<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 1, 1999
mobile mini, inc.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 1-12804 86-0748362
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1834 West 3rd Street
Tempe, Arizona 85281
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (602) 894-6311
(Former name or former address, if changed since last report.)
<PAGE> 2
ITEM 5. OTHER EVENTS.
On April 3, 1999, Mobile Mini, Inc. entered into an agreement to
acquire substantially all of the assets of National Security Containers, L.L.C.,
a portable storage leasing company. The closing of this acquisition is subject
to a number of conditions, and is expected to close before the end of April
1999. At the closing of this acquisition, we will pay $17.5 million in cash and
issue shares of redeemable convertible preferred stock valued at $8 million.
However, if certain funding is completed prior to closing this acquisition and
results in net proceeds to us in excess of $16 million, we are obligated to pay
a total of $25.5 million in cash and we will not issue any preferred stock.
National Security Containers leases portable storage containers from
its nine branches located in Phoenix, Tucson, Dallas, San Antonio, Houston,
Memphis, New Orleans, Denver and Colorado Springs. We also operate branches in
six of these nine cities and over time we will integrate National Security
Containers' operations with our existing branches in those cities. Through this
acquisition, we will enter three new markets: Colorado Springs, Memphis and New
Orleans. For the nine month period from April 1, 1998 to December 31, 1998,
National Security Containers had revenues of about $7 million and operating
income of about $1.8 million.
Effective April 1, 1999, we amended our revolving credit facility to
increase the maximum amount we can borrow from $75 million to $90 million.
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO.
<S> <C>
10.1 Asset Purchase Agreement, dated April 3, 1999, by and among
Mobile Mini, Inc., National Security Containers, L.L.C. and
Alfred R. Ghelfi.
10.2 Amendment Number Seven to Credit Agreement, dated as of March
31, 1999, by and among, Mobile Mini, Inc., each financial
institution a party to the Credit Agreement and BT Commercial
Corporation, as agent.
99.1 Mobile Mini, Inc. Press Release, dated April 5, 1999.
</TABLE>
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MOBILE MINI, INC., a Delaware corporation
Date April 12, 1999 By /s/ Lawrence Trachtenberg
-----------------------------------------
Lawrence Trachtenberg, Chief Financial
Officer and Executive Vice President
3
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.
<S> <C>
10.1 Asset Purchase Agreement, dated April 3, 1999, by and among
Mobile Mini, Inc., National Security Containers, L.L.C. and
Alfred R. Ghelfi.
10.2 Amendment Number Seven to Credit Agreement, dated as of March
31, 1999, by and among, Mobile Mini, Inc., each financial
institution a party to the Credit Agreement and BT Commercial
Corporation, as agent.
99.1 Mobile Mini, Inc. Press Release, dated April 5, 1999.
</TABLE>
<PAGE> 1
Exhibit 10.1
ASSET PURCHASE AGREEMENT
DATED AS OF
APRIL 3, 1999
AMONG
MOBILE MINI, INC.
(BUYER)
NATIONAL SECURITY CONTAINERS, L.L.C.
(SELLER)
AND
ALFRED R. GHELFI
(GUARANTOR)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1. TRANSFER OF ASSETS....................................................................................1
1.1. Real Property Leases.....................................................................................2
1.2. Containers and Trailer Storage Units.....................................................................2
1.3. Equipment and Personal Property...........................................................................2
1.4. Inventory.................................................................................................2
1.5. Contracts and Other Agreements............................................................................2
1.6. Accounts Receivable.......................................................................................2
1.7. Intellectual Property....................................................................................2
1.8. Books and Records........................................................................................3
1.9. Prepaid Expenses.........................................................................................3
1.10. Permits, Etc............................................................................................3
1.11. All Property Not Elsewhere Described....................................................................3
1.12. Warranties and Guarantees................................................................................3
1.13. Excluded Assets.........................................................................................3
ARTICLE 2. PURCHASE PRICE.........................................................................................4
2.1. Payment of Purchase Price................................................................................4
2.2. Allocation of Purchase Price.............................................................................4
ARTICLE 3. THE CLOSING...........................................................................................4
3.1. Closing Balance Sheet.....................................................................................4
3.2. Selling Parties' Obligations at the Closing..............................................................5
3.3. Buyer's Obligations at the Closing.......................................................................6
3.4. Post-Closing Selling Party Further Assurances.............................................................7
ARTICLE 4. ASSUMPTION OF LIABILITIES; SELLER'S\EMPLOYEES; COLLECTION OF RECEIVABLES...............................7
4.1. Assumption of Liabilities................................................................................7
4.2. Seller's Accounts Receivable..............................................................................9
4.3. Security Deposits.........................................................................................9
ARTICLE 5. CERTAIN ARRANGEMENTS REGARDING EMPLOYEES..............................................................9
5.1. Employees.................................................................................................9
5.2. Employee Compensation; Stay Bonus Programs...............................................................10
5.3. Retained Liabilities with Respect to the Employees.......................................................10
5.4. Buyer's Option to Hire Seller's Employees................................................................10
5.5. Seller's Further Assurances Regarding Employees..........................................................11
5.6. Worker's Compensation....................................................................................11
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF SELLING PARTIES....................................................11
6.1. Organization; Good Standing and Qualification...........................................................11
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
6.2. Inventory Summary.......................................................................................11
6.3. No Dealership Agreements.................................................................................11
6.4. Real Property...........................................................................................11
6.5. Zoning..................................................................................................12
6.6. Storage Units...........................................................................................12
6.7. Other Tangible Personal Property........................................................................12
6.8. Contracts and Other Agreements..........................................................................12
6.9. Intellectual Property...................................................................................14
6.10. Financial Statements...................................................................................15
6.11. Employees..............................................................................................16
6.12. Title to Assets........................................................................................16
6.13. Customers and Sales....................................................................................16
6.14. Insurance Policies.....................................................................................16
6.15. Compliance with Laws...................................................................................16
6.16. Litigation..............................................................................................17
6.17. Agreement Will Not Cause Breach or Violation...........................................................17
6.18. Authority and Consents.................................................................................17
6.19. Interest in Customers, Suppliers and Competitors.......................................................17
6.20. Environmental Matters..................................................................................18
6.21. Documents Delivered....................................................................................19
6.22. Prepaid Storage Unit Fees..............................................................................19
6.23. Investment Representation..............................................................................19
6.24. Intentionally Omitted..................................................................................20
6.25. Promotions and Special Offers..........................................................................20
6.26. Future Commitments.....................................................................................20
6.27. Receivables.............................................................................................20
6.28. Taxes...................................................................................................20
6.29. Absence of Certain Changes or Events....................................................................21
6.30. Inventories.............................................................................................23
6.31. Undisclosed Liabilities.................................................................................23
6.32. Product Warranties......................................................................................23
6.33. Full Disclosure........................................................................................23
ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF BUYER..............................................................23
7.1. Organization and Qualification...........................................................................23
7.2. Authority; Non-Contravention; Approvals..................................................................24
7.3. Valid Issuance of Shares.................................................................................24
7.4. Capitalization...........................................................................................25
7.5. Information..............................................................................................25
7.6. Financing................................................................................................25
ARTICLE 8. SELLING PARTIES' OBLIGATIONS BEFORE CLOSING..........................................................25
8.1. Buyer's Access to Premises and Information..............................................................25
8.2. Conduct of Business in Normal Course....................................................................26
8.3. Preservation of Business and Relationships..............................................................27
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
8.4. Maintenance of Insurance................................................................................27
8.5. Consent of Others.......................................................................................27
8.6. Representations and Warranties True at Closing..........................................................27
8.7. Sales and Use Tax of Prior Sales........................................................................27
8.8. Statutory Filings.......................................................................................28
8.9. Transition Services......................................................................................28
ARTICLE 9. CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE..........................................................28
9.1. Accuracy of Representations and Warranties..............................................................28
9.2. Absence of Liens........................................................................................28
9.3. Selling Parties' Performance............................................................................28
9.4. Absence of Litigation...................................................................................28
9.5. Approval................................................................................................28
9.6. Consents................................................................................................29
9.7. Approval of Documents and Closing Balance Sheet.........................................................29
9.8. Bill of Sale; Transfer Documents........................................................................29
9.9. Non-Competition Agreement...............................................................................29
9.10. Corporate Documents.....................................................................................29
9.11. Good Standing Certificates..............................................................................29
9.12. Environmental Assessment Report.........................................................................29
9.13. SCHEDULE 6.2............................................................................................29
9.14. HSR Waiting Period......................................................................................29
9.15. Financial Statements....................................................................................29
9.16. Transition Services Agreement...........................................................................30
9.17. License Agreement.......................................................................................30
9.18. Opinion of Seller's Counsel.............................................................................30
ARTICLE 10. CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE........................................................30
10.1. Accuracy of Buyer's Representations and Warranties.....................................................30
10.2. Buyer's Performance....................................................................................30
10.3. Certification by Buyer.................................................................................30
10.4. Buyer's Corporate Approval.............................................................................30
10.5. Absence of Litigation..................................................................................30
10.6. Certificate of Designations............................................................................30
10.7. Approval of Documents...................................................................................31
10.8. Consents................................................................................................31
10.9. HSR Waiting Period......................................................................................31
10.10. Assignment and Assumption..............................................................................31
10.11. Registration Rights....................................................................................31
10.12. License Agreement......................................................................................31
10.13. Opinion of Buyer's Counsel.............................................................................31
10.14. Buyer Good Standing....................................................................................31
ARTICLE 11. INDEMNIFICATION......................................................................................31
11.1. Indemnification of Buyer...............................................................................31
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C>
11.2. Guarantee..............................................................................................32
11.3. Indemnification of Seller...............................................................................32
11.4. Exclusive Remedy........................................................................................33
ARTICLE 12. BUYER'S PRE-CLOSING OBLIGATIONS; BUYER AND
SELLING PARTY POST CLOSING OBLIGATIONS...........................................................................33
12.1. Buyer's Pre-Closing Obligations.........................................................................33
12.2. Seller's Post-Closing Obligations.......................................................................34
12.3. Buyer's Post Closing Obligations........................................................................34
ARTICLE 13. MISCELLANEOUS.......................................................................................35
13.1. Nature and Survival of Representations and Warranties...................................................35
13.2. Finder's or Broker's Fees..............................................................................35
13.3. Expenses...............................................................................................36
13.4. Headings...............................................................................................36
13.5. Entire Agreement; Modification; Waiver.................................................................36
13.6. Knowledge...............................................................................................36
13.7. Counterparts...........................................................................................36
13.8. Parties in Interest....................................................................................36
13.9. Assignment.............................................................................................36
13.10. Recovery of Litigation Costs..........................................................................36
13.11. Conditions Permitting Termination.....................................................................37
13.12. Defaults Permitting Termination; Other Termination Rights.............................................37
13.13. Notices................................................................................................37
13.14. Governing Law; Jurisdiction; Venue.....................................................................38
13.15. Announcements..........................................................................................38
13.16. References.............................................................................................38
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C>
Schedule 1.1 Real Property Leases
Schedule 1.2 Storage Units
Schedule 1.3 Personal Property
Schedule 1.5 Other Agreements
Schedule 1.10 Permits
Schedule 1.13 Excluded Assets
Schedule 2.2 Allocation of Purchase Price
Schedule 4.1(a) Stay Bonus Programs
Schedule 4.1(d) Specifically Excluded Liabilities
Schedule 6.2 Monthly Inventory Summaries
Schedule 6.3 Dealership Agreements
Schedule 6.4 Required Real Property Lease Consents
Schedule 6.6 Condition
Schedule 6.8 Storage Unit Contracts
Schedule 6.9 Intellectual Property
Schedule 6.10 Financial Statements
Schedule 6.11 Employee Plans
Schedule 6.13 Seller's Customer Lists
Schedule 6.14 Insurance
Schedule 6.16 Litigation
Schedule 6.18 Consents
Schedule 6.19 Interest in Customers, Suppliers and Competitors
Schedule 6.20 Environmental Matters
Schedule 6.22 Prepaid Storage Unit Fees
Schedule 6.25 Promotions and Special Offers
Schedule 6.26 Future Commitments
Schedule 6.28 Taxes
Schedule 6.29 Certain Changes
Schedule 12.3 Named Dealers
Exhibit A Terms of Series B Preferred Stock
Exhibit B Bill of Sale
Exhibit C Assignment and Assumption Agreements
(1) Assignment and Assumption of Real Property Leases
(2) Assignment and Assumption of Contracts and Other Agreements
(3) Liability Assumption Agreement
Exhibit D Non-Competition Agreement
Exhibit E Seller's Certificate
Exhibit F Members' Certificates
Exhibit G Registration Rights Agreement
Exhibit H Seller's Counsel Opinion
Exhibit I Transition Services Agreements Terms
Exhibit J Terms of License to TEP-98, LLP
Exhibit K Buyer's Counsel Opinion
</TABLE>
v
<PAGE> 7
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated April 3, 1999,
among Mobile Mini, Inc., a Delaware corporation ("Buyer"), National Security
Containers, L.L.C., an Arizona limited liability company ("Seller"), and Alfred
R. Ghelfi, an individual and on behalf of his marital community (the
"Guarantor"). Seller and the Guarantor are sometimes collectively referred to in
this Agreement as "Selling Parties."
RECITALS:
A. Seller is in the businesses of (i) owning, leasing and selling
containers for use as mobile on-land storage units ("Containers"), and (ii)
owning, leasing and selling wheeled trailers used as storage units ("Trailer
Units").
B. Buyer desires to purchase from Seller and Seller desires to sell to
Buyer, on the terms and subject to the conditions of this Agreement, all of the
assets of Seller's business (the "Business") other than those assets
specifically excluded in this Agreement.
C. The Containers and Trailer Units, in the aggregate, are of a unique
nature in their number, locations, configurations and modifications and, as to
most, their existing lease status pursuant to Contracts (as defined in this
Agreement).
D. One or more members of the Guarantor's family is a beneficiary of a
trust that owns of record all of the membership interest in G-98, L.L.C., an
Arizona limited liability company that owns of record all of the issued and
outstanding membership interests of Seller and the Guarantor will receive an
acknowledged economic benefit from the transactions contemplated by this
Agreement.
THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties agree as
follows:
AGREEMENT:
ARTICLE 1.
TRANSFER OF ASSETS
Subject to the terms and conditions set forth in this Agreement, Seller
will sell, convey, transfer, assign and deliver to Buyer, and Buyer will
purchase from Seller, at the Closing described in Article 3 of this Agreement,
the assets, properties and business of Seller (other than any assets of Seller
specifically excluded under the terms of this Article 1 or Article 4 of this
Agreement) of every kind, character and description, whether tangible,
intangible, real, personal or mixed, and wherever located, which are used in
connection with or which relate to the Business, as presently conducted and as
conducted since April 9, 1998, all of which are sometimes collectively referred
to in this Agreement as the "Assets." The Assets include, but are not limited
to, the following:
<PAGE> 8
1.1. Real Property Leases. All right, title and interest of Seller in
the leases of real property more fully described in SCHEDULE 1.1 (the "Real
Property Leases"), together with all rights and privileges under such leases and
to the real property subject to such leases (the "Leased Property").
