ASSET PURCHASE AND SALE AGREEMENT
between
IRON MOUNTAIN RECORDS MANAGEMENT, INC.
as Buyer
RECORDS RETENTION/FILESAFE
as Seller
AS OF AUGUST 20, 1997
TABLE OF CONTENTS
ARTICLE I...................................................................1
DEFINITIONS........................................................1
ARTICLE II..................................................................4
SALE AND PURCHASE OF SUBJECT ASSETS................................4
ARTICLE III.................................................................7
REPRESENTATIONS AND WARRANTIES OF SELLER...........................7
ARTICLE IV.................................................................15
REPRESENTATIONS AND WARRANTIES OF BUYER...........................15
ARTICLE V..................................................................16
PRE-CLOSING AGREEMENTS............................................16
ARTICLE VI.................................................................19
CONDITIONS PRECEDENT TO OBLIGATION OF BUYER TO CLOSE..............19
ARTICLE VII................................................................22
CONDITIONS PRECEDENT TO OBLIGATION OF SELLER......................22
ARTICLE VIII...............................................................23
THE CLOSING.......................................................23
ARTICLE IX.................................................................24
POST-CLOSING MATTERS..............................................24
ARTICLE X..................................................................25
TERMINATION.......................................................25
ARTICLE XI.................................................................26
INDEMNIFICATION...................................................26
ARTICLE XII................................................................31
MISCELLANEOUS PROVISIONS..........................................31
TABLE OF CONTENTS
(cont'd.)
Schedule 1.7 Items of Excluded Personal Property
Schedule 1.8 General Ledger entries for Funded Indebtedness
Schedule 1.11 Owned Premises Legal Description
Schedule 1.12 Principal Items of Owned Tangible Assets and
Software Licenses
Schedule 2.3 Allocation of Purchase Price
Schedule 3.3 Compliance with Other Instruments
Schedule 3.4 Authorizations
Schedule 3.5 Encumbrances
Schedule 3.6 Contracts
Schedule 3.8 Litigation; Claims
Schedule 3.9 Permits, Licenses
Schedule 3.10 List of Environmental Reports
Schedule 3.11 Encumbrances on Leased Premises
Schedule 3.13 Financial Statement Exceptions
Schedule 3.14 Benefit Plans
Schedule 3.16 Customers/Seeking Bids
Schedule 3.18 Employee Information
Schedule 3.24 Transactions with Interested Persons
Schedule 3.25 Exceptions to locatable records
Schedule 3.26 Exceptions to prompt shelving/filing
Exhibit 2.2 Post-Closing Escrow Agreement
Exhibit 6.3(i)-(iv) Noncompetition and Confidentiality Agreement
Exhibit 6.11 Opinion of Seller's Counsel
Exhibit 7.4 Opinion of Buyer's General Counsel
ASSET PURCHASE AND SALE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 20th day of August, 1997
by and between Iron Mountain Records Management, Inc., a Delaware corporation
("Buyer"), and Records Retention/Filesafe, a California limited partnership
("Seller").
RECITALS
A. Seller is engaged in the business of providing records management
and storage services in the metropolitan San Francisco, Oakland, the "Silicon
Valley" area and metropolitan Los Angeles, California under the trade name
"Filesafe".
B. Buyer desires to purchase, and Seller desires to sell, substantially
all the assets of the Business (as hereinafter defined) on the terms and subject
to the conditions contained in this Agreement.
In consideration of the mutual covenants and agreements set forth
herein, and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer, intending to be
legally bound, agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, certain terms used in this Agreement and not
otherwise defined herein shall have the meanings designated below:
Section 1.1 Agreement means all or any part of this Agreement, including
schedules, exhibits, and appendices, as any of the foregoing may be amended,
modified or supplemented in writing from time to time.
Section 1.2 Business means the paper and magnetic media records management and
storage business and related paper shredding business conducted by Seller in
metropolitan San Francisco, Oakland, the "Silicon Valley" area and metropolitan
Los Angeles, California under the trade name "Filesafe".
Section 1.3 Closing means the occasion upon which the transactions contemplated
by this Agreement are carried out by the delivery of documents, payment of funds
and other actions contemplated herein, as described in Article VIII.
Section 1.4 Closing Date shall be October 1, 1997, or such other date as the
parties may agree.
Section 1.5 Effective Time means 12:01 a.m. in San Francisco, California on the
Closing Date.
Section 1.6 Encumbrances means any and all encumbrances, mortgages, deeds of
trust, security interests, liens, Taxes, claims, liabilities, options,
commitments, charges, restrictions or other obligations of whatsoever kind,
quantity or nature, whether accrued, absolute, contingent or otherwise, which
affect title to the Subject Assets.
Section 1.7 Excluded Assets means (i) Seller's partnership, tax and financial
records not relevant to the operation of the Business or preparation of tax
returns related to the Business, (ii) Seller's interest in the Versatrac and
Source File businesses, including Source File's interest in the storage contract
between Seller and Source File dated May 9, 1997; (iii) the payments and
distributions that Seller is permitted to make pursuant to Section 2.2(a)(ii)
hereof; (iv) all claims, rights and causes of action whatsoever, whether under
insurance policies, claims for contribution or indemnification, whether as a
matter of tort, contract or otherwise, from other parties which relate to any of
the Excluded Assets or liabilities of Seller not expressly assumed by Buyer; and
(v) certain items of personal property and software licenses related to the
Versatrac and Source File businesses which are listed on Schedule 1.7.
Section 1.8 Funded Indebtedness means, with respect to Seller, liabilities in
respect of borrowed money, capitalized leases and other funded obligations with
respect to which Seller pays interest, but shall not include trade accounts
payable. Schedule 1.8 identifies items of Funded Indebtedness on Seller's
general ledger as of December 31, 1996.
Section 1.9 Knowledge or the phrases "to the knowledge of" or "to the best of
Seller's knowledge", when used in reference to Seller, means (except as
otherwise stated herein) matters actually known by Xxxxxx X.
Xxxxxxxxx, Xxxxxx Xxxxxx or Xxxxxxx Xxxxx after reasonable investigation.
Section 1.10 Leased Premises means the following premises occupied by Seller in
which the Business is operated:
(i) the building at 00000 Xxxxx Xxxx Xxxxxx, Xxxxxx (Gardena),
California owned by Xxxxxx X. Xxxx, and leased to Records Retention/Filesafe or
nominee pursuant to a lease dated December 3, 1993, as amended by a Second
Addendum dated January 31, 1994 and an Amendment dated February 4, 1994;
(ii) Units E, F and G, constituting approximately 44,054 square
feet of space, of the building located at 000 Xxxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxxxxx, owned by The Realty Associates Fund III and leased pursuant to a
lease dated February 4, 1997 to Filesafe, Inc.; and
(iii) the building at 00 Xxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx,
owned by Crisp Building, Inc. and leased to Filesafe, Inc. pursuant to a lease
dated October 16, 1985, which lease has been extended to expire on August 31,
2005.
The leases for the Leased Premises are referred to herein collectively
as the "Leases", and each individually as a "Lease".
Section 1.11 Owned Premises means the land, buildings and other
improvements at the following addresses:
(i) 0000 Xxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx; and
(ii) Madrone Way, Felton, California.
The legal description of each of the Owned Premises is set forth in Schedule
1.11.
2
Section 1.12 Subject Assets means all of Seller's assets and properties of
whatever kind, character and description, and whether tangible, intangible,
real, personal or mixed, and wherever located, excluding the Excluded Assets.
The Subject Assets, which assets constitute all the assets, property and
equipment owned by Seller or any subsidiary of Seller and regularly used in the
Business, include the following Tangible Assets and Interests:
A. Tangible Assets means all personal tangible property used in the
Business, such as inventory; computers, computer peripherals and maintenance
manuals; word processors; typewriters and other business machines; automobiles,
trucks and other vehicles; warehouse equipment; lifts; pallet jacks; racking and
shelving; shredders; furniture, furnishings, and office equipment; and supplies.
Principal items of Tangible Assets, including vehicles, are listed on Schedule
1.12.
B. Interests means all intangible property used in the Business to the
extent assignable, including rights, privileges, benefits and interests under
all contracts and agreements, together with consents, licenses, files and
correspondence related thereto; licensee rights in computer software used or
useful in the Business, including the software licenses listed in Schedule 1.12;
governmental permits, including certificates of occupancy; agreements, leases
and arrangements with respect to intangible or tangible property or interests
therein; confidentiality and non-competition agreements with employees and third
parties, whether oral or written; consents; agreements with suppliers and
customers; deposits held by contract parties, including any lease deposits;
rights to refunds; prepaid expenses; accounts receivable; equity interests held
by Seller in any business entity in any form of records management business;
Seller's rights in and to the trade names "Filesafe" and "Records Retention";
all financial and operating records related to the Business, excluding Seller's
income tax records; and any sales agent or sales affiliate agreements used in
connection with the Business.
Buyer acknowledges that where an Interest is represented by a contract
right, Buyer's failure to assume such contract may mean that the Interest
associated therewith will not be available to Buyer.
Section 1.13 Taxes means any and all taxes, sums or amounts assessed or
assessable, levied and due by any federal, state or county or other local
governmental authority or agency, including without limitation, real and
personal property taxes, income taxes, whether measured by gross or net income
or profit, franchise, excise, sales and use taxes, employee withholding, social
security, unemployment taxes and any other taxes required to be paid by Seller,
including interest and penalties in respect thereof whether disputed or not, and
whether accrued, contingent, due, absolute, deferred, unknown or other, together
with any and all penalties, interests and additions to all such taxes, sums or
amounts.
(ARTICLE II COMMENCES ON THE NEXT PAGE)
3
ARTICLE II
SALE AND PURCHASE OF SUBJECT ASSETS
Section 2.1 Sale and Transfer. Subject to the terms and conditions set forth in
this Agreement, Seller shall sell, convey, transfer, assign and deliver to
Buyer, and Buyer shall purchase and receive from Seller, at the Closing, all of
the Subject Assets.
Section 2.2 Purchase Price; Assumption of Certain Obligations.
