SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
IRON MOUNTAIN INCORPORATED
--------------------------
(Name of Issuer)
Common Stock $0.01 Par Value
----------------------------
(Title of Class of Securities)
46284P 10 4
-----------
(CUSIP Number)
Harry P. Messina, Jr., Esq.
WOODS, OVIATT, GILMAN, STURMAN & CLARKE LLP
44 Exchange Street
Rochester, New York 14614
(716) 454-5370
--------------
(Name, Address and Telephone Number
of Person Authorized to Receive Notices
and Communications)
June 12, 1997
-------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ]
Check the following box if a fee is being paid with the statement [ ]
<PAGE>
SCHEDULE 13D
CUSIP NO. 46284P 10 4
1. NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
B. Thomas Golisano
SSN: ###-##-####
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ] (b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS
(A)
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e)
[ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
7. SOLE VOTING POWER
1,027,490 (A)
8. SHARED VOTING POWER
-0-
9. SOLE DISPOSITIVE POWER
945,409 (A)
10. SHARED DISPOSITIVE POWER
82,081 (A)
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,027,490 (A)
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.45%
<PAGE>
14. TYPE OF REPORTING PERSON
00
(A) See Item 3 below.
<PAGE>
Item 1. Security and Issuer.
Common Stock, par value $.01 per share.
Iron Mountain Incorporated
745 Atlantic Avenue
Boston, Massachusetts 02111
Item 2. Identity and Background.
(a) B. THOMAS GOLISANO
(b) c/o Paychex, Inc.
911 Panorama Trail South
Rochester, New York 14625
(c) Chairman and President of Paychex, Inc.
(Address in (b) above)
(d) Mr. Golisano has not, during the last five years, been convicted in
a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) Negative
(f) United States of America
Item 3. Source and Amount of Funds or Other Consideration.
The shares of Iron Mountain Incorporated Common Stock, par value $.01 per
share, were acquired on June 12, 1997, as a result of the merger of Safesite
Records Management Corporation ("Safesite") with and into Iron
Mountain/Safesite, Inc., a wholly-owned subsidiary of Iron Mountain
Incorporated. Mr. Golisano was Chairman of Safesite and owned 5,275,185
shares of Safesite Common Stock which, in accordance with the Plan of Merger,
were exchanged for 1,023,875 shares of Iron Mountain Common Stock. However,
it should be noted that while all Iron Mountain shares issued to Mr. Golisano
were registered with the Securities and Exchange Commission, only 356,939 were
freely tradeable. 584,855 shares are restricted by Iron Mountain Incorporated
By-Law from transfer or other disposition until June 12, 1998 and 82,081
shares are held in escrow until June 12, 1998 to satisfy certain claims which
Iron Mountain may have arising out of the Merger Agreement. Mr. Golisano has
(i) sole voting power with respect to all of the shares (so long as held by
him or the escrow agent); (ii) sole dispository power with respect to 945,409
of the shares, subject to the By-Law limitation referred to previously, and
(iii) shared dispositive power with respect to the 82,081 shares held in
escrow (as to which Iron Mountain Incorporated and the escrow agent have sole
dispositive power until June 12, 1998 and Mr. Golisano has sole dispositive
power thereafter).
Mr. Golisano also received, in exchange for his Safesite shares, cash in
the amount of $6,720,585.69 (and $16.36 in lieu of fractional shares).
In accordance with the Plan of Merger, Mr. Golisano also exchanged
options to purchase 15,000 shares of Safesite common stock for options to
purchase 3,615 shares of Iron Mountain Common Stock. The Iron Mountain
options are currently exercisable at prices ranging from $9.96 per share to
$13.65 per share and expire as to one-third of the shares optioned on January
1st of each of the next three (3) years.
<PAGE>
Mr. Golisano was elected a director of Iron Mountain effective July 12,
1997.
Item 4. Purpose of the Transaction.
Please see the answer to Item 3.
(a) Mr. Golisano has no present plans to acquire additional securities
of the issuer. Mr. Golisano intends to transfer an aggregate of
12,586 shares of Iron Mountain Common Stock to 49 employees of
Safesite.
(b) Negative
(c) Negative
(d) Negative
(e) Negative
(f) Negative
(g) Negative
(h) Negative
(i) Negative
(j) Negative
Item 5. Interest in Securities of the Issuer.
(a) Aggregate number and percentage of class of Common Stock
beneficially owned (subject to Escrow Agreement described in Item 3
above).
Shares Percent of Class
------ ----------------
1,027,490 10.45%
Includes 3,615 Shares subject to currently exercisable options
held by Mr. Golisano.
(b) See Item 3 above.
(c) See Item 3 above.
(d) Negative
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings with respect to Securities of
the Issuer.
See Item 3 above.
<PAGE>
Item 7. Materials to be Filed as Exhibits.
Exhibit 1 Agreement and Plan of Merger dated February 19, 1997, as
amended
Exhibit 2 Stockholders' Agreement
Exhibit 3 Escrow Agreement
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.
/s/ B. Thomas Golisano
_______________________
B. Thomas Golisano
Dated: June 20, 1997
<PAGE>
EXHIBIT 1
ANNEX I
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
By and Among
IRON MOUNTAIN INCORPORATED,
IM-1 ACQUISITION CORP.
and
SAFESITE RECORDS MANAGEMENT CORPORATION
dated as of
February 19, 1997,
as amended as of April 1, 1997
and as further amended as of May 7, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE 1.
THE MERGER. . . . . . . . . . . . . . . . . . . . . . . .I-2
Section 1.1. The Merger. . . . . . . . . . . . . .I-2
Section 1.2. Action by Stockholders. . . . . . . .I-2
Section 1.3. Closing.. . . . . . . . . . . . . . .I-2
Section 1.4. Effective Time. . . . . . . . . . . .I-2
Section 1.5. Effect of the Merger. . . . . . . . .I-2
Section 1.6. Certificate of Incorporation. . . . .I-2
Section 1.7. Bylaws. . . . . . . . . . . . . . . .I-2
Section 1.8. Directors and Officers. . . . . . . .I-3
ARTICLE 2.
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES. . . .I-3
Section 2.1. Conversion of Securities. . . . . . .I-3
Section 2.2. Exchange of Certificates; Exchange
Agent and Exchange Procedures . . . .I-4
Section 2.3. Stock Transfer Books. . . . . . . . .I-5
Section 2.4. Option Securities . . . . . . . . . .I-5
Section 2.5. Dissenting Shares.. . . . . . . . . .I-6
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . .I-7
Section 3.1. Organization and Business; Power and
Authority; Effect of Transaction. . .I-7
Section 3.2. Financial and Other Information . . .I-8
Section 3.3. Changes in Condition. . . . . . . . .I-9
Section 3.4. Liabilities . . . . . . . . . . . . .I-9
Section 3.5. Title to Properties; Leases . . . . .I-9
Section 3.6. Compliance with Private
Authorizations. . . . . . . . . . . I-10
Section 3.7. Compliance with Governmental
Authorizations and Applicable Law . I-10
Section 3.8. Intangible Assets . . . . . . . . . I-11
Section 3.9. Related Transactions. . . . . . . . I-11
Section 3.10. Insurance . . . . . . . . . . . . . I-11
Section 3.11. Tax Matters . . . . . . . . . . . . I-11
Section 3.12. ERISA . . . . . . . . . . . . . . . I-12
Section 3.13. Authorized and Outstanding Capital
Stock . . . . . . . . . . . . . . . I-13
Section 3.14. Employment Arrangements . . . . . . I-14
Section 3.15. Material Agreements . . . . . . . . I-15
Section 3.16. Ordinary Course of Business . . . . I-15
Section 3.17. Bank Accounts, Etc. . . . . . . . . I-16
Section 3.18. Adverse Restrictions. . . . . . . . I-16
Section 3.19. Broker or Finder. . . . . . . . . . I-16
Section 3.20. Environmental Matters . . . . . . . I-17
Section 3.21. Operational Matters . . . . . . . . I-18
Section 3.22. Materiality . . . . . . . . . . . . I-18
<PAGE>
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND ACQUIROR
MERGER SUBSIDIARY . . . . . . . . . . . . . . . . . . . I-18
Section 4.1. Organization and Qualification;
Power and Authority; Effect of
Transaction . . . . . . . . . . . . I-18
Section 4.2. Capitalization of Acquiror and
Acquiror Merger Subsidiary. . . . . I-19
Section 4.3. SEC Filings; Financial Statements . I-19
Section 4.4. Registration Statement. . . . . . . I-20
Section 4.5. Brokers . . . . . . . . . . . . . . I-20
ARTICLE 5.
ADDITIONAL COVENANTS. . . . . . . . . . . . . . . . . . I-20
Section 5.1. Access to Information;
Confidentiality . . . . . . . . . . I-20
Section 5.2. Agreement to Cooperate. . . . . . . I-21
Section 5.3. Affiliate Agreements; Registration
Rights Agreement. . . . . . . . . . I-22
Section 5.4. No Solicitation . . . . . . . . . . I-22
Section 5.5. Directors' and Officers'
Indemnification and Insurance . . . I-23
Section 5.6. Notification of Certain Matters . . I-23
Section 5.7. Public Announcements. . . . . . . . I-23
Section 5.8. Obligations of Acquiror . . . . . . I-23
Section 5.9. Employee Benefits; Severance Policy I-23
Section 5.10. Certain Actions Concerning Business
Combinations. . . . . . . . . . . . I-24
Section 5.11. Conversion of Option Securities . . I-24
Section 5.12. Tax Treatment . . . . . . . . . . . I-24
Section 5.13. Preparation of the Registration
Statement . . . . . . . . . . . . . I-24
ARTICLE 6.
CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . I-25
Section 6.1. Conditions to Obligations of Each
Party to Effect the Merger. . . . . I-25
Section 6.2. Conditions to Obligations of
Acquiror and Acquiror Merger
Subsidiary. . . . . . . . . . . . . I-26
Section 6.3. Conditions to Obligations of the
Company . . . . . . . . . . . . . . I-27
ARTICLE 7.
TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . I-28
Section 7.1. Termination . . . . . . . . . . . . I-28
Section 7.2. Effect of Termination . . . . . . . I-29
Section 7.3. Amendment . . . . . . . . . . . . . I-29
Section 7.4. Waiver. . . . . . . . . . . . . . . I-29
Section 7.5. Fees, Expenses and Other Payments . I-29
Section 7.6. Effect of Investigation . . . . . . I-30
<PAGE>
ARTICLE 8.
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . I-30
Section 8.1. Survival. . . . . . . . . . . . . . I-30
Section 8.2. Escrow; Indemnification . . . . . . I-30
Section 8.3. Limitation of Liability;
Disposition of Escrow Indemnity
Funds . . . . . . . . . . . . . . . I-31
Section 8.4. Notice of Claims. . . . . . . . . . I-32
Section 8.5. Defense of Third Party Claims . . . I-32
Section 8.6. Balance Sheet Adjustment. . . . . . I-32
Section 8.7. Exclusive Remedy. . . . . . . . . . I-32
ARTICLE 9.
GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . I-32
Section 9.1. Notices . . . . . . . . . . . . . . I-32
Section 9.2. Headings. . . . . . . . . . . . . . I-33
Section 9.3. Severability. . . . . . . . . . . . I-33
Section 9.4. Entire Agreement. . . . . . . . . . I-33
Section 9.5. Assignment. . . . . . . . . . . . . I-34
Section 9.6. Parties in Interest . . . . . . . . I-34
Section 9.7. Governing Law . . . . . . . . . . . I-34
Section 9.8. Enforcement of the Agreement. . . . I-34
Section 9.9. Counterparts. . . . . . . . . . . . I-34
Section 9.10. Mutual Drafting . . . . . . . . . . I-34
Section 9.11. Continuation of Covenants . . . . . I-34
ARTICLE 10.
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . I-35
EXHIBITS
5.3 Form of Affiliate Agreement
6.2(c) Form of Opinion of Woods, Oviatt, Gilman, Sturman & Clarke LLP
6.3(a) Form of Opinion of Sullivan & Worcester LLP
8.3 Form of Escrow Agreement
SCHEDULES
Disclosure Schedule
Acquiror Disclosure Schedule
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 19, 1997, among Iron
Mountain Incorporated, a Delaware corporation ("Acquiror"), IM-1 Acquisition
Corp., a Delaware corporation and a wholly owned Subsidiary of Acquiror
("Acquiror Merger Subsidiary"), and Safesite Records Management Corporation, a
Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of this Agreement
(this and other capitalized terms used herein are either defined in Section 10
below or in another Section of this Agreement and, in such case, Article 10
includes a reference to such Section), in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), the Company and
Acquiror Merger Subsidiary will carry out a business combination transaction
pursuant to which Acquiror Merger Subsidiary will merge with and into the
Company (the "Merger") and the stockholders of the Company (the
"Stockholders") will convert their holdings into a combination of cash and
shares of the Voting Common Stock, par value $.01 per share, of Acquiror
("Acquiror Stock");
WHEREAS, the Board of Directors of the Company has unanimously determined
that the Merger is fair to, and in the best interests of, the Company and the
Stockholders and has approved and adopted this Agreement as a tax-free plan of
reorganization within the provisions of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), has approved this Agreement, the Merger
and the Transactions and has recommended approval and adoption of this
Agreement, the Merger and the Transactions by the Stockholders; and
WHEREAS, the Board of Directors of Acquiror has unanimously approved and
adopted this Agreement, the Merger and the Transactions, and Acquiror has
approved and adopted this Agreement, the Merger and the Transactions as the
sole stockholder of Acquiror Merger Subsidiary;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1.
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL at the Effective
Time, the Company shall be merged with and into Acquiror Merger Subsidiary.
As a result of the Merger, the separate existence of the Company shall cease
and Acquiror Merger Subsidiary shall continue as the surviving corporation of
the Merger (the "Surviving Corporation").
Section 1.2. Action by Stockholders.
(a) The Company, acting through its Board of Directors, shall, in
accordance with and subject to Applicable Law and its Organic Documents: as
soon as practicable, duly call, give notice of, convene and hold a special
meeting of the Stockholders for the purpose of adopting and approving this
Agreement, the Merger and the Transactions (the "Special Meeting"); include in
<PAGE>
any proxy statement related to the Special Meeting the conclusion and
recommendation of the Board of Directors to the effect that the Board of
Directors, having determined that this Agreement, the Merger and the
Transactions are in the best interests of the Company and the Stockholders,
has approved this Agreement, the Merger and the Transactions and recommends
that the Stockholders vote in favor of the approval and adoption of this
Agreement, the Merger and the Transactions; and use its best efforts to obtain
the necessary approval and adoption of this Agreement, the Merger and the
Transactions by the Stockholders.
(b) Acquiror hereby represents that Acquiror, as sole stockholder of
Acquiror Merger Subsidiary, has approved and adopted this Agreement, the
Merger and the Transactions. Acquiror shall take all additional actions as
sole stockholder of Acquiror Merger Subsidiary necessary to adopt and approve
and effectuate the provisions of this Agreement, the Merger and the
Transactions.
Section 1.3. Closing. Unless this Agreement shall have been terminated
pursuant to Section 7.1 hereof and the Merger and the Transactions shall have
been abandoned, the closing of the Merger (the "Closing") will take place at
10:00 A.M., local time, on the fifth business day (the "Closing Date") after
the date on which the last of the conditions set forth in Article 6 is
satisfied or waived (other than conditions requiring deliveries at the
Closing), at the offices of Sullivan & Worcester LLP, One Post Office Square,
Boston, Massachusetts, unless another date, time or place is agreed to in
writing by the Company and Acquiror.
Section 1.4. Effective Time. As promptly as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
6 (but subject to Section 1.3 hereof), the Parties shall cause the Merger to
be consummated by filing a certificate of merger with the Secretary of State
of the State of Delaware, and by making any related filings required under the
DGCL. The Merger shall become effective at such time (but not prior to the
Closing Date) as such certificate is duly filed with the Secretary of State of
the State of Delaware, or at such later time as is specified in such
certificate (the "Effective Time").
Section 1.5. Effect of the Merger. From and after the Effective Time,
the Surviving Corporation shall possess all the rights, privileges, powers and
franchises and be subject to all of the restrictions, disabilities and duties
of the Company and Acquiror Merger Subsidiary, and the Merger shall otherwise
have the effects, all as provided under the DGCL.
Section 1.6. Certificate of Incorporation. From and after the
Effective Time, the Certificate of Incorporation of Acquiror Merger Subsidiary
as in effect immediately prior to the Effective Time shall be the Certificate
of Incorporation of the Surviving Corporation, until amended in accordance
with Applicable Law, and the name of the Surviving Corporation shall be such
name as Acquiror may elect.
Section 1.7. Bylaws. From and after the Effective Time, the bylaws of
Acquiror Merger Subsidiary as in effect immediately prior to the Effective
Time shall be the bylaws of the Surviving Corporation, until amended in
accordance with Applicable Law.
<PAGE>
Section 1.8. Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed and qualified (or their
earlier resignation or removal) in accordance with Applicable Law the
directors of Acquiror Merger Subsidiary at the Effective Time shall be the
directors of the Surviving Corporation and the officers of Acquiror Merger
Subsidiary at the Effective Time shall be the officers of the Surviving
Corporation. B. Thomas Golisano shall be appointed or elected as a Director
of Acquiror, to hold office in accordance with the Restated Certificate of
Incorporation and By-Laws of Acquiror.
ARTICLE 2.
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.1. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Acquiror Merger
Subsidiary, the Company or the holders of any of the following securities:
(a) Each share of Common Stock, par value $.01 per share, of the Company
(the "Company Stock") issued and outstanding immediately prior to the
Effective Time (other than any shares of Company Stock to be cancelled
pursuant to Section 2.1(b) and any Dissenting Shares), shall be converted into
the right to receive, subject to the indemnification provisions of Article 8
hereof, (i) that number equal to the Stock Conversion Number of fully paid and
nonassessable shares of Acquiror Stock (the "Stock Merger Consideration") and
(ii) cash in an amount equal to the Cash Conversion Number (the "Cash Merger
Consideration", and together with the Stock Merger Consideration, the "Merger
Consideration"). At the Effective Time, all shares of Company Stock (the
"Shares") shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and certificates previously evidencing
any such Shares (each, a "Certificate") shall thereafter represent the right
to receive, upon the surrender of such Certificate in accordance with the
provisions of Section 2.2, but subject to the indemnification provisions of
Article 8 hereof, the Stock Merger Consideration and Cash Merger Consideration
multiplied by the number of Shares represented by such Certificate, and a
holder of more than one Certificate shall have the right to receive the Stock
Merger Consideration and Cash Merger Consideration multiplied by the number of
Shares represented by all such Certificates (the "Exchange Merger
Consideration"). The holders of such Certificates previously evidencing such
Shares outstanding immediately prior to the Effective Time shall cease to have
any rights with respect to such Shares except as otherwise provided herein or
by Applicable Law. Notwithstanding anything to the contrary herein, the Stock
Merger Consideration to be received by any Stockholder prior to the
termination of the Escrow Indemnity Period shall be adjusted to give full
effect to the indemnification provisions in Article 8 hereof.
(b) Each Share held in the treasury of the Company and each Share owned
by Acquiror or any direct or indirect Subsidiary of Acquiror immediately prior
to the Effective Time shall automatically be cancelled and extinguished
without any conversion thereof and no payment shall be made with respect
thereto.
(c) Each share of common stock of Acquiror Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock of the Surviving Corporation with the same rights,
powers and privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
<PAGE>
(d) In lieu of issuing fractional shares, Acquiror shall convert a
holder's right to receive shares of Acquiror Stock pursuant to Sections 2.1(a)
and Section 2.1(e) into a right to receive the highest whole number of shares
of Acquiror Stock constituting the non-cash portion of the Exchange Merger
Consideration to be received plus cash equal to the fraction of a share of
Acquiror Stock to which the holder would otherwise be entitled (in each case
after giving effect to Section 1.2(e) hereof) multiplied by the Determination
Price, and the Exchange Merger Consideration to which a holder is so entitled
shall be deemed to be such number of shares of Acquiror Stock plus such cash
in lieu of fractional shares plus the cash portion of the Exchange Merger
Consideration. In addition, upon distribution to Stockholders of any portion
of the Escrow Indemnity Funds, Acquiror shall deliver to such Stockholder the
highest whole number of shares of Acquiror Stock to which such Stockholder is
entitled plus cash equal to the fraction of a share of Acquiror Stock to which
the holder would otherwise be entitled multiplied by the Market Price. For
purposes of carrying out the intent of this Section 2.1(d), Acquiror may
aggregate Certificates so that fractional shares of Acquiror Stock due in
exchange for multiple Certificates may be combined to yield a number of whole
shares thereof plus a single fraction.
(e) In order to implement the indemnification provisions of Section 8
hereof, the Stock Merger Consideration payable to each Stockholder pursuant to
Section 2.2 prior to the termination of the Escrow Indemnity Period hereof
shall be equal to the product of (i) the Closing Stock Conversion Number and
(ii) the number of Shares represented by Certificates held by such
Stockholder. The remainder of such Stockholder's Stock Merger Consideration
shall be held as part of the Escrow Indemnity Funds and shall be payable to
such Stockholder after the Escrow Indemnity Period in accordance with Section
8 hereof and the Escrow Agreement.
Section 2.2. Exchange of Certificates; Exchange Agent and Exchange
Procedures.
(a) As soon as reasonably practicable after the Effective Time, Acquiror
shall deposit or cause to be deposited with a bank or trust company designated
by Acquiror (the "Exchange Agent"), for the benefit of the holders of Shares
(other than Dissenting Shares), for exchange in accordance with this Article,
through the Exchange Agent, (i) cash (by wire transfer of federal funds
pursuant to instructions reasonably satisfactory to the Exchange Agent) in an
amount equal to the Cash Merger Consideration multiplied by the number of all
Shares issued and outstanding immediately prior to the Effective Time (other
than Shares to be cancelled pursuant to Section 2.1(b) and any Dissenting
Shares) (said number of Shares less said Shares to be cancelled and less said
Dissenting Shares hereafter to be referred to as the "Net Shares"), and (ii)
the Stock Merger Consideration multiplied by the Net Shares, plus cash in an
amount sufficient to make payment for fractional shares, in exchange for all
of the outstanding Shares, less the number of shares of Acquiror Stock
constituting the Escrow Indemnity Funds (collectively, the "Exchange Fund").
Subject to Article 8 hereof, the Exchange Agent shall, pursuant to irrevocable
instructions from Acquiror, deliver the Exchange Merger Consideration to be
issued pursuant to Section 2.1(a) out of the Exchange Fund to holders of
Shares upon transmittal of Certificates for exchange as provided therein and
in Section 2.2(b). The Exchange Fund shall not be used for any other purpose.
Any interest, dividends or other income earned by the Exchange Fund shall be
for the account of Acquiror.
<PAGE>
(b) As soon as reasonably practicable after the Effective Time, Acquiror
will instruct the Exchange Agent to issue (pursuant to instructions from each
holder of record reasonably satisfactory to Acquiror and the Exchange Agent,
and otherwise by mail to the most recent address of such holder as shown on
the Company's books and records) to such holder of a Certificate or
Certificates which immediately prior to the Effective Time evidenced
outstanding Shares (other than Shares to be cancelled pursuant to Section
2.1(b) and any Dissenting Shares), a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Acquiror and the Company may reasonably specify) and instructions to effect
the surrender of the Certificates in exchange for the Exchange Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by
Acquiror together with such letter of transmittal, duly executed, and such
other customary documents as may be reasonably required pursuant to such
instructions (collectively, the "Transmittal Documents"), the holder of such
Certificate shall be entitled to receive in exchange therefor the Exchange
Merger Consideration which such holder has the right to receive, subject to
Article 8 hereof, pursuant to Sections 2.1(a) and 2.1(d) hereof, and the
Certificate so surrendered shall forthwith be cancelled. In the event of a
transfer of ownership of Shares which is not registered in the transfer
records of the Company, the Exchange Merger Consideration may be issued and
paid in accordance with this Article to a transferee if the Certificate
evidencing such Shares is presented to the Exchange Agent, accompanied by all
documents reasonably required to evidence and effect such transfer and by
evidence that any applicable stock transfer taxes have been paid. The
Exchange Merger Consideration will be delivered by the Exchange Agent promptly
following surrender of a Certificate and the related Transmittal Documents,
and cash payments for fractional shares and the cash portion of the Exchange
Merger Consideration may be made by check (or, pursuant to instructions
reasonably satisfactory to the Exchange Agent, by wire transfer). No interest
will be payable on the Exchange Merger Consideration regardless of any delay
in making payments. Until surrendered as contemplated by this Section, each
Certificate shall be deemed at any time after the Effective Time to evidence
only the right to receive, upon such surrender, the Exchange Merger
Consideration, without interest.
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and subject to such other
conditions as Acquiror reasonably may impose, the Surviving Corporation shall
issue in exchange for such lost, stolen or destroyed Certificate the Exchange
Merger Consideration deliverable in respect thereof as determined in
accordance with Sections 2.1(a) and 2.1(d), subject to Article 8 hereof.
Acquiror may, in its discretion and as a condition precedent to authorizing
the issuance thereof by the Surviving Corporation, require the owner of such
lost, stolen or destroyed Certificate to provide a bond or other surety to
Acquiror and the Surviving Corporation in such sum as Acquiror may reasonably
direct as indemnity against any claim that may be made against Acquiror or the
Surviving Corporation (and their Affiliates) with respect to the Certificate
alleged to have been lost, stolen or destroyed.
<PAGE>
(d) Any portion of the Exchange Fund which remains undistributed to the
holders of the Company Stock for ninety (90) days after the Effective Time
shall be delivered to Acquiror upon demand by Acquiror, and any holders of
Certificates who have not theretofore complied with this Article shall
thereafter look only to Acquiror for the Exchange Merger Consideration to
which they are entitled pursuant to this Article.
(e) None of Acquiror, Acquiror Merger Subsidiary, the Company or the
Surviving Corporation shall be liable to any holder of Shares for any shares
of Acquiror Stock or cash from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
law.
(f) Each of Acquiror, the Surviving Corporation and the Exchange Agent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Shares such amounts as
Acquiror, the Surviving Corporation or the Exchange Agent is required to
deduct and withhold with respect to the making of such payment under the Code,
or any provision of federal, state, local or foreign tax law. To the extent
that amounts are so withheld by Acquiror, the Surviving Corporation or the
Exchange Agent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the Shares in respect of
which such deduction and withholding was made by Acquiror, the Surviving
Corporation or the Exchange Agent.
Section 2.3. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of Shares thereafter on the records of the Company
other than to Acquiror. On or after the Effective Time, any Certificate
presented to the Exchange Agent or the Surviving Corporation shall be
converted into the Exchange Merger Consideration.
Section 2.4. Option Securities
(a) As soon as reasonably practicable after the Effective Time, each
holder of an Option Security who elects to shall receive (i) subject to clause
(ii) below, in respect of any such Option Security or portion thereof which is
exercisable at the Effective Time (including those which will become
exercisable by virtue of the consummation of the Merger) (1) a non-qualified
option to acquire shares of Acquiror Stock under Acquiror's 1995 Stock
Incentive Plan, which option for Acquiror Stock shall (A) have an exercise
price per share determined by dividing the exercise price per share of the
applicable Option Security by the Stock Conversion Number and (B) entitle the
holder to purchase that number of shares equal to the product of (x) the
number of shares subject to such Option Security which as of the Effective
Time is exercisable and (y) the Stock Conversion Number, and (2) cash in the
amount of the product of (x) the number of shares subject to such Option
Security which as of the Effective Time is exercisable and (y) the Cash
Conversion Number, and (ii) in respect of any such Option Security or portion
thereof which is not exercisable at the Effective Time and in respect of those
Option Securities to acquire 17,500 shares of Company Stock recently granted
to the five individuals identified in Section 3.13(b) of the Disclosure
Schedule, a non-qualified option to acquire shares of Acquiror Stock under
Acquiror's 1995 Stock Incentive Plan at an exercise price and in an amount
affording the holder equivalent value for the Option Security being exchanged,
which option for Acquiror Stock shall (1) have an exercise price per share
determined by dividing (x) the exercise price per share of the applicable
Option Security by (y) the quotient of the Share Price divided by the
<PAGE>
Determination Price, and (2) entitle the holder to purchase that number of
shares as equals the product of (x) the number of shares subject to such
Option Security which as of the Effective Time is not exercisable and (y) the
quotient of the Share Price divided by the Determination Price. In addition,
each option to acquire Acquiror Stock issued in accordance with this Section
2.4 shall be exercisable (subject to the terms of such Option Security and
Acquiror's 1995 Stock Incentive Plan) on the date the applicable Option
Security would have been exercisable and otherwise be subject to the terms and
conditions of the Acquiror 1995 Stock Incentive Plan (it being understood that
the terms of the Acquiror option agreement, as to any employee, other than the
Principal Stockholders, of the Company who is not employed by Acquiror or any
of its Affiliates on the first anniversary of the Closing Date, shall not (a)
make it a condition to exercise such option that such employee be in
compliance with an Acquiror confidentiality or non-competition agreement and
(b) require such employee to pay to Acquiror the excess of the fair market
value on the day of exercise over the exercise price as a result of being
employed by a competitor of Acquiror within two years after the exercise of
such option).
(b) In lieu of issuing any option to acquire a fractional share of
Acquiror Stock, Acquiror shall convert a holder's right to receive an option
pursuant to this Section 2.4 into a right to receive an option to acquire the
nearest whole number of shares of Acquiror Stock (with no adjustment to any
cash amount received in connection with the conversion of an Exercisable
Option).
(c) Notwithstanding the foregoing, in lieu of issuing cash in respect of
exercisable Option Securities, Acquiror reserves the right, in its sole
discretion, subject to notification to the Company not less than ten (10) days
prior to the Closing Date, to exchange each vested and exercisable Option
Security solely for an option to acquire Acquiror Stock, the terms and
conditions (including, without limitation, the amount and exercise price per
share) of which will be determined in accordance with clause (a)(ii) above.
Section 2.5. Dissenting Shares.
(a) Notwithstanding any other provision of this Agreement to the
contrary, Shares that are outstanding immediately prior to the Effective Time
and which are held by Stockholders who shall have not voted in favor of the
Merger or consented thereto in writing and who shall be entitled to and shall
have demanded properly in writing appraisal for such Shares in accordance with
the DGCL, and who shall not have withdrawn such demand or otherwise have
forfeited appraisal rights (collectively, the "Dissenting Shares") shall not
be converted into or represent the right to receive the Merger Consideration.
Such Stockholders shall be entitled to receive payment of the appraised value
of such Shares held by them in accordance with the provisions of the DGCL,
except that all Dissenting Shares held by Stockholders who shall have failed
to perfect or who effectively shall have withdrawn, forfeited or lost their
rights to appraisal of such Shares under the DGCL shall thereupon be deemed to
have been converted into and to have become exchangeable for, as of the
Effective Time, the right to receive, without any interest thereon, the
Exchange Merger Consideration, upon surrender, in the manner provided in
Section 2.2, of the Certificate or Certificates that formerly evidenced such
Shares.
<PAGE>
(b) The Company shall give Acquiror prompt notice of any demands for
appraisal received by it, withdrawals of such demands, and any other
instruments served pursuant to the DGCL and received by the Company and
relating thereto. The Company and Acquiror shall jointly direct all
negotiations and proceedings with respect to demands for appraisal under
Applicable Law. The Company shall not, except with the prior written consent
of Acquiror, make any payment with respect to any demands for appraisal, or
offer to settle, or settle, any such demands.
Section 2.6 Standstill.
(a) Until the first anniversary of the Effective Time, except as
permitted by Acquiror's Restated By-Laws, any Person who receives or is
entitled to receive at the Effective Time any shares of Acquiror Stock
pursuant to Section 2.1 shall not Transfer (as such term is defined in Exhibit
2.6 hereto), and Acquiror shall not be required to register the Transfer of,
the number of shares, rounded upward to the nearest whole share (the "Subject
Shares"), of Acquiror Stock equal to the product of (1) the quotient obtained
by dividing (x) the "Lock-up Value" by (y) the product of (A) the Common Stock
Amount and (B) the lesser of the Closing Price and the Determination Price
multiplied by (2) the Stock Merger Consideration received by such Person in
connection with the Merger. The "Lock-up Value" shall mean one half of the
sum of (x) the product of the Common Stock Amount and the lesser of the
Closing Price and the Determination Price plus (y) the Cash Amount. The
"Closing Price" shall mean the closing price per share of Acquiror Stock for
the trading day immediately prior to the Effective Time. The closing price
for such trading day shall be the last quoted sale price or, if not so quoted,
the average of the low bid and high asked prices on the Nasdaq National Market
System.
(b) Each certificate representing Subject Shares issued pursuant to the
Merger shall bear the following legend:
"The shares represented by this certificate may not be transferred
prior to [first anniversary date of the Effective Time to be inserted]
except as otherwise permitted by the Restated By-Laws of the Corporation.
A copy of the Restated By-Laws of the Corporation will be furnished
without charge upon written request addressed to the Corporation at 745
Atlantic Avenue, Boston, Massachusetts 02111, Attention: Chief Executive
Officer."
