EXHIBIT 2.1
** Confidential portions have been omitted pursuant to a request
for confidential treatment and have been filed separately
with the Securities and Exchange Commission (the "Commission").**
AGREEMENT AND PLAN OF MERGER
AMONG
IRON MOUNTAIN RECORDS MANAGEMENT, INC.
IRON MOUNTAIN/NUS, INC.
AND
NATIONAL UNDERGROUND STORAGE, INC.
JUNE 5, 1998
TABLE OF CONTENTS
1. DEFINITIONS.....................................................................................1
2. BASIC TRANSACTION...............................................................................7
(a) The Merger....................................................................7
(b) The Closing...................................................................7
(c) Actions at the Closing........................................................7
(d) Effect of Merger..............................................................7
(e) Procedure for Payment.........................................................8
(f) Lost or Stolen Certificates..................................................10
(g) Closing of Transfer Records..................................................10
(h) Dissenting Shares............................................................10
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY
11
(a) Organization, Qualification and Corporate Power..............................11
(b) Capitalization...............................................................11
(c) Noncontravention.............................................................12
(d) Brokers' Fees................................................................12
(e) Title to Tangible Personal Property..........................................12
(f) Subsidiaries.................................................................13
(g) Financial Statements.........................................................13
(h) Events Subsequent to Most Recent Fiscal Year End.............................13
(j) Legal Compliance.............................................................15
(k) Tax Matters..................................................................15
(l) Real Property................................................................16
(m) Intellectual Property........................................................18
(n) Tangible Assets..............................................................20
(o) Inventory....................................................................20
(p) Contracts....................................................................20
(q) Notes and Accounts Receivable................................................21
(r) Powers of Attorney...........................................................22
(s) Insurance....................................................................22
(t) Litigation...................................................................22
(v) Employee Benefits............................................................23
(w) Guaranties...................................................................25
(x) Environment, Health, and Safety Matters......................................25
(y) Certain Business Relationships With the Company..............................26
(z) Operational Matters..........................................................26
(aa) Records......................................................................27
(bb) Disclosure...................................................................27
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE
TRANSACTION SUBSIDIARY........................................................................27
(ii)
(a) Organization.................................................................27
(b) Authorization of Transaction.................................................27
(c) Noncontravention.............................................................27
(d) Brokers' Fees................................................................28
5. COVENANTS......................................................................................28
(a) General......................................................................28
(b) Notices and Consents.........................................................28
(c) Regulatory Matters and Approvals.............................................28
(d) Operation of Business........................................................29
(e) Full Access..................................................................30
(f) Notice of Developments.......................................................30
(g) Exclusivity..................................................................30
(h) Termination of 401(k) Plan and Defined Benefit Plan..........................31
(i) Audit........................................................................31
(j) Financial Information........................................................32
(k) Shareholder Approvals........................................................32
(l) Phase I Environmental Assessment.............................................32
6. POST CLOSING COVENANTS.........................................................................32
(a) Indemnification of Officers and Directors....................................32
(b) Continuing Obligations.......................................................33
(c) Costs of Termination of Benefit Plans........................................33
7. CONDITIONS TO OBLIGATION TO CLOSE..............................................................33
(a) Conditions to Obligation of the Buyer and the
Transaction Subsidiary......................................................33
(b) Conditions to Obligation of the Company......................................36
8. DELIVERIES AND ACTIONS AT CLOSING..............................................................37
(a) Deliveries and Actions by the Company........................................38
(b) Deliveries and Actions by the Buyer and the Transaction
Subsidiary..................................................................39
(c) Other Actions................................................................40
9. TERMINATION....................................................................................40
(a) Termination of Agreement.....................................................40
(b) Effect of Termination........................................................40
(c) Effect of Failure to Terminate...............................................41
10. REMEDIES FOR BREACHES OF REPRESENTATIONS AND WARRANTIES
41
(a) Survival of Representations and Warranties...................................41
(b) Indemnification by Company Shareholders......................................41
(c) Indemnification by Buyer.....................................................41
(iii)
(d) Matters Involving Third Parties..............................................42
(e) Determination of Adverse Consequences........................................43
(g) Information Concerning Claims................................................44
11. MISCELLANEOUS..................................................................................44
(a) Survival.....................................................................44
(b) Press Releases and Public Announcements......................................44
(c) No Third-Party Beneficiaries.................................................45
(d) Entire Agreement.............................................................45
(e) Succession and Assignment....................................................45
(f) Counterparts.................................................................45
(g) Headings.....................................................................45
(h) Notices......................................................................45
(i) Governing Law................................................................46
(j) Amendments and Waivers.......................................................46
(k) Severability.................................................................47
(l) Expenses.....................................................................47
(m) Construction.................................................................47
(n) Incorporation of Exhibits and Schedules......................................47
The following exhibits and schedule have been omitted and will be supplementally
filed with the Commission upon request:
Exhibit A - Plan of Merger
Exhibit B - Paying Agent Agreement
Exhibit C - [Intentionally Omitted]
Exhibit D - Post-Closing Escrow Agreement
Exhibit E - Benefit Plan Escrow Agreement
Exhibit F - Company Financial Statements
Exhibit G - Form of Opinion of Counsel to the Company
Exhibit H - Form of Employment Agreement, Xxxxx Xxxxxx
Exhibit I - Form of Noncompetition and Confidentiality Agreement
Exhibit J - Form of Opinion of Counsel to the Buyer and the Transaction
Subsidiary Disclosure Schedule
(iv)
AGREEMENT AND PLAN OF MERGER
Agreement entered into on June 5, 1998, by and among Iron
Mountain Records Management, Inc., a Delaware corporation (the "Buyer"), Iron
Mountain/NUS, Inc., a Pennsylvania corporation and a wholly-owned Subsidiary of
the Buyer (the "Transaction Subsidiary"), and National Underground Storage,
Inc., a Pennsylvania corporation (the "Company"). The Buyer, the Transaction
Subsidiary, and the Company are each referred to individually as a "Party" and
collectively herein as the "Parties."
This Agreement contemplates a transaction in which the Buyer
will acquire all of the outstanding capital stock of the Company for cash
through a reverse subsidiary merger of the Transaction Subsidiary with and into
the Company.
NOW, THEREFORE, in consideration of the premises and the
mutual promises herein made, and in consideration of the representations,
warranties, and covenants herein contained, the Parties agree as follows:
1. DEFINITIONS.
"Benefit Plan Escrow Agent" means Bank of New York or such
other entity as the Buyer and the Company may select prior to the Closing Date.
"Benefit Plan Escrow Agreement" has the meaning set forth in
ss.2(e)(i)(D) below.
"Benefit Plan Escrow Deposit" means the sum of **The
confidential portion has been so omitted pursuant to a request for confidential
treatment and has been filed separately with the Commission.** deposited with
the Benefit Plan Escrow Agent pursuant to the Benefit Plan Escrow Agreement.
"Benefit Plan Escrow Fund" means the Benefit Plan Escrow
Deposit plus any interest or dividends accrued thereon from and after the
Effective Time.
"Buyer" has the meaning set forth in the preface above.
"Claims" has the meaning set forth in ss.10(b) below.
"Closing" has the meaning set forth in ss.2(b) below.
"Closing Date" has the meaning set forth in ss.2(b) below.
"COBRA" means the requirements of Part 6 of Subtitle B of
Title I of ERISA and Codess.4980B.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preface above.
"Company Share" means any share of the common stock, $25 par
value per share, of the Company.
"Company Shareholder" has the meaning set forth in ss.3(b)
below.
"Confidential Information" means any information concerning
the business and affairs of the Company that is not already generally available
to the public.
"Confidentiality Agreement" has the meaning set forth in
ss.5(e) below.
"Defined Benefit Plan" means the National Underground Storage,
Inc. Employee Defined Benefit Pension Plan.
"Disclosure Schedule" has the meaning set forth in ss.3 below.
"Dissenting Share" means any Company Share which any Company
Shareholder, who or which has filed with the Company his or its written notice
of intention to demand payment of fair value in accordance with the provisions
of the Pennsylvania Business Corporation Law, holds of record.
"Effective Time" has the meaning set forth in ss.2(d)(i)
below.
"Employee Benefit Plan" has the meaning set forth in ERISA
ss.3(3).
"Employee Pension Benefit Plan" has the meaning set forth in
ERISA ss.3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in
ERISA ss.3(1).
"Environmental Health and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial administrative orders
and determinations and all common law concerning public health and safety,
worker health and safety, pollution, pollution control or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any Regulated Substances as now in
effect.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means each entity which is treated as a
single employer with the Company for purposes of ss.414 of the Code or
ss.4001(b)(1) of ERISA.
"Existing Violations" has the meaning set forth in ss. 3(n)
below.
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"401(k) Plan" means the National Underground Storage, Inc.
Employees' 401(k) Profit Sharing Plan.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Intellectual Property" means (a) inventions (whether
patentable or unpatentable and whether or not reduced to practice) and all
improvements thereto, (b) trademarks, service marks, trade dress, logos, trade
names, and corporate names, and including all goodwill associated therewith, and
all applications, registrations and renewals in connection therewith, (c) trade
secrets and confidential business information (including ideas, know-how, work
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (d) computer software (including data and
related documentation), (e) other proprietary rights, and (f) copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable
investigation.
"Letter of Transmittal" has the meaning set forth in
ss.2(e)(i)(B) below.
"Merger" has the meaning set forth in ss.2(a) below.
"Merger Consideration" means Thirty Million Dollars
($30,000,000.00) plus any amount, after taxes, distributable to the Surviving
Corporation as sponsoring employer of the Defined Benefit Plan as a result of
the termination of such Plan, minus the aggregate amount of:
(i) Seven Million Three Hundred Eighty One Thousand Two Hundred
and 00/100 Dollars ($7,381,200.00),
(ii) any liabilities of the Company as of the Effective Time and
any amounts paid by the Company from March 1, 1998 up to and
ending on the Effective Time related to termination of the
Defined Benefit Plan and the 401(k) Plan, and
(iii) any obligations or expenses incurred by the Company after
March 1, 1998 with respect to services provided by any third
party in connection with the transactions contemplated by this
Agreement, whether paid prior to the Closing or outstanding on
the Closing Date, including outside attorneys' fees,
accountants' fees and brokers' commissions, fees and expenses
and the retainer fee of Thirty-Five Thousand and 00/100
Dollars ($35,000.00) paid to Xxxxxx/Hunter Investment Bankers
on or about September 17, 1997;
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provided that (i) the Merger Consideration shall be reduced by the amount of any
costs incurred by the Buyer or the Surviving Corporation with respect to
services provided by any third party (including fees and charges of outside
professional advisors, such as attorneys, accountants and actuaries) after the
Effective Time in connection with the termination of the Defined Benefit Plan
and the 401(k) Plan as provided in xx.xx. 5(h) and 6(c), and (ii) the Merger
Consideration is subject to adjustment pursuant to the indemnification
provisions in ss.10(b).
"Most Recent Balance Sheet" means the balance sheet contained
in the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth
in ss.3(g) below.
"Most Recent Fiscal Quarter End" has the meaning set forth in
ss.3(g) below.
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice. With respect to capital
expenditures, "Ordinary Course of Business" means capital expenditures within
the Company's 1998 capital budget included in the Disclosure Schedule.
"Parties" has the meaning set forth in the preface above.
"Party" has the meaning set forth in the preface above.
"Paying Agent" means Bank Boston, N.A., or such other entity
as the Buyer and the Company may select prior to the Closing Date.
"Paying Agent Agreement" has the meaning set forth in
ss.2(e)(i)(A) below.
"Payment Fund" has the meaning set forth in ss.2(e)(i)(A)
below.
"Pennsylvania Articles of Merger" has the meaning set forth in
ss.2(c) below.
"Pennsylvania Business Corporation Law" means the Pennsylvania
Business Corporation Law of 1988, as amended.
"Per Share Merger Consideration" has the meaning set forth in
ss.2(d)(v) below.
"Permitted Exceptions to Title" has the meaning set forth in
ss.3(l) below.
"Permitted Investments" means (i) direct obligations of, or
obligations fully guaranteed by, the United States of America or any agency
thereof, (ii) certificates of deposit issued by commercial banks having a
combined capital, surplus and undivided profits of not less than Five Hundred
Million Dollars ($500,000,000.00), and (iii) money market mutual funds
authorized solely to invest in any of the above.
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"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Plan of Merger" has the meaning set forth in ss.2(a) below.
"Post Closing Escrow Agent" means Bank of New York or such
other entity as the Buyer and the Company may select prior to the Closing Date.
"Post Closing Escrow Agreement" has the meaning set forth in
ss.2(e)(i)(C) below.
"Post Closing Escrow Deposit" means the sum of **The
confidential portion has been so omitted pursuant to a request for confidential
treatment and has been filed separately with the Commission.** deposited with
the Post Closing Escrow Agent.
"Post Closing Escrow Fund" means the Post Closing Escrow
Deposit, plus any interest or dividends accrued thereon from and after the
Effective Time.
