.5. Title to Properties; Leases.
(a) The Company does not own any real property. To the Company's
knowledge, the Company has good leasehold title with respect to all real
property it leases. The Company has good indefeasible and merchantable title to
all other assets, tangible and intangible, reflected on the most recent balance
sheet forming part of the Financial Statements, or (excluding leased real
estate) held by the Company for use in its business if not so reflected, or
purported to have been acquired by the Company since such date, except inventory
sold or depleted, or property, plant
11
and other equipment used up or retired, since such date, in each case in the
ordinary course of business consistent with past practice of the Company, free
and clear of all Liens, except (i) Liens reflected in the Financial Statements,
(ii) Liens for current taxes not yet due and payable, (iii) Liens set forth on
Section 3.5(a) of the Disclosure Schedule, (iv) Liens that will be released
prior to the Closing Date (and which are listed on Section 3.5(a) of the Company
Disclosure Schedule), and (v) such imperfections of title, easements,
encumbrances and mortgages or other Liens, if any, as are not, individually or
in the aggregate, substantial in character, amount or extent and do not
materially detract from the value, or materially interfere with the present use,
of the property subject thereto or affected thereby, or otherwise materially
impair business operations. Each Lease or other occupancy or other agreement
under which the Company holds real or personal property has been duly
authorized, executed and delivered by the Company and, to the Company's
knowledge, by each of the other parties thereto; each such Lease is a legal,
valid and binding obligation of the Company and, to the Company's knowledge, of
each other party thereto, enforceable in accordance with its terms (subject to
the Enforceability Exceptions). To the Company's knowledge, the Company has a
valid leasehold interest in and enjoys peaceful and undisturbed possession under
all Leases pursuant to which it holds any real property or tangible personal
property, none of which, to the Company's knowledge, contains any provision
which would impair the Company's ability to use such property as it is currently
used by the Company, except as described in Section 3.5(a) of the Disclosure
Schedule. To the Company's knowledge, (i) all of such Leases are valid and
subsisting and in full force and effect and (ii) except as set forth in Section
3.5(a) of the Disclosure Schedule, neither the Company nor any other party
thereto is in default in the performance, observance or fulfillment of any
obligation, covenant or condition contained in any such Lease.
(b) Section 3.5(b) of the Disclosure Schedule contains a true,
correct and complete description of all real estate leased by the Company.
(c) To the Company's knowledge, except as set forth in Section 3.5(c)
of the Disclosure Schedule, all real property leased by the Company conforms to
and complies with, except as in the aggregate would not result in an Adverse
Effect on the Company, all applicable title covenants, conditions, restrictions
and reservations and all Environmental Laws and all applicable zoning, wetlands,
land use and other Applicable Laws.
Section 3.6. Compliance with Private Authorizations. Section 3.6 of
the Disclosure Schedule sets forth, to the Company's knowledge, a true, correct
and complete list and description of each Private Authorization which
individually is material to the Company, all of which are in full force and
effect, except as set forth in Section 3.6 of the Disclosure Schedule. To the
Company's knowledge, the Company has obtained all Private Authorizations which
are necessary for the ownership by the Company of its properties and the conduct
of its business as now conducted or as presently proposed to be conducted or
which, if not obtained and maintained, could, singly or in the aggregate,
Adversely Affect the Company. To the Company's knowledge, except as set forth in
Section 3.6 of the Disclosure Schedule, (i) the Company is not in breach or
violation of, or is in default in the performance, observance or fulfillment of,
any Private Authorization, and (ii) no Event exists or has occurred, which
constitutes, or but for any requirement of giving of notice or passage of time
or both would constitute, such a breach, violation or default, under any
Contractual or Private Authorization, except for such defaults,
12
breaches or violations as do not and, to the Company's knowledge, will not in
the aggregate have any Adverse Effect on the Company or the ability of the
Company to perform any of the obligations set forth in this Agreement or any
Collateral Document executed or required to be executed pursuant hereto or
thereto or to consummate the Merger and the Transactions. No material Private
Authorization is the subject of any pending or, to the Company's knowledge,
threatened attack, revocation or termination.
Section 3.7. Compliance with Governmental Authorizations and
Applicable Law.
(a) Section 3.7(a) of the Disclosure Schedule contains a
description of:
(i) all Legal Actions which are pending in which the
Company is engaged, or which involve the business, operations or
properties of the Company or, to the Company's knowledge, which are
threatened or contemplated against, the Company or any of its
business, operations or properties, which in the case of such
threatened or contemplated Legal Actions, individually or in the
aggregate, if determined against the Company would reasonably be
expected to have an Adverse Effect on the Company; and
(ii) to the Company's knowledge, each Governmental
Authorization to which the Company is subject and which relates to
the business, operations, properties, prospects, condition (financial
or other), or results of operations of the Company, all of which are
in full force and effect, except as set forth in Section 3.7(a)(ii)
of the Disclosure Schedule.
(b) To the Company's knowledge, the Company has obtained all
Governmental Authorizations which are necessary for the ownership or use of its
properties and the conduct of its business as now conducted or as presently
proposed to be conducted by the Company or which, if not obtained and
maintained, could singly or in the aggregate, have any Adverse Effect on the
Company. No material Governmental Authorization is the subject of any pending
or, to the Company's knowledge, threatened attack, revocation or termination. To
the Company's knowledge, (i) the Company is not in material breach or violation
of, or in default in the performance, observance or fulfillment of, any
Governmental Authorization or any Applicable Law, and (ii) no Event exists or
has occurred, which constitutes, or but for any requirement of giving of notice
or passage of time or both would constitute, such a breach, violation or
default, under any Governmental Authorization or any Applicable Law, except for
such breaches, violations or defaults as do not and, to the Company's knowledge,
will not have in the aggregate any Adverse Effect on the Company.
(c) The matters, if any, referred to in Sections 3.7(a) or 3.7(b) of
the Disclosure Schedule, if adversely determined against the Company, will not
Adversely Affect the Company, except to the extent set forth in the Disclosure
Schedule, or the ability of the Company to perform its obligations under this
Agreement or any Collateral Documents executed or required to be executed
pursuant hereto or thereto or to consummate the Merger and the Transactions.
Section 3.8. Intangible Assets. Section 3.8 of the Disclosure
Schedule sets forth a true, accurate and complete description of all Intangible
Assets held or used by the Company, including without limitation the nature of
the Company's interest in each and the extent to which the same
13
have been duly registered in the offices as indicated therein. To the Company's
knowledge, the Company owns or possesses or otherwise has the right to use all
Intangible Assets necessary for the present and planned future conduct of its
business, except where the failure to so own, possess or have the right to use
would not, insofar as can reasonably be foreseen, individually or in the
aggregate, have an Adverse Effect on the Company. To the Company's knowledge,
except as set forth in Section 3.8 of the Disclosure Schedule, no authorizations
or intangible assets (except the Intangible Assets so set forth) are required
for the Company to conduct its business as currently conducted or proposed to be
conducted on or prior to the Closing Date. Except as set forth in Section 3.8 of
the Disclosure Schedule, the Company possesses all proprietary rights in and to
the principal software used in operating and conducting its business and no
other Person has any rights therein or with respect thereto.
Section 3.9. Related Transactions. Section 3.9 of the Disclosure
Schedule sets forth a true, correct and complete description of any Contractual
Obligation or transaction, whether now existing or existing during the period
covered by the most recent audited Financial Statements, between the Company and
any Affiliate thereof (other than reasonable compensation for services as
officers, directors and employees and reimbursement for out-of-pocket expenses
reasonably incurred in support of the Company's business), including without
limitation any providing for the furnishing of services to or by, providing for
rental of property, real, personal or mixed, to or from, or providing for the
lending or borrowing of money to or from or otherwise requiring payments to or
from, any such Affiliate.
Section 3.10. Insurance.
(a) Section 3.10(a) of the Disclosure Schedule lists all insurance
policies maintained by the Company and includes the insurers' names, policy
numbers, expiration dates, risks insured against, amounts of coverage, the
annual premiums, exclusions, deductibles and self-insured retention and
describes in reasonable detail any retrospective rating plan, fronting
arrangement or any other self-insurance or risk assumption agreed to by the
Company or imposed upon the Company by any such insurers, as well as any
self-insurance program that is in effect.
(b) To the Company's knowledge, the Company is not in breach or
violation of or in default under any such policy, and all premiums due thereon
have been paid, and each such policy or a comparable replacement policy will
continue to be in force and effect up to and including the Closing Date.
Section 3.11. Tax Matters.
(a) The Company has in accordance with all Applicable Laws filed all
Tax Returns which are required to be filed, and has paid, or made adequate
provision for the payment of, all Taxes which have or may become due and payable
pursuant to said Returns and all other governmental charges and assessments
received to date. The Tax Returns of the Company have been prepared in
accordance with all Applicable Laws and generally accepted principles applicable
to taxation consistently applied. All Taxes which the Company is required by law
to withhold and collect have been duly withheld and collected, and have been
paid over, in a timely manner, to the proper Authorities to the extent due and
payable. The Company has not executed any waiver to
14
extend, or otherwise taken or failed to take any action that would have the
effect of extending, the applicable statute of limitations in respect of any Tax
liabilities of the Company for the fiscal years prior to and including the most
recent fiscal year. Adequate provision has been made on the most recent balance
sheet forming part of the Financial Statements for all Taxes of any kind,
including interest and penalties in respect thereof, whether disputed or not,
and whether past, current or deferred, accrued or unaccrued, fixed, contingent,
absolute or other, and to the knowledge of the Company there are no transactions
or matters or any basis which might or could result in additional Taxes of any
nature to the Company for which an adequate reserve has not been provided on
such balance sheet. The Company is not a "consenting corporation" within the
meaning of Section 341(f) of the Code. The Company has at all times been taxable
as a Subchapter C corporation under the Code, except as otherwise set forth in
Section 3.11(a) of the Disclosure Schedule. The Company has never been a member
of any consolidated group (other than exclusively with the Company and its
former Subsidiaries) for Tax purposes, except as set forth in Section 3.11(a) of
the Disclosure Schedule.
(b) The Company has paid all Taxes which have become due pursuant to
its Returns and has paid all installments (to the extent required to avoid
material underpayment penalties) of estimated Taxes due and payable.
(c) From the end of its most recent fiscal year to the date hereof,
the Company has not made any payment on account of any Taxes except regular
payments required in the ordinary course of business, consistent with prior
practice, with respect to current operations or property presently owned.
(d) The information shown on the Federal income Tax Returns of the
Company (true, correct and complete copies of which have been furnished by the
Company to Acquiror) is true, correct and complete and fairly and accurately
reflects the information purported to be shown. Federal and state income Tax
Returns of the Company have been examined by the IRS or applicable state
Authority through the taxable periods set forth in Section 3.11(d) of the
Disclosure Schedule, and the Company has not been notified regarding any pending
examination, except as shown in Section 3.11(d) of the Disclosure Schedule.
(e) The Company is not a party to any tax sharing agreement or
arrangement.
(f) The Company is not, and within five years of the date hereof has
not been, a "United States real property holding corporation" as defined in
Section 897 of the Code.
Section 3.12. ERISA.
(a) The Company (which for purposes of this Section 3.12 shall
include any ERISA Affiliate with respect to any Plan subject to Title IV of
ERISA) does not contribute to any Plan or sponsor any Plan or Benefit
Arrangement and has not contributed to or sponsored any Plan or Benefit
Arrangement, except as set forth in Section 3.12(a) of the Disclosure Schedule.
As to all Plans and Benefit Arrangements listed in Section 3.12(a) of the
Disclosure Schedule, and except as disclosed in such Section 3.12(a) of the
Disclosure Schedule:
15
(i) to the Company's knowledge, all such Plans and Benefit
Arrangements comply and have been administered in all material
respects in form and in operation with all Applicable Laws, and the
Company has not received any outstanding notice from any Authority
questioning or challenging such compliance;
(ii) to the Company's knowledge, all such Plans maintained
or previously maintained by the Company that are or were intended to
comply with Section 401 of the Code comply and complied in form and
in operation with all applicable requirements of such Section, and no
event has occurred which will or could reasonably be expected to give
rise to disqualification of any such Plan under such Section or to a
tax under Section 511 of the Code;
(iii) none of the assets of any such Plan are invested in
employer securities or employer real property;
(iv) there are no "prohibited transactions" (as described
in Section 406 of ERISA or Section 4975 of the Code) with respect to
any such Plan and the Company has not otherwise engaged in any
prohibited transaction;
(v) to the Company's knowledge, there have been no acts or
omissions by the Company which have given rise to or may reasonably
be expected to give rise to material fines, penalties, taxes or
related charges under Sections 502(c), 502(i) or 4071 of ERISA or
Chapter 43 of the Code for which the Company may be liable;
(vi) there are no Claims (other than routine claims for
benefits) pending or, to the Company's knowledge, threatened
involving such Plans or the assets of such Plans, except as set forth
on Section 3.12(a)(vi) of the Disclosure Schedule;
(vii) no such Plan is subject to Title IV of ERISA, or if
subject, there have been no "reportable events" (as described in
Section 4043 of ERISA) as to which there is any material risk of
termination of such Plan, and no steps have been taken to terminate
any such Plan;
(viii) to the extent that the most recent balance sheet
forming part of the Financial Statements do not include a pro rata
amount of the contributions which would otherwise have been made in
accordance with past practices for the Plan years which include the
Closing Date, such amounts are set forth in Section 3.12(a)(viii) of
the Disclosure Schedule;
(ix) to the Company's knowledge, neither the Company nor
any of its directors, officers, employees or any other fiduciary has
committed any breach of fiduciary responsibility imposed by ERISA
that would subject the Company or any of its directors, officers or
employees to liability under ERISA;
(x) no such Plan which is subject to Part 3 of Subtitle B
of Title I of ERISA or Section 412 of the Code had an accumulated
funding deficiency (as defined in Section 302
16
of ERISA and Section 412 of the Code), whether or not waived, as of
the last day of the most recently completed fiscal year of such Plan;
(xi) no material liability to the PBGC has been or is
expected by the Company to be incurred by the Company with respect to
any such Plan, and there has been no event or condition which
presents a material risk of termination of any such Plan by the PBGC;
(xii) except as set forth in Section 3.12(a)(xii) of the
Disclosure Schedule (which entry, if applicable, shall indicate the
present value of accumulated plan liabilities calculated in a manner
consistent with FAS 106 and actual annual expense for such benefits
for each of the last two (2) years) and pursuant to the provisions of
COBRA, which provisions have been complied with in all material
respects, the Company does not maintain any Plan that provides
benefits described in Section 3(1) of ERISA to any former employees
or retirees of the Company or any of its former Subsidiaries;
(xiii) the Company has made available to Acquiror a copy of
the two most recently filed Federal Form 5500 series and accountant's
opinion, if applicable, for each Plan (and the two most recent
actuarial valuation reports for each Plan, if any, that is subject to
Title IV of ERISA), and all information provided by the Company to
any actuary in connection with the preparation of any such actuarial
valuation report was true, correct and complete in all material
respects; and
(xiv) the Company has delivered to Acquiror correct and
complete copies of all Plans and Benefit Arrangements and, where
applicable, each of the following documents with respect to such
plans: (i) any amendments; (ii) any related trust documents; (iii)
the most recent summary plan descriptions and summaries of material
modifications; and (iv) written communications to employees to the
extent the substance of the Plans and Benefit Arrangements described
therein differ materially from the other documentation furnished
under this clause.