The Subject Shares shall not form a part of the shares of Acquiror Stock to be
held in escrow as part of the Escrow Indemnity Funds.
(c) In order to implement the provisions of this Section 2.6, the
Restated By-Laws of Acquiror shall be amended on or prior to the Closing Date
to include the provisions as to the limitations on the transferability of the
Acquiror Stock set forth in Exhibit 2.6 hereto."
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to, and for Section 3.16
represents, warrants and covenants to, and agrees with, Acquiror and Acquiror
Merger Subsidiary as follows:
<PAGE>
Section 3.1. Organization and Business; Power and Authority; Effect of
Transaction.
(a) The Company:
(i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware,
(ii) has all requisite power and corporate authority to own or
hold under lease its properties and to conduct its business as now
conducted and as presently proposed to be conducted, and, to the
Company's knowledge, except as set forth in Section 3.1(a)(ii) to the
Disclosure Schedule, has in full force and effect all Governmental
Authorizations and Private Authorizations and has made all Governmental
Filings, to the extent required for such ownership and lease of its
property and conduct of its business, and
(iii) is, to the Company's knowledge, duly qualified and authorized
to do business and is in good standing as a foreign corporation in each
jurisdiction (a true and correct list of which is set forth in Section
3.1(a) of the Disclosure Schedule) in which the character of its property
or the nature of its business or operations requires such qualification
or authorization, except to the extent the failure to so qualify or to
maintain such authorizations would not have an Adverse Effect.
(b) The Company has all requisite power and corporate authority and has
in full force and effect all Governmental Authorizations and Private
Authorizations in order to enable it to execute and deliver, and to perform
its obligations under, this Agreement and each Collateral Document executed or
required to be executed by it pursuant hereto or thereto and to consummate the
Merger and the Transactions, and the execution, delivery and performance of
this Agreement and each Collateral Document executed or required to be
executed pursuant hereto or thereto have been duly authorized by all requisite
corporate or other action (other than that of the Stockholders). This
Agreement has been duly executed and delivered by the Company and, subject to
the affirmative vote of the Stockholders referred to below, constitutes, and
each Collateral Document executed or required to be executed pursuant hereto
or thereto or to consummate the Merger and the Transactions, when executed and
delivered by the Company or an Affiliate of the Company will constitute,
legal, valid and binding obligations of the Company or such Affiliate,
enforceable in accordance with their respective terms, except as such
enforceability may be subject to bankruptcy, moratorium, insolvency,
reorganization, arrangement, voidable preference, fraudulent conveyance and
other similar laws relating to or affecting the rights of creditors and except
as the same may be subject to the effect of general principles of equity (the
"Enforceability Exceptions"). The affirmative vote or action by written
consent of the holders of a majority of the outstanding Shares is the only
vote of the holders of any class or series of the capital stock of the Company
necessary to approve this Agreement, the Merger and the Transactions under
Applicable Law and the Company's Organic Documents. The provisions of Section
203 of the DGCL will not apply to this Agreement, the Merger or the
Transactions.
(c) Except as set forth in Section 3.1(c) of the Disclosure Schedule,
neither the execution and delivery of this Agreement or any Collateral
Document executed or required to be executed pursuant hereto or thereto, nor
the consummation of the Transactions, nor compliance with the terms,
conditions and provisions hereof or thereof by the Company or any of the other
parties hereto or thereto which is Affiliated with the Company:
<PAGE>
(i) will conflict with, or result in a breach or violation of, or
constitute a default under, any Applicable Law on the part of the Company
or will conflict with, or result in a breach or violation of, or
constitute a default under, or permit the acceleration of any obligation
or liability in, or but for any requirement of giving of notice or
passage of time or both would constitute such a conflict with, breach or
violation of, or default under, or permit any such acceleration in, any
Contractual Obligation of the Company,
(ii) will result in or permit the creation or imposition of any
Lien upon any property now owned or leased by the Company or any such
other party, or
(iii) will require any Governmental Authorization or
Governmental Filing or Private Authorization, except for the certificate
of merger and related filings under the DGCL in connection with the
Merger and the Transactions and except pursuant to the HSR Act.
(d) The Company does not have any Subsidiaries.
Section 3.2. Financial and Other Information.
(a) The Company has heretofore furnished to Acquiror copies of the
financial statements of the Company listed in Section 3.2(a) of the Disclosure
Schedule (the "Financial Statements"). The Financial Statements, including in
each case the notes thereto, have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby, except
as otherwise noted therein or in Section 3.2(a) of the Disclosure Schedule,
are true, correct and complete, do not contain any untrue statement of a
material fact or omit to state a material fact required by GAAP to be stated
therein or necessary in order to make the statements contained therein not
misleading, subject to normal year-end audit adjustments which adjustments, in
the aggregate, shall not be material, and fairly present the financial
condition and results of operations of the Company, on the bases therein
stated, as of the respective dates thereof, and for the respective periods
covered thereby subject, in the case of unaudited financial statements to
normal nonmaterial year-end audit adjustments and accruals.
(b) To the Company's knowledge, neither the Disclosure Schedule, the
Financial Statements, this Agreement nor any Collateral Document furnished or
to be furnished by or on behalf of the Company or any of the Stockholders
pursuant to this Agreement or any Collateral Document executed or required to
be executed by or on behalf of the Company or the Stockholders pursuant hereto
or thereto or to consummate the Merger and the Transactions, contains or will
contain any untrue statement of a material fact or omits or will omit to state
a material fact required to be stated in such document by its terms or
necessary in order to make the statements contained herein or therein not
misleading and, to the Company's knowledge, all such Collateral Documents are
and will be true, correct and complete.
(c) The Company does not own any capital stock or equity or other
interest in any other Entity or enterprise, however organized and however such
interest may be denominated or evidenced, except as set forth in Section
3.2(c) of the Disclosure Schedule.
<PAGE>
Section 3.3. Changes in Condition. Since the date of the most recent
financial statements forming part of the Financial Statements, except to the
extent specifically described in Section 3.3 of the Disclosure Schedule, there
has been no Adverse Change in the Company. To the Company's knowledge, there
is no Event known to the Company which Adversely Affects, or in the future
might (so far as the Company can now reasonably foresee) Adversely Affect, the
Company or the ability of the Company to perform any of the obligations set
forth in this Agreement or any Collateral Document executed or required to be
executed pursuant hereto or thereto except for changes in general economic
conditions or the industry in general and to the extent set forth in Section
3.3 of the Disclosure Schedule.
Section 3.4. Liabilities. At the date of the most recent balance sheet
forming part of the Financial Statements, the Company had no obligations or
liabilities, past, present or deferred, accrued or unaccrued, fixed, absolute,
contingent or other, except as disclosed in such balance sheet, or the notes
thereto, and since such date the Company has not incurred any such obligations
or liabilities, other than obligations and liabilities incurred in the
ordinary course of business consistent with past practice of the Company,
which do not and, to the Company's knowledge, will not, in the aggregate,
Adversely Affect the Company, except to the extent set forth in Section 3.4 of
the Disclosure Schedule. The Company has not Guaranteed and is not otherwise
primarily or secondarily liable in respect of any obligation or liability of
any other Person, except for endorsements of negotiable instruments for
deposit in the ordinary course of business, consistent with prior practice, or
as disclosed in the most recent balance sheet, or the notes thereto, forming
part of the Financial Statements or in Section 3.4 of the Disclosure Schedule.
Section 3.5. Title to Properties; Leases.
(a) The Company does not own any real property. To the Company's
knowledge, the Company has good leasehold title with respect to all real
property it leases. The Company has good indefeasible and merchantable title
to all other assets, tangible and intangible, reflected on the most recent
balance sheet forming part of the Financial Statements, or (excluding leased
real estate) held by the Company for use in its business if not so reflected,
or purported to have been acquired by the Company since such date, except
inventory sold or depleted, or property, plant and other equipment used up or
retired, since such date, in each case in the ordinary course of business
consistent with past practice of the Company, free and clear of all Liens,
except (i) Liens reflected in the Financial Statements, (ii) Liens for current
taxes not yet due and payable, (iii) Liens set forth on Section 3.5(a) of the
Disclosure Schedule, (iv) Liens that will be released prior to the Closing
Date (and which are listed on Section 3.5(a) of the Company Disclosure
Schedule), and (v) such imperfections of title, easements, encumbrances and
mortgages or other Liens, if any, as are not, individually or in the
aggregate, substantial in character, amount or extent and do not materially
detract from the value, or materially interfere with the present use, of the
property subject thereto or affected thereby, or otherwise materially impair
business operations. Each Lease or other occupancy or other agreement under
which the Company holds real or personal property has been duly authorized,
executed and delivered by the Company and, to the Company's knowledge, by each
of the other parties thereto; each such Lease is a legal, valid and binding
obligation of the Company and, to the Company's knowledge, of each other party
thereto, enforceable in accordance with its terms (subject to the
Enforceability Exceptions). To the Company's knowledge, the Company has a
valid leasehold interest in and enjoys peaceful and undisturbed possession
under all Leases pursuant to which it holds any real property or tangible
<PAGE>
personal property, none of which, to the Company's knowledge, contains any
provision which would impair the Company's ability to use such property as it
is currently used by the Company, except as described in Section 3.5(a) of the
Disclosure Schedule. To the Company's knowledge, (i) all of such Leases are
valid and subsisting and in full force and effect and (ii) except as set forth
in Section 3.5(a) of the Disclosure Schedule, neither the Company nor any
other party thereto is in default in the performance, observance or
fulfillment of any obligation, covenant or condition contained in any such
Lease.
(b) Section 3.5(b) of the Disclosure Schedule contains a true, correct
and complete description of all real estate leased by the Company.
(c) To the Company's knowledge, except as set forth in Section 3.5(c) of
the Disclosure Schedule, all real property leased by the Company conforms to
and complies with, except as in the aggregate would not result in an Adverse
Effect on the Company, all applicable title covenants, conditions,
restrictions and reservations and all Environmental Laws and all applicable
zoning, wetlands, land use and other Applicable Laws.
Section 3.6. Compliance with Private Authorizations. Section 3.6 of
the Disclosure Schedule sets forth, to the Company's knowledge, a true,
correct and complete list and description of each Private Authorization which
individually is material to the Company, all of which are in full force and
effect, except as set forth in Section 3.6 of the Disclosure Schedule. To the
Company's knowledge, the Company has obtained all Private Authorizations which
are necessary for the ownership by the Company of its properties and the
conduct of its business as now conducted or as presently proposed to be
conducted or which, if not obtained and maintained, could, singly or in the
aggregate, Adversely Affect the Company. To the Company's knowledge, except
as set forth in Section 3.6 of the Disclosure Schedule, (i) the Company is not
in breach or violation of, or is in default in the performance, observance or
fulfillment of, any Private Authorization, and (ii) no Event exists or has
occurred, which constitutes, or but for any requirement of giving of notice or
passage of time or both would constitute, such a breach, violation or default,
under any Contractual or Private Authorization, except for such defaults,
breaches or violations as do not and, to the Company's knowledge, will not in
the aggregate have any Adverse Effect on the Company or the ability of the
Company to perform any of the obligations set forth in this Agreement or any
Collateral Document executed or required to be executed pursuant hereto or
thereto or to consummate the Merger and the Transactions. No material Private
Authorization is the subject of any pending or, to the Company's knowledge,
threatened attack, revocation or termination.
Section 3.7. Compliance with Governmental Authorizations and Applicable
Law.
(a) Section 3.7(a) of the Disclosure Schedule contains a description of:
(i) all Legal Actions which are pending in which the Company is
engaged, or which involve the business, operations or properties of the
Company or, to the Company's knowledge, which are threatened or
contemplated against, the Company or any of its business, operations or
properties, which in the case of such threatened or contemplated Legal
Actions, individually or in the aggregate, if determined against the
Company would reasonably be expected to have an Adverse Effect on the
Company; and
<PAGE>
(ii) to the Company's knowledge, each Governmental Authorization to
which the Company is subject and which relates to the business,
operations, properties, prospects, condition (financial or other), or
results of operations of the Company, all of which are in full force and
effect, except as set forth in Section 3.7(a)(ii) of the Disclosure
Schedule.
(b) To the Company's knowledge, the Company has obtained all
Governmental Authorizations which are necessary for the ownership or use of
its properties and the conduct of its business as now conducted or as
presently proposed to be conducted by the Company or which, if not obtained
and maintained, could singly or in the aggregate, have any Adverse Effect on
the Company. No material Governmental Authorization is the subject of any
pending or, to the Company's knowledge, threatened attack, revocation or
termination. To the Company's knowledge, (i) the Company is not in material
breach or violation of, or in default in the performance, observance or
fulfillment of, any Governmental Authorization or any Applicable Law, and (ii)
no Event exists or has occurred, which constitutes, or but for any requirement
of giving of notice or passage of time or both would constitute, such a
breach, violation or default, under any Governmental Authorization or any
Applicable Law, except for such breaches, violations or defaults as do not
and, to the Company's knowledge, will not have in the aggregate any Adverse
Effect on the Company.
(c) The matters, if any, referred to in Sections 3.7(a) or 3.7(b) of
the Disclosure Schedule, if adversely determined against the Company, will not
Adversely Affect the Company, except to the extent set forth in the Disclosure
Schedule, or the ability of the Company to perform its obligations under this
Agreement or any Collateral Documents executed or required to be executed
pursuant hereto or thereto or to consummate the Merger and the Transactions.
Section 3.8. Intangible Assets. Section 3.8 of the Disclosure Schedule
sets forth a true, accurate and complete description of all Intangible Assets
held or used by the Company, including without limitation the nature of the
Company's interest in each and the extent to which the same have been duly
registered in the offices as indicated therein. To the Company's knowledge,
the Company owns or possesses or otherwise has the right to use all Intangible
Assets necessary for the present and planned future conduct of its business,
except where the failure to so own, possess or have the right to use would
not, insofar as can reasonably be foreseen, individually or in the aggregate,
have an Adverse Effect on the Company. To the Company's knowledge, except as
set forth in Section 3.8 of the Disclosure Schedule, no authorizations or
intangible assets (except the Intangible Assets so set forth) are required for
the Company to conduct its business as currently conducted or proposed to be
conducted on or prior to the Closing Date. Except as set forth in Section 3.8
of the Disclosure Schedule, the Company possesses all proprietary rights in
and to the principal software used in operating and conducting its business
and no other Person has any rights therein or with respect thereto.
Section 3.9. Related Transactions. Section 3.9 of the Disclosure
Schedule sets forth a true, correct and complete description of any
Contractual Obligation or transaction, whether now existing or existing during
the period covered by the most recent audited Financial Statements, between
the Company and any Affiliate thereof (other than reasonable compensation for
services as officers, directors and employees and reimbursement for
<PAGE>
out-of-pocket expenses reasonably incurred in support of the Company's
business), including without limitation any providing for the furnishing of
services to or by, providing for rental of property, real, personal or mixed,
to or from, or providing for the lending or borrowing of money to or from or
otherwise requiring payments to or from, any such Affiliate.
Section 3.10. Insurance.
(a) Section 3.10(a) of the Disclosure Schedule lists all insurance
policies maintained by the Company and includes the insurers' names, policy
numbers, expiration dates, risks insured against, amounts of coverage, the
annual premiums, exclusions, deductibles and self-insured retention and
describes in reasonable detail any retrospective rating plan, fronting
arrangement or any other self-insurance or risk assumption agreed to by the
Company or imposed upon the Company by any such insurers, as well as any
self-insurance program that is in effect.
(b) To the Company's knowledge, the Company is not in breach or
violation of or in default under any such policy, and all premiums due thereon
have been paid, and each such policy or a comparable replacement policy will
continue to be in force and effect up to and including the Closing Date.
Section 3.11. Tax Matters.
(a) The Company has in accordance with all Applicable Laws filed all Tax
Returns which are required to be filed, and has paid, or made adequate
provision for the payment of, all Taxes which have or may become due and
payable pursuant to said Returns and all other governmental charges and
assessments received to date. The Tax Returns of the Company have been
prepared in accordance with all Applicable Laws and generally accepted
principles applicable to taxation consistently applied. All Taxes which the
Company is required by law to withhold and collect have been duly withheld and
collected, and have been paid over, in a timely manner, to the proper
Authorities to the extent due and payable. The Company has not executed any
waiver to extend, or otherwise taken or failed to take any action that would
have the effect of extending, the applicable statute of limitations in respect
of any Tax liabilities of the Company for the fiscal years prior to and
including the most recent fiscal year. Adequate provision has been made on
the most recent balance sheet forming part of the Financial Statements for all
Taxes of any kind, including interest and penalties in respect thereof,
whether disputed or not, and whether past, current or deferred, accrued or
unaccrued, fixed, contingent, absolute or other, and to the knowledge of the
Company there are no transactions or matters or any basis which might or could
result in additional Taxes of any nature to the Company for which an adequate
reserve has not been provided on such balance sheet. The Company is not a
"consenting corporation" within the meaning of Section 341(f) of the Code.
The Company has at all times been taxable as a Subchapter C corporation under
the Code, except as otherwise set forth in Section 3.11(a) of the Disclosure
Schedule. The Company has never been a member of any consolidated group
(other than exclusively with the Company and its former Subsidiaries) for Tax
purposes, except as set forth in Section 3.11(a) of the Disclosure Schedule.
(b) The Company has paid all Taxes which have become due pursuant to its
Returns and has paid all installments (to the extent required to avoid
material underpayment penalties) of estimated Taxes due and payable.
<PAGE>
(c) From the end of its most recent fiscal year to the date hereof, the
Company has not made any payment on account of any Taxes except regular
payments required in the ordinary course of business, consistent with prior
practice, with respect to current operations or property presently owned.
(d) The information shown on the Federal income Tax Returns of the
Company (true, correct and complete copies of which have been furnished by the
Company to Acquiror) is true, correct and complete and fairly and accurately
reflects the information purported to be shown. Federal and state income Tax
Returns of the Company have been examined by the IRS or applicable state
Authority through the taxable periods set forth in Section 3.11(d) of the
Disclosure Schedule, and the Company has not been notified regarding any
pending examination, except as shown in Section 3.11(d) of the Disclosure
Schedule.
(e) The Company is not a party to any tax sharing agreement or
arrangement.
(f) The Company is not, and within five years of the date hereof has not
been, a "United States real property holding corporation" as defined in
Section 897 of the Code.
Section 3.12. ERISA.
(a) The Company (which for purposes of this Section 3.12 shall include
any ERISA Affiliate with respect to any Plan subject to Title IV of ERISA)
does not contribute to any Plan or sponsor any Plan or Benefit Arrangement and
has not contributed to or sponsored any Plan or Benefit Arrangement, except as
set forth in Section 3.12(a) of the Disclosure Schedule. As to all Plans and
Benefit Arrangements listed in Section 3.12(a) of the Disclosure Schedule, and
except as disclosed in such Section 3.12(a) of the Disclosure Schedule:
(i) to the Company's knowledge, all such Plans and Benefit
Arrangements comply and have been administered in all material respects
in form and in operation with all Applicable Laws, and the Company has
not received any outstanding notice from any Authority questioning or
challenging such compliance;
(ii) to the Company's knowledge, all such Plans maintained or
previously maintained by the Company that are or were intended to comply
with Section 401 of the Code comply and complied in form and in operation
with all applicable requirements of such Section, and no event has
occurred which will or could reasonably be expected to give rise to
disqualification of any such Plan under such Section or to a tax under
Section 511 of the Code;
(iii) none of the assets of any such Plan are invested in employer
securities or employer real property;
(iv) there are no "prohibited transactions" (as described in
Section 406 of ERISA or Section 4975 of the Code) with respect to any
such Plan and the Company has not otherwise engaged in any prohibited
transaction;
(v) to the Company's knowledge, there have been no acts or
omissions by the Company which have given rise to or may reasonably be
expected to give rise to material fines, penalties, taxes or related
charges under Sections 502(c), 502(i) or 4071 of ERISA or Chapter 43 of
the Code for which the Company may be liable;
<PAGE>
(vi) there are no Claims (other than routine claims for benefits)
pending or, to the Company's knowledge, threatened involving such Plans
or the assets of such Plans, except as set forth on Section 3.12(a)(vi)
of the Disclosure Schedule;
(vii) no such Plan is subject to Title IV of ERISA, or if subject,
there have been no "reportable events" (as described in Section 4043 of
ERISA) as to which there is any material risk of termination of such
Plan, and no steps have been taken to terminate any such Plan;
(viii) to the extent that the most recent balance sheet forming
part of the Financial Statements do not include a pro rata amount of the
contributions which would otherwise have been made in accordance with
past practices for the Plan years which include the Closing Date, such
amounts are set forth in Section 3.12(a)(viii) of the Disclosure
Schedule;
(ix) to the Company's knowledge, neither the Company nor any of
its directors, officers, employees or any other fiduciary has committed
any breach of fiduciary responsibility imposed by ERISA that would
subject the Company or any of its directors, officers or employees to
liability under ERISA;
(x) no such Plan which is subject to Part 3 of Subtitle B of
Title I of ERISA or Section 412 of the Code had an accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, as of the last day of the most recently
completed fiscal year of such Plan;
(xi) no material liability to the PBGC has been or is expected by
the Company to be incurred by the Company with respect to any such Plan,
and there has been no event or condition which presents a material risk
of termination of any such Plan by the PBGC;
(xii) except as set forth in Section 3.12(a)(xii) of the
Disclosure Schedule (which entry, if applicable, shall indicate the
present value of accumulated plan liabilities calculated in a manner
consistent with FAS 106 and actual annual expense for such benefits for
each of the last two (2) years) and pursuant to the provisions of COBRA,
which provisions have been complied with in all material respects, the
Company does not maintain any Plan that provides benefits described in
Section 3(1) of ERISA to any former employees or retirees of the Company
or any of its former Subsidiaries;
(xiii) the Company has made available to Acquiror a copy of the two
most recently filed Federal Form 5500 series and accountant's opinion, if
applicable, for each Plan (and the two most recent actuarial valuation
reports for each Plan, if any, that is subject to Title IV of ERISA),
and all information provided by the Company to any actuary in connection
with the preparation of any such actuarial valuation report was true,
correct and complete in all material respects; and
<PAGE>
(xiv) the Company has delivered to Acquiror correct and complete
copies of all Plans and Benefit Arrangements and, where applicable, each
of the following documents with respect to such plans: (i) any
amendments; (ii) any related trust documents; (iii) the most recent
summary plan descriptions and summaries of material modifications; and
(iv) written communications to employees to the extent the substance of
the Plans and Benefit Arrangements described therein differ materially
from the other documentation furnished under this clause.
(b) The Company is not and has never has been a party to any
Multiemployer Plan or made contributions to any such plan.
Section 3.13. Authorized and Outstanding Capital Stock.
(a) The authorized and outstanding capital stock, Option Securities and
Convertible Securities of the Company is as set forth in Section 3.13(a) of
the Disclosure Schedule. All of such outstanding capital stock has been duly
authorized and validly issued, is fully paid and nonassessable and is not
subject to any preemptive or similar rights. Except as set forth in Section
3.13(a) of the Disclosure Schedule, (i) there is neither outstanding nor has
the Company agreed to grant or issue any shares of its capital stock or any
Option Security or Convertible Security, and (ii) the Company is not a party
to and is not bound by any agreement, put or commitment pursuant to which it
is obligated to purchase, redeem or otherwise acquire any shares of capital
stock or any Option Security or Convertible Security. Between the date hereof
and the Closing, the Company will not issue, sell or purchase or agree to
issue, sell or purchase any capital stock or any Option Security or
Convertible Security of the Company, except to the extent required pursuant to
the terms hereof. All of the issued and outstanding Shares were issued and
sold, and all Option Securities were granted, in compliance with the
Securities Act, the Exchange Act and applicable state securities laws.
(b) As of the date hereof, except as set forth in Section 3.13(b) of the
Disclosure Schedule,: (i) Option Securities to acquire 424,750 Shares are
outstanding under the Company's 1990 Long-Term Incentive Plan (the "Company
Option Plan"), including in such number Option Securities which are currently
exercisable to acquire 216,950 shares of Company Stock; (ii) Option Securities
to acquire 45,000 Shares are outstanding under the Company's 1990 Nonstatutory
Stock Option Plan for Non-Employee Directors (the "Directors Plan" and,
together with the Company Option Plan, the "Option Plans"), including in such
number Option Securities which are currently exercisable to acquire 45,000
shares of Company Stock; and (iii) 514,599 Shares are reserved for future
issuance pursuant to Option Securities which may be granted under the Option
Plans. In accordance with the vesting schedules and acceleration provisions
contained in the Option Plans and the related option agreements and assuming
all option agreements remain outstanding, as of June 1, 1997, Option
Securities would be exercisable to acquire 385,450 Shares. The Option Plans
constitute the only plans or arrangements pursuant to which Option Securities
are currently outstanding. Other than as set forth in Section 3.13(b) of the
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the consummation of the Merger or the Transactions are Events which will cause
an acceleration of the exercise or vesting schedule of any Option Security.
The Company has duly complied in all material respects with all of the terms
and conditions of each Option Plan and no amendment, modification or other
<PAGE>
revision to either Option Plan or any related option agreement which required
the consent or approval of a holder of an Option Security has been made
unless, in each case, such consent or approval was duly obtained. All Shares
subject to issuance under an Option Security will, upon issuance on the terms
and conditions specified in such Option Security, will be validly issued,
fully paid and nonassessable.
(c) All of the outstanding capital stock of the Company is owned by the
Stockholders as set forth in Section 3.13(c) of the Disclosure Schedule and
all of the outstanding Option Securities and Convertible Securities are owned
by the Persons as set forth in Section 3.13(c) of the Disclosure Schedule, and
are in each case, to the Company's knowledge, free and clear of all Liens,
except as set forth in Section 3.13(c) of the Disclosure Schedule, and, to the
Company's knowledge, except as set forth in Section 3.13(c) of the Disclosure
Schedule, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character to which any Stockholder is a
party relating to the pledge, disposition or voting of any shares of the
Company Stock that are owned by such Stockholder, and there are no voting
trusts or voting agreements with respect to such shares.
Section 3.14. Employment Arrangements.
(a) The Company does not have any obligation or liability, contingent or
other, under any Employment Arrangement, other than those listed or described
in Section 3.14(a) of the Disclosure Schedule. None of the employees of the
Company is now, or, to the Company's knowledge, during the past five (5) years
has been, represented by any labor union or other employee collective
bargaining organization, or are now, or, to the Company's knowledge, during
the past five (5) years have been, parties to any labor or other collective
bargaining agreement. The Company has per- formed all obligations required to
be performed under all Employment Arrangements and is not in material breach
or violation of or in default or arrears under any of the terms, provisions or
conditions thereof, except as set forth in Section 3.14(a) of the Disclosure
Schedule.
(b) Except as set forth in Section 3.14(b) of the Disclosure Schedule,
no employee will accrue or receive or is entitled to accrue or receive
additional benefits, service or accelerated rights to payments of benefits
under any Employment Arrangement, including the right to receive any parachute
payment, as defined in Section 280G of the Code, or become entitled to
severance, termination allowance or similar payments as a direct result of
this Agreement, the Merger or the Transactions.
Section 3.15. Material Agreements. To the Company's knowledge, listed
on Section 3.15 of the Disclosure Schedule are all Material Agreements
relating to the ownership or operation of the business and property of the
Company presently held or used by the Company or to which the Company is a
party or to which it or any of its property is subject or bound. True,
complete and correct copies of each of the Material Agreements have been made
available to or furnished by the Company to Acquiror (or true, complete and
correct descriptions thereof have been set forth in Section 3.15 of the
Disclosure Schedule, if any such Material Agreements are oral). To the
Company's knowledge, (i) all of the Material Agreements are valid, binding and
legally enforceable obligations of the Company and of each other party thereto
(subject to the Enforceability Exceptions), and (ii) the Company is validly
and lawfully operating its business and owning its property under each of the
Material Agreements. To the Company's knowledge, the Company has duly
complied in all material respects with all of the terms and conditions of each
<PAGE>
Material Agreement and has not done or performed, or failed to do or perform
(and there is no pending or, to the knowledge of the Company, threatened Claim
that the Company has not so complied, done and performed or fail to do and
perform) any act the effect of which would be to invalidate or provide grounds
for the other party thereto to terminate (with or without notice, passage of
time or both) such Material Agreement or impair the rights or benefits, or
increase the costs, of the Company, under any of the Material Agreements.
Section 3.16. Ordinary Course of Business.
(a) The Company, from the date of the most recent balance sheet forming
part of the Financial Statements to the date hereof, and until the Closing
Date, except (i) as may be described on Section 3.16(a) of the Disclosure
Schedule, (ii) as may be required or expressly contemplated by the terms of
this Agreement, (iii) as may be reflected in the Financial Statements, or (iv)
as may be consented to by Acquiror, which consent shall not be unreasonably
withheld or delayed:
(i) has operated, and will continue to operate, its business in
the normal, usual and customary manner in the ordinary course of
business, consistent with prior practice;
(ii) has not sold or otherwise disposed of, or contracted to sell
or otherwise dispose of, and will not sell or otherwise dispose of or
contract to sell or otherwise dispose of, any of its properties or
assets, other than in the ordinary course of business;
(iii) except in each case in the ordinary course of business,
consistent with prior practice:
(A) has not incurred and will not incur any obligations or
liabilities (fixed, contingent or other);
(B) has not entered and will not enter into any commitments;
and
(C) has not cancelled and will not cancel any debts or claims;
(iv) has not made or committed to make, and will not make or
commit to make, any additions to its property or any purchases of
machinery or equipment, except in the ordinary course of business,
consistent with past practice;
(v) has not discharged or satisfied, and will not discharge or
satisfy, any Lien and has not paid and will not pay any obligation or
liability (absolute or contingent) other than current liabilities or
obligations under contracts then existing or thereafter entered into in
the ordinary course of business, consistent with prior practice, and
commitments under Leases existing on that date or incurred since that
date in the ordinary course of business or repaying or prepaying
long-term indebtedness or the current portion thereof;
(vi) has not created or permitted to be created, and will not
create or permit to be created any Lien on any of its tangible property;
(vii) except in the ordinary course of business, has not
transferred or created, or permitted to be created, and will not transfer
or create, or permit to be created, any Lien on any Intangible Assets;
<PAGE>
(viii) except in the ordinary course of business, consistent with
prior practice, has not increased and will not increase the compensation
payable or to become payable to any of its directors, officers,
employees, advisers, consultants, salesmen or agents or otherwise alter,
modify or change the terms of their employment or engagement;
(ix) has not suffered any material damage, destruction or loss
(whether or not covered by insurance) or any acquisition or taking of
property by any Authority;
(x) has not waived, and will not waive, any rights of material
value without fair and adequate consideration;
(xi) has not entered into, amended or terminated and will not
enter into, amend or terminate any Lease, Governmental Authorization,
Private Authorization, Material Agreement or Employment Arrangement or
any Contractual Obligation or transaction with any Affiliate, except for
terminations in the ordinary course of business, consistent with prior
practice, in accordance with the terms thereof;
(xii) has not amended or terminated and will not amend or
terminate, and has kept and will keep in full force and effect including
without limitation renewing to the extent the same would otherwise expire
or terminate, all insurance policies and coverage;
(xiii) has not amended and will not amend any provision of its
Organic Documents;
(xiv) has not issued and will not issue any additional shares of
capital stock (other than the issuance of shares in accordance with the
terms of Option Securities outstanding on the date hereof, or except as
set forth in Section 3.13(b) of the Disclosure Schedule) or any Option
Securities or Convertible Securities and has not entered, and will not
enter into any agreement to do the same; and
(xv) has not entered into and will not enter into any other
transaction or series of related transactions which individually or in
the aggregate is material to the Company, except in the ordinary course
of business.
(b) From the end of its most recent fiscal year to the date hereof, the
Company has not, or on or prior to the Closing Date will not have, declared,
made or paid, or agreed to declare, make or pay, any Distribution.
Section 3.17. Bank Accounts, Etc. Section 3.17 of the Disclosure
Schedule contains a true and correct and complete list as of the date hereof
of all banks, trust companies, savings and loan associations and brokerage
firms in which the Company has an account or a safe deposit box and the names
of all Persons authorized to draw thereon, to have access thereto, or to
authorize transactions therein, the names of all Persons, if any, holding
powers of attorney from the Company and a summary statement as to the terms
thereof.
<PAGE>
Section 3.18. Adverse Restrictions. To the Company's knowledge, it is
not a party to or subject to, nor is any of its property subject to, any
Applicable Law, Governmental Authorization, Contractual Obligation, Employment
Arrangement, Material Agreement or Private Authorization, or any other
obligation or restriction of any kind or character, or any aggregation
thereof, which impairs in any material respect the Company's ability to
conduct its business as it is currently being conducted or which could, to the
Company's knowledge, have any Adverse Effect on the Company, except as set
forth in Section 3.18 of the Disclosure Schedule.
Section 3.19. Broker or Finder. Except as set forth in Section 3.19 of
the Disclosure Schedule, no Person assisted in or brought about the
negotiation of this Agreement, the Merger or the subject matter of the
Transactions in the capacity of broker, agent or finder or in any similar
capacity on behalf of the Company or any Principal Stockholder.