"Principal Shareholders" means Xxxxxx X. Black, Xxxx X. Xxxxx
and his wife, Xxxxxxx Xxxxx, J. Xxxxxxx Xxxxx, Xxxx X. Xxxx, Xxxxx X. Xxxxxx and
his wife, Xxxxxxxxx Xxxxxx, Xxxxxxx X. Xxxxxx and his wife, Xxxx E.N. Xxxxxx,
and Xxxxxxxx X. Xxxxxxx.
"Pro Forma Company Shares Outstanding" means the number of
Company Shares issued and outstanding, excluding Treasury Shares, at or
immediately prior to the Effective Time plus the number of Company Shares, if
any, which may be issued pursuant to any option, right or warrant to acquire
Company Shares which is outstanding as of the Effective Time.
"Real Property" has the meaning set forth in ss.3(k)(i).
"Regulated Substances" means, without limitation, any
substance, material or waste, regardless of its form or nature, which under
Environmental, Health, and Safety Requirements is defined as a "hazardous
substance," "hazardous waste," "toxic substance," "extremely hazardous
substance," "toxic chemical," "toxic waste," "solid waste," "industrial waste,"
"residual waste," "municipal waste," "special handling waste," "mixed waste,"
"infectious waste," "chemotherapeutic waste," "medical waste," "regulated
substance," "pollutant," or "contaminant"or any other substance, material or
waste, regardless of its form or nature, which otherwise is regulated by
Environmental, Health, and Safety Requirements, including but not limited to,
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. ss.9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
ss.6901 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. ss.1801
et seq., the Toxic Substances Control Act, 15 U.S.C. ss.2601 et seq., the
Federal Water Pollution Control Act, 33 U.S.C. ss.1251 et seq., the Federal Safe
Drinking Water Act, 42 U.S.C. ss.ss.300f-300j, the Federal Air Pollution Control
Act, 42 U.S.C. ss.7401 et seq., the Oil Pollution Act, 33 U.S.C. ss.2701 et
seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. ss.136 to
136y, the
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Occupational Safety and Health Act, 29 U.S.C. ss.651 et seq., each as amended,
or any other equivalent Environmental, Health, and Safety Requirements.
"Representatives" has the meaning set forth in ss.10(d)(v).
"Requisite Shareholder Approval" means the affirmative vote of
a majority of the votes cast by all Company Shares in favor of this Agreement
and the Plan of Merger at a duly convened meeting of the Company Shareholders.
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a) mechanic's,
materialman's, and similar liens for goods or services payment for which is not
yet due, (b) liens for taxes not yet due and payable or for taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Shareholders Agreement" means that Shareholder Agreement
dated the date hereof between the Buyer, on the one hand, and the Principal
Shareholders, on the other.
"Shareholders' Meeting" has the meaning set forth in
ss.5(c)(i) below.
"Storage Customers" means customers of the Company for which
the Company performs records management and storage services in areas controlled
by the Company.
"Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the common stock
or has the power to vote or direct the voting of sufficient securities to elect
a majority of the directors.
"Survival Period" has the meaning set forth in ss.10(a) below.
"Surviving Corporation" has the meaning set forth in ss.2(a)
below.
"Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
ss.59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
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"Transaction Subsidiary" has the meaning set forth in the
preface above.
"Treasury Shares" means any Company Shares held in the
treasury of the Company.
2. BASIC TRANSACTION.
(a) The Merger. On and subject to the terms and conditions of
this Agreement, the Transaction Subsidiary will merge with and into the Company
(the "Merger") at the Effective Time. The Company shall be the corporation
surviving the Merger (the "Surviving Corporation"). In order to effectuate the
Merger, the Company shall, and the Buyer shall cause the Transaction Subsidiary
to, execute and deliver a Plan of Merger substantially in the form of Exhibit A
attached hereto (the "Plan of Merger").
(b) The Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place on the third business day
following the satisfaction or waiver of all conditions to the obligations of the
Parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective Parties will take at the
Closing as provided in ss.2(c) below), which the parties currently anticipate
will be July 1, 1998 or such other date as the Parties may mutually determine
(the "Closing Date"); provided, however, that the Closing Date shall be no later
than July 15, 1998.
(c) Actions at the Closing. At the Closing, (i) the Company
will deliver to the Buyer and the Transaction Subsidiary the various
certificates, instruments and documents referred to in ss. 8(a) below, (ii) the
Buyer and the Transaction Subsidiary will deliver to the Company the various
certificates, instruments, and documents referred to in ss. 8(b) below, (iii)
the Company and the Transaction Subsidiary will file with the Secretary of State
of the Commonwealth of Pennsylvania the Articles of Merger substantially in the
form attached as an exhibit to the Plan of Merger (the "Pennsylvania Articles of
Merger") and (iv) the Buyer will provide confirmation that the Surviving
Corporation has delivered (A) the Payment Fund to the Paying Agent, (B) the
Benefit Plan Escrow Deposit to the Benefit Plan Escrow Agent and (C) the Post
Closing Escrow Deposit to the Post Closing Escrow Agent in the manner provided
below in this ss.2.
(d) Effect of Merger.
(i) General. The Merger shall become effective at the time
(the "Effective Time") the Company and the Transaction Subsidiary file the
Pennsylvania Articles of Merger with the Secretary of State of the Commonwealth
of Pennsylvania, as provided in the Plan of Merger. The Merger shall have the
effect set forth in the Pennsylvania Business Corporation Law. At the Effective
Time, or at such other time as is provided in the Plan of Merger or the
Pennsylvania Articles of Merger, the separate existence of the Transaction
Subsidiary shall cease and the Company shall be the Surviving Corporation. The
Surviving Corporation may, at any time after the Effective Time, take any action
(including executing and delivering any document) in the name and on behalf of
either the Company or the Transaction Subsidiary in order to carry out and
effectuate the transactions contemplated by this Agreement.
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(ii) Articles of Incorporation. The Articles of Incorporation
of the Surviving Corporation shall be amended and restated at and as of the
Effective Time to read as did the Articles of Incorporation of the Transaction
Subsidiary immediately prior to the Effective Time (except that the name of the
Surviving Corporation will remain unchanged).
(iii) Bylaws. The Bylaws of the Surviving Corporation shall be
amended and restated at and as of the Effective Time to read as did the Bylaws
of the Transaction Subsidiary immediately prior to the Effective Time (except
that the name of the Surviving Corporation will remain unchanged).
(iv) Directors and Officers. The directors and officers of the
Transaction Subsidiary shall become the directors and officers of the Surviving
Corporation at and as of the Effective Time (retaining their respective
positions and terms of office).
(v) Conversion of Company Shares. At and as of the Effective
Time, (A) each Company Share (other than any Treasury Shares and any Dissenting
Shares) shall be converted into the right to receive, subject to the
indemnification provisions in ss. 10 hereof (as reflected in the Post-Closing
Escrow Agreement) and the Defined Benefit Plan and 401(k) Plan termination
expense reimbursement provisions of xx.xx. 5(h) and 6(c) (as reflected in the
Benefit Plan Escrow Agreement) an amount (the "Per Share Merger Consideration")
in cash without interest (except such interest as may be disbursed pursuant to
the Post Closing Escrow Agreement and the Benefit Plan Escrow Agreement) equal
to the Merger Consideration divided by the Pro Forma Company Shares Outstanding,
(B) each Dissenting Share shall be converted into the right to receive payment
from the Surviving Corporation with respect thereto in accordance with the
provisions of the Pennsylvania Business Corporation Law; and (C) all Treasury
Shares shall be canceled and extinguished without any conversion thereof;
provided, however, that the Merger Consideration shall be subject to equitable
adjustment in the event of any stock split, stock dividend, reverse stock split,
or other change in the number of Pro Forma Company Shares Outstanding. No
Company Share shall be deemed to be outstanding or to have any rights other than
those set forth in this ss.2(d)(v) after the Effective Time.
(vi) Conversion of Capital Stock of the Transaction
Subsidiary. At and as of the Effective Time, each share of Common Stock, $0.01
par value per share, of the Transaction Subsidiary shall be converted into one
share of Common Stock, $0.01 par value per share, of the Surviving Corporation.
(e) Procedure for Payment.
(i) At and as of the Effective Time:
(A) the Buyer will pay or cause the Transaction Subsidiary
to pay to the Paying Agent cash (the "Payment Fund") in an amount equal to the
Merger Consideration minus the Post Closing Escrow Deposit and the Benefit Plan
Escrow Deposit, and the Buyer, Surviving Corporation, Paying Agent, and the
Representatives, as agents for and representatives
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of the Company Shareholders, shall execute and deliver to the Paying Agent, the
Paying Agent Agreement in the form attached hereto as Exhibit B (the "Paying
Agent Agreement"). The Payment Fund shall be held and disbursed in accordance
with and subject to the terms of the Paying Agent Agreement;
(B) the Buyer will cause the Paying Agent to mail a letter
of transmittal (with instructions for its use) in a form agreed upon by the
Parties (the "Letter of Transmittal") to each record holder of outstanding
Company Shares for the holder to use in surrendering the certificates which
represented his, her or its Company Shares in exchange for the payment of their
respective portion of the Payment Fund in accordance with the Paying Agent
Agreement. In accordance with and subject to the terms of the Paying Agent
Agreement, the Paying Agent will accept the surrender of all properly tendered
certificates which represent the Company Shares, transmit payment to the holders
of such certificates of their respective portion of the Payment Fund and deliver
such certificates to the Surviving Corporation, all in accordance with the
Paying Agent Agreement. No interest will accrue or be paid to the holder of any
outstanding Company Shares with respect to the Payment Fund;
(C) the Buyer will pay or cause the Transaction Subsidiary
to pay an amount in cash equal to the Post Closing Escrow Deposit to the Post
Closing Escrow Agent, and the Buyer, the Surviving Corporation, the Post Closing
Escrow Agent and the Representatives, as agents for and representatives of the
Company Shareholders, shall execute and deliver to the Post Closing Escrow
Agent, the Post Closing Escrow Agreement in the form attached hereto as Exhibit
D (the "Post Closing Escrow Agreement"). The Post Closing Escrow Deposit shall
be held and disbursed in accordance with and subject to the terms of the Post
Closing Escrow Agreement; and
(D) the Buyer will pay or cause the Transaction Subsidiary
to pay an amount in cash equal to the Benefit Plan Escrow Deposit to the Benefit
Plan Escrow Agent, and the Buyer, the Benefit Plan Escrow Agent, the Surviving
Corporation, and the Representatives, as agents for and representatives of the
Company Shareholders, shall execute and deliver to the Benefit Plan Escrow
Agent, the Benefit Plan Escrow Agreement in the form attached hereto as Exhibit
E (the "Benefit Plan Escrow Agreement"). The Benefit Plan Escrow Fund shall be
held and disbursed in accordance with and subject to the terms of the Benefit
Plan Escrow Agreement.
(ii) The Buyer may cause the Paying Agent to invest the cash
included in the Payment Fund in one or more of the Permitted Investments;
provided, however, that the terms and conditions of the investments shall be
such as to permit the Paying Agent to make prompt payment of the Merger
Consideration as necessary. The Buyer may cause the Paying Agent to pay over to
the Surviving Corporation any net earnings with respect to the investments, and
the Buyer will cause the Surviving Corporation to replace promptly any portion
of the Payment fund which the Paying Agent loses through investments.
(iii) The Buyer may cause the Paying Agent to pay over to the
Surviving Corporation any portion of the Payment Fund (including any earnings
thereon) remaining 180 days after the Effective Time, and thereafter all former
shareholders of the Company shall be entitled
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to look to the Surviving Corporation (subject to abandoned property, escheat,
and other similar laws) as general creditors thereof with respect to the cash
payable upon surrender of their certificates.
(iv) The Buyer shall be responsible for and shall pay or cause
the Surviving Corporation to pay all charges and expenses of the Paying Agent,
the Post Closing Escrow Agent, and the Benefit Plan Escrow Agent without the
right to set off any such amounts against the Payment Fund, the Post Closing
Escrow Fund or the Benefit Plan Escrow Fund.
(v) The Post Closing Escrow Agent and the Benefit Plan Escrow
Agent shall invest the cash included in the Post Closing Escrow Fund and the
Benefit Plan Escrow Fund in accordance with the terms of the Post Closing Escrow
Agreement and the Benefit Plan Escrow Agreement, respectively. Any net earnings
with respect to such investments shall be paid to the Company Shareholders or
the Surviving Corporation in accordance with the provisions of the applicable
escrow agreement.
(f) Lost or Stolen Certificates. In the event any certificate
representing Company Shares shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such certificate to
be lost, stolen or destroyed and the execution of an indemnity in respect
thereof, which may include the requirement of a bond (all as provided in the
Letter of Transmittal and the Paying Agent Agreement), the Paying Agent shall be
authorized, in exchange for such affidavit and indemnity, to deliver the Per
Share Merger Consideration in respect of such lost, stolen, or destroyed
certificate representing Company Shares in accordance with the terms of the
Paying Agent Agreement.