(b) The Company is not and has never has been a party to any
Multiemployer Plan or made contributions to any such plan.
Section 3.13. Authorized and Outstanding Capital Stock.
(a) The authorized and outstanding capital stock, Option Securities
and Convertible Securities of the Company is as set forth in Section 3.13(a) of
the Disclosure Schedule. All of such outstanding capital stock has been duly
authorized and validly issued, is fully paid and nonassessable and is not
subject to any preemptive or similar rights. Except as set forth in Section
3.13(a) of the Disclosure Schedule, (i) there is neither outstanding nor has the
Company agreed to grant or issue any shares of its capital stock or any Option
Security or Convertible Security, and (ii) the Company is not a party to and is
not bound by any agreement, put or commitment pursuant to which it is obligated
to purchase, redeem or otherwise acquire any shares of capital stock or any
Option Security or Convertible Security. Between the date hereof and the
Closing, the Company will not issue, sell or purchase or agree to issue, sell or
purchase any capital stock or any Option Security or Convertible Security of the
Company, except to the extent required pursuant to the
17
terms hereof. All of the issued and outstanding Shares were issued and sold, and
all Option Securities were granted, in compliance with the Securities Act, the
Exchange Act and applicable state securities laws.
(b) As of the date hereof, except as set forth in Section 3.13(b) of
the Disclosure Schedule,: (i) Option Securities to acquire 424,750 Shares are
outstanding under the Company's 1990 Long-Term Incentive Plan (the "Company
Option Plan"), including in such number Option Securities which are currently
exercisable to acquire 216,950 shares of Company Stock; (ii) Option Securities
to acquire 45,000 Shares are outstanding under the Company's 1990 Nonstatutory
Stock Option Plan for Non-Employee Directors (the "Directors Plan" and, together
with the Company Option Plan, the "Option Plans"), including in such number
Option Securities which are currently exercisable to acquire 45,000 shares of
Company Stock; and (iii) 514,599 Shares are reserved for future issuance
pursuant to Option Securities which may be granted under the Option Plans. In
accordance with the vesting schedules and acceleration provisions contained in
the Option Plans and the related option agreements and assuming all option
agreements remain outstanding, as of June 1, 1997, Option Securities would be
exercisable to acquire 385,450 Shares. The Option Plans constitute the only
plans or arrangements pursuant to which Option Securities are currently
outstanding. Other than as set forth in Section 3.13(b) of the Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the Merger or the Transactions are Events which will cause an
acceleration of the exercise or vesting schedule of any Option Security. The
Company has duly complied in all material respects with all of the terms and
conditions of each Option Plan and no amendment, modification or other revision
to either Option Plan or any related option agreement which required the consent
or approval of a holder of an Option Security has been made unless, in each
case, such consent or approval was duly obtained. All Shares subject to issuance
under an Option Security will, upon issuance on the terms and conditions
specified in such Option Security, will be validly issued, fully paid and
nonassessable.
(c) All of the outstanding capital stock of the Company is owned by
the Stockholders as set forth in Section 3.13(c) of the Disclosure Schedule and
all of the outstanding Option Securities and Convertible Securities are owned by
the Persons as set forth in Section 3.13(c) of the Disclosure Schedule, and are
in each case, to the Company's knowledge, free and clear of all Liens, except as
set forth in Section 3.13(c) of the Disclosure Schedule, and, to the Company's
knowledge, except as set forth in Section 3.13(c) of the Disclosure Schedule,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character to which any Stockholder is a party relating to the
pledge, disposition or voting of any shares of the Company Stock that are owned
by such Stockholder, and there are no voting trusts or voting agreements with
respect to such shares.
Section 3.14. Employment Arrangements.
(a) The Company does not have any obligation or liability, contingent
or other, under any Employment Arrangement, other than those listed or described
in Section 3.14(a) of the Disclosure Schedule. None of the employees of the
Company is now, or, to the Company's knowledge, during the past five (5) years
has been, represented by any labor union or other employee collective bargaining
organization, or are now, or, to the Company's knowledge, during the past five
(5) years have been, parties to any labor or other collective bargaining
agreement.
18
The Company has performed all obligations required to be performed under all
Employment Arrangements and is not in material breach or violation of or in
default or arrears under any of the terms, provisions or conditions thereof,
except as set forth in Section 3.14(a) of the Disclosure Schedule.
(b) Except as set forth in Section 3.14(b) of the Disclosure
Schedule, no employee will accrue or receive or is entitled to accrue or receive
additional benefits, service or accelerated rights to payments of benefits under
any Employment Arrangement, including the right to receive any parachute
payment, as defined in Section 280G of the Code, or become entitled to
severance, termination allowance or similar payments as a direct result of this
Agreement, the Merger or the Transactions.
Section 3.15. Material Agreements. To the Company's knowledge, listed
on Section 3.15 of the Disclosure Schedule are all Material Agreements relating
to the ownership or operation of the business and property of the Company
presently held or used by the Company or to which the Company is a party or to
which it or any of its property is subject or bound. True, complete and correct
copies of each of the Material Agreements have been made available to or
furnished by the Company to Acquiror (or true, complete and correct descriptions
thereof have been set forth in Section 3.15 of the Disclosure Schedule, if any
such Material Agreements are oral). To the Company's knowledge, (i) all of the
Material Agreements are valid, binding and legally enforceable obligations of
the Company and of each other party thereto (subject to the Enforceability
Exceptions), and (ii) the Company is validly and lawfully operating its business
and owning its property under each of the Material Agreements. To the Company's
knowledge, the Company has duly complied in all material respects with all of
the terms and conditions of each Material Agreement and has not done or
performed, or failed to do or perform (and there is no pending or, to the
knowledge of the Company, threatened Claim that the Company has not so complied,
done and performed or fail to do and perform) any act the effect of which would
be to invalidate or provide grounds for the other party thereto to terminate
(with or without notice, passage of time or both) such Material Agreement or
impair the rights or benefits, or increase the costs, of the Company, under any
of the Material Agreements.
Section 3.16. Ordinary Course of Business.
(a) The Company, from the date of the most recent balance sheet
forming part of the Financial Statements to the date hereof, and until the
Closing Date, except (i) as may be described on Section 3.16(a) of the
Disclosure Schedule, (ii) as may be required or expressly contemplated by the
terms of this Agreement, (iii) as may be reflected in the Financial Statements,
or (iv) as may be consented to by Acquiror, which consent shall not be
unreasonably withheld or delayed:
(i) has operated, and will continue to operate, its
business in the normal, usual and customary manner in the ordinary
course of business, consistent with prior practice;
(ii) has not sold or otherwise disposed of, or contracted
to sell or otherwise dispose of, and will not sell or otherwise
dispose of or contract to sell or otherwise dispose of, any of its
properties or assets, other than in the ordinary course of business;
19
(iii) except in each case in the ordinary course of
business, consistent with prior practice:
(A) has not incurred and will not incur any
obligations or liabilities (fixed, contingent or other);
(B) has not entered and will not enter into any
commitments; and
(C) has not cancelled and will not cancel any
debts or claims;
(iv) has not made or committed to make, and will not make
or commit to make, any additions to its property or any purchases of
machinery or equipment, except in the ordinary course of business,
consistent with past practice;
(v) has not discharged or satisfied, and will not discharge
or satisfy, any Lien and has not paid and will not pay any obligation
or liability (absolute or contingent) other than current liabilities
or obligations under contracts then existing or thereafter entered
into in the ordinary course of business, consistent with prior
practice, and commitments under Leases existing on that date or
incurred since that date in the ordinary course of business or
repaying or prepaying long-term indebtedness or the current portion
thereof;
(vi) has not created or permitted to be created, and will
not create or permit to be created any Lien on any of its tangible
property;
(vii) except in the ordinary course of business, has not
transferred or created, or permitted to be created, and will not
transfer or create, or permit to be created, any Lien on any
Intangible Assets;
(viii) except in the ordinary course of business,
consistent with prior practice, has not increased and will not
increase the compensation payable or to become payable to any of its
directors, officers, employees, advisers, consultants, salesmen or
agents or otherwise alter, modify or change the terms of their
employment or engagement;
(ix) has not suffered any material damage, destruction or
loss (whether or not covered by insurance) or any acquisition or
taking of property by any Authority;
(x) has not waived, and will not waive, any rights of
material value without fair and adequate consideration;
(xi) has not entered into, amended or terminated and will
not enter into, amend or terminate any Lease, Governmental
Authorization, Private Authorization, Material Agreement or
Employment Arrangement or any Contractual Obligation or transaction
with any Affiliate, except for terminations in the ordinary course of
business, consistent with prior practice, in accordance with the
terms thereof;
20
(xii) has not amended or terminated and will not amend or
terminate, and has kept and will keep in full force and effect
including without limitation renewing to the extent the same would
otherwise expire or terminate, all insurance policies and coverage;
(xiii) has not amended and will not amend any provision of
its Organic Documents;
(xiv) has not issued and will not issue any additional
shares of capital stock (other than the issuance of shares in
accordance with the terms of Option Securities outstanding on the
date hereof, or except as set forth in Section 3.13(b) of the
Disclosure Schedule) or any Option Securities or Convertible
Securities and has not entered, and will not enter into any agreement
to do the same; and
(xv) has not entered into and will not enter into any other
transaction or series of related transactions which individually or
in the aggregate is material to the Company, except in the ordinary
course of business.
(b) From the end of its most recent fiscal year to the date hereof,
the Company has not, or on or prior to the Closing Date will not have, declared,
made or paid, or agreed to declare, make or pay, any Distribution.
Section 3.17. Bank Accounts, Etc. Section 3.17 of the Disclosure
Schedule contains a true and correct and complete list as of the date hereof of
all banks, trust companies, savings and loan associations and brokerage firms in
which the Company has an account or a safe deposit box and the names of all
Persons authorized to draw thereon, to have access thereto, or to authorize
transactions therein, the names of all Persons, if any, holding powers of
attorney from the Company and a summary statement as to the terms thereof.
Section 3.18. Adverse Restrictions. To the Company's knowledge, it is
not a party to or subject to, nor is any of its property subject to, any
Applicable Law, Governmental Authorization, Contractual Obligation, Employment
Arrangement, Material Agreement or Private Authorization, or any other
obligation or restriction of any kind or character, or any aggregation thereof,
which impairs in any material respect the Company's ability to conduct its
business as it is currently being conducted or which could, to the Company's
knowledge, have any Adverse Effect on the Company, except as set forth in
Section 3.18 of the Disclosure Schedule.
Section 3.19. Broker or Finder. Except as set forth in Section 3.19
of the Disclosure Schedule, no Person assisted in or brought about the
negotiation of this Agreement, the Merger or the subject matter of the
Transactions in the capacity of broker, agent or finder or in any similar
capacity on behalf of the Company or any Principal Stockholder.
Section 3.20. Environmental Matters.
(a) Except as set forth in Section 3.20(a) of the Disclosure
Schedule:
21
(i) to the Company's knowledge, it is, and at all times
since its organization has been, in compliance in all material
respects with all Environmental Laws and has not been notified that
it is potentially liable, has not received any request for
information or other correspondence concerning any site or facility,
and, to the knowledge of the Company, is not a "potentially
responsible party" under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Resource
Conservation Recovery Act, as amended, or any similar state law;
(ii) the Company has not entered into or received any
consent decree, compliance order, or administrative order relating to
Environmental Law;
(iii) the Company is not a party in interest or in default
under any judgment, order, writ, injunction or decree of any final
order relating to Environmental Law;
(iv) to the Company's knowledge, (1) it has obtained all
material Governmental Authorizations and Private Authorizations
(including without limitation all Environmental Permits) and made all
Governmental Filings which are required to be filed by the Company
for the ownership of its property, facilities and assets and the
operation of its businesses under all Environmental Laws, (2) it is,
and at all times since its organization has been, in material
compliance with the terms and conditions of all such required
Governmental and Private Authorizations, and (3) it is not the
subject of or threatened with any Legal Action involving a demand for
damages or other potential liability with respect to violations or
breaches of any Environmental Requirement; and
(v) has not assumed or agreed to any obligation under any
of its leases of real property to clean up any Hazardous Materials
which exists on such property other than as a result of the Company's
operating and occupying such property.