Section 3.20. Environmental Matters.
(a) Except as set forth in Section 3.20(a) of the Disclosure Schedule:
(i) to the Company's knowledge, it is, and at all times since
its organization has been, in compliance in all material respects with
all Environmental Laws and has not been notified that it is potentially
liable, has not received any request for information or other
correspondence concerning any site or facility, and, to the knowledge of
the Company, is not a "potentially responsible party" under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Resource Conservation Recovery Act, as amended, or
any similar state law;
(ii) the Company has not entered into or received any consent
decree, compliance order, or administrative order relating to
Environmental Law;
(iii) the Company is not a party in interest or in default under
any judgment, order, writ, injunction or decree of any final order
relating to Environmental Law;
(iv) to the Company's knowledge, (1) it has obtained all material
Governmental Authorizations and Private Authorizations (including without
limitation all Environmental Permits) and made all Governmental Filings
which are required to be filed by the Company for the ownership of its
property, facilities and assets and the operation of its businesses under
all Environmental Laws, (2) it is, and at all times since its
organization has been, in material compliance with the terms and
conditions of all such required Governmental and Private Authorizations,
and (3) it is not the subject of or threatened with any Legal Action
involving a demand for damages or other potential liability with respect
to violations or breaches of any Environmental Requirement; and
(v) has not assumed or agreed to any obligation under any of its
leases of real property to clean up any Hazardous Materials which exists
on such property other than as a result of the Company's operating and
occupying such property.
(b) Except as set forth in Section 3.20(b) of the Disclosure Schedule:
<PAGE>
(i) the Company has not disposed, released, buried or placed
Hazardous Materials on, and, to the Company's knowledge, no other
disposal, release, burial or placement of Hazardous Materials has
occurred on, any property or facility leased, operated or occupied by the
Company during the period that such facilities and properties were
leased, operated or occupied by it or, to the knowledge of the Company,
at any other time;
(ii) to the knowledge of the Company, there has been no disposal,
release, burial or placement of Hazardous Materials on any property which
could reasonably be expected to result or has resulted in contamination
of or beneath any properties or facilities leased, operated or occupied
by the Company; and
(iii) no notice has been received by the Company and to the
Company's knowledge no Lien has arisen on its properties or facilities
under Environmental Law.
(c) The Company has not installed, used or otherwise operated any
above-ground or underground fuel storage tanks on property leased, operated or
occupied by it and, to the Company's knowledge, no above-ground or underground
fuel storage tanks exist on property leased, operated or occupied by it.
(d) Section 3.20(d) of the Disclosure Schedule sets forth all site
assessments, audits or other investigations that have been conducted by or on
behalf of the Company as to environmental matters at any property leased,
operated or occupied by the Company.
Section 3.21. Operational Matters. With respect to the Company:
(a) customers are invoiced for special projects, such as purges, special
destructions, de-boxing and re-filing programs, only with respect to completed
work;
(b) substantially all of its customers is party to a customer contract
which limits the Company's liability in the event of loss, damage or
destruction to (i) replacement value of media or (ii) a nominal dollar value
per storage unit; and
(c) the monthly information set forth in Section 3.21 of the Disclosure
Schedule has been prepared consistent with past practice and is true and
correct in all material respects.
Section 3.22. Materiality. The matters and items excluded from the
representations and warranties set forth in this Article by operation of the
materiality exceptions and materiality qualifications contained in such
representations and warranties, in the aggregate for all such excluded matters
and items, are not and could not reasonably be expected to be Adverse to the
Company.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
AND ACQUIROR MERGER SUBSIDIARY
Acquiror and Acquiror Merger Subsidiary, jointly and severally,
represent, warrant and covenant to, and agree with, the Company as follows:
<PAGE>
Section 4.1. Organization and Qualification; Power and Authority;
Effect of Transaction.
(a) Each of Acquiror and Acquiror Merger Subsidiary is a corporation
duly incorporated, validly existing and in good standing under the laws of
Delaware. Each of Acquiror and Acquiror Merger Subsidiary is duly qualified
and authorized to do business and is in good standing as a foreign corporation
in each jurisdiction in which the character of its property or the nature of
its business or operations requires such qualification or authorization,
except to the extent the failure to so qualify or to maintain such
authorizations would not have an Adverse Effect.
(b) Each of Acquiror and Acquiror Merger Subsidiary has all requisite
power and authority (corporate and other) and has in full force and effect all
Governmental Authorizations and Private Authorizations in order to enable it
to execute and deliver, and to perform its obligations under, this Agreement
and each Collateral Document executed or required to be executed pursuant
hereto or thereto and to consummate the Merger and the Transactions; and the
execution, delivery and performance of this Agreement and each Collateral
Document executed or required to be executed pursuant hereto or thereto have
been duly authorized by all requisite corporate or other action. This
Agreement has been duly executed and delivered by each of Acquiror and
Acquiror Merger Subsidiary and constitutes, and each Collateral Document
executed or required to be executed pursuant hereto or thereto when executed
and delivered by it will constitute, legal, valid and binding obligations of
Acquiror and Acquiror Merger Subsidiary, respectively, enforceable in
accordance with their respective terms (subject to the Enforceability
Exceptions).
(c) Neither the execution and delivery of this Agreement or any
Collateral Document executed or required to be executed pursuant hereto or
thereto, nor the consummation of the Transactions, nor compliance with the
terms, conditions and provisions hereof or thereof by each of Acquiror and
Acquiror Merger Subsidiary:
(i) will conflict with, or result in a breach or violation of,
or constitute a default under, any Applicable Law on the part of Acquiror
or Acquiror Merger Subsidiary or will conflict with, or result in a
breach or violation of, or constitute a default under, or permit the
acceleration of any obligation or liability in, or but for any
requirement of giving of notice or passage of time or both would
constitute such a conflict with, breach or violation of, or default
under, or permit any such acceleration in, any Contractual Obligation of
Acquiror or Acquiror Merger Subsidiary, or
(ii) will require any Governmental Authorization or Governmental
Filing or Private Authorization, except for the certificate of merger and
related filings under the DGCL in connection with the Merger and the
Transactions and as the Securities Act and applicable state securities
laws may apply to compliance by Acquiror with the provisions of this
Agreement relating to the Registered Stock and except pursuant to the HSR
Act.
Section 4.2. Capitalization of Acquiror and Acquiror Merger Subsidiary.
<PAGE>
(a) The authorized and outstanding capital stock of each of Acquiror and
Acquiror Merger Subsidiary is as set forth in Section 4.2 of the Acquiror
Disclosure Schedule. All of such outstanding capital stock has been duly
authorized and validly issued, is fully paid and nonassessable and is not
subject to any preemptive or similar rights. Between the date hereof and the
Closing, except as contemplated by this Agreement, Acquiror Merger Subsidiary
will not issue or sell or purchase or agree to issue or sell or purchase any
capital stock or any Option Security or Convertible Security. All shares of
common stock of Acquiror Merger Subsidiary held by Acquiror have been duly
authorized and validly issued to Acquiror and are fully paid and
non-assessable and are not subject to any preemptive or similar rights. As of
the date hereof, except for this Agreement, Acquiror Merger Subsidiary does
not have any outstanding or authorized Convertible Securities. When issued to
the Stockholders in connection with the Merger, the Acquiror Stock will be
duly authorized, validly issued, fully paid and nonassessable and will not be
subject to any preemptive or similar rights.
(b) Acquiror's 1995 Stock Incentive Plan was duly approved by Acquiror's
stockholders and directors and a sufficient number of shares is reserved under
Acquiror's 1995 Stock Incentive Plan to satisfy Acquiror's obligations under
Section 2.4 hereof.
Section 4.3. SEC Filings; Financial Statements.
(a) Acquiror has filed all forms, reports and documents required to be
filed by it with the SEC since January 30, 1996, and has heretofore made
available to the Company, in the form filed with the SEC (including any
exhibits thereto), (i) its Special Financial Report on Form 10-K for the
fiscal year ended December 31, 1995, (ii) its Quarterly Reports on Form 10-Q
for the quarters ended March 31, 1996, June 30, 1996 and September 30, 1996,
(iii) its proxy statement relating to its 1996 meeting of stockholders, and
(iv) all other forms, reports and registration statements filed by it with the
SEC since January 30, 1996 (the forms, reports and other documents referred to
in clauses (i), (ii), (iii) and (iv) above being referred to herein
collectively as the "Acquiror SEC Reports"). The Acquiror SEC Reports and any
forms, reports and other documents filed by the Acquiror with the SEC after
the date of this Agreement, (x) complied with or will comply in all material
respects with the requirements of the Securities Act and the Exchange Act, as
the case may be, and the rules and regulations thereunder and (y) did not at
the time they were filed, or will not at the time they are filed, contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Acquiror's financial statements, including in each case the notes
thereto, contained in the Acquiror SEC Reports have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, except as otherwise noted therein, are true, correct and
complete, do not contain any untrue statement of a material fact or omit to
state a material fact required by GAAP to be stated therein or necessary in
order to make the statements contained therein not misleading, and fairly
present the financial condition and results of operations of Acquiror and its
Subsidiaries, on the bases therein stated, as of the respective dates thereof,
and for the respective periods covered thereby subject, in the case of
unaudited financial statements to normal nonmaterial year-end audit
adjustments and accruals.
<PAGE>
(c) Since the date of Acquiror's most recent report to the SEC (Form
10-Q for the quarter ended September 30, 1996), there has been no Adverse
Change in Acquiror. To Acquiror's knowledge, there is no Event known to
Acquiror which Adversely Affects, or in the future might (so far as Acquiror
can now reasonably foresee) Adversely Affect, Acquiror or the ability of
Acquiror to perform any of the obligations set forth in this Agreement, or any
Collateral Document executed or required to be executed pursuant hereto or
thereto, except for changes in general economic conditions or the industry in
general.
Section 4.4. Registration Statement. As of the Closing Date, the
Registration Statement (if any) and any amendments thereto will comply in all
material respects with the provisions of the Securities Act and will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading. The Prospectus will not as of the issue date thereof contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Notwithstanding the
foregoing, the representations and warranties contained in Section 4.3(a) and
this Section 4.4 shall not apply to statements or omissions in the
Registration Statement or the Prospectus based on information relating to the
Company or any of the Stockholders furnished to Acquiror by the Company or any
of the Stockholders. Neither the Acquiror Disclosure Schedule, this Agreement
nor any Collateral Document, data, information or statement furnished or to be
furnished by or on behalf of Acquiror pursuant to this Agreement or any
Collateral Document executed or required to be executed by or on behalf of
Acquiror pursuant hereto or thereto or to consummate the Merger and the
Transactions, contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact required to be stated herein or
therein or necessary in order to make the statements contained herein or
therein not misleading and all such Collateral Documents, data, information or
statements are and will be true, accurate and complete.
Section 4.5. Brokers. No Person assisted in or brought about the
negotiation of this Agreement, the Merger or the subject matter of the
Transactions in the capacity of broker, agent or finder or in any similar
capacity on behalf of Acquiror or Acquiror Merger Subsidiary (other than
William Blair & Company, whose fees and expenses will be paid by Acquiror).
ARTICLE 5.
ADDITIONAL COVENANTS
Section 5.1. Access to Information; Confidentiality.
(a) The Company shall afford to Acquiror and its Representatives full
access during normal business hours throughout the period prior to the
Effective Time to all of the Company's properties, books, contracts,
commitments and records (including without limitation Tax Returns) and, during
such period, shall furnish promptly upon request (i) to the extent not
provided for pursuant to the preceding clause, all financial records, ledgers,
workpapers and other sources of financial information possessed or controlled
by the Company or its accountants deemed by Acquiror or its Representatives
necessary or useful for the purpose of performing an audit of the Company and
certifying financial statements and financial information, and (ii) such other
information concerning any of the foregoing as Acquiror shall reasonably
request. In addition, each Party shall furnish promptly upon request a copy
<PAGE>
of each report, schedule and other document filed or received by any of them
pursuant to the requirements of any Applicable Law (including without
limitation federal or state securities laws) or filed by it or any of its
Subsidiaries with any Authority in connection with the Transactions or which
may have a material effect on their respective businesses, operations,
properties, prospects, personnel, condition, (financial or other), or results
of operations. The Company and Acquiror acknowledge that they have heretofore
executed a confidentiality agreement, dated December 27, 1996 (the
"Confidentiality Agreement"), which separately and as incorporated herein
shall remain in full force and effect after and notwithstanding the execution
and delivery of this Agreement, and that information obtained from the Company
by Acquiror or its Representatives or by the Company or its Representatives
from Acquiror, pursuant to Section 5.1(a), the Confidentiality Agreement or
otherwise, shall be subject to the provisions of the Confidentiality
Agreement.
(b) Subject to the terms and conditions the Confidentiality Agreement,
Acquiror and the Company may disclose such information as may be necessary in
connection with seeking all Governmental and Private Authorizations or that is
required by Applicable Law to be disclosed. In the event that this Agreement
is terminated in accordance with its terms, Acquiror and the Company shall
each promptly redeliver all non-public written material provided pursuant to
this Section or any other provision of this Agreement or otherwise in
connection with the Merger and the Transactions and shall not retain any
copies, extracts or other reproductions in whole or in part of such written
material other than one copy thereof which shall be delivered to independent
counsel for such party.
(c) No investigation pursuant to this Section 5.1 shall affect any
representation or warranty in this Agreement of any Party hereto or any
condition to the obligations of the Parties hereto.
Section 5.2. Agreement to Cooperate.
(a) Each of the Parties shall use its best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under Applicable Law to consummate the Merger and make
effective the Transactions, including using its best efforts (i) to prepare
and file with the applicable Authorities as promptly as practicable after the
execution of this Agreement all requisite applications and amendments thereto,
together with related information, data and exhibits, necessary to request
issuance of orders approving the Merger and the Transactions by all such
applicable Authorities, each of which must be obtained or become final in
order to satisfy the condition applicable to it set forth in Section 6.1(d);
(ii) to obtain all necessary or appropriate waivers, consents and approvals,
(iii) to effect all necessary registrations, filings and submissions
(including without limitation filings under federal or state securities laws
or the HSR Act and any other submissions requested by the SEC, the Federal
Trade Commission or the Department of Justice) and (iv) to lift any injunction
or other legal bar to the Merger and the Transactions (and, in such case, to
proceed with the Merger and the Transactions as expeditiously as possible),
subject, however, to the requisite vote of the Stockholders. Each of the
Parties recognizes that the consummation of the Merger and the Transactions is
subject to the preacquisition notification requirements of the HSR Act. Each
agrees that, to the extent required by Applicable Law to consummate the
Merger, it will file with the Antitrust Division of the Department of Justice
and the Federal Trade Commission a Notification and Report Form in a manner so
as to constitute substantial compliance with the notification requirements of
<PAGE>
HSR. Each covenants and agrees to use its best efforts to achieve the prompt
termination or expiration of any waiting period or any extension thereof under
the HSR Act. Notwithstanding anything to the contrary contained in this
Agreement, in connection with or as a condition to receiving the consent or
approval of any Authority or otherwise, Acquiror shall not be required to
divest, abandon, license or take similar action with respect to any assets
(tangible or intangible) of it or any of its Subsidiaries (including, without
limitation, the Surviving Corporation after consummation of the Merger).
(b) Each of the Parties agrees to take such actions as may be necessary
to obtain any Governmental Authorizations legally required for the
consummation of the Merger and the Transactions, including the making of any
Governmental Filings, publications and requests for extensions and waivers.
(c) The Company will use its best efforts on or prior to the Closing
Date to obtain the satisfaction of the conditions specified in Sections 6.1
and 6.2. Each of Acquiror and Acquiror Merger Subsidiary will use its best
efforts on or prior to the Closing Date to obtain the satisfaction of the
conditions applicable to it specified in Sections 6.1 and 6.3.
(d) The Company shall take such steps as are necessary and appropriate
to obtain, and shall promptly obtain, satisfaction and discharge of all Liens
set forth in Section 3.5(a) of the Disclosure Schedule in favor of Fleet Bank
of Massachusetts, N.A., but only to the extent that Acquiror elects to repay
or prepay the Indebtedness corresponding to such Liens from its own funds.
(e) The parties shall cooperate with one another in the preparation,
execution and filing of all Returns, questionnaires, applications, or other
documents regarding any real property transfer or gains, sales, use, transfer,
value added, stock transfer and stamp Taxes or any Plan, Benefit Arrangement
or Employment Arrangement, any transfer, recording, registration and other
fees, and any similar Taxes which become payable in connection with the
Transactions that are required or permitted to be filed on or before the
Effective Time.
(f) The Company shall cause its independent accountants to cooperate
with Acquiror and shall prepare audited financial statements for the Company
for inclusion in the Registration Statement. Without limiting the generality
of the foregoing, the Company agrees that it will (i) consent to the use of
such audited financial statements in any registration statement or other
document filed by Acquiror (or any of its Subsidiaries) under the Securities
Act or the Exchange Act, and (ii) execute and deliver, and cause its officers
to execute and deliver, such "representation" letters as are customarily
delivered in connection with audits and as Acquiror's independent accountants
may reasonably request under the circumstances.
(g) Without intending to limit the generality of the covenants set forth
in Section 3.17, the Company agrees that it shall not without the prior
written consent of Acquiror, which consent shall not unreasonably be withheld
or delayed, (i) enter into, agree to or otherwise become bound by any new
leases of real property or amend or exercise any option to extend any existing
lease of real property or (ii) hire any new employee whose annual compensation
exceeds $50,000. In addition, the Company shall confer on a regular and
frequent basis with Acquiror with respect to operational matters of the
Company.
Section 5.3. Affiliate Agreements; Registration Rights Agreement.
<PAGE>
(a) Prior to the Closing Date, the Company shall deliver to Acquiror a
letter identifying all Persons who are, at the time this Agreement is
submitted to the Stockholders, "affiliates" of the Company for purposes of
Rule 145 under the Securities Act. Each of Acquiror and the Company shall use
its best efforts to cause each such "affiliate", or each Person who will, upon
consummation of the Merger and the Transactions become, an "affiliate" of
Acquiror, to deliver to Acquiror on or prior to the Closing Date a written
agreement (an "Affiliate Agreement") substantially in the form attached hereto
as Exhibit 5.3.
(b) Acquiror agrees that it will enter into a registration rights
agreement (the "Registration Rights Agreement") with the Principal
Stockholders and such other stockholders of Acquiror as Acquiror deems
necessary or appropriate, with respect to shares of Acquiror Stock to be
issued to the Principal Stockholders pursuant to Section 2.1(a) hereof (and
any shares of such other stockholders), for the benefit of the Principal
Stockholders reasonably satisfactory in form and substance to Acquiror and the
Principal Stockholders, which Registration Rights Agreement shall include,
without limitation, the following terms: (i) the Principal Stockholders shall
have demand registration rights upon the written request of the Principal
Stockholders, or upon the written request by either of them, requesting the
registration of shares of Acquiror Stock having a market price of an aggregate
of at least $10,000,000 on no more than two occasions (subject to customary
proration or "cut-back" provisions); (ii) the Principal Stockholders shall
have an unlimited number of piggyback registration rights in conjunction with
public offerings of Acquiror Stock (other than any such offerings in
connection with acquisitions and subject to customary proration or "cut-back"
provisions); (iii) Acquiror and the Principal Stockholders shall indemnify
each other in the event of any losses resulting from any misrepresentations,
acts or omissions of the other party in connection with any such registration
or any document related thereto; (iv) Acquiror shall have the right, in its
discretion, subject to the consent of the Principal Stockholders, which
consent shall not be unreasonably withheld, to choose the underwriter(s) in
any underwritten public offering of Acquiror Stock; (v) each Principal
Stockholder will agree to customary lock-up provisions in connection with any
registration; and (vi) the Principal Stockholders shall be solely responsible
for all of their own expenses (including, without limitation, underwriting
discounts and selling commissions and the fees of their counsel) and all
registration filing fees of Acquiror in connection with any registration and,
with respect to demand registration only, shall reimburse Acquiror for all
reasonable out-of-pocket expenses incurred in satisfying any such demand
registration, including, without limitation, fees and expenses of complying
with securities and blue sky laws, printing expenses, fees and expenses of
Acquiror's counsel and accountants.
Section 5.4. No Solicitation. The Company shall not, nor shall it
permit any of the Company's Representatives (including, without limitation,
any investment banker, attorney or accountant retained by it) to, initiate,
solicit or facilitate, directly or indirectly, any inquiries or the making of
any proposal with respect to an Other Transaction, engage in any discussions
or negotiations concerning, or provide to any other person any information or
data relating to, it for the purposes of, or otherwise cooperate in any way
with or assist or participate in, or facilitate any inquiries or the making of
any proposal which constitutes, or may reasonably be expected to lead to, a
proposal to seek or effect an Other Transaction, or agree to or endorse any
Other Transaction; provided, however, that nothing contained in this Section
shall prohibit the Company or its Board of Directors from making any
disclosure to Stockholders that, in the reasonable judgment of its Board of
<PAGE>
Directors in accordance with, and based upon the written advice of, outside
counsel, is required under Applicable Law. The Company shall promptly advise
Acquiror of, and communicate the material terms of, any proposal it may
receive, or any inquiries it receives which may reasonably be expected to lead
to such a proposal relating to an Other Transaction, and the identity of the
Person making it. The Company shall further advise Acquiror of the status and
changes in the material terms of any such proposal or inquiry (or any
amendment to any of them). During the term of this Agreement, the Company
shall not enter into any agreement oral or written, and whether or not legally
binding, with any Person that provides for, or in any way facilitates, an
Other Transaction, or affects any other obligation of the Company under this
Agreement.
Section 5.5. Directors' and Officers' Indemnification and Insurance.
From and after the Effective Time, the Surviving Corporation shall indemnify,
defend and hold harmless the present and former officers and directors of the
Company against all Claims or amounts that, with the approval of the Surviving
Corporation as to settlements only, are paid in settlement of or otherwise in
connection with any Claim based in whole or in part on the fact that such
Person is or was a director or officer of the Company and arising out of
actions or omissions occurring at or prior to the Effective Time (including,
without limitation, the Merger and the Transactions), in each case to the
fullest extent currently provided under the Company's Organic Documents (but
only to the extent permitted under the DGCL), and shall pay any expenses in
advance of the final disposition of any such action or proceeding to each such
Person to the fullest extent permitted under the DGCL, upon receipt from the
Person to whom expenses are advanced of an undertaking to repay such advances
to the extent required under the DGCL. Acquiror hereby guarantees the
performance by the Surviving Corporation of all of its obligations in this
Section 5.5 and the payment of all sums which would be due hereunder from the
Surviving Corporation.
Section 5.6. Notification of Certain Matters. Each party shall give
prompt notice to the other of the occurrence or non-occurrence of any Event
the occurrence or non-occurrence of which would be likely to cause in any
material respect (i) any representation or warranty made by it contained in
this Agreement to be untrue or inaccurate, or (ii) any change to be made in
the Disclosure Schedule or the Acquiror Disclosure Schedule, as the case may
be, or (iii) any failure of the Company or Acquiror, as the case may be, to
comply with or satisfy, or be able to comply with or satisfy, any material
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.6 shall not limit or otherwise affect the remedies available
hereunder to the Party receiving such notice.
Section 5.7. Public Announcements. Until the Closing, or in the event
of termination of this Agreement, each party shall consult with the other
before issuing any press release or otherwise making any public statements
with respect to this Agreement, the Merger or any Transaction and shall not
issue any such press release or make any such public statement without the
prior consent of the other, which consent shall not be unreasonably withheld
or delayed. Notwithstanding the foregoing, the Company acknowledges and
agrees that Acquiror may, without the prior consent of the Company, issue such
press releases or make such public statements as may be required by Applicable
Law, in which case, to the extent practicable, Acquiror will consult with, and
exercise in good faith, all reasonable business efforts to agree with the
Company regarding the nature, extent and form of such press release or public
statement, and, in any event, with prior notice to the Company.
<PAGE>
Section 5.8. Obligations of Acquiror. Acquiror agrees to take all
action necessary to cause Acquiror Merger Subsidiary and the Surviving
Corporation to perform their respective obligations under this Agreement.
Acquiror shall be liable as provided herein for any breach of any
representation, warranty, covenant or agreement of Acquiror Merger Subsidiary
and for any breach of this covenant.
Section 5.9. Employee Benefits; Severance Policy. Provided that it
complies in all material respects with Applicable Law, the Surviving
Corporation may, in its sole discretion, substitute employee compensation,
benefit and severance programs for those of the Company as are comparable with
the programs provided from time to time to Acquiror's employees and the
employees of Acquiror's Subsidiaries.
Section 5.10. Certain Actions Concerning Business Combinations. The
Company will not apply, and will not take any action resulting in the
application of, or otherwise elect to apply, the provisions of applicable
state takeover laws, if any, with respect to or as a result of the Merger or
the Transactions.
Section 5.11. Conversion of Option Securities. The Company will take
all action necessary (a) to provide timely written notice to all persons
holding Option Securities to the effect that all Option Securities outstanding
as of the Effective Time will be exchanged for options to acquire Acquiror
Stock, and cash, in the case of vested and exercisable Option Securities, upon
such exchange, in accordance with Section 2.4 hereof, and (b) to obtain any
consent or waiver from the holder of an Option Security which may be necessary
to give effect to actions contemplated by Section 2.4. Without the prior
written consent of Acquiror, except as set forth in Section 3.13(b) of the
Disclosure Schedule, (i) such notice will not cause an acceleration of the
exercise, conversion or vesting schedule of any Option Security, and (ii) the
Company will not otherwise accelerate, or cause an acceleration of, the
exercise, exchange or vesting schedule of any Option Security.
Section 5.12. Tax Treatment. Each of Acquiror, Acquiror Merger
Subsidiary and the Company shall use its reasonable best efforts to cause the
Merger to qualify as a tax-free reorganization under the provisions of Section
368(a) of the Code and to obtain the opinions of counsel referred to in
Sections 6.2(j) and 6.3(d). Without limiting the foregoing, Acquiror covenants
that it will not dispose of the Company, whether by sale of stock, sale of
assets, merger, consolidation, liquidation, redemption, or otherwise, for a
period of one year after the Closing Date, except as permitted under Section
368(a)(2)(C) of the Code and the administrative authorities under Section 368
of the Code, or unless it first shall have received an opinion of counsel,
addressed to Acquiror and the Stockholders, that the proposed disposition will
not affect the tax-free nature of the Merger.
Section 5.13. Preparation of the Registration Statement.
(a) Promptly following the date of this Agreement, Acquiror shall
prepare and file with the SEC the Registration Statement. Each of the Company
and Acquiror shall use its reasonable best efforts to have the Registration
Statement declared effective under the Securities Act as promptly as
practicable after such filing. The Company shall use its reasonable best
efforts to cause the Prospectus to be mailed to the Stockholders as promptly
as practicable after the Registration Statement is declared effective under
the Securities Act. Acquiror shall also take any action (other than
qualifying to do business in any jurisdiction in which it is not now so
<PAGE>
qualified or consenting to service of process in any jurisdiction in which it
has not previously so consented in any action other than one arising out of
the offering of the Acquiror Stock in such jurisdiction) required to be taken
to qualify the Acquiror Stock to be issued in the Merger under any applicable
state securities or "blue sky" laws prior to the Effective Time, and the
Company shall furnish all information concerning the Company and the holders
of the Company Stock as may be requested in connection with any such action.
(b) The Company and Acquiror shall cooperate with each other and provide
to each other all information necessary in order to prepare the Registration
Statement. Acquiror shall notify the Company promptly of the receipt of any
comments from the SEC or its staff and of any requests by the SEC or its staff
for amendments or supplements to the Registration Statement or for additional
information and shall supply the Company with copies of all correspondence
between Acquiror or any of its Representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect thereto. The Company and
Acquiror shall use their respective reasonable best efforts to respond to any
comments of the SEC with respect to the Registration Statement as promptly as
practicable. If at any time prior to the Effective Time there shall occur any
event with respect to the Company or Acquiror or any of its Subsidiaries, as
the case may be, or with respect to other information supplied by the Company
or Acquiror, as the case may be, for inclusion in the Registration Statement,
in either case which event is required to be described in an amendment of, or
a supplement to, the Prospectus or the Registration Statement, such event
shall be so described, and such amendment or supplement shall be promptly
filed with the SEC and, as required by law, disseminated to the Stockholders.
Acquiror shall notify the Company promptly upon (i) the declaration by the SEC
of the effectiveness of the Registration Statement, (ii) the issuance or
threatened issuance of any stop order or other order preventing or suspending
the use of any prospectus relating to the Registration Statement, (iii) any
suspension or threatened suspension of the use of any prospectus relating to
the Registration Statement in any state, (iv) any proceedings commenced or
threatened to be commenced by the SEC or any state securities commission that
might result in the issuance of a stop order or other order or suspension of
use or (v) any request by the SEC to supplement or amend the Prospectus after
the effectiveness thereof. Acquiror and, to the extent applicable, the
Company, shall use their reasonable best efforts to prevent or promptly remove
any stop order or other order preventing or suspending the use of any
prospectus relating to the Registration Statement and to comply with any such
request by the SEC or any state securities commission to amend or supplement
the Registration Statement or the Prospectus.
(c) None of the information supplied or to be supplied by the Company or
any Stockholder for inclusion in (i) the Registration Statement will, at the
time the Registration Statement is filed with the SEC, at any time it is
amended or supplemented or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) the Prospectus or any other proxy
statement or information furnished to Stockholders in connection with the
Special Meeting will, at the date it is first mailed to the Stockholders or at
the time of the Special Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Prospectus and
the Registration Statement will comply as to form in all material respects
with the requirements of the Securities Act. Notwithstanding the foregoing,
<PAGE>
no representation is made by the Company with respect to statements made or
incorporated by reference in the Registration Statement other than with
respect to information which is supplied by the Company or any Stockholder
specifically for inclusion or incorporation by reference in the Registration
Statement.
ARTICLE 6.
CLOSING CONDITIONS
Section 6.1. Conditions to Obligations of Each Party to Effect the
Merger. The respective obligations of each Party to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of the
following conditions, any or all of which may be waived, in whole or in part,
to the extent permitted by Applicable Law:
(a) This Agreement, the Merger and the Transactions shall have been
approved and adopted in accordance with the DGCL by the affirmative vote, or
to the extent permitted by Applicable Law, by written consent, of the
Stockholders holding at least the minimum number of shares of the Company
Stock then issued and outstanding as are required by Applicable Law and the
Company's Organic Documents for such approval and adoption;
(b) As of the Closing Date, no Legal Action shall be pending before or
threatened in writing by any Authority seeking to restrain, prohibit, make
illegal or delay materially, or seeking material damages from the Party
seeking to invoke this Section 6.1(b) and, in case Acquiror is seeking to
invoke this Section 6.1(b), the Company, or to impose any Adverse conditions
in connection with, the consummation of the Merger and the Transactions, or
which might, in the reasonable business judgment of Acquiror, have an Adverse
Effect on Acquiror and its Subsidiaries taken as a whole assuming consummation
of the Merger;
(c) Other than the filing of the certificate of merger in accordance
with the DGCL, all authorizations, consents, waivers, orders or approvals
required to be obtained, and all filings, submissions, registrations, notices
or declarations required to be made, by Acquiror or Acquiror Merger Subsidiary
and the Company prior to the consummation of the Merger and the Transactions
shall have been obtained from, and made with, all required Authorities, except
for such authorizations, consents, waivers, orders, approvals, filings,
registrations, notices or declarations the failure to obtain or make would
not, in the reasonable judgment of Acquiror, assuming consummation of the
Merger, have an Adverse Effect on the Company;
(d) The filing and waiting period requirements under the HSR Act
relating to the consummation of the Merger shall have been complied with; and
(e) Acquiror or its nominee and the owner of each Property shall have
entered into and closed a purchase and sale agreement for each such Property
for the price of $2,200,000 for the Property located at 5 Fortune Drive,
Billerica, Massachusetts, $2,400,000 for the Property located at 96 High
Street, N. Billerica, Massachusetts, and $2,700,000 for the Property located
at 520 Metro Park West, Rochester, New York; provided, however, that it shall
not be a condition to the Company's obligation to effect the Merger if the
reason for Acquiror's or such nominee's failure to acquire a Property is due
to the inability of the owner of such Property to convey to Acquiror or such
nominee good and marketable title to the Property free and clear of all Liens
other than Permitted Liens.