(g) Closing of Transfer Records. After the close of business
on the Closing Date, transfers of Company Shares outstanding prior to the
Effective Time shall not be made on the stock transfer books of the Surviving
Corporation.
(h) Dissenting Shares.
(i) Notwithstanding any other provision of this Agreement to
the contrary, holders of shares of Company Shares outstanding immediately prior
to the Effective Time that are held by Company Shareholders who are entitled to
and shall have properly complied with all requirements of and asserted
dissenters rights under the provisions of Subchapter D of Chapter 15 (relating
to dissenters rights) of the Pennsylvania Business Corporation Law, who shall
have performed every act required up to and after the time involved for the
assertion of those rights and who shall not have withdrawn such assertion or
otherwise have forfeited appraisal rights (collectively, the "Dissenting
Shares"), shall be entitled to their rights under the Pennsylvania Business
Corporation Law with respect to such shares. The Surviving Corporation shall pay
the fair value for any Dissenting Shares and, if applicable, interest as
required by and as determined in accordance with the Pennsylvania Business
Corporation Law, and no such payment shall form the basis of a claim against the
Company Shareholders under this Agreement.
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(ii) The Company shall give the Buyer prompt written notice of
its receipt of any notices of intention to demand payment of fair value for
shares or other demands for payment or appraisals, any withdrawals of such
notices or demands and any other instruments or certificates deposited with the
Company or served by Company Shareholders in accordance with or pursuant to the
Pennsylvania Business Corporation Law relating thereto. The Company and the
Buyer shall jointly direct all negotiations and proceedings with respect to
notices or demands for payment or appraisals under the Pennsylvania Business
Corporation Law. The Company shall not, except with the prior written consent of
the Buyer, settle or offer to settle, or make any payment with respect to, any
demands for payment of fair value for shares or other demands for payment or
appraisal except as required by the provisions of the Pennsylvania Business
Corporation Law. The Company shall timely comply with all requirements and
provisions of the Pennsylvania Business Corporation Law relating to any
Dissenting Shares and shall give the Buyer prompt written notice prior to taking
any action in connection therewith or making any payment required thereunder.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY.
The Company represents and warrants to the Buyer that the
statements contained in this ss.3 are correct and complete as of the date of
this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this ss.3), except as otherwise set forth in the
disclosure schedule delivered by the Company to the Buyer on the date hereof and
initialed by the Parties (the "Disclosure Schedule"). The Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this ss.3. The Company shall be entitled to supplement
and amend the information in the Disclosure Schedule at any time and from time
to time prior to the Effective Time and such supplements or amendments shall not
form the basis of any claim against the Company or the Company Shareholders
including without limitation any claim under ss.10 below; provided, that no such
supplement or amendment which constitutes a material change from information
originally included in the Disclosure Schedule shall constitute a waiver by the
Buyer and the Transaction Subsidiary of their right not to close the
transactions contemplated hereby if the original representations and warranties
are not true and correct on the Closing Date.
(a) Organization, Qualification and Corporate Power. The
Company is a corporation duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation. The Company is duly
authorized to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required, except where the lack of such
qualification would not have a material adverse effect on the business,
financial condition, operations, results of operations, or future prospects of
the Company. The Company has full corporate power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it. ss.3(a) of the Disclosure Schedule lists the directors and officers
of the Company.
(b) Capitalization. The entire authorized capital stock of the
Company consists of 40,000 Company Shares, of which 10,175 Company Shares are
issued and outstanding of
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which 2,980 Company Shares are held in treasury. All of the issued and
outstanding Company Shares have been duly authorized, are validly issued, fully
paid, and nonassessable, and are held of record by the respective Persons (each
a "Company Shareholder") as set forth in the Company's shareholder records. The
Company's Shareholder records accurately reflect the number of Company Shares
held by each Company Shareholder. The Company will provide a list of Company
Shareholders and will permit the Buyer to inspect the Company's records as to
Company Shareholders at any time after the date of this Agreement. Except as set
forth in ss.3(b) of the Disclosure Schedule, there are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
the Company to issue, sell, or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Company. Except for that certain Voting Trust Agreement dated December 14, 1988,
a copy of which has been delivered to the Buyer, there are no voting trusts,
proxies, or other agreements or understandings with respect to the voting of the
capital stock of the Company.
(c) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Company is subject or any provision
of the charter or bylaws of the Company or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Company is a party or by which it is bound or to which
any of its assets are subject (or result in the imposition of any Security
Interest upon any of its assets), except where the violation, conflict, breach,
default, acceleration, termination, modification, cancellation, failure to give
notice, or Security Interest would not have a material adverse effect on the
business, financial condition, operations or results of operations of the
Company or on the ability of the Parties to consummate the transactions
contemplated by this Agreement. Other than in connection with the provisions of
the Xxxx-Xxxxx-Xxxxxx Act and the Pennsylvania Business Corporation Law, the
Company is not required to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government or governmental agency
in order for the Parties to consummate the transactions contemplated by this
Agreement, except where the failure to give notice, to file, or to obtain any
authorization, consent, or approval would not have a material adverse effect on
the business, financial condition, operations, results of operations, or future
prospects of the Company or on the ability of the Parties to consummate the
transactions contemplated by this Agreement.
(d) Brokers' Fees. Except as set forth on ss.3(d) of the
Disclosure Schedule, the Company does not have any liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(e) Title to Tangible Personal Property. The Company has good
title to, or a valid, leasehold interest in, the tangible personal property used
by it, located on its premises, or shown on the Most Recent Balance Sheet or
acquired after the date thereof, free and clear of all
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Security Interests, except as set forth on ss.3(e) of the Disclosure Schedule
and except for property disposed of in the Ordinary Course of Business since the
date of the Most Recent Balance Sheet.
(f) Subsidiaries. The Company has no Subsidiaries and has not
had any Subsidiaries during the preceding five years.
(g) Financial Statements. Attached hereto as Exhibit F are the
following financial statements (collectively the "Financial Statements"): (i)
audited consolidated balance sheets and statements of income, changes in
shareholders' equity, and cash flow as of and for the fiscal years ended
December 31, 1996 and December 31, 1997 (the "Most Recent Fiscal Year End") for
the Company; and (ii) unaudited consolidated balance sheets and statements of
income, changes in shareholders' equity, and cash flow (the "Most Recent
Financial Statements") as of and for the quarter ended March 31, 1998 (the "Most
Recent Fiscal Quarter End") for the Company. The Financial Statements (including
the notes thereto) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby and present fairly the
financial condition of the Company for such periods; provided, however, that the
Most Recent Financial Statements are subject to normal year-end adjustments and
lack footnotes and other presentation items.
(h) Events Subsequent to Most Recent Fiscal Year End. Except
as set forth in ss. 3(h) of the Disclosure Schedule, since the Most Recent
Fiscal Year End, there has not been any material adverse change in the business,
financial conditions, operations, or results of operations of the Company taken
as a whole. Without limiting the generality of the foregoing, since that date:
(i) the Company has not sold, leased, transferred, or
assigned any material assets, tangible or intangible, outside the Ordinary
Course of Business;
(ii) the Company has not entered into any material
agreement, contract, lease, or license outside the Ordinary Course of Business;
(iii) to the Knowledge of the Company, no party (including
the Company) has accelerated, terminated, made material modifications to, or
canceled any material agreement, contract, lease, or license to which the
Company is a party or by which it is bound;
(iv) the Company has not imposed or suffered the existence
or imposition of any Security Interest upon any of its assets, tangible or
intangible;
(v) the Company has not made any material capital
expenditures outside the Ordinary Course of Business;
(vi) the Company has not made any material capital
investment in, or any material loan to, any other Person outside the Ordinary
Course of Business;
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(vii) the Company has not created, incurred, assumed, or
guaranteed indebtedness for borrowed money or capitalized lease obligations, and
since the Most Recent Fiscal Year End the Company has amortized all indebtedness
then existing in accordance with amortization requirements as they then existed;
(viii) the Company has not granted any license or
sublicense of any material rights under or with respect to any Intellectual
Property;
(ix) there has been no change made or authorized in the
charter or bylaws of the Company;
(x) except pursuant to the Company's Key Employee
Restricted Stock Option Plan, the Company has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock;
(xi) the Company has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock (whether in
cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock other than a dividend paid to the Company Shareholders in March,
1998 in the amount of approximately Forty Thousand and 00/100 Dollars
($40,000.00);
(xii) the Company has not experienced any material damage,
destruction, or loss (whether or not covered by insurance) to its property;
(xiii) the Company has not made any loan to, or entered
into any other transaction with, any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xiv) the Company has not entered into any employment
contract or collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement, except as provided for in this
Agreement;
(xv) the Company has not granted any increase in the base
compensation of any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xvi) the Company has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors, officers, and
employees (or taken any such action with respect to any other Employee Benefit
Plan), except as provided for in this Agreement;
(xvii) the Company has not made any other material change
in employment terms for any of its directors, officers, and employees outside
the Ordinary Course of Business; and
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(xviii) the Company has not committed to any of the
foregoing, except as provided for in this Agreement.
(i) Undisclosed Liabilities. To the knowledge of the Company,
it has no material liability (whether asserted or unasserted, whether absolute
or contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due, including any liability for taxes), except for
(i) liabilities set forth on the face of the Most Recent Balance Sheet (rather
than in any notes thereto), (ii) liabilities which have arisen after the Most
Recent Fiscal Quarter End in the Ordinary Court of Business, and (iii) the items
set forth on the Disclosure Schedule.
(j) Legal Compliance. The Company has substantially complied
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings and charges thereunder) of
federal, state, local and foreign governments (and all agencies thereof), and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or, to the knowledge of the Company, commenced
against it alleging any failure so to comply, except where the failure to comply
would not have a material adverse effect on the business, financial condition,
operations, or results of operations of the Company.
(k) Tax Matters. With respect to Taxes:
(i) the Company has filed, within the time and in the
manner prescribed by law, all Tax Returns or requests for extensions, required
to be filed under federal, state or local laws by the Company;
(ii) the Company has, within the time and in the manner
prescribed by law, paid (and until the Effective Time will, within the time and
in the manner prescribed by law, pay) all Taxes that are shown as due and
payable on all Tax Returns filed by the Company;
(iii) the Company has established (and until the Effective
Time will establish) on its books and records reserves (to be specifically
designated as an increase to current liabilities) that are adequate for the
payment of all Taxes accrued or accruable under GAAP for all periods prior to
and including the Closing Date;
(iv) there are no liens for Taxes upon the assets of the
Company except liens for Taxes not yet due;
(v) the Company has not filed (and will not file prior to
the Effective Time) any consent agreement under ss.341(f) of the Code and none
of the assets of the Company are subject to an election under ss.341(f) of the
Code;
(vi) except as set forth in ss. 3(k) of the Disclosure
Schedule (which shall set forth the type of return, date filed, and date of
expiration of the statute of limitations), no
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deficiency for any Taxes has been proposed, asserted or assessed against the
Company which has not been resolved and paid in full;
(vii) except as set forth in ss. 3(k) of the Disclosure
Schedule, there are no outstanding written waivers or comparable written
consents regarding the application of the statute of limitations with respect to
any Taxes or Tax Returns that have been given by the Company;
(viii) except as set forth in ss. 3(k) of the Disclosure
Schedule, which shall set forth that nature of the proceeding, the type of
return, the deficiencies proposed or assessed and the amount thereof, and the
taxable year in question, no federal, state or local audits or other
administrative proceedings or court proceedings are presently pending, or to the
Knowledge of the Company, threatened, with regard to any Taxes or Tax Returns;
(ix) the Company is not a party to any tax-sharing or
allocation agreement, nor does it owe any amount under any tax-sharing or
allocation agreement;
(x) the Company does not have actual or potential
liability for any tax obligation of any taxpayer (including without limitation
any affiliated group of corporations or other entities that included the Company
during a prior period) other than itself;
(xi) no amounts payable by the Company will fail to be
deductible for federal income tax purposes by virtue of ss.280G of the Code;
(xii) except as set forth in ss. 3(k) of the Disclosure
Schedule, the Company has complied (and until the Effective Time will comply)
with all applicable laws, rules and regulations relating to the payment of
withholding Taxes (including, without limitation, withholding of Taxes pursuant
to Section 1441 or 1442 of the Code) and has, within the time and in the manner
prescribed by law, withheld from employees' wages and paid over to the proper
governmental authorities all material amounts required to be so withheld and
paid over under all applicable laws;
(xiii) the Company is not and has not in the last five (5)
years been a member of an Affiliated Group within the meaning of Code
ss.1504(a).
(xiv) Copies of all federal, state and local income Tax
Returns, examination reports and statements of income tax deficiencies assessed
against or agreed to by the Company and for any and all taxable periods with
respect to which the statute of limitations for the collection of any Tax has
not expired have been made available by the Company for inspection by the Buyer.
(l) Real Property.
