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 8, 1999
0-27584 04-3107342
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(Commission file number) (I.R.S. Employer Identification No.)
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All share and per share data contained herein has been restated to reflect the three-for-two stock split previously reported on the Form 8-K filed with the Securities and Exchange Commission on July 10, 1998.
Item 2. Acquisition or Disposition of Assets
Data Base, Inc. and Affiliate
On April 8, 1999, Iron Mountain Incorporated ("Iron Mountain" or the "Registrant") acquired all of the outstanding capital stock of Data Base, Inc. pursuant to a Stock Purchase Agreement among Iron Mountain, Data Base, Inc. and the stockholders of Data Base, Inc. Data Base, Inc. is a premier provider of data security services, with over 3,000 customers. In addition, Iron Mountain acquired certain real estate used in Data Base, Inc.'s operations pursuant to a Real Estate Purchase and Sale Agreement with Data Base Real Estate Holdings LLC ("DBR" or the "Affiliate"). The acquisition of the stock and real estate was accounted for as a purchase. Data Base, Inc. and DBR are hereafter collectively referred to as Data Base.
Total consideration for the Data Base acquisition and related real estate, including estimated transaction costs, was approximately $116.0 million. This amount consisted of approximately $70 million in cash and assumed debt and expenses and 1,476,577 shares of the Registrant's Common Stock, $.01 par value per share (the "Common Stock"). The funds used for the cash consideration were comprised of borrowings under Iron Mountain's $250 million revolving credit facility, dated September 27, 1997, as amended, among Iron Mountain, various financial institutions and The Chase Manhattan Bank, as administrative agent for such lenders (the "Credit Agreement").
The assets acquired by Iron Mountain include real property, tangible personal property (consisting primarily of office equipment, furniture and fixtures, motor vehicles, racking and shelving) and intangible personal property regularly used in Data Base's records and information management business. Iron Mountain intends to use the acquired property and equipment in the operation of its records and information management business.
Britannia Data Management Limited
On January 4, 1999, as previously reported on Form 8-K filed with the Securities and Exchange Commission on January 19, 1999, Iron Mountain, through a wholly owned subsidiary, purchased a controlling 50.1 percent interest in Britannia Data Management Limited, a corporation formed under the laws of England and Wales ("BDM"), pursuant to an Agreement, dated December 2, 1998, between Iron Mountain and Mentmore Abbey plc. The acquisition was accounted for as a purchase and BDM will be included in Iron Mountain's consolidated financial results from the date of acquisition.
Total consideration for the 50.1 percent interest in BDM was $49.8 million consisting of cash and the capital stock of Arcus Data Security Limited ("ADS"), Iron Mountain's existing data security business in London. The funds used for the consideration were comprised of borrowings under the Credit Agreement.
National Underground Storage, Inc.
On July 1, 1998, as previously reported on the Form 8-K filed with the
Securities and Exchange Commission on July 10, 1998, National Underground
Storage, Inc. ("NUS") merged with and into a wholly owned subsidiary of Iron
Mountain pursuant to an Agreement and Plan of Merger dated June 5, 1998 among
NUS and the Registrant's wholly owned
subsidiary.
Total consideration was $29.2 million in cash and assumed debt. The funds used for the consideration
were comprised of a portion of the net proceeds from the Registrant's 1998 public offering (the "Equity Offering") of 6.0 million shares of its Common Stock and borrowings under the Credit Agreement. The acquisition was accounted for as a purchase.
Arcus Group, Inc.
On January 6, 1998, as previously reported on the Form 8-K filed with the Securities and Exchange Commission on January 13, 1998, the Registrant, Arcus Group, Inc. ("AGI"), United Acquisition Company ("UAC") and Arcus Technology Services, Inc. ("ATSI" and together with AGI and UAC, "Arcus") consummated the transactions contemplated by a certain Agreement and Plan of Merger among the Registrant and Arcus dated September 26, 1997.
In consideration, the Registrant issued approximately 2.2 million shares of its Common Stock valued at $39.4 million and options to purchase approximately 0.9 million shares of its Common Stock valued at $15.6 million. In addition, Iron Mountain paid cash and assumed debt totaling $98.7 million. The funds used for the consideration were comprised of a portion of the net proceeds from the sale of the Registrant's $250 million in aggregate principal amount of 8.75% Senior Subordinated Notes due 2009 (the "1997 Notes") and borrowings under the Credit Agreement. The acquisition was accounted for as a purchase.
Item 5. Other Events
Proposed Equity Offering
The Company is currently planning an underwritten public offering of 5,000,000 shares of its Common Stock. The Company intends to use the proceeds from such offering to repurchase shares of Common Stock issued in Iron Mountain's acquisition of Data Base, to repay debt and for general corporate purposes, including future acquisitions. Although the Company currently expects to complete such public equity offering within the second quarter of 1999, the Company cannot assure you that this will occur. The public equity offering will be made only by means of a prospectus. This does not constitute an offer to sell or solicit an offer to buy shares of Common Stock.
As part of the Data Base acquisition, the Company has agreed with the sellers to purchase from them all or a portion of the 1,476,577 shares of the Common Stock issued to them if the Company completes its currently proposed public equity offering. The Company would repurchase their shares at a per share price equal to the per share offering price in Iron Mountain's proposed public offering, less underwriting discounts. This repurchase is contingent on closing Iron Mountain's proposed public equity offering.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of the Businesses Acquired:
Data Base, Inc. and Affiliate Page
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Independent Auditor's Report 6
Combined Balance Sheets as of December 31, 1997 and 1998 7
Combined Statements of Operations for the years ended
December 31, 1996, 1997 and 1998 8
Combined Statements of Stockholders' and Members' Equity for
the years ended December 31, 1996, 1997 and 1998 9
Combined Statements of Cash Flows for the years ended
December 31, 1996, 1997 and 1998 10
Notes to Combined Financial Statements 11
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Britannia Data Management Limited
The audited financial statements of BDM as of and for the years ended October 31, 1997 and 1998 were previously filed on the Form 8-K/A filed with the Securities and Exchange Commission on March 22, 1999.
National Underground Storage, Inc.
The audited financial statements of NUS as of and for the years ended December 31, 1997 and 1996, and the unaudited financial statements as of June 30, 1998 and for the six months ended June 30, 1998 and 1997, were previously filed on the Form 8-K filed with the Securities and Exchange Commission on August 7, 1998.
Arcus Technology Services, Inc.
The audited financial statements of ATSI as of December 31, 1997 and 1996 and for the five month period ended December 31, 1995 and each of the two years ended December 31, 1997, and of Arcus, Inc. (the "Predecessor Company") for the seven month period ended July 31, 1995, were previously filed on the Form 8-K filed with the Securities and Exchange Commission on March 9, 1998.
Page
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(b) Pro Forma Financial Information: 22
Unaudited Pro Forma Condensed Consolidated Balance
Sheet as of December 31, 1998 23
Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the Year Ended
December 31, 1998 24
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Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements 25
(c) Exhibits:
Exhibit 2.1 Stock Purchase Agreement, dated as of February 28, 1999, by
and among Iron Mountain, Data Base and all of the
Stockholders of Data Base (portions of this exhibit have been
omitted pursuant to a request for confidential treatment)
filed as an exhibit to Iron Mountain's Annual Report on Form
10-K for the year ended December 31, 1998 filed with the
Securities and Exchange Commission (File No. 0-27584).
Exhibit 2.2 Stock Purchase Agreement, dated as of April 1, 1999, by and
among Iron Mountain Records Management, Inc., First American
Records Management, Inc. and all of the stockholders of First
American Records Management, Inc. (portions of this exhibit
have been omitted pursuant to a request for confidential
treatment).
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Exhibit 10.1 First Amendment to Stock Purchase Agreement, dated as of April 8, 1999, by and among Iron Mountain, Data Base, Inc. and all of the stockholders of Data Base, Inc.
Exhibit 10.2 Amendment, Waiver and Joinder to Registration Rights Agreement, dated as of April 8, 1999, by and among Iron Mountain, the stockholders of Data Base, Inc. and certain parties to Iron Mountain's Amended and Restated Registration Rights Agreement.
Exhibit 10.3 Iron Mountain Incorporated 1995 Stock Incentive Plan, as amended.
Exhibit 23.1 Consent of Moss Adams L.L.P. (Data Base, Inc. and Affiliate)
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Members
of Data Base, Inc. and Affiliate:
We have audited the accompanying combined balance sheets of Data Base, Inc. and Affiliate at December 31, 1997 and 1998, and the related combined statements of operations, stockholders' and members' equity and cash flows for each of the three years in the period ended December 31, 1998. These financial statements are the responsibility of the companies' management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the combined financial position of Data Base, Inc. and Affiliate at December 31, 1997 and 1998, and the results of their combined operations and cash flows for each of the three years in the period ended December 31, 1998 in conformity with generally accepted accounting principles.
/s/ Moss Adams LLP
Seattle, Washington
April 8, 1999
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DATA BASE, INC. AND AFFILIATE
COMBINED BALANCE SHEETS
DECEMBER 31, 1997 AND 1998
1997 1998
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ASSETS
Current Assets:
Cash and cash equivalents .......................................... $ 116,665 $ 747,812
Restricted cash .................................................... 700,000 --
Accounts receivable (less allowances of $55,500 and $55,837
as of 1997 and 1998, respectively) ................................ 4,066,999 3,797,336
Notes and other receivables from related parties ................... 1,006,978 155,283
Inventory .......................................................... 59,423 72,424
Prepaid expenses ................................................... 81,812 103,490
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Total Current Assets ............................................ 6,031,877 4,876,345
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Net Property, Plant and Equipment ................................... 19,869,255 21,933,779
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Other Assets:
Deposits and other assets .......................................... 304,353 299,989
Intangible assets, net ............................................. 2,345,418 4,594,961
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Total Other Assets .............................................. 2,649,771 4,894,950
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Total Assets .................................................... $28,550,903 $ 31,705,074
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LIABILITIES AND STOCKHOLDERS'AND MEMBERS' EQUITY
Current Liabilities:
Current maturities of long-term obligations ........................ $ 3,348,476 $ 1,545,545
Notes payable to related parties ................................... -- 707,938
Demand notes and other current obligations ......................... 861,280 635,739
Accounts payable ................................................... 1,442,372 549,844
Construction costs payable ......................................... -- 1,185,470
Accrued compensation ............................................... 1,199,406 1,058,643
Other accrued liabilities .......................................... 269,852 113,258
Deferred revenue ................................................... 294,446 96,161
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Total Current Liabilities ....................................... 7,415,832 5,892,598
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Long-Term Obligations:
Notes and other payables, less current portion ..................... 16,272,754 19,227,177
Notes payable to related parties, less current portion ............. 1,325,000 --
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Total Long-term Obligations ..................................... 17,597,754 19,227,177
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Commitments and Contingencies (Notes 13 and 17)
Stockholders' and Members' Equity:
Common stock ....................................................... 8,550 8,550
Contributed capital ................................................ 1,520,657 1,520,657
Members' equity .................................................... (445,863) (1,150,439)
Retained earnings .................................................. 2,453,973 6,206,531
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Total Stockholders' and Members' Equity ......................... 3,537,317 6,585,299
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Total Liabilities and Stockholders' and Members' Equity ......... $28,550,903 $ 31,705,074
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The accompanying notes are an integral part of these combined financial statements.
DATA BASE, INC. AND AFFILIATE
COMBINED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
1996 1997 1998
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Revenues:
Storage ............................................... $19,059,667 $21,746,450 $24,907,140
Service and storage material sales .................... 1,729,161 3,195,462 1,682,146
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Total Revenues ...................................... 20,788,828 24,941,912 26,589,286
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Operating Expenses:
Cost of sales (excluding depreciation and amortization) 7,988,071 11,780,052 11,336,967
Selling, general and administrative ................... 8,459,489 8,017,124 6,554,557
Depreciation and amortization ......................... 1,951,693 3,732,601 3,705,727
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Total Operating Expenses ............................ 18,399,253 23,529,777 21,597,251
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Operating Income ....................................... 2,389,575 1,412,135 4,992,035
Interest Expense, Net .................................. 643,450 1,598,404 1,775,911
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Net Income (Loss) ...................................... $ 1,746,125 $ (186,269) $ 3,216,124
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The accompanying notes are an integral part of these combined financial statements.
DATA BASE, INC. AND AFFILIATE
COMBINED STATEMENTS OF STOCKHOLDERS' AND MEMBERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
Total
Stockholders'
Common Contributed Members' Retained and Members'
Stock Capital Equity Earnings Equity
------------ ------------- --------------- --------------- --------------
Balance, December 31, 1995 ............... $ 84,300 $1,174,907 $ -- $ 893,461 $ 2,152,668
Contributions from members .............. -- -- 334,876 -- 334,876
Distributions to members ................ -- -- (608,960) -- (608,960)
Distributions to stockholders ........... -- -- -- (1,043,292) (1,043,292)
Net income (loss) ....................... -- -- (361,590) 2,107,715 1,746,125
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Balance, December 31, 1996 ............... 84,300 1,174,907 (635,674) 1,957,884 2,581,417
Reclassification of contributed
capital resulting from
reorganization ......................... (75,750) 75,750 -- -- --
Contributions from members .............. -- -- 1,087,068 -- 1,087,068
Contributions from stockholders ......... -- 270,000 -- -- 270,000
Distributions to stockholders ........... -- -- -- (214,899) (214,899)
Net income (loss) ....................... -- -- (897,257) 710,988 (186,269)
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Balance, December 31, 1997 ............... 8,550 1,520,657 (445,863) 2,453,973 3,537,317
Contributions from members .............. -- -- 304,615 -- 304,615
Distributions to stockholders ........... -- -- -- (472,757) (472,757)
Net income (loss) ....................... -- -- (1,009,191) 4,225,315 3,216,124
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Balance, December 31, 1998 ............... $ 8,550 $1,520,657 $ (1,150,439) $ 6,206,531 $ 6,585,299
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The accompanying notes are an integral part
of these combined financial statements.
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DATA BASE, INC. AND AFFILIATE
COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
1996 1997 1998
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Cash Flows from Operating Activities
Net income (loss) .......................................... $ 1,746,125 $ (186,269) $ 3,216,124
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Depreciation and amortization ............................. 1,951,693 3,732,601 3,705,727
Changes in Assets and Liabilities (exclusive of
acquisitions)
Accounts receivable ....................................... (439,563) (1,881,370) 444,228
Inventory ................................................. (65,275) 8,477 (13,001)
Prepaid expenses .......................................... 36,228 1,104 (14,567)
Deposits and other assets ................................. 68,722 (100,729) (11,005)
Accounts payable .......................................... (69,193) 932,210 (961,962)
Construction costs payable ................................ -- -- 1,185,470
Accrued liabilities ....................................... 312,665 368,799 (297,355)
Deferred revenue .......................................... 40,307 (74,548) (198,284)
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Cash Flows Provided by Operating Activities ............. 3,581,709 2,800,275 7,055,375
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Cash Flows from Investing Activities
Restricted cash ........................................... -- (700,000) 700,000
Acquisition of property, plant and equipment .............. (3,929,254) (7,813,404) (5,378,980)
Acquisition of File Protek, Inc. .......................... -- -- (1,960,000)
Acquisition of First Safe Deposit Corp. ................... -- (2,169,747) --
Acquisition of Fortress for Valuables ..................... -- (2,661,117) --
Acquisition of United Leasing Corporation ................. -- (54,602) --
Proceeds from sale of property, plant and equipment ....... 8,375 -- 76,150
Notes and other receivables from related parties, net ..... 35,271 (899,965) 851,696
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Cash Flows Used in Investing Activities ................. (3,885,608) (14,298,835) (5,711,134)
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Cash Flows from Financing Activities
Net borrowing (repayment) on line of credit ............... 1,250,000 (750,000) (500,000)
Proceeds from current and long-term obligations ........... 4,999,899 14,331,280 4,150,000
Payments on current and long-term obligations ............. (2,017,321) (10,704,412) (4,089,403)
Payment for early retirement of capital lease ............. -- -- (105,549)
Member contributions ...................................... 1,000 1,000,000 304,615
Member distributions ...................................... (608,960) -- --
Stockholder contributions ................................. -- 270,000 --
Stockholder distributions ................................. (1,043,292) (214,899) (472,757)
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Cash Flows Provided by (Used in) Financing
Activities ............................................ 2,581,326 3,931,969 (713,094)
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Increase (decrease) in Cash and Cash Equivalents ............ 2,277,427 (7,566,591) 631,147
Cash and Cash Equivalents, Beginning of Year ................ 5,405,829 7,683,256 116,665
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Cash and Cash Equivalents, End of Year ...................... $ 7,683,256 $ 116,665 $ 747,812
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The accompanying notes are an integral part of these combined financial statements.
DATA BASE, INC. AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. Summary of Accounting Policies
Basis of Presentation
The accompanying combined financial statements include the accounts of Data Base, Inc. (DBI) and Affiliate (collectively, the Companies). The affiliate is Data Base Real Estate Holdings, LLC (DBRHC), whose majority member is also the majority stockholder of DBI. All material intercompany accounts and transactions have been eliminated in combination.
For financial reporting purposes, all land and buildings owned (less accumulated depreciation) by the majority member, net of related outstanding mortgage notes payable, are presented as if contributed to DBRHC on January 1, 1996. Additionally, all revenues and expenses of DBRHC are accounted for in the accompanying combined statement of operations.
Nature of the Business and Organization
DBI is a full service provider of offsite data recovery management services including Data Protection Services (DPS), Disaster Recovery Services (DRS), Tape Move Services (TMS), Electronic Vaulting Services (EVS), Data Escrow Services (ESC) and other auxiliary services required to fully support the core offerings. DBI provides these services in twelve locations throughout the United States to Fortune 500 companies, large financial institutions and numerous legal, health care, accounting, insurance, entertainment and governmental organizations.
The Data Base Combined Group, which consisted of seven separate companies under common ownership at December 31, 1996, merged into one company, DBI, effective January 1, 1997. This transaction resulted in a decrease in common stock from $84,300 to $8,550 and an increase in contributed capital of $75,750 at January 1, 1997. The Combined Group included the accounts of Data Base, Inc., Data Base Co., Inc., Data Base of Virginia, Inc., Data Base of Northern Virginia, Inc., Data Base of Chicago, Inc., Data Base of Ohio, Inc., and Data Base of Pennsylvania, LLC.
DBRHC, a Washington limited liability company, was formed in October 1996 to hold land and buildings that are rented solely to DBI under long-term rental agreements. DBRHC authorized 10,000 member units, which were issued for $100 in total.
Members' equity in the accompanying combined balance sheets includes DBRHC's results of operations net of eliminations, and contributions and distributions. All other equity accounts include the activity for DBI.
Allocation of Net Profits and Losses of DBRHC
Net profits, net losses and cash distributions, as defined in the Limited Liability Company Agreement (the Agreement), are to be allocated to the members in accordance with their respective percentage interests. The net loss allocated to each member is not to exceed the maximum amount of the net loss that can be allocated without causing a member to have a deficit capital account at the end of the fiscal year.
Special allocations, corrective allocations and other allocations, all as defined in the Agreement, are also allocated to members in accordance with the Agreement.
Cash Equivalents
For purposes of the statements of cash flows, the Companies consider all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.
DATA BASE, INC. AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)
DECEMBER 31, 1998
1. Summary of Accounting Policies (continued)
Restricted Cash
At December 31, 1997, a $700,000 certificate of deposit was pledged as collateral on outstanding notes payable related to buildings and land owned by DBRHC.
Inventory
Inventories, which consist of disaster recovery carts held for resale, are stated at the lower of cost, on a first-in, first-out basis, or market.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. The Companies provide for depreciation on property, plant and equipment on a straight-line basis over the estimated useful lives of such assets. The following is a listing of asset types and their respective estimated useful lives in years.
Buildings .............................. 15-40 Leasehold improvements ................. 10 Equipment and racking .................. 5-7 Vehicles ............................... 5 Computer hardware and software ......... 5 Office furniture and fixtures .......... 7 |
Maintenance and repairs are charged to operations as incurred. When equipment is sold or otherwise disposed of, the asset and accumulated depreciation are removed from the accounts and the resulting gain or loss is included in the respective statement of operations.
Intangible Assets
Goodwill reflects the cost in excess of the fair value of the net assets of companies acquired in purchase transactions. Goodwill is amortized using the straight-line method from the date of acquisition over the expected period to be benefited, which is estimated to be twenty-five years. Amortization on non-competition agreements is calculated using the straight-line method over the five-year life of the agreements.
Impairment of Long-Lived Assets
The Companies assess the recoverability of goodwill, as well as other long lived assets based upon expectations of future undiscounted cash flows in accordance with the Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of."
Software Costs
DBI develops software for internal use. The costs associated with the development have been capitalized in accordance with each phase of development. Upon substantial completion of each phase, capitalization ceases and the asset is placed in service. The related costs are then amortized on a straight-line basis over the estimated useful life of five years. In March 1998, the American Institute of Certified Public Accountants issued Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use." Management believes that the effect of applying the new statement is not material to the results of operations or financial position.
DATA BASE, INC. AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)
DECEMBER 31, 1998
1. Summary of Accounting Policies (continued)
DBI also develops software for sale to external customers and has capitalized a portion of these costs in accordance with SFAS No. 86, "Accounting for the Costs of Computer Software To Be Sold, Leased or Otherwise Marketed." The related costs are then amortized on a straight-line basis over the estimated useful life of five years. The company performs an annual review of the internally developed software assets to determine the appropriate amount to record as amortization expense.
Revenue Recognition
Revenues for DBI consist of storage revenues and service and storage material sales revenues. Storage revenues consist of periodic charges related to the storage of materials on a per unit basis. In certain circumstances, based upon customer requirements, storage revenues include periodic charges associated with normal recurring service activities. Service and storage material sales revenues are comprised of charges for related service activities and the sale of storage materials. Customers are generally billed on a monthly basis on contractually agreed-upon terms.
Storage and service revenues are recognized in the month the respective service is provided. Storage material sales are recognized when shipped to the customer. Amounts related to future storage for customers where storage fees are billed in advance are accounted for as deferred revenue and amortized over the applicable period. Advance payments cover periods ranging from four to twelve months in duration. Most customers are billed in arrears.
Federal Income Tax
DBI has elected to be taxed as a Small Business Corporation pursuant to subchapter S of the Internal Revenue Code. Under this election, DBI's stockholders, rather than the corporation, are liable for federal and state income taxes. Accordingly, there is no provision for income taxes in the accompanying combined statements of operations.
DBRHC is a limited liability company and is treated as a partnership under the Internal Revenue Code. Accordingly, the members of DBRHC are allocated their proportionate share of the DBRHC's federal and state taxable income or loss and there is no provision for income taxes in the accompanying combined statements of operations.
Use of Estimates
The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Significant estimates used in preparing these statements include estimating the useful lives of assets and intangibles that have a direct effect on net income.