<PAGE>
Section 6.2. Conditions to Obligations of Acquiror and Acquiror Merger
Subsidiary. The obligations of Acquiror and Acquiror Merger Subsidiary to
effect the Merger shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions, any or all of which may be waived,
in whole or in part, to the extent permitted by Applicable Law:
(a) All agreements, certificates, opinions and other documents shall be
reasonably satisfactory in form, scope and substance to Acquiror and its
counsel, and Acquiror and its counsel shall have received all information and
copies of all documents, including records of corporate proceedings, which
they may reasonably request in connection therewith, such documents where
appropriate to be certified by proper corporate officers;
(b) The representations, warranties, covenants and agreements of the
Company contained in this Agreement or otherwise made in writing by it or on
its behalf pursuant hereto or otherwise made in connection with the Merger and
the Transactions shall be true and correct in all material respects at and as
of the Closing Date with the same force and effect as though made on and as of
such date except those which speak as of a certain date which shall continue
to be true and correct as of such date on the Closing Date; each and all of
the agreements and conditions to be performed or satisfied by the Company or
any Stockholders hereunder or under the Stockholders' Agreement at or prior to
the Closing Date shall have been duly performed or satisfied in all material
respects; and the Company shall have furnished Acquiror with such certificates
and other documents evidencing the truth of such representations, warranties,
covenants and agreements and the performance of such agreements or conditions
as Acquiror shall have reasonably requested;
(c) The Company shall have furnished Acquiror and, at Acquiror's
request, any bank or other financial institution providing credit to Acquiror,
with favorable opinions dated the Closing Date of Woods, Oviatt, Gilman,
Sturman & Clarke, LLP, counsel for the Company, in the form attached hereto as
Exhibit 6.2(c);
(d) No Legal Action or other Claim shall be pending or threatened at any
time prior to or on the Closing Date before or by any Authority or by any
other Person seeking to restrain or prohibit, or damages or other relief in
connection with, the execution and delivery of this Agreement or the
consummation of the Merger and the Transactions or which might in the
reasonable judgment of Acquiror have any Adverse Effect on the Company or,
assuming consummation of the Merger, Acquiror and its Subsidiaries taken as a
whole;
(e) Each Affiliate of the Company shall have executed and delivered an
Affiliate Agreement in the form of Exhibit 5.3 hereto and Acquiror and the
Principal Stockholders shall have entered into the Registration Rights
Agreement;
(f) The Company shall have obtained consents to the assignment and
continuation of all Material Agreements which, in the reasonable judgment of
Acquiror require such consents, and the Company shall have obtained
satisfaction and discharge of all Liens set forth in Section 3.5(a) of the
Disclosure Schedule in favor of Fleet Bank of Massachusetts, N.A., but only to
the extent that Acquiror elects to repay or prepay the Indebtedness
corresponding to such Liens from its own funds;
(g) As of the Closing Date, there shall not have occurred and be
continuing any Adverse Change affecting the Company from the condition thereof
(financial and other) reflected in the Financial Statements;
<PAGE>
(h) Each of the officers and directors of the Company and each trustee
under each Plan shall have submitted his or her unqualified written
resignation, dated as of the Closing Date, from all such positions held with
the Company and as a trustee for each such Plan;
(i) Except for such Contractual Obligations as to which Acquiror has
notified the Company that it wants to retain, which notice shall be delivered
not less than twenty (20) days prior to Closing and which Contractual
Obligations shall be effective as of the Effective Time, all Contractual
Obligations set forth in Section 3.9 of the Disclosure Schedule shall have
been satisfied and discharged as of the Closing Date;
(j) Acquiror shall have received a favorable opinion, dated the Closing
Date, of Sullivan & Worcester LLP, its special tax counsel, to the effect that
this Agreement constitutes a tax-free plan of reorganization in accordance
with the provisions of Section 368(a) of the Code and as to the consequences
thereof to Acquiror; and
(k) Acquiror, the Company, the Agent and the Escrow Agent shall have
executed and delivered the Escrow Agreement and the Escrow Indemnity Funds
described therein shall have been delivered to the Escrow Agent.
Section 6.3. Conditions to Obligations of the Company. The obligations
of the Company to effect the Merger shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions, any or all of which
may be waived, in whole or in part to the extent permitted by Applicable Law:
(a) Acquiror shall have furnished the Company and the Principal
Stockholders with the favorable opinion, dated the Closing Date, of Sullivan &
Worcester LLP, counsel to Acquiror, in the form attached hereto as Exhibit
6.3(a);
(b) All agreements, certificates, opinions and other documents shall be
reasonably satisfactory in form, scope and substance to the Company and its
counsel, and the Company and its counsel shall have received all information
and copies of all documents, including records of corporate proceedings, which
they may reasonably request in connection therewith, such documents where
appropriate to be certified by proper corporate officers;
(c) The representations, warranties, covenants and agreements of each of
Acquiror and Acquiror Merger Subsidiary contained in this Agreement or
otherwise made in writing by it or on its behalf pursuant hereto or otherwise
made in connection with the Transactions shall be true and correct in all
material respects at and as of the Closing Date with the same force and effect
as though made on and as of such date except those which speak as of a certain
date which shall continue to be true and correct as of such date on the
Closing Date; each and all of the agreements and conditions to be performed or
satisfied by each of Acquiror and Acquiror Merger Subsidiary hereunder at or
prior to the Closing Date shall have been duly performed or satisfied in all
material respects; and each of Acquiror and Acquiror Merger Subsidiary shall
have furnished the Company with such certificates and other documents
evidencing the truth of such representations, warranties, covenants and
agreements and the performance of such agreements or conditions as the Company
shall have requested; and
<PAGE>
(d) The Company shall have received a favorable opinion, dated the
Closing Date, of Woods, Oviatt, Gilman, Sturman & Clarke, LLP, its special tax
counsel, to the effect that this Agreement constitutes a tax-free plan of
reorganization in accordance with the provisions of Section 368(a) of the Code
and as to the consequences thereof to the Stockholders;
(e) Affiliates of the Company who are guarantors of any Company bank
Indebtedness, leases or other obligations shall have been released from all
liability under the guarantees listed on Section 6.3(e) of the Disclosure
Schedule and all collateral granted by them to secure those guarantees shall
have been released and returned to them (it being understood that if any
Person who is benefited by any guaranty does not agree to release such
guaranty or collateral without the receipt of consideration, the condition to
Closing shall be deemed to be satisfied if, at Acquiror's option, Acquiror
indemnifies such Affiliate for any payment made in respect of such guaranty);
and
(f) The Escrow Agreement shall have been executed and delivered by
Acquiror and the escrow agent and the Registration Rights Agreement shall have
been executed and delivered by Acquiror and such other parties thereto (other
than the Principal Stockholders).
ARTICLE 7.
TERMINATION, AMENDMENT AND WAIVER
Section 7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of this
Agreement, the Merger and the Transactions by the Stockholders:
(a) by mutual consent of Acquiror and the Company;
(b) by either Acquiror or the Company if any permanent injunction,
decree or judgment by any Authority preventing the consummation of the Merger
shall have become final and nonappealable;
(c) by the Company in the event (i) the Company is not in breach of this
Agreement and none of its representations and warranties shall have become and
continue to be untrue in any material respect, unless such breach or untruth
is capable of being cured by and will not prevent or delay consummation of the
Merger by or beyond the Termination Date, and (ii) either (A) Acquiror or
Acquiror Merger Subsidiary is in breach of this Agreement or any of its
representations or warranties shall have become and continue to be untrue in
any material respect, unless, in either case such breach or untruth is capable
of being cured by and will not prevent or delay consummation of the Merger by
or beyond the Termination Date, or (B) the Merger and the Transaction have not
been consummated by the Termination Date;
(d) by Acquiror:
(i) if the Merger and the Transactions fail to receive the
approval required by Applicable Law, by vote (or to the extent permitted
by Applicable Law, by consent) of the Stockholders;
(ii) in the event (A) neither Acquiror nor Acquiror Merger
Subsidiary is in breach of this Agreement and none of their
representations or warranties shall have become and continue to be untrue
in any material respect, unless such breach or untruth is capable of
<PAGE>
being cured by and will not prevent or delay consummation of the Merger
by or beyond the Termination Date, and (B) either (I) the Company is in
breach of this Agreement or any of its representations or warranties
shall have become and continue to be untrue in any material respect,
unless, in either case, such breach or untruth is capable of being cured
by and will not prevent or delay consummation of the Merger by or beyond
the Termination Date, (II) the Merger and the Transactions have not been
consummated prior to the Termination Date, or (III) any of the
Stockholders is in breach of the Stockholders' Agreement or any of their
representations or warranties shall have become and continue to be untrue
in any material respect, unless, in either case, such breach or untruth
is capable of being cured by and will not prevent or delay consummation
of the Merger by or beyond the Termination Date; or
(iii) if (A) the Board of Directors of the Company shall (I)
withdraw, modify or change its recommendation so that it is not in favor
of this Agreement, the Merger or the Transactions, or shall have resolved
to do any of the foregoing, or (II) have recommended or resolved to
recommend to the Stockholders any Other Transaction, or (B) the Company
shall have entered into or agreed to enter into any Other Transaction.
Section 7.2. Effect of Termination. Except as provided in Sections
5.1, 5.7, 7.2, 7.5 and 9.11 in the event of the termination of this Agreement
pursuant to Section 7.1, this Agreement shall forthwith become void, there
shall be no liability on the part of any Party, or any of their respective
officers or directors, to the other and all rights and obligations of any
Party shall cease; provided, however, that such termination shall not relieve
any Party from liability for the breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement, or impair the
right of the Company, on the one hand, and Acquiror and Acquiror Merger
Subsidiary, on the other hand, to compel specific performance of the other
party of its or their obligations under this Agreement.
Section 7.3. Amendment. This Agreement may be amended by the Parties
by action taken by or on behalf of the respective Boards of Directors thereof
at any time prior to the Effective Time; provided, however, that, after
approval of this Agreement and the Merger by the Stockholders, no amendment,
which under Applicable Law may not be made without the approval of the
Stockholders, may be made without such approval. This Agreement may not be
amended except by an instrument in writing signed by the Parties hereto.
Section 7.4. Waiver. At any time prior to the Effective Time, except
to the extent Applicable Law does not permit, either Acquiror and Acquiror
Merger Subsidiary or the Company may extend the time for the performance of
any of the obligations or other acts of the other, subject, however, to the
terms and conditions of Section 7.1, waive any inaccuracies in the
representations and warranties of the other contained herein or in any
document delivered pursuant hereto and waive compliance by the other with any
of the agreements, covenants or conditions contained herein. Any such
extension or waiver shall be valid only if set forth in an agreement in
writing signed by the Party or Parties to be bound thereby.
Section 7.5. Fees, Expenses and Other Payments.
<PAGE>
(a) All costs and expenses incurred in connection with this Agreement,
the Merger and the Transactions, and compliance with Applicable Law and
Contractual Obligations as a consequence hereof and thereof, including,
without limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred by the Parties shall be borne solely and entirely by the
Party which has incurred such costs and expenses (with respect to such Party,
its "Expenses").
(b) The Company agrees that if this Agreement shall be terminated by
Acquiror pursuant to Section 7.1(d) (other than a termination by Acquiror
pursuant to Section 7.1(d)(ii)(B)(II) unless the reason for the failure to
consummate the Merger prior to the Termination Date is due to any breach by
the Company of its covenants herein or the failure of the representations and
warranties of the Company to be true and correct in all material respects),
then the Company will pay to Acquiror an amount equal to $5,000,000, which
amount is in recognition of, among other things, the out-of-pocket Expenses of
Acquiror related to this Agreement, the reliance of Acquiror on the Company's
fulfillment of its obligations hereunder, the costs in delayed opportunity to
Acquiror, and the benefit to the Company, which heretofore has been a private
closely-held business, in establishing a market price for it, but which amount
shall not be considered to constitute liquidated damages. Any payment
required to be made pursuant to this Section 7.5(b) shall be made as promptly
as practicable but not later than ten business days after termination of this
Agreement and, in any such case, shall be made by wire transfer of immediately
available funds to an account designated by Acquiror.
(c) Acquiror agrees that if this Agreement shall be terminated by the
Company pursuant to Section 7.1(c) (other than a termination by the Company
pursuant to Section 7.1(c)(ii)(B) unless the reason for the failure to
consummate the Merger prior to the Termination Date is due to any breach by
Acquiror or Acquiror Merger Subsidiary of any of their respective covenants
herein or the failure of the representations and warranties of Acquiror and
Acquiror Merger Subsidiary to be true and correct in all material respects),
then Acquiror will pay to the Company an amount equal to $5,000,000, which
amount is in recognition of, among other things, the out-of-pocket Expenses of
the Company related to this Agreement, the reliance of the Company on
Acquiror's fulfillment of its obligations hereunder, the costs in delayed
opportunity to the Company, but which amount shall not be considered to
constitute liquidated damages. Any payment required to be made pursuant to
this Section 7.5(c) shall be made as promptly as practicable but not later
than ten business days after termination of this Agreement and, in any such
case, shall be made by wire transfer of immediately available funds to an
account designated by the Company.
Section 7.6. Effect of Investigation. The right of any Party to
terminate this Agreement pursuant to Section 7.1 shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any Party, or any Person controlling any such party or any of their respective
Representatives whether prior to or after the execution of this Agreement.
ARTICLE 8.
INDEMNIFICATION; ADJUSTMENT
Section 8.1. Survival. The representations, warranties, covenants and
agreements of the Company contained in or made pursuant to this Agreement or
any Collateral Document shall survive the Closing and shall remain operative
and in full force and effect for a period of one (1) year after the Closing
<PAGE>
Date (the "Escrow Indemnity Period"), regardless of any investigation or
statement as to the results thereof made by or on behalf of any Party. No
claim for indemnification may be asserted after the expiration of the Escrow
Indemnity Period. Notwithstanding anything herein to the contrary, any
representation, warranty, covenant and agreement which is the subject of a
Claim which is asserted in writing prior to the expiration of the Escrow
Indemnity Period shall survive with respect to such Claim or any dispute with
respect thereto until the final resolution thereof.
Section 8.2. Escrow; Indemnification. The Parties hereto agree, and by
adopting and approving this Agreement and the Merger, the Stockholders shall
agree, that the Escrow Indemnity Funds will be withheld from the Exchange
Merger Consideration and held in escrow in accordance with the terms of this
Article 8 and the Escrow Agreement in order to provide a fund to indemnify
Acquiror and hold Acquiror harmless from and against any and all damages,
claims, losses, expenses, costs, obligations and liabilities, including
without limitation liabilities for all reasonable attorneys', accountants',
and experts' fees and expenses including those incurred to enforce the terms
of this Agreement or any Collateral Document (collectively, "Loss and
Expense"), suffered, directly or indirectly, by Acquiror by reason of, or
arising out of:
(a) any breach of representation or warranty made by the Company
pursuant to this Agreement or any Collateral Document or any failure by the
Company to perform or fulfill any of its covenants or agreements set forth in
this Agreement or any Collateral Document;
(b) any Legal Action or other Claim by any third party relating to the
Company to the extent such Legal Action or other Claim has resulted in a
breach of representation or warranty by the Company pursuant to this Agreement
or any Collateral Document; or
(c) the Indebtedness of the Company and its Subsidiaries as of the
Effective Time exceeding $500,000 (unless any adjustment has been made to the
Cash Amount in accordance with Section 8.6).
The Company hereby appoints, and by adopting and approving this Agreement
and the Merger, the Stockholders shall appoint, James B. Wayman, Jr. (the
"Agent", with full and unqualified power to delegate to one or more persons
the authority granted to him hereunder) to act as his, her or its agent and
attorney-in-fact, with full power of substitution, to take all actions called
for by this Article 8 and the Escrow Agreement on his, her or its behalf, in
accordance with the terms of this Article 8 and the Escrow Agreement.
Section 8.3. Limitation of Liability; Disposition of Escrow Indemnity
Funds.
(a) Notwithstanding the provisions of Section 8.2, after the Closing,
Acquiror's rights to indemnification shall be subject to the following
limitations: (i) Acquiror shall be entitled to recover its Loss and Expense in
respect of any Claim only if the Loss and Expense for all Claims exceeds, in
the aggregate, $150,000 and (ii) in no event shall the aggregate amount to be
paid to Acquiror exceed the lesser of (i) the Escrow Indemnity Funds and (ii)
shares of Acquiror Stock having an aggregate Market Value of Three Million
Dollars ($3,000,000).
<PAGE>
(b) Anything in this Agreement, including without limitation the
provisions of Sections 8.2 or 8.3(a), to the contrary notwithstanding, the
exclusive recourse of Acquiror with respect to Claims brought after the
Effective Time arising out of the transactions contemplated by this Agreement
shall be the Escrow Indemnity Funds. On or before the Closing Date, Acquiror,
the Company and the Agent shall execute and deliver an escrow agreement
substantially in the form attached hereto as Exhibit 8.3 (the "Escrow
Agreement"). Any Claims of Acquiror for indemnification to be satisfied out
of the Escrow Indemnity Fund shall be made in accordance with the terms of the
Escrow Agreement (it being hereby understood that for purposes of determining
the number of shares of Acquiror Stock necessary to satisfy such Claim, the
Market Price of the Acquiror Stock calculated in accordance with the terms of
the Escrow Agreement shall be used). At the Effective Time, a certificate
registered in the name of James B. Wayman, Jr., as Agent, representing the
Escrow Indemnity Funds shall be withheld from the Merger Consideration
hereunder and shall be deposited with the Escrow Agent. In accordance with
the terms of the Escrow Agreement, each Stockholder shall be entitled to
receive all ordinary cash dividends paid in respect of his or her
Proportionate Share of Acquiror Stock that would otherwise be registered in
his or her name but for such shares being a part of the Escrow Indemnity Funds
and to vote and to give consents, waivers and ratifications in respect of his
or her Proportionate Share of Acquiror Stock which is part of the Escrow
Indemnity Funds. In connection with any such vote or consent, the Agent and
Acquiror, at Acquiror's expense, shall cause to be delivered to such
Stockholder such information (including, without limitation, any proxy
statement and cards). The Agent shall vote the shares of Acquiror Stock
forming part of the Escrow Indemnity Funds in accordance with the directions
of the Stockholders. In order to take such vote, the Agent shall tabulate the
votes it receives from the Stockholders and inform Acquiror in writing of the
aggregate percent of all votes received for, against and in abstention with
respect to each matter voted upon. Acquiror shall then convert such percent
to number based on the then-existing Escrow Indemnity Funds, rounded in each
case down to the nearest whole number.
(c) In the event there are no Unresolved Claims (as defined in the
Escrow Agreement), on the date which is ten (10) days after the expiration of
the Escrow Indemnity Period, or the next business day if such date is not a
business day, the Escrow Indemnity Funds then remaining shall be distributed
to the Stockholders (or their nominee or transferee, as set forth in the
Transmittal Documents in respect of the Exchange Merger Consideration)
entitled thereto in accordance with the proportions with their ownership of
Shares immediately prior to the Effective Time (provided that cash in lieu of
fractional shares will be distributed in accordance with Section 2.1(d)
hereof). In the event one or more Unresolved Claims with respect to the
Escrow Indemnity Funds, if any, shall exist upon the expiration of the Escrow
Indemnity Period, shares of Acquiror Stock, rounded to the nearest shares,
having a Market Price equal to the sum of (i) the aggregate amount of such
Unresolved Claims and (ii) the amount reasonably estimated by Acquiror to
cover the fees, expense and other costs (including reasonable counsel fees and
expenses) which will be required to resolve such Unresolved Claims shall be
retained as part of the Escrow Indemnity Funds and the balance thereof, if
any, shall be distributed to the Persons entitled thereto. Upon the
resolution of all such Claims and the payment of all such fees, expenses and
costs out of the Escrow Indemnity Funds, the balance of the shares of Acquiror
Stock, if any, shall be distributed to the Persons entitled thereto.
<PAGE>
Section 8.4. Notice of Claims. If Acquiror believes that it has
suffered or incurred any Loss and Expense, it shall notify the Agent promptly
in writing, and in any event within the applicable time period specified in
Section 8.2, describing such Loss and Expense, all with reasonable
particularity and containing a reference to the provisions of this Agreement
in respect of which such Loss and Expense shall have occurred. If any Legal
Action is instituted by a third party with respect to which Acquiror intends
to claim any liability or expense as Loss and Expense under this Article,
Acquiror shall promptly notify the Agent of such Legal Action, but the failure
to so notify the Agent shall not relieve the Stockholders of their obligations
under this Article, except to the extent such failure to notify prejudices its
ability to defend against such Claim.
Section 8.5. Defense of Third Party Claims. The Agent shall have the
right to conduct and control, through counsel of his own choosing, reasonably
acceptable to Acquiror, any third party Legal Action or other Claim (unless
the amount claimed under such Legal Action or other Claim exceeds the Escrow
Indemnity Funds, in which case Acquiror shall retain the right to control such
Legal Action or other Claim), but Acquiror may, at its election, participate
in the defense thereof at its sole cost and expense; provided, however, that
if the Agent shall fail to defend any such Legal Action or other Claim, then
Acquiror may defend, through counsel of its own choosing, such Legal Action or
other Claim, and (so long as it gives the Stockholders at least fifteen (15)
days' notice of the terms of the proposed settlement thereof and permits the
Stockholders to then undertake the defense thereof, except as set forth above)
settle such Legal Action or other Claim, and to recover out of the Escrow
Indemnity Funds the amount of such settlement or of any judgment and the costs
and expenses of such defense. The Agent shall not compromise or settle any
such Legal Action or other Claim without the prior written consent of
Acquiror. All reasonable costs and expenses defending any such third party
Legal Action or other Claim, including the amount of any settlement or of any
judgment, shall be paid out of the Escrow Indemnity Funds.
Section 8.6. Balance Sheet Adjustment. Five business days prior to the
Closing Date, the Company shall prepare and deliver to Acquiror a schedule
showing the Company's best estimate of its Indebtedness as of the Effective
Time (the "Company Indebtedness Calculation"). If Acquiror disagrees with
such estimate, Representatives of the Company and Acquiror shall meet to
discuss such estimate, and the Company Indebtedness Calculation shall be
revised, to the extent agreed, to reflect such discussions. In addition, at
the Closing, the Company shall deliver to Acquiror a letter from Fleet Bank of
Massachusetts, N.A. certifying to Acquiror the entire unpaid balance
(principal and interest) of the Company's Indebtedness to Fleet Bank of
Massachusetts, N.A., such that the payment thereof at that time would
terminate that Indebtedness. If the Company Indebtedness Calculation indicates
that the Indebtedness of the Company is greater than $500,000, the Cash Amount
shall be adjusted in accordance with the definition thereof; if the Company
Indebtedness Calculation indicates that Indebtedness of the Company is less
than $500,000, there shall be no such adjustment.
Section 8.7. Exclusive Remedy. Except as otherwise provided in this
Article and Section 9.8 of the Merger Agreement and Section 5.1 of the
Stockholders' Agreement, the indemnification provided in this Article shall be
the sole and exclusive post-Closing remedy available to Acquiror against the
Stockholders for any Claim under this Agreement.
<PAGE>
ARTICLE 9.
GENERAL PROVISIONS
Section 9.1. Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered or transmitted, and shall be effective
upon receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the telecopier
number specified below:
(a) If to Acquiror or Acquiror Merger Subsidiary:
Iron Mountain Incorporated
745 Atlantic Avenue, 10th Floor
Boston, MA 02110
Attention: Chief Executive Officer
Telecopier No.: (617) 357-9031
with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02109
Attention: William J. Curry, Esq.
Telecopier No.: (617) 338-2880
(b) If to the Company or the Agent:
c/o B. Thomas Golisano
911 Panorama Trail South
Rochester, NY 14625
Telecopier No.: (716) 383-3428
with a copy to:
Woods, Oviatt, Gilman, Sturman & Clarke LLP
44 Exchange Street
Rochester, NY 14614
Attention: Harry P. Messina, Jr.
Telecopier No.: (716) 454-3968
Section 9.2. Headings. The headings contained in this Agreement are
for purposes of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.3. Severability. If any term or provision of this Agreement
shall be held or deemed to be, or shall in fact be, invalid, inoperative,
illegal or unenforceable as applied to any particular case in any jurisdiction
or jurisdictions, or in all jurisdictions or in all cases, because of the
conflicting of any provision with any constitution or statute or rule of
public policy or for any other reason, such circumstance shall not have the
effect of rendering the provision or provisions in question invalid,
inoperative, illegal or unenforceable in any other jurisdiction or in any
other case or circumstance or of rendering any other provision or provisions
herein contained invalid, inoperative, illegal or unenforceable to the extent
<PAGE>
that such other provisions are not themselves actually in conflict with such
constitution, statute or rule of public policy, but this Agreement shall be
reformed and construed in any such jurisdiction or case as if such invalid,
inoperative, illegal or unenforceable provision had never been contained
herein and such provision reformed so that it would be valid, operative and
enforceable to the maximum extent permitted in such jurisdiction or in such
case. Notwithstanding the foregoing, in the event of any such determination
the effect of which is to Affect Materially and Adversely either party, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible to the fullest
extent permitted by Applicable Law in an acceptable manner to the end that the
Transactions are fulfilled and consummated to the maximum extent possible.
Section 9.4. Entire Agreement. This Agreement (together with the
Confidentiality Agreement, the Disclosure Schedule, the Acquiror Disclosure
Schedule and the other Collateral Documents delivered in connection herewith)
constitutes the entire agreement of the Parties and supersedes all prior
agreements and undertakings, both written and oral (other than the
Confidentiality Agreement), between the Parties, or any of them, with respect
to the subject matter hereof.
Section 9.5. Assignment. This Agreement shall not be assigned by
operation of law or otherwise and any purported assignment shall be null and
void, provided that Acquiror may cause a wholly owned Subsidiary of Acquiror
to be substituted for Acquiror Merger Subsidiary as the party to the Merger
and may, in addition, assign the other rights, but not its obligations,
including, without limitation, its obligation to pay the Merger Consideration,
under this Agreement to such Subsidiary.
Section 9.6. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each Party, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any Person any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
Section 9.7. Governing Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by, and construed in
accordance with, the applicable laws of the United States of America and the
laws of The Commonwealth of Massachusetts applicable to contracts made and
performed in such State and, in any event, without giving effect to any choice
or conflict of laws provision or rule that would cause the application of
domestic substantive laws of any other jurisdiction, except to the extent that
the provisions of the DGCL apply to the Merger. Anything in this Agreement to
the contrary notwithstanding, including without limitation the provisions of
Article 8, in the event of any dispute between the parties which results in a
Legal Action, the prevailing party shall be entitled to receive from the
non-prevailing party reimbursement for reasonable legal fees and expenses
incurred by such prevailing party in such Legal Action.
Section 9.8. Enforcement of the Agreement. Each Party recognizes and
agrees that each other Party's remedy at law for any breach of the provisions
of this Agreement would be inadequate and agrees that for breach of such
provisions, such Party shall, in addition to such other remedies as may be
available to it at law or in equity or as provided in this Agreement, be
entitled to injunctive relief and to enforce its rights by an action for
specific performance to the extent permitted by Applicable Law. Each Party
hereby waives any requirement for security or the posting of any bond or other
surety in connection with any temporary or permanent award of injunctive,
<PAGE>
mandatory or other equitable relief. Nothing herein contained shall be
construed as prohibiting a Party from pursuing any other remedies available to
such Party for any breach or threatened breach hereof or failure to take or
refrain from any action as required hereunder to consummate the Merger and
carry out the Transactions.
Section 9.9. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different Parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.
Section 9.10. Mutual Drafting. This Agreement is the result of the
joint efforts of Acquiror and the Company, and each provision hereof has been
subject to the mutual consultation, negotiation and agreement of the parties
and there shall be no construction against any Party based on any presumption
of that Party's involvement in the drafting thereof.
Section 9.11. Continuation of Covenants. Notwithstanding any termination
by Acquiror of this Agreement, the Company agrees that all of the
representations, warranties and covenants of the Company contained in this
Agreement shall continue and be in full force and effect for so long as
Acquiror has the right to commence an offer to purchase the Company Stock of
the Principal Stockholders pursuant to the terms and provisions of the
Stockholders' Agreement and, in the event Acquiror commences such an offer,
until such time as such offer is consummated.
ARTICLE 10.
DEFINITIONS
As used herein, unless the context otherwise requires, the following
terms (or any variant in the form thereof) have the following respective
meanings. Terms defined in the singular shall have a comparable meaning when
used in the plural, and vice versa, and the reference to any gender shall be
deemed to include all genders. Unless otherwise defined or the context
otherwise clearly requires, terms for which meanings are provided herein shall
have such meanings when used in the Disclosure Schedule, the Acquiror
Disclosure Schedule and each Collateral Document, notice, certificate,
communication, opinion or other document executed or required to be executed
pursuant hereto or thereto or otherwise delivered, from time to time, pursuant
hereto or thereto.
Acquiror shall have the meaning given to it in the Preamble.
Acquiror Disclosure Schedule shall mean the disclosure schedule dated as
of the date of this Agreement delivered by Acquiror to the Company.
Acquiror Merger Subsidiary shall have the meaning given to it in the
Preamble.
Acquiror SEC Reports shall have the meaning given to it in Section
4.3(a).
Acquiror Stock shall have the meaning given to it in the Preamble.
<PAGE>
Adverse, Adversely, when used alone or in conjunction with other terms
(including without limitation "Affect,""Change" and"Effect") shall mean, with
respect to the Company or Acquiror, as the case may be, any Event which could
reasonably be expected to (a) adversely affect the validity or enforceability
of this Agreement or any Collateral Document or the likelihood of consummation
of the Merger, (b) adversely affect in any material respect the business,
operations, management, properties or the condition, (financial or other), or
results of operation (including without limitation, earnings before interest,
taxes, depreciation and amortization) of the Company or Acquiror, as the case
may be (it being understood that a reduction in the Market Value of Acquiror
Stock shall not, in and of itself, constitute or be deemed to reflect an
Adverse Change), (c) impair the Company's or Acquiror's, as the case may be,
ability to fulfill its obligations under the terms of this Agreement or any
Collateral Document, or (d) adversely affect in any material respect the
aggregate rights and remedies of Acquiror under this Agreement or any
Collateral Document.
Affiliate, Affiliated shall mean, with respect to any Person, (a) any
other Person at the time directly or indirectly controlling, controlled by or
under direct or indirect common control with such Person, (b) any other Person
of which such Person at the time owns, or has the right to acquire, directly
or indirectly, ten percent (10%) or more of any class of the capital stock or
beneficial interest, (c) any other Person which at the time owns, or has the
right to acquire, directly or indirectly, ten percent (10%) or more of any
class of the capital stock or beneficial interest of such Person, (d) any
executive officer or director of such Person, (e) with respect to any
partnership, joint venture or similar Entity, any general partner thereof, and
(f) when used with respect to an individual, shall include any member of such
individual's immediate family or a family trust.
Affiliate Agreement shall have the meaning given to it in Section 5.3(a).
Agent shall have the meaning given to it in Section 8.2(c).
Agreement shall mean this Agreement as originally in effect, including
unless the context otherwise specifically requires, all schedules and exhibits
hereto, as the same may from time to time be supplemented, amended, modified
or restated in the manner herein or therein provided.
Alternative Transaction shall have the meaning given to it in Section 1.9.
Applicable Law shall mean any Law of any Authority, whether domestic or
foreign, including without limitation the DGCL, all federal and state
securities laws, the Code, ERISA and Environmental Laws, to or by which a
Person or it or any of its business or operations is subject or any of its
property or assets is bound.
Authority shall mean any governmental or quasi-governmental authority,
whether administrative, executive, judicial, legislative or other, or any
combination thereof, including without limitation any federal, state,
territorial, county, municipal or other government or governmental or
quasi-governmental agency, arbitrator, authority, board, body, branch, bureau,
central bank or comparable agency or Entity, commission, corporation, court,
department, instrumentality, master, mediator, panel, referee, system or other
political unit or subdivision or other Entity of any of the foregoing, whether
domestic or foreign.
<PAGE>
Benefit Arrangement shall mean any material benefit arrangement that is
not a Plan, including (i) any employment or consulting agreement, (ii) any
arrangement providing for insurance coverage or workers' compensation
benefits, (iii) any incentive bonus or deferred bonus arrangement, (iv) any
arrangement providing termination allowance, severance, salary continuation
for disability, or other leave of absence, supplemental unemployment benefits,
lay-off, reduction in force or similar benefits, (v) any equity compensation
plan, (vi) any deferred compensation plan, (vii) any compensation policy and
practice, (viii) any educational assistance arrangements or policies and (ix)
any change of control arrangements or policies.
Cash Amount shall mean the difference between (a) $12,090,000 and (b) in
the event the Company Indebtedness Calculation exceeds $500,000, an amount
equal to such amount above $500,000.
Cash Conversion Number shall mean the quotient obtained by dividing (i)
the Cash Amount by (ii) the sum of (a) the number of shares of Company Stock
issued and outstanding immediately prior to the Merger (except shares subject
to Section 2.1(b)) and (b) the number of shares of Company Stock which may be
issued pursuant to Option Securities which are exercisable as of the Effective
Time (including those which will become exercisable by virtue of the
consummation of the Merger).
Cash Merger Consideration shall have the meaning given to it in Section
2.1(a).
Certificate shall have the meaning given to it in Section 2.1(a).
Claims shall mean any and all debts, liabilities, obligations, losses,
damages, deficiencies, assessments and penalties, together with all Legal
Actions, pending or threatened, claims and judgments of whatever kind and
nature relating thereto, and all fees, costs, expenses and disbursements
(including without limitation reasonable attorneys' and other legal fees,
costs and expenses) relating to any of the foregoing.