(b) Except as set forth in Section 3.20(b) of the Disclosure
Schedule:
(i) the Company has not disposed, released, buried or
placed Hazardous Materials on, and, to the Company's knowledge, no
other disposal, release, burial or placement of Hazardous Materials
has occurred on, any property or facility leased, operated or
occupied by the Company during the period that such facilities and
properties were leased, operated or occupied by it or, to the
knowledge of the Company, at any other time;
(ii) to the knowledge of the Company, there has been no
disposal, release, burial or placement of Hazardous Materials on any
property which could reasonably be expected to result or has resulted
in contamination of or beneath any properties or facilities leased,
operated or occupied by the Company; and
(iii) no notice has been received by the Company and to the
Company's knowledge no Lien has arisen on its properties or
facilities under Environmental Law.
22
(c) The Company has not installed, used or otherwise operated any
above-ground or underground fuel storage tanks on property leased, operated or
occupied by it and, to the Company's knowledge, no above-ground or underground
fuel storage tanks exist on property leased, operated or occupied by it.
(d) Section 3.20(d) of the Disclosure Schedule sets forth all site
assessments, audits or other investigations that have been conducted by or on
behalf of the Company as to environmental matters at any property leased,
operated or occupied by the Company.
Section 3.21. Operational Matters. With respect to the Company:
(a) customers are invoiced for special projects, such as purges,
special destructions, de-boxing and re-filing programs, only with respect to
completed work;
(b) substantially all of its customers is party to a customer
contract which limits the Company's liability in the event of loss, damage or
destruction to (i) replacement value of media or (ii) a nominal dollar value per
storage unit; and
(c) the monthly information set forth in Section 3.21 of the
Disclosure Schedule has been prepared consistent with past practice and is true
and correct in all material respects.
Section 3.22. Materiality. The matters and items excluded from the
representations and warranties set forth in this Article by operation of the
materiality exceptions and materiality qualifications contained in such
representations and warranties, in the aggregate for all such excluded matters
and items, are not and could not reasonably be expected to be Adverse to the
Company.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
AND ACQUIROR MERGER SUBSIDIARY
Acquiror and Acquiror Merger Subsidiary, jointly and severally,
represent, warrant and covenant to, and agree with, the Company as follows:
Section 4.1. Organization and Qualification; Power and Authority;
Effect of Transaction.
(a) Each of Acquiror and Acquiror Merger Subsidiary is a corporation
duly incorporated, validly existing and in good standing under the laws of
Delaware. Each of Acquiror and Acquiror Merger Subsidiary is duly qualified and
authorized to do business and is in good standing as a foreign corporation in
each jurisdiction in which the character of its property or the nature of its
business or operations requires such qualification or authorization, except to
the extent the failure to so qualify or to maintain such authorizations would
not have an Adverse Effect.
23
(b) Each of Acquiror and Acquiror Merger Subsidiary has all requisite
power and authority (corporate and other) and has in full force and effect all
Governmental Authorizations and Private Authorizations in order to enable it to
execute and deliver, and to perform its obligations under, this Agreement and
each Collateral Document executed or required to be executed pursuant hereto or
thereto and to consummate the Merger and the Transactions; and the execution,
delivery and performance of this Agreement and each Collateral Document executed
or required to be executed pursuant hereto or thereto have been duly authorized
by all requisite corporate or other action. This Agreement has been duly
executed and delivered by each of Acquiror and Acquiror Merger Subsidiary and
constitutes, and each Collateral Document executed or required to be executed
pursuant hereto or thereto when executed and delivered by it will constitute,
legal, valid and binding obligations of Acquiror and Acquiror Merger Subsidiary,
respectively, enforceable in accordance with their respective terms (subject to
the Enforceability Exceptions).
(c) Neither the execution and delivery of this Agreement or any
Collateral Document executed or required to be executed pursuant hereto or
thereto, nor the consummation of the Transactions, nor compliance with the
terms, conditions and provisions hereof or thereof by each of Acquiror and
Acquiror Merger Subsidiary:
(i) will conflict with, or result in a breach or violation
of, or constitute a default under, any Applicable Law on the part of
Acquiror or Acquiror Merger Subsidiary or will conflict with, or
result in a breach or violation of, or constitute a default under, or
permit the acceleration of any obligation or liability in, or but for
any requirement of giving of notice or passage of time or both would
constitute such a conflict with, breach or violation of, or default
under, or permit any such acceleration in, any Contractual Obligation
of Acquiror or Acquiror Merger Subsidiary, or
(ii) will require any Governmental Authorization or
Governmental Filing or Private Authorization, except for the
certificate of merger and related filings under the DGCL in
connection with the Merger and the Transactions and as the Securities
Act and applicable state securities laws may apply to compliance by
Acquiror with the provisions of this Agreement relating to the
Registered Stock and except pursuant to the HSR Act.
Section 4.2. Capitalization of Acquiror and Acquiror Merger
Subsidiary.
(a) The authorized and outstanding capital stock of each of Acquiror
and Acquiror Merger Subsidiary is as set forth in Section 4.2 of the Acquiror
Disclosure Schedule. All of such outstanding capital stock has been duly
authorized and validly issued, is fully paid and nonassessable and is not
subject to any preemptive or similar rights. Between the date hereof and the
Closing, except as contemplated by this Agreement, Acquiror Merger Subsidiary
will not issue or sell or purchase or agree to issue or sell or purchase any
capital stock or any Option Security or Convertible Security. All shares of
common stock of Acquiror Merger Subsidiary held by Acquiror have been duly
authorized and validly issued to Acquiror and are fully paid and non-assessable
and are not subject to any preemptive or similar rights. As of the date hereof,
except for this Agreement, Acquiror Merger Subsidiary does not have any
outstanding or authorized Convertible Securities. When issued to the
Stockholders in connection with the
24
Merger, the Acquiror Stock will be duly authorized, validly issued, fully paid
and nonassessable and will not be subject to any preemptive or similar rights.
(b) Acquiror's 1995 Stock Incentive Plan was duly approved by
Acquiror's stockholders and directors and a sufficient number of shares is
reserved under Acquiror's 1995 Stock Incentive Plan to satisfy Acquiror's
obligations under Section 2.4 hereof.
Section 4.3. SEC Filings; Financial Statements.
(a) Acquiror has filed all forms, reports and documents required to
be filed by it with the SEC since January 30, 1996, and has heretofore made
available to the Company, in the form filed with the SEC (including any exhibits
thereto), (i) its Special Financial Report on Form 10-K for the fiscal year
ended December 31, 1995, (ii) its Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1996, June 30, 1996 and September 30, 1996, (iii) its
proxy statement relating to its 1996 meeting of stockholders, and (iv) all other
forms, reports and registration statements filed by it with the SEC since
January 30, 1996 (the forms, reports and other documents referred to in clauses
(i), (ii), (iii) and (iv) above being referred to herein collectively as the
"Acquiror SEC Reports"). The Acquiror SEC Reports and any forms, reports and
other documents filed by the Acquiror with the SEC after the date of this
Agreement, (x) complied with or will comply in all material respects with the
requirements of the Securities Act and the Exchange Act, as the case may be, and
the rules and regulations thereunder and (y) did not at the time they were
filed, or will not at the time they are filed, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(b) Acquiror's financial statements, including in each case the notes
thereto, contained in the Acquiror SEC Reports have been prepared in accordance
with GAAP applied on a consistent basis throughout the periods covered thereby,
except as otherwise noted therein, are true, correct and complete, do not
contain any untrue statement of a material fact or omit to state a material fact
required by GAAP to be stated therein or necessary in order to make the
statements contained therein not misleading, and fairly present the financial
condition and results of operations of Acquiror and its Subsidiaries, on the
bases therein stated, as of the respective dates thereof, and for the respective
periods covered thereby subject, in the case of unaudited financial statements
to normal nonmaterial year-end audit adjustments and accruals.
(c) Since the date of Acquiror's most recent report to the SEC (Form
10-Q for the quarter ended September 30, 1996), there has been no Adverse Change
in Acquiror. To Acquiror's knowledge, there is no Event known to Acquiror which
Adversely Affects, or in the future might (so far as Acquiror can now reasonably
foresee) Adversely Affect, Acquiror or the ability of Acquiror to perform any of
the obligations set forth in this Agreement, or any Collateral Document executed
or required to be executed pursuant hereto or thereto, except for changes in
general economic conditions or the industry in general.
Section 4.4. Registration Statement. As of the Closing Date, the
Registration Statement (if any) and any amendments thereto will comply in all
material respects with the provisions of the
25
Securities Act and will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading. The Prospectus will not as of the
issue date thereof contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, the representations and warranties contained in
Section 4.3(a) and this Section 4.4 shall not apply to statements or omissions
in the Registration Statement or the Prospectus based on information relating to
the Company or any of the furnished to Acquiror by the Company or any of the
Stockholders. Neither the Acquiror Disclosure Schedule, this Agreement nor any
Collateral Document, data, information or statement furnished or to be furnished
by or on behalf of Acquiror pursuant to this Agreement or any Collateral
Document executed or required to be executed by or on behalf of Acquiror
pursuant hereto or thereto or to consummate the Merger and the Transactions,
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact required to be stated herein or therein or
necessary in order to make the statements contained herein or therein not
misleading and all such Collateral Documents, data, information or statements
are and will be true, accurate and complete.
Section 4.5. Brokers. No Person assisted in or brought about the
negotiation of this Agreement, the Merger or the subject matter of the
Transactions in the capacity of broker, agent or finder or in any similar
capacity on behalf of Acquiror or Acquiror Merger Subsidiary (other than Xxxxxxx
Xxxxx & Company, whose fees and expenses will be paid by Acquiror).
ARTICLE 5.
ADDITIONAL COVENANTS
Section 5.1. Access to Information; Confidentiality.
(a) The Company shall afford to Acquiror and its Representatives full
access during normal business hours throughout the period prior to the Effective
Time to all of the Company's properties, books, contracts, commitments and
records (including without limitation Tax Returns) and, during such period,
shall furnish promptly upon request (i) to the extent not provi ded for pursuant
to the preceding clause, all financial records, ledgers, workpapers and other
sources of financial information possessed or controlled by the Company or its
accountants deemed by Acquiror or its Representatives necessary or useful for
the purpose of performing an audit of the Company and certifying financial
statements and financial information, and (ii) such other information concerning
any of the foregoing as Acquiror shall reasonably request. In addition, each
Party shall furnish promptly upon request a copy of each report, schedule and
other document filed or received by any of them pursuant to the requirements of
any Applicable Law (including without limitation federal or state securities
laws) or filed by it or any of its Subsidiaries with any Authority in connection
with the Transactions or which may have a material effect on their respective
businesses, operations, properties, prospects, personnel, condition, (financial
or other), or results of operations. The Company and Acquiror acknowledge that
they have heretofore executed a confidentiality agreement, dated December 27,
1996 (the "Confidentiality Agreement"), which separately and as incorporated
herein shall remain in full force and effect after and
26
notwithstanding the execution and delivery of this Agreement, and that
information obtained from the Company by Acquiror or its Representatives or by
the Company or its Representatives from Acquiror, pursuant to Section 5.1(a),
the Confidentiality Agreement or otherwise, shall be subject to the provisions
of the Confidentiality Agreement.
(b) Subject to the terms and conditions the Confidentiality
Agreement, Acquiror and the Company may disclose such information as may be
necessary in connection with seeking allGovernmental and Private Authorizations
or that is required by Applicable Law to be disclosed. In the event that this
Agreement is terminated in accordance with its terms, Acquiror and the Company
shall each promptly redeliver all non-public written material provided pursuant
to this Section or any other provision of this Agreement or otherwise in
connection with the Merger and the Transactions and shall not retain any copies,
extracts or other reproductions in whole or in part of such written material
other than one copy thereof which shall be delivered to independent counsel for
such party.
(c) No investigation pursuant to this Section 5.1 shall affect any
representation or warranty in this Agreement of any Party hereto or any
condition to the obligations of the Parties hereto.
Section 5.2. Agreement to Cooperate.
(a) Each of the Parties shall use its best efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under Applicable Law to consummate the Merger and make
effective the Transactions, including using its best efforts (i) to prepare and
file with the applicable Authorities as promptly as practicable after the
execution of this Agreement all requisite applications and amendments thereto,
together with related information, data and exhibits, necessary to request
issuance of orders approving the Merger and the Transactions by all such
applicable Authorities, each of which must be obtained or become final in order
to satisfy the condition applicable to it set forth in Section 6.1(d); (ii) to
obtain all necessary or appropriate waivers, consents and approvals, (iii) to
effect all necessary registrations, filings and submissions (including without
limitation filings under federal or state securities laws or the HSR Act and any
other submissions requested by the SEC, the Federal Trade Commission or the
Department of Justice) and (iv) to lift any injunction or other legal bar to the
Merger and the Transactions (and, in such case, to proceed with the Merger and
the Transactions as expeditiously as possible), subject, however, to the
requisite vote of the Stockholders. Each of the Parties recognizes that the
consummation of the Merger and the Transactions is subject to the preacquisition
notification requirements of the HSR Act. Each agrees that, to the extent
required by Applicable Law to consummate the Merger, it will file with the
Antitrust Division of the Department of Justice and the Federal Trade Commission
a Notification and Report Form in a manner so as to constitute substantial
compliance with the notification requirements of HSR. Each covenants and agrees
to use its best efforts to achieve the prompt termination or expiration of any
waiting period or any extension thereof under the HSR Act. Notwithstanding
anything to the contrary contained in this Agreement, in connection with or as a
condition to receiving the consent or approval of any Authority or otherwise,
Acquiror shall not be required to divest, abandon, license or take similar
action with respect to any assets (tangible or intangible) of it or any of its
27
Subsidiaries (including, without limitation, the Surviving Corporation after
consummation of the Merger).
(b) Each of the Parties agrees to take such actions as may be
necessary to obtain any Governmental Authorizations legally required for the
consummation of the Merger and the Transactions, including the making of any
Governmental Filings, publications and requests for extensions and waivers.