(a) Purchase Price. The Purchase Price to be paid by Buyer for all the
Subject Assets shall be Forty-two Million Dollars ($42,000,000), plus assumption
of all Funded Indebtedness, trade accounts payable, deferred revenue and other
accrued expenses of Seller as of the Effective Time, provided that Buyer's
assumption of such obligations of Seller shall be limited as follows:
(i) Seller shall have incurred no Funded Indebtedness in addition
to that reflected on Seller's balance sheet as of December 31, 1996, and no
trade accounts payable (other than customary trade accounts payable incurred in
the ordinary course of business) since December 31, 1996, and Seller shall have
operated the Business in the ordinary course between December 31, 1996 and the
Effective Time;
(ii) Seller shall have not made any cash distributions to or
other payments to the General Partners or the limited partners of Seller
(including payments in the form of bonuses, loans or distributions of profit or
gain) between December 31, 1996 and the Effective Time other than distributions
which do not exceed Seller's net income for such period, determined on the basis
of generally accepted accounting principles ("GAAP"), applied in a manner
consistent with Seller's financial statements as of and for the period ended
December 31, 1996; and
(iii) the sum of Funded Indebtedness, less cash as of the
Effective Time shall not exceed the sum of Funded Indebtedness, less cash at
December 31, 1996.
If Seller's Funded Indebtedness less cash exceeds what it would
otherwise be if Seller had complied with the foregoing, Buyer shall not assume
or be liable for such excess, which shall be the sole responsibility of Seller.
Notwithstanding any other provision of this Section 2.2(a), Buyer shall
not assume or pay for, and there shall be excluded from liabilities assumed by
Buyer, (i) all attorneys' and accountants fees incurred by Seller in connection
with the transactions contemplated hereby, all brokers' or finders' fees
incurred by Seller in connection with this Agreement and similar transaction
expenses all of which shall be paid by Seller, (ii) any contingent liabilities
of Seller, and (iii) any liabilities of Seller which are, or would ordinarily
be, covered by policies of comprehensive general liability insurance or
automobile liability insurance including any deductibles or fronting
arrangements related to such insurance. If and to the extent Seller has paid, or
prior to the Closing shall pay, any attorneys', accountants', brokers' or
similar fees related to the transactions contemplated hereby, Buyer shall
receive a credit against the purchase price in the aggregate amount of such
payments except to the extent such payments are or will be made from cash
otherwise available for distribution to the partners of Seller pursuant to
Section 2.2(a)(ii) above.
(b) Payment of Purchase Price. The Purchase Price, less Five Million
Dollars ($5,000,000), shall be payable to Seller at the Closing by wire transfer
of immediately available
4
funds to such account as Seller shall designate in writing not less than two
business days prior to the Closing Date. Five Million Dollars of the Purchase
Price shall be paid in escrow to Bank of the West or such other escrow agent as
may be acceptable to Buyer and Seller as escrow agent under a Post-Closing
Escrow Agreement in the form of Exhibit 2.2 hereto, to be held and disbursed as
provided therein. Pursuant to the Post-Closing Escrow Agreement, $5,000,000
shall be held in escrow until the date which is six months after the Closing
Date, when the amount held in escrow will be reduced to $2,500,000, provided
that the aggregate of claims made by or paid to Indemnified Buyer Parties (as
defined in Section 11.3 hereof) on such date shall be less than $2,500,000.
Buyer shall retire assumed Funded Indebtedness of Seller on the Closing
Date. Buyer shall pay assumed trade payables within the periods Seller
customarily paid trade accounts payable.
(c) Assumption of Certain Contracts and Other Obligations. In addition
to Funded Indebtedness and trade accounts payable, Buyer shall assume and
perform the following obligations of Seller:
(i) all obligations of Seller arising or accruing after the
Effective Time in respect of Seller's contracts, agreements and arrangements
with its customers providing for storage of business records at customary rates;
(ii) Seller's obligations under the vehicle and equipment leases
listed on Schedule 3.5;
(iii) miscellaneous contracts for goods and services to be
delivered or performed after the Effective Time, provided that any of such
contracts which require payment of more than $10,000 or cannot be cancelled on
sixty days' notice or less shall have been identified on a Schedule hereto;
(iv) Seller's obligations under the Leases;
(v) other executory agreements or arrangements relating to the
ongoing operations of the Business in the ordinary course, provided that any of
such agreements or arrangements which require payment of more than $10,000 or
cannot be cancelled on sixty days' notice or less shall have been identified on
a Schedule hereto or in the preliminary title reports for the Owned Premises
described in Section 3.11;
(vi) real and personal property taxes with respect to the Subject
Assets which are not delinquent; and
(vii) accrued salary, vacation, sick leave and other benefits for
Seller's employees of the Business, excluding severance benefits payable under
Seller's severance policy for senior management employees which are payable to
Xxxxxx X. Xxxxxxxxx, Xxxxxxx Xxxxx, Xxxxxx Xxxxxx and Xxxxx XxXxxx, which
excluded obligations shall remain the obligations of Seller. Notwithstanding the
foregoing, Buyer will be responsible for "normal" severance benefits payable to
Xxxxx XxXxxx.
5
Notwithstanding any other provision to the contrary in this Agreement,
Buyer shall not be required by this Agreement to assume any contingent
obligations or claims against Seller related to the operation of the Business
prior to the Effective Time.
Section 2.3 Allocation. The Purchase Price shall be allocated among the Subject
Assets as set forth on Schedule 2.3, and the parties shall report the
transactions contemplated hereby in a manner consistent with such allocation for
tax purposes.
Section 2.4 Confirmation of Assumed Liabilities. Prior to the Closing Date Buyer
and Seller shall prepare an estimated statement of Funded Indebtedness and trade
accounts payable, deferred revenues and other accrued expenses of Seller to be
assumed by Buyer as of the Effective Time. During a period of 60 days after the
Closing Date Buyer shall have the right to review or audit Seller's operations
with respect to the period from January 1, 1997 through the Closing Date to
confirm that the amount of Funded Indebtedness, trade accounts payable, deferred
revenue and other accrued expenses of Seller assumed by Buyer as of the
Effective Time (the "Assumed Liabilities"); and the amount of cash distributions
made by Seller to its partners during such period, are consistent with the
limitations in respect of such assumed obligations and distributions set forth
in Section 2.2(a).
If Buyer tentatively determines that the Assumed Liabilities are inconsistent
with the limitations then set forth in Section 2.2(a), and if the aggregate of
such adjustments is greater than $25,000, Buyer shall so notify Seller in
writing ("Buyer's Section 2.4 Notice"). Such notice will state the amount of any
proposed adjustment deriving from such inconsistency (which adjustment shall
disregard the $25,000 threshold). If requested by Seller, Buyer will provide
information in reasonable detail describing the basis for Buyer's determination.
If Seller has any objections to Buyer's Section 2.4 Notice, Seller will deliver
a detailed statement of its objections to Buyer's Section 2.4 Notice within
thirty days after Buyer's receipt thereof. The parties will thereafter confer
and attempt to resolve any disagreement with respect to the Section 2.4 Notice.
If the parties are unable to reach agreement on any matters contained in the
Section 2.4 Notice within thirty days after receipt of Seller's objection, Buyer
and Seller shall select an accounting firm mutually acceptable to them to
resolve any unresolved issues. If Buyer and Seller are unable to agree on the
choice of an accounting firm, they will select a nationally recognized
accounting firm (other than Xxxxxx Xxxxxxxx LLP) by lot. Such accounting firm
shall make a final determination as to any matters raised by the Section 2.4
Notice then unresolved, and such determination, expressed in writing, shall be
final and binding on the parties.
Buyer and Seller shall be responsible for the fees of the accounting firm as
follows:
(a) if the accounting firm resolves all of the remaining
objections in favor of Buyer, Seller will be responsible for all of the fees and
expenses of the accounting firm;
(b) if the accounting firm resolves all of the remaining
objections in favor of Seller, Buyer will be responsible for all of the fees and
expenses of the accounting firm; and
(c) if the accounting firm resolves some of the remaining
objections in favor of Buyer and the rest of the remaining objections in favor
of Seller, Seller and Buyer shall share in such fees and expenses in proportion
to the dollar value of the issues decided in favor of each.
(ARTICLE III COMMENCES ON THE NEXT PAGE)
6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows as of the date hereof:
Section 3.1 Organization and Good Standing. Seller is a limited partnership duly
organized and validly existing under the laws of the State of California, and
has all requisite power and authority to own, operate, sell and lease its
properties and to carry on its business as presently conducted. Seller has all
requisite power and authority to execute and deliver, and perform its
obligations under, this Agreement. Seller is not required by the nature or
location of the Subject Assets to be qualified to do business as a foreign
limited partnership in any jurisdiction where failure to so qualify would have a
material adverse impact on the Business.
Section 3.2 Authorization. The execution and delivery of this Agreement and
performance by Seller of its obligations hereunder, and all transactions
contemplated hereby, have been duly and validly authorized by all necessary
action on the part of Seller, the general partners of Seller and the limited
partners of Seller. This Agreement has been, and the other agreements and
documents required to be delivered by Seller, in accordance with the provisions
hereof (the "Seller's Documents") will be, duly executed and delivered on behalf
of Seller, by one or more of the general partners of Seller as duly authorized
general partners of Seller; and this Agreement constitutes, and the Seller's
Documents when executed and delivered will constitute, the valid and binding
obligations of Seller, enforceable in accordance with their respective terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws from time to time in effect affecting creditor's
rights generally and by legal and equitable limitations on the availability of
specific remedies (the "Enforceability Limits").
Section 3.3 Compliance With Other Instruments. Except as set forth on Schedule
3.3, neither the execution and delivery by Seller of this Agreement and the
Seller's Documents, nor the consummation by Seller of the transactions
contemplated hereby and thereby, will, with or without the giving of notice or
passage of time, or both, be contrary to or violate, breach, or constitute a
default under, or permit the termination or acceleration of maturity of, or
result in the imposition of any lien, claim or encumbrance upon any property or
asset of Seller pursuant to any provision of, any note, bond, indenture,
mortgage, deed of trust, evidence of indebtedness or lease agreement, other
agreement or instrument or any judgment, order, injunction or decree by which
Seller is bound, to which Seller is a party, or to which the assets of Seller is
subject except for (i) such of the foregoing which would not result in a
material adverse effect on the Business taken as a whole; and (ii) the consents
of any customers pursuant to their contracts; nor is the effectiveness or
enforceability of this Agreement or such other documents adversely affected by
any provision of the agreement of limited partnership or certificate of limited
partnership of Seller, as both are presently in effect.