Closing shall have the meaning given to it in Section 1.3.
Closing Date shall have the meaning given to it in Section 1.3.
Closing Stock Conversion Number shall mean the quotient obtained by
dividing (i) the difference between (a) the Common Stock Amount and (b) the
Escrow Indemnity Funds by (ii) the sum of (a) the number of shares of Company
Stock issued and outstanding immediately prior to the Merger (except shares
subject to Section 2.1(b)) and (b) the number of shares of Company Stock which
may be issued pursuant to Option Securities which are exercisable as of the
Effective Time (including those which will become exercisable by virtue of the
consummation of the Merger).
COBRA shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, as set forth in Section 4980B of the Code and Part 6 of
Title I of ERISA.
Code shall have the meaning given to it in the Preamble.
Collateral Document shall mean any agreement, instrument, certificate,
opinion, memorandum, schedule or other document delivered by a Party or a
Stockholder pursuant to this Agreement or in connection with the Merger and
the Transactions.
<PAGE>
Common Stock Amount shall mean the quotient obtained by dividing (a)
$49,910,000 by (b) the Determination Price.
Company shall have the meaning given to it in the Preamble.
Company Indebtedness Calculation shall have the meaning given to it in
Section 8.6.
the Company's knowledge (including the term "to the knowledge of the
Company") means the knowledge, information or belief of any Company director,
executive officer or any Principal Stockholder; and that such director,
executive officer or Principal Stockholder, after reasonable investigation
(which shall include, without limitation, interrogation of John Cercone,
Kristen Gardner, Michael Karp and Michael Young but, due to the Parties'
desire and need for secrecy, shall not include interrogation of any other
employee, including, without limitation, any branch manager), shall have
reason to believe and shall believe that the subject representation or
warranty is true and accurate as stated.
Company Option Plan shall have the meaning given to it in Section 3.13(b).
Company Stock shall have the meaning given to it in Section 2.1(a).
Confidentiality Agreement shall have the meaning given to it in Section
5.1(a).
Contract, Contractual Obligation shall mean any term, condition,
provision, representation, warranty, agreement, covenant, undertaking,
commitment, indemnity or other obligation which is outstanding or existing
under any instrument, contract, lease or other contractual undertaking to
which the obligee is a party or by which it or any of its business is subject
or property or assets is bound.
control (including the terms "controlled," "controlled by" and "under
common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management or policies of a Person, or the disposition of such Person's assets
or properties, whether through the ownership of stock, equity or other
ownership, by contract, arrangement or understanding, or as trustee or
executor, by contract or credit arrangement or otherwise.
Convertible Securities shall mean any evidences of indebtedness, shares
of capital stock (other than common stock) or other securities directly or
indirectly convertible into or exchangeable for Shares, whether or not the
right to convert or exchange thereunder is immediately exercisable or is
conditioned upon the passage of time, the occurrence or non-occurrence or
existence or non-existence of some other Event, or both.
Determination Price shall mean the average closing price per share of
Acquiror Stock for the period of 20 trading days ending three trading days
prior to the Closing Date; provided however, that if the average closing price
per share of Acquiror Stock for such period is less than $26.00, then the
Determination Price shall be $26.00, and provided further that if the average
closing price per share of Acquiror Stock for such period is greater than
$31.00, then the Determination Price shall be $31.00. The closing price for
each such trading day shall be the last quoted sale price or, if not so
quoted, the average of the low bid and high asked prices on the Nasdaq
National Market System.
<PAGE>
DGCL shall have the meaning given to it in the Preamble.
Directors Plan shall have the meaning given to it in Section 3.13(b).
Disclosure Schedule shall mean the disclosure schedule dated as of the
date of this Agreement delivered by the Company to Acquiror.
Dissenting Shares shall have the meaning given to it in Section 2.5(a).
Distribution shall mean, with respect to the Company: (a) the declaration
or payment of any dividend (except dividends payable in Company Stock) on or
in respect of any shares of any class of capital stock of the Company owned by
a Person other than the Company, (b) the purchase, redemption or other
retirement of any shares of any class of capital stock of the Company owned by
a Person other than the Company, and (c) any other distribution on or in
respect of any shares of any class of capital stock of the Company owned by a
Person other than the Company.
Effective Time shall have the meaning given to it in Section 1.4.
Employment Arrangement shall mean, with respect to any Person, any
employment, consulting, retainer, severance or similar contract, agreement,
plan, arrangement or policy (exclusive of any which is terminable within
thirty (30) days without liability, penalty or payment of any kind by such
Person or any Affiliate (other than any such liability, penalty or payment of
general application to all the Company's employees)), providing for severance,
termination payments, insurance coverage (including any self-insured
arrangements), workers compensation, disability benefits, life, health,
medical, dental or hospitalization benefits, supplemental unemployment
benefits, vacation or sick leave benefits, pension or retirement benefits or
for deferred compensation, profit-sharing, bonuses, stock options, stock
purchase or appreciation rights or other forms of incentive compensation or
post-retirement insurance, compensation or benefits, or any collective
bargaining or other labor agreement, whether or not any of the foregoing is
subject to the provisions of ERISA.
Encumber shall mean to suffer, accept, agree to or permit the imposition
of any Lien.
Enforceability Exceptions shall have the meaning set forth in Section
3.1(b).
Entity shall mean any corporation, firm, unincorporated organization,
association, partnership, limited liability company, trust (inter vivos or
testamentary), estate of a deceased, insane or incompetent individual,
business trust, joint stock company, joint venture or other organization,
entity or business, whether acting in an individual, fiduciary or other
capacity, or any Authority.
Environmental Law shall mean any Law relating to or otherwise imposing
liability or standards of conduct concerning pollution or protection of the
environment or occupational health and safety, including without limitation
Laws relating to emissions, discharges, releases or threatened releases of
Hazardous Materials or other pollutants, contaminants, chemicals, noises,
odors or industrial, toxic or hazardous substances, materials or wastes,
whether as matter or energy, into the environment (including, without
limitation, ambient air, surface water, ground water, land surface or
<PAGE>
subsurface strata) or otherwise relating to the manufacture, processing,
generation, distribution, use, treatment, storage, disposal, cleanup,
transport or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances, materials or wastes.
Environmental Permit shall mean any Governmental Authorization required
by or pursuant to any Environmental Law.
ERISA shall mean the Employee Retirement Income Security Act of 1974, and
the rules and regulations thereunder, all as from time to time in effect, or
any successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
ERISA Affiliate shall mean any Person that is or has ever been treated as
a single employer with the Company under Sections 414(b), (c), (m) or (o) of
the Code or Section 4001(b)(1) of ERISA.
Escrow Agreement shall have the meaning given to it in Section 8.3(b).
Escrow Indemnity Funds shall mean shares of Acquiror Common Stock in an
amount equal to quotient obtained by dividing (i) Four Million Dollars
($4,000,000) by (ii) the Determination Price.
Escrow Indemnity Period shall have the meaning given to it in Section
8.1.
Event shall mean the occurrence or existence of any act, action,
activity, circumstance, condition, event, fact, failure to act, omission,
incident or practice, or any set or combination of any of the foregoing.
Exchange Act shall mean the Securities Exchange Act of 1934, and the
rules and regulations of the Commission thereunder, all as from time to time
in effect, or any successor law, rules or regulations, and any reference to
any statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
Exchange Agent shall have the meaning given to it in Section 2.2(a).
Exchange Fund shall have the meaning given to it in Section 2.2(a).
Exchange Merger Consideration shall have the meaning given to it in
Section 2.1(a).
Expenses shall have the meaning set forth in Section 7.5(a).
Financial Statements shall have the meaning given to it in Section
3.2(a).
GAAP shall mean generally accepted accounting principles as in effect
from time to time in the United States of America.
Governmental Authorizations shall mean all approvals, concessions,
consents, franchises, licenses, permits, plans, registrations and other
authorizations of all Authorities.
Governmental Filings shall mean all filings, including franchise and
similar Tax filings, and the payment of all fees, assessments, interest and
penalties associated with such filings, with all Authorities.
<PAGE>
Guaranty or Guaranteed shall mean any agreement, undertaking or
arrangement by which the Company guarantees, endorses or otherwise becomes or
is liable, directly or indirectly, contingently or otherwise, upon any
indebtedness of any other Person including without limitation the payment of
amounts drawn down by beneficiaries of letters of credit (other than by
endorsements of negotiable instruments for deposit or collection in the
ordinary course of business). The amount of the obligor's obligation under
any Guaranty shall be deemed to be the outstanding amount (or maximum
permitted amount, if larger) of the indebtedness directly or indirectly
guaranteed thereby (subject to any limitation set forth therein).
Hazardous Materials shall mean any substance (in whatever state of
matter): (a) the presence of which requires investigation or remediation under
any Environmental Law; (b) that is defined as a "hazardous waste","hazardous
material" or "hazardous substance" under any Environmental Law; (c) that is
toxic, explosive, corrosive, pollutive, contaminating, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is regulated
by any Authority; (d) that contains or consists of petroleum or petroleum
products, PCBs, asbestos, or urea formaldehyde foam insulation.
HSR Act shall mean the Hart-Scott-Rodino Antitrust Improvement Act of
1976, and the rules and regulations thereunder, all as from time to time in
effect, or any successor law, rules or regulations, and any reference to any
statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
Indebtedness shall mean, with respect to the Company, all obligations,
contingent or otherwise, which in accordance with GAAP should be classified
upon the Company's consolidated balance sheet as liabilities in respect of
borrowed money and all guarantees, endorsements and other contingent
obligations in respect of Indebtedness of others (it being understood that
obligations of the Company in respect of trade payables and capitalized leases
incurred in the ordinary course of business shall not be included in the
definition of Indebtedness).
Intangible Assets shall mean all assets and property lacking physical
properties the evidence of ownership of which must customarily be maintained
by independent registration, documentation, certification, recordation or
other means.
Law shall mean any (a) administrative, judicial, legislative or other
action, code, consent decree, constitution, decree, directive, enactment,
finding, guideline, law, injunction, interpretation, judgment, order,
ordinance, policy statement, proclamation, promulgation, regulation,
requirement, rule, rule of law, rule of public policy, settlement agreement,
statute, or writ or any Authority, domestic or foreign; (b) the common law, or
other legal or quasi-legal precedent; or (c) arbitrator's, mediator's or
referee's award, decision, finding or recommendation; including, in each such
case or instance, any interpretation, directive, guideline or request, whether
or not having the force of law including, in all cases, without limitation any
particular section, part or provision thereof.
Lease shall mean any lease of property, whether real, personal or mixed,
and all amendments thereto.
<PAGE>
Legal Action shall mean any litigation or legal or other actions,
arbitrations, counterclaims, proceedings, requests for material information by
or pursuant to the order of any Authority, or suits, at law or in arbitration,
equity or admiralty commenced by any Person, whether or not purported to be
brought on behalf of a party hereto affecting such party or any of such
party's business, property or assets.
Lien shall mean any of the following: mortgage; lien (statutory or
other); preference, priority or other security agreement, arrangement or
interest; hypothecation, pledge or other deposit arrangement; assignment;
charge; levy; executory seizure; attachment; garnishment; encumbrance
(including any easement, exception, variance, reservation or limitation, right
of way, zoning restriction, building or use restriction, and the like);
conditional sale, title retention or other similar agreement, arrangement,
device or restriction; preemptive or similar right; any financing lease
involving substantially the same economic effect as any of the foregoing; the
filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction; restriction on sale, transfer, assignment,
disposition or other alienation; or any option, equity, claim or right of or
obligation to, any other Person, of whatever kind and character.
Loss and Expense shall have the meaning given to it in Section 8.2.
Market Price shall have the meaning set forth in the Escrow Agreement.
Material or materiality for the purposes of this Agreement, shall, unless
specifically stated to the contrary, be determined without regard to the fact
that various provisions of this Agreement set forth specific dollar amounts.
Material Agreement or Material Commitment shall mean, with respect to the
Company, any Contractual Obligation (a) which (i) involves the purchase, sale
or lease of goods or materials or performance of services aggregating more
than Twenty-five Thousand Dollars ($25,000), (ii) extends for more than three
(3) months, or (iii) is not terminable on thirty (30) days or less notice
without penalty or other payment, (b) which involves indebtedness for money
borrowed in excess of One Hundred Thousand Dollars ($100,000) or (c) which is
or otherwise constitutes a written agency, dealer, license, distributorship,
sales representative or similar written agreement.
Merger shall have the meaning given to it in the Preamble.
Merger Consideration shall have the meaning given to it in Section
2.1(a).
Multiemployer Plan shall mean a "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA.
Net Shares shall have the meaning given to it in Section 2.2(a).
Option Plans shall have the meaning given to it in Section 3.13(b).
Option Securities shall mean all rights, options and warrants, and calls
or commitments evidencing the right, to subscribe for, purchase or otherwise
acquire Shares or Convertible Securities, whether or not the right to
subscribe for, purchase or otherwise acquire is immediately exercisable or is
conditioned upon the passage of time, the occurrence or non-occurrence or the
existence or non-existence of some other Event.
<PAGE>
Organic Document shall mean the Company's Certificate of Incorporation,
its by-laws and all stockholder agreements, voting trusts and similar
arrangements applicable to any of its capital stock, each as in effect from
time to time.
Other Transaction shall mean a transaction or series of related
transactions (other than the Merger) resulting in (a) any change in control of
the Company, (b) any merger or consolidation of the Company, regardless of
whether the Company is the surviving Entity, (c) any tender offer or exchange
offer for, or any acquisition of, any securities of the Company, (d) any sale
or other disposition of assets of the Company not otherwise permitted under
Section 3.17 hereof, or (e) so long as this Agreement remains in effect, any
issue or sale, or any agreement to issue or sell, any capital stock,
Convertible Securities or Option Securities of the Company (other than the
issuance of shares in accordance with the terms of Option Securities
outstanding on the date hereof).
Party shall mean a signatory to this Agreement.
PBGC shall mean the Pension Benefit Guaranty Corporation and any Entity
succeeding to any or all of its functions under ERISA.
Permitted Liens shall mean any of the following Liens: (i) building and
zoning ordinances and by-laws of any applicable Authority applicable to the
Property; (ii) taxes assessed or to be assessed on the Property for the then
current year to the extent the same are not yet due or payable; and (iii)
rights, easements and restrictions of record, provided the same do not
materially interfere with the current occupancy and use of the Property by the
Company.
Person shall mean any natural individual or any Entity.
Plan shall mean, with respect to the Company and at a particular time,
any employee benefit plan which is covered by ERISA and in respect of which
the Company, or, in the case of any such plan subject to Title IV of ERISA, an
ERISA Affiliate is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer," as defined in Section
3(5) of ERISA, other than a Multiemployer Plan.
Principal Stockholders shall mean B. Thomas Golisano and James B. Wayman,
Jr.
Private Authorizations shall mean all approvals, concessions, consents,
franchises, licenses, permits, and other authorizations of all Persons (other
than Authorities) including without limitation those with respect to patents,
trademarks, service marks, trade names, copyrights, computer software
programs, technology and know-how, but not including those with respect to
Leases.
Property shall mean each of the premises located at 5 Fortune Drive,
Billerica, Massachusetts, 96 High Street, Billerica, Massachusetts and 520
Metro Park West, Rochester, New York, including all buildings and other
improvements and fixtures thereon (but only to the extent such improvements
and fixtures are owned by the owner of such Property and not the Company).
Proportionate Share shall have the meaning set forth in the Escrow
Agreement.
<PAGE>
Prospectus shall mean the form of prospectus to form part of the
Registration Statement.
Registered Stock shall mean that portion of the Stock Merger
Consideration consisting of shares of Acquiror Stock to be registered pursuant
to the Securities Act.
Registration Rights Agreement shall have the meaning given to it in
Section 5.3(b).
Registration Statement shall mean the registration statement (including
the Prospectus, exhibits, financial statements and schedules included
therein), and all amendments thereof (including post-effective amendments) and
supplements to the Prospectus which are a part thereof, filed under the
Securities Act registering the Registered Stock.
Representatives of a Party shall mean the officers, directors, employees,
accountants, counsel, financial advisors, consultants and other
representatives of such Party.
SEC shall mean the Securities and Exchange Commission of the United
States or any successor Authority.
Securities Act shall mean the Securities Act of 1933, and the rules and
regulations of the Commission thereunder, all as from time to time in effect,
or any successor law, rules or regulations, and any reference to any statutory
or regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
Share Price shall mean the quotient obtained by dividing (i) the
difference between $62,000,000 and, in the event the Company Indebtedness
Calculation exceeds $500,000, an amount equal to such amount above $500,000,
by (ii) the sum of (a) the number of shares of Company Stock issued and
outstanding immediately prior to the Merger (except shares subject to Section
2.1(b)) and (b) the number of shares of Company Stock which may be issued
pursuant to Option Securities which are exercisable as of the Effective Time
(including those which will become exercisable by virtue of the consummation
of the Merger).
Shares shall have the meaning given to it in Section 2.1(a).
Special Meeting shall have the meaning given to it in Section 1.2(a).
Stock Conversion Number shall mean the quotient obtained by dividing (i)
the Common Stock Amount by (ii) the sum of (a) the number of shares of Company
Stock issued and outstanding immediately prior to the Merger (except shares
subject to Section 2.1(b)) and (b) the number of shares of Company Stock which
may be issued pursuant to Option Securities which are exercisable as of the
Effective Time (including those which will become exercisable by virtue of the
consummation of the Merger).
Stockholders shall mean the Principal Stockholders and all other Persons
entitled to Merger Consideration (or who would be entitled thereto but for
their dissent from the Merger) pursuant to Sections 2.1(a) or (to the extent
Persons holding Option Securities or Convertible Securities exercise their
rights to acquire Shares prior to the Effective Time, from and after the time
they acquire such Shares) 2.4.
<PAGE>
Stockholders' Agreement shall mean that certain Stockholders' Agreement
of even date herewith among the Principal Stockholders and Acquiror, as the
same may from time to time be supplemented, amended, modified or restated in
the manner therein provided.
Stock Merger Consideration shall have the meaning given to it in Section
2.1(a).
Subsidiary shall mean, with respect to a Person, any Entity a majority
of the capital stock ordinarily entitled to vote for the election of directors
of which, or if no such voting stock is outstanding, a majority of the equity
interests of which, is owned directly or indirectly, legally or beneficially,
by such Person or any other Person controlled by such Person.
Surviving Corporation shall have the meaning given to it in Section 1.1
Tax (and "Taxable", which shall mean subject to Tax), shall mean, with
respect to the Company, (a) all taxes (domestic or foreign), including without
limitation any income (net, gross or other including recapture of any tax
items such as investment tax credits), alternative or add-on minimum tax,
gross income, gross receipts, gains, sales, use, leasing, lease, user, ad
valorem, transfer, recording, franchise, profits, property (real or personal,
tangible or intangible), fuel, license, withholding on amounts paid to or by
the Company, payroll, employment, unemployment, social security, excise,
severance, stamp, occupation, premium, environmental or windfall profit tax,
custom, duty or other tax, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest, levies, assessments,
charges, penalties, addition to tax or additional amount imposed by any Taxing
Authority, (b) any joint or several liability of the Company with any other
Person for the payment of any amounts of the type described in (a), and (c)
any liability of the Company for the payment of any amounts of the type
described in (a) as a result of any express or implied obligation to indemnify
any other Person.
Tax Claim shall mean any Claim which relates to Taxes, including without
limitation the representations and warranties set forth in Section 3.11.
Tax Return or Returns shall mean all returns, consolidated or otherwise
(including without limitation information returns), required to be filed with
any Authority with respect to Taxes.
Taxing Authority shall mean any Authority responsible for the imposition
of any Tax.
Termination Date shall mean September 30, 1997 or such other date as the
Parties may, from time to time, mutually agree; provided, however, that in the
event that any waiting periods or requests under the HSR Act have not expired
or been satisfied by September 30, 1997, the Termination Date shall mean
December 31, 1997.
Transactions shall mean the other transactions contemplated by this
Agreement or the Merger or by any Collateral Document executed or required to
be executed in connection herewith or therewith.
Transmittal Documents shall have the meaning given to it in Section
2.2(b).
<PAGE>
IN WITNESS WHEREOF, Acquiror, Acquiror Merger Subsidiary and the Company
have caused this Agreement to be executed as of the date first written above
by their respective officers thereunto duly authorized.
IRON MOUNTAIN INCORPORATED
By: /s/ David S. Wendell
Name: David S. Wendell
Title: President and Chief Operating Officer
IM-1 ACQUISITION CORP.
By: /s/ John P. Lawrence
Name: John P. Lawrence
Title: Treasurer
SAFESITE RECORDS MANAGEMENT CORPORATION
By: /s/ B. Thomas Golisano
Name: B. Thomas Golisano
Title: Chairman
By: /s/ James B. Wayman, Jr.
Name: James B. Wayman, Jr.
Title: President
<PAGE>
EXHIBIT 2A
CONFORMED COPY
AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT No. 1 TO AGREEMENT AND PLAN OF MERGER is made as of April
1, 1997, among Iron Mountain Incorporated, a Delaware corporation
("Acquiror"), IM-1 Acquisition Corp., a Delaware corporation and a wholly
owned Subsidiary of Acquiror ("Acquiror Merger Subsidiary"), and Safesite
Records Management Corporation, a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Acquiror, Acquiror Merger Subsidiary and the Company are parties
to an Agreement and Plan of Merger dated as of February 19, 1997 (the "Merger
Agreement"); and
WHEREAS, Acquiror, Acquiror Merger Subsidiary and the Company have agreed
to amend the Merger Agreement as set forth herein pursuant to Section 7.3 of
the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing, the parties hereto,
intending to be legally bound, agree as follows:
1. Section 1.8 of the Merger Agreement is hereby amended by inserting
the following sentence immediately after the first sentence thereof:
"B. Thomas Golisano shall be appointed or elected as a Director of
Acquiror, to hold office in accordance with the Restated Certificate of
Incorporation and By-Laws of Acquiror."
2. Section 2.4 of the Merger Agreement is hereby deleted and the
following new Section 2.4 is inserted in its place:
"Section 2.4. Option Securities.
(a) As soon as reasonably practicable after the Effective Time,
each holder of an Option Security who elects to shall receive, subject to
the indemnification provisions of Article 8 hereof, (i) subject to clause
(ii) below, in respect of any such Option Security or portion thereof
which is exercisable at the Effective Time (including those which will
become exercisable by virtue of the consummation of the Merger) (1) a
non-qualified option to acquire shares of Acquiror Stock under Acquiror's
1995 Stock Incentive Plan, which option for Acquiror Stock shall (A) have
an exercise price per share determined by dividing the exercise price per
share of the applicable Option Security by the Stock Conversion Number
and (B) entitle the holder to purchase that number of shares equal to the
product of (x) the number of shares subject to such Option Security which
as of the Effective Time is exercisable and (y) the Stock Conversion
Number, and (2) cash in the amount of the product of (x) the number of
shares subject to such Option Security which as of the Effective Time is
<PAGE>
exercisable and (y) the Cash Conversion Number, and (ii) in respect of
any such Option Security or portion thereof which is not exercisable at
the Effective Time and in respect of those Option Securities to acquire
17,500 shares of Company Stock recently granted to the five individuals
identified in Section 3.13(b) of the Disclosure Schedule, a non-qualified
option to acquire shares of Acquiror Stock under Acquiror's 1995 Stock
Incentive Plan at an exercise price and in an amount affording the holder
equivalent value for the Option Security being exchanged, which option
for Acquiror Stock shall (1) have an exercise price per share determined
by dividing (x) the exercise price per share of the applicable Option
Security by (y) the quotient of the Share Price divided by the
Determination Price, and (2) entitle the holder to purchase that number
of shares as equals the product of (x) the number of shares subject to
such Option Security which as of the Effective Time is not exercisable
and (y) the quotient of the Share Price divided by the Determination
Price. In addition, each option to acquire Acquiror Stock issued in
accordance with this Section 2.4 shall be exercisable (subject to the
terms of such Option Security and Acquiror's 1995 Stock Incentive Plan)
on the date the applicable Option Security would have been exercisable
and otherwise be subject to the terms and conditions of the Acquiror 1995
Stock Incentive Plan (it being understood that the terms of the Acquiror
option agreement, as to any employee, other than the Principal
Stockholders, of the Company who is not employed by Acquiror or any of
its Affiliates on the first anniversary of the Closing Date, shall not
(a) make it a condition to exercise such option that such employee be in
compliance with an Acquiror confidentiality or non-competition agreement
and (b) require such employee to pay to Acquiror the excess of the fair
market value on the day of exercise over the exercise price as a result
of being employed by a competitor of Acquiror within two years after the
exercise of such option). Notwithstanding anything to the contrary
herein, the cash to be received herein by any holder of an Exercisable
Option prior to the termination of the Escrow Indemnity Period shall be
adjusted to give full effect to the indemnification provisions of Article
8 hereof.
(b) In lieu of issuing any option to acquire a fractional share of
Acquiror Stock, Acquiror shall convert a holder's right to receive an
option pursuant to this Section 2.4 into a right to receive an option to
acquire the nearest whole number of shares of Acquiror Stock (with no
adjustment to any cash amount received in connection with the conversion
of an Exercisable Option).
(c) Notwithstanding the foregoing, in lieu of issuing cash in
respect of exercisable Option Securities, Acquiror reserves the right, in
its sole discretion, subject to notification to the Company not less than
ten (10) days prior to the Closing Date, to exchange each vested and
exercisable Option Security solely for an option to acquire Acquiror
Stock, the terms and conditions (including, without limitation, the
amount and exercise price per share) of which will be determined in
accordance with clause (a)(ii) above.
3. Article 2 of the Merger Agreement is hereby further amended by
inserting the following new Section 2.6 immediately following Section 2.5:
<PAGE>
"Section 2.6 Standstill.
(a) Until the first anniversary of the Effective Time, except as
permitted by Acquiror's Restated By-Laws, any Person who receives or is
entitled to receive at the Effective Time any shares of Acquiror Stock
pursuant to Section 2.1 shall not Transfer (as such term is defined in
Exhibit 2.6 hereto), and Acquiror shall not be required to register the
Transfer of, the number of shares, rounded upward to the nearest whole
share (the "Subject Shares"), of Acquiror Stock equal to the product of
(1) the quotient obtained by dividing (x) the "Lock-up Value" by (y) the
product of (A) the Common Stock Amount and (B) the lesser of the Closing
Price and the Determination Price multiplied by (2) the Stock Merger
Consideration received by such Person in connection with the Merger. The
"Lock-up Value" shall mean one half of the sum of (x) the product of
the Common Stock Amount and the lesser of the Closing Price and the
Determination Price plus (y) the Cash Amount. The "Closing Price" shall
mean the closing price per share of Acquiror Stock for the trading day
immediately prior to the Effective Time. The closing price for such
trading day shall be the last quoted sale price or, if not so quoted, the
average of the low bid and high asked prices on the Nasdaq National
Market System.
(b) Each certificate representing Subject Shares issued pursuant to
the Merger shall bear the following legend:
"The shares represented by this certificate may not be
transferred prior to [first anniversary date of the Effective Time
to be inserted] except as otherwise permitted by the Restated
By-Laws of the Corporation. A copy of the Restated By-Laws of the
Corporation will be furnished without charge upon written request
addressed to the Corporation at 745 Atlantic Avenue, Boston,
Massachusetts 02111, Attention: Chief Executive Officer."
(c) In order to implement the provisions of this Section 2.6, the
Restated By-Laws of Acquiror shall be amended on or prior to the Closing
Date to include the provisions as to the limitations on the
transferability of the Acquiror Stock set forth in Exhibit 2.6 hereto."
4. Section 8.2 of the Merger Agreement is hereby amended by inserting
the words "and from the cash, if any, issued with respect to Exercisable
Options pursuant to Section 2.4" immediately after the words "Exchange Merger
Consideration" appearing at the end of the third line thereof.
5. The Merger Agreement is hereby further amended by inserting a new
Exhibit 2.6 thereto substantially in the form of Exhibit 2.6 hereto.
6. Each of Acquiror, Acquiror Merger Subsidiary and the Company
represents and warrants that all requisite corporate action necessary for the
valid execution and delivery of this Amendment No. 1 has been duly and
effectively taken.
7. Each capitalized term used herein without definition shall have the
same meaning herein as is given to such term in the Merger Agreement.
8. The Merger Agreement as amended hereby is ratified and confirmed in
all respects and shall continue in full force and effect.
<PAGE>
9. This Amendment No. 1 may be executed in one or more counterparts,
and by the different Parties hereto in separate counterparts, each of which
when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, Acquiror, Acquiror Merger Subsidiary and the Company
have caused this Amendment No. 1 to be executed as of the date first written
above by their respective officers thereunto duly authorized.
IRON MOUNTAIN INCORPORATED
By: /s/ Eugene B. Doggett
Name: Eugene B. Doggett
Title: Executive Vice President and Chief
Financial Officer
IM-1 ACQUISITION CORP.
By: /s/ John P. Lawrence
Name: John P. Lawrence
Title: Treasurer
SAFESITE RECORDS MANAGEMENT
CORPORATION
By: /s/ B. Thomas Golisano
Name: B. Thomas Golisano
Title: Chairman
By: /s/ James B. Wayman, Jr.
Name: James B. Wayman, Jr.
Title: President
<PAGE>
Exhibit 2.6
FORM OF AMENDMENT TO ACQUIROR'S RESTATED BY-LAWS
ARTICLE XII
Restrictions on Transfer of Certain Shares of Capital Stock of the Corporation
Section 1. Restrictions on Transfer. Any Person who receives any shares
of Common Stock of the Corporation (the "Merger Securities") issued pursuant
to the Agreement and Plan of Merger, dated as of February 19, 1997, by and
among the Corporation, IM-1 Acquisition Corp. and Safesite Records Management
Corporation, as amended (the "Merger Agreement"), shall not Transfer (as
defined herein), and the Corporation shall not be required to register the
Transfer of, the number of shares, rounded upward to the nearest whole share
(the "Subject Shares"), of the Merger Securities equal to the product of (1)
the quotient obtained by dividing (x) the "Lock-up Value" by (y) the product
of (A) the Common Stock Amount and (B) the lesser of the Closing Price and the
Determination Price multiplied by (2) the Stock Merger Consideration received
by such Person in connection with the Merger, until the first anniversary date
of the effective date of the Merger Agreement (the "Effective Time"), except
as otherwise allowed by the Board of Directors of the Corporation in its sole
discretion. The "Lock-up Value" shall mean one half of the sum of (x)
the product of the Common Stock Amount and the lesser of the Closing Price and
the Determination Price plus (y) the Cash Amount. The "Closing Price" shall
mean the closing price per share of Acquiror Stock for the trading day
immediately prior to the Effective Time. The closing price for such trading
day shall be the last quoted sale price or, if not so quoted, the average of
the low bid and high asked prices on the Nasdaq National Market System.
Capitalized terms used herein and not otherwise defined shall have the
meanings prescribed therefor in the Merger Agreement. The term "Transfer"
means any indirect or direct transfer, offer to sell, sale, assignment, grant
of an option to acquire, pledge, or other disposition.
Section 2. Legend on Stock Certificates. The Corporation shall note on
the certificates for the Subject Shares of Merger Securities issued upon
transfer that the shares represented by such certificates are subject to the
restrictions on transfer and registration of transfer imposed in this Article
XII.
Section 3. Termination of Restrictions on Transfers. The provisions of
this Article XII shall terminate in their entirety on the first anniversary of
the Effective Time.
<PAGE>
CONFORMED COPY
EXHIBIT 2B
AMENDMENT NO. 2
TO
AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT No. 2 TO AGREEMENT AND PLAN OF MERGER is made as of May
___, 1997, among Iron Mountain Incorporated, a Delaware corporation
("Acquiror"), IM-1 Acquisition Corp., a Delaware corporation and a wholly
owned Subsidiary of Acquiror ("Acquiror Merger Subsidiary"), and Safesite
Records Management Corporation, a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Acquiror, Acquiror Merger Subsidiary and the Company are parties
to an Agreement and Plan of Merger dated as of February 19, 1997 (the
"Original Merger Agreement");
WHEREAS, the Merger Agreement was amended by Amendment No. 1 to Agreement
and Plan of Merger dated as of April 1, 1997 (the Original Merger Agreement,
as so amended is hereinafter referred to as the "Merger Agreement"); and
WHEREAS, Acquiror, Acquiror Merger Subsidiary and the Company have agreed
to further amend the Merger Agreement as set forth herein pursuant to Section
7.3 of the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing, the parties hereto,
intending to be legally bound, agree as follows:
1. The sixth line of the first Whereas clause of the Merger Agreement
is hereby deleted in its entirety and the following words are inserted in lieu
thereof: "pursuant to which the Company will merge with and into Acquiror
Merger Subsidiary (the".
2. Section 1.1 of the Merger Agreement is hereby deleted in its
entirety and the following new Section 1.1 is inserted in lieu thereof:
"Section 1.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the DGCL,
at the Effective Time, the Company shall be merged with and into Acquiror
Merger Subsidiary. As a result of the Merger, the separate existence of
the Company shall cease and Acquiror Merger Subsidiary shall continue as
the surviving corporation of the Merger (the "Surviving Corporation")."