(c) The Company will use its best efforts on or prior to the Closing
Date to obtain the satisfaction of the conditions specified in Sections 6.1 and
6.2. Each of Acquiror and Acquiror Merger Subsidiary will use its best efforts
on or prior to the Closing Date to obtain the satisfaction of the conditions
applicable to it specified in Sections 6.1 and 6.3.
(d) The Company shall take such steps as are necessary and
appropriate to obtain, and shall promptly obtain, satisfaction and discharge of
all Liens set forth in Section 3.5(a) of the Disclosure Schedule in favor of
Fleet Bank of Massachusetts, N.A., but only to the extent that Acquiror elects
to repay or prepay the Indebtedness corresponding to such Liens from its own
funds.
(e) The parties shall cooperate with one another in the preparation,
execution and filing of all Returns, questionnaires, applications, or other
documents regarding any real property transfer or gains, sales, use, transfer,
value added, stock transfer and stamp Taxes or any Plan, Benefit Arrangement or
Employment Arrangement, any transfer, recording, registration and other fees,
and any similar Taxes which become payable in connection with the Transactions
that are required or permitted to be filed on or before the Effective Time.
(f) The Company shall cause its independent accountants to cooperate
with Acquiror and shall prepare audited financial statements for the Company for
inclusion in the Registration Statement. Without limiting the generality of the
foregoing, the Company agrees that it will (i) consent to the use of such
audited financial statements in any registration statement or other document
filed by Acquiror (or any of its Subsidiaries) under the Securities Act or the
Exchange Act, and (ii) execute and deliver, and cause its officers to execute
and deliver, such "representation" letters as are customarily delivered in
connection with audits and as Acquiror's independent accountants may reasonably
request under the circumstances.
(g) Without intending to limit the generality of the covenants set
forth in Section 3.17, the Company agrees that it shall not without the prior
written consent of Acquiror, which consent shall not unreasonably be withheld or
delayed, (i) enter into, agree to or otherwise become bound by any new leases of
real property or amend or exercise any option to extend any existing lease of
real property or (ii) hire any new employee whose annual compensation exceeds
$50,000. In addition, the Company shall confer on a regular and frequent basis
with Acquiror with respect to operational matters of the Company.
Section 5.3. Affiliate Agreements; Registration Rights Agreement.
28
(a) Prior to the Closing Date, the Company shall deliver to Acquiror
a letter identifying all Persons who are, at the time this Agreement is
submitted to the Stockholders, "affiliates" of the Company for purposes of Rule
145 under the Securities Act. Each of Acquiror and the Company shall use its
best efforts to cause each such "affiliate", or each Person who will, upon
consummation of the Merger and the Transactions become, an "affiliate" of
Acquiror, to deliver to Acquiror on or prior to the Closing Date a written
agreement (an "Affiliate Agreement") substantially in the form attached hereto
as Exhibit 5.3.
(b) Acquiror agrees that it will enter into a registration rights
agreement (the "Registration Rights Agreement") with the Principal Stockholders
and such other stockholders of Acquiror as Acquiror deems necessary or
appropriate, with respect to shares of Acquiror Stock to be issued to the
Principal Stockholders pursuant to Section 2.1(a) hereof (and any shares of such
other stockholders), for the benefit of the Principal Stockholders reasonably
satisfactory in form and substance to Acquiror and the Principal Stockholders,
which Registration Rights Agreement shall include, without limitation, the
following terms: (i) the Principal Stockholders shall have demand registration
rights upon the written request of the Principal Stockholders, or upon the
written request by either of them, requesting the registration of shares of
Acquiror Stock having a market price of an aggregate of at least $10,000,000 on
no more than two occasions (subject to customary proration or "cut-back"
provisions); (ii) the Principal Stockholders shall have an unlimited number of
piggyback registration rights in conjunction with public offerings of Acquiror
Stock (other than any such offerings in connection with acquisitions and subject
to customary proration or "cut-back" provisions); (iii) Acquiror and the
Principal Stockholders shall indemnify each other in the event of any losses
resulting from any misrepresentations, acts or omissions of the other party in
connection with any such registration or any document related thereto; (iv)
Acquiror shall have the right, in its discretion, subject to the consent of the
Principal Stockholders, which consent shall not be unreasonably withheld, to
choose the underwriter(s) in any underwritten public offering of Acquiror Stock;
(v) each Principal Stockholder will agree to customary lock-up provisions in
connection with any registration; and (vi) the Principal Stockholders shall be
solely responsible for all of their own expenses (including, without limitation,
underwriting discounts and selling commissions and the fees of their counsel)
and all registration filing fees of Acquiror in connection with any registration
and, with respect to demand registration only, shall reimburse Acquiror for all
reasonable out-of-pocket expenses incurred in satisfying any such demand
registration, including, without limitation, fees and expenses of complying with
securities and blue sky laws, printing expenses, fees and expenses of Acquiror's
counsel and accountants.
Section 5.4. No Solicitation. The Company shall not, nor shall it
permit any of the Company's Representatives (including, without limitation, any
investment banker, attorney or accountant retained by it) to, initiate, solicit
or facilitate, directly or indirectly, any inquiries or the making of any
proposal with respect to an Other Transaction, engage in any discussions or
negotiations concerning, or provide to any other person any information or data
relating to, it for the purposes of, or otherwise cooperate in any way with or
assist or participate in, or facilitate any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead to, a proposal
to seek or effect an Other Transaction, or agree to or endorse any Other
Transaction; provided, however, that nothing contained in this Section shall
prohibit the Company or its Board of Directors from making any disclosure to
Stockholders that, in the reasonable
29
judgment of its Board of Directors in accordance with, and based upon the
written advice of, outside counsel, is required under Applicable Law. The
Company shall promptly advise Acquiror of, and communicate the material terms
of, any proposal it may receive, or any inquiries it receives which may
reasonably be expected to lead to such a proposal relating to an Other
Transaction, and the identity of the Person making it. The Company shall further
advise Acquiror of the status and changes in the material terms of any such
proposal or inquiry (or any amendment to any of them). During the term of this
Agreement, the Company shall not enter into any agreement oral or written, and
whether or not legally binding, with any Person that provides for, or in any way
facilitates, an Other Transaction, or affects any other obligation of the
Company under this Agreement.
Section 5.5. Directors' and Officers' Indemnification and Insurance.
From and after the Effective Time, the Surviving Corporation shall indemnify,
defend and hold harmless the present and former officers and directors of the
Company against all Claims or amounts that, with the approval of the Surviving
Corporation as to settlements only, are paid in settlement of or otherwise in
connection with any Claim based in whole or in part on the fact that such Person
is or was a director or officer of the Company and arising out of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the Merger and the Transactions), in each case to the fullest extent
currently provided under the Company's Organic Documents (but only to the extent
permitted under the DGCL), and shall pay any expenses in advance of the final
disposition of any such action or proceeding to each such Person to the fullest
extent permitted under the DGCL, upon receipt from the Person to whom expenses
are advanced of an undertaking to repay such advances to the extent required
under the DGCL. Acquiror hereby guarantees the performance by the Surviving
Corporation of all of its obligations in this Section 5.5 and the payment of all
sums which would be due hereunder from the Surviving Corporation.
Section 5.6. Notification of Certain Matters. Each party shall give
prompt notice to the other of the occurrence or non-occurrence of any Event the
occurrence or non-occurrence of which would be likely to cause in any material
respect (i) any representation or warranty made by it contained in this
Agreement to be untrue or inaccurate, or (ii) any change to be made in the
Disclosure Schedule or the Acquiror Disclosure Schedule, as the case may be, or
(iii) any failure of the Company or Acquiror, as the case may be, to comply with
or satisfy, or be able to comply with or satisfy, any material covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 5.6
shall not limit or otherwise affect the remedies available hereunder to the
Party receiving such notice.
Section 5.7. Public Announcements. Until the Closing, or in the event
of termination of this Agreement, each party shall consult with the other before
issuing any press release or otherwise making any public statements with respect
to this Agreement, the Merger or any Transaction and shall not issue any such
press release or make any such public statement without the prior consent of the
other, which consent shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, the Company acknowledges and agrees that Acquiror
may, without the prior consent of the Company, issue such press releases or make
such public statements as may be required by Applicable Law, in which case, to
the extent practicable, Acquiror will consult with, and exercise in good faith,
all reasonable business efforts to agree with the Company
30
regarding the nature, extent and form of such press release or public statement,
and, in any event, with prior notice to the Company.
Section 5.8. Obligations of Acquiror. Acquiror agrees to take all
action necessary to cause Acquiror Merger Subsidiary and the Surviving
Corporation to perform their respective obligations under this Agreement.
Acquiror shall be liable as provided herein for any breach of any
representation, warranty, covenant or agreement of Acquiror Merger Subsidiary
and for any breach of this covenant.
Section 5.9. Employee Benefits; Severance Policy. Provided that it
complies in all material respects with Applicable Law, the Surviving Corporation
may, in its sole discretion, substitute employee compensation, benefit and
severance programs for those of the Company as are comparable with the programs
provided from time to time to Acquiror's employees and the employees of
Acquiror's Subsidiaries.
Section 5.10. Certain Actions Concerning Business Combinations. The
Company will not apply, and will not take any action resulting in the
application of, or otherwise elect to apply, the provisions of applicable state
takeover laws, if any, with respect to or as a result of the Merger or the
Transactions.
Section 5.11. Conversion of Option Securities. The Company will take
all action necessary (a) to provide timely written notice to all persons holding
Option Securities to the effect that all Option Securities outstanding as of the
Effective Time will be exchanged for options to acquire Acquiror Stock, and
cash, in the case of vested and exercisable Option Securities, upon such
exchange, in accordance with Section 2.4 hereof, and (b) to obtain any consent
or waiver from the holder of an Option Security which may be necessary to give
effect to actions contemplated by Section 2.4. Without the prior written consent
of Acquiror, except as set forth in Section 3.13(b) of the Disclosure Schedule,
(i) such notice will not cause an acceleration of the exercise, conversion or
vesting schedule of any Option Security, and (ii) the Company will not otherwise
accelerate, or cause an acceleration of, the exercise, exchange or vesting
schedule of any Option Security.
Section 5.12. Tax Treatment. Each of Acquiror, Acquiror Merger
Subsidiary and the Company shall use its reasonable best efforts to cause the
Merger (including, if applicable, the Alternative Transaction) to qualify as a
tax-free reorganization under the provisions of Section 368(a) of the Code and
to obtain the opinions of counsel referred to in Sections 6.2(j) and 6.3(d).
Without limiting the foregoing, Acquiror covenants that it will not dispose of
the Company, whether by sale of stock, sale of assets, merger, consolidation,
liquidation, redemption, or otherwise, for a period of one year after the
Closing Date, except as permitted under Section 368(a)(2)(C) of the Code and the
administrative authorities under Section 368 of the Code, or unless it first
shall have received an opinion of counsel, addressed to Acquiror and the
Stockholders, that the proposed disposition will not affect the tax-free nature
of the Merger.
Section 5.13. Preparation of the Registration Statement.
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(a) Promptly following the date of this Agreement, Acquiror shall
prepare and file with the SEC the Registration Statement. Each of the Company
and Acquiror shall use its reasonable best efforts to have the Registration
Statement declared effective under the Securities Act as promptly as practicable
after such filing. The Company shall use its reasonable best efforts to cause
the Prospectus to be mailed to the Stockholders as promptly as practicable after
the Registration Statement is declared effective under the Securities Act.
Acquiror shall also take any action (other than qualifying to do business in any
jurisdiction in which it is not now so qualified or consenting to service of
process in any jurisdiction in which it has not previously so consented in any
action other than one arising out of the offering of the Acquiror Stock in such
jurisdiction) required to be taken to qualify the Acquiror Stock to be issued in
the Merger under any applicable state securities or "blue sky" laws prior to the
Effective Time, and the Company shall furnish all information concerning the
Company and the holders of the Company Stock as may be requested in connection
with any such action.
(b) The Company and Acquiror shall cooperate with each other and
provide to each other all information necessary in order to prepare the
Registration Statement. Acquiror shall notify the Company promptly of the
receipt of any comments from the SEC or its staff and of any requests by the SEC
or its staff for amendments or supplements to the Registration Statement or for
additional information and shall supply the Company with copies of all
correspondence between Acquiror or any of its Representatives, on the one hand,
and the SEC or its staff, on the other hand, with respect thereto. The Company
and Acquiror shall use their respective reasonable best efforts to respond to
any comments of the SEC with respect to the Registration Statement as promptly
as practicable. If at any time prior to the Effective Time there shall occur any
event with respect to the Company or Acquiror or any of its Subsidiaries, as the
case may be, or with respect to other information supplied by the Company or
Acquiror, as the case may be, for inclusion in the Registration Statement, in
either case which event is required to be described in an amendment of, or a
supplement to, the Prospectus or the Registration Statement, such event shall be
so described, and such amendment or supplement shall be promptly filed with the
SEC and, as required by law, disseminated to the Stockholders. Acquiror shall
notify the Company promptly upon (i) the declaration by the SEC of the
effectiveness of the Registration Statement, (ii) the issuance or threatened
issuance of any stop order or other order preventing or suspending the use of
any prospectus relating to the Registration Statement, (iii) any suspension or
threatened suspension of the use of any prospectus relating to the Registration
Statement in any state, (iv) any proceedings commenced or threatened to be
commenced by the SEC or any state securities commission that might result in the
issuance of a stop order or other order or suspension of use or (v) any request
by the SEC to supplement or amend the Prospectus after the effectiveness
thereof. Acquiror and, to the extent applicable, the Company, shall use their
reasonable best efforts to prevent or promptly remove any stop order or other
order preventing or suspending the use of any prospectus relating to the
Registration Statement and to comply with any such request by the SEC or any
state securities commission to amend or supplement the Registration Statement or
the Prospectus.