1.2. Containers and Trailer Units. All Containers and Trailer Units
owned by Seller (together, the "Storage Units"), whether held as inventory, on
lease to a third party, or in the possession of a third party under a contract
for sale or other lease-purchase arrangement, a bailment, or other arrangement.
SCHEDULE 1.2 sets forth a listing (by type and size) of the Storage Units,
including the manufacturer's serial or other identifying number for each Storage
Unit listed.
1.3. Equipment and Personal Property. All the machinery, equipment,
computers, tools, vehicles, trailers (including without limitation Container
delivery trailers), furniture, office equipment, and any other personal property
wherever located, that are owned by Seller (other than the Storage Units which
are included in the Assets under Section 1.2) (collectively, the "Personal
Property"), a current list of all the Personal Property other than immaterial
items is attached hereto as SCHEDULE 1.3.
1.4. Inventory. All of Seller's inventories of raw materials,
work-in-process, spare parts (including, without limitation, essential
replacement and refurbishment parts and supplies), and supplies for which value
is reflected on the Closing Balance Sheet (the "Inventories").
1.5. Contracts and Other Agreements. All of Seller's right, title and
interest in, to and under (a) any Contract (defined in Section 6.8), and (b) any
other lease, contract or other agreement, written or oral, related to the
Business to which Seller is a party (other than the Real Property Leases which
are included in the Assets under Section 1.1) and identified on SCHEDULE 1.5 or
SCHEDULE 6.8 except for (i) contracts, leases and agreements with or with
respect to employees or consultants of Seller or to any employee benefit or
compensation policy of Seller; (ii) any other contracts, leases or agreements
listed on the Schedules and designated as contracts, leases or agreements not to
be assumed; and (iii) contracts, leases or agreements otherwise excluded
hereunder (together, the Contracts and other agreements to be transferred to
Buyer are referred to herein as the "Other Agreements"), together with all
security deposits, pre-paid pick-up charges, pre-paid delivery charges relating
to Storage Units and any advance payments by customers under or related to the
Contracts and Other Agreements.
1.6. Accounts Receivable. All of Seller's accounts receivable other
than the receivables specifically excluded on SCHEDULE 1.13 (collectively, the
"Receivables").
1.7. Intellectual Property. All of Seller's right, title and interest
in and to the following (the "Intellectual Property"):
(a) the name "National Security Containers" and all variants
thereof (the "Trade Name");
2
<PAGE> 9
(b) the Seller's patents, patent rights and patent
applications set forth in SCHEDULE 6.9 (the "Patents"); and
(c) all of Seller's other proprietary information related to
the Business, including without limitation trade names, trademarks, service
marks, copyrights, copyright registrations, copyright applications, licenses,
brand names, trade secrets, technical information, proprietary rights and
licenses know-how, designs, processes, goodwill, and computer software and all
improvements thereto including without limitation those listed on SCHEDULE 6.9,
but excluding liabilities, obligations and contracts not assumed by Buyer
pursuant to this Article 1 or Article 4 of this Agreement.
1.8. Books and Records. All papers, data from computerized databases
and records in the Seller's care, custody or control relating to any or all of
the above described Assets and the operation thereof, maintenance and production
records, environmental control records, sales and leasing records, marketing
materials, accounting and financial (including without limitation customer lists
and order information) records relating to the Seller's Business or the Assets,
but excluding those pertaining exclusively to the assets of the Seller not
included within the Assets. Seller shall be entitled to retain one copy of the
books and records.
1.9. Prepaid Expenses. All refunds receivable, deposits, prepaid
expenses and other prepaid items and assets of similar nature relating to any of
the Assets and the operation of Seller's Business.
1.10. Permits, Etc. To the extent lawfully transferable, all permits,
licenses, franchises, consents or authorizations issued by, and all
registrations and filings with, any governmental agency in connection with
Seller's Business, including those set forth on SCHEDULE 1.10 (the "Permits").
1.11. All Property Not Elsewhere Described. All other rights,
properties or assets of Seller of every kind, character or description that are
related to or materially used in the conduct of the Business, wherever located,
and reflected on the Closing Balance Sheet (as defined in Section 3.1) including
without limitation all cash, cash equivalents and accounts held by Seller as of
the Closing and all claims and causes of action, whether known or unknown,
against Seller's employees terminated voluntarily or involuntarily, after the
date of this Agreement, but excluding any rights, properties and other assets
specifically excluded in this Article 1.
1.12. Warranties and Guarantees. All rights of Seller under warranties
and guarantees relating to any Assets conveyed pursuant to this Agreement.
1.13. Excluded Assets. Notwithstanding the generality of the foregoing,
the Seller is not selling or otherwise conveying to the Buyer hereunder any
right, title or interest in and to the assets set forth on SCHEDULE 1.13
(together with any rights, properties and other assets specifically excluded in
this Article 1, the "Excluded Assets").
3
<PAGE> 10
ARTICLE 2.
PURCHASE PRICE
2.1. Payment of Purchase Price. The aggregate "Purchase Price"
hereunder shall be payable as provided in this Section 2.1. In consideration for
the transfer and assignment by Seller of the Assets and in consideration of the
representations, warranties and covenants of Selling Parties set forth herein,
Buyer, upon the conditions set forth herein, shall:
(a) deliver to Seller at the Closing cash in the amount of
$17.5 million (payable by wire transfer);
(b) deliver to Seller at the Closing a certificate for 640,000
shares (the "Shares") of the Company's Series B Convertible Preferred Stock (the
"Series B Preferred Stock"), with each Share having a mutually agreed value of
$12.50 and the Series B Preferred Stock having the rights, preferences,
privileges and limitations set forth in Exhibit "A" hereto; provided, if the
Buyer consummates an offering, whether public or private, of its equity
securities prior to the Closing resulting in net proceeds to the Company in
excess of $16 million, in lieu of issuing the Shares, the Buyer will deliver to
Seller additional cash in the amount of $8 million (payable by wire transfer);
and
(c) Buyer's assumption of certain liabilities, the Contracts,
the Other Agreements and the Real Property Leases as provided in this Agreement.
2.2. Allocation of Purchase Price. The parties agree that the Purchase
Price shall be allocated as set forth on SCHEDULE 2.2 and that such allocation
will be used by the parties in reporting the transaction contemplated by this
Agreement for Federal and state tax purposes.
ARTICLE 3.
THE CLOSING
The closing of the purchase and sale of the Assets by Seller to Buyer
(the "Closing") shall take place at the offices of Bryan Cave LLP, Two North
Central Avenue, Suite 2200, Phoenix, Arizona 85004, at 10:00 a.m. local time, on
April 30, 1999, or at such other place and/or time as the parties may agree in
writing (the "Closing Date"). In the event that the conditions specified in this
Agreement have not been fulfilled by such date, Buyer or the Selling Parties may
extend the Closing Date for a period or periods not exceeding an aggregate of 30
days by written notice to the other party. If on the original or any postponed
Closing Date, Selling Parties shall have been unable to obtain all waivers and
consents of private parties and governmental agencies required under this
Agreement, then Buyer shall have the right, but not the obligation, to extend
the Closing Date to such time as it may specify by written notice to Seller;
provided, that Seller's consent is required to extend the Closing Date beyond
the date set forth in Section 12.1.
3.1. Closing Balance Sheet. Prior to the Closing, Seller will cause
its accountants to prepare a balance sheet of the Seller as of a date not more
than 7 days prior to the Closing (the
4
<PAGE> 11
"Closing Balance Sheet"). Seller will deliver the Closing Balance Sheet to Buyer
for review as soon as it is prepared, but in no event later than 2 days prior to
the Closing.
3.2. Selling Parties' Obligations at the Closing. At the Closing,
Selling Parties shall deliver or cause to be delivered to Buyer:
(a) An Assignment and Assumption of Real Property Leases (in
recordable form and properly executed and acknowledged by Seller) substantially
in the form attached hereto in Exhibit "C(1)", an Assignment and Assumption of
Contracts and Other Agreements to be assumed in connection herewith,
substantially in the form attached hereto in Exhibit "C(2)", and a Liability
Assumption Agreement, substantially in the form attached hereto as Exhibit
"C(3)", with each, as appropriate, accompanied by all consents required by this
Agreement and the Real Property Leases, Contracts and Other Agreements being
assigned;
(b) Instruments of assignment and transfer of all of the
Storage Units and the other Assets (including without limitation a bill of sale
in the form attached hereto as Exhibit "B") to be sold, transferred and assigned
hereunder, in form and substance reasonably satisfactory to Buyer and Buyer's
counsel;
(c) A Non-Competition Agreement, substantially in the form of
Exhibit "D" attached hereto, duly executed by each Seller, Guarantor and by
Gregg Ghelfi;
(d) The instruments and documents described in Section 2.1 and
Article 9 of this Agreement to be delivered to Buyer at Closing;
(e) United States, state and foreign patent, trademark and
copyright assignments with respect to the Intellectual Property listed in
SCHEDULE 6.9(a)-(c) in form and substance reasonably satisfactory to Buyer and
Buyer's counsel;
(f) Certificate of the President of the Seller, dated as of
the Closing Date, substantially in the form attached hereto as Exhibit "E";
(g) A Member's Certificate executed by the Seller's sole
member substantially in the form attached hereto as Exhibit "F";
(h) the Registration Rights Agreement, attached hereto as
Exhibit "G", duly executed by Seller;
(i) An opinion of Seller's counsel substantially in the form
attached hereto as Exhibit "H";
(j) a transition services agreement containing the terms set
forth in Exhibit "I", duly executed by Seller;
5
<PAGE> 12
(k) a license agreement containing the terms set forth on
Exhibit "J", duly executed by TEP-98, LP; and
(l) Such other certificates, documents and instruments as
Buyer may reasonably request to consummate the transactions contemplated by this
Agreement.
Simultaneously with the consummation of the transfer of the Assets, Seller shall
put Buyer into full possession and enjoyment of all the Assets.
3.3. Buyer's Obligations at the Closing. At the Closing, Buyer shall
deliver or cause to be delivered to Seller against delivery of the items
specified in Section 3.2, the following:
(a) A wire transfer of immediately available funds in the
amount set forth in Section 2.1(a);
(b) A certificate representing the Shares or a wire transfer
of immediately available funds in the amount set forth in Section 2.1(b);
(c) Counter-signatures on the Assignment and Assumption of
Real Property Leases and the Assignment and Assumption of Contracts and Other
Agreements, in the forms attached hereto as Exhibit "C(1)" and "C(2)",
respectively;
(d) The Liability Assumption Agreement, substantially in the
form attached hereto as Exhibit "C(3)", duly executed by Buyer;
(e) The Registration Rights Agreement, attached hereto as
Exhibit "G", duly executed by Buyer;
(f) An opinion of Buyer's counsel, substantially in the form
attached hereto as Exhibit "I";
(g) The instruments and documents described in Article 10 of
this Agreement to be delivered to Selling Parties at Closing (including without
limitation the certificate to be delivered pursuant to Section 10.3);
(h) a transition services agreement containing the terms set
forth in Exhibit
"I", duly executed by Buyer;
(i) a license agreement containing the terms set forth on
Exhibit "J", duly executed by Buyer; and
(j) Such other certificates, documents and instruments as
either Selling Party may reasonably request to consummate the transaction
contemplated by this Agreement.
6
<PAGE> 13
3.4. Post-Closing Selling Party Further Assurances. Selling Parties, at
any time after the Closing Date, shall execute, acknowledge, and deliver any
further deeds, assignments, conveyances and other assurances, documents and
instruments of transfer, including without limitation UCC Forms 2 and 3 and
Certificates of Title for such Assets as may be necessary or as may be
reasonably requested by Buyer and shall take any other action consistent with
the terms of this Agreement that may reasonably be requested by Buyer for the
purpose of assigning, transferring, granting, conveying and confirming to Buyer,
or reducing to possession, any or all of the Assets to be conveyed and
transferred pursuant to this Agreement, all such actions which are not
contemplated by this Agreement other than by this Section 3.4 shall be taken at
Buyer's expense. If requested by Buyer, Selling Parties agree to prosecute or
otherwise enforce in their own names for the benefit of Buyer any claims,
rights, or benefits that are transferred to Buyer by this Agreement and that
require prosecution or enforcement in any of the Selling Parties' name. Any
prosecution or enforcement of claims, rights, or benefits under this Section
shall be solely at Buyer's expense, unless the prosecution or enforcement is
made necessary by a breach of this Agreement by a Selling Party.
ARTICLE 4.
ASSUMPTION OF LIABILITIES; SELLER'S EMPLOYEES;
COLLECTION OF ACCOUNTS RECEIVABLES
4.1. Assumption of Liabilities.
(a) On the Closing Date, Buyer will absolutely and irrevocably
assume (subject to the terms of this Agreement), and Buyer shall have the
benefit of, pay and perform in accordance with their terms, only the following
liabilities and obligations of Seller related to the Assets arising on and after
the Closing Date (when the same become due or are required to be performed or
discharged):
(i) all of the Seller's liabilities, as described and
reflected on the Closing Balance Sheet to the extent those liabilities remain
outstanding on the Closing Date and other liabilities incurred by Seller since
the date of the Closing Balance Sheet in the Ordinary Course (as defined in
Section 6.29(d)) of the Business and without any breach of this Agreement;
provided, however, the Buyer will not assume the following: (A) any of the
Seller's outstanding debt obligations related to borrowed money; (B) any of
Seller's dividends or distributions payable to members of Seller of their
affiliates; (C) any of Seller's intercompany or related party liabilities or
obligations; (D) any liability for income taxes of Seller or its members; (E)
any obligation of Seller to indemnify any person by reason of the fact that such
person was a manager, officer, employee of the Seller or any other person; (F)
any liability arising from or in connection with any laws relating to emissions,
discharges, releases or threatened releases of pollutants contaminants,
chemicals or hazardous substances or wastes into the environment; (G) other than
those liabilities specifically assumed pursuant to Section 4.1(a)(iii) and
Article 5, any liability or obligation of Seller under any employee benefit
plan, program or arrangement or employee or consultant compensation program or
agreement, including without limitation those liabilities specifically not
assumed pursuant to Article 5; (H) any liabilities that arise from, out of, in
connection with, or as a result of any alleged or actual breach of warranty
(whether express
7
<PAGE> 14
or implied) or any other theory of liability relating to any product
manufactured, designed, distributed, leased or sold by or for Seller or its
predecessors prior to the Closing Date; (I) any liability arising out of, or
related to any prior or existing dealer arrangement of the Seller, the
termination of any such dealer arrangement or any transactions or agreements
between Seller and its current or former dealers; (J) any liability of Seller
with respect to any lawsuit currently pending to which Seller is a party
(whether plaintiff, defendant or other party); and (K) any liability or
obligation of Seller or the Seller's predecessors arising out of the Seller's or
the predecessor's acquisition of the Assets or the Business.