3. Section 1.9 of the Merger Agreement is hereby deleted in its
entirety.
4. Section 2.1(a) of the Merger Agreement is hereby amended by deleting
the words "Cash Merger Consideration" appearing on the third to last line
thereof and inserting in lieu thereof the words "Stock Merger Consideration."
5. Section 2.1(d) of the Merger Agreement is hereby deleted in its
entirety and the following new Section 2.1(d) is inserted in lieu thereof:
<PAGE>
"(d) In lieu of issuing fractional shares, Acquiror shall convert a
holder's right to receive shares of Acquiror Stock pursuant to Sections
2.1(a) and Section 2.1(e) into a right to receive the highest whole
number of shares of Acquiror Stock constituting the non-cash portion of
the Exchange Merger Consideration to be received plus cash equal to the
fraction of a share of Acquiror Stock to which the holder would otherwise
be entitled (in each case after giving effect to Section 1.2(e) hereof)
multiplied by the Determination Price, and the Exchange Merger
Consideration to which a holder is so entitled shall be deemed to be such
number of shares of Acquiror Stock plus such cash in lieu of fractional
shares plus the cash portion of the Exchange Merger Consideration. In
addition, upon distribution to Stockholders of any portion of the Escrow
Indemnity Funds, Acquiror shall deliver to such Stockholder the highest
whole number of shares of Acquiror Stock to which such Stockholder is
entitled plus cash equal to the fraction of a share of Acquiror Stock to
which the holder would otherwise be entitled multiplied by the Market
Price. For purposes of carrying out the intent of this Section 2.1(d),
Acquiror may aggregate Certificates so that fractional shares of Acquiror
Stock due in exchange for multiple Certificates may be combined to yield
a number of whole shares thereof plus a single fraction."
6. Article 2 of the Merger Agreement is hereby further amended by
inserting the following new Section 2.1(e) immediately following Section
2.1(d):
"(e) In order to implement the indemnification provisions of Section
8 hereof, the Stock Merger Consideration payable to each Stockholder
pursuant to Section 2.2 prior to the termination of the Escrow Indemnity
Period hereof shall be equal to the product of (i) the Closing Stock
Conversion Number and (ii) the number of Shares represented by
Certificates held by such Stockholder. The remainder of such
Stockholder's Stock Merger Consideration shall be held as part of the
Escrow Indemnity Funds and shall be payable to such Stockholder after the
Escrow Indemnity Period in accordance with Section 8 hereof and the
Escrow Agreement."
7. Section 2.2(a) of the Merger Agreement is hereby amended by deleting
the words "less the amount of cash constituting the Escrow Indemnity Funds"
appearing in the ninth line thereof.
8. Section 2.2(a) of the Merger Agreement is hereby further amended by
inserting the words "less the number of shares of Acquiror Stock constituting
the Escrow Indemnity Funds," immediately before the words "(collectively, the
"Exchange Fund")." appearing at the end of the twelfth line thereof.
9. Section 2.2(c) of the Merger Agreement is hereby amended by
inserting the words ", subject to Article 8 hereof" immediately after the
words "2.1(a) and 2.1(d)" appearing in the sixth line thereof.
10. Section 2.4(a) of the Merger Agreement is hereby amended by deleting
the words ", subject to the indemnification provisions of Article 8 hereof,"
appearing in the second line thereof.
11. Section 2.4(a) of the Merger Agreement is hereby further amended by
deleting the last sentence thereof in its entirety.
<PAGE>
12. Section 2.6(b) of the Merger Agreement is hereby amended by adding
the following sentence at the end of such Section: "The Subject Shares shall
not form a part of the shares of Acquiror Stock to be held in escrow as part
of the Escrow Indemnity Funds."
13. Section 5.12 of the Merger Agreement is hereby amended by deleting
the words "(including, without limitation, the Alternative Transaction)"
appearing in the second and third lines thereof.
14. Section 8.2 of the Merger Agreement is hereby amended by deleting
the words "$3,000,000 in cash (the "Escrow Indemnity Funds")" appearing in the
second line thereof and inserting in lieu thereof the words "the Escrow
Indemnity Funds".
15. Section 8.2 of the Merger Agreement is hereby further amended by
deleting the words "and from the cash, if any, issued with respect to
Exercisable Options pursuant to Section 2.4" appearing immediately after the
words "Exchange Merger Consideration" appearing at the end of the third line
thereof.
16. Section 8.2 of the Merger Agreement is hereby further amended by
deleting the name "B. Thomas Golisano" appearing in the second line of the
last paragraph thereof and inserting in lieu thereof the name "James B.
Wayman, Jr."
17. Section 8.3 of the Merger Agreement is hereby deleted in its
entirety and the following new Section 8.3 is inserted in lieu thereof:
"Section 8.3. Limitation of Liability; Disposition of Escrow Indemnity
Funds.
(a) Notwithstanding the provisions of Section 8.2, after the Closing,
Acquiror's rights to indemnification shall be subject to the following
limitations: (i) Acquiror shall be entitled to recover its Loss and Expense in
respect of any Claim only if the Loss and Expense for all Claims exceeds, in
the aggregate, $150,000 and (ii) in no event shall the aggregate amount to be
paid to Acquiror exceed the lesser of (i) the Escrow Indemnity Funds and (ii)
shares of Acquiror Stock having an aggregate Market Value of Three Million
Dollars ($3,000,000).
(b) Anything in this Agreement, including without limitation the
provisions of Sections 8.2 or 8.3(a), to the contrary notwithstanding, the
exclusive recourse of Acquiror with respect to Claims brought after the
Effective Time arising out of the transactions contemplated by this Agreement
shall be the Escrow Indemnity Funds. On or before the Closing Date, Acquiror,
the Company and the Agent shall execute and deliver an escrow agreement
substantially in the form attached hereto as Exhibit 8.3 (the "Escrow
Agreement"). Any Claims of Acquiror for indemnification to be satisfied out
of the Escrow Indemnity Fund shall be made in accordance with the terms of the
Escrow Agreement (it being hereby understood that for purposes of determining
the number of shares of Acquiror Stock necessary to satisfy such Claim, the
Market Price of the Acquiror Stock calculated in accordance with the terms of
the Escrow Agreement shall be used). At the Effective Time, a certificate
registered in the name of James B. Wayman, Jr., as Agent, representing the
Escrow Indemnity Funds shall be withheld from the Merger Consideration
hereunder and shall be deposited with the Escrow Agent. In accordance with
the terms of the Escrow Agreement, each Stockholder shall be entitled to
receive all ordinary cash dividends paid in respect of his or her
<PAGE>
Proportionate Share of Acquiror Stock that would otherwise be registered in
his or her name but for such shares being a part of the Escrow Indemnity Funds
and to vote and to give consents, waivers and ratifications in respect of his
or her Proportionate Share of Acquiror Stock which is part of the Escrow
Indemnity Funds. In connection with any such vote or consent, the Agent and
Acquiror, at Acquiror's expense, shall cause to be delivered to such
Stockholder such information (including, without limitation, any proxy
statement and cards). The Agent shall vote the shares of Acquiror Stock
forming part of the Escrow Indemnity Funds in accordance with the directions
of the Stockholders. In order to take such vote, the Agent shall tabulate the
votes it receives from the Stockholders and inform Acquiror in writing of the
aggregate percent of all votes received for, against and in abstention with
respect to each matter voted upon. Acquiror shall then convert such percent
to number based on the then-existing Escrow Indemnity Funds, rounded in each
case down to the nearest whole number.
(c) In the event there are no Unresolved Claims (as defined in the
Escrow Agreement), on the date which is ten (10) days after the expiration of
the Escrow Indemnity Period, or the next business day if such date is not a
business day, the Escrow Indemnity Funds then remaining shall be distributed
to the Stockholders (or their nominee or transferee, as set forth in the
Transmittal Documents in respect of the Exchange Merger Consideration)
entitled thereto in accordance with the proportions with their ownership of
Shares immediately prior to the Effective Time (provided that cash in lieu of
fractional shares will be distributed in accordance with Section 2.1(d)
hereof). In the event one or more Unresolved Claims with respect to the
Escrow Indemnity Funds, if any, shall exist upon the expiration of the Escrow
Indemnity Period, shares of Acquiror Stock, rounded to the nearest shares,
having a Market Price equal to the sum of (i) the aggregate amount of such
Unresolved Claims and (ii) the amount reasonably estimated by Acquiror to
cover the fees, expense and other costs (including reasonable counsel fees and
expenses) which will be required to resolve such Unresolved Claims shall be
retained as part of the Escrow Indemnity Funds and the balance thereof, if
any, shall be distributed to the Persons entitled thereto. Upon the
resolution of all such Claims and the payment of all such fees, expenses and
costs out of the Escrow Indemnity Funds, the balance of the shares of Acquiror
Stock, if any, shall be distributed to the Persons entitled thereto."
18. The Merger Agreement is hereby further amended by deleting Exhibit
8.3 thereto in its entirety and inserting in lieu thereof a new Exhibit 8.3
thereto substantially in the form of Exhibit 8.3 hereto.
19. Article 10 of the Merger Agreement is hereby amended by adding the
following new definitions to appear in the Merger Agreement in alphabetical
order with the other definitions:
"Closing Stock Conversion Number shall mean the quotient obtained by
dividing (i) the difference between (a) the Common Stock Amount and (b) the
Escrow Indemnity Funds by (ii) the sum of (a) the number of shares of Company
Stock issued and outstanding immediately prior to the Merger (except shares
subject to Section 2.1(b)) and (b) the number of shares of Company Stock which
may be issued pursuant to Option Securities which are exercisable as of the
Effective Time (including those which will become exercisable by virtue of the
consummation of the Merger)."
"Market Price" shall have the meaning set forth in the Escrow Agreement."
"Proportionate Share" shall have the meaning set forth in the Escrow
Agreement."
<PAGE>
19. Article 10 of the Merger Agreement is hereby further amended by
deleting the definition of "Escrow Indemnity Funds" appearing therein and
inserting in lieu thereof the following new definition:
"Escrow Indemnity Funds shall mean shares of Acquiror Common Stock in an
amount equal to quotient obtained by dividing (i) Four Million Dollars
($4,000,000) by (ii) the Determination Price."
20. Each of Acquiror, Acquiror Merger Subsidiary and the Company
represents and warrants that all requisite corporate action necessary for the
valid execution and delivery of this Amendment No. 2 has been duly and
effectively taken (including, without limitation, that the Company's Board of
Directors have unanimously approved the execution of this Amendment)
21. Each capitalized term used herein without definition shall have the
same meaning herein as is given to such term in the Merger Agreement.
22. The Merger Agreement as amended hereby is ratified and confirmed in
all respects and shall continue in full force and effect. Without limiting
the generality of the foregoing, the term Agreement as used in the Merger
Agreement shall be deemed to be the Original Merger Agreement as amended by
Amendment No. 1 and this Amendment No. 2.
23. This Amendment No. 2 may be executed in one or more counterparts,
and by the different Parties hereto in separate counterparts, each of which
when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, Acquiror, Acquiror Merger Subsidiary and the Company
have caused this Amendment No. 2 to be executed as of the date first written
above by their respective officers thereunto duly authorized.
IRON MOUNTAIN INCORPORATED
By: /s/ C. Richard Reese
Name: C. Richard Reese
Title: Chairman and Chief Executive Officer
IM-1 ACQUISITION CORP.
By: /s/ C. Richard Reese
Name: C. Richard Reese
Title: President
SAFESITE RECORDS MANAGEMENT
CORPORATION
By: /s/ B. Thomas Golisano
Name: B. Thomas Golisano
Title: Chairman
By: /s/ James B. Wayman, Jr.
Name: James B. Wayman, Jr.
Title: President
<PAGE>
Exhibit 8.3
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement") is entered into as of the _____
day of ________, 1997, by and among Iron Mountain Incorporated, a Delaware
corporation ("Acquiror"), Safesite Records Management Corporation, a Delaware
corporation (the "Company"), James B. Wayman, Jr., an individual residing at
251 Old Billerica Road, Bedford, MA 01730 (in his capacity as agent for the
Stockholders, the "Agent"), as agent for the stockholders of the Company (the
"Stockholders"), and State Street Bank and Trust Company, as Escrow Agent (the
"Escrow Agent").
W I T N E S S E T H :
WHEREAS, Acquiror and the Company entered into that certain Agreement and
Plan of Merger dated as of February 19, 1997, as amended (the "Merger
Agreement"), an executed copy of which has been provided to the Escrow Agent,
pursuant to which the Company will merge with and into a wholly owned
subsidiary of Acquiror (the "Merger"), and pursuant to which ____________
shares of Common Stock, par value $.01 per share of Acquiror ("Acquiror
Stock") were withheld from the consideration payable to the Stockholders and
were allocated to indemnify Acquiror for certain matters relating to the
Merger Agreement, all as is more fully set forth in the Merger Agreement;
WHEREAS, this Agreement is being entered into pursuant to Article 8 of
the Merger Agreement; and
WHEREAS, in accordance with and pursuant to Article 8 of the Merger
Agreement, the Agent has been appointed as agent and attorney-in-fact, with
full power of substitution, to take all actions called for by Article 8 of the
Merger Agreement, including, without limitation, the execution of this
Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements set forth below, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1
ESCROW INDEMNITY FUNDS
1.1 Delivery. Upon consummation of the Merger, Acquiror will deliver to
the Escrow Agent a certificate registered in the name of James B. Wayman, Jr.,
as Agent, representing ___________ shares of Acquiror Stock (the "Escrow
Indemnity Funds"). The shares of Acquiror Stock represented by the Escrow
Indemnity Funds shall not be subject to the restrictions set forth in Article
XII of Acquiror's By-Laws.
1.2 Receipt. The Escrow Agent agrees to hold and disburse the Escrow
Indemnity Funds (together with interest earned thereon) solely in accordance
with the terms and conditions of this Agreement, pursuant to the written
direction of Acquiror, and for the uses and purposes stated herein. The
Escrow Agent shall, upon receipt of the Escrow Indemnity Funds, issue written
acknowledgment to Acquiror and the Agent of receipt thereof.
<PAGE>
1.3 Rights of Stockholders.
(a) In the case any distribution of capital or stock dividend shall
be made on or in respect of Acquiror Stock, or any money or property shall be
distributed with respect to Acquiror Stock, pursuant to a recapitalization or
reclassification of the capital of Acquiror, or pursuant to a reorganization
or liquidation or dissolution of Acquiror, any such money or property to be
distributed with respect to the Escrow Indemnity Funds shall be delivered to
the Escrow Agent to be held by it as part of the Escrow Indemnity Funds.
Acquiror shall forthwith deliver to the Escrow Agent an additional certificate
registered in the name of James B. Wayman, Jr., as Agent, representing any
such additional Acquiror Stock or such money and the Escrow Agent shall hold
such additional Acquiror Stock or money pursuant to the terms of this
Agreement.
(b) Each Stockholder shall be entitled to receive all ordinary cash
dividends paid in respect of his or her Proportionate Share (as defined below)
of Acquiror Stock that would otherwise be registered in his or her name but
for such shares being a part of the Escrow Indemnity Funds and to vote and to
give consents, waivers and ratifications in respect of his or her
Proportionate Share of Acquiror Stock which is part of the Escrow Indemnity
Funds. The Agent shall pay over to each Stockholder, forthwith upon receipt,
his or her Proportionate Share of all ordinary cash dividends paid on the
Escrow Indemnity Funds, and, at the cost of Acquiror, shall execute and
deliver to each Stockholder such proxies or other documents in writing as may
be necessary to enable each Stockholder to exercise the foregoing rights. In
connection with any vote or consent by the Stockholders with respect to shares
of Acquiror Stock which are part of the Escrow Indemnity Funds, the Agent
shall vote the shares of Acquiror Stock forming part of the Escrow Indemnity
Funds in accordance with the directions of the Stockholders to the Agent. In
order to take such vote, the Agent shall tabulate the votes it receives from
the Stockholders and inform Acquiror in writing of the aggregate percent of
all votes received for, against and in abstention with respect to each matter
voted upon. Acquiror shall then convert such percent to a number based on the
then-existing Escrow Indemnity Funds, rounded in each case down to the nearest
whole number. The term "Proportionate Share", as to each Stockholder, shall
mean such Stockholder's proportionate share of the total number of shares of
Aquiror Stock to be issued in connection with the Merger.
ARTICLE 2
PROCEDURES FOR DISBURSEMENT OF ESCROW INDEMNITY FUNDS
2.1 Purpose. The Escrow Indemnity Funds shall be held by the Escrow
Agent to secure the indemnification obligations to Acquiror under the Merger
Agreement and shall be held and released in accordance with the provisions of
this Agreement. The Escrow Agent agrees to hold, disburse and invest the
Escrow Indemnity Funds solely in accordance with the terms and conditions of
this Agreement and for the uses and purposes stated herein.
2.2 Disbursement.
(a) If at any time after the Closing Date and prior to the
termination of this Agreement, the Escrow Agent receives written instructions
in accordance with the terms of Section 2.4 hereof from Acquiror to make a
payment to Acquiror, then the Escrow Agent shall make payments out of the
Escrow Indemnity Funds to Acquiror, in accordance with such instructions and
with Section 2.4, unless the Escrow Indemnity Funds shall be insufficient to
<PAGE>
comply with such instructions, in which case the Escrow Agent shall pay the
entire Escrow Indemnity Funds to Acquiror and shall advise Acquiror and the
Agent in writing of the amount of such payment. The number of shares of the
Escrow Indemnity Funds to be delivered to Acquiror in connection with each
payment hereunder shall be calculated by Acquiror and shall be equal to the
quotient obtained by dividing (i) the Claimed Amount (as defined in Section
2.4) by (ii) the average closing price per share of Acquiror Stock for the
period of 20 trading days ending three trading days prior to the date of such
payment (the "Market Price"). The closing price for each such trading day
shall be the last quoted sale price or, if not so quoted, the average of the
low bid and high asked prices on the Nasdaq National Market System.
(b) The Escrow Agent may make any payments out of the Escrow
Indemnity Funds that may at the time be permitted to be made under the
provisions of Section 2.4 below, and shall make all such payments that at the
time are required to be made under such provisions or are jointly requested in
writing by Acquiror and the Agent. Any payment which would result in the
disbursement of a fractional share of Acquiror Stock shall be rounded to the
nearest whole share. In the event that any payment is made pursuant to this
Agreement, Acquiror shall deliver to the Escrow Agent a new certificate
registered in the name of James B. Wayman, Jr., as Agent, representing the
Escrow Indemnity Funds less such shares disbursed in the payment and all
previous payments.
(c) In the event there are no Unresolved Claims (as hereinafter
defined), on the date which is ten (10) days after the expiration of the
Escrow Indemnity Period, or the next business day if such date is not a
business day, Acquiror shall deliver or cause to be delivered to the Escrow
Agent cash in lieu of fractional shares calculated in accordance with the
second to last sentence of this paragraph (c) and separate certificates
registered in each Stockholder's name (or, in the event of a transfer of
ownership of Acquiror Stock which is not registered in the transfer records of
the Company, in the name of a transferee who has presented documents
reasonably required to evidence and effect such transfer and evidence that any
applicable stock transfer taxes have been paid), representing such
Stockholder's Proportionate Share of the Escrow Indemnity Funds, less such
Stockholder's Proportionate Share of all portions thereof, if any,
(i) paid to Acquiror pursuant to subparagraphs (a) and (b) above,
and
(ii) which are the subject of Unresolved Claims (as hereinafter
defined).
The Escrow Agent shall retain the portion of the Escrow Indemnity Funds which
relates to all Unresolved Claims until resolution of such Unresolved Claims in
accordance with the terms hereof. In the event one or more Unresolved Claims
with respect to the Escrow Indemnity Funds, if any, shall exist upon the
expiration of the Escrow Indemnity Period, shares of Acquiror Stock with a
Market Price measured as of the date of such expiration (such number to be
determined by Acquiror) equal to the sum of (i) the aggregate amount of such
Unresolved Claims and (ii) the amount reasonably estimated by Acquiror to
cover the fees, expense and other costs (including reasonable counsel fees and
expenses) which will be required to resolve such Unresolved Claims shall be
retained as part of the Escrow Indemnity Funds and the balance thereof, if
any, shall be distributed to the Stockholders entitled thereto. Upon the
resolution of all such Unresolved Claims and the payment of all such fees,
expenses and costs out of the Escrow Indemnity Funds, the balance of the
<PAGE>
Acquiror Stock, if any, shall be distributed to the Stockholders entitled
thereto in accordance with the terms hereof. In lieu of issuing fractional
shares pursuant to this paragraph (c), each Stockholder shall receive the
highest whole number of shares of Acquiror Stock to which he or she is
entitled plus cash equal to the fraction of a share of Acquiror Stock to which
the Stockholder would otherwise be entitled multiplied by the Market Price of
the Acquiror Stock determined by Acquiror as of the date three days prior to
the distribution of such shares. Promptly after such receipt, the Escrow
Agent will deliver such certificates together with any cash in lieu of
fractional shares to each respective Stockholder (or transferee) at the
addresses to be supplied by Acquiror in accordance with Acquiror's written
instructions. Acquiror shall make all calculations relating to shares of
Acquiror Stock or cash in lieu of fractional shares, and the Escrow Agent
shall not be responsible for determining the accuracy of any such calculation.
2.3 Unresolved Claims. The term "Unresolved Claims" shall mean any
claim or request made pursuant to the Merger Agreement against the Escrow
Indemnity Funds in accordance with the Merger Agreement and Section 2.4 below,
until such time as such claim or request has been paid in full or otherwise
fully settled, compromised or adjusted by Acquiror, the Agent and the Escrow
Agent or by a final order of a court of competent jurisdiction resolving such
claim, from which no appeal is or can be taken.
2.4 Notice of Request; Dispute Notice. If at any time during the term
of this Agreement, Acquiror believes that it is entitled to any portion of the
Escrow Indemnity Funds, then Acquiror shall furnish to the Escrow Agent (with
a simultaneous copy to the Agent), a notice (the "Indemnity Notice of
Request") setting forth the cash amount (the "Claimed Amount") to which
Acquiror believes it is entitled and the reasons for such belief. If the
Escrow Agent does not receive, within fifteen (15) business days after receipt
of the Indemnity Notice of Request, a notice from the Agent (the "Indemnity
Dispute Notice") with a simultaneous copy to Acquiror that a dispute (the
"Indemnity Dispute") exists relating to Acquiror's right to that portion of
the Escrow Indemnity Funds claimed in the Indemnity Notice of Request, the
Escrow Agent shall, immediately after such fifteen business day period,
release to Acquiror the certificate then held by the Escrow Agent pursuant to
the terms of this Agreement in exchange for a new certificate registered in
the name of James B. Wayman, Jr., as Agent, representing a number of shares of
Acquiror Stock equal to the quotient obtained by dividing (a) the difference
between, if positive, the Market Price of the shares of Acquiror Stock
represented by the certificate being released calculated as of the date three
trading days prior to such exchange and the Claimed Amount by (b) such Market
Price, and the Escrow Agent shall hold such replacement certificate for
Acquiror Stock or money pursuant to the terms of this Agreement.
In the event the Escrow Agent receives an Indemnity Dispute Notice that
an Indemnity Dispute exists, the Escrow Agent shall retain custody of that
portion of the Escrow Indemnity Funds which relates to the Unresolved Claim
until the first to occur of the following events:
(a) Receipt by the Escrow Agent of a notice ("Indemnity Settlement
Notice") signed by Acquiror and the Agent that the Indemnity Dispute has
been resolved, said notice to contain instructions to Escrow Agent
regarding delivery of that portion of the Escrow Indemnity Funds which
relates to the Unresolved Claim; or
<PAGE>
(b) Receipt by Escrow Agent of a final order of a court of
competent jurisdiction (the "Indemnity Award") resolving the Indemnity
Dispute and directing the disposition of that portion of the Escrow
Indemnity Funds;
after which Escrow Agent shall promptly pay that portion of the Escrow
Indemnity Funds which relates to the Indemnity Unresolved Claim in accordance
with the Indemnity Settlement Notice or the Indemnity Award.
2.5 Maximum Distributions. Notwithstanding anything in this
Agreement to the contrary, in no event shall Acquiror be entitled to received
shares of Acquiror Stock having an aggregate value of greater than $3,000,000
(calculated, in each case, based on the shares of Acquiror Stock being
disbursed multiplied by the Market Price employed in connection with such
disbursement). At such time as the aggregate amount paid to Acquiror
(calculated in accordance with the foregoing sentence) equals $3,000,000, any
remaining Escrow Indemnity Funds shall be disbursed to the Stockholders and
this Agreement shall terminate, all in accordance with the other provisions of
this Agreement.
ARTICLE 3
ESCROW AGENT
3.1 Appointment. Acquiror, the Company and the Agent hereby appoint the
Escrow Agent to serve hereunder and the Escrow Agent hereby accepts such
appointment and agrees to perform all duties which are expressly set forth in
this Agreement.
3.2 Compensation. The Escrow Agent shall be entitled to compensation
for legal fees incurred in connection with the preparation of this Agreement
and for its services hereunder in accordance with the attached fee schedule,
which may be subject to change hereafter on an annual basis, upon notice to
Acquiror and the Agent. Compensation of the Escrow Agent and all reasonable
expenses of the Escrow Agent (including all reasonable attorneys' fees of
those attorneys not regularly in its employ) in connection with the
performance of its services hereunder shall be borne one half by Acquiror and
one half by the Agent. The Escrow Agent shall be entitled to reimbursement on
demand for all reasonable out-of-pocket expenses incurred in connection with
the administration of this Agreement or the escrow created hereby which are in
excess of its compensation for normal services hereunder, including without
limitation, payment of any reasonable legal fees and expenses reasonably
incurred by the Escrow Agent in connection with the resolution of any claim in
any party hereunder.
3.3 Indemnification. Notwithstanding anything to the contrary in the
foregoing, Acquiror and the Agent will at their joint and several expense hold
the Escrow Agent, its directors, officers and employees harmless and indemnify
the Escrow Agent in connection with any and all third party claims, losses,
judgments or costs, regardless of their nature, arising out of or because of
this Agreement, except such as may arise because of the Escrow Agent's gross
negligence or willful misconduct or breach of this Agreement (including,
without limitation, Article 2 hereof). Any such expense in the preceding
sentence as between Acquiror and the Agent shall be borne jointly and
severally by Acquiror and the Agent. Acquiror and the Agent also exonerate
said Escrow Agent from any liability in connection with this Agreement or with
the administration of its duties hereunder, including but not limited to
reasonable legal fees and other reasonable costs and expenses of defending or
<PAGE>
preparing to defend against any claim or liability except such as may arise
because of the Escrow Agent's gross negligence or willful misconduct in
performing its specified duties hereunder or breach of this Agreement
(including, without limitation, Article 2 hereof). Nothing in this Section
3.3 shall constitute a waiver of any claim which Acquiror and the Agent may
have against the other for contribution arising from their joint obligations
to hold the Escrow Agent harmless hereunder. Anything in this Agreement to
the contrary notwithstanding, in no event shall the Escrow Agent be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Escrow Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
action. The Escrow Agent shall not be obligated to take any legal or other
action hereunder which might in its judgment involve any expense or liability
unless it shall have been furnished with acceptable indemnification.
3.4 Resignation; Removal. The Escrow Agent may resign at any time upon
giving the parties hereto 30 days' prior written notice. Acquiror and the
Agent may also, at any time, mutually agree in a writing signed by Acquiror
and the Agent to remove the Escrow Agent upon 30 days' prior written notice.
In either event, the successor Escrow Agent shall be such person, firm or
corporation as shall be mutually selected by Acquiror and the Agent. It is
understood and agreed that such resignation or removal shall not be effective
until a successor agrees to act hereunder by signing a copy hereof; provided,
however, if no successor is appointed and acting hereunder within thirty (30)
days after such notice is given, the Escrow Agent may pay and deliver the
Escrow Indemnity Funds into a court of competent jurisdiction.
ARTICLE 4
LIABILITIES OF ESCROW AGENT
4.1 Limitations.
(a) The Escrow Agent shall be liable only to accept, hold and
deliver the Escrow Indemnity Funds in accordance with the provisions of this
Agreement and any amendments hereto or other written instructions executed by
Acquiror and the Agent; provided, however, that the Escrow Agent shall not
incur any liability with respect to (a) any action taken or omitted in good
faith and with due care upon the reasonable advice of its counsel, including
in-house counsel, given with respect to any questions relating to the duties
and responsibilities of the Escrow Agent under this Agreement, or (b) any
action taken or omitted in reliance upon any instrument which the Escrow Agent
shall in good faith and with due care believe to be genuine (including the
execution of such instrument, the identity or authority of any person
executing such instrument, its validity and effectiveness, and the truth and
accuracy of any information contained therein), to have been signed by a
proper person or persons and to conform to the provisions of this Agreement.
(b) The Escrow Agent does not have any interest in the Escrow
Indemnity Funds deposited hereunder but is serving as escrow holder only and
having only possession thereof. The Agent, on behalf of the Stockholders,
covenants and agrees that he will pay or reimburse the Escrow Agent upon
request for any transfer taxes, to the extent that any exist, relating to the
Escrow Indemnity Funds incurred in connection herewith. Any payments or
income from the Escrow Indemnity Funds shall be subject to withholding
regulations then in force with respect to United States taxes. The Agent, on
behalf of the Stockholders, agrees to assume any and all obligations imposed
now or hereafter by any applicable tax law with respect to the payment of
<PAGE>
Escrow Indemnity Funds under this Agreement to the Stockholders, and to
indemnify and hold the Escrow Agent harmless from and against any taxes,
additions for late payment, interest, penalties and other expenses, that may
be assessed against the Escrow Agent in any such payment or other activities
under this Agreement. Acquiror and the Agent undertake to instruct the Escrow
Agent in writing with respect to the Escrow Agent's responsibility for
withholding and other taxes, assessments or other governmental charges,
certifications and governmental reporting in connection with its acting as
Escrow Agent under this Agreement. The Agent agrees to hold the Escrow Agent
harmless and the Agent agrees to indemnify the Escrow Agent for any liability
on account of taxes, assessments or other governmental charges, including
without limitation the withholding or deduction or the failure to withhold or
deduct the same, and any liability for failure to obtain proper certifications
or to properly report to governmental authorities, to which the Escrow Agent
may be or become subject in connection with any payment to the Stockholders
under this Agreement, including costs and expenses (including reasonable legal
fees and expenses), interest and penalties. The parties hereto agree that,
for tax reporting purposes, all interest or other income earned in the Escrow
Indemnity Funds shall be allocable to the Stockholders.
Acquiror agrees to assume any and all obligations imposed now or
hereafter by any applicable tax law with respect to the payment of Escrow
Indemnity Funds under this Agreement to Acquiror, and to indemnify and hold
the Escrow Agent harmless from and against any taxes, additions for late
payment, interest, penalties and other expenses, that may be assessed against
the Escrow Agent in any such payment or other activities under this Agreement.
Acquiror agrees to hold the Escrow Agent harmless and Acquiror agrees to
indemnify the Escrow Agent for any liability on account of taxes, assessments
or other governmental charges, including without limitation the withholding or
deduction or the failure to withhold or deduct the same, and any liability for
failure to obtain proper certifications or to properly report to governmental
authorities, to which the Escrow Agent may be or become subject in connection
with any payment to Acquiror under this Agreement or which otherwise arises
out of this Agreement, except as provided in the preceding paragraph,
including costs and expenses (including reasonable legal fees and expenses),
interest and penalties.
The Escrow Agent shall have no more or less responsibility or liability
on account of any action or omission of any book-entry depository or subescrow
agent employed by the Escrow Agent than any such book-entry depository or
subescrow agent has to the Escrow Agent, except to the extent that such action
or omission of any book-entry depository or subescrow agent was caused by the
Escrow Agent's own gross negligence, bad faith or willful misconduct.
No distributions will be made unless Acquiror and the Agent provide the
Escrow Agent with an appropriate W-9 form for tax identification number
certification or non-resident alien certification prior to distribution. This
Section 4.1(b) and Section 3.3 hereof shall survive any termination of this
Agreement or the resignation or removal of the Escrow Agent.
4.2 Collateral Agreements. Other than this Agreement, which shall be
controlling in regards to the Escrow Indemnity Funds, the Escrow Agent shall
not be bound in any way by any contract or agreement between other parties
hereto, including the Merger Agreement and the Stockholders' Agreement,
whether or not it has knowledge of any such contract or agreement or of its
terms or conditions.
<PAGE>
ARTICLE 5
TERMINATION
This Agreement shall be terminated upon the earliest to occur of (a)
disbursement or release of all of the Escrow Indemnity Funds by the Escrow
Agent as provided in this Agreement, or (b) the written mutual consent signed
by each of the parties hereto. This Agreement shall not be otherwise
terminated.