Reclassifications
Certain prior year amounts have been reclassified to conform to the 1998 presentation. These changes had no impact on previously reported results of operations or stockholders' and members' equity.
DATA BASE, INC. AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)
DECEMBER 31, 1998
2. Acquisitions
File Protek, Inc. (Portland, Oregon)
DBI purchased certain assets and assumed certain liabilities of this company on December 31, 1998 for $3,077,187. The transaction was funded utilizing $1,960,000 of available cash, $750,000 in notes payable to the seller and $250,000 of additional short-term seller financing. Additionally, a working capital adjustment of $117,187 is payable to the seller at December 31, 1998, and is included in demand notes and other current obligations in the accompanying combined balance sheet. The allocation of the purchase price is detailed below:
Working capital .............................. $ 117,187
Tangible personal property ................... 500,000
Non-competition agreements ................... 100,000
Goodwill ..................................... 2,360,000
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$3,077,187
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Concurrent with the purchase, DBI assumed an operating lease agreement on a data protection facility. The data protection facility is leased from a third party and the lease is in effect through September 30, 2000, requiring monthly rental payments of $6,263.
First Safe Deposit Corp. (Raleigh, North Carolina)
DBI purchased certain assets of this company on January 31, 1997 for $3,169,747. The acquisition included a media storage facility and certain assets of a paper storage business. The transaction was funded utilizing $336,385 of available cash, $1,000,000 in a note payable to the seller and $1,833,362 of additional bank financing. The allocation of the purchase price is detailed below:
Land ......................................... $ 75,000
Building ..................................... 608,362
Purchased working capital .................... 161,385
Tangible personal property ................... 1,050,000
Non-competition agreements ................... 100,000
Goodwill ..................................... 1,175,000
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$3,169,747
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Concurrent with the purchase, DBI entered into an operating lease agreement for the paper storage facility land and building, which requires average annual rents of approximately $138,000 over a five-year term.
Fortress for Valuables (Milwaukee, Wisconsin)
DBI purchased certain assets of this company on February 28, 1997 for $2,661,117. The transaction was funded utilizing $111,117 of available cash and $2,550,000 of additional bank financing. The allocation of the purchase price is detailed below:
Land ......................................... $ 325,000
Building ..................................... 675,000
Tangible personal property ................... 1,076,627
Non-competition agreements ................... 100,000
Goodwill ..................................... 484,490
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$2,661,117
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DATA BASE, INC. AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)
DECEMBER 31, 1998
2. Acquisitions (continued)
Concurrent with the purchase, DBI assumed a capital lease on a related facility, the Total Corporate Recovery Center (TCRC). DBI recorded the building asset of $747,316 with $19,770 of accumulated amortization at December 31, 1997. Total liabilities assumed with the lease were $469,642.
United Leasing Corporation (Richmond, Virginia)
DBI purchased the assets of this company on May 30, 1997 for $54,602. The transaction was funded utilizing available cash and the entire purchase price was allocated to goodwill. Liabilities assumed in this transactions consisted of deferred revenue only.
The business combinations discussed above have been accounted for under the purchase method. Accordingly, assets and liabilities have been recorded at their fair value at acquisition date. Operating results of the acquired companies are included in the Companies' combined statements of operations from the respective acquisition date.
3. Notes and Other Receivables from Related Parties
Notes and other receivables from related parties consist of the following at December 31:
1997 1998
---------- --------
Data Base Integrated Services Corporation ........... $ 118,795 $125,327
Stockholder ......................................... 850,000 --
Employee loans ...................................... 38,183 29,956
---------- --------
$1,006,978 $155,283
========== ========
|
DBI has a receivable due from Data Base Integrated Services Corporation (DBISC), an affiliate through common ownership, for services paid by DBI on behalf of DBISC. The outstanding balance is unsecured, due on demand and subject to monthly interest payments based on a 9% annual rate.
DBI had a receivable due from one of its stockholders totaling $850,000 at December 31, 1997. The note was unsecured, due on demand and subject to monthly interest payments based on a 9% annual rate. The note was repaid during 1998.
The remaining balance represents computer loans due from employees, resulting from DBI's employee computer purchase program.
4. Intangible Assets
Intangible assets consist of the following at December 31:
1997 1998
------------ ----------
Non-competition agreements ........... $ 525,000 $ 375,000
Goodwill ............................. 2,941,934 4,546,778
------------ ----------
3,466,934 4,921,778
Accumulated amortization ............. (1,121,516) (326,817)
------------ ----------
$ 2,345,418 $4,594,961
============ ==========
|
When intangible assets are fully amortized, the asset and accumulated amortization are removed from the accounts.
Total amortization of intangibles charged to expense was $203,960, $281,824 and $230,766 for the years ended December 31, 1996, 1997 and 1998, respectively.
DATA BASE, INC. AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)
DECEMBER 31, 1998
5. Property, Plant and Equipment
Property, plant and equipment consist of the following at December 31:
1997 1998
------------- ------------
Buildings and land ....................... $ 10,878,204 $ 11,199,414
Leasehold improvements ................... 2,657,829 2,893,213
Equipment and racking .................... 8,139,979 6,797,192
Vehicles ................................. 2,726,737 2,670,975
Computer hardware and software ........... 5,206,468 5,992,851
Office furniture and fixtures ............ 1,244,311 1,022,239
Construction in progress ................. 7,197 1,198,644
------------- ------------
30,860,725 31,774,528
Accumulated depreciation and
amortization ............................. (10,991,470) (9,840,749)
------------- ------------
$ 19,869,255 $ 21,933,779
============= ============
|
DBI expended approximately $1,756,000, $2,780,000 and $1,130,500 during 1996, 1997 and 1998, respectively, on the internal development of two software applications.
One of the applications, SecureBase(SM), tracks the operational activity associated with off site data recovery management. DBI capitalized $2,017,072 and $652,830 in 1997 and 1998, respectively, for costs associated with SecureBase(SM) development. Cumulative capitalized expenditures for SecureBase(SM) development through December 31, 1997 and 1998 are $2,503,249 and $3,156,079, respectively and are included in computer hardware and software. Management expects to spend an additional $1 to $2 million to complete all phases of the SecureBase(SM) development effort.
The other application, SecureSync(TM), allows customers to interface with the SecureBase(SM) application and view and update their off site data recovery management information. DBI capitalized $145,514 and $194,311 in 1997 and 1998, respectively, for costs associated with SecureSync(TM) development. Cumulative capitalized expenditures for SecureSync(TM) development through December 31, 1997 and 1998 are $233,513 and $427,824, respectively and are included in computer hardware and software. Management expects to spend an additional $1 million to complete all phases of the SecureSync(TM) development effort.
Construction costs payable of $1,185,470 at December 31, 1998 relate to the construction in progress of the Companies' North Carolina facility.
Total depreciation and amortization of property, plant and equipment charged to expense was $1,747,733, $3,450,777 and $3,474,961 for the years ended December 31, 1996, 1997 and 1998, respectively.
Included in depreciation and amortization of property, plant and equipment are losses on the disposition of property, plant and equipment of $99,198, $1,124,465 and $95,757 for the years ended December 31, 1996, 1997 and 1998, respectively.
Additionally, for the year ended December 31, 1998, DBI realized a gain of $263,346 from the early retirement of debt associated with a capital lease obligation. Total debt of $368,895 was relieved in exchange for cash of $105,549. In conjunction with this transaction, DBI also realized a loss on the disposition of the related building of $712,186. The total net loss of $448,840 is included in depreciation and amortization.
DATA BASE, INC. AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)
DECEMBER 31, 1998
6. Line of Credit
DBI maintains a revolving line of credit limited to $2,500,000, scheduled to expire on December 1, 1999. The line of credit is secured by DBI's accounts receivable, vehicles and equipment, general intangibles and is guaranteed by the majority stockholder. The line bears interest annually at Seafirst Bank's prime rate plus 0.5%, which was 8.5% and 7.75% at December 31, 1997 and 1998, respectively. There were no outstanding advances on the line at December 31, 1998. At December 31, 1997, outstanding advances were $500,000. See Note 8 related to financial and restrictive covenants.
7. Long-Term Obligations
Long-term obligations consist of the following at December 31:
1997 1998
--------------- --------------
Note payable to bank (Note 8) ......................................... $ 8,500,000 $ 10,500,000
Notes payable to bank, due in 2007, payments total $61,208 plus
interest
at various rates, secured by deeds of trust on real property. (Note 8) 7,612,058 6,877,557
Subordinated notes payable (Note 9) ................................... 3,775,000 3,657,938
Lease payable, due August 1999, payments of $11,400 including
interest at 8.5%, secured by the TCRC building. ...................... 469,642 --
Note payable to bank, due October 2001, payments of $4,071 per
month including interest at prime plus 2%, secured by a deed of
trust on real property. (Note 8) ..................................... 455,305 445,165
Note payable to bank, due January 1998, payments of $91,666
including interest at prime plus 0.5%, unsecured. .................... 91,666 --
Note payable to bank, due June 2001, payments of $1,105 per month
including interest at 4.9%, secured by a vehicle. .................... 42,559 --
------------ ------------
Total Long-Term Obligations .......................................... 20,946,230 21,480,660
Less -- Current Portion .............................................. (3,348,476) (2,253,483)
------------ ------------
Long-Term Obligations, Net of Current Portion ......................... $ 17,597,754 $ 19,227,177
============ ============
|
Aggregate maturities of long-term obligations are as follows:
Years Ending
December 31,
------------
1999 ......................... $ 2,253,483
2000 ......................... 4,918,620
2001 ......................... 4,284,500
2002 ......................... 6,084,500
2003 ......................... 734,500
Thereafter ................... 3,205,057
-----------
$21,480,660
===========
|
8. Note Payable to Bank
DBI has a term note payable of $8,500,000 and $10,500,000 at December 31, 1997 and 1998, respectively. The note bears annual interest at 0.25% plus Seafirst Bank's prime rate or 2.5% plus the 30-day LIBOR rate. At the end of each month, DBI has the option to choose which interest rate is used for the
DATA BASE, INC. AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)
DECEMBER 31, 1998
8. Note Payable to Bank (continued)
following month. The interest rate was 8.125% at December 31, 1998. Principal payments are due as follows:
Monthly Sum of
Payment Payments
----------- --------------
July - December 1999 ....... $ 50,000 $ 300,000
January - December 2000..... 250,000 3,000,000
January - December 2001..... 275,000 3,300,000
January - November 2002..... 300,000 3,300,000
December, 2000 ............. 600,000 600,000
-----------
$10,500,000
===========
|
On December 1, 2002, the entire unpaid balance of principal plus all unpaid interest is due. The note is secured by bank accounts, accounts receivable, equipment and general intangibles.
DBI's loan agreements with the bank for the line of credit and the note payable to bank contain several covenants that include maintaining adequate stockholders' equity as well as leverage and debt coverage ratios. The borrowing agreements also contain provisions that place limits on capital expenditures and stockholder distributions. At December 31, 1998, DBI was in compliance with all loan covenants.
DBRHC has a series of notes payable related to the acquisition of certain properties of $7,612,058 and $6,877,557 at December 31, 1997 and 1998, respectively. The real estate for each property is held as collateral for each respective loan. Under the terms of each agreement, these notes bear interest at rates ranging from 2.75% to 3.25% over the annual adjusted index rate, as defined in the agreements. The interest rates range from 8.45% to 8.77% and 7.36% to 8.67% at December 31, 1997 and 1998, respectively. These notes expire at various dates in 2007.
DBRHC has a note payable related to the acquisition of a certain property of $455,305 and $445,165 at December 31, 1997 and 1998, respectively. The real estate for the property is held as collateral for the loan. Under the terms of the agreement, this note bears interest at prime plus 2.0% and expires in October 2001. DBRHC repaid the note in March 1999.
9. Subordinated Notes Payable
DBI has a series of notes payable to a stockholder totaling $1,325,000 and $707,938 at December 31, 1997 and 1998, respectively. The notes bear interest at 9.0%, mature on December 31, 1999, and are subordinated to the notes payable to bank.
DBI has a series of notes payable to an unrelated individual totaling $1,450,000 at December 31, 1997 and 1998. The notes bear interest at 10.5%, mature on September 20, 2002, and are subordinated to the notes payable to bank.
DBI has a note payable for $1,000,000 and $750,000 at December 31, 1997 and 1998, respectively, related to the acquisition of First Safe Deposit Corp. The note bears interest at 9.5%. The note is due in two installments; $250,000 due February 1, 1999 and the remaining amount of $500,000 due February 1, 2000. The note is subordinated to the notes payable to bank.
DBI has two notes payable at December 31, 1998 totaling $750,000 related to the acquisition of File Protek, Inc. The notes bear interest at 8.3% and are due in three equal installments of $250,000, payable on December 31, 1999, 2000 and 2001. The notes are subordinated to the notes payable to bank.
DATA BASE, INC. AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)
DECEMBER 31, 1998
10. Demand Notes and Other Current Obligations
DBI has a series of demand notes payable to unrelated third parties for $215,000 and $206,500 at December 31, 1997 and 1998, respectively, with monthly interest payments based on an annual rate of 10%. In addition, DBI has short-term notes payable related to the acquisition of File Protek, Inc. in the amount of $250,000 and a working capital settlement payable of $117,187 at December 31, 1998.
DBRHC owes a stockholder $146,280 and $62,052 at December 31, 1997 and 1998, respectively. The obligation bears no interest and is due on demand.
11. Common Stock
On July 28, 1998, DBI amended its corporate bylaws and changed the par value and authorized number of shares of common stock. The following details apply to common stock at December 31:
1997 1998
---------- ------------
Par value .............................. $ 1.00 $ 0.0855
Authorized voting shares ............... 50,000 1,000
Authorized non-voting shares ........... -- 499,000
Outstanding voting shares .............. 8,550 400
Outstanding non-voting shares .......... -- 99,600
|
On July 28, 1998, the $1 par value common stock was retired and replaced with 100,000 shares of $.0855 par value common stock. In August 1998, the majority stockholder transferred 17,000 non-voting shares to four new stockholders and retained ownership of 83,000 shares, consisting of 400 voting shares and 82,600 non-voting shares.
12. Employee Retirement / Profit Sharing Plan
DBI maintains a qualified deferred compensation plan under section 401(k) of the Internal Revenue Code. Under the plan, employees meeting certain eligibility requirements may elect to defer up to 15% of their salary, subject to Internal Revenue Service limits. DBI contributes a matching 50% of the first 6% of employee contributions based upon the participant's salary. Total contributions made by DBI to the plan were $428,000, $393,901 and $494,495 for the years ended December 31, 1996, 1997 and 1998, respectively.
13. Commitments
At December 31, 1997 and 1998, various facilities are leased from third parties under operating leases expiring through 2002. Future rental commitments under these operating leases are as follows:
Years Ending
December 31,
----------------
1999 ......... $ 519,531
2000 ......... 424,070
2001 ......... 297,677
2002 ......... 129,701
----------
$1,370,979
==========
|
Rent expense for DBI paid to third parties was approximately $436,000, $501,000 and $488,000 for the years ended December 31, 1996, 1997 and 1998, respectively.
DATA BASE, INC. AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)
DECEMBER 31, 1998
Note 14. Significant Components of Combined Financial Statements and Related Party Transactions
The significant components of the entities, including eliminations, comprising the combined financial statements are as follows:
Combined
DBI DBRHC Eliminations Amounts
-------------- ------------- ---------------- --------------
1996
Total revenues ............................. $20,788,828 $ 829,368 $ (829,368) $20,788,828
Total operating expenses ................... 19,087,260 141,361 (829,368) 18,399,253
Interest expense, net ...................... 423,221 220,229 -- 643,450
----------- ----------- ------------ -----------
Net income ................................. $ 1,278,347 $ 467,778 $ -- $ 1,746,125
=========== =========== ============ ===========
1997
Property, plant and equipment, net ......... $11,118,307 $ 8,750,948 $ -- $19,869,255
Other assets ............................... 7,684,984 1,120,842 (124,178) 8,681,648
----------- ----------- ------------ -----------
Total assets ............................... $18,803,291 $ 9,871,790 $ (124,178) $28,550,903
=========== =========== ============ ===========
Debt obligations ........................... $13,718,044 $ 8,213,644 $ (124,178) $21,807,510
Other liabilities .......................... 3,153,133 52,943 -- 3,206,076
Stockholders' and members' equity .......... 1,932,114 1,605,203 -- 3,537,317
----------- ----------- ------------ -----------
Total liabilities and stockholders' and
members' equity ......................... $18,803,291 $ 9,871,790 $ (124,178) $28,550,903
=========== =========== ============ ===========
Total revenues ............................. $24,941,911 $ 1,221,699 $ (1,221,698) $24,941,912
Total operating expenses ................... 24,379,621 371,854 (1,221,698) 23,529,777
Interest expense, net ...................... 1,073,000 525,404 -- 1,598,404
----------- ----------- ------------ -----------
Net income (loss) .......................... $ (510,710) $ 324,441 $ -- $ (186,269)
=========== =========== ============ ===========
1998
Property, plant and equipment, net ......... $11,240,196 $10,693,583 $ -- $21,933,779
Other assets ............................... 9,566,833 244,763 (40,301) 9,771,295
----------- ----------- ------------ -----------
Total assets ............................... $20,807,029 $10,938,346 $ (40,301) $31,705,074
=========== =========== ============ ===========
Debt obligations ........................... $14,731,625 $ 7,425,075 $ (40,301) $22,116,399
Other liabilities .......................... 1,757,268 1,246,108 -- 3,003,376
Shareholders' and members' equity .......... 4,318,136 2,267,163 -- 6,585,299
----------- ----------- ------------ -----------
Total liabilities and stockholders' and
members' equity ......................... $20,807,029 $10,938,346 $ (40,301) $31,705,074
=========== =========== ============ ===========
Total revenues ............................. $26,589,288 $ 1,366,530 $ (1,366,532) $26,589,286
Total operating expenses ................... 22,561,715 402,068 (1,366,532) 21,597,251
Interest expense, net ...................... 1,168,790 607,121 -- 1,775,911
----------- ----------- ------------ -----------
Net income ................................. $ 2,858,783 $ 357,341 $ -- $ 3,216,124
=========== =========== ============ ===========
|
All properties held by DBRHC are leased to DBI in the normal course of business under long-term rental agreements. Total rent paid to DBRHC by DBI was $829,368, $1,221,698 and $1,366,532 for the years ended December 31, 1996, 1997 and 1998, respectively. These amounts have been eliminated in the accompanying statements of operations.
In the normal course of business, DBI funds capital expenditures for DBRHC and records a corresponding receivable. Total amount owed to DBRHC by DBI was $124,178 as of December 31, 1997. Total amount owed to DBI by DBRHC was $40,301 as of December 31, 1998. These amounts have been eliminated in the accompanying combined balance sheets.
DATA BASE, INC. AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS -- (Continued)
DECEMBER 31, 1998
15. Supplemental Cash Flow Disclosures
1996 1997 1998
------------ ------------- -------------
Cash paid for interest .............................................. $ 678,228 $1,686,091 $1,878,929
Interest capitalized on software .................................... -- 107,000 40,000
Non cash investing and financing activities consist of:
Notes payable exchanged for purchase of File Protek, Inc. ........... -- -- 1,117,187
Refinance of note payable ........................................... -- -- 6,350,000
Subordinated note payable exchanged for purchase of First Safe
Deposit Corp. ..................................................... -- 1,000,000 --
Long-term obligation exchanged for purchase of building ............. -- 547,316 --
Contribution of property, plant and equipment and other assets ...... 3,198,625 87,068 --
Contribution of long-term debt on property, plant and equipment 2,864,749 -- --
Contribution of equity in property, plant and equipment and
other assets ...................................................... 333,876 -- --
|
16. Concentration of Credit Risk
Financial instruments which potentially subject the Companies to concentrations of credit risk include deposits with financial institutions, short-term investments, and accounts receivable. The Companies place their deposits and investments with high quality financial institutions; however, at times, deposits exceed the federally insured limits. DBI generally grants credit to customers without requiring collateral or other security. DBI's customers are located throughout the United States.
17. Subsequent Events
On April 8, 1999, Iron Mountain Incorporated (Iron Mountain) purchased all of the issued and outstanding shares of DBI and all of the land and improvements of DBRHC for total consideration of approximately $115 million, which is comprised of approximately $69 million in cash and assumed indebtedness, and 1,476,577 shares of Iron Mountain common stock.
In anticipation of a possible sale, merger, consolidation or other business combination of the Companies, DBI established a change in control severance plan for the benefit of eligible employees of DBI and a discretionary change of control bonus plan. The severance plan provides for termination benefits to be paid by the acquiring company to employees who are involuntarily terminated or who voluntarily terminate their employment for good reason as defined in the plan. Compensation to be paid under the severance plan is generally based on a monthly base salary times three to eighteen months, depending on the position held with the Companies. The change of control bonus plan provides for a percentage of the enterprise value to be awarded to employees on a discretionary basis. The amount of the change of control bonus was approximately $4,786,000 and was paid in April 1999 prior to the closing of the sale to Iron Mountain. No provision has been made in the combined financial statements for the change in control severance plan or the discretionary change of control bonus plan.
DBRHC entered into an agreement with a general contractor to build a new facility in Cary, North Carolina. The facility was completed on February 1, 1999 at a total cost $1.8 million. DBI will operate the Research Triangle District out of the new facility.
In January 1999, DBI repaid a $100,000 note to the former owners of File Protek, Inc.
In February 1999, DBI repaid $250,000 of the note payable to the former owners of First Safe Deposit Corp. The remaining balance on the note of $500,000 is due in 2000. DBI entered into an agreement to lease a facility in Westminster, Colorado from an unrelated third party. The operating lease, which requires monthly rental payments of $1,879, commences February 15, 1999 and will run through August 31, 2000.
IRON MOUNTAIN INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Condensed Consolidated Balance Sheet has been prepared based on the historical condensed consolidated balance sheet of Iron Mountain and the historical condensed combined balance sheet of Data Base and Affiliate, as of December 31, 1998 and the historical condensed combined balance sheet of BDM as of October 31, 1998 and gives effect to the Data Base and BDM acquisitions as if they had occurred as of December 31, 1998. The following Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 1998, gives effect to the acquisitions of BDM and NUS (together with related real estate transactions, the "Previous Acquisitions") and the Data Base acquisition, as if each had occurred as of January 1, 1998. Pro Forma adjustments are described in the accompanying notes. See "Overview" in the accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
The Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 1998, also gives effect to the Equity Offering, and the application of the net proceeds therefrom, as if the Equity Offering had occurred as of January 1, 1998. Pursuant to certain SEC Rules and Regulations, the Unaudited Pro Forma Condensed Consolidated Statement of Operations only includes results of operations and pro forma adjustments for acquisitions determined to be individually significant. Accordingly, 13 acquisitions completed in 1998 and four acquisitions completed in 1999 are not included herein. In addition, the Unaudited Pro Forma Condensed Consolidated Statement of Operations does not include results of operations prior to the date of acquisition, or pro forma adjustments, for an acquisition completed by Data Base on December 31, 1998. See "Overview - Data Base Acquisition" in the accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
The Unaudited Pro Forma Condensed Consolidated Statement of Operations is not necessarily indicative of the actual results of operations that would have been reported had the Data Base acquisition, the Previous Acquisitions and the Equity Offering been consummated as of January 1, 1998, nor does it purport to indicate the results of future operations of Iron Mountain. Furthermore, the pro forma results do not give effect to all cost savings or incremental costs which may occur as a result of the integration and consolidation of the Data Base acquisition and the Previous Acquisitions. In the opinion of management, all adjustments necessary to present fairly such pro forma financial statements have been made.