(c) None of the information supplied or to be supplied by the Company
or any Stockholder for inclusion in (i) the Registration Statement will, at the
time the Registration Statement is filed with the SEC, at any time it is amended
or supplemented or at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit
32
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, or (ii) the Prospectus or any other proxy
statement or information furnished to Stockholders in connection with the
Special Meeting will, at the date it is first mailed to the Stockholders or at
the time of the Special Meeting, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Prospectus and the Registration Statement
will comply as to form in all material respects with the requirements of the
Securities Act. Notwithstanding the foregoing, no representation is made by the
Company with respect to statements made or incorporated by reference in the
Registration Statement other than with respect to information which is supplied
by the Company or any Stockholder specifically for inclusion or incorporation by
reference in the Registration Statement.
ARTICLE 6.
CLOSING CONDITIONS
Section 6.1. Conditions to Obligations of Each Party to Effect the
Merger. The respective obligations of each Party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by Applicable Law:
(a) This Agreement, the Merger and the Transactions shall have been
approved and adopted in accordance with the DGCL by the affirmative vote, or to
the extent permitted by Applicable Law, by written consent, of the Stockholders
holding at least the minimum number of shares of the Company Stock then issued
and outstanding as are required by Applicable Law and the Company's Organic
Documents for such approval and adoption;
(b) As of the Closing Date, no Legal Action shall be pending before
or threatened in writing by any Authority seeking to restrain, prohibit, make
illegal or delay materially, or seeking material damages from the Party seeking
to invoke this Section 6.1(b) and, in case Acquiror is seeking to invoke this
Section 6.1(b), the Company, or to impose any Adverse conditions in connection
with, the consummation of the Merger and the Transactions, or which might, in
the reasonable business judgment of Acquiror, have an Adverse Effect on Acquiror
and its Subsidiaries taken as a whole assuming consummation of the Merger;
(c) Other than the filing of the certificate of merger in accordance
with the DGCL, all authorizations, consents, waivers, orders or approvals
required to be obtained, and all filings, submissions, registrations, notices or
declarations required to be made, by Acquiror or Acquiror Merger Subsidiary and
the Company prior to the consummation of the Merger and the Transactions shall
have been obtained from, and made with, all required Authorities, except for
such authorizations, consents, waivers, orders, approvals, filings,
registrations, notices or declarations the failure to obtain or make would not,
in the reasonable judgment of Acquiror, assuming consummation of the Merger,
have an Adverse Effect on the Company;
33
(d) The filing and waiting period requirements under the HSR Act
relating to the consummation of the Merger shall have been complied with; and
(e) Acquiror or its nominee and the owner of each Property shall have
entered into and closed a purchase and sale agreement for each such Property for
the price of $2,200,000 for the Property located at 0 Xxxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx, $2,400,000 for the Property located at 00 Xxxx Xxxxxx, X.
Xxxxxxxxx, Xxxxxxxxxxxxx, and $2,700,000 for the Property located at 000 Xxxxx
Xxxx Xxxx, Xxxxxxxxx, Xxx Xxxx; provided, however, that it shall not be a
condition to the Company's obligation to effect the Merger if the reason for
Acquiror's or such nominee's failure to acquire a Property is due to the
inability of the owner of such Property to convey to Acquiror or such nominee
good and marketable title to the Property free and clear of all Liens other than
Permitted Liens.
Section 6.2. Conditions to Obligations of Acquiror and Acquiror
Merger Subsidiary. The obligations of Acquiror and Acquiror Merger Subsidiary to
effect the Merger shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions, any or all of which may be waived,
in whole or in part, to the extent permitted by Applicable Law:
(a) All agreements, certificates, opinions and other documents shall
be reasonably satisfactory in form, scope and substance to Acquiror and its
counsel, and Acquiror and its counsel shall have received all information and
copies of all documents, including records of corporate proceedings, which they
may reasonably request in connection therewith, such documents where appropriate
to be certified by proper corporate officers;
(b) The representations, warranties, covenants and agreements of the
Company contained in this Agreement or otherwise made in writing by it or on its
behalf pursuant hereto or otherwise made in connection with the Merger and the
Transactions 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 those which speak as of a certain date which shall continue to be
true and correct as of such date on the Closing Date; each and all of the
agreements and conditions to be performed or satisfied by the Company or any
Stockholders hereunder or under the Stockholders' Agreement at or prior to the
Closing Date shall have been duly performed or satisfied in all material
respects; and the Company shall have furnished Acquiror with such certificates
and other documents evidencing the truth of such representations, warranties,
covenants and agreements and the performance of such agreements or conditions as
Acquiror shall have reasonably requested;
(c) The Company shall have furnished Acquiror and, at Acquiror's
request, any bank or other financial institution providing credit to Acquiror,
with favorable opinions dated the Closing Date of Xxxxx, Oviatt, Gilman, Xxxxxxx
& Xxxxxx, LLP, counsel for the Company, in the form attached hereto as Exhibit
6.2(c);
(d) No Legal Action or other Claim shall be pending or threatened at
any time prior to or on the Closing Date before or by any Authority or by any
other Person seeking to restrain or prohibit, or damages or other relief in
connection with, the execution and delivery of this Agreement or the
consummation of the Merger and the Transactions or which might in the
34
reasonable judgment of Acquiror have any Adverse Effect on the Company or,
assuming consummation of the Merger, Acquiror and its Subsidiaries taken as a
whole;
(e) Each Affiliate of the Company shall have executed and delivered
an Affiliate Agreement in the form of Exhibit 5.3 hereto and Acquiror and the
Principal Stockholders shall have entered into the Registration Rights
Agreement;
(f) The Company shall have obtained consents to the assignment and
continuation of all Material Agreements which, in the reasonable judgment of
Acquiror require such consents, and the Company shall have obtained satisfaction
and discharge of all Liens set forth in Section 3.5(a) of the Disclosure
Schedule in favor of Fleet Bank of Massachusetts, N.A., but only to the extent
that Acquiror elects to repay or prepay the Indebtedness corresponding to such
Liens from its own funds;
(g) As of the Closing Date, there shall not have occurred and be
continuing any Adverse Change affecting the Company from the condition thereof
(financial and other) reflected in the Financial Statements;
(h) Each of the officers and directors of the Company and each
trustee under each Plan shall have submitted his or her unqualified written
resignation, dated as of the Closing Date, from all such positions held with the
Company and as a trustee for each such Plan;
(i) Except for such Contractual Obligations as to which Acquiror has
notified the Company that it wants to retain, which notice shall be delivered
not less than twenty (20) days prior to Closing and which Contractual
Obligations shall be effective as of the Effective Time, all Contractual
Obligations set forth in Section 3.9 of the Disclosure Schedule shall have been
satisfied and discharged as of the Closing Date;
(j) Acquiror shall have received a favorable opinion, dated the
Closing Date, of Xxxxxxxx & Worcester LLP, its special tax counsel, to the
effect that this Agreement constitutes a tax-free plan of reorganization in
accordance with the provisions of Section 368(a) of the Code and as to the
consequences thereof to Acquiror; and
(k) Acquiror, the Company, the Agent and the Escrow Agent shall have
executed and delivered the Escrow Agreement and the Escrow Indemnity Funds
described therein shall have been delivered to the Escrow Agent.
Section 6.3. Conditions to Obligations of the Company. The
obligations of the Company to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions, any
or all of which may be waived, in whole or in part to the extent permitted by
Applicable Law:
(a) Acquiror shall have furnished the Company and the Principal
Stockholders with the favorable opinion, dated the Closing Date, of Xxxxxxxx &
Worcester LLP, counsel to Acquiror, in the form attached hereto as Exhibit
6.3(a);
35
(b) All agreements, certificates, opinions and other documents shall
be reasonably satisfactory in form, scope and substance to the Company and its
counsel, and the Company and its counsel shall have received all information and
copies of all documents, including records of corporate proceedings, which they
may reasonably request in connection therewith, such documents where appropriate
to be certified by proper corporate officers;
(c) The representations, warranties, covenants and agreements of each
of Acquiror and Acquiror Merger Subsidiary contained in this Agreement or
otherwise made in writing by it or on its behalf pursuant hereto or otherwise
made in connection with the Transactions 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 those which speak as of a certain
date which shall continue to be true and correct as of such date on the Closing
Date; each and all of the agreements and conditions to be performed or satisfied
by each of Acquiror and Acquiror Merger Subsidiary hereunder at or prior to the
Closing Date shall have been duly performed or satisfied in all material
respects; and each of Acquiror and Acquiror Merger Subsidiary shall have
furnished the Company with such certificates and other documents evidencing the
truth of such representations, warranties, covenants and agreements and the
performance of such agreements or conditions as the Company shall have
requested; and
(d) The Company shall have received a favorable opinion, dated the
Closing Date, of Xxxxx, Oviatt, Gilman, Xxxxxxx & Xxxxxx, LLP, its special tax
counsel, to the effect that this Agreement constitutes a tax-free plan of
reorganization in accordance with the provisions of Section 368(a) of the Code
and as to the consequences thereof to the Stockholders;
(e) Affiliates of the Company who are guarantors of any Company bank
Indebtedness, leases or other obligations shall have been released from all
liability under the guarantees listed on Section 6.3(e) of the Disclosure
Schedule and all collateral granted by them to secure those guarantees shall
have been released and returned to them (it being understood that if any Person
who is benefited by any guaranty does not agree to release such guaranty or
collateral without the receipt of consideration, the condition to Closing shall
be deemed to be satisfied if, at Acquiror's option, Acquiror indemnifies such
Affiliate for any payment made in respect of such guaranty); and
(f) The Escrow Agreement shall have been executed and delivered by
Acquiror and the escrow agent and the Registration Rights Agreement shall have
been executed and delivered by Acquiror and such other parties thereto (other
than the Principal Stockholders).
ARTICLE 7.
TERMINATION, AMENDMENT AND WAIVER
Section 7.1. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of this
Agreement, the Merger and the Transactions by the Stockholders:
(a) by mutual consent of Acquiror and the Company;
36
(b) by either Acquiror or the Company if any permanent injunction,
decree or judgment by any Authority preventing the consummation of the Merger
shall have become final and nonappealable;
(c) by the Company in the event (i) the Company is not in breach of
this Agreement and none of its representations and warranties shall have become
and continue to be untrue in any material respect, unless such breach or untruth
is capable of being cured by and will not prevent or delay consummation of the
Merger by or beyond the Termination Date, and (ii) either (A) Acquiror or
Acquiror Merger Subsidiary is in breach of this Agreement or any of its
representations or warranties shall have become and continue to be untrue in any
material respect, unless, in either case such breach or untruth is capable of
being cured by and will not prevent or delay consummation of the Merger by or
beyond the Termination Date, or (B) the Merger and the Transaction have not been
consummated by the Termination Date;
(d) by Acquiror:
(i) if the Merger and the Transactions fail to receive the
approval required by Applicable Law, by vote (or to the extent
permitted by Applicable Law, by consent) of the Stockholders;
(ii) in the event (A) neither Acquiror nor Acquiror Merger
Subsidiary is in breach of this Agreement and none of their
representations or warranties shall have become and continue to be
untrue in any material respect, unless such breach or untruth is
capable of being cured by and will not prevent or delay consummation
of the Merger by or beyond the Termination Date, and (B) either (I)
the Company is in breach of this Agreement or any of its
representations or warranties shall have become and continue to be
untrue in any material respect, unless, in either case, such breach
or untruth is capable of being cured by and will not prevent or delay
consummation of the Merger by or beyond the Termination Date, (II)
the Merger and the Transactions have not been consummated prior to
the Termination Date, or (III) any of the Stockholders is in breach
of the Stockholders' Agreement or any of their representations or
warranties shall have become and continue to be untrue in any
material respect, unless, in either case, such breach or untruth is
capable of being cured by and will not prevent or delay consummation
of the Merger by or beyond the Termination Date; or
(iii) if (A) the Board of Directors of the Company shall
(I) withdraw, modify or change its recommendation so that it is not
in favor of this Agreement, the Merger or the Transactions, or shall
have resolved to do any of the foregoing, or (II) have recommended or
resolved to recommend to the Stockholders any Other Transaction, or
(B) the Company shall have entered into or agreed to enter into any
Other Transaction.
Section 7.2. Effect of Termination. Except as provided in Sections
5.1, 5.7, 7.2, 7.5 and 9.11 in the event of the termination of this Agreement
pursuant to Section 7.1, this Agreement shall forthwith become void, there shall
be no liability on the part of any Party, or any of their
37
respective officers or directors, to the other and all rights and obligations of
any Party shall cease; provided, however, that such termination shall not
relieve any Party from liability for the breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement, or impair the
right of the Company, on the one hand, and Acquiror and Acquiror Merger
Subsidiary, on the other hand, to compel specific performance of the other party
of its or their obligations under this Agreement.
Section 7.3. Amendment. This Agreement may be amended by the Parties
by action taken by or on behalf of the respective Boards of Directors thereof at
any time prior to the Effective Time; provided, however, that, after approval of
this Agreement and the Merger by the Stockholders, no amendment, which under
Applicable Law may not be made without the approval of the Stockholders, may be
made without such approval. This Agreement may not be amended except by an
instrument in writing signed by the Parties hereto.
Section 7.4. Waiver. At any time prior to the Effective Time, except
to the extent Applicable Law does not permit, either Acquiror and Acquiror
Merger Subsidiary or the Company may extend the time for the performance of any
of the obligations or other acts of the other, subject, however, to the terms
and conditions of Section 7.1, waive any inaccuracies in the representations and
warranties of the other contained herein or in any document delivered pursuant
hereto and waive compliance by the other with any of the agreements, covenants
or conditions contained herein. Any such extension or waiver shall be valid only
if set forth in an agreement in writing signed by the Party or Parties to be
bound thereby.