ARTICLE 6
OTHER PROVISIONS
6.1 Notices. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing and
dispatched by the same means to all of the foregoing on the same day and shall
be deemed to have been duly given and received (i) when delivered if delivered
by hand or by confirmed facsimile transmission or telex and (ii) three
business days after mailing if mailed by reputable courier service or
registered or certified mail, postage prepaid and return receipt requested, to
the parties at the following addresses (or to such other address as any party
may request in a notice delivered in accordance with this Section 6.1 to the
other parties hereto, provided that notices of a change of address shall be
effective only upon receipt thereof):
(a) If to Acquiror:
Iron Mountain Incorporated
745 Atlantic Avenue, 10th Floor
Boston, MA 02111
Telephone: (617) 357-4455
Telecopy: (617) 350-7881
Attention: Chief Executive Officer
With copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02109
Telephone: (617) 338-2800
Telecopy: (617) 338-2880
Attention: William J. Curry, Esq.
and
If to the Agent:
c/o James B. Wayman
251 Old Billerica Road
Bedford, MA 01730
Telephone: (508) ___-____
Telecopy: (508) ___-____
<PAGE>
With copies to:
Woods, Oviatt, Gilman, Sturman & Clarke LLP
44 Exchange Street
Rochester, NY 14614
Telephone: (716) 987-2821
Telecopy: (716) 454-3968
Attention: Harry P. Messina, Jr., Esq.
If to the Escrow Agent:
State Street Bank and Trust Company
Two International Place
Boston, MA 02110
Telephone: (617) 664-5776
Telecopy: (617) 664-5365
Attention: Corporate Trust Department
Iron Mountain Incorporated-Escrow Indemnity Funds
Unless otherwise refused by Acquiror or the Agent in writing, the Escrow Agent
shall assume that the receipt of any notice was received by Acquiror and the
Agent on the same day as received by Escrow Agent.
6.2 Benefit and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
6.3 Entire Agreement; Amendment. This Agreement contains all the terms
agreed upon by the parties with respect to the subject matter hereof, except
certain terms and provisions set forth in the Merger Agreement and the
Stockholders' Agreement and except that capitalized terms not otherwise used
herein shall have the meanings set forth in the Merger Agreement. This
Agreement may be amended only by a written instrument signed by the parties
against which enforcement of any waiver, change, modification, extension or
discharge is sought. A waiver of any of the terms and conditions of this
Escrow Agreement on one occasion shall not constitute a waiver of the other
terms of this Agreement, or of such terms and conditions on any other
occasion.
6.4 Tax Identification Numbers. Each party hereto, except the Escrow
Agent, shall provide the Escrow Agent with their Tax Identification Number
(TIN) as assigned by the Internal Revenue Service. All interest or other
income earned under this Agreement shall be allocated and paid as provided
herein and reported by the recipient to the Internal Revenue Service as having
been so allocated and paid.
6.5 Headings. The headings of the sections and subsections of this
Agreement are for ease of reference only and do not evidence the intentions of
the parties.
6.6 Governing Law. This agreement shall be governed by and construed
and enforced in accordance with the law (other than the law governing conflict
of law questions) of the Commonwealth of Massachusetts.
6.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
6.8 Dispute Resolution. It is understood and agreed that should any
dispute arise, including a dispute described in Section 2.4 hereof, with
respect to the delivery, ownership, right of possession, and/or disposition of
the Escrow Indemnity Funds, or should any claim be made upon such Escrow
Indemnity Funds by a third party, the Escrow Agent upon receipt of written
notice of such dispute or claim by the parties hereto or by a third party, is
authorized and directed to retain in its possession without liability to
anyone, all or any of said Escrow Indemnity Funds until such dispute shall
have been settled either by the mutual written agreement of the parties
involved or by a final order, decree or judgment of a Court in the United
States of America, the time for perfection of an appeal of such order, decree
or judgment having expired. The Escrow Agent may, but shall be under no duty
whatsoever to, institute or defend any legal proceedings which relate to the
Escrow Indemnity Funds.
6.9 Consent to Jurisdiction and Service. Acquiror and the Agent hereby
absolutely and irrevocably consent and submit to the jurisdiction of the
courts in the Commonwealth of Massachusetts and of any Federal court located
in said Commonwealth in connection with any actions or proceedings brought
against Acquiror and the Agent by the Escrow Agent arising out of or relating
to this Escrow Agreement. In any such action or proceeding, Acquiror and the
Agent hereby absolutely and irrevocably waive personal service of any summons,
complaint, declaration or other process and hereby absolutely and irrevocably
agree that the service thereof may be made by certified or registered
first-class mail directed to Acquiror and the Agent, as the case may be, at
their respective addresses in accordance with Section 6.1 hereof.
6.10 Force Majeure. Neither Acquiror nor the Agent nor the Escrow Agent
shall be responsible for delays or failures in performance resulting from acts
beyond its control. Such acts shall include but not be limited to acts of
God, strikes, lockouts, riots, acts of war, epidemics, governmental
regulations superimposed after the fact, fire, communication line failures,
computer viruses, power failures, earthquakes or other disasters.
6.11 Reproduction of Documents. This Agreement and all documents
relating hereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, and (b) certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, optical disk, micro-card, miniature
photographic or other similar process. The parties agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized partners or officers as of the day and
year first written above.
THE COMPANY:
SAFESITE RECORDS MANAGEMENT
CORPORATION
By:______________________________________
Name:
Title:
THE AGENT:
_______________________________________________
James B. Wayman, Jr., as Agent
ACQUIROR:
IRON MOUNTAIN INCORPORATED
By:______________________________________
Name:
Title:
ESCROW AGENT:
STATE STREET BANK AND TRUST COMPANY, as
Escrow Agent
By:_____________________________________
Name:
Title:
<PAGE>
EXHIBIT 2
CONFORMED COPY
STOCKHOLDERS' AGREEMENT
AGREEMENT, dated as of February 19, 1997, among Iron Mountain
Incorporated, a Delaware corporation ("Acquiror"), those stockholders of
Safesite Records Management Corporation, a Delaware corporation (the
"Company") signatory hereto (the "Initial Stockholders"), including, without
limitation, B. Thomas Golisano, an individual residing at 911 Panorama Trail
South, Rochester, NY 14625 ("Golisano"), and James B. Wayman, Jr., an
individual residing at 251 Old Billerica Road, Bedford, MA 01730 ("Wayman"),
in his individual capacity and as custodian for Alexander B. Wayman and
Catherine Lia Wayman and those other stockholders of the Company which have
become party hereto by execution of an instrument in accordance with Section
6.8 hereof (the "Additional Stockholders" and, together with the Initial
Stockholders, the "Stockholders").
W I T N E S S E T H:
WHEREAS, each of the Initial Stockholders is the beneficial and
record owner of the shares of Common Stock, $.01 par value per share (the
"Company Stock") of the Company, set forth opposite each such Initial
Stockholder's name on Schedule A-1;
WHEREAS, concurrently with the execution of this Agreement, Acquiror
and the Company are entering into an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which a wholly owned subsidiary of Acquiror will be
merged with and into the Company (the "Merger"), with the Company continuing
as the Surviving Corporation; and
WHEREAS, in order to induce Acquiror to enter into the Merger
Agreement, the Stockholders wish to make certain representations, warranties,
covenants and agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Capitalized terms used herein but not otherwise
defined herein shall have the respective meanings ascribed thereto in the
Merger Agreement and the following terms shall have the following meanings:
"Additional Stockholders" shall have the meaning set forth in the
opening paragraph of this Agreement.
"beneficially own" shall have the meaning set forth in Rule 13d-3
under the Exchange Act.
"Equity Securities" shall have the meaning set forth in Rule 405
under the Securities Act.
"Golisano" shall have the meaning set forth in the opening paragraph
of this Agreement.
<PAGE>
"Initial Stockholders" shall have the meaning set forth in the
opening paragraph of this Agreement.
"Intention" shall have the meaning set forth in Section 2.1(f).
"Merger Agreement" shall have the meaning set forth in the second
recital of this Agreement.
"Offer" and "Offer Consideration" shall have the meanings set forth
in Section 3.7(a).
"Permitted Assignee" shall mean with respect to each Stockholder,
(x) such Stockholder's lineal descendants, siblings and lineal descendants of
siblings, (y) a trust for the benefit of, the estate of, executors, personal
representatives, administrators, guardians or conservators of, any of the
individuals referred to in the foregoing clause (x) (but only in their
capacity as such) and (z) charitable trusts and charitable foundations formed
by such Stockholder.
"Proportionate Share" shall mean, as to each Stockholder, a fraction
the numerator of which is the Offer Consideration such Stockholder receives
pursuant to the Offer and the denominator of which is the Offer Consideration
all Stockholders receive pursuant to the Offer.
"Related Transaction" shall mean a transaction that is in
contemplation of, or related or pursuant to, the Merger or the Merger
Agreement.
"Restricted Stockholder" shall mean any Stockholder that,
individually or together with its Affiliates, beneficially owns, or is a
member of a "group" (within the meaning of Section 13(d)(3) of the Exchange
Act) that beneficially owns, 5% or more of Acquiror Stock.
"Sale" shall have the meaning set forth in Section 2.1(f).
"Stockholder Disclosure Letter" shall have the meaning set forth in
Section 2.1(a).
"Third Party" shall mean a party or parties unaffiliated with either
the Company or Acquiror.
"Transfer" shall have the meaning set forth in Section 3.8.
"Voting Securities" shall have the meaning set forth in Rule 405
under the Securities Act.
"Wayman" shall have the meaning set forth in the opening paragraph
of this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
2.1 Representations and Warranties of the Stockholders. Each
Stockholder represents and warrants, severally but not jointly, to Acquiror as
follows:
<PAGE>
(a) Ownership of Company Shares. Except as disclosed in Section
2.1(a) of the letter from the Stockholders to Acquiror, dated the date hereof
or the date such Stockholder becomes party hereto (the "Stockholder Disclosure
Letter"), such Stockholder is the beneficial owner of the shares of Company
Stock set forth opposite such Stockholder's name on Schedule A-1, free and
clear of all Liens and, except for this Agreement and the Merger Agreement,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character to which such Stockholder is a party relating to
the pledge, disposition or voting of any shares of the Company Stock that are
owned by such Stockholder, and there are no voting trusts or voting agreements
with respect to such shares. The shares of Company Stock set forth opposite
such Stockholder's name on Schedule A-1 constitute all of the outstanding
shares of capital stock of the Company owned beneficially or of record by such
Stockholder and such Stockholder does not have any options, warrants or other
rights to acquire any additional shares of capital stock of the Company or any
security exercisable or exchangeable for, or convertible into, shares of
capital stock of the Company other than as set forth on Schedule A-1.
(b) Authority to Execute and Perform Agreements. Such Stockholder
has the full legal right and power and all authority required to enter into,
execute and deliver this Agreement and to perform fully such Stockholder's
obligations hereunder. The execution and delivery of this Agreement by such
Stockholder have been duly authorized by all requisite organizational action,
if any, on the part of such Stockholder. This Agreement has been duly
executed and delivered and constitutes the legal, valid and binding obligation
of such Stockholder enforceable against such Stockholder in accordance with
its terms (subject to the Enforceability Exceptions).
(c) No Conflicts; Consents. (i) Except as set forth in Section
2.1(c) of the Stockholder Disclosure Letter, the execution and delivery by
such Stockholder of this Agreement do not, and the consummation of the
transactions contemplated hereby will not, conflict with or result in any
violation of or default (with or without notice or lapse of time, or both)
under (A) any contract, agreement or other binding arrangement to which such
Stockholder is a party or (B) any judgment, order, writ, injunction or decree
of any court, governmental body, administrative agency or arbitrator
applicable to such Stockholder.
(ii) Except as set forth in Section 2.1(c) of the Stockholder
Disclosure Letter, no Governmental Authorizations or Private Authorizations
are required to be obtained or made by such Stockholder in connection with the
execution and delivery by such Stockholder of this Agreement and the
consummation of the transactions contemplated hereby.
(d) Information Supplied. None of the information specifically
supplied or to be supplied by such Stockholder with respect to such
Stockholder for inclusion or incorporation by reference in (i) the
Registration Statement will, at the time the Registration Statement is filed
with the SEC and at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated thereon or necessary to make the statements therein
not misleading and (ii) the proxy statement to be delivered to all
stockholders of the Company (the "Proxy Statement") will, at the date the
Proxy Statement is first mailed to the Company's Stockholders and at the time
of the special meeting of Company Stockholders for the purpose of voting on
the Merger Agreement, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading.
<PAGE>
(e) Investigation. Such Stockholder has had a full opportunity to
review and discuss this Agreement, the Escrow Agreement and the Merger
Agreement (including, without limitation, with respect to the representations
and warranties in the Merger Agreement and the related Disclosure Schedule)
and to ask all questions of the Company and its directors and executive
officers necessary in order for such Stockholder to make an informed decision
to enter into this Agreement.
(f) Intent to Transfer Shares. Such Stockholder has, and as of the
Closing Date, will have, no present plan or intention (an "Intention") to
sell, transfer, exchange, pledge (other than in a pre-existing bona fide
margin account) or otherwise dispose of, including a distribution by a
partnership to its partners, or a corporation to its shareholders, or any
other transaction which results in a reduction of ownership (any of the
foregoing, a "Sale") of any of the shares of Acquiror Stock issued to such
Stockholder in the Merger, or any securities that may be paid as a dividend
otherwise distributed thereon or with respect thereto, or issued or delivered
in exchange or substitution therefor or upon exercise of options held by such
Stockholder. For purposes of the preceding sentence, shares of Acquiror Stock
(or the portion thereof) with respect to which a Sale will occur prior to the
Merger shall be considered to be shares of Company Stock that are exchanged
for Acquiror Stock in the Merger and then disposed of pursuant to an
Intention. A Sale of Acquiror Stock shall be considered to have occurred
pursuant to an Intention if, among other things, such Sale occurs in a related
transaction. Subject to Section 3.8, each Stockholder (i) reserves the rights
at any time after the Closing Date to evaluate his or her investment
portfolio, including shares of Acquiror Stock and any other securities issued
by Acquiror, in light of new, material developments, and to make such
investment decision with respect to such securities as such Stockholder and
his or her investment advisors, if any, shall deem to be in his or her best
interests, and (ii) specifically disavows any undertaking to hold any
securities issued by Acquiror for any specific period.
ARTICLE III
COVENANTS
3.1 No Disposition or Acquisition of Shares. Each Initial
Stockholder agrees that, except as set forth in Section 3.1 of the Stockholder
Disclosure Letter, such Initial Stockholder shall not sell, transfer, pledge,
hypothecate, encumber or otherwise dispose of (except upon such Stockholder's
death), or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, hypothecation,
encumbrance or other disposition of, any of the shares of Company Stock set
forth opposite his or her name on Schedule A-1; provided, however, that each
Initial Stockholder shall have the right to transfer such shares to a
Permitted Assignee if such Permitted Assignee becomes a party to this
Agreement and agrees to be bound by the terms hereof. Each Initial
Stockholder agrees that the certificates representing the shares of Company
Stock owned by him shall bear a legend indicating that such shares are subject
to this Agreement, which legend may be removed upon termination of this
Agreement.
<PAGE>
3.2 Voting Arrangements. Each of Golisano and Wayman agrees that,
except pursuant to this Agreement, he shall not grant any proxies, deposit any
shares of Company Stock into a voting trust or enter into any voting agreement
with respect to any shares of Company Stock now or hereafter owned,
beneficially or of record, by him, other than proxies to vote such shares at
any annual or special meeting of Stockholders of the Company on matters
unrelated to the matters set forth in Section 4.1 hereof.
3.3 Satisfaction of Conditions to the Merger. Each of Golisano and
Wayman agrees that each, in his capacity as a Stockholder, shall assist and
cooperate with the parties to the Merger Agreement in doing all things
necessary, proper or advisable under Applicable Laws as promptly as
practicable to consummate and make effective the Merger and the other
Transactions and each of them shall not take any action that would or is
reasonably likely to result in any of its representations and warranties set
forth in this Agreement being untrue as of the date made or in any of the
conditions set forth in Article 6 of the Merger Agreement not being satisfied.
In addition, (i) Acquiror, Golisano and Wayman agree that they will enter
into, or, in the case of Acquiror, cause its nominee to enter into, and, in
the case of Golisano and Wayman, cause their Affiliate which owns any Property
to enter into, a purchase and sale agreement relating to each Property
reasonably satisfactory in form and substance to Acquiror, Golisano and
Wayman, for the price of $2,200,000 for the Property located at 5 Fortune
Drive, Billerica, Massachusetts, $2,400,000 for the Property located at 96
High Street, Billerica, Massachusetts, and $2,700,000 for the Property located
at 520 Metro Park West, Rochester, New York, and (ii) Acquiror, Golisano and
Wayman agree that they will enter into the Registration Rights Agreement.
3.4 No Solicitation. Each Stockholder agrees that he shall not,
nor shall he permit any of such Stockholder's Representatives (including,
without limitation, any investment banker, attorney or accountant retained by
such Stockholder) to, initiate, solicit or facilitate, directly or indirectly,
any inquiries or the making of any proposal with respect to an Other
Transaction, engage in any discussions or negotiations concerning, or provide
to any other person any information or data relating to, such Stockholder for
the purposes of, or otherwise cooperate in any way with or assist or
participate in, or facilitate any inquiries or the making of any proposal
which constitutes, or may reasonably be expected to lead to, a proposal to
seek or effect an Other Transaction, or agree to or endorse any Other
Transaction; provided, however, that nothing contained in this Section shall
prohibit any Stockholder, if such Stockholder is a member of Board of
Directors of the Company, from making any disclosure, in his or her capacity
as a director of the Company, to other Stockholders of the Company that, in
the reasonable judgment of the Company's Board of Directors in accordance
with, and based upon the written advice of, outside counsel, is required under
Applicable Law. Each Stockholder shall promptly advise Acquiror of, and
communicate the material terms of, any proposal such Stockholder may receive,
or any inquiries such Stockholder receives which may reasonably be expected to
lead to such a proposal relating to an Other Transaction, and the identity of
the Person making it. Each Stockholder shall further advise Acquiror of the
status and changes in the material terms of any such proposal or inquiry (or
any amendment to any of them). During the term of this Agreement, each
Stockholder agrees that he shall not enter into any agreement oral or written,
and whether or not legally binding, with any Person that provides for, or in
any way facilitates, an Other Transaction, or affects any other obligation of
the other Stockholders under this Agreement.
<PAGE>
3.5 Standstill. Golisano agrees that, (i) from the date hereof
until the Closing Date and (ii) from and after the Closing Date for so long as
he shall be a Restricted Stockholder, he shall not, and shall use his best
efforts to cause his Affiliates not to, without the prior written consent of
the board of directors of Acquiror, (A) in any manner acquire, agree to
acquire or make any proposal to acquire, directly or indirectly, any Equity
Securities of Acquiror or any rights or options to acquire such Equity
Securities (other than the shares of Acquiror Stock received by him in the
Merger), (B) propose to enter into, directly or indirectly, a merger or other
business combination involving Acquiror or propose to purchase, directly or
indirectly, a material portion of the assets of Acquiror, (C) make, or in any
way participate, directly or indirectly, in, any "solicitation" of "proxies"
(as such terms are used in Regulation 14A under the Exchange Act) to vote or
consent or seek to advise or influence any Person with respect to the voting
of, or granting of a consent with respect to, any Voting Securities of
Acquiror, (D) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) for the purpose of acquiring,
holding voting or disposing of any Equity Securities of Acquiror, (E)
otherwise act, alone or in concert with others, to seek to control or
influence in any public manner or public forum the management or policies of
Acquiror; provided, however, that the foregoing shall not limit the ability to
vote any shares of any Equity Securities of Acquiror, (F) disclose any
intention, plan or arrangement inconsistent with the foregoing, (G) advise,
assist (including by knowingly providing or arranging financing for that
purpose) or encourage any other Person in connection with any of the foregoing
or (H) take any action which might require Acquiror to make a public
announcement regarding the possibility of a transaction between Golisano and
Acquiror (including any of their respective Affiliates).
3.6 Non-Competition.
(a) Except with the prior written consent of Acquiror, for a period
of five years from the Closing Date or the date of the closing of the Offer,
each of Golisano and Wayman shall not disclose to others or use for his or
others' benefit confidential information related to the Company or Acquiror
and its Subsidiaries, including the names of customers, the contact persons at
customers, pricing, the software programs utilized by the Company or Acquiror
and its Subsidiaries in the operation of its business and all other
information material to the operation, management, marketing or financing of
the Company, Acquiror and its Subsidiaries which is not known or generally
available to the public or competitors in the records management or records
storage industries.
The confidentiality obligations of this Section shall not apply to information:
(i) which is required to be disclosed by judicial or
administrative process or order, or by other requirements of law;
(ii) which is or becomes generally available to the public other
than as a result of a breach of this Section;
(iii) which is received from a third party who obtained such
information other than under an obligation of confidentiality; or
(iv) which Acquiror discloses on a nonconfidential basis or
otherwise makes available to the general public or the trade.
<PAGE>
(b) Each of Golisano and Wayman agrees that he shall not, for a
period of five years from the Closing Date or from the date of the closing of
the Offer, directly or indirectly own, manage, engage in, participate in,
provide advice to, be employed by or have a financial interest in, any
enterprise which provides records management or records storage services to
business facilities located in any jurisdiction in which Acquiror or the
Company operates.
This Section 3.6(b) shall not prohibit either Golisano or Wayman from
acquiring up to five percent (5%) of any class of securities registered
pursuant to the Exchange Act of any corporation which may engage in the
records management storage service business in direct competition with the
business of Acquiror within the geographical areas set forth in this Section
3.6.
(c) Each of Golisano and Wayman acknowledges that it has carefully
read all the terms herein stated and agrees that the same are necessary for
the reasonable and proper protection of the value of the Company; and that
each and every covenant is reasonable with respect to such matter, length of
time, and the geographical areas described; and that irrespective of all other
conditions, the covenants and restrictions hereinabove provided shall be
operative during the full period and throughout the geographical area
described. In the event any court finds any such restraint or limitation to
be unreasonable, then it is the intent of the parties that such court should
determine the maximum restraint or limitation which is reasonable and
enforcement will be of that restraint or limitation.
(d) Each of Golisano and Wayman acknowledges that confidential
information in his possession related to the Company has particular value, the
loss of confidentiality of which by communication to unauthorized persons
cannot be reasonably or adequately compensated for by damages alone.
Moreover, each of Golisano and Wayman agrees that any breach of paragraphs (a)
and (b) of this Section 3.6 would give rise to damages which would be
difficult to calculate. Therefore, the parties hereby agree that in the event
of a breach of any of the terms and conditions of this Section 3.6, Acquiror
shall be entitled to equitable relief by way of an injunction. This Section
3.6 shall not be construed as a limitation upon Acquiror's remedies for such
breach.
(e) The restrictions contained in this Section 3.6 shall be broadly
construed by any court having jurisdiction of the matter in order to protect
Acquiror to the maximum degree possible.
3.7 Tender Offer; Commitment to Sell.
(a) If Acquiror terminates the Merger Agreement pursuant to Section
7.1(d) thereof (other than a termination by Acquiror pursuant to Section
7.1(d)(ii)(B)(II) unless the reason for the failure to consummate the Merger
prior to the Termination Date is due to any breach by the Company of its
covenants therein or the failure of the representations and warranties of the
Company to be true and correct in all material respects), it shall have the
right, but not the obligation, to commence an offer (the "Offer") to purchase
all of the outstanding Shares at a per share purchase price (the "Offer
Consideration") equal to the Merger Consideration (assuming for such purposes
that the commencement of the Offer would constitute a Change of Control under
the Option Plans and, as a consequence thereof, there would be an acceleration
<PAGE>
of the Option Securities as of the date of commencement of the Offer, as set
forth in Section 3.13(b) of the Disclosure Schedule). Shares tendered in the
Offer shall be free and clear of all Liens. The Offer shall comply in all
material respects with Applicable Law.
(b) Each of Golisano and Wayman hereby agrees that they will
irrevocably tender their shares of Company Stock identified on Schedule A-1
hereto in any such Offer commenced by Acquiror and, in connection therewith,
transfer to Acquiror all of the right, title and interest of each of Golisano
and Wayman in and to such shares, free and clear of all Liens.
(c) All of the representations, warranties and covenants made by
the Company in the Merger Agreement shall be deemed made in connection with
the Offer by each Stockholder who tenders shares in the Offer, which
representations, warranties and covenants shall survive for a period of one
year after the closing of the Offer. Any claim for indemnification in respect
of breaches of such representations, warranties and covenants shall be
conducted in accordance with the provisions of Article 8 of the Merger
Agreement and Article 5 of this Agreement (except that there will be no Escrow
Indemnity Fund).
(d) The closing of the Offer shall take place in accordance with
the instructions set forth in the Offer. At such closing, (A) Acquiror shall
make payment of the Offer Consideration to each Stockholder who tenders their
shares in the Offer in shares of Acquiror Stock, which shares shall be duly
authorized, validly issued, fully paid and nonassessable, and the cash portion
of the Exchange Merger Consideration and cash in lieu of fractional shares,
(B) each of Golisano and Wayman shall deliver to Buyer evidence reasonably
satisfactory to Buyer and its counsel that all necessary authorizations,
consents, orders, waivers and approvals have been obtained to vest in Buyer
all of the right, title and interest of the Shares being transferred to Buyer
by them, and (C) each Stockholder who tenders Shares in the Offer shall
deliver to Acquiror the Certificates representing such Shares duly endorsed
for transfer to Acquiror or with stock powers duly executed by such
Stockholder and otherwise in a form and at the time which complies with the
terms of the Offer.
(e) It is the understanding of Acquiror, and each of Golisano and
Wayman hereby represents, that, in the event of an acquisition of shares of
Acquiror Stock in the Offer, each of Golisano and/or Wayman will be acquiring
the shares of Acquiror Stock to be acquired by him through the Offer for his
own account for investment with no intention of presently distributing or
reselling the same, subject, nevertheless, to his right to dispose of such
Shares, or any part of any thereof held by him, if at some future time in his
sole discretion he deems it advisable so to do. Each of Golisano and Wayman
hereby agrees that he will not sell, transfer or otherwise dispose of any such
shares of Acquiror Stock in violation of the Securities Act, and that such
shares of Acquiror Stock may contain a legend, reasonably satisfactory to
Acquiror, referring to the provisions of this Section. Each of Golisano and
Wayman understands that the Company is not and will not be required to file a
registration statement under the Securities Act in connection with any sale,
transfer or other disposition of shares of Acquiror Stock which may be
acquired by either Golisano or Wayman pursuant to the Offer.
<PAGE>
(f) The undertakings in this Section 3.7 shall terminate upon the
earlier of (i) the Effective Time, (ii) the termination of the Merger
Agreement in accordance with Section 7.1 thereof (other than a termination
which results in Acquiror having the right to make the Offer in accordance
with this Section 3.7) or (iii) six months after a termination which results
in Acquiror having the right to make the Offer in accordance with this Section
3.7 (provided that on or before thirty days after such termination Acquiror
shall have provided notice to Golisano of its intention to commence the
Offer).
3.8 Post-Closing Transfer Restrictions. In the event the Merger is
consummated as an Alternative Transaction, each of the Stockholders agrees
that, from and after the Closing Date until the one-year anniversary thereof,
such Stockholder shall not sell, transfer, pledge, encumber or otherwise
dispose of, including through any "short sale" or derivative transactions
(collectively "Transfer"), any shares of Acquiror Stock received by such
Stockholder as a result of the Merger if, after giving effect to such
Transfer, the aggregate number of shares of Acquiror Stock received in the
Merger by all Stockholders and not Transferred would be less than a number of
shares of Acquiror Stock having a value, as of the date of the Merger, of less
than fifty percent (50%) of the value of all of the formerly outstanding
Company Stock as of the same date. For purposes of the preceding computation,
shares of Company Stock surrendered by dissenters or exchanged for cash in
lieu of fractional shares of Acquiror Stock will be treated as outstanding
Company Stock on the date of the Merger that has subsequently been
Transferred, and all shares of Company Stock and all shares of Acquiror Stock
held by the Stockholders and Transferred prior or subsequent to the Merger
will be included in the computation.
3.9 [Intentionally Omitted.]
ARTICLE IV
PROXY; CONVERSION;
ELECTIONS; WAIVER OF RIGHTS
4.1 Proxy. Each of Golisano and Wayman hereby agrees that, at any
meeting of the stockholders of the Company, however called, and at every
adjournment thereof, and in any action by written consent of the stockholders
of the Company, to (a) vote all of the shares of Company Stock then owned,
beneficially or of record, by him in favor of the adoption of the Merger
Agreement as in effect on the date hereof (as such agreement may be amended
(1) as contemplated by Section 7.3 of the Merger Agreement or (2) with the
consent of such Stockholder) and each of the other transactions contemplated
thereby and any action required in furtherance thereof, (b) vote such shares
against any action or agreement that would result in a breach in any material
respect of any covenant, representation or warranty or any other obligation of
the Company under the Merger Agreement, and (c) vote such shares against any
Other Transaction or any other action or agreement that, directly or
indirectly, is inconsistent with or that would, or is reasonably likely to,
directly or indirectly, impede, interfere with or attempt to discourage the
Merger or any other transaction contemplated by the Merger Agreement,
including, but not limited to (i) any extraordinary corporate transaction
(other than the Merger on the terms set forth in the Merger Agreement), such
as a merger, consolidation, business combination, reorganization
recapitalization or liquidation involving the Company, (ii) a sale or transfer
of a material amount of assets of the Company, or (iii) any material change in
<PAGE>
the Company's corporate structure or business; provided, however, that, if
either Golisano or Wayman is a member of the Board of Directors of the
Company, nothing herein shall be construed to obligate such Stockholder or
representative to act in his capacity as a director in any manner which may
conflict with such Person's fiduciary duties as a director of the Company.
In furtherance of the foregoing, (i) each of Golisano and Wayman
hereby appoints Acquiror and the proper officers of Acquiror, and each of
them, with full power of substitution in the premises, its proxies to vote all
his shares of Company Capital Stock at any meeting, general or special, of the
Stockholders of the Company, and to execute one or more written consents or
other instruments from time to time in order to take such action without the
necessity of a meeting of the Stockholders of the Company, in accordance with
the provisions of the preceding paragraph and (ii) Acquiror hereby agrees to
vote such shares or execute written consents or other instruments in
accordance with the provisions of the preceding paragraph.
The proxy and power of attorney granted herein shall be irrevocable
during the term of this Agreement, shall be deemed to be coupled with an
interest and shall revoke all prior proxies granted by such Golisano and
Wayman. Each of Golisano and Wayman shall not grant any proxy to any person
which conflicts with the proxy granted herein, and any attempt to do so shall
be void. The power of attorney granted herein is a durable power of attorney
and shall survive the disability or incompetence of such Stockholder.
4.2 Appraisal Rights. Each of Golisano and Wayman hereby waives
his rights to appraisal under Section 262 of the DGCL with respect to any
shares of Company Stock owned by him in connection with the transactions
contemplated by the Merger Agreement. Each of Golisano and Wayman hereby
agrees that he will not in any way attempt to influence, encourage or persuade
any Person who beneficially owns any Company Stock to exercise any rights to
appraisal such Person may have pursuant to Section 262 of the DGCL in
connection with said transactions.
4.3 Waiver of Certain Rights. Each Initial Stockholder hereby
waives and agrees not to assert any claims or rights it may have against any
officer or director of the Company relating to or arising out of actions or
omissions occurring at or prior to the Effective Time or the closing of the
Offer, as the case may be, including, without limitation, in respect of
approval or adoption of the Merger Agreement or the consummation of the Merger
or the other transactions contemplated thereby.
ARTICLE V
INDEMNIFICATION
5.1 Indemnification in the Event of the Offer. Each Stockholder
agrees that the indemnification provisions set forth in Article 8 of the
Merger Agreement shall be applicable in the event Acquiror consummates the
Offer pursuant to Section 3.7 hereof; provided, however, that only
Stockholders who tender Shares in the Offer shall be responsible for such
indemnification and each such Stockholder shall only be responsible for such
Stockholder's Proportionate Share of any claim. In addition, (i) the Escrow
Indemnity Period shall terminate on the first anniversary of the closing of
the Offer and the Closing Date shall be deemed to be the closing of the Offer,
<PAGE>
(ii) the amount of Acquiror Stock received by each Stockholder who tenders
Shares in the Offer shall be adjusted to reflect the escrow to be established,
and (iii) each Stockholder will agree to execute the Escrow Agreement with
such changes therein, if any, as are necessary to reflect the differences
between the Merger and the Offer.
5.2 Exclusive Remedy. Except as otherwise provided in Article 8
and Section 9.8 of the Merger Agreement, the indemnification provided in this
Article shall be the sole and exclusive post-Closing remedy available to
Acquiror against the Stockholders for any Claim under this Agreement.
ARTICLE VI
MISCELLANEOUS
6.1 Termination. This Agreement shall terminate upon the earlier
to occur of (i) the mutual consent of Acquiror and all of the Stockholders,
(ii) one year after the termination of the Merger Agreement prior to the
consummation of the Merger and (iii) the tenth anniversary of the Closing
Date.