(ii) liabilities, arising from and after the Closing
Date, to pay when due amounts owing and to perform executory obligations under
the assigned Real Property Leases, Contracts and Other Agreements; provided that
Buyer will not assume any liability resulting or arising out of any default,
breach, misfeasance, malfeasance or nonfeasance of Seller on or prior to the
Closing Date under the assigned Real Property Leases, Contracts and Other
Agreements;
(iii) liabilities of Seller arising under the Stay
Bonus Programs attached hereto as part of SCHEDULE 4.1(a) (together, the "Stay
Bonus Programs"), but only to the extent of Buyer's obligations to assume the
obligations thereunder as set forth in SCHEDULE 4.1(a); and
(iv) liabilities relating to the ownership,
possession, use or operation of the Assets or the Business arising after the
Closing Date.
(b) Nothing contained in this Section 4.1 or in any instrument
of assumption executed by Buyer at Closing will release or relieve Selling
Parties from their respective representations, warranties, covenants and
agreements contained in this Agreement or in any exhibit, schedule, certificate,
instrument, agreement or document executed in connection with this Agreement or
the Closing, including without limitation the obligations of Seller and
Guarantor to indemnify Buyer in accordance with Article 11.
(c) Except for those liabilities and obligations set forth in
Section 4.1(a), Buyer will not assume any debt, liability or obligation of
Seller, whether known or unknown, fixed or contingent and Seller will pay,
satisfy and perform all of its obligations (other than those assumed by Buyer
under Section 4.1(a)), whether fixed, contingent, known or unknown and whether
existing as of the Closing or arising after the Closing, which relate to the
Seller, the Business, the Seller's employees or the Assets or which may in any
way affect the Assets or the Business.
(d) Without limiting the generality of Section 4.1(c) and of
the provisos of Sections 4.1(a)(i) and 4.1(a)(ii), Buyer specifically does not
assume the debts, liabilities and obligations set forth on SCHEDULE 4.1(d).
(e) As used herein "Retained Liabilities" means the following:
(i) those liabilities of Seller set forth in SCHEDULE
4.1(d); and
8
<PAGE> 15
(ii) whether or not listed on SCHEDULE 4.1(d), the
liabilities specifically not assumed by Buyer in accordance with the following:
(1) the proviso of Section 4.1(a)(i);
(2) the proviso of Section 4.1(a)(ii);
(3) Section 4.1(a)(iii);
(4) Section 4.1(c) (but only to the extent
of Seller's obligation to retain such liabilities as set forth in SCHEDULE
4.1(a)); and
(5) Article 5.
4.2. Seller's Accounts Receivable. In the event that after the Closing
Date, any Selling Party receives payment on any invoice issued by Buyer or
Seller relating to any storage rentals that Selling Party must promptly deliver
the payment received to Buyer.
4.3. Security Deposits. Seller will assign Buyer its right to the
security deposits under the Real Property Leases assigned to Buyer.
ARTICLE 5.
CERTAIN ARRANGEMENTS REGARDING EMPLOYEES
5.1. Definitions. As used in this Article 5, the following terms have
the meanings set forth below:
"Employee Protection Liabilities" means any liability of Seller to any
Employee arising out of claims for wrongful termination, breach of public
policy, breach of contract (express or implied), personal injury, tort, or
damages (whether actual, compensatory or punitive), or claims arising under
state civil rights laws, the Americans with Disabilities Act, the Family Medical
Leave Act, the Fair Labor Standards Act, Title VII of the Civil Rights Act, the
Age Discrimination in Employment Act, the Employment Retirement Income Security
Act or any other federal or state law providing for worker's rights or
protections; provided, notwithstanding anything in the preceding to the
contrary, "Employee Protection Liabilities" shall not include liabilities of
Seller to its Employees for the payment of earned wages, bonuses, severance
benefits, accrued sick pay, vacation pay or any other employee benefits or
compensation.
"Employees" means all salaried and hourly employees of the Seller,
whether or not they were employees before or after the Closing.
9
<PAGE> 16
5.2. Employee Compensation; Stay Bonus Programs.
(a) Seller shall be solely responsible for, and Buyer
specifically does not assume, and Seller shall cause to be paid in full all
amounts owed to any Employees under the Stay Bonus Programs and all amounts owed
to Employees, pursuant to applicable laws or contractual arrangements, including
any wages, salaries, severance benefits, success bonuses, accrued vacation,
accrued sick leave, pensions, payments under any employment, incentive
compensation or bonus agreements or any other employee benefit or compensation
plans, withholding taxes liabilities (including FICA and FUTA), Employee
Protection Liabilities, or the obligation to provide "continuation coverage" (as
defined in section 4980B(f)(2) of the Internal Revenue Code of 1986, as amended)
to any such person (and Seller shall offer and provide such "continuation
coverage") and all other Employee-related costs, expenses and liabilities,
except as set forth in SCHEDULE 4.1(a) with respect to Buyer's obligations under
the Stay Bonus Programs and except for any accruals or reserves reflected on the
Closing Balance Sheet and any of the foregoing incurred in the Ordinary Course
(as defined in Section 6.29(d)) through the Closing Date; provided, Employee
Protection Liabilities shall not be deemed to have occurred in the Ordinary
Course.
(b) Seller shall give written notice to all current Employees
eligible for the Stay Bonus Programs regarding the terms of the Stay Bonus
Programs; provided all written communication to such Employees must be reviewed
and approved by Buyer, which review will be reasonably prompt and approval will
not be unreasonably withheld.
5.3. Retained Liabilities with Respect to the Employees.
(a) Seller is responsible for any and all liabilities and
penalties under the Worker's Adjustment and Retraining Notification Act ("WARN
Act") or any similar state, local or foreign law as they relate to actions taken
by Seller with regard to any site of employment or to one or more facilities or
operating units within any site of employment of Seller or to Buyer's failure to
hire certain active hourly Employees and/or active salaried Employees of Seller.
Notwithstanding the foregoing, nothing in this Agreement shall be construed as
an admission by Seller or Buyer as to the applicability of the WARN Act or any
similar state, local or foreign law.
(b) Seller is solely responsible for, and the Buyer
specifically does not assume, Seller's obligations with respect to its Employee
Protection Liabilities.
5.4. Buyer's Option to Hire Seller's Employees. Prior to the Closing,
Buyer may invite certain of Seller's active hourly Employees and/or active
salaried Employees, as Buyer shall determine in its sole discretion, to be
considered for employment with the Buyer following the Closing. Prior to the
Closing, Buyer may distribute letters to Seller's Employees in connection with
the Business inviting them to apply for consideration for employment with the
Buyer depending on Buyer's needs, and generally setting forth the wages,
benefits and other terms of such employment offered by Buyer.
10
<PAGE> 17
5.5. Seller's Further Assurances Regarding Employees. Seller shall use
commercially reasonable efforts to obtain from Employees upon termination of
their employment with Seller, all property of Seller in the custody or
possession of such Employees.
5.6. Worker's Compensation. Seller shall retain liability for all
worker's compensation claims made by Employees hired by Buyer after the Closing
that were filed on or prior to the Closing Date. Seller also shall retain
liability for all worker's compensation claims filed after the Closing Date by
Employees hired by Buyer after the Closing for which a claim was first filed or
an injury first arose or medical attention was first sought on or prior to the
Closing Date, which are primarily attributable to pre-Closing events or
circumstances. Except to the extent retained by Seller as provided in the
preceding sentences, Buyer shall be liable for worker's compensation claims
arising out of events or circumstances occurring with respect to claims made
after the Closing by employees of Buyer that were Seller's Employees at the time
of Closing.
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES OF SELLING PARTIES
Selling Parties, jointly and severally, hereby represent and warrant to
Buyer that the following facts and circumstances as of the date of this
Agreement are true and correct, and hereby acknowledge that such facts and
circumstances constitute the basis upon which Buyer is induced to enter into and
perform this Agreement.
6.1. Organization; Good Standing and Qualification. Seller is a manager
managed limited liability company duly organized, validly existing and in good
standing under the laws of the State of Arizona, has all necessary powers to
own, lease and operate its assets and properties and to carry on its business as
now owned and operated by it, and is duly qualified to transact business and is
in good standing in all jurisdictions in which the nature of its business or its
properties makes such qualification necessary, except in which the failure to so
qualify would not have a material adverse effect on Seller.
6.2. Inventory Summary. SCHEDULE 6.2 hereto sets the summary of
Seller's inventory of Storage Units as of February 28, 1999. The summary is in
all material respects a true and complete listing of the Storage Units
identified thereon, and contains the status (i.e., rented or inventory) of such
Storage Unit.
6.3. No Dealership Agreements. Except as set forth on SCHEDULE 6.3,
Seller is not a party to any agreement, contract or understanding pursuant to
which any person is appointed to be or agreed to serve as a dealer for Seller or
pursuant to which Seller is committed to supply Storage Units on a continuing or
regular basis.
6.4. Real Property. A true, correct and complete copy of each of the
Real Property Leases has been delivered to Buyer. The Real Property Leases are
valid and in full force, there does not exist any default or event that with
notice or lapse of time, or both, would constitute a material default by Seller
under any of the Real Property Leases, and Selling Parties have no
11
<PAGE> 18
knowledge of any material default or event that with notice or lapse of time, or
both, would constitute a material default by any other party under the Real
Property Leases. Other than Seller's executive offices located at 1001 North
Central Avenue, Phoenix, Arizona, all the buildings, fixtures and leasehold
improvements used by Seller in its Business are located on the Leased Property.
Seller has all right, title and interest of the lessee under the terms of the
Real Property Leases. Except as set forth on SCHEDULE 6.4, no consent is
necessary for the assignment of the Real Property Leases to Buyer and upon the
Closing the Buyer will have all right, title and interest of the lessee under
and subject to the terms of each Real Property Lease, free and clear of all
Liens upon Seller's interest therein.
6.5. Zoning. To the knowledge of Selling Parties, the zoning of the
Leased Property permits the presently existing improvements, the improvements to
be made under the Real Property Leases, and the operation of Seller's Business
thereon.
6.6. Storage Units. Except as set forth in SCHEDULE 6.6, all of the
Storage Units which will be conveyed to Buyer hereunder are structurally sound
and are in good repair, reasonable wear and tear excepted. Except as set forth
on SCHEDULE 6.6, the brakes on the Trailer Units have a useful life of at least
25% of their expected life and the tires on the Trailer Units average at least
three-thirty seconds (3/32nds) tread. None of the Storage Units have been
pledged as collateral or are held by the Seller on consignment from others. No
Selling Party holds any sum representing customer deposits with respect to any
Storage Unit except prepaid rentals pursuant to a Contract.
6.7. Other Tangible Personal Property. The Personal Property described
in Section 1.3 and SCHEDULE 1.3 of this Agreement constitutes all of the items
of tangible personal property owned by, in the possession of, or used by Seller
in connection with its Business, other than the Storage Units and immaterial
Personal Property not listed on the schedules hereto (but which is still being
transferred to Buyer at Closing). The Personal Property described in SCHEDULE
1.3 is in good working condition and repair, reasonable wear and tear excepted,
and not in need of maintenance or repairs except for ordinary, routine
maintenance. The Personal Property listed in SCHEDULE 1.3 plus the Storage Units
listed in SCHEDULE 1.2 constitute all material tangible personal property
necessary for the conduct by Seller of its Business as now conducted, except for
the Excluded Assets listed on SCHEDULE 1.13 which otherwise would be included in
the Assets as Personal Property. Except as stated in SCHEDULE 1.3, no Personal
Property used by Seller in connection with its Business is held under any lease,
security agreement, conditional sales contract, or other title retention or
security arrangement, or is in the possession of anyone other than Seller
(except for Storage Units leased under the Contracts).
6.8. Contracts and Other Agreements.
(a) SCHEDULE 6.8 hereto sets forth a true and correct list of
all oral or written arrangements, contracts, commitments, agreements, leases or
other documents to which Seller is a party that relate, directly or indirectly,
to the lease or sale of the Storage Units (the "Contracts"). SCHEDULE 1.5 hereto
sets forth a true and correct list of all Other Agreements, copies or, if not
written, summaries of which have been provided to Buyer. Each Contract and
12
<PAGE> 19
each Other Agreement is in full force and effect and is enforceable in
accordance with its terms and Seller has performed all obligations required to
be performed by it to the date hereof and has not received a notice of any
default and to the knowledge of Selling Parties no party is in default under any
Contract or Other Agreement, and except as set forth on SCHEDULE 6.8, no event,
occurrence, condition or act which, with the giving of notice or the lapse of
time or both, would become a default or event of default has occurred to the
knowledge of any Selling Party.
(b) Other than those set forth on SCHEDULE 1.5, SCHEDULE 1.13
and SCHEDULE 6.8, Seller is not a party to or bound by any contract, agreement
or understanding relating to or involving any of the following:
(i) the purchase, sale or lease of real property;
(ii) the purchase or lease of any equipment,
machinery, raw materials, supplies or other tangible personal property providing
for an expenditure by Seller, individually or in the aggregate, in excess of
5,000 on an annualized basis;
(iii) the purchase of any raw materials, supplies,
component parts or other items or services in excess of the normal, ordinary,
usual and current requirements of the Business or at a price in excess of the
current reasonable market price, which requires the payment of at least $5,000
on an annualized basis;
(iv) any revocable or irrevocable guaranty,
indemnity, or power of attorney;
(v) any evidence of indebtedness, loan agreement,
indenture, promissory note, letter of credit, foreign exchange contract,
conditional sales agreement or other similar type of agreement, which requires
the payment of at least $5,000 on an annualized basis;
(vi) any joint venture, partnership or similar
arrangement;
(vii) any sales agency, sales representation,
distributorship, franchise or brokerage arrangement;
(viii) any license, option, or other arrangement
relating to Intellectual Property, whether Seller is licensor or licensee, which
requires the payment of at least $5,000 on an annualized basis;
(ix) any collective bargaining agreement, employment
agreement, consulting, advisory or service agreement, deferred compensation
arrangement or covenant not to compete;
(x) any transaction other than in the ordinary course
of the operation of Seller's Business; or
13
<PAGE> 20
(xi) any other material contract which is not
cancelable without penalty on thirty (30) days notice or less, which is not set
forth on another schedule hereto and which requires the payment of at least
$5,000 on an annualized basis.
6.9. Intellectual Property.
(a) SCHEDULE 6.9 describes all patents and patent applications
which are used or held for use by Seller in connection with the Business (in
each such case, identifying the date(s) and jurisdiction(s) in which the patent
was granted or applied for, the owner of such patent or application, and the
number of such patent or application).
(b) SCHEDULE 6.9 describes all trademark registrations and
trademark applications (including, but not limited to, domain names, logos,
trade names and service marks) which are used or held for use by Seller in
connection with the Business (in each such case, identifying the owner of each,
the date of any registrations, and the jurisdiction(s) in which any
registrations have been granted or applications filed).