All of the acquisitions and related real estate transactions have been accounted for using the purchase method of accounting.
IRON MOUNTAIN INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1998
(In thousands)
Historical Pro Forma Historical Pro Forma
Iron Historical for BDM Data Iron
Mountain BDM (1) Adjustments Acquisition Base Adjustments Mountain
-------- ------- ----------- ----------- ---- ----------- --------
Assets
Current Assets $143,937 $13,570 $ 1,280 (A) $ 158,787 $ 4,876 $ -- $ 163,663
Property, Plant and
Equipment, net 266,743 31,988 -- 298,731 21,934 2,252 (G) 322,917
Goodwill, net 527,235 56,963 14,776 (B) 598,974 4,220 85,047 (H) 688,241
Other Long-term
Assets 29,470 -- -- 29,470 675 -- 30,145
-------- -------- -------- ---------- ------- ------- ----------
Total Assets $967,385 $102,521 $ 16,056 $1,085,962 $31,705 $87,299 $1,204,966
======== ======== ======== ========== ======= ======= ==========
Liabilities and
Stockholders'
Equity
Current Liabilities $143,472 $15,073 $ -- $ 158,545 $ 5,893 $(2,889) (I) 161,549
Long-term Debt, net
of Current Portion 454,447 15,109 47,330 (C) 516,886 19,227 50,773 (J)(K) 586,886
Deferred Rent 9,616 -- -- 9,616 -- -- 9,616
Deferred Income Taxes 12,043 837 -- 12,880 -- -- 12,880
Other Long-term
Liabilities 8,925 -- -- 8,925 -- -- 8,925
Minority Interest (2) -- -- 40,228 (D) 40,228 -- -- 40,228
Stockholders' Equity 338,882 71,502 (71,502) (E)(F) 338,882 6,585 39,415 (L)(M) 384,882
-------- -------- -------- ---------- ------- ------- ----------
Total Liabilities and
Stockholders' Equity $967,385 $102,521 $ 16,056 $1,085,962 $31,705 $87,299 $1,204,966
======== ======== ======== ========== ======= ======= ==========
|
(2) Minority interest represents 49.9 percent of the total equity of BDM after giving pro forma effect to the issuance of capital stock to Iron Mountain in exchange for cash and the net assets of ADS.
The accompanying Notes are an integral part of these pro forma financial statements.
IRON MOUNTAIN INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(In thousands, except per share data)
Pro Forma
Historical Previous Acquisitions For Pro Forma
Iron --------------------- Previous Historical Iron
Mountain NUS(1) BDM(2) Adjustments(5) Acquisitions Data Base(3) Adjustments Mountain
-------- ------ ------ -------------- ------------ ------------ ----------- --------
Revenues:
Storage $230,702 $4,657 $16,258 $ -- $251,617 $24,907 $ -- $276,524
Service and
Storage Material
Sales 192,810 885 14,062 -- 207,757 1,682 -- 209,439
-------- ------ ------- ------- -------- ------- ------- --------
Total Revenues 423,512 5,542 30,320 -- 459,374 26,589 -- 485,963
Operating Expenses:
Cost of Sales
(Excluding
Depreciation) 220,980 2,116 16,511 -- 239,607 11,337 -- 250,944
Selling, General
and Administrative 105,025 1,121 5,580 -- 111,726 6,554 -- 118,280
Depreciation and
Amortization 49,152 713 3,863 405 (N) 54,133 3,706 2,910 (U) 60,749
-------- ------ ------- ------- -------- ------- ------- --------
Total Operating
Expenses 375,157 3,950 25,954 405 405,466 21,597 2,910 429,973
-------- ------ ------- ------- -------- ------- ------- --------
Operating Income 48,355 1,592 4,366 (405) 53,908 4,992 (2,910) 55,990
Interest Expense, net 45,756 282 1,533 1,256 (O)(R) 48,827 1,776 2,599 (V) 53,202
Other Income, net (4) 1,384 -- -- -- 1,384 -- -- 1,384
-------- ------ ------- ------- -------- ------- ------- --------
Income Before
Provision for
Income Taxes and
Minority Interest 3,983 1,310 2,833 (1,661) 6,465 3,216 (5,509) 4,172
Provision for
Income Taxes 6,949 544 1,504 (422) (P)(S) 8,575 -- (917) (W) 7,658
Minority Interest -- -- -- 653 (Q) 653 -- -- 653
-------- ------ ------- ------- -------- ------- ------- --------
Net Income (Loss) $ (2,966) $ 766 $ 1,329 $(1,892) $ (2,763) $ 3,216 $(4,592) $ (4,139)
======== ====== ======= ======= ======== ======= ======= ========
Net Income (Loss)
per Common Share -
Basic and Diluted $ (0.11) $ (0.10) $ (0.14)
======== ======== ========
Weighted Average
Common Shares
Outstanding 27,470 1,538 (T) 29,008 1,477 (X) 30,485
======== ======= ======== ======= ========
|
(2) Represents the historical condensed combined statement of operations for BDM after conversion to U.S. generally accepted accounting principles. See "Overview--Previous Acquisitions" in the accompanying Notes.
(3) Represents the historical condensed combined statement of operations for Data Base and Affiliate for the year ended December 31, 1998.
(4) Other income, net includes a $1.7 million gain resulting from the settlement of several insurance claims related to the March 1997 fires at Iron Mountain's South Brunswick Township, New Jersey facilities.
(5) Includes pro forma adjustments for the Equity Offering and the application of the net proceeds therefrom.
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Overview
Previous Acquisitions
In January 1998, Iron Mountain acquired Arcus Group, Inc. ("Arcus") for $153.7 million, including $55.0 million in aggregate fair value of Common Stock and options to acquire Common Stock and the balance in cash and assumed debt. In July 1998, Iron Mountain acquired National Underground Storage, Inc. ("NUS") for $30.1 million in cash and assumed debt.
In January 1999, Iron Mountain acquired a 50.1 percent interest in BDM for total consideration of $49.8 million consisting of $47.3 million in cash and the balance in the capital stock of ADS. Iron Mountain acquired shares of BDM from Mentmore Abbey plc ("MA") and from Abbey Storage Limited, a wholly owned subsidiary of MA. In addition, Iron Mountain acquired newly issued shares from BDM in exchange for cash and the capital stock of ADS. Upon completion of the transaction, Iron Mountain owned 50.1 percent of the outstanding capital stock of BDM and MA owned the remaining 49.9 percent. Concurrent with these transactions, BDM acquired the net assets of Abbey Records Management ("ARM") for $5.7 million.
BDM has an April 30 fiscal year end. For consolidation purposes, Iron Mountain has designated October 31 as the fiscal year end for BDM. Accordingly, the Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 1998 includes the condensed combined balance sheet of BDM as of October 31, 1998 and the Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 1998 includes the condensed combined statement of operations of BDM for the fiscal year ended October 31, 1998.
The financial statements of BDM have been prepared in accordance with U.S. generally accepted accounting principles and have been translated into U.S. dollars in accordance with Statement of Financial Accounting Standards No. 52, Foreign Currency Translation. The functional currency of BDM is Pounds Sterling. Accordingly, assets and liabilities have been translated into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses have been translated into U.S. dollars at the average exchange rate during the period translated. Gains and losses that result from translating assets and liabilities into U.S. dollars are included in stockholders' equity as a cumulative translation adjustment. The amount of the cumulative translation adjustment as of October 31, 1998 included in stockholders' equity on the accompanying Unaudited Condensed Consolidated Balance Sheet was $2.1 million.
Data Base Acquisition
In April 1999, Iron Mountain acquired Data Base and certain related real estate for total consideration, including estimated transaction costs, of $116 million. This amount consisted of $70 million in cash and assumed debt and 1,476,577 shares of its Common Stock with a fair value of $46 million. The acquisition has been accounted for as a purchase.
We agreed to repurchase all or a portion of the 1,476,577 shares issued, in connection with the Data Base acquisition, from the former shareholders of Data Base with a portion of the proceeds from a proposed equity offering. The repurchase is contingent upon the completion of the equity offering. The repurchase price of those shares is equal to the offering price per share less
underwriters' discounts and commissions. The Pro Forma Financial Statements do not include any adjustments for a proposed equity offering nor the potential repurchase of these shares.
Balance Sheet (amounts in thousands)
(1) Purchase Price Allocation
The purchase price of the Data Base acquisition has been allocated to the acquired assets and liabilities based upon their estimated fair values. It is not practicable at this time to estimate the fair value of every asset acquired and liability assumed in the Data Base acquisition; accordingly, the net book value of such assets and liabilities has been used as an estimate of fair value for pro forma purposes. Any excess purchase price has been allocated to goodwill. The purchase price allocation is preliminary and subject to adjustment based on the final determination of the fair value of the net assets acquired.
Purchase Price:
Cash Paid $70,000
Fair Value of Common Stock 46,000
--------
Total Purchase Price $116,000
========
Allocation of Purchase Price:
Current Assets $ 4,876
Property, Plant and Equipment 24,186
Goodwill 89,267
Other Long-term Assets 675
Current Liabilities (3,004)
--------
Total Allocation of Purchase Price $116,000
========
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(2) Pro Forma Balance Sheet Adjustments
The pro forma adjustments to the Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 1998 consist of the following:
Pro Forma
Adjustments
-----------
BDM Acquisition Adjustments
(A) To record cash received by BDM for newly issued
shares of stock net of cash paid by BDM for
the net assets of ARM $ 1,280
(B) To record increase in goodwill equal to the 14,776
excess of purchase price over fair value of
net assets acquired, including BDM's
acquisition of ARM.
(C) To record additional debt incurred to finance
the acquisition 47,330
(D) To record the minority interest in the net
assets of BDM 40,228
(E) To record equity issued by BDM in exchange for cash
and the net assets of ADS 9,116
(F) To reverse the equity of BDM that was not
acquired (80,618)
Data Base Acquisition Adjustments
(G) To record the fair value of real estate acquired $ 2,252
(H) To record increase in goodwill equal to the
excess of purchase price over fair value of
net assets acquired 85,047
(I) To reverse the current portion of debt retired or
not assumed in connection with the Data Base
acquisition (2,889)
(J) To reverse long-term debt retired or not assumed in
connection with the Data Base acquisition (19,227)
(K) To record additional debt incurred to finance the
Data Base acquisition 70,000
(L) To reverse the equity of Data Base that was not (6,585)
acquired
(M) To record the fair value of equity issued in connection
with the Data Base acquisition $ 46,000
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Statement of Operations (amounts in thousands)
(3) Pro Forma Statement of Operations Adjustments
The pro forma adjustments to the Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 1998 consist of the following:
Pro Forma
Adjustments
-----------
Previous Acquisition Adjustments:
(N) To reflect increase in depreciation expense based on the
fair value of the assets acquired and the remaining
useful lives and the amortization of goodwill $ 405
(O) To reverse interest expense on retired debt and to record
interest expense on the additional debt incurred to
finance the Previous Acquisitions 3,244
(P) To adjust the provision for income taxes to a 40% rate on
pro forma U.S. income before nondeductible goodwill
amortization (1,217)
(Q) To record minority interest in the net income of BDM
after giving pro forma effect to the net income of
ADS for the year ended December 31, 1998. $ 653
Equity Offering Adjustments:
(R) To reverse interest expense on Iron Mountain indebtedness
outstanding under the Credit Agreement assumed to be
retired with a portion of the net proceeds from the
Equity Offering $ (1,988)
(S) To adjust the provision for income taxes to a 40% rate
on pro forma income before nondeductible goodwill
amortization $ 795
(T) To adjust pro forma weighted average common shares
outstanding as if the Equity Offering had occurred as
of January 1, 1998 1,538
Data Base Acquisition Adjustments:
(U) To record the amortization of goodwill $ 2,910
(V) To record interest expense on the additional debt
incurred to finance the Data Base acquisition 2,599
(W) To adjust the provision for income taxes to a 40% rate
on pro forma U.S. income before nondeductible goodwill
amortization (917)
28
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(X) To adjust pro forma weighted average common shares
outstanding to reflect the common shares issued in
connection with the Data Base acquisition 1,477
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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 thereunto duly authorized.
April 16, 1999 By: /s/ Jean A. Bua
-------------- ---------------------------------------
(date) Jean A. Bua
Vice President and Corporate Controller
(Principal Accounting Officer)
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EXHIBIT 2.2
**Confidential portions have been omitted pursuant to a request for confidential treatment and have been filed separately with the Securities and Exchange Commission (the "Commission").**
FIRST AMERICAN RECORDS MANAGEMENT, INC.
STOCK PURCHASE AGREEMENT
BY AND AMONG
FIRST AMERICAN RECORDS MANAGEMENT, INC.,
THE SHAREHOLDERS OF FIRST AMERICAN RECORDS MANAGEMENT, INC.
AND
IRON MOUNTAIN RECORDS MANAGEMENT, INC.
DATED
APRIL 1, 1999
TABLE OF CONTENTS
1. Certain Definitions....................................page 1
1.1. "Agreement"
1.2. "Assets"
1.3. "Benefit Arrangement"
1.4. "Business"
1.5. "Closing"
1.6. "Closing Date"
1.7. "Code"
1.8. "Company"
1.9. "Company's Employees"
1.10. "Environmental Law"
1.11. "ERISA"
1.12. "ERISA Affiliate"
1.13. "Escrow Agent"
1.14. "Escrow Agreement"
1.15. "Escrow Indemnity Funds"
1.16. "Escrow Indemnity Period"
1.17. "Excluded Assets"
1.18. "Financial Statements"
1.19. "Fiscal Year"
1.20. "GAAP"
1.21. "Hazardous Material"
1.22. "Indemnified Claim"
1.23. "Indemnified Party"
1.24. "Indemnifying Party"
1.25. "Intangible Properties"
1.26. "Leases"
1.27. "Legal Requirement"
1.28. "Lien"
1.29. "Losses"
1.30. "Measured Current Assets"
1.31. "Measured Current Liabilities"
1.32. "Notice of Claim"
1.33. "Party"
1.34. "Permits"
1.35. "Permitted Encumbrances"
1.36. "Person"
1.37. "Plan"
1.38. "Properties"
1.39. "Purchase Price"
1.40. "Purchaser Indemnified Parties"
1.41. "Qualified Plan"
1.42. "Real Property"
1.43. "Seller Indemnified Parties"
1.44. "Seller Representative"
1.45. "Sellers"
1.46. "Sellers' knowledge"
1.47. "Separate Counsel"
1.48. "Shares"
1.49. "Shareholders"
1.50. "Special Claim"
1.51. "Tangible Properties"
1.52. "Tax Claim"
1.53. "Termination Date"
1.54. "Third Party Claim"
2. Terms of Sale and Payment..............................page 5
2.1. Purchase of Shares.
2.2. Purchase Price.
2.3. Adjustments to Base Price.
2.4. Delivery of Shares.
2.5. Further Assurances.
3. Representations of the Sellers Regarding the Shares....page 6
3.1. Title to Shares.
3.2. Authority.
3.3. No Conflicts.
4. Representations and Warranties of the Sellers (excluding the Shareholders) Regarding the Company.....page 7
4.1. Organization.
4.2. Authority and Enforceability.
4.3. Capitalization.
4.4. No Breach or Violation.
4.5. Title to Assets.
4.6. Retirement Benefit Plans.
4.7. Financial Statements.
4.8. Absence of Specified Changes.
4.9. Tax Returns and Audits.
4.10. Real Property.
4.11. Hazardous Material.
4.12. Inventory.
4.13. Other Tangible Personal Property.
4.14. Accounts Receivable.
4.15. Contracts.
4.16. Tradenames, Trademarks and Copyrights.
4.17. Intellectual Property.
4.18. Customers.
4.19. Employment Contracts and Benefits.
4.20. Insurance Policies.
4.21. Liabilities.
4.22. Compliance with Laws.
4.23. Litigation.
4.24. Full Disclosure.
4.25. Brokers.
4.26. Operational Matters.
4.27. Related Transactions.
4.28. Bank Accounts, Etc.
4.29. Corporate Records.
5. Purchaser's Representations and Warranties.............page 17
5.1. Organization.
5.2. Authority and Enforceability.
5.3. No Breach or Violation.
5.4. Sufficient Funds.
5.5. Brokers.
5.6. Investment Representation.
6. Pre-Closing Actions....................................page 18
6.1. The Company's Obligations.
6.2. The Purchaser's Obligations.
6.3. Notification of Certain Matters.
6.4. Public Announcements.
6.5. Termination of 401(k).
6.6. Transfer of Excluded Assets.
7. Conditions to Closing..................................page 21
7.1. Purchaser's Conditions to Closing.
7.2. Sellers' Conditions to Closing.
8. Closing................................................page 23
8.1. Time and Place.
8.2. Deliveries at Closing.
9. Post-Closing Obligations...............................page 24
9.1. Indemnification.
9.2. Survival of Representations; Claims for
Indemnification.
9.3. Exclusive Remedy.
10. Termination and Abandonment............................page 27
10.1. Methods of Termination.
10.2. Procedure Upon Termination.
11. General Provisions.....................................page 28
11.1. Notices.
11.2. Governing Law.
11.3. Expenses.
11.4. Headings.
11.5. Modification and Waiver.
11.6. Counterparts/Fax Signatures.
11.7. Variations of Pronouns.
11.8. Rights of Parties.
11.9. Binding Effect; Assignment.
11.10. Arbitration.
11.11. Attorneys' Fees.
11.12. Severability.
11.13. Interpretation of Agreement.
11.14. Specific Performance.
11.15. Farm.com.
The following exhibits and schedules have been omitted and will be supplementally filed with the Commission upon request:
Exhibits
Exhibit 7.1(l)A Form of Noncompetition Agreement of William Jalbert
and Gordon Clark
Exhibit 7.1(l)B Form of Noncompetition Agreement of Kenneth Saxon and
Thomas Bird
Exhibit 8.2.1(e) Form of Legal Opinion of Counsel for Seller
Exhibit 8.2.2(d) Form of Legal Opinion of Counsel for Purchaser
Schedules
Schedule 1.21 Excluded Assets
Schedule 2.2 Allocation of Purchase Price and Escrow Indemnity
Funds Among Sellers
Schedule 3.1 Agreements to which the Shares Subject
Schedule 4.1 Subsidiaries
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Schedule 4.3 Capitalization
Schedule 4.4 Breach or Violation
Schedule 4.5 Permitted Encumbrances; Condition of Properties
Schedule 4.6 ERISA Plans
Schedule 4.6(a)(vi) Claims Against Plans
Schedule 4.6(a)(viii) Contributions to Plans
Schedule 4.6(a)(x) Accumulated Plan Liabilities
Schedule 4.9 Tax Returns and Audits
Schedule 4.9(d) Affiliated Group Membership
Schedule 4.10 Real Property; Leases
Schedule 4.11 Environmental Reports
Schedule 4.14 Accounts Receivable
Schedule 4.15 Material Contracts and Permits
Schedule 4.16 Tradenames, Trademarks and Copyrights
Schedule 4.17 Intellectual Property
Schedule 4.18 Customers
Schedule 4.19 Employees; Employment Contracts and Benefits; Labor
Disputes
Schedule 4.20 Insurance Policies
Schedule 4.22 Compliance with Laws
Schedule 4.23 Litigation
Schedule 4.26 Operational Matters
Schedule 4.27 Related Transactions
Schedule 4.28 Bank Accounts
Schedule 6.14 Exceptions to Ordinary Course of Business
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is dated this 1st day of April, 1999, by and among First American Records Management, Inc., a Delaware corporation (the "Company"), the shareholders of the Company which are listed on the signature pages hereto (collectively, "Sellers"), and Iron Mountain Records Management, Inc., a Delaware corporation ("Purchaser").
R E C I T A L S
A. The Company is a privately-owned company that is engaged in the business of records storage and management, and also provides consulting services regarding the same. The Sellers own all of the issued and outstanding shares of capital stock of the Company.
B. The parties desire for Purchaser to acquire ownership of the Company through the purchase of 100% of the outstanding shares of capital stock of the Company.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Certain Definitions. For purposes of this Agreement (including the Schedules attached hereto), the following capitalized terms used herein shall have the respective meanings set forth below:
1.1. "Agreement" shall mean this Agreement, including the
Exhibits and Schedules attached hereto and any amendments in accordance with
Section 11.5.
1.2. "Assets" shall mean the Company's right, title and interest in any and all Properties owned by the Company immediately prior to the Closing, excluding, however, the Excluded Assets.
1.3. "Benefit Arrangement" means any material benefit
arrangement that is not a Plan, including (i) any employment or consulting
agreement, (ii) any arrangement providing for insurance coverage or workers'
compensation benefits, (iii) any incentive bonus or deferred bonus arrangement,
(iv) any arrangement providing termination allowance, severance pay, salary
continuation for disability, or other leave of absence, supplemental
unemployment benefits, lay-off, reduction in force or similar benefits, (v) any
stock option or equity compensation plan, (vi) any deferred compensation plan,
(vii) any compensation policy or practice, (viii) any educational assistance
arrangements or policies, (ix) any plan governed by Section 125 of the Code and
(x) any change of control arrangements or policies.
1.4. "Business" means the Company's business of records storage and management and related consulting services, as conducted on the date of this Agreement and on the Closing Date.
1.5. "Closing" shall have the meaning set forth in Section 8.1.
1.6. "Closing Date" shall have the meaning set forth in
Section 8.1.
1.7. "Code" shall mean the Internal Revenue Code of 1986, as amended, together with any and all rules and regulations promulgated thereunder, as amended.
1.8. "Company" means First American Records Management, Inc.
1.9. "Company's Employees" means the employees of the Company as of the date of this Agreement and on the Closing Date.