Section 7.5. Fees, Expenses and Other Payments.
(a) All costs and expenses incurred in connection with this
Agreement, the Merger and the Transactions, and compliance with Applicable Law
and Contractual Obligations as a consequence hereof and thereof, including,
without limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred by the Parties shall be borne solely and entirely by the
Party which has incurred such costs and expenses (with respect to such Party,
its "Expenses").
(b) The Company agrees that if this Agreement shall be terminated by
Acquiror pursuant to Section 7.1(d) (other than a termination by Acquiror
pursuant to Section 7.1(d)(ii)(B)(II) unless the reason for the failure to
consummate the Merger prior to the Termination Date is due to any breach by the
Company of its covenants herein or the failure of the representations and
warranties of the Company to be true and correct in all material respects), then
the Company will pay to Acquiror an amount equal to $5,000,000, which amount is
in recognition of, among other things, the out-of-pocket Expenses of Acquiror
related to this Agreement, the reliance of Acquiror on the Company's fulfillment
of its obligations hereunder, the costs in delayed opportunity to Acquiror, and
the benefit to the Company, which heretofore has been a private closely-held
business, in establishing a market price for it, but which amount shall not be
considered to constitute liquidated damages. Any payment required to be made
pursuant to this Section 7.5(b) shall be made as promptly as practicable but not
later than ten business days after termination of this Agreement and, in any
such case, shall be made by wire transfer of immediately available funds to an
account designated by Acquiror.
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(c) Acquiror agrees that if this Agreement shall be terminated by the
Company pursuant to Section 7.1(c) (other than a termination by the Company
pursuant to Section 7.1(c)(ii)(B) unless the reason for the failure to
consummate the Merger prior to the Termination Date is due to any breach by
Acquiror or Acquiror Merger Subsidiary of any of their respective covenants
herein or the failure of the representations and warranties of Acquiror and
Acquiror Merger Subsidiary to be true and correct in all material respects),
then Acquiror will pay to the Company an amount equal to $5,000,000, which
amount is in recognition of, among other things, the out-of-pocket Expenses of
the Company related to this Agreement, the reliance of the Company on Acquiror's
fulfillment of its obligations hereunder, the costs in delayed opportunity to
the Company, but which amount shall not be considered to constitute liquidated
damages. Any payment required to be made pursuant to this Section 7.5(c) shall
be made as promptly as practicable but not later than ten business days after
termination of this Agreement and, in any such case, shall be made by wire
transfer of immediately available funds to an account designated by the Company.
Section 7.6. Effect of Investigation. The right of any Party to
terminate this Agreement pursuant to Section 7.1 shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any Party, or any Person controlling any such party or any of their respective
Representatives whether prior to or after the execution of this Agreement.
ARTICLE 8.
INDEMNIFICATION; ADJUSTMENT
Section 8.1. Survival. The representations, warranties, covenants and
agreements of the Company contained in or made pursuant to this Agreement or any
Collateral Document shall survive the Closing and shall remain operative and in
full force and effect for a period of one (1) year after the Closing Date (the
"Escrow Indemnity Period"), regardless of any investigation or statement as to
the results thereof made by or on behalf of any Party. No claim for
indemnification may be asserted after the expiration of the Escrow Indemnity
Period. Notwithstanding anything herein to the contrary, any representation,
warranty, covenant and agreement which is the subject of a Claim which is
asserted in writing prior to the expiration of the Escrow Indemnity Period shall
survive with respect to such Claim or any dispute with respect thereto until the
final resolution thereof.
Section 8.2. Escrow; Indemnification. The Parties hereto agree, and
by adopting and approving this Agreement and the Merger, the Stockholders shall
agree, that $3,000,000 in cash (the "Escrow Indemnity Funds") will be withheld
from the Exchange Merger Consideration and held in escrow in accordance with the
terms of this Article 8 and the Escrow Agreement in order to provide a fund to
indemnify Acquiror and hold Acquiror harmless from and against any and all
damages, claims, losses, expenses, costs, obligations and liabilities, including
without limitation liabilities for all reasonable attorneys', accountants', and
experts' fees and expenses including those incurred to enforce the terms of this
Agreement or any Collateral Document (collectively, "Loss and Expense"),
suffered, directly or indirectly, by Acquiror by reason of, or arising out of:
39
(a) any breach of representation or warranty made by the Company
pursuant to this Agreement or any Collateral Document or any failure by the
Company to perform or fulfill any of its covenants or agreements set forth in
this Agreement or any Collateral Document;
(b) any Legal Action or other Claim by any third party relating to
the Company to the extent such Legal Action or other Claim has resulted in a
breach of representation or warranty by the Company pursuant to this Agreement
or any Collateral Document; or
(c) the Indebtedness of the Company and its Subsidiaries as of the
Effective Time exceeding $500,000 (unless any adjustment has been made to the
Cash Amount in accordance with Section 8.6).
The Company hereby appoints, and by adopting and approving this
Agreement and the Merger, the Stockholders shall appoint, B. Xxxxxx Xxxxxxxx
(the "Agent", with full and unqualified power to delegate to one or more persons
the authority granted to him hereunder) to act as his, her or its agent and
attorney-in-fact, with full power of substitution, to take all actions called
for by this Article 8 and the Escrow Agreement on his, her or its behalf, in
accordance with the terms of this Article 8 and the Escrow Agreement.
Section 8.3. Limitation of Liability; Disposition of Escrow Indemnity
Funds.
(a) Notwithstanding the provisions of Section 8.2, after the Closing,
Acquiror's rights to indemnification shall be subject to the following
limitations: (i) Acquiror shall be entitled to recover its Loss and Expense in
respect of any Claim only if the Loss and Expense for all Claims exceeds, in the
aggregate, $150,000 and (ii) in no event shall the aggregate amount to be paid
to Acquiror exceed the Escrow Indemnity Funds.
(b) Anything in this Agreement, including without limitation the
provisions of Sections 8.2 or 8.3(a), to the contrary notwithstanding, the
exclusive recourse of Acquiror with respect to Claims brought after the
Effective Time arising out of the transactions contemplated by this Agreement
shall be the Escrow Indemnity Funds. On or before the Closing Date, Acquiror,
the Company and the Agent shall execute and deliver an escrow agreement
substantially in the form attached hereto as Exhibit 8.3 (the "Escrow
Agreement"). Any Claims of Acquiror for indemnification to be satisfied out of
the Escrow Indemnity Funds shall be made in accordance with the terms of the
Escrow Agreement.
(c) In the event there are no Unresolved Claims (as defined in the
Escrow Agreement), on the date which is ten (10) days after the expiration of
the Escrow Indemnity Period, or the next business day if such date is not a
business day, the Escrow Indemnity Funds then remaining shall be distributed to
the Stockholders (or their nominee or transferee, as set forth in the
Transmittal Documents in respect of the Exchange Merger Consideration) entitled
thereto in accordance with the proportions with their ownership of Shares
immediately prior to the Effective Time. In the event one or more Unresolved
Claims with respect to the Escrow Indemnity Funds, if any, shall exist upon the
expiration of the Escrow Indemnity Period, cash in the amount equal to the sum
of (i) the aggregate amount of such Unresolved Claims and (ii) the amount
reasonably estimated by Acquiror to cover the fees, expense and other costs
(including reasonable counsel fees and
40
expenses) which will be required to resolve such Unresolved Claims shall be
retained as part of the Escrow Indemnity Funds and the balance thereof, if any,
shall be distributed to the Persons entitled thereto. Upon the resolution of all
such Claims and the payment of all such fees, expenses and costs out of the
Escrow Indemnity Funds, the balance of the cash, if any, shall be distributed to
the Persons entitled thereto.
Section 8.4. Notice of Claims. If Acquiror believes that it has
suffered or incurred any Loss and Expense, it shall notify the Agent promptly in
writing, and in any event within the applicable time period specified in Section
8.2, describing such Loss and Expense, all with reasonable particularity and
containing a reference to the provisions of this Agreement in respect of which
such Loss and Expense shall have occurred. If any Legal Action is instituted by
a third party with respect to which Acquiror intends to claim any liability or
expense as Loss and Expense under this Article, Acquiror shall promptly notify
the Agent of such Legal Action, but the failure to so notify the Agent shall not
relieve the Stockholders of their obligations under this Article, except to the
extent such failure to notify prejudices its ability to defend against such
Claim.
Section 8.5. Defense of Third Party Claims. The Agent shall have the
right to conduct and control, through counsel of his own choosing, reasonably
acceptable to Acquiror, any third party Legal Action or other Claim (unless the
amount claimed under such Legal Action or other Claim exceeds the Escrow
Indemnity Funds, in which case Acquiror shall retain the right to control such
Legal Action or other Claim), but Acquiror may, at its election, participate in
the defense thereof at its sole cost and expense; provided, however, that if the
Agent shall fail to defend any such Legal Action or other Claim, then Acquiror
may defend, through counsel of its own choosing, such Legal Action or other
Claim, and (so long as it gives the Stockholders at least fifteen (15) days'
notice of the terms of the proposed settlement thereof and permits the
Stockholders to then undertake the defense thereof, except as set forth above)
settle such Legal Action or other Claim, and to recover out of the Escrow
Indemnity Funds the amount of such settlement or of any judgment and the costs
and expenses of such defense. The Agent shall not compromise or settle any such
Legal Action or other Claim without the prior written consent of Acquiror. All
reasonable costs and expenses defending any such third party Legal Action or
other Claim, including the amount of any settlement or of any judgment, shall be
paid out of the Escrow Indemnity Funds.
Section 8.6. Balance Sheet Adjustment. Five business days prior to
the Closing Date, the Company shall prepare and deliver to Acquiror a schedule
showing the Company's best estimate of its Indebtedness as of the Effective Time
(the "Company Indebtedness Calculation"). If Acquiror disagrees with such
estimate, Representatives of the Company and Acquiror shall meet to discuss such
estimate, and the Company Indebtedness Calculation shall be revised, to the
extent agreed, to reflect such discussions. In addition, at the Closing, the
Company shall deliver to Acquiror a letter from Fleet Bank of Massachusetts,
N.A. certifying to Acquiror the entire unpaid balance (principal and interest)
of the Company's Indebtedness to Fleet Bank of Massachusetts, N.A., such that
the payment thereof at that time would terminate that Indebtedness. If the
Company Indebtedness Calculation indicates that the Indebtedness of the Company
is greater than $500,000, the Cash Amount shall be adjusted in accordance with
the definition thereof; if the Company Indebtedness Calculation indicates that
Indebtedness of the Company is less than $500,000, there shall be no such
adjustment.
41
Section 8.7. Exclusive Remedy. Except as otherwise provided in this
Article and Section 9.8 of the Merger Agreement and Section 5.1 of the
Stockholders' Agreement, the indemnification provided in this Article shall be
the sole and exclusive post-Closing remedy available to Acquiror against the
Stockholders for any Claim under this Agreement.
ARTICLE 9.
GENERAL PROVISIONS
Section 9.1. Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered or transmitted, and shall be effective
upon receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the telecopier number
specified below:
(a) If to Acquiror or Acquiror Merger Subsidiary:
Iron Mountain Incorporated
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attention: Chief Executive Officer
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopier No.: (000) 000-0000
(b) If to the Company or the Agent:
c/o B. Xxxxxx Xxxxxxxx
000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxx, Oviatt, Gilman, Xxxxxxx & Xxxxxx LLP
00 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
42
Attention: Xxxxx X. Xxxxxxx, Xx.
Telecopier No.: (000) 000-0000
Section 9.2. Headings. The headings contained in this Agreement are
for purposes of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.3. Severability. If any term or provision of this Agreement
shall be held or deemed to be, or shall in fact be, invalid, inoperative,
illegal or unenforceable as applied to any particular case in any jurisdiction
or jurisdictions, or in all jurisdictions or in all cases, because of the
conflicting of any provision with any constitution or statute or rule of public
policy or for any other reason, such circumstance shall not have the effect of
rendering the provision or provisions in question invalid, inoperative, illegal
or unenforceable in any other jurisdiction or in any other case or circumstance
or of rendering any other provision or provisions herein contained invalid,
inoperative, illegal or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule
of public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative, illegal or unenforceable
provision had never been contained herein and such provision reformed so that it
would be valid, operative and enforceable to the maximum extentpermitted in such
jurisdiction or in such case. Notwithstanding the foregoing, in the event of any
such determination the effect of which is to Affect Materially and Adversely
either party, the parties shall negotiate in good faith to modify this Agreement
so as to effect the original intent of the parties as closely as possible to the
fullest extent permitted by Applicable Law in an acceptable manner to the end
that the Transactions are fulfilled and consummated to the maximum extent
possible.
Section 9.4. Entire Agreement. This Agreement (together with the
Confidentiality Agreement, the Disclosure Schedule, the Acquiror Disclosure
Schedule and the other Collateral Documents delivered in connection herewith)
constitutes the entire agreement of the Parties and supersedes all prior
agreements and undertakings, both written and oral (other than the
Confidentiality Agreement), between the Parties, or any of them, with respect to
the subject matter hereof.
Section 9.5. Assignment. This Agreement shall not be assigned by
operation of law or otherwise and any purported assignment shall be null and
void, provided that Acquiror may cause a wholly owned Subsidiary of Acquiror to
be substituted for Acquiror Merger Subsidiary as the party to the Merger and
may, in addition, assign the other rights, but not its obligations, including,
without limitation, its obligation to pay the Merger Consideration, under this
Agreement to such Subsidiary.