(c) SCHEDULE 6.9 describes all copyright registrations and
copyright applications which are used or held for use by Seller in connection
with the Business (in each such case, identifying the owner of each, the date of
any registrations, and the jurisdiction(s) in which any registrations have been
granted or applications filed).
(d) SCHEDULE 6.9 describes substantially all of the computer
software and databases (including, but not limited to, the addresses for and
contents of any world wide web pages) which are used or held for use by Seller
in connection with the Business, wherever located, including, without
limitation, such software and databases which are resident on Seller's network
servers and individual personal computers (in each such case, identifying the
owner of each such item of software or database) except for software and
databases listed on SCHEDULE 1.13. All software and databases, and any licenses
thereto, set forth on SCHEDULE 6.9 are assignable to Buyer without cost or
expense to Buyer other than payment of the Purchase Price, except as otherwise
indicated on SCHEDULE 6.9. For that software and databases listed on SCHEDULE
1.13 or the assignment of which is limited as described in SCHEDULE 6.9, Seller
will cooperate in good faith with Buyer, both before and after the Closing, to
obtain a transfer of the information and data stored therein with respect to the
Assets, the Contracts and the Business to Buyer's operating systems in a manner
making such information and data usable by Buyer in the operation of the
Business after the Closing. Buyer and Seller acknowledge and agree that such
data and information are included in the Assets.
(e) Except as set forth on SCHEDULE 6.9, (i) the Patents and
Trade Name are free and clear of all Liens (as defined in Section 6.12 below)
and to the Seller's knowledge, the Patents are valid and enforceable; (ii)
Seller has taken all action necessary to maintain and protect the Patents and to
maintain Trade Name; (iii) there has been no claim made against Seller asserting
the invalidity, misuse or unenforceability of any of the Intellectual Property
or the infringement upon the rights of third parties thereby, and to Seller's
knowledge, there are no grounds for any such claim or challenge against the
Trade Name or the Patents; (iv) Seller is not
14
<PAGE> 21
aware of an infringement or misappropriation of any of the Patents or Trade
Name, or of any facts raising a likelihood of infringement or misappropriation
of any of the Patents or Trade Name; (v) to Seller's knowledge, the conduct of
the Business has not infringed or misappropriated, and does not infringe or
misappropriate, any intellectual property or proprietary right of any other
entity; (vi) no loss of any of the Intellectual Property is to Seller's
knowledge threatened or pending; and (vii) the consummation of the transactions
contemplated by this Agreement will not alter, impair or extinguish any of the
Intellectual Property.
6.10. Financial Statements.
(a) SCHEDULE 6.10 hereto sets forth true and accurate copies
of the Seller's unaudited balance sheet as of December 31, 1998 and the
statement of operations for the period April 1, 1998 through December 31, 1998
and Seller will provide Buyer the following:
(i) the unaudited financial statements for the
monthly periods ending January 31, 1999 and February 28, 1999, on or before
April 14, 1999;
(ii) its audited balance sheet as of December 31,
1998, the statement of operations and statement of cash flows for the period
April 1, 1998 through December 31, 1998, the notes to such financial statements,
and the report of independent public accountants related thereto, as soon as
available, but in no event later than 7 days prior to the Closing;
(iii) unaudited financial statements for March 1999
and each calendar month ending after the date of this Agreement and before the
Closing Date, each within 20 days after the end of each such monthly period; and
(iv) the Closing Balance Sheet as contemplated by
Section 3.1.
(b) All of the financial statements specified in Section
6.10(a) are referred to herein together as the "Financial Statements".
(c) With respect to the Financial Statements attached hereto
as SCHEDULE 6.10 and with respect to the Financial Statements delivered to Buyer
after the date of this Agreement, when delivered, the Selling Parties represent
that such Financial Statements (i) are in accordance in all material respects
with the books, files, reports, ledgers and other operating records of every
kind related to the Seller, the Assets, and the Business, (ii) have been
prepared in accordance with generally accepted accounting principles in the
United States, as in effect from time to time, consistently applied through the
periods covered ("GAAP"), except in the case of unaudited financial statements
the absence of notes and presentation items required by GAAP and subject to
annual recurring adjustments and (iii) present fairly and accurately in
accordance with GAAP the Assets, liabilities (including without limitation all
reserves) and financial conditions of the Seller as of the respective dates and
periods covered by the Financial Statements. The Seller maintains systems of
internal accounting controls sufficient to provide reasonable assurance that
transactions are recorded as necessary to prepare financial statements
conforming with GAAP and to maintain asset accountability.
15
<PAGE> 22
6.11. Employees. Except as set forth in SCHEDULE 4.1(a) and SCHEDULE
6.11, Seller has no pension, retirement, disability, medical, dental or other
health insurance plans, or other employee benefit plans or similar arrangements
covering any current or former employee who was employed or compensated in
connection with activities involving Seller's Business. Except as set forth in
SCHEDULE 4.1(a) and SCHEDULE 6.11, there are no employment contracts or
severance agreements with any of Seller's employees.
6.12. Title to Assets. Seller has good and sufficient title to all the
Assets and its interests in the Assets which Seller purports to own. All such
owned Assets are free and clear of mortgages, liens, pledges, charges,
encumbrances, equities, claims, easements, rights of way, covenants, conditions,
or restrictions ("Liens"), except Liens for current taxes not yet due and
payable.
6.13. Customers and Sales. SCHEDULE 6.13 to this Agreement is a correct
list containing the following persons and entities:
(i) current Storage Unit customers of Seller;
(ii) all customers of Seller or Seller's predecessors
that leased or purchased Storage Units from Seller or Seller's predecessors
after April 1, 1998; and
(iii) certain customers of Seller or Seller's
predecessors that leased or purchased Storage Units from Seller or Seller's
predecessors prior to April 1, 1998.
SCHEDULE 6.13 also sets forth a correct and current list of Seller's
pricing information as of February 28, 1999. Except pursuant to the scheduled
termination of Contracts or as indicated on SCHEDULE 6.3 or SCHEDULE 6.13,
Seller has no information or knowledge of any facts indicating that any of its
current customers that have leased or have had on lease in excess of 25 Storage
Units from Seller since April 9, 1998 intend to cease leasing or purchasing
Storage Units or materially alter the amount of the Storage Unit lease or
purchase business that they are presently doing with Seller. Seller has, or
prior to the Closing Date will have, delivered to Buyer a schedule setting forth
all accounts receivable write-offs during 1998 and the first three months of
1999 with respect to its current and former customers, excepting only individual
write-offs which are $100 or less in amount.
6.14. Insurance Policies. SCHEDULE 6.14 to this Agreement is a
description of all insurance policies held by Seller concerning the Assets and
the Business. Such policies are, and on the Closing Date will be, in full force
and effect.
6.15. Compliance with Laws. To the knowledge of Selling Parties, Seller
has substantially complied with, and is not in violation of, applicable federal,
state or local statutes, laws and regulations (including, without limitation,
any applicable environmental, health, building, zoning or other law, ordinance
or regulation) affecting its Assets (including without limitation the Leased
Property) in the operation of its Business.
16
<PAGE> 23
6.16. Litigation. Except as set forth in SCHEDULE 6.16, there is no
suit, action, arbitration or legal, administrative or other proceeding, or
governmental investigation pending or, to the best knowledge of Selling Parties,
threatened, against or affecting Seller, the Assets or the Business. The matters
set forth in SCHEDULE 6.16 if decided adversely to Seller would not reasonably
be expected to result in a material adverse change in the Seller's Business or
the Assets. Seller is not in default with respect to any order, writ,
injunction, or decree of any federal, state, local or foreign court, department,
agency or instrumentality. Except as set forth in SCHEDULE 6.16, Seller is not
presently engaged in any legal proceeding to recover moneys due it or damages
sustained by it in connection, directly or indirectly, with the Business.
6.17. Agreement Will Not Cause Breach or Violation. Neither the entry
into this Agreement nor the consummation of the transactions contemplated hereby
will result in or constitute any of the following: (i) a breach of any term or
provision of this Agreement; (ii) a material default or an event that, with
notice or lapse of time or both, would be a material default, breach or
violation of the articles of organization or operating agreement of Seller or
any lease, license, promissory note, conditional sales contract, commitment,
indenture, mortgage, deed of trust or other agreement, instrument or arrangement
to which Seller is a party or by which Seller, Assets or the Business are bound;
(iii) an event that would permit any party to terminate any Contract, Other
Agreement or Real Property Lease with Seller or to accelerate the maturity of
any indebtedness or other obligation of Seller; (iv) the creation or imposition
of any Lien on any of the Assets; or (v) the violation of any law, regulation,
ordinance, judgment, order or decree applicable to or affecting the Seller,
Assets or the Business.
6.18. Authority and Consents. Except as set forth in SCHEDULE 6.18,
Seller has the right, power and legal capacity and authority to enter into and
perform its obligations under this Agreement, and no approval, consent, waiver
or agreement of any person is necessary in connection with this Agreement or the
transactions contemplated hereby other than (i) as required in connection with
or in compliance with the provisions of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR Act"), or (ii) those that prior to the Closing Date will be
obtained or made, all of which are set forth on SCHEDULE 6.18. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby by Seller has been, or prior to the Closing will have been, duly
authorized by all necessary action of Seller (including without limitation any
necessary action by Seller's members and managers). This Agreement constitutes a
legal, valid and binding obligation of the Selling Parties enforceable against
the Selling Parties in accordance with its terms, except to the extent that
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting creditor's rights generally.
6.19. Interest in Customers, Suppliers and Competitors. Except as set
forth in SCHEDULE 6.19 and except for ownership of TEP-98, LP, neither of the
Selling Parties nor any officer, director or employee of Seller, nor any spouse
or child of any of them, has any direct or indirect interest in any competitor,
supplier or customer of Seller in its Business or in any person with whom Seller
is conducting its Container business.
17
<PAGE> 24
6.20. Environmental Matters.
(a) Definitions. As used in this Section 6.20, the following
capitalized terms have the respective meanings specified below:
(i) "Environmental Laws" means all federal, state,
local or foreign laws, regulations, rules, ordinances, orders, judgments and
Environmental Permits relating to pollution or protection of the environment or
human health and safety, including, without limitation, laws and regulations
relating to Releases or threatened Releases of Hazardous Materials into the
indoor or outdoor environment (including, without limitation, ambient air,
surface water, groundwater, land, surface and subsurface strata) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
Release, transport or handling of Hazardous Materials and all laws and
regulations with regard to recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Materials, and all laws and regulations
relating to endangered or threatened species of fish, wildlife and plants and
the management or use of natural resources.
(ii) "Environmental Permits" means all permits,
registrations, approvals, exemptions and licenses, and all filings with and
submissions to any governmental agency or other authority, required by any
Environmental Law.
(iii) "Hazardous Materials" means any pollutants,
contaminants, hazardous substances, hazardous chemicals, toxic substances,
hazardous wastes, infectious wastes, radioactive materials, petroleum including
crude oil or any fraction thereof, asbestos in any form or condition,
polychlorinated biphenyls, or solid wastes or other hazardous materials,
including without limitation those defined as any of the foregoing in, or
regulated as such under, any Environmental Law, including, without limitation,
petroleum and asbestos.
(iv) "Release" shall mean any release, spill,
emission, discharge, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the indoor or outdoor environment
(including, without limitation, ambient air, surface water, groundwater, and
surface or subsurface strata) or into or out of any property, including, without
limitation, such movement of Hazardous Materials through or in the air, soil,
surface water, groundwater or property.
(b) Representations and Warranties.
(i) Except as set forth on SCHEDULE 6.20, with
respect to the Business and the Assets, (1) Seller has complied in all material
respects at all times in the past and currently is in compliance in all material
respects with all applicable Environmental Laws and, to Seller's knowledge,
there are not any presently existing circumstances that are reasonably likely to
prevent or interfere with such compliance by Seller in the future; (2) to
Seller's knowledge there have been no Releases, discharges or spills or, to
Seller's knowledge, threatened releases, discharges, or spills of Hazardous
Materials at, on, under, or from the Leased Property, or migrating to the Leased
Property from adjacent properties, that are reasonably likely to subject
18
<PAGE> 25
Seller or Buyer to any material liability under applicable Environmental Laws,
including, but not limited to, liability for corrective actions, compliance
actions, response costs, natural resource damages or tort damages; (3) neither
Seller nor, to the knowledge of Seller, any of Seller's predecessors in their
operation of the storage container and trailer business prior to Seller, have
disposed of, transported, recycled, treated or stored Hazardous Materials at any
off-site location, or arranged for the same, in a manner that is reasonably
likely to result in any liability to Buyer under applicable Environmental Laws,
including, but not limited to, liability for correction actions, compliance
actions, response costs, natural resource damages or tort damages; (4) to
Seller's knowledge, no underground storage tank (active or abandoned) is or has
been present at, on, under or in any Leased Property; and (5) there are no
claims, notices of violation, litigation, investigations, inquiries, rulings,
orders, or citations pending, of which Seller has received notice or to the
knowledge of Seller, threatened or contemplated, by governmental officials or
other persons, with respect to Seller, the Business or the Assets, that allege
that Seller is in violation or is otherwise liable or potentially liable
pursuant to applicable Environmental Laws or in connection with Hazardous
Materials. Except as set forth in SCHEDULE 6.20, Seller has obtained all
material Environmental Permits for the Leased Property currently utilized by
them, all such Environmental Permits are valid and in full force and effect, no
appeal nor any other action is pending to revoke, revise or impair any such
Environmental Permits, Seller has applied in a timely fashion for any renewal
for such Environmental Permits, and Seller is in material compliance with all
terms and conditions of all such Environmental Permits.
(ii) SCHEDULE 1.10 includes a true, correct and
complete description of all material Environmental Permits of Seller required to
operate the Business or the Assets pursuant to applicable Environmental Laws and
in a manner consistent with past practice. Seller has delivered to Buyer true,
correct and complete copies of the material Environmental Permits and each
material environmental investigation, study, audit, test, review of analysis
(including all Phase I environmental assessments) in its possession or control
relating to the Business or the Assets within the past five (5) years.
6.21. Documents Delivered. Each copy or original of any agreement,
contract or other instrument which is identified in any exhibit or Schedule to
this Agreement and delivered by or on behalf of any Selling Party to Buyer (or
its representative), is what it is purported to be by such Selling Party and has
not been amended, canceled or otherwise modified. The agreements, contracts and
other instruments identified in this Agreement and its Schedules comprise all of
the agreements, contracts and other instruments to which Seller is a party and
which are material to the conduct of the Business (excepting only agreements or
contracts that will become immaterial as a consequence of the Closing of the
transactions contemplated hereby).