(i) ss.3(l)(i) of the Disclosure Schedule lists and
describes briefly all Real Property that the Company owns (the "Real Property"),
as well as any real property previously
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owned by the Company in the last ten (10) years. With respect to the Real
Property presently owned by the Company:
(A) the Company has good and marketable title to the
Real Property, free and clear of any Security Interest except as set forth on
ss.3(l)(i)(A) of the Disclosure Schedule, easement, covenant, or other
restriction, except for installments of special assessments not yet due and
payable, recorded easements, covenants, leases and reservations of mineral
rights and utility and other restrictions of record, and building restrictions,
zoning restrictions, and other easements and restrictions existing generally
with respect to properties of a similar character, none of which affects
materially and adversely the current use, occupancy, value, or the marketability
of title, of the property subject thereto (all of the foregoing, except for
Security Interests, the "Permitted Exceptions to Title");
(B) there are no pending or, to the Knowledge of the
Company, threatened condemnation proceedings, lawsuits, or administrative
actions relating to the Real Property or other matters affecting materially and
adversely the current use, occupancy, or value thereof;
(C) the buildings and improvements (including
underground improvements) are located within the boundary lines of the described
parcels of land and the Company is not aware of any encroachment on any easement
which may burden the land;
(D) the buildings and improvements on the Real Property
are not in material 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);
(E) all facilities located on the Real Property are,
insofar as the Company is aware, structurally sound, and all facilities located
on the Real Property have received all approvals of governmental authorities
(including material licenses and permits) required in connection with the
ownership or operation thereof, and have been operated and maintained in
accordance with applicable laws, rules, and regulations in all material
respects;
(F) 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 other
than leases entered in the Ordinary Course of Business pursuant to which the
Company has leased space to tenants thereupon;
(G) Section 3(l)(i)(G) of the Disclosure Schedule
identifies each non-standard lease pursuant to which the Company has leased
space to tenants;
(H) there are no outstanding options or rights of first
refusal to purchase the Real Property, or any portion thereof or interest
therein;
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(I) there are no parties (other than the Company) in
possession of the Real Property, other than tenants under any leases entered in
the Ordinary Course of Business who are in possession of space to which they are
entitled; and
(J) insofar as the Company is aware, no third party has
any adverse claims to any portion of the Real Property and there are no boundary
disputes.
(ii) ss.3(l)(ii) of the Disclosure Schedule lists and
describes briefly all real property leased or subleased to the Company. The
Company has delivered to the Buyer correct and complete copies (as amended to
date) of the leases and subleases listed in ss.3(l)(ii) of the Disclosure
Schedule. With respect to each material lease and sublease listed in ss.3(l)(ii)
of the Disclosure Schedule:
(A) to the Knowledge of the Company the lease or
sublease is legal, valid, binding, enforceable, and in full force and effect in
all material respects;
(B) to the Knowledge of the Company no party to the
lease or sublease is in material breach or default, and no event has occurred
which, with notice or lapse of time, would constitute a material breach or
default or permit termination, modification, or acceleration thereunder;
(C) to the Knowledge of the Company no party to the
lease or sublease has repudiated any material provision thereof;
(D) to the Knowledge of the Company there are no
material disputes, oral agreements, or forbearance programs in effect as to the
lease or sublease;
(E) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the leasehold or
subleasehold; and
(F) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including material licenses
and permits) required in connection with the operation thereof, and have been
operated and maintained in accordance with applicable laws, rules and
regulations in all material respects.
(m) Intellectual Property.
(i) The Company owns or has the right to use pursuant to
license, sublicense, agreement or permission all Intellectual Property necessary
for the operation of the business of the Company as presently conducted.
(ii) The Company has not interfered with, infringed upon,
misappropriated, or violated any material Intellectual Property rights of third
parties in any material respect, and has not received any charge, complaint,
claim, demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that the
-18-
Company must license or refrain from using any Intellectual Property rights of
any third party). To the Knowledge of the Company, no third party has interfered
with, infringed upon, misappropriated, or violated any material Intellectual
Property rights of the Company in any material respect.
(iii) ss.3(m)(iii) of the Disclosure Schedule identifies
each patent or registration which has been issued to the Company with respect to
any of its Intellectual Property, identifies each pending patent application or
application for registration which the Company has made with respect to any of
its Intellectual Property, and identifies each material licensed, agreement, or
other permission which the Company has granted to any third party with respect
to any of its Intellectual Property (together with any exceptions). The Company
has delivered to the Buyer correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and permissions (as amended
to date). ss.3(m)(iii) of the Disclosure Schedule also identifies each material
unregistered trade name or trademark used by the Company in connection with its
business. With respect to each item of Intellectual Property required to be
identified in ss.3(m)(iii) of the Disclosure Schedule:
(A) the Company possesses all right, title, and interest
in and to the item, and the item is not subject to any Security Interest,
license, or other restriction;
(B) the items are not subject to any outstanding
injunction, judgment, order, decree, ruling or charge;
(C) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge of the
Company, is threatened which challenges the legality, validity, enforceability,
use, or ownership of the item; and
(D) to the knowledge of the Company, it has not entered
into any agreement in the last five (5) years to indemnify any Person for or
against any interference, infringement, misappropriation, or other conflict with
respect to
the item.
(iv) ss.3(m)(iii) of the Disclosure Schedule identifies
each material item of Intellectual Property that any third party owns and that
the Company uses pursuant to license, sublicense, agreement, or permission. The
Company has delivered to the Buyer correct and complete copies of all such
licenses, sublicenses, agreements, and permissions (as amended to date). With
respect to each item of Intellectual Property required to be identified in
ss.3(m)(iii) of the Disclosure Schedule, the Company has no Knowledge that:
(A) the license, sublicense, agreement, or permission
covering the item is not legal, valid, binding, enforceable, and in full force
and effect in all material
respects;
(B) any party to the license, sublicense, agreement, or
permission is in material breach or default, or that any event has occurred
which with notice or lapse of time
-19-
would constitute a material breach or default or permit termination,
modification, or acceleration thereunder;
(C) any party to the license, sublicense, agreement, or
permission has repudiated any material provision thereof; or
(D) the Company has granted any sublicense or similar
right with respect to the license, sublicense, agreement, or permission.
(v) The Company has granted sublicenses to three customers
to use an inventory-tracking software module licensed to the Company by O'Neil
Software. Such sublicenses were authorized by O'Neil Software. The Company has
not otherwise licensed or sublicensed O'Neil Software products or any other
software products licensed to it.
(n) Tangible Assets. The buildings, machinery, equipment, and
other tangible assets that the Company owns and leases are in good operating
condition and repair (subject to normal wear and tear); none of said buildings
or the Real Property on which they are located are the subject of any
outstanding material violations under building or fire codes affecting the use
or occupancy thereof, including, without limitation, any requirements relating
to the installation, use and/or maintenance of fire sprinkler systems, except
for violations listed in ss.3(n) of the Disclosure Schedule (the "Existing
Violations").
(o) Inventory. The inventory of the Company consists of
construction materials and supplies, cartons and other finished goods, which
taken as a whole, are in all material respects, merchantable and fit for the
purpose for which they were procured, and, again taken as a whole are not in any
material respect obsolete, damaged, or defective, except as provided for by the
reserve for inventory writedown set forth on the face of the Most Recent Balance
Sheet (rather than in any notes thereto) as adjusted for operations and
transactions through the Closing Date in accordance with the past custom and
practice of the Company.
(p) Contracts. ss.3(p) of the Disclosure Schedule lists the
following contracts and other agreements to which the Company is a party:
(i) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease payments in
excess of **The confidential portion has been so omitted pursuant to a request
for confidential treatment and has been filed separately with the Commission.**
per annum;
(ii) any agreement (or group of related agreements) for
the purchase or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the performance
of which will extend over a period of more than one year or involve
consideration in excess of **The confidential portion has been so omitted
pursuant to a request for confidential treatment and has been filed separately
with the Commission.** per annum, except with respect to any such agreement
related to the Company's capital expenditure program;
-20-
(iii) any agreement concerning a partnership or joint
venture;
(iv) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, or under which it has
imposed a Security Interest on any of its assets, tangible or intangible;
(v) any material agreement concerning confidentiality or
noncompetition, except as set forth in ss.3(p) of the Disclosure Schedule;
(vi) any material agreement with any of the officers,
directors or principal shareholders of the Company;
(vii) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers, and
employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on
a full-time, part-time, consulting, or other basis providing annual compensation
in excess of **The confidential portion has been so omitted pursuant to a
request for confidential treatment and has been filed separately with the
Commission.** or providing material severance benefits;
(x) any agreement under which it has advanced or loaned
any amount to any of its directors, officers, and employees outside the Ordinary
Course of Business;
(xi) any agreement under which the consequences of a
default or termination would have a material adverse effect on the business,
financial condition, operations or results of operations of the Company;
(xii) other than in the Ordinary Course of Business, any
lease or other agreement pursuant to which the Company has leased space to third
parties; or
(xiii) other than in the Ordinary Course of Business, any
other agreement (or group of related agreements) the performance of which
involves consideration in excess of **The confidential portion has been so
omitted pursuant to a request for confidential treatment and has been filed
separately with the Commission.**
The Company has delivered to the Buyer a correct and complete
copy of each written agreement listed in ss.3(p) of the Disclosure Schedule (as
amended to date) and a written summary setting forth the material terms and
conditions of each oral agreement referred to in ss.3(p) of the Disclosure
Schedule. With respect to each such agreement and to the Knowledge of the
Company: (A) the agreement is legal, valid, binding, enforceable, and in full
force and effect in
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all material respects; (B) no party is in material breach or default, and no
event has occurred which with notice or lapse of time would constitute a
material breach or default, or permit termination, modification, or
acceleration, under the agreement; and (C) no party has repudiated any material
provision of the agreement.
(q) Notes and Accounts Receivable. To the Knowledge of the
Company, all notes and accounts receivable of the Company are reflected properly
on its books and records, are valid receivables subject to no setoffs or
counterclaims, are current and collectible in accordance with their terms at
their recorded amounts, subject only to a reserve of Twenty Five Thousand
Dollars ($25,000) for bad debts as of March 31, 1998.
(r) Powers of Attorney. To the Knowledge of the Company, there
are no material outstanding powers of attorney executed on behalf of the
Company.
(s) Insurance. ss.3(s) of the Disclosure Schedule lists each
material insurance policy (including policies providing property, casualty,
liability, and workers' compensation coverage and bond and surety arrangements)
with respect to which the Company is a party, a named insured, or otherwise the
beneficiary of coverage.
With respect to each such insurance policy and to the
Knowledge of the Company: (A) the policy is legal, valid, binding, enforceable,
and in full force and effect in all material respects; (B) neither the Company
nor any other party to the policy is in material breach or default (including
with respect to the payment of premiums or the giving of notices), and no event
has occurred which, with notice or the lapse of time, would constitute such a
material breach or default, or permit termination, modification, or
acceleration, under the policy; and (C) no party to the policy has repudiated
any material provision thereof. ss.3(s) of the Disclosure Schedule describes any
material self-insurance arrangements affecting the Company. Except as set forth
in ss.3(s) of the Disclosure Schedule, the Company has filed no insurance claims
since January 1, 1995, the reserve for which is in excess of **The confidential
portion has been so omitted pursuant to a request for confidential treatment and
has been filed separately with the Commission.** ss. 3(s) of the Disclosure
Schedule lists open and pending insurance claims with respect to the policies
listed on the Disclosure Schedule (other than medical, prescription drug, vision
and dental plans, and life insurance on Xxxxxx Xxxxx and Xxxxx Xxxxxx). With
respect to all claims filed under the Company's worker's compensation and
employer liability, business auto, directors and officers liability, commercial
coverage, life and accidental death and dismemberment, short term disability and
group long term disability insurance policies since January 1, 1995, the
Disclosure Schedule identifies the date of loss, date of report, amount of claim
and nature of such claim.
(t) Litigation. ss.3(t) of the Disclosure Schedule sets forth
each instance in which the Company (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or, to the
Knowledge of the Company, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator.
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(u) Employees. The Company is not a party to or bound by any
collective bargaining agreement, nor has it experienced any strike or material
grievance, claim of unfair labor practices, or other collective bargaining
dispute within the past three years. The Company has not committed any material
unfair labor practice. To the Knowledge of the Company no organizational effort
is presently being made or threatened by or on behalf of any labor union with
respect to employees of the Company. To the knowledge of the Company, all
terminations of employees effected by the Company since January 1, 1995 were
carried out in accordance with state and federal laws. The Company has received
no pending or threatened claims from terminated employees of the Company related
to their termination. The Company has paid all of its employees in accordance
with the requirements of the Fair Labor Standards Act and regulations
thereunder.
(v) Employee Benefits.
(i) ss.3(v) of the Disclosure Schedule lists each Employee
Benefit Plan that the Company maintains or to which the Company contributes or
has any obligation to contribute or has contributed to or has sponsored within
the three (3) year period ending on the Closing Date.
(A) During the three (3) year period ending on the
Closing Date, the Defined Benefit Plan, the 401(k) Plan and all Employee Welfare
Benefit Plans (and each related trust, insurance contract, or fund) complied in
form and in operation in all material respects with the applicable requirements
of ERISA, the Code, and other applicable laws, and the Company has not received
any outstanding notice from any governmental agency or authority questioning or
challenging such compliance.