Section 9.6. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each Party, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any Person
any right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
Section 9.7. Governing Law. The validity, interpretation,
construction and performance of this Agreement shall be governed by, and
construed in accordance with, the applicable laws of the
00
Xxxxxx Xxxxxx xx Xxxxxxx and the laws of The Commonwealth of Massachusetts
applicable to contracts made and performed in such State and, in any event,
without giving effect to any choice or conflict of laws provision or rule that
would cause the application of domestic substantive laws of any other
jurisdiction, except to the extent that the provisions of the DGCL apply to the
Merger. Anything in this Agreement to the contrary notwithstanding, including
without limitation the provisions of Article 8, in the event of any dispute
between the parties which results in a Legal Action, the prevailing party shall
be entitled to receive from the non-prevailing party reimbursement for
reasonable legal fees and expenses incurred by such prevailing party in such
Legal Action.
Section 9.8. Enforcement of the Agreement. Each Party recognizes and
agrees that each other Party's remedy at law for any breach of the provisions of
this Agreement would be inadequate and agrees that for breach of such
provisions, such Party shall, in addition to such other remedies as may be
available to it at law or in equity or as provided in this Agreement, be
entitled to injunctive relief and to enforce its rights by an action for
specific performance to the extent permitted by Applicable Law. Each Party
hereby waives any requirement for security or the posting of any bond or other
surety in connection with any temporary or permanent award of injunctive,
mandatory or other equitable relief. Nothing herein contained shall be construed
as prohibiting a Party from pursuing any other remedies available to such Party
for any breach or threatened breach hereof or failure to take or refrain from
any action as required hereunder to consummate the Merger and carry out the
Transactions.
Section 9.9. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different Parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
Section 9.10. Mutual Drafting. This Agreement is the result of the
joint efforts of Acquiror and the Company, and each provision hereof has been
subject to the mutual consultation, negotiation and agreement of the parties and
there shall be no construction against any Party based on any presumption of
that Party's involvement in the drafting thereof.
Section 9.11. Continuation of Covenants. Notwithstanding any
termination by Acquiror of this Agreement, the Company agrees that all of the
representations, warranties and covenants of the Company contained in this
Agreement shall continue and be in full force and effect for so long as Acquiror
has the right to commence an offer to purchase the Company Stock of the
Principal Stockholders pursuant to the terms and provisions of the Stockholders'
Agreement and, in the event Acquiror commences such an offer, until such time as
such offer is consummated.
ARTICLE 10.
DEFINITIONS
As used herein, unless the context otherwise requires, the following
terms (or any variant in the form thereof) have the following respective
meanings. Terms defined in the singular shall
44
have a comparable meaning when used in the plural, and vice versa, and the
reference to any gender shall be deemed to include all genders. Unless otherwise
defined or the context otherwise clearly requires, terms for which meanings are
provided herein shall have such meanings when used in the Disclosure Schedule,
the Acquiror Disclosure Schedule and each Collateral Document, notice,
certificate, communication, opinion or other document executed or required to be
executed pursuant hereto or thereto or otherwise delivered, from time to time,
pursuant hereto or thereto.
Acquiror shall have the meaning given to it in the Preamble.
Acquiror Disclosure Schedule shall mean the disclosure schedule dated
as of the date of this Agreement delivered by Acquiror to the Company.
Acquiror Merger Subsidiary shall have the meaning given to it in the
Preamble.
Acquiror SEC Reports shall have the meaning given to it in Section
4.3(a).
Acquiror Stock shall have the meaning given to it in the Preamble.
Adverse, Adversely, when used alone or in conjunction with other
terms (including without limitation "Affect,""Change" and"Effect") shall mean,
with respect to the Company or Acquiror, as the case may be, any Event which
could reasonably be expected to (a) adversely affect the validity or
enforceability of this Agreement or any Collateral Document or the likelihood of
consummation of the Merger, (b) adversely affect in any material respect the
business, operations, management, properties or the condition, (financial or
other), or results of operation (including without limitation, earnings before
interest, taxes, depreciation and amortization) of the Company or Acquiror, as
the case may be (it being understood that a reduction in the Market Value of
Acquiror Stock shall not, in and of itself, constitute or be deemed to reflect
an Adverse Change), (c) impair the Company's or Acquiror's, as the case may be,
ability to fulfill its obligations under the terms of this Agreement or any
Collateral Document, or (d) adversely affect in any material respect the
aggregate rights and remedies of Acquiror under this Agreement or any Collateral
Document.
Affiliate, Affiliated shall mean, with respect to any Person, (a) any
other Person at the time directly or indirectly controlling, controlled by or
under direct or indirect common control with such Person, (b) any other Person
of which such Person at the time owns, or has the right to acquire, directly or
indirectly, ten percent (10%) or more of any class of the capital stock or
beneficial interest, (c) any other Person which at the time owns, or has the
right to acquire, directly or indirectly, ten percent (10%) or more of any class
of the capital stock or beneficial interest of such Person, (d) any executive
officer or director of such Person, (e) with respect to any partnership, joint
venture or similar Entity, any general partner thereof, and (f) when used with
respect to an individual, shall include any member of such individual's
immediate family or a family trust.
Affiliate Agreement shall have the meaning given to it in Section
5.3(a).
Agent shall have the meaning given to it in Section 8.2(c).
45
Agreement shall mean this Agreement as originally in effect,
including unless the context otherwise specifically requires, all schedules and
exhibits hereto, as the same may from time to time be supplemented, amended,
modified or restated in the manner herein or therein provided.
Alternative Transaction shall have the meaning given to it in Section
1.9.
Applicable Law shall mean any Law of any Authority, whether domestic
or foreign, including without limitation the DGCL, all federal and state
securities laws, the Code, ERISA and Environmental Laws, to or by which a Person
or it or any of its business or operations is subject or any of its property or
assets is bound.
Authority shall mean any governmental or quasi-governmental
authority, whether administrative, executive, judicial, legislative or other, or
any combination thereof, including without limitation any federal, state,
territorial, county, municipal or other government or governmental or
quasi-governmental agency, arbitrator, authority, board, body, branch, bureau,
central bank or comparable agency or Entity, commission, corporation, court,
department, instrumentality, master, mediator, panel, referee, system or other
political unit or subdivision or other Entity of any of the foregoing, whether
domestic or foreign.
Benefit Arrangement shall mean any material benefit arrangement that
is not a Plan, including (i) any employment or consulting agreement, (ii) any
arrangement providing for insurance coverage or workers' compensation benefits,
(iii) any incentive bonus or deferred bonus arrangement, (iv) any arrangement
providing termination allowance, severance, salary continuation for disability,
or other leave of absence, supplemental unemployment benefits, lay-off,
reduction in force or similar benefits, (v) any equity compensation plan, (vi)
any deferred compensation plan, (vii) any compensation policy and practice,
(viii) any educational assistance arrangements or policies and (ix) any change
of control arrangements or policies.
Cash Amount shall mean the difference between (a) $12,090,000 and (b)
in the event the Company Indebtedness Calculation exceeds $500,000, an amount
equal to such amount above $500,000.
Cash Conversion Number shall mean the quotient obtained by dividing
(i) the Cash Amount by (ii) the sum of (a) the number of shares of Company Stock
issued and outstanding immediately prior to the Merger (except shares subject to
Section 2.1(b)) and (b) the number of shares of Company Stock which may be
issued pursuant to Option Securities which are exercisable as of the Effective
Time (including those which will become exercisable by virtue of the
consummation of the Merger).
Cash Merger Consideration shall have the meaning given to it in
Section 2.1(a).
Certificate shall have the meaning given to it in Section 2.1(a).
Claims shall mean any and all debts, liabilities, obligations,
losses, damages, deficiencies, assessments and penalties, together with all
Legal Actions, pending or threatened, claims and judgments of whatever kind and
nature relating thereto, and all fees, costs, expenses and
46
disbursements (including without limitation reasonable attorneys' and other
legal fees, costs and expenses) relating to any of the foregoing.
Closing shall have the meaning given to it in Section 1.3.
Closing Date shall have the meaning given to it in Section 1.3.
COBRA shall mean the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended, as set forth in Section 4980B of the Code and Part 6 of
Title I of ERISA.
Code shall have the meaning given to it in the Preamble.
Collateral Document shall mean any agreement, instrument,
certificate, opinion, memorandum, schedule or other document delivered by a
Party or a Stockholder pursuant to this Agreement or in connection with the
Merger and the Transactions.
Common Stock Amount shall mean the quotient obtained by dividing (a)
$49,910,000 by (b) the Determination Price.
Company shall have the meaning given to it in the Preamble.
Company Indebtedness Calculation shall have the meaning given to it
in Section 8.6.
the Company's knowledge (including the term "to the knowledge of the
Company") means the knowledge, information or belief of any Company director,
executive officer or any Principal Stockholder; and that such director,
executive officer or Principal Stockholder, after reasonable investigation
(which shall include, without limitation, interrogation of Xxxx Xxxxxxx, Xxxxxxx
Xxxxxxx, Xxxxxxx Xxxx and Xxxxxxx Xxxxx but, due to the Parties' desire and need
for secrecy, shall not include interrogation of any other employee, including,
without limitation, any branch manager), shall have reason to believe and shall
believe that the subject representation or warranty is true and accurate as
stated.
Company Option Plan shall have the meaning given to it in Section
3.13(b).
Company Stock shall have the meaning given to it in Section 2.1(a).
Confidentiality Agreement shall have the meaning given to it in
Section 5.1(a).
Contract, Contractual Obligation shall mean any term, condition,
provision, representation, warranty, agreement, covenant, undertaking,
commitment, indemnity or other obligation which is outstanding or existing under
any instrument, contract, lease or other contractual undertaking to which the
obligee is a party or by which it or any of its business is subject or property
or assets is bound.
control (including the terms "controlled," "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct
47
or cause the direction of the management or policies of a Person, or the
disposition of such Person's assets or properties, whether through the ownership
of stock, equity or other ownership, by contract, arrangement or understanding,
or as trustee or executor, by contract or credit arrangement or otherwise.
Convertible Securities shall mean any evidences of indebtedness,
shares of capital stock (other than common stock) or other securities directly
or indirectly convertible into or exchangeable for Shares, whether or not the
right to convert or exchange thereunder is immediately exercisable or is
conditioned upon the passage of time, the occurrence or non-occurrence or
existence or non-existence of some other Event, or both.
Determination Price shall mean the average closing price per share of
Acquiror Stock for the period of 20 trading days ending three trading days prior
to the Closing Date; provided however, that if the average closing price per
share of Acquiror Stock for such period is less than $26.00, then the
Determination Price shall be $26.00, and provided further that if the average
closing price per share of Acquiror Stock for such period is greater than
$31.00, thenthe Determination Price shall be $31.00. The closing price for each
such trading day shall be the last quoted sale price or, if not so quoted, the
average of the low bid and high asked prices on the Nasdaq National Market
System.
DGCL shall have the meaning given to it in the Preamble.
Directors Plan shall have the meaning given to it in Section 3.13(b).
Disclosure Schedule shall mean the disclosure schedule dated as of
the date of this Agreement delivered by the Company to Acquiror.
Dissenting Shares shall have the meaning given to it in Section
2.5(a).
Distribution shall mean, with respect to the Company: (a) the
declaration or payment of any dividend (except dividends payable in Company
Stock) on or in respect of any shares of any class of capital stock of the
Company owned by a Person other than the Company, (b) the purchase, redemption
or other retirement of any shares of any class of capital stock of the Company
owned by a Person other than the Company, and (c) any other distribution on or
in respect of any shares of any class of capital stock of the Company owned by a
Person other than the Company.
Effective Time shall have the meaning given to it in Section 1.4.
Employment Arrangement shall mean, with respect to any Person, any
employment, consulting, retainer, severance or similar contract, agreement,
plan, arrangement or policy (exclusive of any which is terminable within thirty
(30) days without liability, penalty or payment of any kind by such Person or
any Affiliate (other than any such liability, penalty or payment of general
application to all the Company's employees)), providing for severance,
termination payments, insurance coverage (including any self-insured
arrangements), workers compensation, disability benefits, life, health, medical,
dental or hospitalization benefits, supplemental
48
unemployment benefits, vacation or sick leave benefits, pension or retirement
benefits or for deferred compensation, profit-sharing, bonuses, stock options,
stock purchase or appreciation rights or other forms of incentive compensation
or post-retirement insurance, compensation or benefits, or any collective
bargaining or other labor agreement, whether or not any of the foregoing is
subject to the provisions of ERISA.
Encumber shall mean to suffer, accept, agree to or permit the
imposition of any Lien.
Enforceability Exceptions shall have the meaning set forth in Section
3.1(b).
Entity shall mean any corporation, firm, unincorporated organization,
association, partnership, limited liability company, trust (inter vivos or
testamentary), estate of a deceased, insane or incompetent individual, business
trust, joint stock company, joint venture or other organization, entity or
business, whether acting in an individual, fiduciary or other capacity, or any
Authority.
Environmental Law shall mean any Law relating to or otherwise
imposing liability or standards of conduct concerning pollution or protection of
the environment or occupational health and safety, including without limitation
Laws relating to emissions, discharges, releases or threatened releases of
Hazardous Materials or other pollutants, contaminants, chemicals, noises, odors
or industrial, toxic or hazardous substances, materials or wastes, whether as
matter or energy, into the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata) or
otherwise relating to the manufacture, processing, generation, distribution,
use, treatment, storage, disposal, cleanup, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances, materials
or wastes.
Environmental Permit shall mean any Governmental Authorization
required by or pursuant to any Environmental Law.
ERISA shall mean the Employee Retirement Income Security Act of 1974,
and the rules and regulations thereunder, all as from time to time in effect, or
any successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
ERISA Affiliate shall mean any Person that is or has ever been
treated as a single employer with the Company under Sections 414(b), (c), (m) or
(o) of the Code or Section 4001(b)(1) of ERISA.
Escrow Agreement shall have the meaning given to it in Section
8.3(b).
Escrow Indemnity Funds shall have the meaning given to it in the
Stockholders' Agreement.
Escrow Indemnity Period shall have the meaning given to it in Section
8.1.
49
Event shall mean the occurrence or existence of any act, action,
activity, circumstance, condition, event, fact, failure to act, omission,
incident or practice, or any set or combination of any of the foregoing.