6.22. Prepaid Storage Unit Fees. Except as set forth on SCHEDULE 6.22,
Seller holds no sums which have been deposited or paid by any customer of Seller
to cover pre-paid rent, security deposits or for the purpose of pre-paying the
expense of Seller's picking-up or re-delivering any Storage Unit upon the
termination of the lease or rental of any such Storage Unit.
6.23. Investment Representation. Seller is an "accredited investor" as
that term is defined in Rule 501(a) promulgated under the Securities Act. Seller
is and will be acquiring the
19
<PAGE> 26
Shares for its own account for investment and without a view to the resale
thereof in a distribution within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), and acknowledges that the Shares will not be
transferable by Seller in violation of the Securities Act or the then-applicable
rules or regulations thereunder, provided that Seller may, subject to the
limitations of Section 12.2(a), distribute the Shares to its direct and indirect
members. Buyer has made available to the Selling Parties all of Buyer's public
filings with the Securities and Exchange Commission (the "Commission") and any
and all additional information which any Selling Party has requested concerning
Buyer, its financial condition, results of operations and business prospects.
The Selling Parties further acknowledge that the Shares to be issued as a
portion of the Purchase Price hereunder have not been registered and will not be
registered under the Securities Act or any state securities laws in reliance on
an exemption for private offerings.
6.24. [Intentionally Omitted].
6.25. Promotions and Special Offers. Except as set forth on SCHEDULE
6.25, Seller is not a party to any rental, sale, lease purchase or other
arrangement pursuant to which customers may be entitled to special offers or
special pricing relating to any Storage Units. Except as set forth on SCHEDULE
6.25, no customer of Seller has any special or unusual arrangement for the
purchase or lease of any Storage Unit, including, without limitation, any fixed
price purchase option at the end of lease term or any arrangement whereby
portions of rental payments may be credited towards the purchase of a Storage
Unit.
6.26. Future Commitments. Except as set forth on SCHEDULE 6.26, Seller
has not committed to make available to any person or entity any Storage Unit
except pursuant to an existing Contract, and Seller has not committed to make
any Storage Units available to for sale, lease or use at special rates or
without charge to any charity or non-profit organization or event.
6.27. Receivables. All of the Receivables are the result of bona fide
transactions of the Business in the ordinary course, are valid and enforceable
obligations collectible in accordance with their terms, subject to the reserves
set forth in the Financial Statements and are not subject to any unreserved
offset or counterclaim known to Seller as of the Closing Date. The Receivables
reflected on the audited December 31, 1998 balance sheet and the Closing Balance
Sheet are, or will be, valued and subject to reserves established in accordance
with GAAP. Since November 30, 1998, there have not been any write-offs as
uncollectible of any accounts receivable of the Business, individually in excess
of $100 or in the aggregate, in excess of $2,500. Except as disclosed in
SCHEDULE 6.8, none of the Storage Units have been leased by Seller pursuant to
lease-purchase or similar arrangements.
6.28. Taxes.
(a) All tax and information returns required to be filed by
the Seller, on or prior to the Closing Date with respect to taxes of any kind or
nature have been or will be timely filed, and except as set forth on SCHEDULE
6.28, all such returns are or will be true, correct and complete in all material
respects. Except as set forth in SCHEDULE 6.28, all amounts owed by Seller
(whether or not shown on any return) as due and payable on each of such returns
for all
20
<PAGE> 27
periods through the Closing Date have been paid or will be paid in full when
due; provided, however, that the representations set forth in this Section 6.28
are made only to the extent that taxes (i) are or may become Liens on the
Assets; (ii) are those for which Buyer may be liable in the capacity of
transferee of the Assets; or (iii) are those for which the non-payment of which
could result, or reasonably could be expected to result, in a material adverse
effect, individually or in the aggregate, on the Assets, the Business or the
financial condition of the Business.
(b) Any taxes which were not due and owing will be adequately
reflected on the audited December 31, 1998 balance sheet and will be adequately
reflected on each other balance sheet provided under Section 6.10. Any taxes
which are to be assumed by Buyer in respect of the Assets which at the Closing
Date are not yet due and owing will be adequately reflected on the Final Balance
Sheet as a reserve for taxes. There are no grounds for the assertion or
assessment of any taxes against Seller, the Assets or the Business other than
those reflected or reserved against on balance sheets provided under Section
6.10 or the Closing Balance Sheet.
(c) Neither the Assets nor the Business are and will not be
encumbered by any Liens arising out of any unpaid taxes for any period ending on
or prior to the Closing Date, and there are no grounds for the assertion or
assessment of any Liens against the Assets or the Business in respect of any
taxes. The transactions contemplated by this Agreement will not give rise to the
creation of any Liens against the Assets or the Business in respect of any
taxes.
(d) Except as set forth in SCHEDULE 6.28, there is no action
or proceeding or unresolved claim for assessment or collection, pending or, to
Seller's knowledge, threatened by, or present or expected dispute with, any
governmental authority for assessment or collection from Seller of any taxes of
any nature affecting Seller, the Assets or the Business.
(e) The Seller has withheld and paid or will pay prior to
Closing all taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
manager, member or other third party for any period ending on or prior to the
Closing Date.
6.29. Absence of Certain Changes or Events. Since November 30, 1998,
except as set forth on SCHEDULE 6.29, and with respect to the Business, there
has not been, any of the following:
(a) any event or occurrence which has had, or would reasonably
be expected to have, a material adverse effect, individually or in the
aggregate, on the business, assets, results of operations or condition
(financial or otherwise) of the Seller, the Business or the Assets (a "Material
Adverse Change");
(b) loss or threatened loss of a material customer account;
(c) damage, destruction or casualty loss affecting the Assets,
whether or not covered by insurance;
21
<PAGE> 28
(d) waiver, release, cancellation, settlement or compromise of
any indebtedness owed to Seller or claim or right of Seller other than
receivables in the ordinary course of commercial operations customarily engaged
in by the Business consistent with past practices ("Ordinary Course") which do
not exceed $5,000 in the aggregate;
(e) implementation of any unusual payment arrangements with
customers of the Business or related to the Assets, including, without
limitation, "early-buy" or "bill and hold" or discounted receivable
arrangements;
(f) markdowns or promotions, or any allowances, sales returns
or other credits to customers or suppliers other than in the Ordinary Course;
(g) increase in or commitment to increase compensation,
benefits, or other remuneration to or for the benefit of any member, manager,
officer, employee, consultant or agent of Seller, or, in connection with the
Business, any other person, or any increase in or commitment to increase any
benefits granted under any benefit plan with or for the benefit of any such
member, manager, officer, employee, agent, consultant or person other than in
the Ordinary Course or except pursuant to the Stay Bonus Programs;
(h) borrowing or incurrence of any indebtedness (including
letters of credit and foreign exchange contracts), contingent or otherwise, by
or on behalf of Seller other than trade payables incurred in the Ordinary Course
or any endorsement, assumption, or guarantee of payment or performance of any
indebtedness or liability of any other person or entity by Seller;
(i) material change made by the Seller in its tax or financial
accounting;
(j) grant of any Lien with respect to the Assets which Lien
remains outstanding;
(k) transfer, sale, lease, license or other disposition of any
Assets, other than in sales or leases of Storage Units in the Ordinary Course;
(l) termination or material modification of any Contract,
Other Agreement, Real Property Lease or any material term thereof;
(m) lease or acquisition of any capital assets included in the
Assets involving an expenditure greater than $5,000 per item except for Storage
Units acquired in the Ordinary Course;
(n) loan or advance to any person;
(o) any other transaction entered into or carried out by
Seller relating to the Business or the Assets other than in the Ordinary Course;
or
22
<PAGE> 29
(p) payment by Seller on the principal amount of the
$4,500,000 loan from Janal, LLLP to Seller.
(q) commitment or agreement by Seller to do any of the
foregoing items (d) through (o) (other than this Agreement or any arrangement
specifically and expressly provided for in this Agreement).
6.30. Inventories. All Inventories held by Seller at any location are
not physically damaged or obsolete in any material respect and all are in a
condition useable for their usual and intended purpose, reasonable wear and tear
excepted.
6.31. Undisclosed Liabilities. The Seller has no liabilities relating
to the Assets or the Business whatsoever, known or unknown, asserted or
unasserted, liquidated or unliquidated, accrued, absolute, contingent, or
otherwise, and there is no basis for any claim against the Seller for any such
liability, except (a) to the extent set forth on the audited December 31, 1998
balance sheet or (b) to the extent set forth on the Closing Balance Sheet (other
than liabilities incurred in the Ordinary Course since the audited December 31,
1998 balance sheet, which will be reflected on the Closing Balance Sheet or
incurred since the Closing Balance Sheet), none of which will, or could, result
in a Material Adverse Change.
6.32. Product Warranties. Seller has no knowledge of any significant
product warranty claims or similar product claims made against Seller since
December 31, 1998. No person or party (including, but not limited to, any
governmental authority or agency of any kind) has any claim or basis for any
action or proceeding against Seller under any law, rule, regulation or order
relating to unfair competition, false advertising or other similar claims
arising out of product warranties, guarantees, specifications, manuals or
brochures used in the Business.
6.33. Full Disclosure. To the knowledge of Seller, none of the
representations and warranties made by any of the Selling Parties in this
Agreement or any exhibit or schedule hereto contains any untrue statement of a
material fact, or omits any material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading.
ARTICLE 7.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that the following facts
and circumstances as of the date of this Agreement are true and correct, and
hereby acknowledge that such facts and circumstances constitute the basis upon
which Seller is induced to enter into and perform this Agreement.
7.1. Organization and Qualification. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all necessary corporate power to own, lease and operate its
assets and properties and to carry on its business as now owned and operated by
it, and is duly qualified to transact business and is in good standing in all
jurisdictions in which the nature of its business or its properties makes such
qualification
23
<PAGE> 30
necessary, except in which the failure to so qualify would not have a material
adverse effect on Buyer.
7.2. Authority; Non-Contravention; Approvals.
(a) Buyer has the right, power and legal capacity and
authority to enter into and perform its obligations under this Agreement, and no
approval or consent of any person (including the stockholders of the Buyer) is
necessary in connection with this Agreement or the transactions contemplated
hereby including but not limited to authorization and issuance of the Shares.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by Buyer have been, or prior to the Closing
will have been, duly authorized by all necessary corporate action of Buyer and
its stockholders. This Agreement constitutes a legal, valid and binding
obligation of Buyer enforceable against Buyer in accordance with its terms,
except to the extent that enforcement may be limited by bankruptcy, insolvency
or other similar laws affecting creditor's rights generally.
(b) Neither the entry into this Agreement nor the consummation
of the transactions contemplated hereby, nor the exercise of any rights and
remedies set forth in the Certificate of Designations for the Series B Preferred
Stock will result in or constitute any of the following: (i) a breach of any
term or provision of this Agreement or the Certificate of Incorporation or
Bylaws of Buyer; (ii) a default or an event that, with notice or lapse of time
or both, would be a default, breach or violation of the certificate of
incorporation or bylaws of Buyer or any lease, license, promissory note,
conditional sales contract, commitment, indenture, mortgage, deed of trust or
other agreement, instrument or arrangement to which Buyer is a party or by which
Buyer is are bound; (iii) an event that would permit any party to terminate any
agreement with Buyer or to accelerate the maturity of any indebtedness or other
obligation of Buyer; or (iv) the violation of any law, regulation, ordinance,
judgment, order or decree applicable to or affecting Buyer.
(c) Except for the applicable requirements of the HSR Act and
federal and state securities laws, no consent, approval, order or authorization
of, or registration, declaration or filing with, any governmental entity is
required to be obtained or made by or with respect to Buyer or any assets,
properties or operations of Buyer or with respect to the authorization or
issuance of the Series B Preferred Stock or the common stock issuable upon
conversion thereof, in connection with the execution and delivery by Buyer of
this Agreement, the consummation of the transactions contemplated hereby or the
conversion of the Series B Preferred Stock.
7.3. Valid Issuance of Shares. On or before the Closing Date, (i) the
Buyer will have duly and validly adopted, through all necessary corporate
action, and filed with the Secretary of State of the State of Delaware a
Certificate of Designations for the Series B Preferred Stock containing the
terms and conditions described in Exhibit "A" and which is reasonably acceptable
to Seller, and (ii) the Shares will have been duly authorized and validly
reserved for issuance. Upon the Closing and issuance of the Shares, the Shares
will be duly authorized, validly issued, fully paid and nonassessable shares of
Series B Preferred Stock, and will be free of restrictions on transfer other
than restrictions on transfer under applicable federal and state securities laws
24
<PAGE> 31
and pursuant to Section 12.2(a). There are no preemptive rights with respect to
the Shares, or the shares of the Buyer's common stock issuable upon conversion
of the Shares. On or prior to the Closing Date, the Buyer will have reserved
sufficient number of Shares of its common stock for issuance upon conversion of
the Shares. The common stock issuable upon conversion of the Shares acquired
under this Agreement will, upon issuance in accordance with the terms of the
Series B Preferred Stock described in Exhibit "A", be duly authorized, validly
issued, fully paid and nonassessable and will be free of restriction on transfer
other than restrictions on transfer under applicable state and federal
securities laws, under Section 12.2(a) and those created by Seller (including
without limitation those under the Registration Rights Agreement executed and
delivered by Seller at Closing).
7.4. Capitalization. The entire authorized capital stock of the Buyer
consists of 22,000,000 shares of stock, of which 17,000,000 shares are
designated common stock, $.01 par value, and 5,000,000 shares are designated
preferred stock, $.01 par value ("Preferred Stock"). As of the Closing Date, no
shares of Preferred Stock will be outstanding, except for the Shares. All of the
outstanding shares of capital stock of the Buyer (and any shares issued pursuant
to presently outstanding options, if exercised and purchased at the applicable
exercise price) were duly authorized (or will be when so issued) validly issued,
fully paid and nonassessable.
7.5. Information. Buyer has made available to the Selling Parties each
registration statement, schedule, report, proxy statement or information
statement it has filed with the Securities and Exchange Commission since January
1, 1998 (collectively, the "Buyer Reports"). To the knowledge of Buyer, none of
the Buyer Reports, taken together with any information disclosed to Buyer in the
Schedules to this Agreement or otherwise in writing, contain any untrue
statement of material fact or omits any material fact necessary in order to make
the statements made, in light of the circumstances under which they are made,
not misleading. Since January 1, 1998, the Buyer has made all filings with the
SEC in a timely manner as required by law and no event has occurred that
requires an additional filing or any amendment to a prior filing.
7.6. Financing. Buyer has, or will have at the Closing Date, the funds
necessary to pay the cash portion of the Purchase Price payable to Seller under
this Agreement.
ARTICLE 8.
SELLING PARTIES' OBLIGATIONS BEFORE CLOSING
Selling Parties covenant that, except as otherwise agreed in writing by
Buyer, from the date of this Agreement until the Closing:
8.1. Buyer's Access to Premises and Information. For purposes of
conducting Buyer's "due diligence" investigation of Seller's business, Buyer and
its counsel, accountants and other representatives shall be entitled to have
full access during normal business hours to all Seller's properties, books,
accounts, records, contracts and documents of or relating to the Assets and the
Business.