Section 3.4 No Governmental or Other Authorization Required. No authorization or
approval of, or filing with, any governmental agency, authority or other body or
any other third persons will be required in connection with Seller's execution
and delivery of this Agreement or the consummation by either of the transactions
contemplated hereby and thereby other than (i) as required by the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) as set forth in Schedules 3.3 and 3.4, (iii) the consent of any
customers pursuant to their contracts, (iv) the consent of any suppliers of
goods or services to Seller whose contracts with Seller
7
are assumed by Buyer, and (v) the consent of the general partners and limited
partners of Seller (which have previously been obtained).
Section 3.5 Title to Subject Assets; Sufficiency. Seller has, or at Closing will
have, good and marketable title to all the Tangible Assets and Interests,
excluding the Leased Premises, the Owned Premises and those Tangible Assets or
Interests leased or licensed by Seller as disclosed in one or more of the
schedules to this Agreement, free and clear of all Encumbrances except as set
forth on Schedule 3.5, which Schedule identifies leases for vehicles and
equipment as well as Encumbrances, except (i) liens securing Funded Indebtedness
reflected in Seller's December 31, 1996 balance sheet; (ii) liens for current
taxes not yet due and payable; and (iii) such imperfections of title 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 the operation of the Business.
Seller is not a party to, nor are the Subject Assets subject to, any judgment,
judicial order, writ, injunction or decree that materially adversely affects the
Subject Assets or the use thereof by Seller. The Subject Assets include all
assets regularly used by Seller in the operation of the Business.
Section 3.6 Contracts and Other Interests.
(a) Except as disclosed on Schedule 3.6, Part A, all material
contracts (including all customer contracts) are in full force and effect, valid
and enforceable in accordance with their respective terms against Seller and, to
Seller's knowledge, against the other parties thereto, and to Seller's knowledge
(after inquiry of those employees of Seller who because of their position or
responsibility are in a position to be aware of any such defaults), there are no
existing defaults of Seller or events of default that, with the giving of notice
or lapse of time, or both, would constitute defaults of Seller under any
material contracts, nor are material amendments pending with respect to any
material contracts.
(b) Except as set forth on Schedule 3.6, Part B, all of Seller's
customers have executed storage and service agreements with Seller pursuant to
which Seller's liability in the event of the loss or destruction of, or damage
to, stored material is limited to $2.00 per carton or other storage unit.
(c) Schedule 3.6, Part C lists Seller's twenty largest paper
customers and ten largest magnetic media customers (measured by storage revenue
during the six-month period ended June 30, 1997). Seller has delivered a copy of
its contract with each such customer to Buyer.
(d) Except as set forth in Schedule 3.6, Part D, Seller has no
contracts with customers under which Seller has agreed to perform move-in
services at no or reduced cost, or to pay permanent removal charges from such
customer's current storage facility, except any such contracts wherein Seller
has completed performance of such move-in services or payment.
(e) Seller has no oral agreements with customers which require
Seller to provide storage or services at no charge or at rates significantly
below the average rates for such services set forth in Seller's written customer
contracts, except for immaterial discounts and/or free services provided as
incentives to certain accounts.
8
(f) Schedule 3.6, Part F, lists all of Seller's major customers
which have notified Seller either orally or in writing that such customers
intend to terminate their business relationship with Seller or to materially
reduce their volume of business with Seller since January 1, 1996. For purposes
of this Section 3.6(f), "major customers" shall mean customers to which Seller's
xxxxxxxx for the six months ended June 30, 1997 exceeded $50,000.
Section 3.7 Taxes. Seller has filed all federal, state and local income tax
returns, and Seller has filed all excise or franchise tax returns, real estate
and personal property tax returns, sales and use tax returns and other tax
returns (including returns in respect of withholding and unemployment tax),
required to be filed by it and has paid all taxes owing by it, including any
interest and penalties thereon, except taxes which have not yet accrued (or,
with respect to Owned Premises, taxes not delinquent) or otherwise become due
for which adequate provision has been made.
Section 3.8 Litigation; Claims; Defaults. Except as set forth in Schedule 3.8,
Seller has not been served with any currently effective summons or complaint and
there is no action or suit, equitable or legal, to which Seller is a party, nor
any administrative, arbitration or other proceeding pending or, to Seller's
knowledge, threatened against Seller in respect of the Subject Assets or the
Business. Except as set forth on Schedule 3.8, during the past six months Seller
has not received any material written assertions from customers of the Business
to the effect that their materials stored with Seller have been lost, damaged or
inappropriately destroyed or that such customers are being billed inaccurately
for storage of materials or records. Buyer shall not be deemed to have assumed
responsibility for any matter disclosed on Schedule 3.8 by reason of such
disclosure. Seller is not in default with respect to any currently effective
judgment, order, writ, injunction, decree, demand or assessment issued by any
court or of any federal, state, municipal or other governmental agency, board,
commission, bureau, instrumentality or department and applicable to Seller.
Seller is not charged or to Seller's knowledge (without investigation other than
inquiry of employees of Seller whose responsibilities place them in a position
to be aware of such matters) threatened with or under investigation with respect
to, any violation of any provision of any federal, state, municipal or other law
or administrative rule or regulation with respect to the Subject Assets or the
Business.
Section 3.9 Compliance with Laws. To Seller's knowledge (after inquiry by Xxxxxx
X. Xxxxxxxxx, Xxxxxx Xxxxxx or Xxxxxxx Xxxxx, of employees of Seller whose
position or responsibilities place them in a position to be aware of such
matters), Seller has complied, and through the Closing Seller will comply, in
all material respects with federal, state and local laws, rules and regulations
applicable to the Business and the Subject Assets, and Seller has received no
notice that it is not in such compliance with such laws, rules and regulations.
Seller possesses such certificates, authorities or permits issued by the
appropriate local, state or federal regulatory agencies or bodies as are
necessary to conduct the Business in all material respects, all of which are
listed on Schedule 3.9 and copies of which have been delivered to Buyer; and
Seller has not received any written notice of proceedings relating to the
revocation or modification of any such certificate, authority or permit.
Section 3.10 Certain Environmental Matters. Except as disclosed in the surveys
and reports disclosed in Schedule 3.10, to Seller's knowledge, Seller is
operating and has operated the Business in the Leased Premises and the Owned
Premises in substantially full compliance with all applicable local, state and
federal environmental laws, regulations and ordinances, including, but not
limited to, the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. ss.ss.9601 et seq. ("CERCLA"), the Resource
Conservation and Recovery Act, 42 U.S.C. ss.ss.6901 et seq., the Clean Water
Act, 33 U.S.C. ss.ss.1251 et seq., and the environmental laws and regulations of
9
the State of California as such statute or regulation has been amended from time
to time ("Environmental Laws and Regulations"). Seller has not knowingly
accepted for storage, and to the best of its knowledge does not store, any
nitrate film or any hazardous substance or hazardous material in the Leased
Premises or the Owned Premises except for de minimis amounts used in the
ordinary course of business. Seller has never knowingly caused the release from
the Leased Premises or the Owned Premises of an amount of any hazardous
substance or hazardous material into the environment which release would
constitute a violation of any Environmental Laws and Regulations. For purposes
of this paragraph, "hazardous substance", "release" and "environment" shall have
the same meanings as that term is defined by Xxxxxxx 000 xx XXXXXX, 00 X.X.X.
xx.0000, and "hazardous material" shall have the same meaning as those terms are
defined by Environmental Laws and Regulations. Seller does not own, lease, rent
or otherwise utilize any underground storage tanks in connection with the
Business, and, to the best of Seller's knowledge, there are no waste tanks,
containers, cylinders, drums or cans buried, stored or deposited in or at the
Leased Premises or the Owned Premises. Except as disclosed in the surveys and
reports disclosed in Schedule 3.10, and except for the presence of asbestos in
the Leased Premises at 00 Xxxxx Xxxxxx, Xxx Xxxxxxxxx, to the best of Seller's
knowledge (without having conducted an investigation), the Leased Premises and
the Owned Premises do not contain (i) any asbestos, (ii) any polychlorinated
biphenyl (PCB) substances or (iii) any waste petroleum products, and Seller has
received no notices from any governmental agency to such effect. Seller has
delivered to Buyer copies of all environmental surveys in Seller's possession
related to the Leased Premises and the Owned Premises, all of which are
identified in Schedule 3.10.
Section 3.11 Real Property. The Leased Premises and the Owned Premises
constitute all of the real property that Seller owns or leases. With respect to
each of the Owned Premises, except as disclosed in Schedule 3.11:
(a) Seller has title to each parcel of real property constituting part
of the Owned Premises as described in the following preliminary title reports:
(i) with respect to 0000 Xxxx Xxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxx, Seller's title is subject to the matters disclosed in that certain
Preliminary Title Report issued by Chicago Title Insurance Company dated as of
July 11, 1997; and
(ii) with respect to the Madrone Way, Felton, California
property, Seller's title is subject to the matters disclosed in that certain
Preliminary Title Report issued by First American Title Insurance Company dated
as of July 21, 1997;
(b) Seller has received no notices regarding pending condemnation
proceedings, lawsuits, or administrative actions relating to the Owned Premises
or other matters affecting materially and adversely the current use, occupancy
or value thereof nor, to the knowledge of Seller, are any such actions
threatened;
(c) to Seller's knowledge,, the buildings and improvements are located
within the boundary lines of the described parcels of land, are not in violation
of applicable setback requirements, zoning laws, and ordinances (and none of the
properties or buildings or improvements thereon are subject to "permitted
non-conforming use" or "permitted non-conforming structure" classifications),
and do not encroach on any easement which may burden the land, the land does not
serve any adjoining property for any purpose inconsistent with the use of the
land, and the property is not located within any flood plain or subject to any
similar
10
type restriction for which any permits or licenses necessary to the use thereof
have not been obtained, and Seller has received no notice as to any such
matters;
(d) to Seller's knowledge, all facilities have received all approvals
of governmental authorities (including licenses and permits) required in
connection with the ownership or operation thereof, are in compliance with
applicable building, fire, electrical and similar codes and have been operated
and maintained in accordance with applicable laws, rules, and regulations, and
Seller has received no notice to the effect that Seller lacks any approvals or
that the facilities are not so in compliance;
(e) there are no leases, subleases, licenses, concessions, or other
agreements, written or oral, granting to any party or parties the right of use
or occupancy of any portion of the real property;
(f) there are no outstanding options or rights of first refusal to
purchase the real property, or any portion thereof or interest therein;
(g) there are no parties (other than Seller) in possession of either
parcel of real property; and
(h) all facilities located on the real property are supplied with
utilities and other services necessary for the operation of such facilities,
including gas, electricity, water, telephone, sanitary sewer, and storm sewer,
all of which services are adequate in accordance with all applicable laws,
ordinances, rules, and regulations and are provided via public roads or via
permanent, irrevocable, appurtenant easements benefiting the parcel of real
property.