1.10. "Environmental Law" shall mean any Legal Requirement
relating to or otherwise imposing liability or standards of conduct concerning
pollution or protection of the environment or occupational health and safety,
including without limitation laws relating to emissions, discharges and releases
of Hazardous Materials or other pollutants, contaminants, chemicals, noises,
odors or industrial, toxic or hazardous substances, materials or wastes, whether
as matter or energy, into the environment (including, without limitation,
ambient air, surface water, ground water, mining or reclamation or mined land,
land surface or subsurface strata) or otherwise relating to the manufacture,
processing, generation, distribution, use, treatment, storage, disposal,
cleanup, transport or handling of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances, materials or wastes. Environmental
laws shall include without limitation the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.), the Hazardous
Material Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act
(42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
Section 2601 et seq.), the Occupational Safety and Health Act (29 U.S.C. Section
651 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
Section 136 et seq.), and the Surface Mining Control and Reclamation Act of 1977
(30 U.S.C. Section 1201 et seq.) and any analogous federal, state, local or
foreign Legal Requirements, and the rules and regulations promulgated
thereunder, as from time to time in effect on or prior to the Closing Date.
1.11. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
1.12. "ERISA Affiliate" means any Person that is or has been
in the five year period ending with the Closing Date treated as a single
employer with the Company under Section 414(b), (c), (m) or (o) of the Code or
Section 4001(b)(1) of ERISA.
1.13. "Escrow Agent" shall mean an escrow agent mutually acceptable to the Purchaser and the Sellers.
1.14. "Escrow Agreement" shall have the meaning set forth in
Section 7.1(k).
1.15. "Escrow Indemnity Funds" shall mean an amount equal to **The confidential portion has been so omitted pursuant to a request for confidential treatment and has
been filed separately with the Commission.**, to be withheld from the Purchase Price delivered to Sellers on the Closing Date, together with any interest and earnings which accrue thereon.
1.16. "Escrow Indemnity Period" shall mean a period of **The confidential portion has been so omitted pursuant to a request for confidential treatment and has been filed separately with the Commission.** after the Closing Date.
1.17. "Excluded Assets" shall mean the property listed on Schedule 1.21.
1.18. "Financial Statements" means the Company's audited balance sheet and income and cash flow statements as of and for the fiscal years ended December 31, 1997 and December 31, 1998, and unaudited monthly balance sheet and income and cash flow statement for the two month period ended February 28, 1999.
1.19. "Fiscal Year" shall mean the Company's fiscal year commencing January 1 and ending December 31 of each year.
1.20. "GAAP" means generally accepted accounting principles as in effect from time to time in the United States of America applied on a basis consistent with the Company's past practice.
1.21. "Hazardous Material" means any dangerous, hazardous, toxic, prohibited or controlled substance, material, or waste (including, without limitation, gasoline, diesel fuel or other petroleum products) that is regulated by law, regulation, order, bylaw or permit of any federal, state, provincial or local government authority relating to the environment, health, occupational health and safety, product liability or transportation of dangerous goods.
1.22. "Indemnified Claim" shall have the meaning set forth in
Section 9.1.4(a).
1.23. "Indemnified Party" shall have the meaning set forth in
Section 9.1.4(a).
1.24. "Indemnifying Party" shall have the meaning set forth in
Section 9.1.4(a).
1.25. "Intangible Properties" shall mean contract rights, designs, know-how, copyrights, trademarks, service marks, trade names, proprietary methodologies, processes, specifications, patents, software and the like.
1.26. "Leases" shall mean any and all leases, instruments, contracts and other agreements pursuant to which the Company leases Real Property or Tangible Properties.
1.27. "Legal Requirement" shall mean the common law and all statutes, regulations, ordinances, rules and other laws promulgated by a governmental authority.
1.28. "Lien" means any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), security interest,
adverse claim or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including any conditional sale or other title retention agreement. "Lien" includes reservations, exceptions, easements, leases and other restrictions and encumbrances affecting Real Property.
1.29. "Losses" shall have the meaning set forth in Section 9.1.1.
1.30. "Measured Current Assets" shall mean, with respect to the Company as of the date of measurement, the following current assets: **The confidential portion has been so omitted pursuant to a request for confidential treatment and has been filed separately with the Commission.**
1.31. "Measured Current Liabilities" shall mean, with respect
to the Company as of the date of measurement, the following current liabilities:
**The confidential portion has been so omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.**
1.32. "Notice of Claim" shall have the meaning set forth in
Section 9.1.4(a).
1.33. "Party" shall, unless the context otherwise requires, refer to Purchaser, on the one hand, and the Company and Sellers, on the other hand.
1.34. "Permits" shall mean any and all permits, authorizations, approvals, registrations, certificates of completion or legal status, orders or other approvals or licenses granted by any federal, state or local administrative or governmental authority, bureau or agency under any Legal Requirement.
1.35. "Permitted Encumbrances" shall mean (a) Liens for taxes, assessments and governmental charges due and being contested in good faith by appropriate proceedings; (b) servitudes, easements, restrictions, rights-of-way, encroachments and other similar rights in real property or any interest therein, provided the same are not of such nature alone or together as to adversely interfere with or affect in any material respect the use of the property subject thereto or materially affect its value; (c) Liens that are not material and constitute mechanics', carriers', workers' or like liens incurred in the ordinary course of business; (d) the conditions of all Permits which relate to the Assets or the Business, and (e) all other Liens and exceptions to title to the Assets described in Schedule 4.5.
1.36. "Person" shall mean any individual, corporation, limited liability company, general partnership, limited partnership, joint venture, association, trust, organization, business entity, government (or political subdivision thereof) or governmental agency.
1.37. "Plan" means an employee benefit plan as defined in
Section 3(3) of ERISA.
1.38. "Properties" shall mean Tangible Properties and Intangible Properties.
1.39. "Purchase Price" shall have the meaning set forth in
Section 2.2.
1.40. "Purchaser Indemnified Parties" shall have the meaning set forth in Section 9.1.1.
1.41. "Qualified Plan" means a Plan maintained by the Company or an ERISA Affiliate that complies or is intended to comply with Section 401 of the Code.
1.42. "Real Property" means the real property owned or leased by the Company listed or described in Schedule 4.10.
1.43. "Seller Indemnified Parties" shall have the meaning set forth in Section 9.1.3.
1.44. "Seller Representative" shall have the meaning set forth in Section 9.1.2(c).
1.45. "Sellers" means the Persons listed on the signature page under "Sellers", provided, however, that for purposes of the representations made in Section 3.1, "Sellers" shall not include the Shareholders.
1.46. "Sellers' knowledge" means the actual knowledge of the Sellers after reasonable inquiry of Messrs. Thomas W. Bird, Gordon R. Clark, William T. Jalbert, Milanka Radosavljevic and I. Kenneth Saxon.
1.47. "Separate Counsel" shall have the meaning set forth in
Section 9.1.5(b).
1.48. "Shares" means, collectively, the 254,742 issued and outstanding shares of common stock of the Company owned of record and beneficially by Sellers.
1.49. "Shareholders" means The Boston Foundation, Inc. and El Adobe Corporation.
1.50. "Special Claim" shall have the meaning set forth in
Section 9.1.2(a).
1.51. "Tangible Properties" shall mean any and all tangible properties and assets of the Company including equipment, inventory, furniture, fixtures, books and records, and supplies.
1.52. "Tax Claim" shall have the meaning set forth in Section 9.1.2(a).
1.53. "Termination Date" shall have the meaning set forth in
Section 10.1.2.
1.54. "Third Party Claim" shall have the meaning set forth in
Section 9.1.5(a).
2. Terms of Sale and Payment.
2.1. Purchase of Shares. Subject to the terms and conditions of this Agreement, each Seller, severally, agrees to sell, assign, transfer and deliver to Purchaser at the Closing, and Purchaser agrees to purchase from each Seller at the Closing, that number of Shares as are held by the respective Seller as set forth in Schedule 2.2; provided, however, that Purchaser shall not be required to purchase any Shares unless all Shares are transferred to Purchaser, free and clear of any and all covenants, conditions, restrictions, voting trust agreements, Liens, charges, encumbrances, options and adverse claims or rights whatsoever, at the Closing Date.
2.2. Purchase Price. The aggregate purchase price to be paid by the Purchaser to Sellers for the Shares shall be Forty Two Million Dollars ($42,000,000) minus the amounts set forth in Section 2.3 (the "Purchase Price"). Purchaser shall pay the Purchase Price (as adjusted), minus the Escrow Indemnity Funds, at the Closing by wire transfer of immediately available funds to a Doty Sundheim & Gilmore Trust Account, Sellers hereby acknowledge and agree that such payment shall be deemed to be a payment of such Purchase Price by Purchaser to the Sellers, prorated among the Sellers as set forth in Schedule 2.2 attached to this Agreement. Sellers shall cause Doty Sundheim & Gilmore to provide Purchaser with wire transfer instructions not later than two (2) business days prior to the Closing Date.
2.3. Adjustments to Base Price. The Purchase Price shall be determined by subtracting the following from $42,000,000:
(a) all indebtedness of the Company as of the Closing Date (including both long-term and short-term portions), and all interest accrued thereon and prepayment penalties or fees payable if such debt is paid-in-full on the Closing Date; provided, that the indebtedness payable to State Street Bank shall be paid by Company at the Closing utilizing funds provided to Company by Purchaser.
(b) all obligations owed by the Company under capital leases as of the Closing Date;
(c) all amounts payable by the Company under stock appreciation rights agreements as of the Closing Date based on the value of the Company as of the Closing Date; provided, that such amounts shall be paid by Company at the Closing or promptly thereafter utilizing funds provided to Company by Purchaser;
(d) all amounts payable by the Company under management incentive plans as of the Closing Date based on the value of the Company as of the Closing Date; provided, that such amounts shall be paid by Company at the Closing or promptly thereafter utilizing funds provided to Company by Purchaser;
(e) all other amounts payable by the Company as special bonuses to employees as a result of the transactions contemplated by this Agreement; provided, that such amounts shall be paid by Company at the Closing or promptly thereafter utilizing funds provided to Company by Purchaser;
(f) $50,000 to be paid to **The confidential portion has been so omitted pursuant to a request for confidential treatment and has been filed separately with the Commission.** as additional purchase price for the assets acquired by the Company on or about **The confidential portion has been so omitted pursuant to a request for confidential treatment and has been filed separately with the Commission.** provided, that such amount shall be paid by Company at the Closing or promptly thereafter utilizing funds provided to Company by Purchaser;
(g) amounts payable to **The confidential portion has been so omitted pursuant to a request for confidential treatment and has been filed separately with the Commission.** in connection with a noncompete agreement;
(h) the amount, if any, by which the difference between Measured Current Assets and Measured Current Liabilities as of the Closing Date is less than the difference between Measured Current Assets and Measured Current Liabilities as of December 31, 1998.
All determinations of amounts pursuant to this Section 2.3 shall be made in accordance with GAAP applied on a basis consistent with the audited financial statements of the Company for the year ended December 31, 1998.
2.4. Delivery of Shares. At the Closing, Sellers shall deliver to the Purchaser or such Person that Purchaser may designate, free and clear of any Lien or option, equity, restriction or adverse claim of any kind or nature, certificates representing all of the Shares, duly endorsed in blank or accompanied by stock powers duly executed in blank and with all stock transfers stamped and affixed if any are required.
2.5. Further Assurances. In addition to the actions, documents and instruments specifically required to be taken or delivered hereby, Sellers, the Company, and Purchaser, whether before or after the Closing Date, shall execute and deliver such other instruments or such other actions as a party, or its counsel, may reasonably request in order to complete the transactions contemplated by this Agreement.
3. Representations of the Sellers Regarding the Shares. Each Seller severally represents and warrants to the Purchaser as follows:
3.1. Title to Shares. Such Seller will deliver to Purchaser at the Closing good and marketable title to the Shares which are to be transferred to the Purchaser by such Seller pursuant hereto, free and clear of any and all covenants, conditions, restrictions, voting trust arrangements, liens, charges, encumbrances, options and adverse claims or rights whatsoever. The Bird Revocable Trust dated June 6, 1991 hereby represents and warrants that The Boston Foundation, Inc. will deliver to Purchaser at the Closing good and marketable title to the Shares which are to be transferred to the Purchaser by such Seller pursuant hereto, free and clear of any and all covenants, conditions, restrictions, voting trust arrangements, liens, charges, encumbrances, options and adverse claims or rights whatsoever. I. Kenneth Saxon hereby
represents and warrants that El Adobe Corporation will deliver to Purchaser at the Closing good and marketable title to the Shares which are to be transferred to the Purchaser by such Seller pursuant hereto, free and clear of any and all covenants, conditions, restrictions, voting trust arrangements, liens, charges, encumbrances, options and adverse claims or rights whatsoever. The Shares are currently subject to the agreements set forth on Schedule 3.1 which will be terminated prior to Closing.
3.2. Authority. Such Seller has the full right, power and authority to enter into this Agreement and to transfer, convey and sell to the Purchaser at the Closing the Shares to be sold by such Seller hereunder. The execution and delivery of this Agreement and each other agreement and document to be executed and delivered in connection herewith, and the consummation of the transactions contemplated hereby and thereby, have been duly and validly authorized by all necessary trust, limited liability company or corporate, as the case may be, proceedings on the part of such Seller. This Agreement and each other agreement to be executed and delivered in connection herewith constitutes or will constitute the valid and legally binding obligation of such Seller, enforceable against such Seller in accordance with the terms hereof or thereof, subject as to enforceability to bankruptcy, insolvency, reorganization and other similar laws and judicial decisions of general applicability relating to or affecting creditors' rights generally and subject to the availability of equitable remedies and the application of equitable principles, including the possible unavailability of specific performance or injunctive relief, regardless of whether such enforceability is considered at law or in equity.
3.3. No Conflicts. The execution, delivery and performance of this Agreement and each other agreement and document to be executed and delivered in connection herewith, and the consummation of the transactions contemplated hereby and thereby, do not and will not (i) violate any provision of such Seller's agreement and declaration of trust, certificate of incorporation and bylaws or operating agreement and certificate of formation (in each case, to the extent applicable) or (ii) violate or breach any provision of, or be an event that is (or with the giving of notice or the passage of time will result in) a violation or breach of, or result in the acceleration of or entitle any Person to accelerate (whether after the giving of notice or lapse of time or both) any obligation under, or result in the imposition of any Lien or other restriction upon the Shares pursuant to, any agreement, contract, instrument or Legal Requirement to which such Seller is a party or by which it or its assets are bound.
4. Representations and Warranties of the Sellers (excluding the Shareholders) Regarding the Company. Sellers (excluding the Shareholders) hereby make the following representations and warranties to Purchaser regarding Company which shall, for purposes of Sections 4.6, 4.9, 4.10(a), 4.11 and 4.19, include Company and all of Company's predecessors which have been merged into or similarly subsumed by Company:
4.1. Organization. The Company is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware, has the corporate power and authority to carry on the business presently conducted by it and to undertake the activities contemplated by this Agreement. The Company is qualified to transact business and is in good standing in each jurisdiction in which the failure to be so qualified would have a material adverse
effect on the Company. Except as set forth on Schedule 4.1, the Company is not, and within the last four (4) years was not, a subsidiary of any Person, and does not have any subsidiaries and is not the owner of the capital stock or other equity interests in any Person.
4.2. Authority and Enforceability. The Company has the corporate power and authority to execute, deliver and perform this Agreement and each other agreement and document to be executed and delivered in connection herewith. The execution and delivery of this Agreement and each other agreement and document to be executed and delivered in connection herewith, and the consummation of the transactions contemplated hereby and thereby, have been duly and validly authorized by all necessary corporate proceedings on the part of the Company. This Agreement, and each other agreement and document to be executed and delivered in connection herewith, constitutes or will constitute the valid and legally binding obligation of the Company, enforceable against the Company in accordance with the terms hereof or thereof, subject as to enforceability to bankruptcy, insolvency, reorganization and other similar laws and judicial decisions of general applicability relating to or affecting creditors' rights generally and subject to the availability of equitable remedies and the application of equitable principles, including the possible unavailability of specific performance or injunctive relief, regardless of whether such enforceability is considered at law or in equity.
4.3. Capitalization. The authorized capital stock of the Company consists of 1,000,000 shares of common stock, par value $0.001 per share. The Shares constitute all of the issued and outstanding capital stock of the Company. The Shares have been duly authorized and validly issued and are fully paid and non-assessable and were not issued in violation of any preemptive right or federal or state securities laws. Except as provided in Schedule 4.3, none of the Company or any Seller is party to or bound by, and there are not outstanding, any options, warrants, puts, calls, voting agreements, contracts, or commitments of any character relating to (including, without limitation, any such instrument which calls for the issuance of) any issued or unissued stock or any other equity security issued or to be issued by the Company.
4.4. No Breach or Violation. Except as set forth in Schedule 4.4, neither the execution and delivery by the Company of this Agreement or any other agreement and document to be executed and delivered in connection herewith, nor the consummation of the transactions contemplated hereby or thereby, will (a) violate or conflict with the Certificate of Incorporation or Bylaws of the Company; (b) violate or breach any provision of, or be an event that is (or with the giving of notice or the passage of time will result in) a violation or breach of, or result in the acceleration of or entitle any Person to accelerate (whether after the giving of notice or lapse of time or both) any obligation under, or result in the imposition of any Lien or other restriction (other than restrictions arising under federal or state securities laws) upon the Shares or any of the Assets pursuant to, any instrument, contract, lease or other agreement by which the Company or any of the Assets is bound; (c) violate or breach any Legal Requirement to which the Company is subject or any order, judgment, award or decree of any court, arbitrator or government agency against or binding upon the Company or its assets or (d) require the consent of any Person.
4.5. Title to Assets. The Company has good and marketable title to all the
Assets and to all other assets, tangible and intangible, reflected on the most recent balance sheet forming part of the Financial Statements, or held by the Company for use in the Business if not so reflected, or purported to have been acquired by the Company since such date, except inventory sold or depleted, or property, plant and other equipment used up or retired, since such date, in each case in the ordinary course of business consistent with past practice of the Company, free and clear of all Liens other than the Permitted Encumbrances set forth in Schedule 4.5. Except as set forth on Schedule 4.5, the Real Property leased by the Company and the Tangible Properties owned or leased by the Company are in good operating condition and repair, ordinary wear and tear excepted.
4.6. Retirement Benefit Plans.
(a) Except as provided in Schedule 4.6, neither the Company nor any ERISA Affiliate contributes to any Plan or Benefit Arrangement or has contributed to or sponsored any Plan or Benefit Arrangement in the five-year period ending with the Closing Date. As to all Plans and Benefit Arrangements listed in Schedule 4.6:
(i) all such Plans and Benefit Arrangements
comply and have been administered in all material respects in form and in
operation in compliance with all applicable Legal Requirements, all required
returns (including without limitation information returns) have been prepared in
accordance with all applicable Legal Requirements and have been timely filed in
accordance with applicable Legal Requirements with respect to any such Plan or
Benefit Arrangement, and neither the Company nor any ERISA Affiliate has
received any outstanding written notice from any governmental authority
(including, without limitation, the Pension Benefit Guaranty Corporation)
questioning or challenging such compliance;
(ii) all Qualified Plans maintained or previously maintained by the Company or any ERISA Affiliate comply and complied in form and in operation with all applicable requirements of the Code and ERISA, a favorable determination letter has been received from the Internal Revenue Service with respect to each such Plan or the sponsor of the Plan is entitled to rely on a favorable opinion letter issued to the prototype sponsor by the Internal Revenue Service with respect to each such Plan, and no event has occurred that will or could reasonably be expected to give rise to disqualification of any such Plan or to a tax under Section 511 of the Code;
(iii) none of the assets of any Qualified Plans are invested in securities of the Company or an ERISA Affiliate or employer real property and each asset may be liquidated or terminated without the imposition of any redemption or surrender charge or comparable liability;
(iv) there are no non-exempt "prohibited transactions" (as described in Section 406 of ERISA or Section 4975 of the Code) with respect to any Qualified Plan and neither the Company nor any of its ERISA Affiliates has otherwise engaged in any prohibited transaction;
(v) there have been no acts or omissions by the Company or any ERISA Affiliate that have given rise or could reasonably be expected to give rise to material fines, penalties, taxes or related charges under Sections 502(c), 502(i) or 4071 of ERISA or Chapter 43 of the Code for which the Company or any ERISA Affiliate may be liable;
(vi) there are no claims (other than routine claims for benefits) pending or, to the Sellers' knowledge, threatened involving any Plan or the assets of any Plan, except as set forth on Schedule 4.6(a)(vi);
(vii) no Qualified Plan is subject to Title IV of ERISA, or if subject, there have been no "reportable events" (as described in Section 4043 of ERISA) as to which there is any material risk of termination of such Plan, no steps have been taken to terminate any such Plan, no material liability to the Pension Benefit Guaranty Corporation has been or is expected by the Company or any ERISA Affiliate to be incurred by the Company or any ERISA Affiliate with respect to any Qualified Plan, and there has been no event or condition that presents a material risk of termination of any Qualified Plan by the Pension Benefit Guaranty Corporation;
(viii) to the extent that the most recent balance sheet forming part of the Financial Statements does not include a pro rata amount of the contributions that would otherwise have been made in accordance with past practices for the plan years which include the Closing Date, such amounts are set forth in Schedule 4.6(a)(viii);
(ix) neither the Company nor any ERISA Affiliate nor any of their respective directors, officers, employees or any other fiduciary has committed any breach of fiduciary responsibility imposed by ERISA that could reasonably be expected to subject the Company or any ERISA Affiliate or any of their respective directors, officers or employees to liability under ERISA;
(x) except as set forth in Schedule
4.6(a)(x), which entry, if applicable, shall indicate the present value of
accumulated plan liabilities calculated in a manner consistent with FAS 106 and
actual annual expense for such benefits for each of the last two years, and
other than pursuant to the provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, or any equivalent state statute, which
provisions have been complied with in all material respects, neither the Company
nor any ERISA Affiliate maintains any Plan that provides benefits described in
Section 3(1) of ERISA to any former employees or retirees of the Company or any
of its ERISA Affiliates;
(xi) the Company has made available to Purchaser copies of the Federal Form 5500 series and accountant's opinion, if applicable, for each Plan or Benefit Arrangement (and the most recent actuarial valuation reports for each Plan, if any, that is subject to Title IV of ERISA), for the three plan years preceding the Closing Date and all information provided by the Company or any ERISA Affiliate to any actuary in connection with the preparation of any such actuarial valuation report was true, correct and complete in all material respects; and
(xii) the Company has delivered to Purchaser
correct and complete copies of all Plans and Benefit Arrangements and, where
applicable, each of the following documents with respect to such Plans or
Benefit Arrangements: (i) any amendments; (ii) any related trust documents;
(iii) any documents governing the investment and management of the Plan or the
Benefit Arrangement, or the assets thereof, including, without limitation, any
documents relating to fees incurred by the sponsor or participants and
beneficiaries; (iv) the most recent summary plan descriptions and summaries of
material modifications; and (v) written communications to employees to the
extent the substance of the Plans and Benefit Arrangements described therein
differ materially from the other documentation furnished under this clause.