25
<PAGE> 32
8.2. Conduct of Business in Normal Course. Prior to the Closing, Seller
shall carry on its Business and activities diligently and in the Ordinary
Course, and shall not make or institute any unusual or novel methods of
purchase, sale, lease, management, accounting or operation that will vary
materially from the methods used by Seller as of the date of this Agreement.
Without limiting the foregoing, prior to the Closing, Seller shall not without
the prior written consent of the Buyer, take any of the following actions:
(a) enter into any agreements which grant any person the right
to purchase any Storage Units or an option to purchase any Storage Units except
in the Ordinary Course;
(b) enter into any agreements for the purchase of supplies,
raw materials, equipment, spare parts or the like at prices higher than
generally prevailing in the industry;
(c) enter into any agreements for the lease of Storage Units
at prices lower than generally prevailing in the industry (any such leases
actually entered shall be included in the Contracts by addendum to SCHEDULE 6.8
delivered by Seller to Buyer and upon delivery, Seller shall be deemed to make
the representations contained in Section 6.8 with respect to such Contract);
(d) sell or enter into any agreement to sell (other than this
Agreement) any Assets (including without limitation, Storage Units);
(e) grant any increase in the rate of pay, salaries, bonuses,
benefits, or other compensation or commitments of any officers, managers,
employees, consultants, or agents other than in the Ordinary Course or pursuant
to the Stay Bonus Programs;
(f) enter into any employment contract or collection
bargaining agreement;
(g) enter into any contract or agreement for any capital
expenditure involving more than $5,000 or enter into any material lease of
capital equipment or real property, except in connection with Seller's assets
not included in the Assets;
(h) create, assume, incur or guarantee any indebtedness other
than in the Ordinary Course and with a maturity date of less than one year;
(i) make or institute any change in any accounting procedures
or practices or the Seller's financial structure, except in accordance with
GAAP;
(j) perform or attempt to take any act, or omit to take an
action, which will cause a material breach of any Contract, Other Agreement,
Real Property Lease, commitment or obligation that Seller is assigning to Buyer;
(k) waive, release, cancel, settle or compromise any
indebtedness owed to Seller (other than indebtedness constituting Excluded
Assets) that would affect, in any material
26
<PAGE> 33
respect, Seller's balance sheet, other than Receivables in the Ordinary Course
having an aggregate stated fact value not to exceed $5,000;
(l) take any action or voluntarily incur any liability which
if taken or incurred prior to the date of this Agreement would be required to be
disclosed on any Schedule hereto;
(m) make any distribution to Seller's members or pay any
amounts due to a related party (including without limitation the Guarantor)
other than payment of $30,000 accrued, imputed interest per month on that
certain loan in the amount of $4,500,000 from, LLLP to Seller; or
(n) modify, amend, cancel or terminate any of its existing
Real Estate Leases, Contracts or Other Agreements, or agree to do any of those
acts.
8.3. Preservation of Business and Relationships. Seller shall use its
best efforts, without making any commitments on behalf of Buyer, to preserve its
business organization intact, to keep available to Seller until Closing its
present officers and employees, and to preserve its present relationships with
suppliers, customers and others having business relationships with it.
8.4. Maintenance of Insurance. Seller shall continue to carry its
existing insurance, subject to variations in amounts required by the ordinary
operations of its business.
8.5. Consent of Others. As soon as reasonably practicable after the
execution and delivery of this Agreement, and in any event on or before the
Closing Date, Seller shall use its reasonable commercial efforts to obtain the
written consent of the landlord under any lease relating to the property to be
subject to the Leased Property and the Real Property Leases that are included in
the Assets and any persons whose consent may be required under the terms of any
Contract or Other Agreement, each such consent in form and substance
satisfactory to Buyer and will furnish to Buyer executed copies of those
consents. Buyer shall use its reasonable commercial efforts to assist and
cooperate in Seller's efforts under this Section 8.5.
8.6. Representations and Warranties True at Closing. Selling Parties
shall promptly disclose to Buyer any information contained in the Schedules to
this Agreement which, because of an event occurring after the date hereof, is
incomplete or is no longer correct as of all times after the date hereof until
the Closing Date; provided, however, that none of such disclosures shall be
deemed to modify, amend or supplement the representations and warranties of
Seller or the Schedules hereto for the purposes of Article 9 hereof, unless
Buyer shall have consented thereto in writing.
8.7. Sales and Use Tax of Prior Sales. Seller shall, as promptly as
practicable upon Buyer's request, furnish to Buyer a certificate from the
appropriate governmental agency evidencing that all sales and use and other tax
responsibilities of Seller (other than income tax liabilities) accruing before
the Closing Date have been fully satisfied or provided for.
27
<PAGE> 34
8.8. Statutory Filings. Seller shall cooperate fully with Buyer in
preparing and filing all information and documents deemed necessary or desirable
by Buyer under any statutes or governmental rules or regulations pertaining to
the transactions contemplated by this Agreement, including without limitation
filings pursuant to the HSR Act.
8.9. Transition Services. Seller shall negotiate, in good faith, a
reasonable transition services agreement containing the terms specified in
Exhibit "I".
ARTICLE 9.
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
The obligations of Buyer to purchase the Assets under this Agreement
and pay the Purchase Price are subject to the satisfaction, at or before the
Closing, of all the conditions set out below in this Article 9. Buyer may waive
any or all of these conditions in accordance with Section 13.6 hereof; provided,
however, that no such waiver of a condition (other than a waiver of Section 9.1
in a particular case) shall constitute a waiver by Buyer of any of its other
rights or remedies, at law or in equity, if Selling Parties shall be in default
of any of their representations, warranties or covenants under this Agreement.
9.1. Accuracy of Representations and Warranties. All representations
and warranties by Selling Parties in this Agreement or in any written statement
that shall have been delivered to Buyer by Selling Parties under this Agreement
shall be true on and as of the Closing Date as though made on and as of that
date.
9.2. Absence of Liens. At or prior to the Closing, the Assets must be
free and clear of Liens or the Seller will have made arrangements, satisfactory
to Buyer and its counsel, for the release of Liens from the Assets. Buyer must
have received UCC search reports satisfactory to it issued by the Office of the
Secretary of State, or other appropriate office, in each state in which the
Assets may be located, indicating that there are no filings under the Uniform
Commercial Code or otherwise which relate to any of the Assets.
9.3. Selling Parties' Performance. Selling Parties shall have
performed, satisfied, and complied with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by
Selling Parties on or before the Closing Date.
9.4. Absence of Litigation. No action, suit or proceeding before any
court or any governmental body or authority, pertaining to the Assets or to the
transactions contemplated by this Agreement or to their consummation, shall have
been instituted or threatened on or before the Closing Date.
9.5. Approval. The execution, delivery and performance of this
Agreement by Seller, and the performance of its covenants and obligations
hereunder, shall have been duly authorized by all necessary corporate action,
and Buyer shall have received copies of all resolutions pertaining to that
authorization, certified by the manager of Seller.
28
<PAGE> 35
9.6. Consents. All necessary agreements and consents of any parties to
the consummation of the transactions contemplated by this Agreement, or
otherwise pertaining to the matters covered by it, shall have been obtained by
Seller and delivered to Buyer.
9.7. Approval of Documents. The form and substance of certificates,
instruments and other documents delivered to Buyer under this Agreement shall be
satisfactory in all reasonable respects to Buyer and its counsel.
9.8. Bill of Sale; Transfer Documents. Seller shall deliver to Buyer a
bill of sale substantially in the form attached hereto as Exhibit "B" hereto
covering the Assets, the assignment and assumptions substantially in the form
attached hereto as Exhibit "C", and all other documents reasonably necessary to
transfer title to the Assets (including without limitation all necessary
certificates of title).
9.9. Non-Competition Agreement. Selling Parties and Gregg Ghelfi shall
deliver to Buyer the Non-Competition Agreement, in the form attached hereto as
Exhibit "D" fully executed.
9.10. Corporate Documents. Seller shall have delivered to Buyer at
least two business days prior to the date of the Closing a copy of Seller's
articles of organization, certified by the Secretary of State of the State of
Arizona, and a copy of Seller's operating agreement certified as true and
complete by the manager of Seller.
9.11. Good Standing Certificates. Seller shall deliver to Buyer at the
Closing a certificate of good standing issued by the secretary of state of
Arizona, Texas, Colorado, Tennessee, Louisiana and Oklahoma, dated a date not
more than thirty (30) days prior to the Closing Date.
9.12. Environmental Assessment Report. Buyer shall have received a
"Phase I Environmental Assessment Report" with respect to the Leased Property
and upon review of such report Buyer is willing to close the transactions
contemplated by this Agreement.
9.13. SCHEDULE 6.2. Seller shall deliver to Buyer copies of monthly
summaries of inventory for all available periods after February 28, 1999,
certified by the Chief Financial Officer of Seller, or other officer having
knowledge, as true and complete listing of the Storage Units and Contracts
identified thereon and the status (rented or inventory).
9.14. HSR Waiting Period. The consummation of the transactions
contemplated by this Agreement shall be in compliance with the HSR Act and any
filing under the HSR Act due to the transactions contemplated by this Agreement
shall have expired or have been terminated early.
9.15. Financial Statements. Buyer shall have delivered to Seller all of
the Financial Statements.
29
<PAGE> 36
9.16. Transition Services Agreement. Seller shall have delivered to
Buyer a reasonable transition services agreement containing the terms attached
hereto as Exhibit "I".
9.17. License Agreement. Seller shall have delivered to Buyer a license
agreement, duly executed by TEP-98, LP, containing the terms attached hereto as
Exhibit "J".
9.18. Opinion of Seller's Counsel. Seller shall have delivered to Buyer
an opinion of Seller's counsel substantially in the form attached hereto as
Exhibit "H".
ARTICLE 10.
CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
The obligations of Seller to purchase the Assets under this Agreement
and pay the Purchase Price are subject to the satisfaction, at or before the
Closing, of all the conditions set out below in this Article 10. Seller may
waive any or all of these conditions in accordance with Section 13.6 hereof;
provided, however, that no such waiver of a condition (other than a waiver of
Section 10.1 in a particular case) shall constitute a waiver by Seller of any of
its other rights or remedies, at law or in equity, if Selling Parties shall be
in default of any of their representations, warranties or covenants under this
Agreement.
10.1. Accuracy of Buyer's Representations and Warranties. All
representations and warranties by Buyer in this Agreement or in any written
statement delivered to Seller by Buyer under this Agreement shall be true on and
as of the Closing Date as though made at that date.
10.2. Buyer's Performance. Buyer shall have performed, satisfied and
complied with all covenants, agreements, and conditions that it is required by
this Agreement to perform, satisfy or comply with on or before the Closing Date.
10.3. Certification by Buyer. Seller shall have received a certificate,
dated the Closing Date, signed by Buyer's president or vice president and its
chief financial officer, certifying, in such detail as seller and its counsel
may reasonably request, that the conditions specified in Sections 10.1 and 10.2
have been fulfilled.
10.4. Buyer's Corporate Approval. Buyer shall have received corporate
authorization and approval for the execution and delivery of this Agreement and
all corporate action necessary or proper to fulfill the obligations of Buyer to
be performed under this Agreement on or before the Closing Date.
10.5. Absence of Litigation. No action, suit or proceeding before any
court or any governmental body or authority, pertaining to the transactions
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened on or before the Closing Date.
10.6. Certificate of Designations. Buyer shall have delivered to Seller
a copy of the Certificate of Designations for the Series B Preferred Stock
certified by the Delaware Secretary of State.
30
<PAGE> 37
10.7. Approval of Documents. The form and substance of certificates,
instruments and other documents delivered to Seller under this Agreement shall
be reasonably satisfactory in all respects to Seller and its counsel.
10.8. Consents. All necessary agreements and consents of any parties to
the consummation of the transactions contemplated by this Agreement, or
otherwise pertaining to the matters covered by it, shall have been obtained by
Buyer and delivered to Seller.
10.9. HSR Waiting Period. The consummation of the transactions
contemplated by this Agreement shall be in compliance with the HSR Act and any
filing under the HSR Act due to the transactions contemplated by this Agreement
shall have expired or have been terminated early.
10.10. Assignment and Assumption. Buyer shall deliver to Seller the
assignment and assumptions substantially in the form attached hereto as Exhibit
"C."
10.11. Registration Rights. Buyer shall deliver to Seller the
Registration Rights Agreement, substantially in the form attached hereto as
Exhibit "G", duly executed.
10.12. License Agreement. Buyer shall have delivered to Seller a
license agreement containing the terms attached hereto as Exhibit "J",
reasonably acceptable to Seller.
10.13. Opinion of Buyer's Counsel. Buyer shall have delivered to Seller
an opinion of Buyer's counsel, substantially in the form attached hereto as
Exhibit "K."
10.14. Buyer Good Standing. Buyer shall deliver to seller at the
Closing a certificate of good standing issued by the Secretary of State of
Arizona and the Secretary of State of Delaware, dated a date not more than
thirty (30) days prior to the Closing Date.
ARTICLE 11.
INDEMNIFICATION
11.1. Indemnification of Buyer. Selling Parties shall jointly and
severally (except as specifically provided below) indemnify, defend and hold
harmless Buyer against and in respect of any and all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries and deficiencies
("Buyer Losses"), including interest, penalties and reasonable attorneys' fees
and costs, that Buyer shall incur or suffer, which arise, result from or relate
to (i) any breach (whether or not material) of, or failure by Selling Parties to
perform, any of their representations, warranties, covenants or agreements in
this Agreement or in any schedule, certificate, exhibit or other instrument
furnished or to be furnished by Selling Parties under this Agreement; (ii) any
relationship, agreement, or dealings between Seller and any of its dealers or
the termination of those relationships; (iii) any failure of the parties to
comply with the "bulk sales law" of any jurisdiction applicable to the sale and
transfer of the Assets as contemplated by this Agreement or (iv) any Retained
Liabilities (provided, (a) that in the case of Retained Liabilities listed in
Section 4.1(a)(i)(H), such indemnity shall apply only to the extent the Buyer
31
<PAGE> 38
Losses arise from a breach of any representation or warranty in this Agreement,
and (b) that in the case of Buyer Losses from the Retained Liabilities listed in
Section 4.1(a)(i)(F), only the Seller shall be responsible for satisfaction of
the indemnification obligations hereunder and Guarantor shall not be liable to
indemnify Buyer for any Buyer Losses resulting from those Retained Liabilities).