With respect to each of the Leased Premises, except as disclosed in Schedule
3.11:
(a) Seller has delivered to Buyer a complete and correct copy of the
Lease related to such Leased Premises;
(b) the Lease is legal, valid, binding upon Seller (and to its
knowledge, the Lessor), enforceable (subject to the Enforceability Limits), and
in full force and effect;
(c) upon obtaining the consents described in Schedules 3.3 and 3.4, the
Lease (including any option to extend, expand or purchase, and any right of
first refusal or right of first offer) will continue to be legal, valid,
binding, enforceable, and in full force and effect to the extent represented in
the immediately preceding subparagraph (b) on identical terms following the
consummation of the transactions contemplated hereby (including the assignments
and assumptions referred to in Section 6.4);
(d) to Seller's knowledge, no party to the Lease is in breach or
default, and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;
(e) no party to the Lease has repudiated any provision thereof;
(f) there are no disputes, oral agreements or forbearance programs in
effect as to the Lease;
11
(g) Seller has not assigned, transferred, conveyed, mortgaged, deeded
in trust, or encumbered any interest in the leasehold;
(h) to the best of Seller's knowledge, all facilities leased thereunder
(including alterations constructed by Seller and shelving installed by Seller)
have received all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and have been
operated and maintained in accordance with applicable laws, rules, and
regulations; and
(i) all facilities leased thereunder are supplied with utilities and
other services necessary for the operation of said facilities.
Section 3.12 No Inconsistent Agreements. Seller has not entered into any letter
of intent, preliminary agreement or other agreement, written or oral, with any
other party which would be inconsistent with the terms of this Agreement.
Section 3.13 Financial Statements. Seller has previously delivered to Buyer
Seller's (i) audited annual income and expense statement and balance sheet for
the year ended December 31, 1996, (ii) reviewed annual income and expense
statement and balance sheet for the year ended December 31, 1995 and (iii)
unaudited statements for the six months ended June 30, 1997 (the "Financial
Statements"). The Financial Statements are true, correct and complete in all
material respects for the periods covered and fairly present the results of
operation of the Business for the periods covered. Except as described in
Schedule 3.13, the Financial Statements for the years ended December 31, 1996
and 1995 were prepared pursuant to GAAP, consistently applied; the Financial
Statements for the six months ended June 30, 1997 were prepared on a basis
consistent with the Financial Statements for the year ended December 31, 1996,
except for accruals normally performed at year-end, such as bonuses and
profit-sharing, and other customary year-end adjustments and other adjustments
required by GAAP, none of which are material, either individually or in the
aggregate.
Section 3.14 ERISA Plans. Schedule 3.14 lists the Employee Pension Benefit Plans
or Employee Welfare Benefit Plans, as each term is defined in the Employee
Retirement Income Security Act of 1974, maintained by Seller for the employees
of the Business.
Section 3.15 Condition of Subject Assets. Except as disclosed in Schedule 3.8,
all the material Tangible Assets are at present, and will be as of the Closing
Date, in good operating condition, normal wear and tear excepted, and Seller has
not received written notice of any violation of the Occupational Safety and
Health Act with respect thereto, or rules and regulations issued thereunder, and
to the best of Seller's knowledge, Seller is not in violation of such Act, rules
or regulations.
Section 3.16 Customers Seeking Bids. Except as otherwise stated in Schedule
3.16, to Seller's knowledge (without investigation other than inquiry of
employees of Seller whose responsibilities place them in a position to be aware
of such matters), Seller has no customers to which xxxxxxxx for the six months
ended June 30, 1997 exceeded $50,000 whose storage business is or has within 90
days prior to the date of this Agreement been the subject of competitive bidding
procedures.
Section 3.17 No Material Undisclosed Liabilities. Except as described in this
Agreement or reflected in the Financial Statements, there is no liability or
obligation of Seller related to the
12
operation of the Business, whether accrued, absolute or contingent, other than
liabilities and obligations that have been incurred in the ordinary course of
business consistent with past practice since December 31, 1996 and are not
material in the aggregate to the Business.
Section 3.18 Personnel Information. Schedule 3.18 lists the names of all full-
and part-time employees of Seller (or leased employees utilized by Seller) who
perform services for the Business and sets forth a brief job description or
title and compensation for each such person. Schedule 3.18 also sets forth a
list of all written and oral employment and noncompetition agreements with
Seller's employees employed in the Business, excluding Seller's employment
agreement with Xxxxxx X. Xxxxxxxxx.
Section 3.19 Patents, Trademarks, Etc. Except for the trade names "Filesafe" and
"Records Retention", which are unregistered trades name used by Seller, Seller
has no trademarks, service marks, trade names, copyrights, computer programs or
programs rights, patents, licenses or other similar intangible property rights
and interests which it uses in connection with the Business.
Section 3.20 Intellectual Property. Except for possible unauthorized copies of
generally available software which are being used by Seller's employees (none of
which Seller is aware), to Seller's knowledge, Seller owns or has the right to
use pursuant to license, sublicense or other agreement all computer programs,
software, customer information, technology and know-how necessary for the
operation of the Business as presently conducted. Each item of such intellectual
property owned or used by Seller prior to the closing will be available to Buyer
on the same terms.
Section 3.21 Labor Relations. During the past three years there has not been,
and there is not now, any strike, labor dispute, slow down, stoppage or other
material interference with or impairment by labor of the business of Seller
pending or, to the knowledge of Seller (without investigation), threatened or
contemplated against or directly affecting the Business. Seller's employees are
not represented by any labor or trade union, nor, to the knowledge of Seller,
has there been any attempt to organize Seller's employees during the three-year
period prior to the date hereof.
Section 3.22 Insurance. There is in force comprehensive general liability and
casualty insurance for the Subject Assets and the Business which, in the
reasonable opinion of Seller, is appropriate and adequate coverage for such
assets and operations.
Section 3.23 Trade Secrets and Customer Lists. Seller has received no written
claims challenging its right to use any trade secrets, customer lists,
intellectual property and operating methods required for or incident to the
operation of the Business. To the best of its knowledge (without investigation),
Seller is not using or in any way making use of any confidential information or
trade secrets of any third party, including without limitation, a former
employer of any present or past employee or Seller.
Section 3.24 Transactions with Interested Persons. Except as set forth on
Schedule 3.24, Seller is not an affiliate of any customer, competitor or
supplier of the Business, or any organization which has a material contract or
arrangement with the Business.
Section 3.25 Records Services and Storage. Except as described in Schedule 3.25,
substantially all items received and stored by Seller on behalf of customers
(singly or in the aggregate) are held in storage by Seller and are locatable and
accessible without extraordinary effort except for items
13
withdrawn or destroyed at the respective customer's request. The stored items
for which customers are billed exist and, in all material respects, can be
accounted for.
Section 3.26 Filing; Destructions, Etc. Except as described in Schedule 3.26,
Seller has shelved or refiled substantially all records received for filing or
refiling more than two business days prior to the date hereof. Seller has
completed substantially all destructions and other inventory and special-service
projects for which Seller has invoiced, recorded as revenue and/or received
payment.
Section 3.27 Business in Ordinary Course. From December 31, 1996 until the date
hereof, except for the distribution of the Source File business, the Business
has been conducted in the ordinary course in accordance with past practice.
Without limiting the generality of the foregoing, Seller has not, since
December 31, 1996
(i) mortgaged or pledged any of its property or assets;
(ii) sold, assigned, transferred or waived rights with respect to
any material part of the Subject Assets (except in the ordinary course of
business);
(iii) entered into or adopted any employee benefit plan or any
employment or severance agreement, or increased in any manner the compensation
or fringe benefits of its personnel or employees (except in the ordinary course
of business and consistent with past practice or pursuant to pre-existing
agreements or as required by law);
(iv) changed its billing, accounts payable, collections or other
cash management practices;
(v) made any payments or distributions to its partners in excess
of net income or paid to its employees any bonuses or special cash payments in
excess of regular compensation; or
(vi) agreed to take any of the foregoing actions.
Section 3.28 No Material Adverse Change. There has been no material adverse
change in the Subject Assets (including, without limitation, loss of or damage
to a material amount or part of the Subject Assets) or the results of operation
(including operating cash flow), other than possible industry-wide changes, as
to which Seller makes no representation, between December 31, 1996 and the date
hereof.
Section 3.29 Funded Indebtedness. The terms of the Funded Indebtedness do not
require, or permit the holder thereof to require, a prepayment premium or
penalty upon payment in full of such indebtedness prior to its stated maturity.
(ARTICLE IV COMMENCES ON THE NEXT PAGE)
14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
Section 4.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer possesses all requisite corporate power and authority to own,
operate and lease its properties and carry on its business, and to execute and
deliver, and perform its obligations under, this Agreement. Buyer is duly
qualified to do business in the State of California
Section 4.2 Authorization. The execution and delivery of this Agreement and
performance by Buyer of its obligations hereunder, and all transactions
contemplated hereby, have been duly and validly authorized by all necessary
corporate action. This Agreement has been, and the other agreements and
documents required to be delivered by Buyer in accordance with the provisions
hereof (the "Buyer's Documents") will be, duly executed and delivered on behalf
of Buyer by duly authorized officers of Buyer; and this Agreement constitutes,
and Buyer's Documents when executed and delivered will constitute, the valid and
binding obligations of Buyer, enforceable in accordance with their respective
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws from time to time in effect affecting
creditor's rights generally and by legal and equitable limitations on the
availability of specific remedies.
Section 4.3 Compliance with Other Instruments. Neither the execution and
delivery by Buyer of this Agreement and the Buyer's Documents, nor the
consummation by Buyer of the transactions contemplated hereby and thereby, will,
with or without the giving of notice or passage of time, or both, be contrary to
or violate, breach, or constitute a default under, or permit the termination or
acceleration of maturity of, or result in the imposition of any lien, claim or
encumbrance on any property or asset of Buyer pursuant to any provision of, any
note, bond, indenture, mortgage, deed of trust, evidence of indebtedness or
lease agreement, other agreement or instrument or any judgment, order,
injunction or decree by which Buyer is bound, to which Buyer is a party, or to
which the assets of Buyer are subject; nor is the effectiveness or
enforceability of this Agreement or such other documents adversely affected by
any provision of the certificate of incorporation or by-laws of Buyer.