(b) Neither the Company nor any ERISA Affiliate is or ever has been a party to any multiemployer plan, within the meaning of Section 400(a)(3) of ERISA, or made contributions to any such plan.
(c) No employee is entitled to, nor shall any
employee accrue or receive, additional benefits, services or accelerated rights
to payment of benefits, whether pursuant to any Plan, Benefit Arrangement or
otherwise, including the right to receive any parachute payment as defined in
Section 280G of the Code, or become entitled to severance, termination allowance
or other similar payments as a result of this Agreement.
4.7. Financial Statements. The Company has delivered to Purchaser the Financial Statements, which financial statements present fairly, in all material respects, the financial position and results of operations of the Company as of the dates and for the periods specified therein. All the financial statements delivered to Purchaser have been prepared from and are in accordance with, the books and records of the Company and in accordance with GAAP consistently followed by the Company historically, subject (in the case of interim reports) to normal year-end adjustments, and except the unaudited Financial Statements do not contain all footnotes required by GAAP.
4.8. Absence of Specified Changes. Since December 31, 1998, the Company has operated its business in the ordinary course, consistent with past practice. Without intending to limit the generality of the foregoing, since such date, there has not been any:
(a) capital expenditure(s) by the Company exceeding **The confidential portion has been so omitted pursuant to a request for confidential treatment and has been filed separately with the Commission.** in the aggregate, nor has there been any commitment on the part of the Company to make any additions to its property or any purchases of machinery or equipment, except in the ordinary course of business, consistent with past practice;
(b) material adverse change in the financial condition, liabilities, assets, or business of the Company;
(c) change in accounting methods or practices (including, without limitation, any change in depreciation or amortization policies or rates) of the Company;
(d) increase in the salary or other compensation payable or to become payable by the Company to any of the Company's directors or employees or commitment or obligation of any kind for the payment, by the Company of a bonus or other additional salary or compensation to any such person, except in the ordinary course of the Company's Business and consistent
with its past practices;
(e) sale or transfer of any Asset, except for fair
value in the ordinary course of business;
(f) amendment or termination of any Permit, contract,
agreement or license to which the Company is a party or is bound, except in the
ordinary course of business;
(g) loan by the Company to any Person in the
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principal amount in excess of $5,000, (or in the aggregate in excess of $25,000) or guaranty by the Company of any loan;
(h) mortgage, pledge, or other encumbrance of, or the grant of a lien on, any Asset;
(i) commencement of any litigation, arbitration or any governmental proceeding, against or investigation of the Company, the Assets or the Business;
(j) discharge or satisfaction of any Lien or any payment of any obligation or liability (absolute or contingent) other than current liabilities or obligations under contracts existing in the ordinary course of business, consistent with past practice;
(k) material damage, destruction or loss (whether or not covered by insurance) or any acquisition or taking of property by any governmental authority, or any amendment, termination or lapse of any insurance policies;
(l) waiver of any rights of material value without fair and adequate consideration;
(m) issuance or agreement to issue any notes, bonds or other debt securities or any capital stock or other equity securities or any securities convertible, exchangeable or exercisable into any capital stock or other equity securities;
(n) (i) declaration or payment of any dividend on or in respect of any shares of any class of capital stock of the Company (other than a dividend or distribution of the Excluded Assets), (ii) purchase, redemption or other retirement of any shares of any class of capital stock of the Company, or (iii) any other distribution on or in respect of any shares of any class of capital stock of the Company;
(o) entrance into any transaction with any affiliate of the Company,
(p) strike, work stoppage or notice of any claim of wrongful discharge;
(q) acceleration of collection of accounts receivable as compared with past practice; or
(r) agreement by the Company to do any of the foregoing actions described in this Section 4.8.
4.9. Tax Returns and Audits.
(a) Within the time and in the manner prescribed by applicable Legal Requirements, the Company has filed all federal, state, and local tax returns required by applicable Legal Requirements and has paid all taxes, estimates and penalties payable. All such tax returns were true, correct and complete in all material respects. Except as set forth on Schedule 4.9, (i) the Company has not executed any waivers of the statutes of limitations as to the assessment or collection of any tax, (ii) to the Sellers' knowledge, no audits of any tax return of the Company are pending and (iii) the Company has not received notice of any audit of any tax return of the Company or any dispute as to taxes payable by the Company. The Company has in all material respects duly and timely withheld from salaries, wages and other compensation of its employees and paid over to the appropriate tax authorities all amounts required to be so withheld and paid over for all periods not barred by applicable statutes of limitations.
(b) The Company has not filed a consent pursuant to
Section 341(f) of the Code or agreed to have Section 341(f)(2) apply to any
disposition of a Subsection (f) asset; the Company has not executed or entered
into a closing agreement pursuant to Section 7121 of the Code or any similar
provision of state or local law; the Company is not required to make any
adjustments pursuant to Section 481(a) of the Code or any similar provision of
state or local law by reason of a change in accounting method; and no assets of
the Company are properly required to be treated as being owned by another person
under the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954.
(c) Federal and state income tax returns of the Company have been examined by the IRS, or the periods covered by such tax returns have been closed by applicable statutes of limitations, for all periods through December 31, 1994, except to the extent such tax returns may be examined for the purposes of determining net operating loss or credit carryforwards to a year not so closed.
(d) Except as set forth in Schedule 4.9(d), the Company has not been a member of any "affiliated group" (as defined in Section 1504 of the Code) since January 1, 1992.
(e) The Company is not currently, has not been within the last five (5) years, and does not anticipate becoming a "United States real property holding corporation" within the meaning of Section 897(c) of the Code.
4.10. Real Property.
(a) The Company does not own, and has never owned, the legal or any beneficial interest in any Real Property.
(b) Schedule 4.10 lists and describes briefly all real property leased or subleased to the Company. The Company has delivered to the Buyer correct and complete copies (as amended to date) of the leases and subleases listed in Schedule 4.10. With respect to each lease and sublease listed in Schedule 4.10:
(i) the lease or sublease is a legal, valid, binding, enforceable obligation of the Company, and in full force and effect in all material respects;
(ii) the Company is not in default, and to the Sellers' knowledge the lessor or sublessor is not in material breach or default, and no event has occurred which, with notice or lapse of time, would constitute a material breach or default or permit termination, modification, or
acceleration thereunder;
(iii) no party to the lease or sublease has
repudiated any material provision thereof;
(iv) there are no material disputes, oral
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agreements, or forbearance programs in effect as to the lease or sublease; and
(v) the Company has not assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered any interest in the leasehold or subleasehold.
4.11. Hazardous Material.
(a) The Company is, and at all times during the last five (5) years has been, in compliance in all material respects with all applicable Environmental Laws.
(b) The Company (a) has not been notified that it is potentially liable, (b) has not received any written request for information or other correspondence concerning any site or facility and (c) is not a "potentially responsible party" under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Resource Conservation Recovery Act, as amended, or any similar state or provincial law.
(c) The Company has obtained all material Permits and made all material filings which are required by Environmental Laws for the ownership of the Company's property, facilities and assets and the operation of the Business, and there are no pending or, to the Sellers' knowledge, threatened investigations or proceedings with respect to such Permits.
(d) Neither the Company nor, to the Sellers' knowledge, any other Person has spilled, disposed of, discharged, buried or released any Hazardous Materials into,
upon, from, over or about the Real Property or any other properties now or, to
the Sellers' knowledge formerly, owned, leased, operated or used by the Company
or into or upon ground or surface water on any such property (i) which would
require or reasonably be expected to require remediation or investigation by the
Company; (ii) violate any Environmental Law, including a failure to report; or
(iii) constitute grounds for a cost recovery claim by any governmental
authority.
(e) The Company has not assumed or agreed to any obligation under any of its Leases of real property or otherwise to cleanup or take responsibility for any Hazardous Material which exists on such property other than as a result of the Company's operating and occupying such property.
(f) Schedule 4.11 lists all site assessments, audits and other investigation reports which have been conducted by or on behalf of the Company with respect to environmental matters at any of its properties or facilities.
(g) To the Sellers' knowledge (i) there are no above or under ground storage tanks located at any property currently owned, leased, operated or used by the Company; and (ii) no friable asbestos containing materials or equipment containing polychlorinated biphenyls exist on any property currently owned, leased, operated or used by the Company.
4.12. Inventory. The inventory listed in the Financial Statements is usable in the ordinary course of business. Except for sales made in the ordinary course of business since the date of the Financial Statements, all inventory is the property of the Company.
4.13. Other Tangible Personal Property. The Financial Statements accurately describe all depreciable Tangible Property owned by or used by the Company. The Tangible Property forming part of the Assets constitute all such tangible personal property necessary for the conduct of the Company's Business as now conducted.
4.14. Accounts Receivable. Schedule 4.14 contains a complete and accurate list of the Company's accounts receivable as of December 31, 1998, together with an accurate aging of these accounts. The accounts receivable described in Schedule 4.14, and all accounts receivable created thereafter, arose from valid sales in the ordinary course of business.
4.15. Contracts. Schedule 4.15 contains a complete and accurate list of all of the Company's material contracts and Permits, whether oral or written, and there is no material default or event that, with notice or lapse of time or both, would constitute a default by the Company or to Sellers' knowledge, any other party thereto. True, complete and correct copies of each of the material contracts and Permits have been made available to or furnished by the Company to Purchaser (or true, complete and correct descriptions thereof have been set forth in Schedule 4.15, if any such material contract is oral). All of the material contracts and Permits are valid, binding and legally enforceable obligations of the Company and, to Sellers' knowledge, of each other party thereto, and the Company is validly and lawfully operating its business and owning its property under each of the material contracts and Permits which, to Sellers'
knowledge, are all Permits required to conduct the Company's Business as now conducted. The Company has not received any notice that any party intends to cancel or terminate any of these agreements. For purposes of this Section 4.15, "material" means (a) contracts involving the payment or receipt by the Company of more than **The confidential portion has been so omitted pursuant to a request for confidential treatment and has been filed separately with the Commission.** per year or **The confidential portion has been so omitted pursuant to a request for confidential treatment and has been filed separately with the Commission.** in the aggregate, and (b) permits necessary to the conduct of the Business as currently conducted, (c) each note, mortgage, indenture, guaranty, other obligation, agreement or other instrument for or relating to any lending or borrowing (including assumed debt) relating to any of the Company's properties or assets; (d) nondisclosure or confidentiality contracts (other than those entered into in the ordinary course of business with customers, suppliers and employees), (e) joint venture or similar contracts or agreements; (f) each assignment, license, indemnification or other agreement with respect to any Intangible Property, (g) powers of attorney or other similar contracts or grants of agency, or (h) contracts or agreements prohibiting the Company from engaging in any business or competing anywhere in the world.
4.16. Tradenames, Trademarks and Copyrights. Schedule 4.16 is an accurate and complete list of all tradenames, trademarks, service marks, and copyrights owned by the Company or in which the Company has rights or licenses. The Company has not received notice of any infringement or alleged infringement by others of any such tradename, trademark, service mark, or copyright. The Company has not received notice alleging that it is infringing on any tradename, trademark, service mark, or copyright belonging to any Person.
4.17. Intellectual Property. Schedule 4.17 is a true and complete list of all computer software programs, patents and all applications for patents owned by the Company or in which the Company has any rights or licenses. The patents are valid. The Company has not received notice of interference actions or other judicial, arbitration, or other adversary proceedings concerning the patents or applications for patents described in Schedule 4.17. All computer programs (other than "off-the-shelf") are used pursuant to valid licenses with the Licensor thereof.
4.18. Customers. Schedule 4.18 contains a true and complete list of the Company's twenty (20) largest (by revenue) customers during the year ended December 31, 1998. Except as set forth on Schedule 4.18, the Company has not received written notice that any of these customers intend to cease, or materially decrease the rate of or change the terms of, doing business with the Company. Except as set forth on Schedule 4.18, to the Sellers' knowledge, the Company has not received written notice that any such customer is soliciting bids for services similar to those performed by the Company.
4.19. Employment Contracts and Benefits. Schedule 4.19 is a complete and accurate list of the Company's employees and their (i) date of hire; (ii) salary; (iii) age; and (iv) title. Except as described in Schedule 4.19, the Company has no written employment contracts, pensions, bonus, profit sharing, stock option or other agreements or arrangements providing for employee compensation or benefits to which the Company is a party or bound. None of the
employees of the Company is now, or during the past five (5) years has been, represented by any labor union or other employee collective bargaining organization which is a party to a collective bargaining agreement with the Company, or are now, or during the past five (5) years have been, parties to any labor or other collective bargaining agreement with the Company. Except as set forth on Schedule 4.19, there are currently no, and during the last five (5) years there have been no, labor disputes existing, or to the Sellers' knowledge, threatened involving strikes, work stoppages, slowdowns, picketing, or any other interference with work or production. No charges or proceedings with respect to the Company before the National Labor Relations Board, or similar agency, exist, or to the Sellers' knowledge, are threatened. The Company has performed all obligations required to be performed under all employment arrangements and is not in material breach or violation of or in default or arrears under any of the terms, provisions or conditions thereof, except as set forth in Schedule 4.19.
4.20. Insurance Policies. Schedule 4.20 contains a list of all
insurance policies held by the Company and the amounts of coverage therefor.
Such policies are in the respective principal amounts set forth in Schedule
4.20. The Company is not in default with respect to payment of premiums on any
such policy or, to Sellers' knowledge, with respect to any other provision of
such policy, and, to Sellers' knowledge, no claim is pending under any such
policy.
4.21. Liabilities. The balance sheet as of December 31, 1998 included in the Financial Statements has been prepared in accordance with GAAP, and since such date the Company has not incurred any obligations or liabilities, other than obligations and liabilities incurred in the ordinary course of business consistent with past practice of the Company, which do not in the aggregate, have a material adverse effect on the Company. As of December 31, 1998 the Company had no obligations or liabilities, accrued or unaccrued, contingent or otherwise, except (i) as disclosed on the balance sheet as of such date included in the Financial Statements, and **The confidential portion has been so omitted pursuant to a request for confidential treatment and has been filed separately with the Commission.**
4.22. Compliance with Laws. Except as disclosed on Schedule 4.22, the Company is, and to Sellers' knowledge has been, in compliance in all material respect with, and is not, and to Sellers' knowledge has not been, in violation in any material respect of, any and all applicable Legal Requirements and any and all judgments, orders, injunctions, decrees, stipulations or other awards applicable thereto.
4.23. Litigation. Except as set forth in Schedule 4.23, there are no suits, arbitrations, legal, administrative, or other proceedings, or governmental investigations pending, or to Sellers' knowledge threatened, against or affecting the Company or its Business, Assets, or the Shares. The Company is not presently engaged in any legal action to recover monies due or damages sustained by the Company.
4.24. Full Disclosure. No representation, warranty or statement made in this Agreement, any agreement, certificate, statement or document referred to in this Agreement (including, without limitation, the Schedules hereto) contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the
statements contained therein not misleading. Purchaser agrees and acknowledges that, except as otherwise expressly provided in this Agreement, Purchaser is a person experienced in businesses like that of the Company and acquisition transactions of the type contemplated in this Agreement, and has entered into this Agreement with the intention of making and relying upon its own investigation of the physical, environmental and economic condition of the Company, the Business and the Assets (subject, however, to Purchaser's ability to rely on the representations and warranties set forth herein). Purchaser further acknowledges that it has not received from Sellers or the Company any accounting, tax, legal or other advice with respect to this transaction and is relying solely upon the advice of its own accounting, tax, legal and other advisors.
4.25. Brokers. No brokers, finders or investment bankers have been retained by Sellers in connection with this Agreement or the transactions contemplated by this Agreement. The Beacon Group Capital Services, LLC has been retained as investment banker for the Company. The Sellers shall solely be responsible for any fees, commissions or other payments that may be due to The Beacon Group Capital Services, LLC by the Company, the Sellers or any of their respective affiliates in connection with the transactions contemplated by this Agreement (unless an adjustment has been made to the Purchase Price in accordance with the terms hereof).
4.26. Operational Matters.
(a) Except as set forth in Schedule 4.26, all items received and stored by the Company on behalf of customers are held in storage by the Company (except for items withdrawn or destroyed at the customer's request), and are locatable without extraordinary effort through the Company's inventory software system. The Company's invoices to customers do not charge customers for storage of nonexistent items or services not performed in any material respect.
(b) Schedule 4.26 identifies which of the Company's customer contracts contain a limitation of liability other than an amount not greater than the cost of replacing the lost medium (and not reproduction or restoration of content). Schedule 4.26 also lists those customers for which the Company has no signed contract, and those customers for which the Company has only a purchase order from the customer.
(c) Substantially all items in storage have been logged into the Company's inventory software system.
(d) Except as set forth in Schedule 4.26, the Company's invoices to its customers are accurate in all material respects; the Company invoices for storage monthly in advance, but does not invoice for any services until the services have been performed.
(e) Except as set forth in the Schedule 4.26, since January 1, 1996 no materials stored with the Company have been damaged (including damage by water) while in the Company's custody.
(f) Materials received by the Company from customers are registered
in the Company's computer system and shelved on the date of receipt if magnetic media, or within **The confidential portion has been so omitted pursuant to a request for confidential treatment and has been filed separately with the Commission.** after receipt if the materials are paper media (except in cases of unusual volume).
(g) The Company has sufficient racked and unfilled shelving locations to accommodate all cartons or magnetic media in the Company's custody, plus all cartons or magnetic media returned to customers on temporary retrieval.
4.27. Related Transactions. Schedule 4.27 sets forth a true, correct and complete description of any contract, agreement, lease or other transaction, whether now existing or existing during the period covered by the Financial Statements, between the Company and any Seller or affiliate of a Seller or the Company (other than reasonable compensation for services as officers, directors and employees and reimbursement for out-of-pocket expenses reasonably incurred in support of the Business), including without limitation any providing for the furnishing of services to or by, providing for rental of property, real, personal or mixed, to or from, or providing for the lending or borrowing of money to or from or otherwise requiring payments to or from, any such affiliate.
4.28. Bank Accounts, Etc. Schedule 4.28 contains a true, accurate and complete list as of the date hereof of all banks, trust companies, savings and loan associations and brokerage firms in which the Company has an account or a safe deposit box and the names of all Persons authorized to draw thereon, to have access thereto, or to authorize transactions therein, the names of all Persons, if any, holding valid and subsisting powers of attorney from the Company and a summary statement as to the terms thereof. The Company will not make or permit to be made any change affecting any account or safe deposit box with any bank, trust company, savings and loan association, brokerage firm or safe deposit box or in the names of the Persons authorized to draw thereon, to have access thereto or to authorize transactions therein or in such powers of attorney, or open any additional accounts or boxes or grant any additional powers of attorney, without in each case first notifying Purchaser in writing.
4.29. Corporate Records. The copies of the charter documents and all amendments thereto of the Company that have been delivered to Purchaser are true, correct and complete copies thereof, as in effect on the date hereof. The minute books of the Company, copies of which have been made available to Purchaser, contain accurate minutes of all actions taken at all meetings of, and accurate consents to all actions taken without meetings by, the Board of Directors (and any committees thereof) and the stockholders of the Company.
5. Purchaser's Representations and Warranties. Purchaser hereby makes the following representations and warranties to Sellers:
5.1. Organization. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of Delaware. Purchaser is qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on Purchaser.
5.2. Authority and Enforceability. Purchaser has the corporate power and authority, to execute, deliver, and perform this Agreement and each other agreement and document to be executed and delivered in connection herewith. The execution and delivery of this Agreement and each other agreement and document to be executed and delivered in connection herewith, and the consummation of the transactions contemplated hereby and thereby, have been duly and validly authorized by all necessary corporate proceedings on the part of the Purchaser. This Agreement, and each other agreement and document to be executed and delivered in connection herewith, constitutes or will constitute the valid and legally binding obligation of the Purchaser, enforceable against the Purchaser in accordance with the terms hereof or thereof, subject as to enforceability to bankruptcy, insolvency, reorganization and other similar laws and judicial decisions of general applicability relating to or affecting creditors' rights generally and subject to the availability of equitable remedies and the application of equitable principles, including the possible unavailability of specific performance or injunctive relief, regardless of whether such enforceability is considered at law or in equity.
5.3. No Breach or Violation. Neither the execution and delivery by the Purchaser of this Agreement or any other agreement and document to be executed and delivered in connection herewith, nor the consummation of the transactions contemplated hereby or thereby, will (a) violate or conflict with the Certificate of Incorporation or Bylaws of the Purchaser; (b) violate or breach any provision of, or be an event that is (or with the giving of notice or the passage of time will result in) a violation or breach of any instrument, contract, lease or other agreement by which the Purchaser is bound; (c) violate or breach any Legal Requirement to which the Purchaser is subject or any order, judgment, award or decree of any court, arbitrator or government agency against or binding upon the Purchaser or (d) require the consent of any Person.
5.4. Sufficient Funds. Purchaser has sufficient funds available and will have sufficient funds at the Closing to consummate the transactions contemplated by this Agreement, including, without limitation, to pay the Purchase Price in full.
5.5. Brokers. No brokers, finders or investment bankers have been retained by Purchaser in connection with this Agreement or the transactions contemplated by this Agreement.
5.6. Investment Representation. The Purchaser is acquiring the Shares from the Sellers for its own account for investment and not with a view to, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling the same; and, the Purchaser has no present or contemplated agreement, undertaking, arrangement, obligation, indebtedness or commitment providing for the disposition of the Shares.
6. Pre-Closing Actions. Prior to the Closing, the parties shall do the following:
6.1. The Company's Obligations. The Company shall, and Sellers shall cause the Company to, take the following action from the date of this Agreement to the Closing Date:
(a) Purchaser's Access to Premises and Information. Purchaser and its counsel, accountants, and other representatives shall be entitled to have full access, upon reasonable notice, to all of the Company's books, accounts, records, contracts, and documents provided that the Purchaser and its representatives shall not enter any Company property or contact any Company employee without the prior consent of the Sellers' Representative, which consent shall not be unreasonably withheld. All investigations conducted by the Purchaser and its representatives shall be conducted so as to minimize disruption of the Company's business. The Company shall furnish to Purchaser and its representatives all data and information concerning the Business, finances and properties of the Company that may be reasonably requested by Purchaser. Purchaser shall be entitled, at its cost and expense, to make copies of such books, accounts, records, contracts and documents as it shall reasonably request. No investigation pursuant to this Section 6.1.1 or otherwise shall affect any representation or warranty in this Agreement of any party hereto or any condition to the obligations of the parties hereto. The Company shall reasonably cooperate with the Purchaser so that the Purchaser, with the consent of requisite parties, may conduct such environmental site assessments at the Real Property as Purchaser desires (including, without limitation, subsurface sampling).
(b) Conduct of Business in Normal Course. The Company shall: (i) carry on its business in the ordinary course; and (ii) maintain its books and records in accordance with its past practices.