Notwithstanding any of the foregoing indemnification provisions to the contrary,
(i) the Selling Parties shall not be required to make any payments in respect of
their indemnification obligations under this Agreement (except with respect to
Buyer Losses in connection with the Retained Liabilities described in (iv)
above, or arising out of fraud by either Selling Party in connection with this
Agreement or the transaction contemplated by this Agreement ("Seller Fraud"))
unless and until the aggregate amount of the Buyer Losses hereunder exceeds
$100,000 (the "Seller's Basket"), at which time the Buyer shall be entitled to
recover the full amount of all Buyer Losses included in the Seller's Basket
hereunder and all such subsequently incurred Buyer Losses. The aggregate
payments by the Selling Parties in respect of their indemnification obligations
under this Section 11.1 (except for payments made with respect to Buyer Losses
in connection with the Retained Liabilities described in (iv) above or Seller
Fraud) shall not exceed $12,500,000 (the "Seller's Ceiling"). Notwithstanding
the limitations imposed by the Seller's Basket and Seller's Ceiling on the
Selling Parties' indemnification obligations, any Buyer Losses in connection
with the Retained Liabilities described in (iv) above or arising out of Seller
Fraud (a) shall be subject to indemnification by the Selling Parties without
regard to the Seller's Basket, (b) shall not be included towards determining
whether the Seller's Basket has been satisfied, and (c) shall not be included
towards the Seller's Ceiling.
11.2. Guarantee. Guarantor hereby unconditionally guarantees to Buyer
the full and timely performance of all of the obligations and agreements of
Seller (other than Seller's indemnification obligations with respect to the
Retained Liabilities listed in Section 4.1(a)(i)(F) set forth herein. The
foregoing guarantee shall include the guarantee of the payment of all damages,
costs and expenses which might become recoverable by Buyer as a result of the
nonperformance of any of Seller's obligations or agreements so guaranteed,
including without limitation those indemnification obligations under Section
11.1. Buyer may, at its option, proceed against the Guarantor for the
performance of any such obligation or agreement, or for damages for default in
the performance thereof, without first proceeding against the Seller or against
any of its properties. The Guarantor further agrees that its guarantee shall be
an irrevocable guarantee and shall continue in effect notwithstanding any
extension or modification of any guaranteed obligation, any assumption of any
such guaranteed obligation by any other party, or any other act or thing which
might otherwise operate as a legal or equitable discharge of a guarantor, and
hereby waives all special suretyship defenses and notice requirements.
11.3. Indemnification of Seller. Buyer shall indemnify, defend and
hold harmless the Selling Parties against and in respect of any and all claims,
demands, losses, costs, expenses, obligations, liabilities, damages, recoveries
and deficiencies ("Seller Losses"), including interest, penalties and reasonable
attorneys' fees and costs, that either Selling Party shall incur or suffer,
which arise, result from or relate to any breach (whether or not material) of,
or failure by Buyer to perform, any of its representations, warranties,
covenants or agreements in this Agreement or in any schedule, certificate,
exhibit or other instrument furnished or to be furnished by Buyer
32
<PAGE> 39
under this Agreement. Notwithstanding any of the foregoing indemnification
provisions to the contrary, (i) the Buyer shall not be required to make any
payments in respect of their indemnification obligations under this Agreement
(except with respect to Seller Losses arising out of or related to Buyer's
failure to pay the Purchase Price specified in Section 2.1 or fraud by the Buyer
in connection with this Agreement or the transaction contemplated by this
Agreement ("Buyer Fraud")) unless and until the aggregate amount of the Seller
Losses hereunder exceeds $100,000 (the "Buyer's Basket"), at which time the
Selling Parties shall be entitled to recover the full amount of all Seller
Losses included in the Buyer's Basket hereunder and all such subsequently
incurred Seller Losses. The aggregate payments by the Buyer in respect of its
indemnification obligations under this Section 11.3 (except for payments made
with respect to Seller Losses in connection with Buyer's failure to pay the
Purchase Price specified in Section 2.1 or Buyer Fraud) shall not exceed
$12,500,000 (the "Buyer's Ceiling"). Notwithstanding the limitations imposed by
the Buyer's Basket and Buyer's Ceiling on the Buyer's indemnification
obligations, any Seller Losses incurred by the Selling Parties arising out of
Buyer's failure to pay the Purchase Price specified in Section 2.1 or Buyer
Fraud (a) shall be subject to indemnification by the Buyer without regard to the
Buyer's Basket, (b) shall not be included towards determining whether the
Buyer's Basket has been satisfied, and (c) shall not be included towards the
Buyer's Ceiling.
11.4. Exclusive Remedy. Subject to the right to seek equitable
relief and to recover its costs and expenses pursuant to Section 13.10 hereof,
the indemnification and guaranty afforded by this Article 11 shall be the sole
and exclusive remedy against any party hereto for any and all Buyer Losses or
Seller Losses in respect of the matters arising out of this Agreement and the
documents and instruments delivered pursuant hereto other than with respect to
claims which may not be waived under applicable law, which are hereby expressly
reserved.
ARTICLE 12.
BUYER'S PRE-CLOSING OBLIGATIONS;
BUYER AND SELLING PARTY POST CLOSING OBLIGATIONS
12.1. Buyer's Pre-Closing Obligations. Buyer warrants, except as agreed
in writing by Seller, from the date of this Agreement until the Closing:
(a) Representations and Warranties True at Closing. Buyer
shall promptly disclose to the Selling Parties any information contained in the
Schedules to this Agreement or Buyer Reports which, because of an event
occurring after the date hereto, is incomplete or is no longer correct as of all
times after the date hereof until the Closing Date; provided, however, that none
of such disclosures shall be deemed to modify, amend or supplement the
representations and warranties of Buyer or the Schedules hereto for purposes of
Article 10 hereof, unless the Selling Parties have consented thereto in writing.
(b) Statutory Filings. Buyer shall cooperate fully with Seller
in preparing and filing all information and documents deemed necessary or
desirable by Buyer under any statute or governmental rules or regulations,
pertaining to the transactions contemplated by this Agreement, including without
limitation filings pursuant to the HSR Act.
33
<PAGE> 40
(c) Transition Services and License. Buyer shall negotiate in
good faith a reasonable transition services agreement with Seller containing the
terms specified in Exhibit "I" and a license agreement containing the terms
specified in Exhibit "J".
12.2. Selling Parties Post-Closing Obligations.
(a) No Distributions or Payments to Members or Related
Parties; Impairment of Indemnity Obligation. Except as otherwise permitted below
in this Section 12.2(a), from the date hereof until the date 18 calendar months
after the Closing Date, Seller shall not distribute cash or other property or
make any other payment to, Guarantor, any member or manager of Seller, or any
affiliated party or any family member of any of the preceding persons, without
the prior written consent of Buyer. Notwithstanding the preceding sentence,
Seller may make the following payments and/or distributions during this 18 month
period: (i) payment of salaries and other compensation, consistent with past
practices, to Employees and the manager; (ii) payment of Seller's obligations
under the Stay Bonus Programs; and (iii) distributions to the members of Seller
to pay income taxes on the transactions contemplated by this Agreement in an
amount not to exceed 28% of the Purchase Price. For 18 months after the Closing,
Seller shall not, without the Buyer's prior written consent, merger or
consolidate with any other person or entity, sell any assets to any person or
entity, liquidate, dissolve or incur any secured indebtedness, or otherwise
impair Seller's ability to perform its obligations under Article 11.
(b) Consultation. For the 6 month period following the
Closing, the Selling Parties will make the Seller's existing president
reasonably available to Buyer, at his reasonable convenience at mutually agreed
times, for reasonable amounts of time during normal business hours to answer
Buyer's questions concerning the Assets and the Seller's, and its predecessors',
operation of the Business prior to Closing. The parties agree that a "reasonable
amount of time" shall not exceed 10 hours per month.
(c) Access to Records. From and after the Closing, Selling
Parties shall allow Buyer, and its counsel, accountants and other
representatives, access to records which after the Closing are in the custody or
control of Selling Parties as the Buyer reasonably requires in order to comply
with its obligations under any applicable law or in order for Buyer to comply
with its obligations under contracts assumed by Buyer pursuant to this
Agreement.
(d) Change of Name. Seller shall, within 5 days after Closing,
cease using the Trade Name and derivations thereof (including without limitation
"NSC") and take all necessary actions to change its name, dbas and trade names
and marks consistent with the transfer of the Assets to Buyer at Closing.
12.3. Buyer's Post Closing Obligations.
(a) Dealer Use of Trade Name. Buyer hereby grants to Seller's
former dealers set forth on SCHEDULE 12.3 (the "Named Dealers"), effective upon
completion of the Closing, a non-exclusive and non-transferable right and
license to use the name "National Security
34
<PAGE> 41
Containers," on Storage Units which, on the Closing Date, are subject to a lease
or other rental arrangement entered into before the date of this Agreement or in
possession of such Dealer at the time of Closing. Seller shall cooperate in good
faith with Buyer enforcing its rights to the Trade Name, including without
limitation making written demands on its current or former dealers (including
without limitation the Named Dealers) to cease using the Trade Name in
contravention of this Agreement or in a manner inconsistent with Buyer's
ownership of the Trade Name, subject to the license granted pursuant to this
Section 12.3. The right and license granted under this Section 12.3(a) shall
terminate upon the earliest to occur of (i) October 25, 1999 or (ii) the
termination of all of such leases or other rental arrangements which are in
effect on the Closing Date; provided, however, that the right and license of the
Named Dealers to maintain their "yellow page" advertising using the name
"National Security Containers" shall only continue through the term of the
existing yellow page advertisements, whether or not the term of such
advertisement expires before or after the termination of the right and license
under (i) or (ii) preceding.
(b) Consultation. For the 6 month period following the
Closing, the Buyer will make its employees with the reasonably necessary
knowledge and information reasonably available to Seller, at their reasonable
convenience at mutually agreed times, for reasonable amounts of time during
normal business hours to answer Seller's questions and inquiries concerning the
Assets and the Business for purposes of Seller obtaining information required
for its tax and other reporting obligations. The parties agree that a
"reasonable amount of time" shall not exceed an aggregate 5 hours of employee
time per month.
(c) Access to Records. For a period of 12 months after the
Closing, Buyer shall allow Selling Parties and their counsel, accountants and
other representatives, such access to records which after the Closing are in the
custody or control of Buyer, as the Selling Parties reasonably require in order
to comply with their obligations under any applicable law or in order for the
Selling Parties to comply with their obligations in connection with Retained
Liabilities or Excluded Assets.
ARTICLE 13.
MISCELLANEOUS
13.1. Nature and Survival of Representations and Warranties. All
representations, warranties, covenants and agreements of the parties contained
in this Agreement, or in any instrument, certificate, opinion or other writing
provided for in this Agreement, shall survive any investigation by any of the
parties and shall survive the Closing for a period of 12 months following the
Closing Date, unless a different term is specified in such representation,
warranty, covenant or agreement. The covenants and agreements of the parties in
the Certificate of Designations with regard to the Series B Preferred Stock and
in the Registration Rights Agreement executed and delivered at the Closing will
survive until performed or until they otherwise terminate on their own terms.
13.2. Finder's or Broker's Fees. Each of the parties represents and
warrants that it has dealt with no broker or finder in connection with any of
the transactions contemplated by this
35
<PAGE> 42
Agreement, and, insofar as it knows, no broker or other person is entitled to
any commission or finder's fee in connection with any of these transactions.
13.3. Expenses. Each of the parties shall pay all costs and expenses,
including but not limited to, attorneys' and accountant's fees, costs, expenses
and disbursements, incurred or to be incurred by it in negotiating and preparing
this Agreement and in closing and carrying out the transactions contemplated by
this Agreement.
13.4. Headings. The subject headings of the Articles and Section of
this Agreement are included for purposes of convenience only, and shall not
affect the construction or interpretation of any of its provisions.
13.5. Entire Agreement; Modification; Waiver. This Agreement
constitutes the entire agreement between the parties pertaining to the subject
matter contained in it and supersedes all prior and contemporaneous agreements,
representations, and understandings of the parties. No supplement, modification
or amendment of this Agreement shall be binding unless in writing executed by
all of the parties. No waiver of any of the provisions of this Agreement shall
be, or shall constitute, a waiver or any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the waiver.
13.6. Knowledge. When used with respect to the Seller herein,
"knowledge" or "know-how" means the actual knowledge of any officer or manager
of the Seller or of the Guarantor, based upon due inquiry, including inquiry of
any individual participating in the negotiation or documentation of the
transactions contemplated by this Agreement on behalf of Seller or Guarantor;
provided that for purposes of Section 6.9, "knowledge" means the actual
knowledge of any officer or manager of the Seller or the Guarantor without any
inquiry or investigation whatsoever.
13.7. 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.
13.8. Parties in Interest. Nothing in this Agreement, whether express
or implied, is intended to confer any rights or remedies under or by reason of
this Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over against any party to this Agreement.
13.9. Assignment. This Agreement shall be binding upon and shall inure
to the benefit of the parties to it and their respective heirs, legal
representatives, successors and assigns.
13.10. Recovery of Litigation Costs. If any legal action or any
arbitration or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute,
36
<PAGE> 43
breach, default or misrepresentation in connection with any of the provisions of
this Agreement, the successful or prevailing party or parties shall be entitled
to recover reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
13.11. Conditions Permitting Termination. Subject to the provisions of
Article 3 relating to the postponement of the Closing Date, any party to this
Agreement may on the Closing Date terminate this Agreement as to it by written
notice to the others, without liability to the others, if any bona fide action
or proceeding shall be pending against any party on the Closing Date that could
result in an unfavorable judgment, decree or order that would prevent or make
unlawful the carrying out of this Agreement.
13.12. Defaults Permitting Termination; Other Termination Rights. If
either Buyer or Seller materially defaults in the due and timely performance of
any of its warranties, covenants, or agreements this Agreement, the
non-defaulting party or parties may on the Closing Date give notice of
termination of this Agreement. The notice shall specify with particularity the
default or defaults on which the notice is based. The termination shall be
effective 10 days after the Closing Date, unless the specified default or
defaults have been cured on or before the effective date for termination. In the
event the transactions contemplated by this Agreement are not consummated by
June 1, 1999, this Agreement may be terminated by either party unless extended
by mutual agreement; provided, that a party does not have the right to terminate
this Agreement if such failure to consummate is due to the default or breach of
this Agreement by such party.
13.13. Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given (i) on the date of service if served personally on the party to whom
notice is to be given, or (ii) when dispatched, during the normal business hours
of the addressee, by customary means of telefacsimile, on the date dispatched
or, if dispatched after the recipient's normal business hours, at the opening of
business on the next business day, or (iii) on the third business day after
mailing if mailed to the party to whom notice to be given, by first class mail
registered or certified, postage prepaid, in each case directed to the following
addresses, as appropriate:
If to Buyer: Mobile Mini, Inc.
1834 West Third Street
Tempe, Arizona 85281
Attention: Lawrence Trachtenberg
Fax: (602) 894-6433
with copy to: Bryan Cave LLP
Two North Central Avenue, Suite 2200
Phoenix, Arizona 85004
Fax: (602) 364-7070
Attention: Joseph P. Richardson
37
<PAGE> 44
If to Seller or any other Selling Party:
National Security Containers, L.L.C.