(B) All required reports and descriptions (including
Form 5500 Annual Reports, summary annual reports, PBGC-1's, and summary plan
descriptions) have been timely filed and distributed appropriately with respect
to the Defined Benefit Plan, the 401(k) Plan and the trust related to each such
plan. The requirements of COBRA have been met in all material respects with
respect to each such Employee Benefit Plan which is an Employee Welfare Benefit
Plan and subject to COBRA.
(C) All contributions (including all employer
contributions and employee salary reduction contributions) which are due have
been paid to the Defined Benefit Plan (or its related trust) and the 401(k) Plan
(or its related trust) and all contributions for any period ending on or before
the Closing Date which are not yet due will, as of the Closing Date, have been
paid to the Defined Benefit Plan and 401(k) Plan or accrued in accordance with
the past custom and practice of the Company. All premiums or other payments for
all periods ending on or before the Closing Date have been paid with respect to
each such Employee Benefit Plan which is an Employee Welfare Benefit Plan.
(D) The Defined Benefit Plan and the 401(k) Plan meet
the requirements of a "qualified plan" under Code ss.401(a) in form and, during
the six (6) year period
-23-
ending on the Closing Date, each such plan has received a timely favorable
determination letter from the Internal Revenue Service that it is a "qualified
plan," and the Company is not aware of any facts or circumstances that could
result in the revocation of such determination letter.
(E) The market value of assets under the Defined Benefit
Plan equals or exceeds the present value of accumulated benefits, as of the date
of the most recent actuarial valuation report prepared with respect to the
Defined Benefit Plan.
(F) The Company has delivered to the Buyer correct and
complete copies of the plan documents, including amendments, summary plan
descriptions and summaries of material modifications, if any, the most recent
determination letter received from the Internal Revenue Service, the three most
recent Form 5500 Annual Reports, and accountant's opinion, if applicable, and
all related trust agreements, insurance contracts, and other funding agreements
which implement each such Employee Benefit Plan and all written communications,
if any, to employees to the extent the substance of the plan described therein
differs materially from other documentation furnished.
(G) Within the three (3) year period ending on the
Closing Date, there have been no acts or omissions by the Company that have
given rise to or may reasonably be expected to give rise to material fines,
penalties, taxes or related charges under Sections 502(c), 502(i) or 4071 of
ERISA or Chapter 43 of the Code for which the Company may be liable.
(ii) With respect to each Employee Benefit Plan that the
Company maintains or has maintained during the three (3) year period ending on
the Closing Date or to which it contributes, has contributed, or has been
required to contribute during the three (3) year period ending on the Closing
Date:
(A) Except as required by the terms of this Agreement,
during the three (3) year period ending on the Closing Date, no such Employee
Benefit Plan which is an Employee Pension Benefit Plan and which is subject to
Title IV of ERISA has been completely or partially terminated or been the
subject of a reportable event as to which notices would be required to be filed
with the PBGC. During the three (3) year period ending on the Closing Date, no
proceeding by the PBGC to terminate any such Employee Pension Benefit Plan which
is subject to Title IV of ERISA has been instituted or, to the Knowledge of the
Company, threatened.
(B) During the three (3) year period ending on the
Closing Date, there have been, and are, no prohibited transactions (as defined
in ss.406 of ERISA and Code ss.4975) for which no exemption is available with
respect to any such Employee Benefit Plan. To the Knowledge of the Company,
during the three (3) year period ending on the Closing Date, no Fiduciary has
any liability for material breach of fiduciary duty or any other material
failure to act or comply in connection with the administration or investment of
the assets of any such Employee Benefit Plan. During the three (3) year period
ending on the Closing Date, no action, suit, proceeding, hearing, or
investigation with respect to the administration or the investment of the assets
of any such Employee Benefit Plan (other than routine claims for benefits) has
been pending or, to the Knowledge of the Company, threatened.
-24-
(iii) The Company does not contribute to and is not
required to contribute to any Multiemployer Plan and has no Knowledge of any
material liability (whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any withdrawal liability (as
defined in ERISA ss.4201), under any Multiemployer Plan.
(iv) Except as disclosed in ss.3(v) of the Disclosure
Schedule, the Company does not maintain or contribute to and is not required to
contribute to any Employee Welfare Benefit Plan providing medical, health, or
life insurance or other welfare-type benefits for current or future retired or
terminated employees, their spouses, or their dependents (other than in
accordance with COBRA).
(w) Guaranties. The Company is not a guarantor or otherwise
responsible for any liability or obligation (including indebtedness) of any
other Person.
(x) Environment, Health, and Safety Matters.
(i) The Company has complied, and the Real Property and
the improvements thereon are in compliance, in each case in all material
respects, with all, Environmental, Health, and Safety Requirements.
(ii) Without limiting the generality of the foregoing, the
Company has obtained, has complied, and is in compliance with, in each and in
all material respects, all material permits, licenses and other authorizations
that are required pursuant to Environmental, Health, and Safety Requirements
(the "Required Permits") for the occupation of its facilities and the operation
of its business and each Required Permit is in full force and effect. A list of
all such material permits, licenses and other authorizations is set forth in
ss.3(x) of the Disclosure Schedule.
(iii) The Company has not received any written report or
other written information regarding any actual or alleged material violation of
Environmental, Health, and Safety Requirements, or any material liabilities or
potential material liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any material investigatory, remedial or
corrective obligations, relating to any of them or its facilities arising under
Environmental, Health, and Safety Requirements.
(iv) To the Knowledge of the Company, the Company has not
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled, or released any Regulated Substance, or owned or operated
any property or facility (and no such property or facility is contaminated by
any such substance) in a manner that has given or would give rise to material
liabilities, including any material liability for civil or criminal penalties,
response costs, corrective action costs, indemnification, contribution, personal
injury, property damage, natural resources damages or attorney fees, pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. ss.9601 et seq., as amended ("CERCLA") or the Solid
-00-
Xxxxx Xxxxxxxx Xxx, 42 U.S.C. ss.6901 et seq., as amended ("SWDA") or any other
Environmental, Health, and Safety Requirements.
(v) Neither this Agreement nor the consummation of the
transaction that is the subject of this Agreement will result in any material
obligations for site investigation or cleanup, or notification to or consent of
government agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible party transfer" Environmental, Health,
and Safety Requirements.
(vi) To the Knowledge of the Company, no facility or site
to which the Company and its predecessors, either directly or indirectly by a
third party, has sent Regulated Substances for storage, treatment, disposal or
other management has been nor is being operated in violation of applicable
Environmental, Health, and Safety Requirements or pursuant to Environmental,
Health, and Safety Requirements is identified or proposed to be identified on
any list of contaminated properties or other list of properties which pursuant
to Environmental, Health, and Safety Requirements are the subject of an
investigation or remediation action by any Person.
(y) Certain Business Relationships With the Company. Except as
set forth in ss.3(y) of the Disclosure Schedule, none of the officers or
directors of the Company, or the Company Shareholders have been involved in any
material business arrangement or relationship with the Company within the past
twelve (12) months, and none of such persons owns any material asset, tangible
or intangible, which is used in the business of the Company.
(z) Operational Matters. With respect to the Company's
operations:
(i) Storage Customers are invoiced for special projects,
such as purges, special destructions, re-boxing and re-filing programs, only
with respect to completed work;
(ii) all of its Storage Customers have executed a customer
contract in the form previously provided to the Buyer except as set forth in ss.
3(z) of the Disclosure Schedule (which lists customers for which the Company has
no written contract, customers for which the Company has only a purchase order,
and customer contracts with nonstandard terms and conditions);
(iii) no Storage Customers' stored records have been
damaged or lost since December 31, 1994, except in instances which would not
give rise to a material liability of the Company and are listed in ss. 3(z) of
the Disclosure Schedule;
(iv) substantially all items received and stored by the
Company on behalf of each of the Company's Storage Customers are held in storage
by the Company and are locatable and accessible without extraordinary effort
except for items withdrawn or destroyed at the respective customer's request;
(v) substantially all items received by the Company from
Storage Customers (including files for refiling) are logged into the Company's
bar-coded computer
-26-
inventory system or a manual inventory system and placed in a locatable
temporary position within **The confidential portion has been so omitted
pursuant to a request for confidential treatment and has been filed separately
with the Commission.** business days, and placed on a storage shelf within **The
confidential portion has been so omitted pursuant to a request for confidential
treatment and has been filed separately with the Commission.** business days,
after receipt at the Company's facilities and can be located through use of such
inventory systems; and
(vi) the stored items for which Storage Customers are
billed exist and, in all material respects, can be accounted for.
(vii) the Company's invoices to customers are accurate in
all material respects, and the unit rates charged to each Storage Customers are
consistent with the Company's contract with such customer, as such contract may
have been modified by written correspondence to reflect price adjustments from
time to time.
(aa) Records. The corporate minute books of the Company
contain true and complete copies of the articles of incorporation, as amended,
by-laws, as amended, and to the Knowledge of the Company the original minutes of
all meetings of directors and shareholders and instruments reflecting all
actions taken by the directors or shareholders by written consent without a
meeting, from the date of incorporation of the Company to the Effective Time.
There are in such records no authorizations or approvals of any presently
effective material obligations or agreements on the part of the Company which
have not been disclosed by the Company in this Agreement or the Disclosure
Schedule. The stock records of the Company contain accurate, true and complete
records of the issuance of the Company Shares and, to the Knowledge of the
Company, all transfers of Company Shares since the date of their issuance to the
extent certificates representing Shares have been tendered to the Company for
recordation of transfer.
(bb) Disclosure. The representations and warranties contained
in this ss.3 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this ss.3 not misleading.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE TRANSACTION
SUBSIDIARY.
Each of the Buyer and the Transaction Subsidiary represent and
warrant to the Company that the statements contained in this ss.4 are correct
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this ss.4), except as set
forth in the Disclosure Schedule. The Disclosure Schedule will be arranged in
paragraphs corresponding to the numbered and lettered paragraphs contained in
this ss.4.
(a) Organization. Each of the Buyer and the Transaction
Subsidiary is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation.
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(b) Authorization of Transaction. Each of the Buyer and the
Transaction Subsidiary has full power and authority (including full corporate
power and authority) to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of each of the Buyer and the Transaction Subsidiary, enforceable in
accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulations, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which either the Buyer or the Transaction
Subsidiary is subject or any provision of the charter of bylaws of either the
Buyer or the Transaction Subsidiary or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which either the Buyer or the Transaction Subsidiary is a party
or by which it is bound or to which any of its assets is subject, except where
the violation, conflict, breach, default, acceleration, termination,
modification, cancellation, or failure to give notice would not have a material
adverse effect on the ability of the Parties to consummate the transactions
contemplated by this Agreement. Other than in connection with the provisions of
the Xxxx-Xxxxx-Xxxxxx Act and the Pennsylvania Business Corporation Law, neither
the Buyer nor the Transaction Subsidiary needs to give nay notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement, except where the failure to give notice, to
file, or to obtain any authorization, consent, or approval would not have a
material adverse effect on the ability of the Parties to consummate the
transactions contemplated by this Agreement.
(d) Brokers' Fees. Neither the Buyer nor the Transaction
Subsidiary has any liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement for which the Company Shareholders could become liable or obligated.
5. COVENANTS.
The Parties agree as follows with respect to the period from
and after the execution of this Agreement.
(a) General. Each of the Parties will use its reasonable best
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in ss.7 below).
(b) Notices and Consents. The Parties will give all notices to
third parties, and will use their reasonable best efforts to obtain any third
party consents, in connection with the matters referred to in ss.3(c) and
ss.4(c) above.
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(c) Regulatory Matters and Approvals. Each of the Parties will
give any notices (and will cause each of its Subsidiaries to give any notices)
to, make any filings with, and use its reasonable best efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the matters referred to in ss.3(c) and ss.4(c) above.
Without limiting the generality of the foregoing:
(i) Shareholders' Meeting. The Company will hold its
annual meeting or call a special meeting of the Company Shareholders (the
"Shareholders' Meeting"), as soon as reasonably practicable (and in no event
will the date of the Shareholders' Meeting be later than June 26, 1998) in order
that the Company Shareholders may consider and vote upon the adoption of this
Agreement and the approval of the Plan of Merger. The information materials sent
to the Company Shareholders will contain the affirmative recommendation of the
board of directors of the Company with respect to the Merger and whether the
Plan of Merger is in the best interests of the Company and the Company
Shareholders; provided, however, that no director or officer of the Company
shall be required to violate any fiduciary duty or other requirement imposed by
law in connection therewith. The Company will use its reasonable best efforts to
obtain the approval and adoption of this Agreement and the Plan of Merger by the
Company Shareholders.