(c) Preservation of Business. The Company shall use reasonable efforts to preserve its business organization intact and preserve its present relationships with the suppliers, employees, lessors, licensors, lenders, customers, and others having business relationships with it.
(d) Employees and Compensation. Except in the
ordinary course of business consistent with past practice or as is set forth in
Schedule 6.1.4, the Company shall not do any of the following acts: (i) grant
any increase in salaries payable or to become payable to, or pay any bonus to,
any director, officer, employee, sales agent, or representative of the Company;
(ii) increase benefits payable to any director, officer, employee, sales agent,
or representative under any bonus or benefit plan or other contract or
commitment except pursuant to the provisions of such plan, contract or
commitment; (iii) enter into any new employment, severance, consulting or other
compensation agreement with any employee (other than at-will employment
arrangements with new employees in accordance with past practice); or (iv)
commit itself to any pension, profit sharing, deferred compensation, group
insurance, severance pay, retirement or other employee benefit plan, fund or
similar arrangement in addition to those in effect on the date hereof, or amend
or commit itself to amend any of such plans, funds or similar arrangements in
existence on the date hereof.
(e) Controlled Acts. Except as otherwise permitted or contemplated by this Agreement, the Company, without the prior written consent of the Purchaser, will not do, or agree to do, any of the following acts:
(i) enter into any contract, commitment, or transaction except
in the ordinary course of its business;
(ii) make any capital expenditures or commitments therefor in excess of **The confidential portion has been so omitted pursuant to a request for confidential treatment and has been filed separately with the Commission.** for any single item or **The confidential portion has been so omitted pursuant to a request for confidential treatment and has been filed separately with the Commission.** in the aggregate, or enter into any leases of capital equipment or property or commitments therefor under which the annual aggregate lease charges are in excess of **The confidential portion has been so omitted pursuant to a request for confidential treatment and has been filed separately with the Commission.**;
(iii) change the name or change the nature of the business of the Company as currently conducted;
(iv) authorize the merger or consolidation of the Company or the sale of all or substantially all of its assets;
(v) change its accounting methods or practices or make any change in depreciation or amortization policies or rates adopted by it;
(vi) amend its certificate of incorporation or bylaws or terminate its corporate existence;
(vii) make any payment or commitment to pay any severance or termination pay to any of its officers, directors, employees, consultants or agents;
(viii) guarantee any debt, obligation or liability; or
(ix) pay any dividends or distributions to stockholders other than bonuses to employees which may include payments in satisfaction of stock appreciation rights.
(x) accelerate the collection of accounts receivable as compared with the Company's practice prior to December 31, 1998; or
(xi) make any bonus payments to employees, other than as contemplated by this Agreement or in the ordinary course of business consistent with past practices.
(f) Waiver of Claims. The Company shall not compromise any material right or claim other than in the ordinary course of business.
(g) Reasonable Efforts. The Company and the Sellers shall use all reasonable efforts to take all action necessary to consummate the transactions contemplated by
this Agreement (including, without limitation, satisfaction of the conditions specified in Section 7).
(h) Consents. The Company and the Sellers shall use all reasonable efforts to obtain all permits, authorizations, consents and approvals from third parties necessary to consummate the transactions contemplated by this Agreement, provided, however, that neither the Company or any Seller shall be required to expend material sums of money or grant any material financial or other accommodation (other than as contemplated hereby).
6.2. The Purchaser's Obligations. The Purchaser shall take the following actions from the date of this Agreement to the Closing Date:
(a) Reasonable Efforts. Purchaser shall use reasonable efforts to take all action necessary to consummate the transactions contemplated by this Agreement (including, without limitation, satisfaction of the conditions specified in Section 7).
(b) Consents. Purchaser shall use reasonable efforts
to obtain all permits, authorizations, consents and approvals from third parties
necessary to consummate the transactions contemplated by this Agreement.
Notwithstanding anything to the contrary contained in this Agreement, in
connection with or as a condition to receiving the consent or approval of any
governmental entity, third party or otherwise, Purchaser shall not be required
(i) to divest, abandon, license or take similar action with respect to any
assets (tangible or intangible) of it or any of its affiliates (including,
without limitation, the Company after consummation of the transactions
contemplated hereby), and (ii) to expend material sums of money or grant any
material financial or other accommodation (other than as contemplated hereby).
(c) Information to be Held in Confidence. Purchaser shall, and shall cause its officers, directors, shareholders, employees, agents and representatives to, keep confidential information received from the Company and the Sellers regarding the Business, finances and properties of the Company (the "Company's Confidential Information") in accordance with the terms of the Confidentiality Agreement dated November 24, 1998 (the "Confidentiality Agreement") between Purchaser and the Company, the terms of which are hereby incorporated by reference and made a part hereof. Purchaser acknowledges and agrees that the Confidentiality Agreement and each party's reports and obligations thereunder shall survive the termination of this Agreement.
6.3. Notification of Certain Matters. Each Party shall give prompt notice to the other of the occurrence or non-occurrence of any event the occurrence or non-occurrence of which would be reasonably expected to cause in any material respect (i) any representation or warranty made by it contained in this Agreement to be untrue or inaccurate, or (ii) any change to be made in the Disclosure Schedules hereto, or (iii) any failure of such Party to comply with or satisfy, or be able to comply with or satisfy, any material covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 6.3 shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
6.4. Public Announcements. Until the Closing, or in the event of termination of this Agreement, each Party shall consult with the other before issuing any press release or otherwise making any public statements with respect to this Agreement or the transactions contemplated hereby and shall not at any time issue any such press release or make any such public statement without the prior consent of the other, which consent shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, the Sellers and the Company acknowledge and agree that Purchaser may, without the prior consent of the Company, issue such press releases or make such public statements as may be required by applicable law or the rules and regulations of any exchange or quotation system on which Purchaser's or any of its affiliates' securities are listed, in which case, to the extent practicable, Purchaser will consult with, and exercise in good faith, all reasonable business efforts to agree with the Company regarding the nature, extent and form of such press release or public statement, and, in any event, with prior notice to the Company.
6.5. Termination of 401(k). At least one day prior to the Closing Date, the Company and each ERISA Affiliate shall take all actions necessary to terminate each Qualified Plan. If a Qualified Plan is terminated in accordance with this Section 6.5, benefit accruals, including contributions of salary reduction contributions, if any, shall cease. The Company and each ERISA Affiliate agrees to take no action to merge any of its Qualified Plans, transfer the assets of any of its Qualified Plans, or terminate any of its Qualified Plans, except as otherwise provided in this Section 6.5, following the execution of this Agreement without the consent of Purchaser.
6.6. Transfer of Excluded Assets. Prior to Closing, the Company and the Sellers shall execute and deliver all documents reasonably requested by the Sellers to transfer for no consideration all right, title and interest in the Excluded Assets to the appropriate Seller.
7. Conditions to Closing. The following conditions shall apply:
7.1. Purchaser's Conditions to Closing. Purchaser's obligation to purchase the Shares are subject to the satisfaction, or waiver, of all the conditions set forth below on or before the Closing Date:
(a) Accuracy of Representations and Warranties. All representations and warranties by Sellers and the Company shall be true on and as of the Closing Date as if they were made on and as of such date;
(b) Performance. The Company and Sellers shall have performed, satisfied, and complied with all covenants, agreements, and conditions required to be performed under this Agreement on or before the Closing Date;
(c) No Material Adverse Change. During the period from December 31, 1998 through the Closing Date, there shall not have been any material adverse change in the
financial condition, the results of operations (including cash flows), assets or business of the Company, and the Company shall not have sustained any material loss or damage that materially adversely affects the Company's Business;
(d) Litigation. No action, suit or proceeding before any court or governmental body or authority, pertaining to the transactions contemplated by this Agreement, shall have been filed and not dismissed on or before the Closing Date;
(e) Approval of Documentation. The form and substance of all certificates, instruments, opinions, and other documents delivered to Purchaser under this Agreement shall be satisfactory in all reasonable respects to Purchaser and its counsel.
(f) Documents. The Sellers and the Company shall have delivered the closing documents described in Section 8.2.1.
(g) Compliance with Governmental Authorities. All authorizations, consents, waivers, orders or approvals required to be obtained, and all filings, submissions, registrations, notices or declarations required to be made, by the Sellers or the Company prior to the transfer of the Shares shall have been obtained from, and made with, all required governmental authorities.
(h) No Injunction. At the Closing Date, there shall be no Legal Requirement, judgment, order, injunction, decree, stipulation or award of any nature of any governmental authority that restrains, prohibits or enjoins or seeks to restrain, prohibit or enjoin, the consummation of the transactions contemplated hereby.
(i) Resignations. Each of the officers and directors of the Company and each trustee under any employee benefit plan shall have submitted his or her unqualified written resignation, dated as of the Closing Date, from all such positions held with the Company (and, at the request of Purchaser, from positions as an employee of the Company) and as a trustee for each such plan.
(j) Related Party Transactions. Except for such contracts, agreements and undertakings as to which Purchaser has notified the Company that it wants to retain, which contracts shall be effective as of the Closing Date, all contracts, agreements and undertakings between the Company and any affiliate thereof shall have been satisfied and discharged as of the Closing Date with no further liability to the Company.
(k) Escrow Agreement. The Seller Representative (as defined below) and the Escrow Agent shall have executed and delivered an Escrow Agreement in form and substance reasonably satisfactory to Sellers and Purchaser to hold the Escrow Indemnity Funds contemplated hereby (the "Escrow Agreement").
(l) Noncompetition Agreements. William Jalbert and Gordon Clark shall each have entered into Noncompetition Agreements substantially in the form of Exhibit
7.1(l)A attached hereto, and Kenneth Saxon and Thomas Bird shall each have entered into Noncompetition Agreements substantially in the form of Exhibit 7.1(l)B attached hereto.
(m) The agreements referred to on Schedule 3.1 shall have been terminated.
7.2. Sellers' Conditions to Closing. Sellers' obligation to sell and transfer the Shares to Purchaser is subject to the satisfaction, or waiver, of the following conditions on or before the Closing Date:
(a) Accuracy of Representations and Warranties. All representations and warranties by Purchaser shall be true on and as of the Closing Date as if they were made on and as of such date;
(b) Performance. Purchaser shall have performed, satisfied and complied with all covenants and agreements and satisfied all conditions required to be performed under this Agreement on or before the Closing;
(c) Litigation. No action, suit or proceeding before any court or governmental body or authority pertaining to the transactions contemplated by this Agreement shall have been filed and not dismissed on or before the Closing Date.
(d) Approval of Documentation. The form and substance of all certificates, instruments, opinions, and other documents delivered to Sellers under this Agreement shall be satisfactory in all reasonable respects to Sellers and their counsel.
(e) Documents. Purchaser shall have delivered the documents described in Section 8.2.2.
(f) Compliance with Governmental Authorities. All other authorizations, consents, waivers, orders or approvals required to be obtained, and all filings, submissions, registrations, notices or declarations required to be made, by the Purchaser prior to the transfer of the Shares shall have been obtained from, and made with, all required governmental authorities.
(g) No Injunction. At the Closing Date, there shall be no Legal Requirement, judgment, order, injunction, decree, stipulation or award of any nature of any governmental authority that restrains, prohibits or enjoins or seeks to restrain, prohibit or enjoin, the consummation of the transactions contemplated hereby.
(h) Escrow Agreement. The Purchaser and the Escrow Agent shall have executed and delivered the Escrow Agreement.
8. Closing.
8.1. Time and Place. Subject to the satisfaction or waiver of the conditions set forth in Section 7 hereof, the transfer of the Shares by Sellers to Purchaser (the "Closing") shall take place at the law offices of Doty Sundheim & Gilmore, 420 Florence Street, Palo Alto, CA 94301 at 9:00 a.m. local time on April 1, 1999, or at such other time and place as the parties may agree in writing (the "Closing Date").
8.2. Deliveries at Closing. The following items shall be delivered at the Closing:
(a) Sellers. Sellers shall deliver, or cause to be delivered, to Purchaser the following in form and content reasonably satisfactory to Purchaser's counsel:
(i) Stock certificates in the name of each Seller, evidencing the Shares, duly endorsed by each Seller (or with duly
endorsed in blank separate stock powers);
(ii) A closing certificate executed by
Sellers certifying the accuracy of Sellers' representations and warranties and
compliance with Sellers' covenants;
(iii) A certificate certifying (i) the
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incumbency of the Company's officers, (ii) the resolutions of the Company's Board of Directors authorizing the execution, delivery and performance of this Agreement, and (iii) the Company's organizational documents;
(iv) A closing certificate executed by the Company's president certifying the accuracy of the Company's representations and warranties and compliance with the Company's covenants;
(v) The legal opinion of counsel for Company and for each Seller, dated as of the Closing Date, in the form attached collectively hereto as Exhibit 8.2.1(e);
(vi) Copies of any required consents; and
(vii) Such other documents and instruments as Purchaser may reasonably request in order to effect the purpose of this Agreement;
(b) Purchaser. Purchaser shall deliver or cause to be delivered to Sellers and the Company the following in form and content reasonably satisfactory to Sellers' counsel:
(i) Confirmation from Purchaser's bank of the wire transfers of the Purchase Price;
(ii) A certificate certifying (i) the incumbency of Purchaser's officers, (ii) the resolutions of Purchaser's Board of Directors authorizing the execution, delivery and performance of this Agreement, and (iii) Purchaser's organizational documents;
(iii) A closing certificate executed by a duly authorized officer of Purchaser certifying the accuracy of Purchaser's representations and warranties and compliance with the Company's covenants;
(iv) The legal opinion of Purchaser's counsel, in the form attached hereto as Exhibit 8.2.2(d);
(v) Copies of any required consents; and
(vi) Such other documents and instruments as Sellers or the Company may reasonably request in order to effect the purpose of this Agreement.
9. Post-Closing Obligations.
9.1. Indemnification.
(a) Indemnification by Sellers. Subject to this
Section 9, Sellers shall indemnify, hold harmless and defend Purchaser, Iron
Mountain Incorporated, their respective affiliates, each of their respective
directors, officers, employees, shareholders, representatives and agents, and
each of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "Purchaser Indemnified Parties") against and in respect of
any and all claims, actions, demands, liabilities, damages, losses, costs,
expenses and deficiencies (including interest, penalties, reasonable attorneys'
fees and expenses and litigation expenses), including, but not limited to, those
incurred to enforce the terms of this Agreement (such claims, demands,
liabilities, losses, costs, expenses and deficiencies are referred to
collectively as "Losses") arising out of or in connection with or based upon (i)
the inaccuracy of any representation or warranty made by Sellers in this
Agreement (including in any Schedule or Exhibit hereto) or in any certificate
delivered pursuant to this Agreement, (ii) any breach of any covenant or
agreement of Sellers or the Company contained herein, or (iii) any claims of any
brokers or finders claiming by, through or under Sellers or the Company (other
than claims for which an adjustment has been made to the Purchase Price). Losses
subject to this Section 9 shall specifically include Losses related to the theft
of personal property from the Company's facility located at 1950 South Vermont,
Los Angeles, California as disclosed in Schedule 4.23.
(b) Limitation on Indemnification.
(i) Purchaser's rights to indemnification shall be subject to the following limitations: (i) Purchaser shall not be entitled to recover its Losses in respect of a breach of a representation or warranty unless and until the aggregate amount of Losses for all breaches of representations and warranties exceeds **The confidential portion has been so omitted pursuant to a request for confidential treatment and has been filed separately with the Commission.**; (ii) in no event shall the aggregate amount to be paid to Purchaser exceed **The confidential portion has been so omitted pursuant to a request for confidential treatment and has been filed separately with the Commission.**
(provided that the limitations in this clause (ii)) shall not apply to a claim
made in respect of the breach of the representations and warranties set forth in
Sections 3.1, 3.2, 3.3 and 4.3 or a claim based upon fraud (each, a "Special
Claim"), and shall not apply to a claim made in respect of the breach of the
representations and warranties set forth in Section 4.9 (a "Tax Claim")); and
(iii) the amount of indemnity payable shall be calculated after giving effect to
the actual tax effect realized by Purchaser from the indemnity payment
(including any tax benefits obtained by way of exclusion from income, deduction,
credit or refund). Notwithstanding any other provision of this Agreement, under
no circumstances shall the total liability of a Shareholder for any and all
indemnification claims including, without limitation, Special Claims and Tax
Claims, exceed such Shareholder's percentage of **The confidential portion has
been so omitted pursuant to a request for confidential treatment and has been
filed separately with the Commission.**
(ii) **The confidential portion has been so omitted pursuant to a request for confidential treatment and has been filed separately with the Commission.** Any claims of Purchaser for indemnification to be satisfied out of the Escrow Indemnity Funds shall be made in accordance with the terms of the Escrow Agreement. In the event there are no Unresolved Claims (as defined below) at the expiration of the Escrow Indemnity Period, or the next business day if such date is not a business day, the Escrow Indemnity Funds then remaining shall be distributed to the Seller Representative for the benefit of each Seller in accordance with their proportionate interests, calculated in accordance with the percentage of the Escrow Indemnity Funds allocated to Sellers as set forth on Schedule 2.2. In the event one or more Unresolved Claims shall exist upon the expiration of the Escrow Indemnity Period, cash in the amount equal to the sum of (i) the aggregate amount of such Unresolved Claims and (ii) the amount reasonably estimated by Purchaser to cover the fees, expenses and other costs (including reasonable counsel fees and expenses) which will be required to resolve such Unresolved Claims shall be retained as part of the Escrow Indemnity Funds and the balance thereof, if any, shall be distributed to the Seller Representative for the benefit of the Sellers in accordance with their proportionate interests. Upon the resolution of all such Unresolved Claims and the payment of all such fees, expenses and costs out of the Escrow Indemnity Funds, the balance of the cash, if any, shall be distributed to the Seller Representative for the benefit of the Sellers in accordance with their proportionate interests.
(c) Each Seller hereby appoints Thomas W. Bird (the
"Seller Representative"), with full and unqualified power to delegate (with the
approval of Purchaser, which shall not be unreasonably withheld) to one or more
Persons the authority granted to such Person hereunder to act as his, her or its
agent and attorney-in-fact, with full power of substitution, to execute the
Escrow Agreement and to take all actions called for by this Section 9 and the
Escrow Agreement on his, her or its behalf, in accordance with the terms of this
Section 9 and the Escrow Agreement.
(d) The term "Unresolved Claims" shall mean any claim or request made pursuant to this Agreement against the Escrow Indemnity Funds, until such time as such claim or request has been paid in full or otherwise fully settled, compromised or adjusted by Purchaser, the Seller Representative and the Escrow Agent or by a final decision of an arbitrator or arbitration panel appointed pursuant to Section 11.10 of this Agreement or a final order of a court of competent jurisdiction resolving such claim, from which no appeal is or can be taken.
(e) Indemnification by Purchaser. Purchaser shall indemnify, hold harmless and defend Sellers and their respective officers, directors, shareholders, employees, agents, representatives, successors, heirs and assigns (the "Seller Indemnified Parties") (as the context so requires) against and in respect of any and all Losses arising out of or in connection with or based upon the inaccuracy of any representation or warranty or breach of any covenant or agreement made by Purchaser in this Agreement (including in any Schedule or Exhibit hereto) or in any certificate delivered pursuant to this Agreement.
(f) Non-Third Party Claims. The following shall apply to claims between the parties that do not involve a third party:
(i) The party entitled to indemnification hereunder (in such capacity, the "Indemnified Party") shall give written notice (a "Notice of Claim") to Purchaser (in the case of a claim for indemnification by a Seller Indemnified Party) or the Seller Representative (in the case of a claim for indemnification by a Purchaser Indemnified Party) (in such capacity, the "Indemnifying Party") within a reasonable period of time after becoming aware of any Losses that the Indemnified Party shall have determined have given rise to, or could reasonably be expected to give rise to, a claim for indemnification hereunder (each, an "Indemnifiable Claim"), and shall provide to the Indemnifying Party as soon as practicable thereafter all information and documentation reasonably necessary to support and verify such claim; provided, that the right of the Indemnified Party to indemnification shall be reduced in the event of its failure to give timely notice only if and to the extent the Indemnifying Party is prejudiced thereby. The Indemnifying Party shall be given reasonable access to all books and records in the possession or under the control of the Indemnified Party which the Indemnifying Party reasonably determines to be related to such claim.
(ii) Any liability for indemnification under
this Section 9.1.4 shall be paid by the Indemnifying Party within fifteen (15)
days after its receipt of a Notice of Claim in immediately available funds in
U.S. dollars; provided that if a contest notice is given to the Indemnified
Party by the Indemnifying Party within such fifteen-day period, such payment
shall not be required until the dispute is resolved, and either party may at any
time thereafter commence a legal proceeding in accordance with this Agreement to
resolve the contested assertion of an Indemnifiable Claim. Any liability for
indemnification under this Section 9.1.4 shall be paid by the Indemnifying Party
in immediately available funds in U.S. dollars within fifteen (15) days after
such liability is finally determined. Liability for an Indemnifiable Claim
hereunder shall be deemed to be "finally determined" for purposes of this
Section 9.1.4 when the parties to such action have so determined by mutual
agreement or when a final non-appealable order of a court having competent
jurisdiction shall have been entered.
(g) Matters Involving Third Parties. The following shall apply to claims asserted against a party by a third party:
(i) If any third party shall commence an action against any Indemnified Party with respect to any matter which may give rise to an Indemnifiable Claim against any Indemnifying Party (a "Third Party Claim"), the Indemnified Party shall give to the
Indemnifying Party, as soon as practicable, a Notice of Claim thereof; provided that the right of the Indemnified Party to indemnification shall be reduced in the event of its failure to give timely notice only if and to the extent the Indemnifying Party is prejudiced thereby.
(ii) The Indemnifying Party shall have the right to defend the Indemnified Party against the Third Party Claim with counsel of its choice (subject to the reasonable approval of Purchaser) if the Indemnifying Party shall notify the Indemnified Party in writing (within the fifteen (15) day period after its receipt of a Notice of Claim specifying the Third Party Claim) that it will indemnify the Indemnified Party from and against any Losses the Indemnified Party may suffer arising out of the Third Party Claim, provided, however, if the amount in dispute in respect of such Third Party Claim exceeds the amount of Escrow Indemnity Funds not subject to Unresolved Claims, the party which has the right to control such Third Party Claim shall be the Sellers unless the amount of Escrow Indemnity Funds not subject to Unresolved Claims is less than 50% of such Third Party Claim, in which event Purchaser shall have the right to control the defense of such claim. Neither party shall have the right to settle any such Claim without the consent of the other party, which consent shall not be unreasonably withheld. If the Indemnifying Party does not so notify the Indemnified Party or, after such notification, does not in fact defend the Third Party Claim, the Indemnified Party may defend, compromise or settle the Third Party Claim, preserving its rights to indemnification hereunder, including without limitation for the cost of such defense. Notwithstanding the foregoing, an Indemnified Party shall have the right to employ one law firm as counsel, together with a separate local law firm in each applicable jurisdiction ("Separate Counsel"), to represent such Indemnified Party in any action or group of related actions (which firm or firms shall be reasonably acceptable to the Indemnifying Party) if the Indemnified Party has been advised by counsel that either there is a reasonable likelihood of a conflict of interest between such Indemnified Party and such Indemnifying Party in respect of such claim, or there may be defenses available to such Indemnified Party which are different from or in addition to those available to such Indemnifying Party and the representation of both parties by the same counsel would be inappropriate, and in that event (i) the reasonable fees and expenses of such Separate Counsel shall be considered Losses, and (ii) each of such Indemnifying Party and such Indemnified Party shall have the right to conduct its own defense in respect of such claim.