Section 4.4 Litigation. There is no action, suit or proceeding pending or, to
the knowledge of Buyer, threatened against Buyer which might interfere with its
ability to consummate the transactions contemplated hereunder.
Section 4.5 No Governmental or Other Authorization Required. Except as required
by the HSR Act, and as described in Schedules 3.3 and 3.4, no authorization or
approval of, or filing with, any governmental agency, authority or other body or
any other third persons will be required in connection with Buyer's execution
and delivery of this Agreement and Buyer's Documents or its consummation of the
transactions contemplated hereby and thereby.
(ARTICLE V COMMENCES ON THE NEXT PAGE)
15
ARTICLE V
PRE-CLOSING AGREEMENTS
Section 5.1 Access to Information and Facilities. Seller shall afford Buyer and
its representatives full access during normal business hours to all facilities,
properties, books, accounts, records, contracts and documents of or relating to
the Business in Seller's possession or control, subject to reasonable
requirements that Buyer not interfere with the operations and activity of the
Business. Buyer shall conduct its examinations off Seller's premises unless
Seller agrees otherwise.
Section 5.2 Confidentiality.
(a) Seller and Buyer shall not use or disclose to others, or permit the
use or disclosure of, any and all non-public information furnished by each to
the other (including confidential information transmitted by each to its
representatives, accountants, counsel, advisors or bankers) in the course of
negotiations relating to this Agreement and the business and financial reviews
and investigations referred to in this Agreement, except to their respective
officers, directors, employees and representatives who need to know such
information in connection with this Agreement or except to the extent that any
such information may become generally available to the public other than through
the actions of the parties or any other person under a duty of confidentiality.
Such obligation of confidentiality extends to the additional financial
statements described in Section 5.3.
(b) Notwithstanding the foregoing, (i) Buyer's parent, Iron Mountain
Incorporated ("IMI"), shall have the right to include disclosure regarding the
transactions contemplated by this Agreement in any registration statement,
filing or other report which IMI, Buyer or any of their respective affiliates
files with the Securities and Exchange Commission or the National Association of
Securities Dealers, including in each case any financial and other information
concerning Seller and the transactions contemplated hereby required in
connection therewith, and Buyer or IMI may disclose the existence of this
Agreement in connection with the issuance of securities of either of them; (ii)
disclosure of such information may be made to the extent required by judicial or
regulatory process, and reviews by financial institutions which are lenders to
either party; and (iii) such information may be used to the extent necessary as
evidence in or in connection with any pending or threatened litigation relating
to this Agreement or any transaction contemplated hereby.
(c) In the event that the sale contemplated by this Agreement is not
consummated for any reason, each party agrees to return to the other party all
materials containing nonpublic information provided by the other immediately on
request. The confidentiality obligation set forth in this Section 5.2 shall
survive termination of this Agreement.
(d) Each party agrees that the confidential information of the other
party is unique and that its release or misuse in contravention of the terms of
this Agreement may not be compensable in monetary damages and that the
non-breaching party shall be entitled to seek appropriate injunctive relief
therefor. In connection therewith the parties waive the claim or defense that an
adequate remedy exists at law or that a bond is necessary.
Section 5.3 Additional Financial Statements. Buyer anticipates that IMI will be
required by statute or regulation to file or disclose financial information
related to the Business with the
16
Securities and Exchange Commission which is in addition to information prepared
by Seller and previously delivered to Buyer. Seller shall make available to
Buyer any relevant financial information related to the Business or the Subject
Assets not previously delivered to Buyer and otherwise cooperate with Buyer, at
Buyer's expense, in preparing, or causing Seller's auditors to prepare, such
information. If requested by Buyer, Seller shall use commercially reasonable
efforts to obtain Seller's auditors' consent to Buyer's use of financial
statements which they have audited, or shall consent to Seller's auditors'
preparing required audits for Buyer (including audited financial statements of
Seller for the year ended December 31, 1995), and shall use its commercially
reasonable best efforts to cause Seller's auditors to prepare such required
audited financial statements. Such audited financial statements will be prepared
in accordance with Regulation S-X under the Securities Act of 1933, and will be
prepared no later than September 12, 1997. Buyer shall have the right to file
and disclose such information as required by any such law, statute or
regulation, including, without limitation, as contemplated by Section 5.2(b)
hereof.
Section 5.4 Communications to Seller's Employees. Buyer and Seller shall
mutually agree on the timing and content of a program of communications to
employees and customers of the Business in respect of the transactions
contemplated hereby; provided that Seller may elect to inform its employees of
the pending transaction if it determines such disclosure is necessary or
desirable.
Section 5.5 Continued Efforts. Seller shall use commercially reasonable efforts
to (a) cause to be fulfilled and satisfied all of the conditions to the Closing
which are the responsibility of Seller, and (b) cause to be performed all of the
matters required upon the Closing which are the responsibility of Seller.
Buyer shall use commercially reasonable efforts to (a) cause to be fulfilled and
satisfied all of the conditions to the Closing which are the responsibility of
Buyer, and (b) cause to be performed all of the matters required upon the
Closing which are the responsibility of Buyer.
Section 5.6 Operation of Business Prior to Closing. From the date hereof until
the Closing Date, Seller shall conduct the Business in the ordinary course
consistent with past practice, and shall use its commercially reasonable efforts
to maintain and service the Business, to keep available the services of present
employees and agents and to maintain existing business relationships. Without
limiting the generality of the foregoing, Seller shall not take any of the
actions described in clauses (i) through (vi) of Section 3.27.
Section 5.7 HSR Act Filing. Promptly after the execution of the Agreement, Buyer
and Seller shall each prepare and file a Notification and Report Form with the
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice under the HSR Act. Each shall file any related materials
that it may be required to file, shall use its commercially reasonable best
efforts to obtain an early termination of the applicable waiting period, and
shall make any further filings pursuant thereto that may be necessary, proper or
advisable in connection therewith. Buyer and Seller shall share equally the HSR
Act filing fees; provided that Buyer shall pay such filing fees and receive a
credit therefor against the purchase price at the Closing. If the Closing does
not occur, and this Agreement is terminated by either party, Seller shall have
no obligation to reimburse Buyer for one-half of the HSR Act filing fees.
Section 5.8 Seller's Employees. Buyer expects to offer employment to
substantially all of Seller's employees, subject to pre-closing review of
staffing levels and employee job performance;
17
provided that Buyer shall not be obligated to offer employment to (i) Xxxxxx X.
Xxxxxxxxx and Xxxxxx Xxxx, or (ii) any other employee of Seller in connection
with the acquisition of the Subject Assets, and such acquisition shall not grant
any employee of Seller a right of continued employment with Buyer. Any of
Seller's employees offered employment by Buyer shall be employed on
substantially the same terms as their employment with Seller. As of the Closing,
Buyer shall provide coverage to those employees of Seller who accept offers of
employment with Buyer under Buyer's normal employee benefit plans, programs or
arrangements, including participation in Buyer's 401(k) profit sharing plan. For
purposes of determining eligibility and vesting, Buyer agrees that any such
transferred employee's service with Seller shall be credited under the terms of
any of Buyer's employee benefit plans, programs or arrangements, to the extent
established, continued or otherwise sponsored after the Closing. Buyer shall
also extend coverage to all such transferred employees under Buyer's health
benefits program without the imposition of any pre-existing condition exclusion.
Section 5.9 Termination of 401(k) Plan. Prior to the Closing Date Seller shall
take such actions as are necessary or appropriate to terminate the 401(k) profit
sharing plan maintained by Seller for its employees and distribute to such
employees their interests therein.
(ARTICLE VI COMMENCES ON THE NEXT PAGE)
18
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATION OF BUYER TO CLOSE
The obligation of Buyer to purchase the Subject Assets and carry out the other
transactions contemplated hereby are, unless waived in writing by Buyer, subject
to the satisfaction, on the Closing Date, of the following conditions:
Section 6.1 Accuracy of Representations and Performance of Seller. The
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects at and as of the Closing Date with the
same force and effect as though made on and as of such date; each and all of the
conditions and covenants to be performed or satisfied by Seller hereunder at or
prior to the Closing Date shall have been duly performed or satisfied in all
material respects; and Seller shall have furnished Buyer with a certificate to
that effect.
Section 6.2 Absence of Certain Litigation. On the Closing Date, no suit, action
or other proceeding, or injunction or final judgment relating thereto, shall be
threatened in writing or pending before any court or governmental or regulatory
official or agency, in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the consummation of
the transactions contemplated hereby (provided that any such suit, action or
other proceeding which would not have a material effect on the transactions
contemplated hereby shall not constitute a failure to satisfy this condition),
and no investigation that might result in any such suit, action or proceeding
shall be pending.
Section 6.3 Noncompetition and Nondisclosure Agreement. Seller, the general
partners of Seller and Xxxxxx X. Xxxxxxxxx shall have each executed and
delivered a Noncompetition and Confidentiality Agreement in the form of Exhibit
6.3(i) through (iv). The Noncompetition and Confidentiality Agreement to be
signed by Xx. Xxxxxxxxx will specifically permit him to engage in the software
escrow business.
Section 6.4 Leases for Leased Premises. Seller shall have assigned to Buyer its
interest as tenant in each of the Leases for the Leased Premises, the landlord
under each of such Leases shall have consented thereto and shall have confirmed
that any option to extend the term, expand the premises or buy the leased real
estate, and any right of first refusal or right of first offer set forth in the
Lease shall be available to Buyer, and (if required under the terms of any
applicable deed of trust), the beneficiary of any deed of trust affecting the
Leased Premises shall have consented thereto and executed a subordination,
non-disturbance and attornment agreement.
Section 6.5 Third Party Consents. Seller shall have procured all of the third
party consents identified in Section 3.4.
Section 6.6 Title Matters.
(a) The applicable title insurance company shall be prepared to issue
the following title insurance policies upon delivery of deeds, discharges of
mortgages and other liens identified in the applicable Preliminary Title Report
and other customary closing documentation.
With respect to each of the Owned Premises, an ALTA Owner's Policy of
Title Insurance Form B-1987 issued by the applicable title insurance company, in
such amount as the Buyer reasonably may determine to be the fair market value of
such Owned Premises (including all
19
improvements located thereon), insuring title to such real property to be in the
Buyer as of the Closing subject only to the title exceptions described in the
Preliminary Title Reports described in Section 3.11(a) (the "Permitted
Exceptions").