(ii) Xxxx-Xxxxx-Xxxxxx Act. The Buyer will file the
pre-merger notification and all related material that it may be required to file
with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice under the Xxxx-Xxxxx-Xxxxxx Act, will use its
reasonable best efforts to obtain an early termination of the applicable waiting
period, will make any further filings pursuant thereto that may be necessary,
proper, or advisable. **The confidential portion has been so omitted pursuant to
a request for confidential treatment and has been filed separately with the
Commission.**
(d) Operation of Business. The Company will not engage in any
practice, take any action, or enter into any transaction outside the Ordinary
Course of Business. Without limiting the generality of the foregoing:
(i) the Company will not authorize or effect any change in
its charter or bylaws;
(ii) the Company will not grant any options, warrants, or
other rights to purchase or obtain any of its capital stock or issue, sell, or
otherwise dispose of any of its capital stock (except upon the conversion or
exercise of options, warrants, and other rights currently outstanding);
(iii) the Company will not declare, set aside, or pay any
dividend or distribution with respect to its capital stock (whether in cash or
in kind), or redeem, repurchase, or otherwise acquire any of its capital stock,
and the Company has not paid or declared any dividend since the date of its
March, 1998 dividend referred to in ss.3(h)(xi);
(iv) the Company will not issue any note, bond, or other
debt security or create, incur, assume, or guarantee any indebtedness for
borrowed money or capitalized lease
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obligation, or increase the amount outstanding under any note or loan agreement
over the amount outstanding hereunder on December 31, 1997;
(v) the Company will not impose any Security Interest upon
any of its assets;
(vi) the Company will not make any capital investment in,
make any loan to, or acquire the securities or assets of any other Person
outside the Ordinary Course of Business;
(vii) the Company will not make any change in employment
terms for any of its directors, officers, and employees outside the Ordinary
Course of Business;
(viii) the Company will not make any capital investments
except (i) as contemplated by the Company's 1998 Capital Expenditure Budget
included in the Disclosure Schedule, or (ii) with respect to any other proposed
capital expenditure or series of related capital expenditures involving the
expenditure of more than **The confidential portion has been so omitted pursuant
to a request for confidential treatment and has been filed separately with the
Commission.**, without the prior written approval of the Buyer; and
(ix) the Company will not commit to any of the foregoing.
(e) Full Access. The Company will permit representatives of
the Buyer to have full access at all reasonable times, and in a manner so as not
to interfere with the normal business operations of the Company to all premises,
properties, personnel, books, records (including tax records), contracts, and
documents of or pertaining to the Company. Each of the Buyer and the Transaction
Subsidiary will treat and hold as such any Confidential Information it receives
from the Company in the course of the reviews contemplated by this ss.5(e) as
provided in that certain Confidentiality Agreement dated as of November 8, 1996
(the "Confidentiality Agreement"), between the Company and the Buyer, including
without limitation, that Buyer will not use any of the Confidential Information
except in connection with this Agreement, and, if this Agreement is terminated
for any reason whatsoever, agrees to return to the Company all tangible
embodiments (and all copies) thereof which are in its possession.
(f) Notice of Developments. Each Party will give prompt
written notice to the others of any material adverse development causing a
breach of any of its own representations and warranties in ss.3 and ss.4 above.
The Company, on the one hand, and the Buyer and the Transaction Subsidiary, on
the other hand, shall be entitled to update or correct the information contained
in the Disclosure Schedule (or, for the Buyer and the Transaction Subsidiary, to
provide information which would be includable in a disclosure schedule), at any
time and from time to time prior to the Effective Time and the addition of any
such items shall not form the basis of any claim against the Company or the
Company Shareholders on the one hand, or the Buyer and the Transaction
Subsidiary, on the other hand, including without limitation any claims under
ss.10 below. No supplemental disclosure by any Party pursuant to this ss.5(f)
which constitutes a material change in information originally presented in this
Agreement or the Disclosure Schedule shall constitute a waiver by the Party
receiving such disclosure of any condition to such Party's
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obligation to close the transactions contemplated hereby (including the
condition that the other Party's representations and warranties as originally
included in this Agreement and in the Disclosure Schedule be true and correct in
all material respects on the Closing Date) unless the Party to which such
disclosure is made agrees in writing to waive such condition.
(g) Exclusivity. The Company will not solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of all or substantially all of the capital stock or assets of
any of the Company (including any acquisition structured as a merger,
consolidation, or share exchange); provided, however, that the Company and its
directors and officers will remain free to participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
Person to do or seek any of the foregoing to the extent their fiduciary duties
may require. The Company shall notify the Buyer immediately if any Person makes
any proposal, offer, inquiry, or contact with respect to any of the foregoing.
(h) Termination of 401(k) Plan and Defined Benefit Plan. Not
later than the day prior to the Closing Date the Company and each current ERISA
Affiliate will adopt resolutions effecting the termination of the 401(k) Plan,
the Defined Benefit Plan and the Key Employee Restricted Stock Option Plan
maintained by the Company. After the closing the Surviving Corporation shall
take appropriate steps to complete the termination of the 401(k) Plan, to
effectuate a standard termination of the Defined Benefit Plan in accordance with
PBGC Reg. ss.4041.21-31, to file a Form 5310, Application for Determination Upon
Termination, with the Internal Revenue Service, with respect to both the Defined
Benefit Plan and the 401(k) Plan and obtain favorable determination letters with
respect to such plans, to distribute assets of the Defined Benefit Plan and the
401(k) Plan to participants and beneficiaries, to file the final Forms 5500 with
respect to the Defined Benefit Plan and the 401(k) Plan and to take any other
necessary steps, execute any other necessary documents and file any other
necessary forms with the appropriate governmental agency in order to effectuate
the terminations of such plans. Such actions shall be subject to the following
limitations:
(i) The Buyer and the Surviving Corporation shall utilize
no more than an aggregate of **The confidential portion has been so omitted
pursuant to a request for confidential treatment and has been filed separately
with the Commission.** of the Benefit Plan Escrow Fund to pay the fees, expenses
and charges of attorneys, accountants, actuaries and other third-party
professionals related to termination of the plans. If such fees, charges and
expenses exceed such amount, they shall be borne solely by the Buyer and the
Surviving Corporation.
(ii) In purchasing annuity contracts to fund the Surviving
Corporation's obligations under the terminated Defined Benefit Plan, the Buyer
shall obtain bids or quotations from at least three insurance companies, each of
which shall have a "Best's" rating of at least "A", and the Surviving
Corporation shall select the lowest-cost bid which is responsive to the
Surviving Corporation's request for proposals.
-31-
(iii) The Buyer and the Surviving Corporation shall not
take any actions to terminate or change the Company's indemnification process
presently available to the trustees of the plans.
If the assets of the Defined Benefit Plan exceed the cost of
purchasing annuities or otherwise funding the termination of the Deferred
Benefit Plan, such excess, net of taxes payable in respect of such excess, shall
be paid by the Surviving Corporation into the funds held by the Benefit Plan
Escrow Agent, pursuant to the Benefit Plan Escrow Agreement; or, if such escrow
shall have terminated prior to the date any such excess becomes available, into
the funds held by the Post Closing Escrow Agent pursuant to the Post Closing
Escrow Agreement, in each case, to be disbursed pursuant thereto. If such excess
becomes available after termination of both such escrow agreements, the
Surviving Corporation shall pay such excess to the Representatives for
distribution to the Company Shareholders.
(i) Audit. At the request and expense of the Buyer, the
Company shall cause its independent accountants to cooperate with the Buyer and
shall assist in the preparation of audited financial statements for the Company.
Without limiting the generality of the foregoing, the Company agrees that it
will (i) consent to the use of such audited financial statements in any
registration statement or other document filed by the Buyer under the Securities
Act of 1933 or the Securities Exchange Act of 1934, and (ii) execute and
deliver, and cause its officers to execute and deliver, such "representation"
letters as are customarily delivered in connection with audits and as the
Buyer's independent accountants may reasonably request under the circumstances.
Notwithstanding the foregoing, the Parties agree that it shall not be a
condition to closing of the Merger that any such audit be completed prior to the
Closing Date.
(j) Financial Information. As promptly as practicable after
the end of each month following the Most Recent Fiscal Quarter End, the Company
shall provide to the Buyer a balance sheet of the Company as of the end of each
such month and statements of income and expenses of the Company for the month
then ended.
(k) Shareholder Approvals. As promptly as practicable after
the Shareholders' Meeting, the Company shall provide to the Buyer a tabulation
of the Company Shares voted by the Company Shareholders in favor of or against
this Agreement and the Merger and any shares not voted.
(l) Phase I Environmental Assessment. Buyer shall use its
reasonable best efforts to cause its environmental consultant to complete, at
Buyer's sole cost, the performance of, and deliver to the Company on or before
June 17, 1998, a Phase I environmental assessment of the Real Property owned by
the Company as described in Section 3(l)(i) of the Disclosure Schedule. Any
follow-up additional studies or reviews shall be performed pursuant to a license
agreement to be negotiated and agreed upon between the Company and the Buyer.
(m) Cure of Existing Violations. The Company shall, at its
sole cost and expense, use its reasonable best efforts to cause all Existing
Violations to be fully cured, corrected and withdrawn on or before the Closing
Date, and shall, in connection with the Closing, and as
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a further condition precedent to the Buyer's and the Transaction Subsidiary's
obligations under this Agreement, present the Buyer and the Transaction
Subsidiary with evidence thereof, which evidence shall be satisfactory to the
Buyer and the Transaction Subsidiary in all respects. To the extent the Company
is unable to fully cure, correct and withdraw all such Existing Violations on or
before the Closing Date, Xxxxx X. Xxxxxx, as representative of the Surviving
Corporation, shall use his reasonable best efforts to cure, correct and withdraw
all such Existing Violations; provided, however, the costs and expenses incurred
in connection therewith shall be paid out of the Post Closing Escrow Fund.
6. POST CLOSING COVENANTS.
(a) Indemnification of Officers and Directors. The Surviving
Corporation agrees to defend, indemnify and hold harmless from all claims all
persons who served as directors and officers of the Company prior to the
Effective Time in respect of matters for which they would have been entitled to
indemnification under any exculpatory or indemnification provisions existing as
of the date of this Agreement in the Articles of Incorporation or Bylaws of the
Company for the benefit of any individual who served as a director or officer of
the Company. The Buyer shall, and does hereby agree to, defend, indemnify and
hold harmless the officers and directors of the Company, to the extent they
would have been entitled to indemnification under any exculpatory or
indemnification provisions existing as of the date of this Agreement in the
Articles of Incorporation or Bylaws of the Company, in respect of any
occurrences or events related to the Surviving Corporation which occur after the
Effective Time.
(b) Continuing Obligations. The Buyer shall be responsible for
and shall cause the Surviving Corporation to continue all payments, benefits and
obligations with respect to the matters set forth in ss.6(b) of the Disclosure
Schedule.
(c) Costs of Termination of Benefit Plans. The Surviving
Corporation shall be responsible for all steps necessary to terminate the 401(k)
Plan and the Defined Benefit Plan after the Closing Date, as set forth in
ss.5(h) hereof. If necessary, the Surviving Corporation shall make the
Commitment To Make Plan Sufficient, as defined in and required by PBGC Reg.
ss.4041.21(b)(1) pursuant to the procedures described in ss.5(h). Costs incurred
by the Surviving Corporation in terminating the 401(k) Plan and the Defined
Benefit Plan with respect to services provided by any third party and funding
such plans (including as a result of the Commitment To Make Plan Sufficient and
fees and expenses of outside professional advisers, such as attorneys,
accountants and actuaries) shall be reimbursed to the Surviving Corporation from
time to time from the Benefit Plan Escrow Fund, subject to the terms of the
Benefit Plan Escrow Agreement or, if such amount is insufficient, from the
Post-Closing Escrow Fund. If the assets of the Defined Benefit Plan exceed the
cost of purchasing annuities or otherwise funding the termination of the Defined
Benefit Plan, such excess, net of taxes payable in respect of such excess, shall
be paid to the Benefit Plan Escrow Fund, the Post Closing Escrow Fund or the
Representatives, as provided in ss.5(h).