(iii) If the Indemnifying Party is
conducting the defense of the Third Party Claim in accordance with Section
9.1.5(b) above, then: (i) the Indemnified Party may retain separate counsel, at
its sole cost and expenses, and participate in the defense of the Third Party
Claim, provided that the Indemnifying Party shall have the right to conduct the
defense of and, subject to this Section 9.1.5(c), settle such Third Party Claim;
(ii) the Indemnified Party shall not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party; (iii) the Indemnified Party
shall fully cooperate with the Indemnifying Party in the investigation and
defense of such Third Party Claim, including without limitation, providing
required information and documents and access to all employees of the
Indemnified Party with knowledge of issues relevant to the claim or litigation
(and such activities required to discharge this obligation to cooperate shall be
considered part of the Losses); and, (iv) the Indemnifying Party shall not
consent to the entry of any judgment or enter into any settlement with respect
to the Third Party
Claim without the prior written consent of the Indemnified Party, which consent
shall not be unreasonably withheld or delayed, unless such settlement (i)
includes a general release of the Indemnified Party from such Third Party Claim;
(ii) does not require any action or payment on the part of the Indemnified
Party; and (iii) does not include the imposition of any injunctive relief or
other equitable remedies against the Indemnified Party. Notwithstanding any
other provision of this Section 9.1.5, if an Indemnified Party withholds its
consent to a settlement or elects to continue the defense of any claim where but
for such action the Indemnifying Party could have settled such claim solely for
the payment of money by the Indemnifying Party as specified in the written
request for consent to the settlement delivered to the Indemnified Party, the
Indemnifying Party shall indemnify the Indemnified Party only up to a maximum of
the bona fide settlement offer for which the Indemnifying Party could have
settled such claim.
9.2. Survival of Representations; Claims for Indemnification.
All representations and warranties made by the Sellers and the Purchaser in this
Agreement, or in any instrument or document furnished in connection with this
Agreement or the transactions contemplated hereby, shall survive the Closing and
any investigation at any time made by or on behalf of the Indemnified Party
until the expiration of the Escrow Indemnity Period, other than (i) any claim
made in respect of the breach of the representations and warranties set forth in
Section 3.1, 3.2 and 3.3 or Section 4.3, which shall survive indefinitely and
(ii) any claim made in respect of the breach of the representations and
warranties set forth in Section 4.9 which shall survive **The confidential
portion has been so omitted pursuant to a request for confidential treatment and
has been filed separately with the Commission.** after the Closing Date. All
such representations and warranties shall expire on the last day of the Escrow
Indemnity Period, except for claims, if any, (i) asserted in writing prior to
such last day of the Escrow Indemnity Period and identified as a claim for
indemnification pursuant to this Section 9, (ii) made in respect of the breach
of the representations and warranties set forth in Section 3.1, 3.2 and 3.3 or
Section 4.3, or (iii) made in respect of the breach of the representations and
warranties set forth in Section 4.9 which shall survive **The confidential
portion has been so omitted pursuant to a request for confidential treatment and
has been filed separately with the Commission.** after the Closing Date.
9.3. Exclusive Remedy. All claims made after the Closing in connection with this Agreement and the transactions contemplated hereby shall be made under, and subject to the limitations set forth in, this Section 9, which, from and after the Closing Date, shall be the exclusive remedy for any party hereto for any breach of this Agreement or other claim arising hereunder or in connection with the transactions contemplated hereby (other than a claim for breach of the Noncompetition Agreements), and all other parties hereby irrevocably waive the right to assert any other remedy.
10. Termination and Abandonment.
10.1. Methods of Termination. This Agreement may be terminated and the transactions herein contemplated may be abandoned at any time:
(a) by written agreement of Purchaser and a majority-in-interest of the
Sellers;
(b) by written notice by either Purchaser or a majority-in-interest of the Sellers if such party or parties is not in breach hereunder and (i) the other party/parties fails to cure a breach of any of its/their obligations hereunder within **The confidential portion has been so omitted pursuant to a request for confidential treatment and has been filed separately with the Commission.** after receipt of a Notice from the other party/parties specifying the nature of such breach, (ii) any of the other party's representations or warranties shall have become and continue to be untrue in any material respect, unless such untruth is capable of being cured by and will not prevent or delay consummation of the transactions contemplated hereby by or beyond April 30, 1999 (the "Termination Date") and (iii) this Agreement is not consummated on or before the Termination Date, including extensions; or
(c) by written notice by either Purchaser or a majority-in-interest of the Sellers if this Agreement is not consummated on or before the Termination Date, including extensions, due to any law, regulation or act of any applicable regulatory body not arising from a breach by the terminating party/parties of any of its/their obligations hereunder.
10.2. Procedure Upon Termination. In the event of termination and abandonment pursuant to Section 10.1.1 or 10.1.3 hereof, this Agreement shall terminate and shall be abandoned, without further action by any of the parties hereto. If this Agreement is terminated as provided herein:
(a) each party will upon request redeliver all documents and other materials of any other party relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof, to the party furnishing the same;
(b) no party hereto shall have any liability or further obligation to any other party to this Agreement; provided, that the obligations of the parties pursuant to Section 6.2.3 of this Agreement shall survive termination; and
(c) each party shall bear its own expenses.
If this Agreement is terminated pursuant to Section 10.1.2, the parties hereto shall have available to them all remedies affordable to them by applicable law.
11. General Provisions.
11.1. Notices. All notices, consents, approvals, requests,
demands, and other communications under this Agreement shall be in writing and
shall be deemed to have been duly given to a party on the date of delivery if
personally delivered to the party to whom notice is to be given, or on the fifth
(5th) business day after mailing if mailed by first class mail, registered or
certified, postage prepaid, at the address set forth below or on the date of
service if delivered by facsimile to the respective facsimile number set forth
below which facsimile is confirmed by answer back or on the next business day
following timely delivery for overnight delivery to a recognized national
courier, charges prepaid, addressed to the respective address set forth below.
Any party may change its address for purposes of this Section by giving the other parties written notice of the new address in the manner set forth above. Addresses for notice purposes are as follows:
If to Sellers: To the respective Seller at the address
set forth for such Seller in the
signature block of this Agreement
With a copy to: Doty Sundheim & Gilmore
420 Florence Street, Suite 200
Palo Alto, CA 94301
Attn.: Stanley E. Doty, Esq.
Tel. No. (650) 327-0100
Facsimile No. (650) 327-0101
and to: Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attn.: Peter B. Tarr, Esq.
Tel. No. (617) 526-6639
Facsimile No. (617) 526-5000
If to Purchaser: Iron Mountain Records Management, Inc.
745 Atlantic Avenue
Boston, MA 02111
Attn.: Mr. Donald Richards
Tel. No. (617) 535-4858
Facsimile No. (617) 350-7881
With a copy to: Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02109
Attn.: William J. Curry, Esq.
Tel. No. (617) 338-2976
Facsimile No. (617) 338-2880
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11.2. Governing Law. This Agreement shall be construed in accordance with, and governed by, the laws of the State of California, without regard to its conflict of laws doctrine.
11.3. Expenses. Subject to the provisions of Section 10, each of the parties shall pay all costs and expenses incurred or to be incurred by it in the negotiation and preparation of this Agreement and in closing and carrying out the transactions contemplated by this Agreement.
11.4. Headings. The subject headings of the Sections, paragraphs and subsections of this Agreement are included for purposes of convenience only, and shall not affect the
construction or interpretation of any of the provisions hereof.
11.5. Modification and Waiver. This Agreement, the Noncompetition Agreements, the Escrow Agreement and the Confidentiality Agreement constitute the entire agreement between the Parties pertaining to the subject matter hereof and supersede all prior and contemporaneous agreements, representations, and understandings of the Parties. If the provisions of any Schedule or Exhibit to this Agreement are inconsistent with the provisions of this Agreement, the provisions of this Agreement shall prevail. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by all the Parties. No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver.
11.6. Counterparts/Fax Signatures. 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. The parties expressly agree that signatures by facsimile shall be deemed valid and enforceable so long as original signatures are received within three (3) days after receipt of delivery of the facsimile signature.
11.7. Variations of Pronouns. Whenever required by the context hereof, the singular number shall include the plural, and vice versa; the masculine gender shall include the feminine and neuter genders; and the neuter gender shall include the masculine and feminine genders.
11.8. Rights of Parties. Nothing in this Agreement, whether express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any persons other than the parties to it and their respective successors and permitted assigns, nor is anything in this Agreement intended to relieve or discharge the obligation or liability of any third parties to any party to this Agreement, nor shall any provision give any third parties any right of subrogation or action over against any party to this Agreement.
11.9. Binding Effect; Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, assigns, heirs and legal representatives (as the context so requires), provided, however, that in the event of an assignment hereunder, the assigning party shall remain liable for his or its obligations hereunder.
11.10. Arbitration. Except as provided in Section 10.2, any dispute between the parties arising out of this Agreement shall be submitted to final and binding arbitration in the San Jose, California, under the Commercial Arbitration Rules of the American Arbitration Association then in effect, upon written notification and demand of either party therefor. The following provisions shall be applicable to any such proceeding:
(a) In the demand for arbitration, the American Arbitration Association shall be requested to submit a list of prospective arbitrators consisting of persons experienced in matters involving business contracts. In any arbitration pursuant to this Section, the award shall be rendered by a single arbitrator appointed jointly by the parties, or if the parties can not agree to a single arbitrator within thirty (30) days after the commencement of the
arbitration proceeding, by an arbitrator appointed by the American Arbitration Association. For purposes of this Section, "commencement of the arbitration proceeding" shall be deemed to be the date on which a written demand for arbitration is received by the American Arbitration Association from one (1) of the parties.
(b) The provision of California Code of Civil Procedure Section 1283.05 and the laws of the State of California and incorporated herein and shall be applicable to the arbitration.
(c) In making the award, the arbitrator shall award recovery of costs and expenses of the arbitration and reasonable attorney's fees to the prevailing party.
(d) Any award may be entered as a judgement in any court of competent jurisdiction. Should judicial proceedings be commenced to enforce or carry out this provision or any arbitration award, the prevailing party in such proceedings shall be entitled to reasonable attorney's fees and costs in addition to other relief.
(e) Either party shall have the right, prior to receiving an arbitration award, to obtain preliminary relief from a court of competent jurisdiction to: (i) avoid injury or prejudice to that party; (ii) or to protect the rights of any party; or (iii) to maintain the status quo as it existed immediately prior to the dispute.
(f) The parties hereby agree that service of any notices in the course of such arbitration shall be sufficient if given as provided in the notices Section of this Agreement.
11.11. Attorneys' Fees. If any legal action or any arbitration or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, 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 such parties may be entitled. The prevailing party will be determined by the court or arbitrator, as the case may be.
11.12. Severability. In the event that any provision of this Agreement, or the application of such provision to any person or set of circumstances, shall be determined to be invalid, unlawful or unenforceable to any extent, the remainder of this Agreement, and the application of such provision to persons or circumstances other than those as to which it is determined to be invalid, unlawful or unenforceable, shall not be affected and shall continue to be enforceable to the fullest extent permitted by law.
11.13. Interpretation of Agreement. Each party hereto acknowledges that it has participated in the drafting of this Agreement and the other documents and instruments delivered in connection herewith, and any applicable rules of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in connection with the construction
or interpretation hereof or thereof.
11.14. Specific Performance. The parties hereto each acknowledge that, in view of the uniqueness of the subject matter hereof, the parties hereto would not have an adequate remedy at law for money damages in the event that this Agreement were not performed in accordance with its terms, and therefore agree that the parties hereto shall be entitled to specific enforcement of the terms hereof in addition to any other remedy to which the parties hereto may be entitled at law or in equity.
11.15. Farm.com. The Purchaser agrees to cease using the domain name farm.com on or before the second anniversary of the Closing and agrees to execute and deliver any and all documents reasonably requested by Messrs. Bird and Saxon to transfer to them all right, title and interest therein.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it on the day and year first above written.
THE COMPANY:
First American Records Management, Inc.
By: /s/ I. Kenneth Saxon
I. Kenneth Saxon
Its: President
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SELLERS:
/s/ I. Kenneth Saxon I. Kenneth Saxon, individually 831 Summit Road Santa Barbara, CA 93108 Tel. No. (805) 844-9223 Facsimile No. (805) 884-0553 |
The Bird Revocable Trust dated June 6, 1991
By:/s/ Thomas W. Bird
Thomas W. Bird, Trustee
By:/s/ Tracey S. Bird
Tracey S. Bird, Trustee
63 Indian Pipe Lane
Concord, MA 01742
Tel. No. (978) 371-7111
Facsimile No. (978) 371-3222
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First American Title Insurance Company 114 East Fifth Street Santa Ana, CA 92702 Tel. No. (800) 854-3643 Facsimile No. (714) 647-2242
By:/s/ Craig I. DeRoy
Craig I. DeRoy
Its: Vice President
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Housatonic Investors, LLC 111 Newbury Street, Suite 500 Boston, MA 02116-3131 Tel. No. (617) 267-4545 Facsimile No. (617) 536-8535
By: Housatonic Partners, LLC, its managing member
By:/s/ William Thorndike, Jr.
William Thorndike, Jr.
Its: Managing Member
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/s/ William Jalbert William Jalbert, individually 3218 Washington Street San Francisco, CA 94115 Tel. No. (415) 928-1137 Facsimile No. __________________ /s/ Gordon Clark Gordon Clark, individually 810 Murphy Drive San Mateo, CA 94402 Tel. No. (650) 349-6135 Facsimile No. __________________ |
The Boston Foundation, Inc. One Boston Place, 24th Floor Boston, MA 02108 Tel. No. (617) 723-7415 Facsimile No. (617) 589-3616
By: /s/ Anna Faith Jones Its: President and Chief Executive Officer El Adobe Corporation c/o Santa Barbara Foundation 15 East Carrillo Street Santa Barbara, CA 93101-2780 Tel. No. (805) 963-1873 Facsimile No. (805) 966-2345 By:/s/ William A. Fry Its: President PURCHASER: |
Iron Mountain Records Management, Inc.
By:/s/ Donald P. Richards
Its: Vice President
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SPOUSAL CONSENT
The undersigned certifies as follows:
1. I am the spouse of Gordon Clark.
2. I understand and approve the provisions of the Stock Purchase Agreement by and among First American Records Management, Inc. ("Company"), the stockholders of Company (including my spouse) and Iron Mountain Records Management, Inc., to which this Consent is attached. Capitalized terms shall have the meanings set forth in the Stock Purchase Agreement.
3. I agree to be bound by and accept the provisions of the Stock Purchase Agreement, as it may be amended from time to time insofar as those provisions may affect any interest I may have in the Company, whether the interest is community property or otherwise.
4. My spouse shall have full power of management of the Shares being sold by my spouse pursuant to this Stock Purchase Agreement, including any portion of those interests that are our community property; and my spouse has the full right, without my further approval, to exercise my spouse's voting rights as a shareholder in the Company, and to sell, transfer, encumber, and deal in any manner with such shares.
Executed March 31, 1999.
/s/ Lauren Clark [Name] |
SPOUSAL CONSENT
The undersigned certifies as follows:
1. I am the spouse of I. Kenneth Saxon.
2. I understand and approve the provisions of the Stock Purchase Agreement by and among First American Records Management, Inc. ("Company"), the stockholders of Company (including my spouse) and Iron Mountain Records Management, Inc., to which this Consent is attached. Capitalized terms shall have the meanings set forth in the Stock Purchase Agreement.
3. I agree to be bound by and accept the provisions of the Stock Purchase Agreement, as it may be amended from time to time insofar as those provisions may affect any interest I may have in the Company, whether the interest is community property or otherwise.
4. My spouse shall have full power of management of the Shares being sold by my spouse pursuant to this Stock Purchase Agreement, including any portion of those interests that are our community property; and my spouse has the full right, without my further approval, to exercise my spouse's voting rights as a shareholder in the Company, and to sell, transfer, encumber, and deal in any manner with such shares.
Executed March 30, 1999.
/s/ Josephine Brickner Saxon [Name] |
EXHIBIT 10.1
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
This First Amendment to Stock Purchase Agreement, dated as of April 8, 1999 (the "Amendment"), is by and among Iron Mountain Incorporated, a Delaware corporation ("Purchaser"); Data Base, Inc., a Washington corporation (the "Company"); John J. Luger; Donna M. Luger; Mary Ann Montandon, George F. Luger and Lisa Luger Frey, as co-trustees of the Lisa Luger Frey GST Trust; Mary Ann Montandon, George F. Luger and Tanya Luger Paszkeicz, as co-trustees of the Tanya Luger Paszkeicz GST Trust; Mary Ann Montandon, George F. Luger and John J. Luger, Jr., as co-trustees of the John J. Luger, Jr. GST Trust; and Mary Ann Montandon and George F. Luger, as co-trustees of the Justin T. Luger GST Trust (each a "Seller" and collectively, "Sellers").
W I T N E S S E T H :
WHEREAS, Purchaser, the Company and Sellers are parties to that Stock Purchase Agreement, dated as of February 28, 1999 (the "Original Agreement");
WHEREAS, Purchaser is contemplating an underwritten public offering of shares of its common stock, par value $.01 per share ("Purchaser Common Stock"), pursuant to its Registration Statement on Form S-3 (No. 333-44185) (the "Universal Shelf");
WHEREAS, Sellers desire liquidity with respect to the Iron Mountain Common Stock (this and other capitalized terms used in this Amendment without definition are used with the meanings ascribed to such terms in the Original Agreement) and Purchaser is willing to apply a portion of the net proceeds from the public offering to repurchase shares of Iron Mountain Common Stock held by Sellers (subject to the terms and conditions set forth herein); and
WHEREAS, Purchaser, the Company and Sellers wish to amend the Original Agreement as set forth in this Amendment;
NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1 Repurchase of Shares.
1.1 Repurchase of Shares. Purchaser hereby agrees that if Purchaser consummates an underwritten public offering of Purchaser Common Stock under the Universal Shelf on or before May 23, 1999 (the "Offering"), it shall purchase from each Seller, and each Seller hereby agrees to sell to Purchaser, on the terms and conditions contained herein, all or such portion of the Iron Mountain Common Stock held by such Seller as Purchaser and such Seller may agree, free and clear of all Liens. The per share purchase price to be paid to Sellers for the Iron Mountain Common Stock shall be equal to the public offering price per share with respect to the Offering, less underwriting discounts and commissions; provided, however, that each Seller, prior to being obligated to sell shares of Iron Mountain Common Stock under this Amendment, shall have the right to designate the net price per share such Seller is willing to accept for his or its Iron Mountain Common Stock. Such agreement shall be reflected in a letter agreement between such Seller and Purchaser (the "Letter Agreement") entered into by them not less than two (2) business days prior to the execution of the Underwriting Agreement to be entered into in connection with the Offering (the "Underwriting Agreement"). The Parties acknowledge that Purchaser has the right to apply the net proceeds of the Offering as it in its sole discretion may determine and that, consistent with an underwritten offering as to which Sellers had piggyback registration rights, Purchaser will only be required to apply the net proceeds of the Offering to purchase shares of Iron Mountain Common Stock from Sellers after it has applied the net proceeds to Purchaser's other intended uses. Accordingly, if the managing underwriters of the Offering deliver a written opinion to Sellers that marketing considerations (including, without limitation, pricing) require a limitation on Purchaser Common Stock to be sold
in the Offering, then, subject to the advice of said managing underwriter or underwriters as to the size and composition of the Offering, such limitation will be imposed on one or more Sellers, and Purchaser shall not be required to purchase Iron Mountain Common Stock from such Seller or Sellers as a result of such limitation.
1.2 No Obligation to Proceed with Offering. Notwithstanding anything to the contrary in this Amendment, Purchaser shall not in any way be obligated to consummate the Offering and it may, at any time prior to the closing thereof, determine not to offer shares of Purchaser Common Stock pursuant to the Universal Shelf without liability to any Seller. Purchaser shall give Sellers prompt written notice of its election not to proceed with the Offering.
1.3 Replacement of Escrow Shares. If as a result of the transactions contemplated hereby, shares of Iron Mountain Common Stock constituting all or part of the Escrow Indemnity Funds are sold by a Seller to Purchaser hereunder, at the Stock Repurchase Closing (as defined in Section 2.1 below) such Seller shall contribute to the Escrow Indemnity Funds cash in an amount (the "Cash Payment") equal to the product of (a) the public offering price in the Offering and (b) the shares of Iron Mountain Common Stock being purchased by Purchaser from such Seller that constitute Escrow Indemnity Funds. To facilitate such contribution, Purchaser shall pay the Cash Payment to the Escrow Agent by wire transfer from a portion of the purchase price otherwise payable to such Seller under Section 1.1 (the "Repurchase Price").
Section 2 Closing.
2.1 Time and Place of Closing. The closing of the purchase and sale described in Section 1.1 (the "Stock Repurchase Closing") shall occur at the offices of Sullivan & Worcester LLP, One Post Office Square, Boston, Massachusetts, on the day that is one (1) business day after the closing under the Underwriting Agreement or, if later, at such time as Purchaser may purchase the Iron Mountain Common Stock in compliance with Regulation M promulgated under the Securities Exchange Act of 1934, as amended (the "Stock Repurchase Closing Date").
2.2 Obligations To Be Performed at Closing. At the Stock Repurchase Closing, (a) Sellers shall deliver to Purchaser stock certificate(s) representing the Iron Mountain Common Stock to be purchased by Purchaser hereunder, duly endorsed in blank or accompanied by stock powers or other duly executed instruments of transfer, as may be necessary to effect the transfer of good and marketable title to such shares to Purchaser, free and clear of all Liens, and (b) Purchaser shall pay to such Seller the Repurchase Price (subject to reduction, if any, as contemplated by Section 1.3 hereof) by wire transfer to a bank account designated by such Seller in immediately available funds. To the extent only a portion of the Iron Mountain Common Stock represented by a certificate is to be purchased by Purchaser, at the Stock Repurchase Closing Purchaser shall also deliver to such Seller a certificate representing the portion of the shares not acquired.