Each title insurance commitment and policy shall (A) insure title to
the real property and all recorded easements benefiting such real property, (B)
contain an "extended coverage endorsement" insuring over the general exceptions
contained customarily in such policies, (C) contain an ALTA Zoning Endorsement
3.1 (or equivalent), (D) contain an endorsement insuring that the real property
described in the title insurance policy is the same real estate as shown on the
Survey (as defined in Section 6.7) delivered with respect to such property, (E)
contain an endorsement insuring that each street adjacent to the real property
is a public street and that there is direct and unencumbered pedestrian and
vehicular access to such street from the real property or across insured
easement, and (F) if the real property consists of more than one record parcel,
contain a "contiguity" endorsement insuring that all of the record parcels are
contiguous to one another.
(b) Seller shall be prepared to deliver the following documents,
certificates and affidavits:
(i) certificate of non-foreign ownership
(ii) affidavit as to parties-in-possession and mechanics' liens;
(iii) documentation required by the applicable title insurance
company concerning partnership authorization for the conveyance; and
(iv) other certificates described in the Preliminary Title
Reports in order to issue the title insurance policies described in Section
6.6(a).
Section 6.7 Surveys. With respect to each parcel of the Owned Premises, Buyer
will procure in preparation for the Closing a current survey of the real
property certified to Buyer, prepared by a licensed surveyor and conforming to
current ALTA Minimum Detail Requirements for Land Title Surveys, disclosing the
location of all improvements, easements, party walls, sidewalks, roadways,
utility lines, and other matters shown customarily on such surveys, and showing
access affirmatively to public streets and roads (the "Survey"). The Surveys
shall not disclose any survey defect or encroachment from or onto the real
property other than (i) those which have been cured or insured over prior to the
Closing or (ii) those which 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 the operation of the
Business.
Section 6.8 Environmental Analysis. No environmental analysis, survey, asbestos
assessment or other study undertaken by Buyer and related to the compliance of
the Owned Premises with Environmental Laws and Regulations shall have disclosed
any condition of the Owned Premises which requires remediation, removal of
material or other corrective action, or which imposes a risk of cost or
liability on the owner of such real property which could reasonably be expected
to cost more than $100,000, individually or in the aggregate.
20
Section 6.9 Evidence of Approval. Seller shall deliver certified copies of
written records of actions taken by the General Partners and limited partners of
Seller pertaining to the authorization of this Agreement and the consummation of
the transactions contemplated hereby, together with a certificate executed by
the secretary or assistant secretary of the General Partners as to the due
election, qualification and incumbency and valid signature of the person or
persons authorized to sign this Agreement or any document, instrument or
certificate to be delivered hereunder on behalf of the General Partners.
Section 6.10 No Material Adverse Change. There shall have been no material
adverse change in the Subject Assets (including, without limitation, loss of or
damage to a material amount or part of the Subject Assets) or the results of
operations (including operating cash flow) between December 31, 1996 and the
Closing Date.
Section 6.11 Opinion of Seller's Counsel. Seller shall have delivered the
opinion of Seller's counsel, Xxxxxxxxx & Xxxxxxxx, LLP, substantially in the
form of Exhibit 6.11 hereto or as otherwise agreed by the parties.
Section 6.12 Shelving. Seller shall have completed installation of, and paid
for, sufficient shelving at the Sunnyvale facility to shelve all records
currently on the floor or on pallets, and shall have placed such records on such
shelving.
Section 6.13 HSR Act. All applicable waiting periods (and any extensions
thereof) under the HSR Act shall have expired or otherwise terminated.
Section 6.14 Post-Closing Escrow Agreement. The Post-Closing Escrow Agreement
shall have been executed by the parties thereto.
Section 6.15 Payment of Funded Indebtedness. Seller shall have provided to Buyer
payoff letters or similar documentation evidencing the amounts required to
retire in full all Funded Indebtedness as of the Closing Date, and committing to
provide discharges or terminations of all mortgages, deeds of trusts, and
security interests securing Funded Indebtedness.
Section 6.16 Amendment of Leases. The leases between Seller and each of Source
File, Inc. and Versa Trac, Inc. for space in the Oakland Owned Premises shall
have been amended to provide that the terms thereof will expire on December 31,
1997.
Section 6.17 Further Documents. Seller shall have executed and delivered to
Buyer such documents, instruments, agreements, and certificates as may
reasonably be needed to carry out the transactions contemplated by this
Agreement, including such documents, instruments and agreements as Buyer's
general counsel may reasonably request in connection therewith.
(ARTICLE VII COMMENCES ON THE NEXT PAGE)
21
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATION OF SELLER
The obligation of Seller to sell, assign, transfer and deliver the Subject
Assets to Buyer hereunder and to carry out the other transactions contemplated
hereby are, unless waived in writing by Seller, subject to the satisfaction at
or prior to the Closing Date of the following conditions:
Section 7.1 Accuracy of Representations and Performance of Conditions. The
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects at and as of the Closing Date with the
same force and effect as though made on and as of such Date; each and all of the
conditions and covenants to be performed or satisfied by Buyer hereunder at or
prior to the Closing Date shall have been duly performed or satisfied in all
material respects; and Buyer shall have furnished Seller with Buyer's
certificate to that effect.
Section 7.2 Approval. Buyer shall deliver certified copies of resolutions
adopted by Buyer's Board of Directors pertaining to the authorization of this
Agreement and the consummation of the transactions contemplated herein, and a
certificate executed by the secretary or assistant secretary of Buyer as to the
due election, qualification and incumbency and valid signatures of its officers
authorized to sign this Agreement or any document or certificates to be
delivered under it.
Section 7.3 Absence of Certain Litigation. On the Closing Date, no suit, action
or other proceeding, or injunction or final judgment relating thereto, shall be
threatened or pending before any court or governmental or regulatory official or
agency, in which it is sought to restrain or prohibit or to obtain damages or
other relief in connection with this Agreement or the consummation of the
transactions contemplated hereby, and no investigation that might result in any
such suit, action or proceeding shall be pending.
Section 7.4 Opinion of Buyer's General Counsel. Buyer's General Counsel shall
have delivered his opinion in the form of Exhibit 7.4 hereto.
Section 7.5 HSR Act. All applicable waiting periods (and any extensions thereof)
under the HSR Act shall have expired or otherwise terminated.
Section 7.6 Post-Closing Escrow Agreement. The Post-Closing Escrow Agreement
shall have been executed by the parties thereto.
Section 7.7 Payment of Funded Indebtedness. Buyer shall be prepared to pay in
full the Funded Indebtedness outstanding as of the Closing Date subject to the
limit in Section 2.2(a).
Section 7.8 Further Documents. Buyer shall have executed and delivered to Seller
such documents, instruments, agreements, and certificates as may reasonably be
needed to carry out the transactions contemplated by this Agreement, including
such documents, instruments, agreements as Seller's counsel may reasonably
request in connection therewith.
(ARTICLE VIII COMMENCES ON THE NEXT PAGE)
22
ARTICLE VIII
THE CLOSING
Section 8.1 Closing and Closing Provisions. The Closing shall be effected by
delivery of documents at the office of Xxxxxxxxx & Falconer LLP, 000 Xxxxxx
Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, and payment of the Purchase Price as
provided herein or in such other manner and at such place as the parties may
agree.
Section 8.2 Deliveries by Seller and General Partners. At or prior to the
Closing, Seller and General Partners shall execute and deliver to Buyer all of
the matters, certificates and other documents designated as conditions precedent
and deliveries precedent to Buyer's obligation to close under this Agreement or
to carry out the transactions contemplated hereby.
Section 8.3 Deliveries by Buyer. At the Closing Buyer shall deliver to Seller
and the Escrow Agent the Purchase Price, subject to adjustments as permitted by
this Agreement, in the manner and form provided for in this Agreement, and all
the certificates and other documents designated as conditions precedent and
deliveries precedent to Seller's obligation to close under this Agreement.
(ARTICLE IX COMMENCES ON NEXT PAGE)
23
ARTICLE IX
POST-CLOSING MATTERS
Section 9.1 Records of the Business. For a period of four years following the
Closing Date or for such longer period as the statute of limitations applicable
to claims for taxes relating to the Business for any period through the Closing
Date shall be extended (through voluntary extension or otherwise), Buyer shall
grant to Seller and its representatives, at Seller's request, access to and the
right to make copies of those records and documents which report the conduct of
the Business or the results thereof as may be necessary in connection with
Seller's affairs or the Business, at Buyer's customary fees therefor. If Seller
notifies Buyer that Seller requires retention of such records beyond four years,
Seller shall have the right to take such records or pay Buyer's customary
storage charges for such post-four-year period.
Seller shall, for at least two years after the Closing Date, retain copies of
all records of the Business retained by Seller, and shall grant access thereto
to Buyer upon reasonable request.
Section 9.2 Public Announcement. Except as provided in Section 5.2(b), no party
shall issue any press release or make any public announcement relating to the
subject matter of this Agreement without the prior written approval of the other
party; provided, however, that after the Closing the parties may (i) make
appropriate announcements to customers of the Business, and (ii) make a public
announcement to the effect that the transaction has occurred (without any
financial information), each after consultation with the other party; and
provided further that either party may make any public disclosure it believes in
good faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities.
(ARTICLE X COMMENCES ON THE NEXT PAGE)
24
ARTICLE X
TERMINATION
Section 10.1 Termination of Agreement. The parties may terminate this Agreement
as provided below:
(i) Buyer and Seller may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(ii) Buyer may terminate this Agreement by giving written notice to
Seller at any time prior to the Closing (A) in the event Seller has breached any
material representation, warranty, or covenant contained in this Agreement in
any material respect, Buyer has notified Seller of the breach, and the breach
has continued without cure for a period of 20 days after the notice of breach or
(B) if the Closing shall not have occurred on or before November 1, 1997, by
reason of the failure of any condition precedent under Article VI hereof (unless
the failure results primarily from Buyer itself breaching any representation,
warranty, or covenant contained in this Agreement); and
(iii) Seller may terminate this Agreement by giving written notice to
Buyer at any time prior to the Closing (A) in the event Buyer has breached any
material representation, warranty, or covenant contained in this Agreement in
any material respect, Seller has notified Buyer of the breach, and the breach
has continued without cure for a period of 20 days after the notice of breach or
(B) if the Closing shall not have occurred on or before November 1, 1997, by
reason of the failure of any condition precedent under Article VII hereof
(unless the failure results primarily from Seller itself breaching any
representation, warranty, or covenant contained in this Agreement).