7. CONDITIONS TO OBLIGATION TO CLOSE.
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(a) Conditions to Obligation of the Buyer and the Transaction
Subsidiary. The obligation of each of the Buyer and the Transaction Subsidiary
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) this Agreement and the Plan of Merger shall have
received the Requisite Shareholder Approval and the number of Dissenting Shares
shall not exceed 10% of the number of outstanding Company Shares;
(ii) the representations and warranties set forth in ss.3
above shall be true and correct in all material respects at and as of the
Closing Date;
(iii) the Company shall have performed and complied with
all of its covenants hereunder in all material respects through the Closing;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement,
(B) cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (C) affect adversely the right of the Buyer to own the
capital stock of the Surviving Corporation and to control the Surviving
Corporation and its Subsidiaries, or (D) affect adversely the right of any of
the Surviving Corporation and its Subsidiaries to own its assets and to operate
its businesses (and no such injunction, judgment, order, decree, ruling, or
charge shall be in effect);
(v) the Company shall have delivered to the Buyer and the
Transaction Subsidiary a certificate to the effect that each of the conditions
specified above in ss.7(a)(i)-(iv) is satisfied in all respects;
(vi) all applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been
terminated and the Parties shall have received all other authorizations,
consents, and approvals of governments and governmental agencies referred to in
ss.3(c) and ss.4(c) above;
(vii) the Buyer and the Transaction Subsidiary shall have
received from Xxxxx, Xxxx & Xxxxxxxxx, counsel to the Company, an opinion in
form and substance as set forth in Exhibit G attached hereto, addressed to the
Buyer and the Transaction Subsidiary, and dated as of the Closing Date;
(viii) the Buyer and the Transaction Subsidiary shall have
received the resignations, effective as of the Closing, of each director and
officer of the Company other than those whom the Buyer shall have specified in
writing at least two business days prior to the Closing;
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(ix) the Post Closing Escrow Agreement shall have been
executed by the Post Closing Escrow Agent, the Buyer, the Surviving Corporation
and the Representatives, as agents for and representatives of the Company
Shareholders;
(x) the Benefit Plan Escrow Agreement shall have been
executed by the Benefit Plan Escrow Agent, the Buyer, the Surviving Corporation
and the Representatives, as agents for and representatives of the Company
Shareholders;
(xi) the Paying Agent Agreement shall have been executed
by the Paying Agent, the Buyer, the Surviving Corporation and the
Representatives, as agents for and representatives of the Company Shareholders;
(xii) Xxxxx X. Xxxxxx shall have executed an employment
agreement with the Surviving Corporation substantially in the form of Exhibit H,
and Xx. Xxxxxx'x employment agreement dated December 14, 1988, as amended, will
have been terminated;
(xiii) there shall not have occurred any material adverse
change in the business, assets, operations, operating results or cash flow of
the Company when compared with the Most Recent Financial Statements;
(xiv) the Company shall have executed the Merger
Documents;
(xv) Xxxxx X. Xxxxxx shall have executed a noncompetition
and confidentiality agreement substantially in the form of Exhibit I; and
(xvi) the Buyer shall have received a title insurance
commitment from Commonwealth Title Insurance Company (the "Title Company")
indicating that the Title Company is prepared to issue title insurance insuring
the Company's Real Property described in ss.3(l)(i) of the Disclosure Schedule
on an ALTA Owner's Policy of Title Insurance (Form B, Amended 10-17-70) with
only such exceptions thereto as the Buyer may reasonably accept (with Buyer not
required to accept any exceptions for coal, oil, gas or other mineral interests
which affect the Real Property) and with such affirmative coverages as the Buyer
may reasonably require;
(xvii) the Buyer shall have received a Phase I
environmental assessment of the Company's Real Property described in ss.3(l)(i)
of the Disclosure Schedule which, to the reasonable satisfaction of the Buyer,
does not disclose (v) any above-ground or underground storage tanks on the Real
Property which are in violation of any Environmental Health and Safety
Requirements, (w) any asbestos-containing material in friable or damaged form or
condition on the Real Property, (x) any materials containing polychlorinated
biphenyls on the Real Property, (y) any landfills, surface impoundments or
disposal areas on the Real Property, or (z) any contamination of the Real
Property or facilities by any Regulated Substance in a manner that (as to any or
all of the foregoing) has given or would give rise to liabilities in excess of
**The confidential portion has been so omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.** in
the aggregate, including any material liability for
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response costs, corrective action costs, personal injury, property damage,
natural resources damages or attorneys fees, pursuant to CERCLA or the SWDA or
any other Environmental, Health, and Safety Requirements; and, if requested by
the Buyer, such further environmental reviews or studies which may be required
to respond to issues raised by the Phase I environmental assessment which will
be conducted pursuant to a license agreement agreed upon by the Buyer and the
Company;
(xviii) the Voting Trust Agreement referred to in ss.3(b)
shall have been terminated, with no liability on the part of the Company, the
Surviving Corporation or the Buyer;
(xix) all options to acquire Company Shares under the Key
Employee Restricted Stock Option Plan and any other options or similar rights to
acquire, or convert securities into, Company Shares shall have been exercised or
terminated, and the Key Employee Restricted Stock Option Plan shall have been
terminated, with no liability on the part of the Company, the Surviving
Corporation or the Buyer;
(xx) subject to the provisions of ss. 5(m), the Buyer
shall have received evidence that all Existing Violations have been or are in
the process of being cured, corrected or withdrawn;
(xxi) any supplements or amendments to the Disclosure
Schedule between the date of execution of this Agreement and the Closing Date
shall be reasonably satisfactory to the Buyer and the Transaction Subsidiary and
shall not result in any of the representations and warranties originally made by
the Company in this Agreement or in the Disclosure Schedule being untrue or
incorrect in any material respect; and
(xxii) all actions to be taken by the Company in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Buyer and the Transaction Subsidiary.
The Buyer and the Transaction Subsidiary may waive any
condition specified in this ss.7(a) if they execute a writing so stating at or
prior to the Closing.
(b) Conditions to Obligation of the Company. The obligation of
the Company to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in ss.4
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) each of the Buyer and the Transaction Subsidiary
shall have performed and complied with all of its covenants hereunder in all
material respects through the Closing;
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(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement,
(B) cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (C) affect adversely the right of the Buyer to own the
capital stock of the Surviving Corporation and to control the Surviving
Corporation and its Subsidiaries, or (D) affect adversely the right of any of
the Surviving Corporation and its Subsidiaries to own its assets and to operate
its businesses (and no such injunction, judgment, order, decree, ruling, or
charge shall be in effect);
(iv) each of the Buyer and the Transaction Subsidiary
shall have delivered to the Company a certificate to the effect that each of the
conditions specified above in ss.7(b)(i)-(iii) is satisfied in all respects;
(v) this Agreement and the Plan of Merger shall have
received the Requisite Shareholder Approval;
(vi) all applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been
terminated and the Parties shall have received all other authorizations,
consents, and approvals of governments and governmental agencies referred to in
ss.3(c) and ss.4(c) above;
(vii) the Company shall have received from Xxxxx X.
Xxxxxx, General Counsel to the Buyer and the Transaction Subsidiary, an opinion
in form and substance as set forth in Exhibit J attached hereto, addressed to
the Company, and dated as of the Closing Date;
(viii) the Post Closing Escrow Agreement shall have been
executed by the Post Closing Escrow Agent, the Buyer, the Surviving Corporation,
and the Representatives on behalf of the Company Shareholders, as agents for and
representatives of the Company Shareholders;
(ix) the Benefit Plan Escrow Agreement shall have been
executed by the Benefit Plan Escrow Agent, the Buyer, the Surviving Corporation
and the Representatives, as agents for and representatives of the Company
Shareholders;
(x) the Paying Agent Agreement shall have been executed by
the Paying Agent, the Buyer, the Surviving Corporation and the Representatives,
as agents for and representatives of the Company Shareholders
(xi) the Surviving Corporation shall have executed an
employment agreement with Xxxxx X. Xxxxxx substantially in the form of Exhibit
H;
(xii) the Surviving Corporation shall have entered into
employment agreements, dated as of the Effective Date with Messrs./Xx. Xxxxxxxx,
Doughty, Mottern,
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Nowicki, Kengor, Xxxxxx and the Company's new customer service manager, which
employment agreements will provide for employment for a period of at least one
year after the Effective Time (absent good cause for termination), and provide
for aggregate compensation, including without limitation, salary, incentive
bonuses, and benefits, equal to the aggregate current compensation for each such
Person; and
(xiii) all actions to be taken by the Buyer and the
Transaction Subsidiary in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the Company.
The Company may waive any condition specified in this ss.7(b)
if it executes a writing so stating at or prior to the Closing.
8. DELIVERIES AND ACTIONS AT CLOSING.
At the Closing the parties shall deliver the following
documents, instruments and agreements, and shall take the following described
actions, all of which shall be deemed part of a single transaction. No part of
the described deliveries and actions shall occur unless all shall occur.
(a) Deliveries and Actions by the Company. The Company shall
deliver or cause to be delivered to the Buyer and the Transaction Subsidiary, or
to other persons, as appropriate, the following documents, instruments and
agreements, and shall take the following actions:
(i) a copy of the Articles of Incorporation of the
Company, certified by the Secretary of State of the Commonwealth of
Pennsylvania;
(ii) a subsistence certificate for the Company issued by
the appropriate officer of the Commonwealth of Pennsylvania;
(iii) a certificate of the Company to the effect that each
of the conditions specified in ss.7(a)(i) through (iv) has been satisfied in all
material respects;
(iv) originals or copies of each consent, authorization
and approval referred to in ss.7(a)(vi);
(v) the opinion of Xxxxx Xxxx & Xxxxxxxxx referred to in
ss.7(a)(vii);
(vi) the resignations described in ss.7(a)(viii),
effective as of the Closing, of each director and officer of the Company;
(vii) originals of the Merger Documents executed by the
Company;
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(viii) the Post Closing Escrow Agreement, executed by the
Post Closing Escrow Agent, the Buyer, the Surviving Corporation and the
Representatives, as agents for and representatives of the Company Shareholders;
(ix) the Benefit Plan Escrow Agreement, executed by the
Benefit Plan Escrow Agent, the Buyer, the Surviving Corporation and the
Representatives, as agents for and representatives of the Company Shareholders;
(x) the Paying Agent Agreement shall have been executed by
the Paying Agent, the Buyer, the Surviving Corporation and the Representatives,
as agents for and representatives of the Company Shareholders; and
(xi) a certificate of the Secretary of the Company
certifying as to the Articles of Incorporation and Bylaws of the Company and
resolutions adopted by the Board of Directors and Company Shareholders in
connection with the transactions contemplated by this Agreement.
(b) Deliveries and Actions by the Buyer and the Transaction
Subsidiary. The Buyer and the Transaction Subsidiary shall deliver, or cause to
be delivered to the Company, or to other persons, as appropriate, the following
documents, instruments and agreements, and shall take the following actions:
(i) a copy of the Certificate of Incorporation for the
Buyer, certified by the Secretary of State of the State of Delaware and the
Articles of Incorporation of the Transaction Subsidiary, certified by the
Secretary of State of the Commonwealth of Pennsylvania;
(ii) a certificate of good standing for the Buyer issued
by the Delaware Secretary of State and a subsidence certificate for the
Transaction Subsidiary issued by the Secretary of State of the Commonwealth of
Pennsylvania;
(iii) certificate of authorization for the Transaction
Subsidiary issued by the appropriate officer of the Commonwealth of
Pennsylvania;
(iv) a certificate of the Buyer and the Transaction
Subsidiary to the effect that each of the conditions specified in ss.7(b)(i)
through (iii) has been satisfied in all material respects;
(v) originals or copies of each consent, authorization and
approval referred to in ss.7(b)(vi);
(vi) a copy of the Paying Agent Agreement, executed by the
Buyer and the Paying Agent;
(vii) originals of the Merger Documents, executed by the
Transaction Subsidiary;
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(viii) the Post Closing Escrow Agreement, executed by the
Post Closing Escrow Agent, the Buyer, the Surviving Corporation and the
Representatives, as agents for and representatives of the Company Shareholders;
(ix) the Benefit Plan Escrow Agreement, executed by the
Benefit Plan Escrow Agent, the Buyer, the Surviving Corporation and by the
Representatives, as agents for and representatives of the Company Shareholders;
(x) the Paying Agent Agreement shall have been executed by
the Paying Agent, the Buyer, the Surviving Corporation and the Representatives,
as agents for and representatives of the Company Shareholders;
(xi) an opinion of Xxxxx Xxxxxx, General Counsel to the
Buyer and the Transaction Subsidiary, referred to in ss.7(b)(vii); and
(xii) a certificate of the Secretary of the Buyer and the
Transaction Subsidiary certifying as to the resolutions adopted by the Board of
Directors of each in connection with the transactions contemplated by this
Agreement.
(c) Other Actions. The actions described in ss.2(c) will be
taken by the Parties.
9. TERMINATION.
(a) Termination of Agreement. Any of the Parties may terminate
this Agreement (whether before or after shareholder approval) as provided below:
(i) the Parties may terminate this Agreement by mutual
written consent at any time prior to the Effective Time;
(ii) the Buyer and the Transaction Subsidiary may
terminate this Agreement by giving written notice to the Company at any time
prior to the Effective Time (A) in the event the Company has breached any
material representation, warranty, or covenant contained in this Agreement in
any material respect, the Buyer or the Transaction Subsidiary has notified the
Company of the breach, and the breach has continued without cure for a period of
thirty (30) days after the notice of breach or (B) if the Closing shall not have
occurred on or before July 15, 1998, by reason of the failure of any condition
precedent under ss.7(a) hereof (unless the failure results primarily from the
Buyer or the Transaction Subsidiary breaching any representation, warranty, or
covenant contained in this Agreement);
(iii) the Company may terminate this Agreement by giving
written notice to the Buyer and the Transaction Subsidiary at any time prior to
the Effective Time (A) in the event the Buyer or the Transaction Subsidiary has
breached any material representation, warranty, or covenant contained in this
Agreement in any material respect, the Company has notified the Buyer and the
Transaction Subsidiary of the breach, and the breach has continued without cure
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for a period of thirty (30) days after the notice of breach or (B) if the
Closing shall not have occurred on or before July 15, 1998, by reason of the
failure of any condition precedent under ss.7(b) hereof (unless the failure
results primarily from the Company breaching any representation, warranty, or
covenant contained in this Agreement);
(iv) any Party may terminate this Agreement by giving
written notice to the other Parties at any time after the Shareholders' Meeting
in the event this Agreement and the Merger fail to receive the Requisite
Shareholder Approval.