1001 North Central, Suite 401
Phoenix, Arizona 85004
Fax: (602) 256-2626
Attention: Gregg Ghelfi
with copy to: Osborn Maledon PA
2929 North Central, Suite 2100
Phoenix, Arizona 85067
Fax: (602) 640-6068
Attention: William M. Hardin, Esq.
Any party may change its address for purposes of this Article by giving the
other parties written notice of the new address in the manner set forth above.
13.14. Governing Law; Jurisdiction; Venue. This Agreement shall be
construed in accordance with and governed by the laws of the State of Arizona
without regard to conflict of laws principles. Any action or proceeding seeking
to enforce any provisions of, or based upon any right arising out of, this
Agreement must be brought against any party hereto in the courts of the State of
Arizona or the courts of the United States located within the State of Arizona,
if it has or can acquire subject matter jurisdiction, and each of the parties
consents to the personal jurisdiction of such courts (and of the appropriate
appellate courts) in any action or proceeding described above and waives any
objection to venue laid therein.
13.15. Announcements. Seller will not make any announcements to the
public concerning this Agreement or the transactions contemplated by this
Agreement without the prior approval of Buyer, which shall not be unreasonably
withheld.
13.16. References. Unless otherwise specified, references to Sections
or Articles are to Section or Articles in this Agreement.
38
<PAGE> 45
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it
as of the day and year first above written.
Buyer: MOBILE MINI, INC.
By /s/ Lawrence Trachtenberg
-----------------------------------
Name: Lawrence Trachtenberg
Its: Executive Vice President
Seller: NATIONAL SECURITY CONTAINERS, L.L.C.
By /s/ Gregg Ghelfi
-----------------------------------
Name: Gregg Ghelfi
Its: President
Guarantor: ALFRED R. GHELFI
/s/ Al Ghelfi
--------------------------------------
Alfred R. Ghelfi
The undersigned spouse of Alfred R. Ghelfi
hereby consents to Guarantor binding the
marital community only (and not as to any
sole and separate property) under Sections
11.1 and 11.2 of, and otherwise under, this
Agreement:
/s/ Jan Ghelfi
--------------------------------------
Name: Janet M. Ghelfi
39
<PAGE> 1
Exhibit 10.2
AMENDMENT NUMBER SEVEN
TO
CREDIT AGREEMENT
This AMENDMENT NUMBER SEVEN TO CREDIT AGREEMENT (this "Seventh Amendment"),
dated as of March 31, 1999, is entered into by and among MOBILE MINI, INC., a
Delaware corporation (the "Borrower"), each financial institution a party to the
Credit Agreement (collectively, the "Lenders"), and BT COMMERCIAL CORPORATION
acting as agent for the Lenders (in such capacity "Agent"), in light of the
following facts:
R E C I T A L S
A. The parties hereto have previously entered into that certain Credit
Agreement, dated as of March 28, 1996, as amended by that certain Amendment
Number One to Credit Agreement, dated as of November __, 1996, that certain
Amendment Number Two to Credit Agreement, dated as of March 24, 1997, that
certain Amendment Number Three to Credit Agreement, dated as of March 31, 1997,
that certain Amendment Number Four to Credit Agreement, dated as of July 30,
1997, that certain Amendment Number Five to Credit Agreement, dated as of March
31, 1998, and that certain Amendment Number Six to Credit Agreement, dated as of
December 3, 1998 (as amended, the "Agreement").
B. Borrower desires to purchase National Security Containers, L.L.C. for
$25,500,000 (the "Acquisition") and, in conjunction with the Acquisition,
desires to issue up to $8,000,000 in redeemable preferred stock (the "First
Equity Issuance") to fund such Acquisition. The Borrower has informed Agent that
the First Equity Issuance will not be deemed to be debt for purposes of GAAP,
and therefore will not reduce the tangible net worth of Borrower.
C. Borrower further desires to increase the Revolving Credit Commitment under
the Agreement to $90,000,000, and to utilize such funds to partially fund the
Acquisition.
D. Borrower further desires to issue $40,000,000 in common stock in a public
offering (the "Second Equity Issuance"), funds from which the Borrower intends
to redeem the preferred stock issued in the First Equity Issuance and to
partially pay down draws on the Revolving Credit Commitment.
E. Borrower further desires to temporarily increase the total amount of Purchase
Money Liens and Leases (as such term is defined herein) which can be incurred or
maintained by the Borrower pursuant to Section 8.9(d) of the Agreement to
$3,250,000 from and after April 19, 1999 until Borrower receives funds pursuant
to the Second Equity Issuance, at which time the total amount of Purchase Money
Liens and Leases which Borrower may incur or maintain pursuant to Section 8.9(d)
of the Agreement will be permanently reduced back to $1,250,000.
F. Borrower has requested that Agent and all of the Lenders approve amendment of
(i) Section 2.2(a) of the Agreement to reflect such increased Revolving Credit
Commitment and (ii) Section 8.9(d) of the Agreement to reflect such temporary
increase in the total amount of Purchase Money Liens and Leases.
<PAGE> 2
G. Agent and Lenders are, on the terms and conditions set forth herein, willing
to amend the Agreement and grant such consents and waivers.
A G R E E M E N T
NOW, THEREFORE, the parties hereto agree as follows:
1. Defined Terms. All initially capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Agreement.
2. Amendment to Section 2.2. Section 2.2(a) of the Agreement, as amended,
is hereby amended by deleting the phrase "which shall not exceed
$75,000,000" from such Section and replacing it with the phrase "which
shall not exceed $90,000,000".
3. Amendment to Section 8.9. Section 8.9(d) of the Agreement is hereby
amended by deleting such Section in its entirety and replacing it with
the following:
"(d) Indebtedness, including lease obligations, secured by purchase money liens
on or respecting equipment the title to or leasehold interest in which is
acquired after the date hereof, not to exceed, prior to April 19, 1999,
$1,250,000 and after April 19, 1999, $3,250,000 in the aggregate (irrespective
of when due) outstanding at any one time ("Purchase Money Liens and Leases") so
long as each Purchase Money Lien or Lease shall attach or relate only to the
property to be acquired or the acquisition cost of which is financed through
leasing, a description shall have been furnished to the Agent for any item of
equipment for which the purchase price (whether payable by Borrower or the
lessor thereof) is greater than $50,000 and the principal amount of the debt
incurred (including the principal component of lease payments) shall not exceed
one hundred percent (100%) of the purchase price of the item or items of
equipment, provided, however, upon the receipt by Borrower of proceeds, whether
cash or otherwise, in connection with the Second Equity Issuance (as defined in
Amendment Number Seven to Credit Agreement, dated March 31, 1999) Borrower's
ability to incur and maintain Indebtedness pursuant to this Section 8.9(d) shall
be limited to $1,250,000."
4. Amendment of Annex I. Annex I of the Agreement is hereby amended by
deleting the amount of the Revolving Credit Commitment for each Lender
and replacing such amounts as follows:
=========================================================================
Lender Revolving Credit Commitment ($)
=========================================================================
BT Commercial Corporation 18,000,000
- -------------------------------------------------------------------------
Nationsbank, N.A. 18,000,000
- -------------------------------------------------------------------------
Deutsche Financial Services Corporation 18,000,000
- -------------------------------------------------------------------------
Summit Commercial/Gibraltar Corp. 18,000,000
- -------------------------------------------------------------------------
Bank One Arizona, N.A. 18,000,000
=========================================================================
2
<PAGE> 3
5. Conditions Precedent. The effectiveness of this Seventh Amendment is subject
to and conditioned upon the fulfillment of each and all of the following
conditions precedent:
a. Agent shall have received this Seventh Amendment duly executed by
Borrower and Lenders;
b. Agent shall have received an affirmation letter duly executed by each
guarantor under the Guaranties, indicating the consent by each such
guarantor to the execution and delivery by Borrower of this Seventh
Amendment;
c. Agent shall have received payment of all fees in connection with this
Seventh Amendment from Borrower;
d. Agent shall have received executed replacement revolving promissory
notes for each Agent and Lenders under the Agreement in form and
substance satisfactory to Agent pursuant to the amendments to the
Agreement under Section 4 herein; and
e. Agent shall have received executed modifications or other necessary
documents and such title insurance as Agent shall require, either by
endorsement to the policy of title insurance, or by a new policy of
title insurance, insuring such deed(s) of trust or mortgages and that
the lien(s) created thereby continue to be first priority lien, all in
form and substance satisfactory to Agent in its sole and absolute
discretion, and subject to such exceptions as are approved by Agent.
6. Counterparts. This Seventh Amendment may be executed in any number of
counterparts and by different parties on separate counterparts, each of which
when so executed and delivered shall be deemed to be an original. All such
counterparts, taken together, shall constitute but one and the same Seventh
Amendment.
7. Reaffirmation of the Agreement. Except as specifically amended by this
Seventh Amendment, the Agreement shall remain in full force and effect.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed at Los Angeles, California as of the date first hereinabove written.
MOBILE MINI, INC.,
a Delaware corporation
By: _________________________________
Larry Trachtenberg,
Chief Financial Officer
BT COMMERCIAL CORPORATION,
a Delaware corporation,
individually and as agent
By: __________________________________
Title:________________________________
4
<PAGE> 5
NATIONSBANK, N.A.
By: __________________________________
Title:________________________________
5
<PAGE> 6
DEUTSCHE FINANCIAL SERVICES CORPORATION
By: ___________________________________
Title:_________________________________
6
<PAGE> 7
SUMMIT COMMERCIAL/GIBRALTER CORP.
By: ___________________________________
Title:_________________________________
7
<PAGE> 8
BANK ONE ARIZONA, N.A.
By: ___________________________________
Title:_________________________________
8
<PAGE> 9
CONSENT OF GUARANTORS
Each of the undersigned, as a guarantor of the obligations of MOBILE MINI, INC.,
a Delaware corporation ("Borrower"), arising out of that certain Credit
Agreement, dated as of March 28, 1996, as amended by that certain Amendment
Number One to Credit Agreement, dated as of November __, 1996, that certain
Amendment Number Two to Credit Agreement, dated as of March 24, 1997, that
certain Amendment Number Three to Credit Agreement, dated as of March 31, 1997,
that certain Amendment Number Four to Credit Agreement, dated as of July 30,
1997, that certain Amendment Number Five to Credit Agreement, dated March 21,
1998, and that certain Amendment Number Six to Credit Agreement, dated December
3, 1998, (as amended, the "Agreement"), among BT Commercial Corporation, a
Delaware corporation ("Agent") and the lenders party thereto ("Lenders"), on the
one hand, and Borrower, on the other hand, hereby acknowledges receipt of a copy
of that certain Amendment Number Seven to Credit Agreement, dated as of March
31, 1999, among Agent, Lenders and Borrower, consents to the terms contained
therein, and agrees that the Continuing Guaranty executed by each of the
undersigned shall remain in full force and effect as a continuing guaranty of
the obligations of Borrower owing to Agent and Lenders under the Agreement.
Although Agent has informed us of the matters set forth above, and we have
acknowledged same, we understand and agree that Agent has no duty under the
Agreement, the Continuing Guaranty or any other agreement between us to so
notify us or to seek an acknowledgment, and nothing contained herein is intended
to or shall create such a duty as to any advances or transactions hereafter.
IN WITNESS WHEREOF, each of the undersigned has caused this Consent of
Guarantors to be duly executed by its respective authorized officers as of March
31, 1999.
MOBILE MINI I, INC.,
an Arizona corporation
By ______________________________________
Title____________________________________
DELIVERY DESIGN SYSTEMS, INC.,
an Arizona corporation
By ______________________________________
Title____________________________________
9
<PAGE> 1
Exhibit 99.1
FOR IMMEDIATE RELEASE
MOBILE MINI, INC. TO ACQUIRE NATIONAL SECURITY CONTAINERS
ALSO COMMENCES OPERATIONS IN TULSA WITH NEW START-UP
CREDIT FACILITY INCREASED TO $90 MILLION
Tempe, AZ - April 5, 1999 -- Mobile Mini, Inc. (NASDAQ National Market: MINI)
today announced that it has signed a definitive agreement to acquire the assets
of privately owned National Security Containers, LLC ("NSC"), one of the largest
container leasing companies in the United States. At closing, the sellers will
be paid $25.5 million -- $17.5 million in cash and $8 million in redeemable
preferred stock. Closing of the transaction, which is subject to completion of
due diligence and customary closing conditions, should take place by the end of
this month.
Headquartered in Phoenix, NSC currently operates nine portable storage leasing
locations, six in cities where Mobile Mini currently has a presence, and in
Colorado Springs, Memphis and New Orleans, which are new markets for Mobile
Mini. Mobile Mini will integrate the NSC operations into existing Mobile Mini
branches in those markets where they both now operate. The acquisition of NSC,
which generated approximately $9.4 million in 1998 revenues, is expected to be
immediately accretive.
Separately, Mobile Mini also announced that it has commenced operations in
Tulsa, Oklahoma utilizing its low-cost start-up business model.
Separately, the Company announced that its senior lenders, led by BT Commercial
Corporation, have agreed to increase the Company's revolving line of credit by
20%, to $90 million from $75 million. Richard Bunger, Chairman of the Board,
noted, "Twice in 1998 and again this year, we fortified our balance sheet by
increasing the amount of borrowing available to us. By expanding our credit line
to $90 million, we have a strong ally in our bankers who have expressed their
confidence in our continued ability to identify and consummate suitable
acquisitions while growing existing locations and our lease fleet."
(more)
<PAGE> 2
Mobile Mini, Inc. News Release Page 2
April 5, 1999
Commenting, Steven Bunger, Mobile Mini's President and Chief Executive Officer
said, "With the Tulsa opening and this acquisition, Mobile Mini will have a
total of 16 locations. The four newly added markets are contiguous with our
existing locations. NSC, whose business model is similar to ours, has been a
strong competitor in our overlapping markets. This acquisition improves our
market share in those territories and gives us the potential for economies of
scale as we integrate NSC's locations into those of our own."
According to Larry Trachtenberg, Executive Vice President and Chief Financial
Officer, "NSC, a former Mobile Mini dealer, has built the highest quality rental
fleet, after our own, that we have encountered among our competitors and peers.
One of our stated goals has been to enter four to eight new markets in 1999.
With our entry in Tulsa, along with this acquisition, our largest ever, Mobile
Mini has already reached the minimum threshold of that goal."
Mobile Mini, Inc. is a market leader in the leasing of portable storage
containers.
This document may contain some forward looking statements, particularly
regarding operating prospects for 1999, which involve a number of risks and
uncertainties that could cause actual results to differ materially. These risk
factors are listed from time to time in the Company's SEC filings.
CONTACT: -OR- INVESTOR RELATIONS COUNSEL:
Lawrence Trachtenberg, Executive VP & The Equity Group Inc.
Chief Financial Officer Linda Latman (212) 836-9609
Mobile Mini, Inc.
(480) 894-6311
www.mobilemini.com