Section 10.2 Effect of Termination. If either party terminates this Agreement
pursuant to Section 10.1, all rights and obligations of the parties hereunder,
other than the confidentiality obligation set forth in Section 5.2, shall
terminate without any liability of any party to any other party (except for any
liability of any party then in breach).
Section 10.3 Risk of Loss. Prior to Closing, the risk of loss, damage or
destruction with respect to the Subject Assets shall be borne solely by Seller.
(ARTICLE XI COMMENCES ON THE NEXT PAGE)
25
ARTICLE XI
INDEMNIFICATION
Section 11.1 General Indemnification Obligation of Seller.
(a) From and after the Closing, Seller shall reimburse, indemnify and
hold harmless Buyer and its successors and assigns (each an "Indemnified Buyer
Party") against and in respect of any and all damages (excluding consequential
damages, lost profits, lost business opportunities and incidental damages),
losses, deficiencies, liabilities, costs and expenses (including assessments,
legal fees, litigation costs, fines and judgments) incurred or suffered by any
Indemnified Buyer Party that result from, relate to or arise out of:
(i) any and all liabilities and obligations of Seller of any
nature whatsoever (including liabilities for Taxes) arising from or incurred in
the operation of the Business prior to the Closing Date, except for those
liabilities and obligations of Seller which Buyer specifically assumes pursuant
to this Agreement;
(ii) other than as described at (iii) below, any and all actions,
suits, claims or legal, administrative, arbitration, governmental or other
proceedings or investigations against any Indemnified Buyer Party to the extent
relating to Seller or the Business to the extent (and only to the extent) the
reason therefor or subject thereof arose or occurred prior to the Closing Date
or which result from or arise out of any action or inaction prior to the Closing
Date of Seller or any director, officer, employee, agent, representative or
subcontractor of Seller, except for those which Buyer specifically assumes
pursuant to this Agreement;
(iii) any cost, claim, expense or liability (including legal fees
and costs of litigation) which Buyer may incur or with which Buyer may be
threatened in writing by a customer in excess of $2.00 per carton, linear foot
of open-shelf files, disk pack or other storage unit in connection with lost,
damaged or destroyed records of customers with which Seller did not, as of the
Closing Date, have a contract which limited Seller's liability in the event of
loss, damage or destruction to such amount, , if such loss, damage or
destruction (i) occurred prior to the Closing Date, or (ii) is such that it
cannot be determined with reasonable certainty whether the date of the loss,
destruction or damage occurred prior to or after the Closing Date; provided that
with respect to any loss described in this clause (ii), Seller shall indemnify
Buyer for only 50% of the cost, claim, expense or liability related thereto; and
further provided that Seller acknowledges that the 6,500 cartons referred to in
Schedule 3.25 are cartons which, if lost, damaged or inadvertently destroyed,
suffered such event prior to the Closing Date occurred after the Closing Date;
and
(iv) any material misrepresentation, breach of warranty or
nonfulfillment of any agreement or covenant on the part of Seller under this
Agreement, or any material misrepresentation in or omission from any
certificate, schedule, statement, document or instrument furnished to Buyer at
the Closing pursuant hereto.
(b) Notwithstanding anything herein contained to the contrary, neither
Seller nor any of its partners shall have any obligations to Buyer under Section
11.1 with respect to any claim of which Buyer gives notice to Seller later than
December 15, 1998, and any such claims shall be expressly limited to the extent
provided in subparagraphs (c), (d) and (e) of this Section 11.1.
26
(c) Notwithstanding any other provision herein contained, Seller shall
not have any indemnification obligation with respect to the first $150,000 of
total claims incurred under Section 11.1; provided, that if such threshold is
reached, Seller shall be liable for all costs, losses and expenses incurred by
Buyer without regard to the threshold.
(d) In case any event shall occur which would otherwise entitle either
party to assert a claim for indemnification hereunder, no loss shall be deemed
to have been sustained by such party to the extent of (i) any tax savings
realized by such party with respect thereto, or (ii) any after-tax proceeds
received by such party from any third party, including but not limited to any
insurance carrier.
(e) Seller and Buyer agree that the $5,000,000 in cash representing a
deferred portion of the purchase price as set forth in Section 2.2(b) above (the
"Indemnity Funds") will be held pursuant to the terms and conditions of the
Post-Closing Escrow Agreement and this Agreement. Notwithstanding any other
provision herein contained, neither Seller nor any of its partners shall have
any indemnification obligation for total claims incurred under Section 11.1 in
excess of the balance of the Indemnity Funds then held by the Escrow Agent under
the Post-Closing Escrow Agreement, and the exclusive recourse of Buyer for
claims incurred under Section 11.1 shall be the Indemnity Funds.
Section 11.2 General Indemnification Obligation of Buyer.
(a) From and after the Closing, Buyer will reimburse, indemnify and
hold harmless Seller and its successors or assigns (an "Indemnified Seller
Party") against and in respect of any and all damages (excluding consequential
damages, lost profits, lost business opportunities and incidental damages),
losses, deficiencies, liabilities, costs and expenses (including assessments,
legal fees, litigation costs, fines and judgments) incurred or suffered by any
Indemnified Seller Party that result from, relate to or arise out of:
(i) any and all liabilities and obligations of Seller which have
been specifically assumed by Buyer pursuant to this Agreement;
(ii) any and all liabilities and obligations arising from or
incurred in the operation of the Business after the Closing Date;
(iii) any and all actions, suits, claims or legal,
administrative, arbitration, governmental or other proceedings or investigations
against any Indemnified Seller Party to the extent relating to Buyer or the
Business to the extent (and only to the extent) the reason therefor or subject
thereof arose or occurred after the Closing Date or which result from or arise
out of any action or inaction after the Closing Date of Buyer or any director,
officer, employee, agent, representative or subcontractor of Buyer; and
(iv) any material misrepresentation, breach of warranty or
non-fulfillment of any agreement or covenant on the part of Buyer under this
Agreement, or any material misrepresentation in or omission from any
certificate, schedule, statement, document or instrument furnished to Seller
pursuant hereto or in connection with the negotiation, execution or performance
of this Agreement.
27
(b) Notwithstanding anything herein contained to the contrary, Buyer
shall have no obligations to Seller under Section 11.2(a)(iv) with respect to
any claim of which Seller gives notice to Buyer later than December 15, 1998.
Such limitation shall not limit Buyer's obligations under Section 11.2(a)(i)
through (iii).
(c) In case any event shall occur which would otherwise entitle either
party to assert a claim for indemnification hereunder, no loss shall be deemed
to have been sustained by such party to the extent of (i) any tax savings
realized by such party with respect thereto, or (ii) any after-tax proceeds
received by such party from any third party, including but not limited to any
insurance carrier.
Section 11.3 Method of Asserting Claims, Etc. In the event that any claim or
demand for which Seller (the "Indemnifying Party") would be liable to an
Indemnified Buyer Party hereunder is asserted against or sought to be collected
from an Indemnified Buyer Party by a third party, the Indemnified Buyer Party
shall promptly (and in case of claims under Section 11.1(a)(iii), within thirty
days after Buyer has knowledge of such claim) notify Seller of such claim or
demand, specifying in reasonable detail the nature of such claim or demand, the
specific provisions of this agreement alleged to have been breached, and the
amount or the estimated amount thereof to the extent then feasible, which
estimate shall not be conclusive of the final amount of such claim and demand
(the "Claim Notice"). Indemnifying Party shall have thirty days from the
personal delivery or mailing of the Claim Notice (the "Notice Period") to notify
the Indemnified Buyer Party (A) whether or not it disputes its liability to the
Indemnified Buyer Party hereunder with respect to such claim or demand and (B)
notwithstanding any such dispute, whether or not it desires, at its sole cost
and expense, to defend the Indemnified Buyer Party against any such claim or
demand.
(a) If Indemnifying Party disputes its obligation to indemnify Buyer
with respect to such claim or demand or the amount thereof (whether or not
Indemnifying Party desires to defend the Indemnified Buyer Party against such
claim or demand as provided in paragraphs (b) and (c) below), such dispute shall
be resolved in accordance with Section 11.5 hereof. Pending the resolution of
any dispute by Indemnifying Party of its liability with respect to any claim or
demand, such claim or demand shall not be settled without the prior written
consent of both Buyer and Seller, which consent shall not be unreasonably
withheld or delayed.
(b) In the event that Indemnifying Party notifies the Indemnified Buyer
Party within the Notice Period that it desires to defend the Indemnified Buyer
Party against such claim or demand then, except as hereinafter provided,
Indemnifying Party shall have the right to defend the Indemnified Buyer Party,
at the Indemnifying Party's sole cost and expense, by appropriate proceedings,
which proceedings shall be promptly settled or prosecuted by it to a final
conclusion in such a manner as to avoid any risk of Indemnified Buyer Party
becoming subject to further liability in respect of such matter; provided,
however, Indemnifying Party shall not, without the prior written consent of the
Indemnified Buyer Party (which consent shall not be unreasonably withheld or
delayed), consent to the entry of any judgment against the Indemnified Buyer
Party or enter into any settlement or compromise which does not include, as an
unconditional term thereof, the giving by the claimant or plaintiff to the
Indemnified Buyer Party of a release, in form and substance satisfactory to the
Indemnified Buyer Party, as the case may be, from all liability in respect of
such claim or litigation. If any Indemnified Buyer Party desires to participate
in, but not control, any such defense or settlement, it may do so at its sole
cost and expense.
28
(c) (i) If Indemnifying Party elects not to defend the Indemnified
Buyer Party against such claim or demand, whether by not giving the Indemnified
Buyer Party timely notice as provided above or otherwise, then the amount of any
such claim or demand as reduced to judgment or settlement, or if the same be
defended by Indemnifying Party or by the Indemnified Buyer Party (but none of
the Indemnified Buyer Party shall have any obligation to defend any such claim
or demand), then that portion thereof as to which such defense is unsuccessful,
in each case, shall be conclusively deemed to be a liability of Indemnifying
Party hereunder, unless Indemnifying Party shall have disputed its liability to
the Indemnified Buyer Party hereunder, as provided in (a) above, in which event
such dispute shall be resolved as provided in Section 11.5 hereof.
(ii) In the event an Indemnified Buyer Party should have a claim
against Indemnifying Party hereunder that does not involve a claim or demand
being asserted against or sought to be collected from it by a third party, the
Indemnified Buyer Party shall promptly send a Claim Notice with respect to such
claim to Indemnifying Party. If Indemnifying Party disputes its liability with
respect to such claim or demand, such dispute shall be resolved in accordance
with Section 11.5 hereof.