(b) Effect of Termination. If any Party terminates this
Agreement pursuant to ss.9(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party;
provided, however, (i) that nothing herein shall relieve any Party from
liability for the willful breach of its covenants contained in this Agreement
and (ii) that the Confidentiality Agreement and the confidentiality provisions
contained in ss.5(e) above shall survive any such termination.
(c) Effect of Failure to Terminate. If either Party fails to
terminate this Agreement in accordance with the provisions of this ss.9
notwithstanding the existence of an event giving rise to a right of termination
as set forth in ss.9(a) or (b) above, such event shall be deemed to have been
waived by the Parties and shall not give rise to any Claims by or against the
Parties.
10. REMEDIES FOR BREACHES OF REPRESENTATIONS AND WARRANTIES.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Company, the Buyer and the Transaction
Subsidiary contained in this Agreement shall survive the Closing Date hereunder
and continue in full force and effect for a period of **The confidential portion
has been so omitted pursuant to a request for confidential treatment and has
been filed separately with the Commission.** thereafter (the "Survival Period").
(b) Indemnification by Company Shareholders.
(i) the Company Shareholders, pursuant to the terms of
this Agreement and the Post Closing Escrow Agreement, severally, and not
jointly, shall indemnify the Buyer and the Surviving Corporation from and
against any costs, losses or expenses, including attorneys' fees (together, the
"Claims") the Buyer or the Surviving Corporation may suffer from and after the
Closing Date resulting from, arising out of or caused by any breach by the
Company of (A) its representations and warranties contained in ss.3 above, (B)
its covenants contained in ss.5 or (C) any excess of the costs of funding the
obligations of the Surviving Corporation in respect of the Defined Benefit Plan
in excess of the portion of the Benefit Plan Escrow Fund allocated for such
purpose; provided that the Company Shareholders shall not have any obligation to
indemnify the Buyer or the Surviving Corporation from and against any liability
for Claims resulting from, arising out of or caused by any breach described in
clauses (A) or (B) of this ss.10(b)(i) until the Buyer or the Surviving
Corporation has suffered aggregate Claims by reason of all such breaches in
excess of **The confidential portion has been so omitted pursuant to a request
for confidential treatment and has been filed separately with the Commission.**
(the "Threshold") **The
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confidential portion has been so omitted pursuant to a request for confidential
treatment and has been filed separately with the Commission.**; and provided
further, that the Buyer makes a written claim for indemnification against the
Company Shareholders pursuant to the terms of the Post Closing Escrow Agreement
within five (5) business days after the end of the Survival Period; and provided
further that the Buyer's and the Surviving Corporation's right to
indemnification under this ss. 10(b) shall be subject to and limited, to the
extent applicable, by each of the other provisions of this ss. 10.
(ii) Notwithstanding any provision to the contrary, each
Company Shareholder's liability to the Buyer and the Surviving Corporation,
whether in respect of the indemnification obligations described in ss.10(b)(i)
or otherwise, shall in no event exceed his or her respective interest in the
Post Closing Escrow Fund. The Buyer's and the Surviving Corporation's sole and
only recourse in respect of any Claims hereunder shall be against the Post
Closing Escrow Fund, in the maximum amount thereof as shall exist from time to
time, subject to the procedures described in the Post Closing Escrow Agreement.
(c) Indemnification by Buyer. The Buyer and the Surviving
Corporation shall jointly and severally indemnify the Company Shareholders from
and against any Claims that the Company Shareholders may suffer from and after
the Closing Date resulting from or arising out of any breach by the Buyer or the
Transaction Subsidiary of (A) their representations and warranties contained in
ss.4 above or (B) its covenants contained in ss.5 and ss.6 above; provided, that
the Buyer and the Surviving Corporation shall not have any obligation to
indemnify the Company Shareholders from and against any liability for Claims
resulting from, arising out of or caused by any breach described in this
ss.10(c) until the Company Shareholders have suffered aggregate Claims by reason
of all such breaches in excess of the Threshold **The confidential portion has
been so omitted pursuant to a request for confidential treatment and has been
filed separately with the Commission.**; and provided further, that the Company
Shareholders make a written claim for indemnification against the Buyer or the
Surviving Corporation within five (5) business days after the Survival Period;
and provided further, that the Company Shareholders' right to indemnification
under this ss.10(c) shall be subject to and limited, to the extent applicable,
by each of the other provisions of this ss.10.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Person (the
"Indemnified Party") with respect to any matter (a "Third Party Claim") which
may give rise to a claim for indemnification against any other Person (the
"Indemnifying Party") under this ss.10, then the Indemnified Party shall
promptly notify the Indemnifying Party or its representative, as applicable,
thereof in writing; provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend
the Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the Indemnifying
Party notifies the Indemnified Party in writing
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within fifteen (15) days after the Indemnified Party has given notice of the
Third Party Claim that the Indemnifying Party will indemnify the Indemnified
Party from and against the entirety of any costs, losses and expenses the
Indemnified Party may suffer resulting from, arising out of or caused by the
Third Party Claim (subject to the limits of liability described in this ss.10),
(B) the Third Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (C) settlement of, or an adverse judgment
with respect to, the Third Party Claim is not, in the good faith judgment of the
Indemnified Party, likely to establish a precedent, custom or practice adverse
to the continuing business interests of the Indemnified Party, and (D) the
Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently.
(iii) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with ss.10(d)(ii) above, (A) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim, (B) the Indemnified
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (C) the Indemnifying
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably); provided, that the
Indemnified Party shall consent to any settlement with respect to a Third Party
Claim where the settlement involves only the payment of money damages and the
amount thereof is fully paid by the Indemnifying Party.
(iv) In the event any of the conditions in ss.10(d) above
is or becomes unsatisfied, however: (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim in any manner it reasonably may deem
appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith), (B) the
Indemnifying Party will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim (including
reasonable attorneys' fees and expenses), subject to the limitations of its
liability authorized in this ss.10, and (C) the Indemnifying Party will remain
responsible for any Claims the Indemnified Party may suffer resulting from,
arising out of or caused by the Third Party Claim, subject to the limitations of
its liability contained in this ss.10.
(v) The Company hereby appoints, and by adopting and
approving this Agreement and Plan of Merger the Company Shareholders who are not
holders of Dissenting Shares shall irrevocably appoint Xxxxx X. Xxxxxx, Xxxxxxx
X. Xxxxxx and Xxxxx Xxxxxxxxx (the "Representatives"), and each of them
individually, to act as their agent and attorneys-in-fact, with full power of
substitution, to execute the Post Closing Escrow Agreement and the Benefit Plan
Escrow Agreement in their name and to take all actions called for by this ss.10
and the Post Closing Escrow Agreement and the Benefit Plan Escrow Agreement on
their behalf, all in accordance with the terms of this ss.10 and the Post
Closing Escrow Agreement. If any of the Representatives dies or resigns, the
remaining Representatives shall appoint a successor.
(vi) In the event the Company Shareholders become
obligated to indemnify the Buyer or the Surviving Corporation pursuant to
ss.10(b)(i) hereof, the Representatives on behalf of the Company Shareholders
shall be authorized to utilize the funds in
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the Post Closing Escrow Fund for the timely payment of any cost of defense
incurred in connection with any such Claim.
(e) Determination of Adverse Consequences. The amount payable
by an Indemnifying Party with respect to any Claim under this ss.10 shall be
reduced by the amount of any insurance proceeds and tax benefits received by an
Indemnified Party with respect to any insurance or tax claim made with respect
thereto. All indemnification payments under this ss.10 shall be deemed
adjustments to the Merger Consideration; provided, however, such adjustments
shall be subject to the limits of liability set forth in this ss.10 and, with
respect to the liability of the Company Shareholders hereunder, shall not exceed
the amount of the Post Closing Escrow Fund.
(f) Resolution of Disputes. If any matter for which a Party
requests indemnification hereunder is disputed by another Party, or if there
shall be a dispute concerning the appropriateness of any requested disbursement
from the Post Closing Escrow Fund or the Benefit Plan Escrow Fund, and such
dispute is not settled within thirty days after either party declares in writing
that a dispute exists, the parties shall submit such disputed matter to
arbitration pursuant to the Commercial Arbitration Rules of the American
Arbitration Association (the "Rules"). An arbitration shall be held in
Pittsburgh, Pennsylvania under a single arbitrator who shall be selected
according to the Rules.
(i) Within fifteen (15) business days after the
designation of the arbitrator, the arbitrator, the Buyer and the Representatives
shall meet, at which time the Buyer and the Representatives shall submit in
writing all disputed issues and a proposed ruling on each such issue.
(ii) The arbitrator shall set a date for a hearing, which
shall be no later than thirty (30) business days after the submission of written
proposals pursuant to clause (i), to discuss each of the issues identified by
the Buyer and the Representatives. Each such party shall have the right to be
represented by counsel. The arbitration shall be governed by the rules of the
American Arbitration Association; provided, that the arbitrator shall have sole
discretion with regard to the admissibility of evidence.
(iii) The arbitrator shall use his or her best efforts to
rule on each disputed issue within thirty (30) business days after the
completion of the hearings described in clause (ii). The arbitrator shall rule
in favor of the position of one party or the other in the matter, and shall not
"split" or compromise the position of the parties. The determination of the
arbitrator to the resolution of any dispute shall be binding and conclusive upon
all parties hereto. All rulings of the arbitrator shall be in writing and shall
be delivered to the parties hereto.
(iv) The prevailing party in any arbitration shall be
entitled to an award of reasonable attorneys' fees incurred in connection with
the arbitration. The non-prevailing party shall pay such fees, together with the
fees of the arbitrator and the costs and expenses of the arbitration. Any fees
and expenses payable by the Representatives in connection with an arbitration
proceeding shall be payable from the Post Closing Escrow Fund or the Benefit
Plan Escrow Fund, as the case may be.
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(v) Any arbitration award may be entered in and enforced
by any court having jurisdiction thereover and shall be final and binding upon
the parties.
(g) Information Concerning Claims. Any Party which presents a
Claim hereunder shall include with such presentation reasonable details and
documentation related to such Claim in the claimant's possession.
11. MISCELLANEOUS.
(a) Survival. None of the representations, warranties, and
covenants of the Parties (other than the provisions in ss.2 above concerning
payment of the Merger Consideration and the provisions in ss.6) will survive the
Effective Time except as provided in ss.10.
(b) Press Releases and Public Announcements. Prior to the
Closing no Party shall issue any press releases or make any public announcement
relating to the subject matter of this Agreement without the prior written
approval of the other Parties; provided, however, that any Party may make any
public disclosure (including filings with the Securities and Exchange Commission
and any exchange on which its shares are listed) it believes in good faith is
required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party shall advise the
other Party prior to making the disclosure and shall cooperate with the other
Party as to the contents of such public disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns; provided, however, that (i) the
provisions in ss.2 above concerning payment of the Merger Consideration are
intended for the benefit of the Company Shareholders and (ii) the provisions in
ss.6 are intended for the benefit of the individuals specified therein and their
respective legal representatives.
(d) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Parties.
(f) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
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(g) Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretations of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Company:
National Underground Storage, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, President
Telecopier: (000)000-0000
Copy to:
Xxxxx Xxxx & Xxxxxxxxx
Xxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
If to the Buyer or the Transaction Subsidiary:
Iron Mountain Records Management, Inc.
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx, Vice President
Telecopier: (000) 000-0000
Copy to:
Iron Mountain Records Management, Inc.
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
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Any Party may send any notice, request, demand, claim, or
other communication hereunder to the intended recipient at the address set forth
above using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail) but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Parties notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware.
(j) Amendments and Waivers. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; provided, however,
that any amendment effected subsequent to shareholder approval will be subject
to the restrictions contained in the Pennsylvania Business Corporation Law. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all of the Parties. No waiver by any Party of
any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
(l) Expenses. Each of the Parties will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby; provided, however, the Buyer
and Transaction Subsidiary shall bear and be solely responsible for the filing
fees incurred in connection with satisfying the requirements of the
Xxxx-Xxxxx-Xxxxxx Act.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
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(n) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof. Any matter disclosed on any Exhibit or Schedule referred to
herein shall be deemed also to have been disclosed on any other applicable
Exhibit or Schedule.
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement on and as of the date first above written.
Iron Mountain Records Management, Inc. Iron Mountain/NUS, Inc.
By: /s/ By: /s/
Name: Name:
Title: Title:
National Underground Storage, Inc.
By: /s/
Name:
Title:
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