6.2 Amendment. This Agreement may be amended only by a written
instrument executed by the parties or their respective successors or assigns.
6.3 Notices. Notices, requests, permissions, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if signed by the respective persons giving them (in the case of any
corporation the signature shall be by an officer thereof) and delivered by
hand, deposited in the United States mail (registered or certified, return
receipt requested), properly addressed and postage prepaid, or delivered by
telecopy:
If to Acquiror, to:
Iron Mountain Incorporated
745 Atlantic Avenue, 10th Floor
Boston, Massachusetts 02111
Telephone: (617) 357-4455
Telecopy: (617) 350-7881
Attention: Chairman of the Board
with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Telephone: (617) 338-2800
Telecopy: (617) 338-2880
Attention: William J. Curry, Esq.
If to the Stockholders, to:
c/o B. Thomas Golisano
911 Panorama Trail South
Rochester, NY 14625
Telephone: (716) 385-6666
Telecopy: (716) 383-3428
<PAGE>
with a copy to:
Woods, Oviatt, Gilman, Sturman & Clarke LLP
44 Exchange Street
Rochester, NY 14614
Telephone: (716) 987-2821
Telecopy: (716) 454-3968
Attention: Harry P. Messina, Jr., Esq.
6.4 Counterparts. This Agreement may be executed in one or more
counterparts and each counterpart shall be deemed to be an original, but all
of which shall constitute one and the same original.
6.5 Applicable Law. This Agreement shall be governed by, and
construed in accordance with the laws of the State of Delaware without
reference to choice of law principles, including all matters of construction,
validity and performance.
6.6 Severability; Enforcement. The invalidity of any portion
hereof shall not affect the validity, force or effect of the remaining
portions hereof. If it is ever held that any restriction hereunder is too
broad to permit enforcement of such restriction to its fullest extent, each
party agrees that a court of competent jurisdiction may enforce such
restriction to the maximum extent permitted by law, and each party hereby
consents and agrees that such scope may be judicially modified accordingly in
any proceeding brought to enforce such restriction. In furtherance of the
foregoing, if any court construes any of the provisions of Section 3.6, or any
part thereof, to be unreasonable because of the duration of such provision or
the geographic scope thereof, such court shall have the power to reduce the
duration or restrict the geographic scope of such provision and to enforce
such provision as so reduced or restricted.
6.7 Further Assurances. Each party hereto shall execute and
deliver such additional documents as may be necessary or desirable to
consummate the transactions contemplated by this Agreement.
6.8 Additional Stockholders; Parties in Interest; Assignment. The
parties hereto agree that, from time to time, any and all Additional
Stockholders of the Company may be added as parties hereto by (i) approving a
resolution or taking such other action at the Special Meeting as Acquiror and
the Company may agree upon or (ii) executing a counterpart of this Agreement
or an agreement by which such stockholder agrees to join and to be bound
hereby, and without in either case further action by any party hereto or
thereto. Neither this Agreement nor any of the rights, interest or obligations
hereunder shall be assigned by any of the parties hereto without the prior
written consent of the other parties. Notwithstanding the foregoing, for the
purposes of Sections 3.5 and 3.6, the term Acquiror shall include any Entity
controlling, controlled by or under common control with Acquiror, any
successor, by operation of law or otherwise of Acquiror, or any entity
controlling, controlled by or under common control with Acquiror, and any
assignee of Acquiror.
<PAGE>
6.9 Entire Agreement. This Agreement and the Merger Agreement and
the Collateral Documents contain the entire understanding of the parties
hereto and thereto with respect to the subject matter contained herein and
therein, and supersede and cancel all prior agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or
written, respecting such subject matter. There are no restrictions, promises,
representations, warranties, agreements or undertakings of any party hereto or
to the Merger Agreement or any of the Collateral Documents with respect to the
transactions contemplated by this Agreement and the Merger Agreement and the
Collateral Documents other than those set forth herein or therein or made
hereunder or thereunder.
6.10 Specific Performance. The parties hereto agree that the remedy
at law for any breach of this Agreement will be inadequate and that any party
by whom this Agreement is enforceable shall be entitled to specific
performance in addition to any other appropriate relief or remedy. Such party
may, in its sole discretion, apply to a court of competent jurisdiction for
specific performance or injunctive or such other relief as such court may deem
just and proper in order to enforce this Agreement or prevent any violation
hereof and, to the extent permitted by applicable law, each party waives any
objection to the imposition of such relief.
6.11 Headings; References. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. All
references herein to "Sections" or "Exhibits" shall be deemed to be references
to Articles or Sections hereof or Exhibits hereto unless otherwise indicated.
IN WITNESS WHEREOF, each of the parties hereto had caused this
Agreement to be duly executed and delivered as of the day and year first above
written.
IRON MOUNTAIN INCORPORATED
By: /s/ David S. Wendell
Name: David S. Wendell
Title: President and Chief Operating Officer
/s/ B. Thomas Golisano
B. Thomas Golisano
/s/ James B. Wayman, Jr.
James B. Wayman, in his individual capacity and
as custodian for Alexander B. Wayman and
Catherine Lia Wayman
_______________________________________________
Roselee Wayman
_______________________________________________
John Glynn
_______________________________________________
Harvey H. Bundy III, in his capacities as
Trustee for each of the Clark H. Bundy 1992
Trust, Elizabeth Lowell Bundy 1996 Trust, H.
Hollister Bundy III 1990 Trust and Harvey H.
Bundy III 1992 Trust
<PAGE>
_______________________________________________
Blakely F. Bundy , in her capacities as Trustee
for the Blakely F. Bundy 1992 Trust and as
Custodian for Reed F. Bundy
_______________________________________________
David F. Bellet
_______________________________________________
Hugh J. Rundle
_______________________________________________
Paul R. Altavena
_______________________________________________
Charles T. Graham
<PAGE>
SCHEDULE A-1
Stockholder Shares Options
B. Thomas Golisano
James B. Wayman
Roselee Wayman
John Glynn
Harvey H. Bundy III
Blakely F. Bundy
David F. Bellet
Hugh J. Rundle
Paul R. Altavena
Charles T. Graham
<PAGE>
STOCKHOLDER DISCLOSURE LETTER
<PAGE>
EXHIBIT 3
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement") is entered into as of the 12th
day of June, 1997, by and among Iron Mountain Incorporated, a Delaware
corporation ("Acquiror"), Safesite Records Management Corporation, a Delaware
corporation (the "Company"), James B. Wayman, Jr., an individual residing at
251 Old Billerica Road, Bedford, MA 01730 (in his capacity as agent for the
Stockholders, the "Agent"), as agent for the stockholders of the Company (the
"Stockholders"), and State Street Bank and Trust Company, as Escrow Agent (the
"Escrow Agent").
W I T N E S S E T H :
WHEREAS, Acquiror and the Company entered into that certain Agreement and
Plan of Merger dated as of February 19, 1997, as amended (the "Merger
Agreement"), an executed copy of which has been provided to the Escrow Agent,
pursuant to which the Company will merge with and into a wholly owned
subsidiary of Acquiror (the "Merger"), and pursuant to which 141,836 shares of
Common Stock, par value $.01 per share of Acquiror ("Acquiror Stock") were
withheld from the consideration payable to the Stockholders and were allocated
to indemnify Acquiror for certain matters relating to the Merger Agreement,
all as is more fully set forth in the Merger Agreement;
WHEREAS, this Agreement is being entered into pursuant to Article 8 of
the Merger Agreement; and
WHEREAS, in accordance with and pursuant to Article 8 of the Merger
Agreement, the Agent has been appointed as agent and attorney-in-fact, with
full power of substitution, to take all actions called for by Article 8 of the
Merger Agreement, including, without limitation, the execution of this
Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements set forth below, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1
ESCROW INDEMNITY FUNDS
1.1 Delivery. Upon consummation of the Merger, Acquiror will deliver to
the Escrow Agent a certificate registered in the name of James B. Wayman, Jr.,
as Agent, representing 141,836 shares of Acquiror Stock (the "Escrow Indemnity
Funds"). The shares of Acquiror Stock represented by the Escrow Indemnity
Funds shall not be subject to the restrictions set forth in Article XII of
Acquiror's By-Laws.
1.2 Receipt. The Escrow Agent agrees to hold and disburse the Escrow
Indemnity Funds (together with interest earned thereon) solely in accordance
with the terms and conditions of this Agreement, pursuant to the written
direction of Acquiror, and for the uses and purposes stated herein. The
Escrow Agent shall, upon receipt of the Escrow Indemnity Funds, issue written
acknowledgment to Acquiror and the Agent of receipt thereof.
<PAGE>
1.3 Rights of Stockholders.
(a) In the case any distribution of capital or stock dividend shall
be made on or in respect of Acquiror Stock, or any money or property shall be
distributed with respect to Acquiror Stock, pursuant to a recapitalization or
reclassification of the capital of Acquiror, or pursuant to a reorganization
or liquidation or dissolution of Acquiror, any such money or property to be
distributed with respect to the Escrow Indemnity Funds shall be delivered to
the Escrow Agent to be held by it as part of the Escrow Indemnity Funds.
Acquiror shall forthwith deliver to the Escrow Agent an additional certificate
registered in the name of James B. Wayman, Jr., as Agent, representing any
such additional Acquiror Stock or such money and the Escrow Agent shall hold
such additional Acquiror Stock or money pursuant to the terms of this
Agreement.
(b) Each Stockholder shall be entitled to receive all ordinary cash
dividends paid in respect of his or her Proportionate Share (as defined below)
of Acquiror Stock that would otherwise be registered in his or her name but
for such shares being a part of the Escrow Indemnity Funds and to vote and to
give consents, waivers and ratifications in respect of his or her
Proportionate Share of Acquiror Stock which is part of the Escrow Indemnity
Funds. The Agent shall pay over to each Stockholder, forthwith upon receipt,
his or her Proportionate Share of all ordinary cash dividends paid on the
Escrow Indemnity Funds, and, at the cost of Acquiror, shall execute and
deliver to each Stockholder such proxies or other documents in writing as may
be necessary to enable each Stockholder to exercise the foregoing rights. In
connection with any vote or consent by the Stockholders with respect to shares
of Acquiror Stock which are part of the Escrow Indemnity Funds, the Agent
shall vote the shares of Acquiror Stock forming part of the Escrow Indemnity
Funds in accordance with the directions of the Stockholders to the Agent. In
order to take such vote, the Agent shall tabulate the votes it receives from
the Stockholders and inform Acquiror in writing of the aggregate percent of
all votes received for, against and in abstention with respect to each matter
voted upon. Acquiror shall then convert such percent to a number based on the
then-existing Escrow Indemnity Funds, rounded in each case down to the nearest
whole number. The term "Proportionate Share", as to each Stockholder, shall
mean such Stockholder's proportionate share of the total number of shares of
Aquiror Stock to be issued in connection with the Merger.
ARTICLE 2
PROCEDURES FOR DISBURSEMENT OF ESCROW INDEMNITY FUNDS
2.1 Purpose. The Escrow Indemnity Funds shall be held by the Escrow
Agent to secure the indemnification obligations to Acquiror under the Merger
Agreement and shall be held and released in accordance with the provisions of
this Agreement. The Escrow Agent agrees to hold, disburse and invest the
Escrow Indemnity Funds solely in accordance with the terms and conditions of
this Agreement and for the uses and purposes stated herein.
2.2 Disbursement.
(a) If at any time after the Closing Date and prior to the
termination of this Agreement, the Escrow Agent receives written instructions
in accordance with the terms of Section 2.4 hereof from Acquiror to make a
payment to Acquiror, then the Escrow Agent shall make payments out of the
Escrow Indemnity Funds to Acquiror, in accordance with such instructions and
with Section 2.4, unless the Escrow Indemnity Funds shall be insufficient to
<PAGE>
comply with such instructions, in which case the Escrow Agent shall pay the
entire Escrow Indemnity Funds to Acquiror and shall advise Acquiror and the
Agent in writing of the amount of such payment. The number of shares of the
Escrow Indemnity Funds to be delivered to Acquiror in connection with each
payment hereunder shall be calculated by Acquiror and shall be equal to the
quotient obtained by dividing (i) the Claimed Amount (as defined in Section
2.4) by (ii) the average closing price per share of Acquiror Stock for the
period of 20 trading days ending three trading days prior to the date of such
payment (the "Market Price"). The closing price for each such trading day
shall be the last quoted sale price or, if not so quoted, the average of the
low bid and high asked prices on the Nasdaq National Market System.
(b) The Escrow Agent may make any payments out of the Escrow
Indemnity Funds that may at the time be permitted to be made under the
provisions of Section 2.4 below, and shall make all such payments that at the
time are required to be made under such provisions or are jointly requested in
writing by Acquiror and the Agent. Any payment which would result in the
disbursement of a fractional share of Acquiror Stock shall be rounded to the
nearest whole share. In the event that any payment is made pursuant to this
Agreement, Acquiror shall deliver to the Escrow Agent a new certificate
registered in the name of James B. Wayman, Jr., as Agent, representing the
Escrow Indemnity Funds less such shares disbursed in the payment and all
previous payments.
(c) In the event there are no Unresolved Claims (as hereinafter
defined), on the date which is ten (10) days after the expiration of the
Escrow Indemnity Period, or the next business day if such date is not a
business day, Acquiror shall deliver or cause to be delivered to the Escrow
Agent cash in lieu of fractional shares calculated in accordance with the
second to last sentence of this paragraph (c) and separate certificates
registered in each Stockholder's name (or, in the event of a transfer of
ownership of Acquiror Stock which is not registered in the transfer records of
the Company, in the name of a transferee who has presented documents
reasonably required to evidence and effect such transfer and evidence that any
applicable stock transfer taxes have been paid), representing such
Stockholder's Proportionate Share of the Escrow Indemnity Funds, less such
Stockholder's Proportionate Share of all portions thereof, if any,
(i) paid to Acquiror pursuant to subparagraphs (a) and (b) above,
and
(ii) which are the subject of Unresolved Claims (as hereinafter
defined).
The Escrow Agent shall retain the portion of the Escrow Indemnity Funds which
relates to all Unresolved Claims until resolution of such Unresolved Claims in
accordance with the terms hereof. In the event one or more Unresolved Claims
with respect to the Escrow Indemnity Funds, if any, shall exist upon the
expiration of the Escrow Indemnity Period, shares of Acquiror Stock with a
Market Price measured as of the date of such expiration (such number to be
determined by Acquiror) equal to the sum of (i) the aggregate amount of such
Unresolved Claims and (ii) the amount reasonably estimated by Acquiror to
cover the fees, expense and other costs (including reasonable counsel fees and
expenses) which will be required to resolve such Unresolved Claims shall be
retained as part of the Escrow Indemnity Funds and the balance thereof, if
any, shall be distributed to the Stockholders entitled thereto. Upon the
resolution of all such Unresolved Claims and the payment of all such fees,
expenses and costs out of the Escrow Indemnity Funds, the balance of the
<PAGE>
Acquiror Stock, if any, shall be distributed to the Stockholders entitled
thereto in accordance with the terms hereof. In lieu of issuing fractional
shares pursuant to this paragraph (c), each Stockholder shall receive the
highest whole number of shares of Acquiror Stock to which he or she is
entitled plus cash equal to the fraction of a share of Acquiror Stock to which
the Stockholder would otherwise be entitled multiplied by the Market Price of
the Acquiror Stock determined by Acquiror as of the date three days prior to
the distribution of such shares. Promptly after such receipt, the Escrow
Agent will deliver such certificates together with any cash in lieu of
fractional shares to each respective Stockholder (or transferee) at the
addresses to be supplied by Acquiror in accordance with Acquiror's written
instructions. Acquiror shall make all calculations relating to shares of
Acquiror Stock or cash in lieu of fractional shares, and the Escrow Agent
shall not be responsible for determining the accuracy of any such calculation.
2.3 Unresolved Claims. The term "Unresolved Claims" shall mean any
claim or request made pursuant to the Merger Agreement against the Escrow
Indemnity Funds in accordance with the Merger Agreement and Section 2.4 below,
until such time as such claim or request has been paid in full or otherwise
fully settled, compromised or adjusted by Acquiror, the Agent and the Escrow
Agent or by a final order of a court of competent jurisdiction resolving such
claim, from which no appeal is or can be taken.
2.4 Notice of Request; Dispute Notice. If at any time during the term
of this Agreement, Acquiror believes that it is entitled to any portion of the
Escrow Indemnity Funds, then Acquiror shall furnish to the Escrow Agent (with
a simultaneous copy to the Agent), a notice (the "Indemnity Notice of
Request") setting forth the cash amount (the "Claimed Amount") to which
Acquiror believes it is entitled and the reasons for such belief. If the
Escrow Agent does not receive, within fifteen (15) business days after receipt
of the Indemnity Notice of Request, a notice from the Agent (the "Indemnity
Dispute Notice") with a simultaneous copy to Acquiror that a dispute (the
"Indemnity Dispute") exists relating to Acquiror's right to that portion of
the Escrow Indemnity Funds claimed in the Indemnity Notice of Request, the
Escrow Agent shall, immediately after such fifteen business day period,
release to Acquiror the certificate then held by the Escrow Agent pursuant to
the terms of this Agreement in exchange for a new certificate registered in
the name of James B. Wayman, Jr., as Agent, representing a number of shares of
Acquiror Stock equal to the quotient obtained by dividing (a) the difference
between, if positive, the Market Price of the shares of Acquiror Stock
represented by the certificate being released calculated as of the date three
trading days prior to such exchange and the Claimed Amount by (b) such Market
Price, and the Escrow Agent shall hold such replacement certificate for
Acquiror Stock or money pursuant to the terms of this Agreement.
In the event the Escrow Agent receives an Indemnity Dispute Notice that
an Indemnity Dispute exists, the Escrow Agent shall retain custody of that
portion of the Escrow Indemnity Funds which relates to the Unresolved Claim
until the first to occur of the following events:
(a) Receipt by the Escrow Agent of a notice ("Indemnity Settlement
Notice") signed by Acquiror and the Agent that the Indemnity Dispute has
been resolved, said notice to contain instructions to Escrow Agent
regarding delivery of that portion of the Escrow Indemnity Funds which
relates to the Unresolved Claim; or
<PAGE>
(b) Receipt by Escrow Agent of a final order of a court of
competent jurisdiction (the "Indemnity Award") resolving the Indemnity
Dispute and directing the disposition of that portion of the Escrow
Indemnity Funds;
after which Escrow Agent shall promptly pay that portion of the Escrow
Indemnity Funds which relates to the Indemnity Unresolved Claim in accordance
with the Indemnity Settlement Notice or the Indemnity Award.
2.5 Maximum Distributions. Notwithstanding anything in this
Agreement to the contrary, in no event shall Acquiror be entitled to received
shares of Acquiror Stock having an aggregate value of greater than $3,000,000
(calculated, in each case, based on the shares of Acquiror Stock being
disbursed multiplied by the Market Price employed in connection with such
disbursement). At such time as the aggregate amount paid to Acquiror
(calculated in accordance with the foregoing sentence) equals $3,000,000, any
remaining Escrow Indemnity Funds shall be disbursed to the Stockholders and
this Agreement shall terminate, all in accordance with the other provisions of
this Agreement.
ARTICLE 3
ESCROW AGENT
3.1 Appointment. Acquiror, the Company and the Agent hereby appoint the
Escrow Agent to serve hereunder and the Escrow Agent hereby accepts such
appointment and agrees to perform all duties which are expressly set forth in
this Agreement.
3.2 Compensation. The Escrow Agent shall be entitled to compensation
for legal fees incurred in connection with the preparation of this Agreement
and for its services hereunder in accordance with the attached fee schedule,
which may be subject to change hereafter on an annual basis, upon notice to
Acquiror and the Agent. Compensation of the Escrow Agent and all reasonable
expenses of the Escrow Agent (including all reasonable attorneys' fees of
those attorneys not regularly in its employ) in connection with the
performance of its services hereunder shall be borne one half by Acquiror and
one half by the Agent. The Escrow Agent shall be entitled to reimbursement on
demand for all reasonable out-of-pocket expenses incurred in connection with
the administration of this Agreement or the escrow created hereby which are in
excess of its compensation for normal services hereunder, including without
limitation, payment of any reasonable legal fees and expenses reasonably
incurred by the Escrow Agent in connection with the resolution of any claim in
any party hereunder.
3.3 Indemnification. Notwithstanding anything to the contrary in the
foregoing, Acquiror and the Agent will at their joint and several expense hold
the Escrow Agent, its directors, officers and employees harmless and indemnify
the Escrow Agent in connection with any and all third party claims, losses,
judgments or costs, regardless of their nature, arising out of or because of
this Agreement, except such as may arise because of the Escrow Agent's gross
negligence or willful misconduct or breach of this Agreement (including,
without limitation, Article 2 hereof). Any such expense in the preceding
sentence as between Acquiror and the Agent shall be borne jointly and
severally by Acquiror and the Agent. Acquiror and the Agent also exonerate
said Escrow Agent from any liability in connection with this Agreement or with
the administration of its duties hereunder, including but not limited to
reasonable legal fees and other reasonable costs and expenses of defending or
<PAGE>
preparing to defend against any claim or liability except such as may arise
because of the Escrow Agent's gross negligence or willful misconduct in
performing its specified duties hereunder or breach of this Agreement
(including, without limitation, Article 2 hereof). Nothing in this Section
3.3 shall constitute a waiver of any claim which Acquiror and the Agent may
have against the other for contribution arising from their joint obligations
to hold the Escrow Agent harmless hereunder. Anything in this Agreement to
the contrary notwithstanding, in no event shall the Escrow Agent be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Escrow Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
action. The Escrow Agent shall not be obligated to take any legal or other
action hereunder which might in its judgment involve any expense or liability
unless it shall have been furnished with acceptable indemnification.
3.4 Resignation; Removal. The Escrow Agent may resign at any time upon
giving the parties hereto 30 days' prior written notice. Acquiror and the
Agent may also, at any time, mutually agree in a writing signed by Acquiror
and the Agent to remove the Escrow Agent upon 30 days' prior written notice.
In either event, the successor Escrow Agent shall be such person, firm or
corporation as shall be mutually selected by Acquiror and the Agent. It is
understood and agreed that such resignation or removal shall not be effective
until a successor agrees to act hereunder by signing a copy hereof; provided,
however, if no successor is appointed and acting hereunder within thirty (30)
days after such notice is given, the Escrow Agent may pay and deliver the
Escrow Indemnity Funds into a court of competent jurisdiction.
ARTICLE 4
LIABILITIES OF ESCROW AGENT
4.1 Limitations.
(a) The Escrow Agent shall be liable only to accept, hold and
deliver the Escrow Indemnity Funds in accordance with the provisions of this
Agreement and any amendments hereto or other written instructions executed by
Acquiror and the Agent; provided, however, that the Escrow Agent shall not
incur any liability with respect to (a) any action taken or omitted in good
faith and with due care upon the reasonable advice of its counsel, including
in-house counsel, given with respect to any questions relating to the duties
and responsibilities of the Escrow Agent under this Agreement, or (b) any
action taken or omitted in reliance upon any instrument which the Escrow Agent
shall in good faith and with due care believe to be genuine (including the
execution of such instrument, the identity or authority of any person
executing such instrument, its validity and effectiveness, and the truth and
accuracy of any information contained therein), to have been signed by a
proper person or persons and to conform to the provisions of this Agreement.
(b) The Escrow Agent does not have any interest in the Escrow
Indemnity Funds deposited hereunder but is serving as escrow holder only and
having only possession thereof. The Agent, on behalf of the Stockholders,
covenants and agrees that he will pay or reimburse the Escrow Agent upon
request for any transfer taxes, to the extent that any exist, relating to the
Escrow Indemnity Funds incurred in connection herewith. Any payments or
income from the Escrow Indemnity Funds shall be subject to withholding
regulations then in force with respect to United States taxes. The Agent, on
behalf of the Stockholders, agrees to assume any and all obligations imposed
now or hereafter by any applicable tax law with respect to the payment of
<PAGE>
Escrow Indemnity Funds under this Agreement to the Stockholders, and to
indemnify and hold the Escrow Agent harmless from and against any taxes,
additions for late payment, interest, penalties and other expenses, that may
be assessed against the Escrow Agent in any such payment or other activities
under this Agreement. Acquiror and the Agent undertake to instruct the Escrow
Agent in writing with respect to the Escrow Agent's responsibility for
withholding and other taxes, assessments or other governmental charges,
certifications and governmental reporting in connection with its acting as
Escrow Agent under this Agreement. The Agent agrees to hold the Escrow Agent
harmless and the Agent agrees to indemnify the Escrow Agent for any liability
on account of taxes, assessments or other governmental charges, including
without limitation the withholding or deduction or the failure to withhold or
deduct the same, and any liability for failure to obtain proper certifications
or to properly report to governmental authorities, to which the Escrow Agent
may be or become subject in connection with any payment to the Stockholders
under this Agreement, including costs and expenses (including reasonable legal
fees and expenses), interest and penalties. The parties hereto agree that,
for tax reporting purposes, all interest or other income earned in the Escrow
Indemnity Funds shall be allocable to the Stockholders.
Acquiror agrees to assume any and all obligations imposed now or
hereafter by any applicable tax law with respect to the payment of Escrow
Indemnity Funds under this Agreement to Acquiror, and to indemnify and hold
the Escrow Agent harmless from and against any taxes, additions for late
payment, interest, penalties and other expenses, that may be assessed against
the Escrow Agent in any such payment or other activities under this Agreement.
Acquiror agrees to hold the Escrow Agent harmless and Acquiror agrees to
indemnify the Escrow Agent for any liability on account of taxes, assessments
or other governmental charges, including without limitation the withholding or
deduction or the failure to withhold or deduct the same, and any liability for
failure to obtain proper certifications or to properly report to governmental
authorities, to which the Escrow Agent may be or become subject in connection
with any payment to Acquiror under this Agreement or which otherwise arises
out of this Agreement, except as provided in the preceding paragraph,
including costs and expenses (including reasonable legal fees and expenses),
interest and penalties.
The Escrow Agent shall have no more or less responsibility or liability
on account of any action or omission of any book-entry depository or subescrow
agent employed by the Escrow Agent than any such book-entry depository or
subescrow agent has to the Escrow Agent, except to the extent that such action
or omission of any book-entry depository or subescrow agent was caused by the
Escrow Agent's own gross negligence, bad faith or willful misconduct.
No distributions will be made unless Acquiror and the Agent provide the
Escrow Agent with an appropriate W-9 form for tax identification number
certification or non-resident alien certification prior to distribution. This
Section 4.1(b) and Section 3.3 hereof shall survive any termination of this
Agreement or the resignation or removal of the Escrow Agent.
4.2 Collateral Agreements. Other than this Agreement, which shall be
controlling in regards to the Escrow Indemnity Funds, the Escrow Agent shall
not be bound in any way by any contract or agreement between other parties
hereto, including the Merger Agreement and the Stockholders' Agreement,
whether or not it has knowledge of any such contract or agreement or of its
terms or conditions.
<PAGE>
ARTICLE 5
TERMINATION
This Agreement shall be terminated upon the earliest to occur of (a)
disbursement or release of all of the Escrow Indemnity Funds by the Escrow
Agent as provided in this Agreement, or (b) the written mutual consent signed
by each of the parties hereto. This Agreement shall not be otherwise
terminated.
ARTICLE 6
OTHER PROVISIONS
6.1 Notices. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing and
dispatched by the same means to all of the foregoing on the same day and shall
be deemed to have been duly given and received (i) when delivered if delivered
by hand or by confirmed facsimile transmission or telex and (ii) three
business days after mailing if mailed by reputable courier service or
registered or certified mail, postage prepaid and return receipt requested, to
the parties at the following addresses (or to such other address as any party
may request in a notice delivered in accordance with this Section 6.1 to the
other parties hereto, provided that notices of a change of address shall be
effective only upon receipt thereof):
(a) If to Acquiror:
Iron Mountain Incorporated
745 Atlantic Avenue, 10th Floor
Boston, MA 02111
Telephone: (617) 357-4455
Telecopy: (617) 350-7881
Attention: Chief Executive Officer
With copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02109
Telephone: (617) 338-2800
Telecopy: (617) 338-2880
Attention: William J. Curry, Esq.
and
If to the Agent:
c/o James B. Wayman
251 Old Billerica Road
Bedford, MA 01730
Telephone: (617) 275-5523
Telecopy: (617) 275-5523
<PAGE>
With copies to:
Woods, Oviatt, Gilman, Sturman & Clarke LLP
44 Exchange Street
Rochester, NY 14614
Telephone: (716) 987-2821
Telecopy: (716) 454-3968
Attention: Harry P. Messina, Jr., Esq.
If to the Escrow Agent:
State Street Bank and Trust Company
Two International Place
Boston, MA 02110
Telephone: (617) 664-5776
Telecopy: (617) 664-5365
Attention: Corporate Trust Department
Iron Mountain Incorporated-Escrow Indemnity Funds
Unless otherwise refused by Acquiror or the Agent in writing, the Escrow Agent
shall assume that the receipt of any notice was received by Acquiror and the
Agent on the same day as received by Escrow Agent.
6.2 Benefit and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
6.3 Entire Agreement; Amendment. This Agreement contains all the terms
agreed upon by the parties with respect to the subject matter hereof, except
certain terms and provisions set forth in the Merger Agreement and the
Stockholders' Agreement and except that capitalized terms not otherwise used
herein shall have the meanings set forth in the Merger Agreement. This
Agreement may be amended only by a written instrument signed by the parties
against which enforcement of any waiver, change, modification, extension or
discharge is sought. A waiver of any of the terms and conditions of this
Escrow Agreement on one occasion shall not constitute a waiver of the other
terms of this Agreement, or of such terms and conditions on any other
occasion.
6.4 Tax Identification Numbers. Each party hereto, except the Escrow
Agent, shall provide the Escrow Agent with their Tax Identification Number
(TIN) as assigned by the Internal Revenue Service. All interest or other
income earned under this Agreement shall be allocated and paid as provided
herein and reported by the recipient to the Internal Revenue Service as having
been so allocated and paid.
6.5 Headings. The headings of the sections and subsections of this
Agreement are for ease of reference only and do not evidence the intentions of
the parties.
6.6 Governing Law. This agreement shall be governed by and construed
and enforced in accordance with the law (other than the law governing conflict
of law questions) of the Commonwealth of Massachusetts.
6.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
6.8 Dispute Resolution. It is understood and agreed that should any
dispute arise, including a dispute described in Section 2.4 hereof, with
respect to the delivery, ownership, right of possession, and/or disposition of
the Escrow Indemnity Funds, or should any claim be made upon such Escrow
Indemnity Funds by a third party, the Escrow Agent upon receipt of written
notice of such dispute or claim by the parties hereto or by a third party, is
authorized and directed to retain in its possession without liability to
anyone, all or any of said Escrow Indemnity Funds until such dispute shall
have been settled either by the mutual written agreement of the parties
involved or by a final order, decree or judgment of a Court in the United
States of America, the time for perfection of an appeal of such order, decree
or judgment having expired. The Escrow Agent may, but shall be under no duty
whatsoever to, institute or defend any legal proceedings which relate to the
Escrow Indemnity Funds.
6.9 Consent to Jurisdiction and Service. Acquiror and the Agent hereby
absolutely and irrevocably consent and submit to the jurisdiction of the
courts in the Commonwealth of Massachusetts and of any Federal court located
in said Commonwealth in connection with any actions or proceedings brought
against Acquiror and the Agent by the Escrow Agent arising out of or relating
to this Escrow Agreement. In any such action or proceeding, Acquiror and the
Agent hereby absolutely and irrevocably waive personal service of any summons,
complaint, declaration or other process and hereby absolutely and irrevocably
agree that the service thereof may be made by certified or registered
first-class mail directed to Acquiror and the Agent, as the case may be, at
their respective addresses in accordance with Section 6.1 hereof.
6.10 Force Majeure. Neither Acquiror nor the Agent nor the Escrow Agent
shall be responsible for delays or failures in performance resulting from acts
beyond its control. Such acts shall include but not be limited to acts of
God, strikes, lockouts, riots, acts of war, epidemics, governmental
regulations superimposed after the fact, fire, communication line failures,
computer viruses, power failures, earthquakes or other disasters.
6.11 Reproduction of Documents. This Agreement and all documents
relating hereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, and (b) certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, optical disk, micro-card, miniature
photographic or other similar process. The parties agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized partners or officers as of the day and
year first written above.
THE COMPANY:
SAFESITE RECORDS MANAGEMENT CORPORATION
By: /s/ James B. Wayman, Jr.
Name: James B. Wayman, Jr.
Title: President
THE AGENT:
/s/ James B. Wayman, Jr.
James B. Wayman, Jr., as Agent
ACQUIROR:
IRON MOUNTAIN INCORPORATED
By: /s/ C. Richard Reese
Name: C. Richard Reese
Title: Chairman and Chief Executive Officer
ESCROW AGENT:
STATE STREET BANK AND TRUST COMPANY, as
Escrow Agent
By: /s/ Patrick E. Thebado
Name: Patrick E. Thebado
Title: Assistant Vice President