(d) All claims for indemnification by Indemnified Seller Party under
this Agreement shall be asserted and resolved under the procedures set forth
above substituting in the appropriate place "Indemnified Seller Party" for
"Indemnified Buyer Party", "Buyer" for "Indemnifying Party" and variations
thereof.
Section 11.4 Payment. Upon the determination of liability under Section 11.3 or
11.5 hereof, the appropriate party shall pay, or cause the Escrow Agent to pay,
to the other, as the case may be, within ten days after such determination, the
amount of any claim for indemnification made hereunder; provided that any
Indemnified Buyer Party's right to receive payment shall be limited to the
balance of the Indemnity Funds then held by the Escrow Agent pursuant to the
Post-Closing Escrow Agreement. Upon the payment in full of any claim, either by
setoff or otherwise, the entity making payment shall be subrogated to the rights
of the indemnified party against any person, firm or corporation with respect to
the subject matter of such claim.
Section 11.5 Arbitration.
(i) All disputes under this Article XI or otherwise arising under this
Agreement shall be settled by arbitration in San Francisco, California, before
three arbitrators pursuant to the rules of the American Arbitration Association.
Arbitration may be commenced at any time by any party hereto giving written
notice to each other party to a dispute that such dispute has been referred to
arbitration under this Section 11.5. The arbitrators shall be selected by the
joint agreement of Seller and Buyer, but if they do not so agree within 20 days
after the date of the notice referred to above, the selection shall be made
pursuant to the rules from the panels of arbitrators maintained by such
Association. Any award rendered by the arbitrators shall be conclusive and
binding upon the parties hereto and not subject to appeal, and judgment on the
arbitration award may be entered in any court having jurisdiction over the
subject matter of the controversy; provided, however, that any such award shall
be accompanied by a written opinion of the arbitrators giving the reasons for
the award. This provision for arbitration shall be specifically enforceable by
the parties and the decision of the arbitrators in accordance herewith shall be
final and binding and there shall be no right of appeal therefrom. For purposes
of this Section 11.5, in any arbitration hereunder in which any claim or the
amount thereof stated in the Buyer's notice of claim is at issue, Buyer shall be
deemed to be the non-prevailing party if the arbitrators award Buyer less than
the
29
sum of one-half (1/2) of the disputed amount; otherwise, Seller shall be
deemed to be the non-prevailing party. The non-prevailing party to an
arbitration shall pay its own expenses, the fees of each arbitrator, the
administrative costs of the arbitration, and the expenses, including without
limitation, reasonable attorneys' fees and costs, incurred by the other party to
the arbitration.
(ii) To the extent that arbitration may not be legally permitted by
applicable law or statute, and the parties to any dispute hereunder do not at
the time of such dispute mutually agree to submit such dispute to arbitration,
any party may commence a civil action in a court of appropriate jurisdiction to
solve disputes hereunder. Nothing contained in this Section 11.5 shall prevent
the parties from settling any dispute by mutual agreement at any time.
Section 11.6 Compliance with Bulk Sales Law. Buyer and Seller hereby waive
compliance by Seller with the bulk sales law and any other similar laws in any
applicable jurisdiction in respect of the transactions contemplated by this
Agreement.
Section 11.7 Other Rights and Remedies. The indemnification rights of the
parties under this Article XI and the parties' rights and obligations set forth
in Section 2.4, are such parties' sole rights and remedies under this Agreement
and with respect to disputes arising herefrom, and are in lieu of, and not in
addition to, rights and remedies a party may otherwise have at law or in equity.
(ARTICLE XII COMMENCES ON THE NEXT PAGE)
30
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1 Commissions. Each party represents and warrants that it has dealt
with no broker or finder in connection with this Agreement (except that Seller
has engaged the services of TM Capital Corp., for whose fees Seller shall be
solely responsible) and, insofar as it knows, no broker or other person is
entitled to any commission or finder's fee in connection with the consummation
of the transactions contemplated by this Agreement.
Section 12.2 Expenses. Except as otherwise provided herein, each of the parties
shall pay all costs and expenses incurred or to be incurred by it in the
negotiation and preparation of this Agreement and in closing and carrying out
the transactions contemplated by this Agreement. Buyer shall be responsible for
the cost of the Preliminary Title Reports, premiums for title insurance policies
and the Surveys.
Section 12.3 Headings; Schedules. The subject headings of the sections and
subsections of this Agreement are included only for purposes of convenience, and
shall not affect the construction or interpretation of any of its provisions.
Any disclosure made by Seller in a Schedule hereto shall be deemed a disclosure
on all Schedules hereto.
Section 12.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Signatures on this
Agreement delivered by fax or telecopier shall be considered original signatures
for purposes of effectiveness of this Agreement.
Section 12.5 Rights of Parties. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third person to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action against any party to this Agreement.
Section 12.6 Assignment. Except as provided in the following paragraph, the
rights and obligations of the parties to this Agreement or any interest in this
Agreement shall not be assigned, transferred, hypothecated, pledged or otherwise
disposed of without the prior written consent of the nonassigning party which
consent may be withheld in such party's sole discretion.
Buyer shall have the right to assign to a wholly-owned subsidiary of Buyer its
rights and obligations under this Agreement; provided that such assignment shall
not release Buyer from its obligations hereunder, and Buyer shall remain fully
liable for all of Buyer's obligations hereunder, including without limitation
the payment of the entire Purchase Price (including contingent elements
thereof).
Section 12.7 Survival of Representations and Warranties. All representations,
warranties, covenants and agreements shall survive the Closing until the end of
the twelfth month after the Closing Date, except for ongoing agreements to
indemnify the other party for post-Closing actions.
Section 12.8 Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if delivered by telecopier (with notice of
receipt), or if served personally on the party to whom notice
31
is to be given; or if delivered by overnight private carrier, on the date of
delivery; or on the third day after mailing if mailed to the party to whom
notice is to be given by first class mail, certified, postage prepaid, and
properly addressed as following:
To Seller:
Records Retention/Filesafe L. P.
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Telecopier: (000) 000-0000
With a copy (which shall not constitute notice but which is nonetheless required
for notice) to:
Xxxxxxxxx & Falconer LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Xx.
Telecopier: (000) 000-0000
To Buyer:
Iron Mountain Records Management, Inc.
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx, Xx.
Telecopier: (000) 000-0000
With a copy (which shall not constitute notice but which is nonetheless required
for notice) to:
Xxxxx X. Xxxxxx, Esq.
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Telecopier: (000) 000-0000
Any party may change its address for purposes of this paragraph by giving the
other parties written notice of the new address in the manner set for above. If
Seller notifies Buyer after the Closing that Seller has been dissolved, Seller
may direct Buyer to send notices to a designated representative of the General
Partners.
Section 12.9 Applicable Law and Remedies. The terms, conditions and other
provisions of this Agreement and any documents or instruments delivered in
connection with it shall be governed and construed according to the internal
laws of the State of California (other than the choice of law rules thereof)
except as to matters of law concerning the internal corporate affairs of any
corporate entity which is a party to or the subject of this Agreement, and as to
those matters, the jurisdiction under which such entity derives its powers shall
govern. All remedies at law, in equity, by statute or otherwise shall be
cumulative and may be enforced concurrently or from time to time and, subject to
the express terms of this Agreement, the election of any remedy or remedies
shall not constitute a waiver of the right to pursue any other available
remedies. The parties agree that all disputes arising under this Agreement shall
be settled through arbitration procedures as described in Section 11.5.
32
Section 12.10 Additional Instruments and Assistance. Each party hereto shall
from time to time execute and deliver such further instruments, provide
additional information and render such further assistance as the other party or
its counsel may reasonably request in order to complete and perfect the
transactions contemplated herein.
Section 12.11 Severability. If any provision of this Agreement is held or deemed
to be invalid or unenforceable to any extent when applied to any person or
circumstance, such invalidity or unenforceability shall not affect the remaining
provisions of this Agreement; the remaining provisions hereof and the
enforcement of such provision with respect to other persons or circumstances, or
to another extent, shall not be affected thereby and each provision hereof shall
be enforced to the fullest extent allowed by law. Moreover, the invalid or
inoperative provision shall be reformed and construed so that it shall be valid
and enforceable to the maximum extent permitted.
Section 12.12 Pronouns and Terms. In this Agreement, the singular shall include
the plural, the plural the singular, and the use of any gender shall include all
genders.
Section 12.13 Taxes. Any California sales taxes imposed on the transaction shall
be paid one-half by Seller and one-half by Buyer. With respect to Owned Property
located in Oakland, California, Seller shall pay real property transfer taxes
payable to the County of Alameda and Seller and Buyer shall each pay one-half of
the real property transfer taxes payable to the City of Oakland. With respect to
the Owned Property located in Felton, California, Seller shall pay all real
property transfer taxes. Recording, escrow, deed preparation and similar fees
shall be paid by the parties in accordance with the custom of the respective
counties in which the Owned Interests are owned.
Seller's federal tax identification number is 00-0000000.
Buyer's federal tax identification number is 00-0000000.
Section 12.14 Disclosure. No representation or warranty made by either party in
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statement of facts contained within
it not materially misleading.
Section 12.15 Entire Agreement, Amendments and Waivers. This Agreement, together
with all Exhibits and Schedules hereto, constitutes the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties (including the letter of intent dated
July 3, 1997), and there are no representations, warranties or other agreements
among the parties in connection with the subject matter hereof except as set
forth specifically herein or contemplated hereby. No supplement, modification or
waiver of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
33
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it
on the date first above written.
Records Retention/Filesafe Iron Mountain Records Management, Inc.
By Records Retention, Inc.,
a general partner
By /s/ Xxxxxxx X. Xxxx, Xx. By /s/ Xxxx X. Xxxxx, Xx.
---------------------------- ------------------------------
Xxxxxxx X. Xxxx, Xx. Xxxx X. Xxxxx, Xx.
President Executive Vice President and
Chief Financial Officer
By Filesafe, Inc., a general partner
By /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxxx
President
34
SCHEDULE 2.3
ALLOCATION OF PURCHASE PRICE
----------------------------
Asset Category
--------------
Accounts Receivable Actual amount as of the closing date.
Equipment $1,000,000
Oakland land and building ) Fair market values determined by an appraisal
Xxxxxx land and building ) obtained by Buyer.
Covenants not to compete,
customer lists and goodwill Remainder of Purchase Price
TOTAL $42,000,000 plus the amount of assumed liabilities
and Funded Indebtedness