Exchange Act shall mean the Securities Exchange Act of 1934, and the
rules and regulations of the Commission thereunder, all as from time to time in
effect, or any successor law, rules or regulations, and any reference to any
statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
Exchange Agent shall have the meaning given to it in Section 2.2(a).
Exchange Fund shall have the meaning given to it in Section 2.2(a).
Exchange Merger Consideration shall have the meaning given to it in
Section 2.1(a).
Expenses shall have the meaning set forth in Section 7.5(a).
Financial Statements shall have the meaning given to it in Section
3.2(a).
GAAP shall mean generally accepted accounting principles as in effect
from time to time in the United States of America.
Governmental Authorizations shall mean all approvals, concessions,
consents, franchises, licenses, permits, plans, registrations and other
authorizations of all Authorities.
Governmental Filings shall mean all filings, including franchise and
similar Tax filings, and the payment of all fees, assessments, interest and
penalties associated with such filings, with all Authorities.
Guaranty or Guaranteed shall mean any agreement, undertaking or
arrangement by which the Company guarantees, endorses or otherwise becomes or is
liable, directly or indirectly, contingently or otherwise, upon any indebtedness
of any other Person including without limitation the payment of amounts drawn
down by beneficiaries of letters of credit (other than by endorsements of
negotiable instruments for deposit or collection in the ordinary course of
business). The amount of the obligor's obligation under any Guaranty shall be
deemed to be the outstanding amount (or maximum permitted amount, if larger) of
the indebtedness directly or indirectly guaranteed thereby (subject to any
limitation set forth therein).
Hazardous Materials shall mean any substance (in whatever state of
matter): (a) the presence of which requires investigation or remediation under
any Environmental Law; (b) that is defined as a "hazardous waste","hazardous
material" or "hazardous substance" under any Environmental Law; (c) that is
toxic, explosive, corrosive, pollutive, contaminating, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and is regulated by any
Authority; (d) that contains or consists of petroleum or petroleum products,
PCBs, asbestos, or urea formaldehyde foam insulation.
50
HSR Act shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of
1976, and the rules and regulations thereunder, all as from time to time in
effect, or any successor law, rules or regulations, and any reference to any
statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
Indebtedness shall mean, with respect to the Company, all
obligations, contingent or otherwise, which in accordance with GAAP should be
classified upon the Company's consolidated balance sheet as liabilities in
respect of borrowed money and all guarantees, endorsements and other contingent
obligations in respect of Indebtedness of others (it being understood that
obligations of the Company in respect of trade payables and capitalized leases
incurred in the ordinary course of business shall not be included in the
definition of Indebtedness).
Intangible Assets shall mean all assets and property lacking physical
properties the evidence of ownership of which must customarily be maintained by
independent registration, documentation, certification, recordation or other
means.
Law shall mean any (a) administrative, judicial, legislative or other
action, code, consent decree, constitution, decree, directive, enactment,
finding, guideline, law, injunction, interpretation, judgment, order, ordinance,
policy statement, proclamation, promulgation, regulation, requirement, rule,
rule of law, rule of public policy, settlement agreement, statute, or writ or
any Authority, domestic or foreign; (b) the common law, or other legal or
quasi-legal precedent; or (c) arbitrator's, mediator's or referee's award,
decision, finding or recommendation; including, in each such case or instance,
any interpretation, directive, guideline or request, whether or not having the
force of law including, in all cases, without limitation any particular section,
part or provision thereof.
Lease shall mean any lease of property, whether real, personal or
mixed, and all amendments thereto.
Legal Action shall mean any litigation or legal or other actions,
arbitrations, counterclaims, proceedings, requests for material information by
or pursuant to the order of any Authority, or suits, at law or in arbitration,
equity or admiralty commenced by any Person, whether or not purported to be
brought on behalf of a party hereto affecting such party or any of such party's
business, property or assets.
Lien shall mean any of the following: mortgage; lien (statutory or
other); preference, priority or other security agreement, arrangement or
interest; hypothecation, pledge or other deposit arrangement; assignment;
charge; levy; executory seizure; attachment; garnishment; encumbrance (including
any easement, exception, variance, reservation or limitation, right of way,
zoning restriction, building or use restriction, and the like); conditional
sale, title retention or other similar agreement, arrangement, device or
restriction; preemptive or similar right; any financing lease involving
substantially the same economic effect as any of the foregoing; the filing of
any financing statement under the Uniform Commercial Code or comparable law of
any jurisdiction; restriction on sale, transfer, assignment, disposition or
other alienation; or any option, equity, claim or right of or obligation to, any
other Person, of whatever kind and character.
51
Loss and Expense shall have the meaning given to it in Section 8.2.
Material or materiality for the purposes of this Agreement, shall,
unless specifically stated to the contrary, be determined without regard to the
fact that various provisions of this Agreement set forth specific dollar
amounts.
Material Agreement or Material Commitment shall mean, with respect to
the Company, any Contractual Obligation (a) which (i) involves the purchase,
sale or lease of goods or materials or performance of services aggregating more
than Twenty-five Thousand Dollars ($25,000), (ii) extends for more than three
(3) months, or (iii) is not terminable on thirty (30) days or less notice
without penalty or other payment, (b) which involves indebtedness for money
borrowed in excess of One Hundred Thousand Dollars ($100,000) or (c) which is or
otherwise constitutes a written agency, dealer, license, distributorship, sales
representative or similar written agreement.
Merger shall have the meaning given to it in the Preamble.
Merger Consideration shall have the meaning given to it in Section
2.1(a).
Multiemployer Plan shall mean a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA.
Net Shares shall have the meaning given to it in Section 2.2(a).
Option Plans shall have the meaning given to it in Section 3.13(b).
Option Securities shall mean all rights, options and warrants, and
calls or commitments evidencing the right, to subscribe for, purchase or
otherwise acquire Shares or Convertible Securities, whether or not the right to
subscribe for, purchase or otherwise acquire is immediately exercisable or is
conditioned upon the passage of time, the occurrence or non-occurrence or the
existence or non-existence of some other Event.
Organic Document shall mean the Company's Certificate of
Incorporation, its by-laws and all stockholder agreements, voting trusts and
similar arrangements applicable to any of its capital stock, each as in effect
from time to time.
Other Transaction shall mean a transaction or series of related
transactions (other than the Merger) resulting in (a) any change in control of
the Company, (b) any merger or consolidation of the Company, regardless of
whether the Company is the surviving Entity, (c) any tender offer or exchange
offer for, or any acquisition of, any securities of the Company, (d) any sale or
other disposition of assets of the Company not otherwise permitted under Section
3.17 hereof, or (e) so long as this Agreement remains in effect, any issue or
sale, or any agreement to issue or sell, any capital stock, Convertible
Securities or Option Securities of the Company (other than the issuance of
shares in accordance with the terms of Option Securities outstanding on the date
hereof).
Party shall mean a signatory to this Agreement.
52
PBGC shall mean the Pension Benefit Guaranty Corporation and any
Entity succeeding to any or all of its functions under ERISA.
Permitted Liens shall mean any of the following Liens: (i) building
and zoning ordinances and by-laws of any applicable Authority applicable to the
Property; (ii) taxes assessed or to be assessed on the Property for the then
current year to the extent the same are not yet due or payable; and (iii)
rights, easements and restrictions of record, provided the same do not
materially interfere with the current occupancy and use of the Property by the
Company.
Person shall mean any natural individual or any Entity.
Plan shall mean, with respect to the Company and at a particular
time, any employee benefit plan which is covered by ERISA and in respect of
which the Company, or, in the caseof any such plan subject to Title IV of ERISA,
an ERISA Affiliate is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer," as defined in
Section 3(5) of ERISA, other than a Multiemployer Plan.
Principal Stockholders shall mean B. Xxxxxx Xxxxxxxx and Xxxxx X.
Xxxxxx, Xx.
Private Authorizations shall mean all approvals, concessions,
consents, franchises, licenses, permits, and other authorizations of all Persons
(other than Authorities) including without limitation those with respect to
patents, trademarks, service marks, trade names, copyrights, computer software
programs, technology and know-how, but not including those with respect to
Leases.
Property shall mean each of the premises located at 0 Xxxxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx, 00 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx and 000 Xxxxx
Xxxx Xxxx, Xxxxxxxxx, Xxx Xxxx, including all buildings and other improvements
and fixtures thereon (but only to the extent such improvements and fixtures are
owned by the owner of such Property and not the Company).
Prospectus shall mean the form of prospectus to form part of the
Registration Statement.
Registered Stock shall mean that portion of the Stock Merger
Consideration consisting of shares of Acquiror Stock to be registered pursuant
to the Securities Act.
Registration Rights Agreement shall have the meaning given to it in
Section 5.3(b).
Registration Statement shall mean the registration statement
(including the Prospectus, exhibits, financial statements and schedules included
therein), and all amendments thereof (including post-effective amendments) and
supplements to the Prospectus which are a part thereof, filed under the
Securities Act registering the Registered Stock.
Representatives of a Party shall mean the officers, directors,
employees, accountants, counsel, financial advisors, consultants and other
representatives of such Party.
53
SEC shall mean the Securities and Exchange Commission of the United
States or any successor Authority.
Securities Act shall mean the Securities Act of 1933, and the rules
and regulations of the Commission thereunder, all as from time to time in
effect, or any successor law, rules or regulations, and any reference to any
statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
Share Price shall mean the quotient obtained by dividing (i) the
difference between $62,000,000 and, in the event the Company Indebtedness
Calculation exceeds $500,000, an amount equal to such amount above $500,000, by
(ii) the sum of (a) the number of shares of Company Stock issued and outstanding
immediately prior to the Merger (except shares subject to Section 2.1(b)) and
(b) the number of shares of Company Stock which may be issued pursuant to Option
Securities which are exercisable as of the Effective Time (including those which
will become exercisable by virtue of the consummation of the Merger).
Shares shall have the meaning given to it in Section 2.1(a).
Special Meeting shall have the meaning given to it in Section 1.2(a).
Stock Conversion Number shall mean the quotient obtained by dividing
(i) the Common Stock Amount by (ii) the sum of (a) the number of shares of
Company Stock issued and outstanding immediately prior to the Merger (except
shares subject to Section 2.1(b)) and (b) the number of shares of Company Stock
which may be issued pursuant to Option Securities which are exercisable as of
the Effective Time (including those which will become exercisable by virtue of
the consummation of the Merger).
Stockholders shall mean the Principal Stockholders and all other
Persons entitled to Merger Consideration (or who would be entitled thereto but
for their dissent from the Merger) pursuant to Sections 2.1(a) or (to the extent
Persons holding Option Securities or Convertible Securities exercise their
rights to acquire Shares prior to the Effective Time, from and after the time
they acquire such Shares) 2.4.
Stockholders' Agreement shall mean that certain Stockholders'
Agreement of even date herewith among the Principal Stockholders and Acquiror,
as the same may from time to time be supplemented, amended, modified or restated
in the manner therein provided.
Stock Merger Consideration shall have the meaning given to it in
Section 2.1(a).
Subsidiary shall mean, with respect to a Person, any Entity a
majority of the capital stock ordinarily entitled to vote for the election of
directors of which, or if no such voting stock is outstanding, a majority of the
equity interests of which, is owned directly or indirectly, legally or
beneficially, by such Person or any other Person controlled by such Person.
Surviving Corporation shall have the meaning given to it in Section
1.1
54
Tax (and "Taxable", which shall mean subject to Tax), shall mean,
with respect to the Company, (a) all taxes (domestic or foreign), including
without limitation any income (net, gross or other including recapture of any
tax items such as investment tax credits), alternative or add-on minimum tax,
gross income, gross receipts, gains, sales, use, leasing, lease, user, ad
valorem, transfer, recording, franchise, profits, property (real or personal,
tangible or intangible), fuel, license, withholding on amounts paid to or by the
Company, payroll, employment, unemployment, social security, excise, severance,
stamp, occupation, premium, environmental or windfall profit tax, custom, duty
or other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, levies, assessments, charges, penalties,
addition to tax or additional amount imposed by any Taxing Authority, (b) any
joint or several liability of the Company with any other Person for the payment
of any amounts of the type described in (a), and (c) any liability of the
Company for the payment of any amounts of the type described in (a) as a result
of any express or implied obligation to indemnify any other Person.
Tax Claim shall mean any Claim which relates to Taxes, including
without limitation the representations and warranties set forth in Section 3.11.
Tax Return or Returns shall mean all returns, consolidated or
otherwise (including without limitation information returns), required to be
filed with any Authority with respect to Taxes.
Taxing Authority shall mean any Authority responsible for the
imposition of any Tax.
Termination Date shall mean September 30, 1997 or such other date as
the Parties may, from time to time, mutually agree; provided, however, that in
the event that any waiting periods or requests under the HSR Act have not
expired or been satisfied by September 30, 1997, the Termination Date shall mean
December 31, 1997.
Transactions shall mean the other transactions contemplated by this
Agreement or the Merger or by any Collateral Document executed or required to be
executed in connection herewith or therewith.
Transmittal Documents shall have the meaning given to it in Section
2.2(b).
[Signatures appear on following page.]
55
IN WITNESS WHEREOF, Acquiror, Acquiror Merger Subsidiary and the
Company have caused this Agreement to be executed as of the date first written
above by their respective officers thereunto duly authorized.
IRON MOUNTAIN INCORPORATED
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President and Chief Operating Officer
IM-1 ACQUISITION CORP.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Treasurer
SAFESITE RECORDS MANAGEMENT
CORPORATION
By: /s/ B. Xxxxxx Xxxxxxxx
--------------------------------------------
Name: B. Xxxxxx Xxxxxxxx
Title: Chairman
By: /s/ Xxxxx X. Xxxxxx, Xx.
--------------------------------------------
Name: Xxxxx X. Xxxxxx, Xx.
Title: President