Section 3 Representations and Warranties of Sellers. To induce Purchaser to enter into and perform this Amendment, Sellers represent and warrant to Purchaser as follows:
3.1 Due Authorization and Execution. Each Seller has all requisite power and authority to own the Iron Mountain Common Stock, to execute and deliver this Amendment and to perform its obligations hereunder and consummate the transactions contemplated hereby. This Amendment has been duly authorized, executed and delivered by each Seller and is a legal, valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and except as the availability of equitable remedies may be limited by equitable principles of general applicability.
3.2 No Approvals or Notices Required; No Conflicts With Material Contracts. The execution, delivery and performance of this Amendment by each Seller, and the consummation of the transactions contemplated hereby, will not (a) conflict with or constitute a default or violation (with or without the giving of notice or lapse of time, or both) of any Governmental Regulation, or of any Permit, authorization, status, concession, franchise, license, statute, law, ordinance, rule or regulation applicable to any Seller, (b) require any consent, approval or authorization of, or declaration, filing or registration with any Governmental Entity (except for consents, approvals or authorizations of, or declarations, filings or registrations required under federal and state securities laws), (c) result in a material default under or violation of (with or without the giving of notice or lapse of time, or both), acceleration or termination (with or without the giving of notice or lapse of time or both) of, or give rise to an acceleration of any material obligation or to the loss of a material benefit under, any contract or other restriction, encumbrance, obligation or liability affecting Seller, (d) conflict with or result in a breach of or constitute a default or violation under any provision of any applicable trust agreement of Seller, or (e) result in or permit the creation or imposition of any Lien upon any Iron Mountain Common Stock.
3.3 Absence of Legal Proceedings. No litigation, investigation or administrative proceeding (including, without limitation, any arbitration proceeding) is pending or (to Sellers' Knowledge) threatened in writing against any Seller which seeks to enjoin, restrain, condition or prevent consummation by Sellers of this Amendment or the transactions contemplated herein.
3.4 Brokerage. No Seller has retained any broker or finder in connection with the transactions contemplated by this Amendment.
3.5 Title to Shares. At the Stock Repurchase Closing, each Seller will have good and marketable title to the shares of Iron Mountain Common Stock to be sold to Purchaser hereunder, free and clear of all Liens, except for Liens (i) arising in connection with this Amendment or from the terms of the Escrow Agreement or (ii) arising from applicable securities laws.
Section 4 Representations and Warranties of Purchaser. To induce Sellers to enter into and perform this Amendment, Purchaser represents and warrants to Sellers as follows:
4.1 Due Authorization and Execution. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, is duly qualified to do business and is in good standing in all other jurisdictions where its failure to qualify to do business would result in a Material Adverse Change in Purchaser. Purchaser has all requisite power and authority to own or hold under lease its properties and to conduct its business, to execute and deliver this Amendment and to perform its obligations hereunder and consummate the transactions contemplated hereby. This Amendment has been duly authorized, executed and delivered by Purchaser and is a legal, valid and binding obligation of Purchaser, enforceable against it in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and except as the availability of equitable remedies may be limited by equitable principles of general applicability.
4.2 No Approvals or Notices Required; No Conflicts With Material Contracts. Except as listed in Schedule 4.2, the execution, delivery and performance of this Amendment by Purchaser, and the consummation of the transactions contemplated hereby, will not (a) conflict with or constitute a default or violation (with or without the giving of notice or lapse of time, or both) of any Governmental Regulation, or of any Permit, authorization, status, concession, franchise, license, statute, law, ordinance, rule or regulation applicable to any Seller, (b) require any consent, approval or authorization of, or declaration, filing or registration with any Governmental Entity (except for consents, approvals or authorizations of, or declarations, filings or registrations required under
federal and state securities laws), (c) result in a material default under or violation of (with or without the giving of notice or lapse of time, or both), acceleration or termination (with or without the giving of notice or lapse of time or both) of, or give rise to an acceleration of any material obligation or to the loss of a material benefit under, any contract or other restriction, encumbrance, obligation or liability affecting Purchaser, or (d) conflict with or result in a breach of or constitute a default or violation under any provision of the Certificate of Incorporation or bylaws of Purchaser.
4.3 Absence of Legal Proceedings. No litigation, investigation or administrative proceeding (including, without limitation, any arbitration proceeding) is pending or (to Purchaser's Knowledge) threatened in writing against Purchaser which seeks to enjoin, restrain, condition or prevent consummation by Purchaser of this Amendment or the transactions contemplated herein.
4.4 Brokerage. Other than the underwriters retained in connection with the Offering, the Company has not retained any broker or finder in connection with the transactions contemplated by this Amendment. Purchaser shall be responsible for all fees, discounts and commissions payable to such underwriters.
Section 5 Purchaser Conditions. The obligations of Purchaser to perform and observe the covenants, agreements and conditions of this Amendment to be performed and observed by it at the Stock Repurchase Closing shall be subject to the satisfaction of the following conditions at or before the Stock Repurchase Closing, any one or more of which may be waived by Purchaser and the non-fulfillment of any of which will permit Purchaser, at its sole option, to terminate this Agreement:
5.1 Accuracy of Representations and Warranties; Compliance with Covenants. All representations and warranties of Sellers contained in this Amendment shall be true in all material respects on and as of the Stock Repurchase Closing Date with the same force and effect as if again made on and as of such date. Sellers shall have performed in all material respects all obligations and agreements and complied in all material respects with all covenants and conditions contained in this Amendment to be performed and complied with by them on or prior to the Stock Repurchase Closing Date. At the Stock Repurchase Closing Sellers shall have delivered a certificate confirming the matters set forth in this Section 5.1.
5.2 Legal Proceedings; Filings. No Governmental Regulation shall be in effect which enjoins, restrains, conditions or prohibits, or seeks damages or other relief in connection with, consummation of this Amendment or the transactions contemplated herein, and no litigation, investigation or administrative proceeding (other than action initiated or threatened by Purchaser) shall be pending or threatened in writing which would enjoin, restrain, condition or prevent, or seeks damages or other relief in connection with, consummation of this Amendment or the transactions contemplated herein. All filings required by applicable law to be made by Sellers with or to any Governmental Entity in connection with the transactions contemplated by this Agreement shall have been made and any waiting period thereunder shall have lapsed.
5.3 Offering. The Offering shall have been consummated and not less than two (2) days prior to execution of the Underwriting Agreement, one or more Sellers and Purchaser shall have entered into the Letter Agreement, which shall set forth the price or, if applicable, range of prices that Seller is willing to consummate such purchase and sale.
5.4 Consents. Purchaser shall have received the consent identified on Exhibit 4.2 hereto.
Section 6 Seller Conditions. The obligations of each Seller to perform and observe the covenants, agreements and conditions of this Amendment to be performed and observed by he or it at the
Stock Repurchase Closing shall be subject to the satisfaction of the following conditions at or before the Stock Repurchase Closing, any one or more of which may be expressly waived in writing by such Seller and the non-fulfillment of any of which will permit such Seller, at his or its sole option, to terminate this Amendment:
6.1 Accuracy of Representations and Warranties; Compliance with Covenants. All representations and warranties of Purchaser contained in this Amendment shall be true in all material respects on and as of the Stock Repurchase Closing Date with the same force and effect as if again made on and as of such date. Purchaser shall have performed in all material respects all obligations and agreements and complied in all material respects with all covenants and conditions contained in this Amendment to be performed and complied with by it on or prior to the Stock Repurchase Closing Date. At the Stock Repurchase Closing Purchaser shall have delivered a certificate confirming the matters set forth in this Section 6.1.
6.2 Legal Proceedings; Filings. No Governmental Regulation shall be in effect which enjoins, restrains, conditions or prohibits, or seeks damages or other relief in connection with, consummation of this Amendment or the transactions contemplated herein, and no litigation, investigation or administrative proceeding (other than action initiated or threatened by any Seller) shall be pending or threatened in writing which would enjoin, restrain, condition or prevent, or seeks damages or other relief in connection with, consummation of this Amendment or the transactions contemplated herein. All filings required by applicable law to be made by Purchaser with or to any Governmental Entity in connection with the transactions contemplated by this Agreement shall have been made and any waiting period thereunder shall have lapsed.
Section 7 Agreements Relating to Registration Rights Agreement, Shelf Registration Statement and Securities Laws Matters.
7.1 Waiver of Rights. Notwithstanding anything to the contrary in the Original Agreement or the Joinder, each Seller agrees that in the event Purchaser acquires from Sellers at least ninety percent (90%) of the Iron Mountain Common Stock issued pursuant to the Original Agreement (as contemplated Section 1.1 of this Amendment), (a) Sellers shall have no right to request Purchaser to register the shares of Iron Mountain Common Stock pursuant to Section 1(b) of the Registration Rights Agreement and Paragraph 3 of the Joinder, and (b) Purchaser shall have no obligation to file a Shelf Registration Statement on behalf of Sellers in accordance with Section 10.4 of the Original Agreement.
7.2 Shelf Registration Statement. Notwithstanding Section 10.4 of the Original Agreement, Purchaser's obligation to prepare and file the Shelf Registration Statement shall be suspended until as soon as reasonably possible following the earlier to occur of (a) May 23, 1999 or (b) Purchaser's determination not to proceed with the Offering as notified in writing to Sellers in accordance with Section 1.2.
7.3 Certain Activities. Sellers will not (and will cause their respective affiliates not to) take, directly or indirectly, any action which is designed to or which constitutes or which might reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of Purchaser to facilitate the sale or resale of the Purchaser Common Stock to be sold in the Offering, and neither Sellers nor any of their affiliated purchasers (as defined in Rule 100 of Regulation M under the Securities Exchange Act of 1934, as amended) will take any action prohibited by Regulation M.
Section 8 Closing Date. Notwithstanding anything to the contrary, for purposes of the definition of ERISA Affiliate, Sections 9.4(b) and 11 of the Original Agreement and for accounting purposes,
the Closing Date under the Original Agreement shall be deemed to be April 1, 1999. For all other purposes (including, without limitation, the definition of Escrow Indemnity Period and Indebtedness and Sections 3, 9.3, 9.4 and 12 of the Original Agreement), the Closing Date under the Original Agreement shall be deemed to be April 8, 1999, and the Closing will be deemed to take place at 12:01 a.m. (local time) on such date.
Section 9 Other Amendments.
9.1 Definitions. The following definition is added to the Original Agreement:
"First Amendment" means the First Amendment to Stock Purchase Agreement, dated as of April 8, 1999, by and among the Company, Purchaser and Sellers.
9.2 Section 7.10. Section 7.10 of the Original Agreement is hereby amended by (i) deleting the word "and" between the word "Act," and "(ii)" in the ninth line of such Section and (ii) inserting the following words after "Company" and before the comma appearing in the tenth line of such Section: ", and (iii) for consents, approvals or authorizations of, or declarations, filings or registrations required under federal and state securities laws in connection with the Shelf Registration Statement and the transactions contemplated thereby".
9.3 Section 8.3. Section 8.3 of the Original Agreement is hereby amended by (i) deleting the word "and" between the word "Act," and "(ii)" in the seventh line of such Section and (ii) inserting the following words after "Purchaser" and before the comma appearing in the ninth line of such Section: ", and (iii) for consents, approvals or authorizations of, or declarations, filings or registrations required under federal and state securities laws in connection with the Shelf Registration Statement and the transactions contemplated thereby".
9.4 Section 12.1(a). Section 12.1(a) of the Agreement is hereby amended by adding the words "the First Amendment or the Letter Agreement (as defined in the First Amendment)" between the words "Agreement," and "or" in the eleventh line of such Section.
9.5 Section 12.1(b). Section 12.1(b) of the Agreement is hereby amended by adding the words "the First Amendment or the Letter Agreement" between the words "Agreement," and "or" in the seventh line of such Section.
9.6 Section 12.3(a). Section 12.3(a) of the Agreement is hereby amended by adding the words "or in Section 3.5 of the First Amendment" after the words "Sections 7.9(a), (b) or (c)" and before the comma in the eighth line of such Section.
9.7 Section 12.3(c). Section 12.3(c) of the Agreement is hereby amended by adding the words "or in Section 3.5 of the First Amendment" after the words "Sections 7.9(a), (b) or (c)" and before the comma in the seventh line of such Section.
Section 10 Termination. This Amendment (other than Sections 8 and 9 hereof) may be terminated at any time prior to Stock Repurchase Closing by Purchaser or Sellers. Upon any termination of this Amendment, there shall be no liability on the part of any Party; provided, however, that such termination shall not affect the liability of any Party for the breach of any provision of this Amendment. Notwithstanding any such termination, the Original Agreement shall continue in full force and effect.
Section 11 Miscellaneous Provisions.
11.1 Incorporation of Provisions. Sections 14.2 through and including Section 14.14 of the Original Agreement are hereby incorporated by reference herein, mutatis mutandis,with the same force and effect as if set forth herein.
11.2 Original Agreement Still in Effect. All other terms and conditions of the Original Agreement not specifically addressed by this Amendment shall remain unchanged and shall continue in full force and effect.
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IN WITNESS WHEREOF, each of the parties hereto had caused this Amendment to be duly executed and delivered as of the day and year first above written.
IRON MOUNTAIN INCORPORATED
By: /s/
Name: Donald P. Richards
Title: Vice President
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DATA BASE, INC.
By: /s/
Name: John J. Luger
Title: CEO and President
/s/
John J. Luger
/s/
Donna M. Luger
Mary Ann Montandon, George F. Luger and Lisa
Luger Frey, as co-trustees of the LISA LUGER
FREY GST TRUST
By: /s/
Mary Ann Montandon, Trustee
By: /s/
George F. Luger, Trustee
By: /s/
Lisa Luger Frey, Trustee
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Mary Ann Montandon, George F. Luger and Tanya Luger Paszkeicz, as co-trustees of the TANYA LUGER PASZKEICZ GST TRUST
By: /s/ Mary Ann Montandon, Trustee By: /s/ George F. Luger, Trustee By: /s/ Tanya Luger Paszkeicz, Trustee Mary Ann Montandon, George F. Luger and John J. Luger, Jr., as co-trustees of the JOHN J. LUGER, JR. GST TRUST By: /s/ Mary Ann Montandon, Trustee By: /s/ George F. Luger, Trustee By: /s/ John J. Luger, Jr., Trustee Mary Ann Montandon and George F. Luger, as co-trustees of the JUSTIN T. LUGER GST TRUST By: /s/ Mary Ann Montandon, Trustee By: /s/ George F. Luger, Trustee |
Schedule 4.2
1. Purchaser will require the consent of its lenders under its Second Amended and Restated Credit Agreement, dated as of December 31, 1997, among Purchaser, the lenders party thereto and The Chase Manhattan Bank, as Administrative Agent, as amended and in effect on the date hereof.
EXHIBIT 10.2
AMENDMENT, WAIVER AND JOINDER
TO REGISTRATION RIGHTS AGREEMENT
This Amendment, Waiver and Joinder to Registration Rights Agreement (this "Agreement") is made and entered into as of April 8, 1999 by and among Iron Mountain Incorporated, a Delaware corporation (the "Company"), John J. Luger, Donna M. Luger, Mary Ann Montandon, George F. Luger and Lisa Luger Frey, as co-trustees of the Lisa Luger Frey GST Trust, Mary Ann Montandon, George F. Luger and Tanya Luger Paszkeicz, as co-trustees of the Tanya Luger Paszkeicz GST Trust, Mary Ann Montandon, George F. Luger and John J. Luger, Jr., as co-trustees of the John J. Luger, Jr. GST Trust, and Mary Ann Montandon and George F. Luger, as co-trustees of the Justin T. Luger GST Trust (collectively, the "Sellers"), and each of the stockholders party to the Registration Rights Agreement (as defined below) signatory hereto (the "Existing Stockholders").
WHEREAS, the Company and certain of its Stockholders are parties to that certain Amended and Restated Registration Rights Agreement, dated as of June 12, 1997, as heretofore supplemented (the "Registration Rights Agreement");
WHEREAS, in accordance with the terms of the Registration Rights Agreement, the Company and the Sellers desire to admit the Sellers as a Stockholder (this and other capitalized terms used herein without definition are used with the meanings given to such terms in the Registration Rights Agreement) under the Registration Rights Agreement;
WHEREAS, the Company, the Sellers and Data Base, Inc. are party to that certain Stock Purchase Agreement, dated as of February 28, 1999 (the "Stock Purchase Agreement"), pursuant to which the Company has agreed to file a registration statement (the "Resale Registration Statement") under the Securities Act and Rule 415 promulgated thereunder pursuant to which the Sellers may sell shares of Common Stock to be issued to the Sellers under the Stock Purchase Agreement ("Acquisition Shares"); and
WHEREAS, the Company has informed the Existing Stockholders that it is contemplating an underwritten public offering of shares of its Common Stock pursuant to its Registration Statement on Form S-3 (No. 333-44185) (the "Universal Shelf"), and that it may use a portion of the net proceeds of such offering to fund the repurchase of all or a portion of the Acquisition Shares, in addition to or in lieu of filing the Resale Registration Statement;
NOW, THEREFORE, in consideration of the recitals, the mutual covenants and agreements herein contained, and other valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby covenant and agree as follows:
1. The Stock Purchase Agreement shall be an "Equity Agreement" for purposes of the Registration Rights Agreement. Notwithstanding the foregoing, only the Acquisition Shares to be issued to the Sellers thereunder shall be "Registrable Securities" for purposes of the Registration Rights Agreement.
2. Each Seller hereby (i) joins in and becomes party to the Registration Rights Agreement as a Stockholder, (ii) agrees to be bound by and to perform all obligations of a
Stockholder under the Registration Rights Agreement, and (iii) agrees that such Seller shall not assign such Seller's rights under the Registration Rights Agreement other than as expressly permitted by Section 9(a) to the contrary therein. For the avoidance of doubt, the Sellers collectively shall be considered a "Significant Stockholder" for purposes of the Registration Rights Agreement.
3. Pursuant to Section 1(b) of the Registration Rights Agreement, the
Sellers as a Significant Stockholder shall have the right to demand that the
Company effect registration of all or part of the Registrable Securities held by
the Sellers pursuant to said Section 1(b) on one occasion; provided, however,
that such demand may not be made until the first anniversary of the closing
under the Stock Purchase Agreement unless the Company has not consummated a
public offering (the "Primary Offering") on or before the date which is 270 days
after the closing in respect of which either (i) the Sellers have piggyback
registration rights under Section 1(a) of the Registration Rights Agreement or
(ii) (a) the Company offers to the Sellers to apply a portion of the net
proceeds from the Primary Offering to acquire the Acquisition Shares (at a
purchase price equal to the public offering price less underwriting discounts
and commissions) and (b) the Company repurchases not less than seventy-five
percent (75%) of the Acquisition Shares that the Sellers have agreed to sell to
the Company at the public offering price less underwriting discounts and
commissions, in which case the Sellers shall be entitled to exercise such demand
on or after the 271st day following such closing.
4. Notwithstanding anything in the Registration Rights Agreement, the rights of the Sellers under the Registration Rights Agreement will terminate on the sixth anniversary of the date hereof.
5. Section 8 of the Registration Rights Agreement is hereby amended by adding the following definitions to be inserted in alphabetical order in such section:
"Data Base Agreement" shall mean that certain Stock Purchase Agreement dated as of February 28, 1999 among the Company, the Luger Stockholders and Data Base, Inc.
"Luger Stockholders" shall mean John J. Luger, Donna M. Luger, Mary Ann Montandon, George F. Luger and Lisa Luger Frey, as co-trustees of the Lisa Luger GST Trust, Mary Ann Montandon, George F. Luger and Tanya Luger Paszkeicz, as co-trustees of the Tanya Luger Paszkeicz GST Trust, Mary Ann Montandon, George F. Luger and John J. Luger, Jr., as co-trustees of the John J. Luger, Jr. GST Trust, and Mary Ann Montandon and George F. Luger, as co-trustees of the Justin T. Luger GST Trust.
"Shelf Registration Statement" shall mean a registration statement under the Securities Act to register a maximum aggregate offering amount of the Company's securities, including the Common Stock, to be offered by the Company from time to time on a delayed basis, including without limitation its Registration Statement on Form S-3 (No. 333-44185) .
6. Section 1(a) of the Registration Rights Agreement is hereby amended
by adding the following sentence as the last sentence in clause (iii) of Section
1(a): "Notwithstanding the preceding sentence, until the earlier to occur of (i)
the first anniversary of the closing under the Data Base Agreement, (ii) the
consummation, after the closing under the Data Base Agreement, of a public
offering of Common Stock by the Company in respect of which Stockholders had an
opportunity to include Registrable Securities pursuant to this Section 1(a) or
(iii) the consummation, after the closing under the Data Base Agreement, of a
public offering of Common Stock by the Company effected pursuant to a Shelf
Registration Statement in respect of which the Company shall have offered to
apply a portion of the net proceeds of which to acquire from the Luger
Stockholders the Registrable Securities held by the Luger Stockholders at a
purchase price equal to the public offering price less underwriting discounts
and commissions (it being understood that (w) the Company shall be entitled to
sell all shares of Common Stock it desires for its account prior to selling
shares of Common Stock to satisfy its offer to repurchase Registrable Securities
from the Luger Stockholders, (x) if the Luger Stockholders accept such offer,
the Company shall use its reasonable best efforts to sell a sufficient quantity
of Common Stock in such offering to provide for the shares of Common Stock it
intended to sell for its own account as well as to repurchase such Registrable
Shares from the Luger Stockholders, subject, however, to downsizing the offering
upon receipt from the underwriters of an opinion of the type referenced to in
the immediately preceding sentence, (y) notwithstanding such offer and
acceptance or agreement to use reasonable best efforts, the Company shall not be
required to consummate such offering and it may, at any time prior to the
closing of such offering, determine not to offer the securities to which the
Shelf Registration Statement relates without liability to the Luger Stockholders
and (z) if the Company, due to any such downsizing, is unable to acquire at
least 75% of the Registrable Securities that the Luger Stockholders agreed to
sell to the Company at the public offering price less underwriting discounts and
commissions, then this clause (iii) shall not be deemed to have been satisfied
until the Company shall have consummated an additional offering under a Shelf
Registration Statement that satisfies the conditions set forth in this clause
(iii) and this parenthetical, other than clause (z) of this parenthetical), in
the event of any limitation on the number of shares of Common Stock to be
imposed on Stockholders, the number of shares of Common Stock to be included in
such offering by Stockholders shall be included in the following order: (i)
first, the Registrable Securities held by the Luger Stockholders and (ii)
second, pro rata among the holders of Registrable Securities, other than the
Luger Stockholders based on the value (based upon the proposed public offering
price) of the respective numbers or amount of Registrable Securities as to which
registration has been requested by such Stockholders."
7. Section 5(a)(i) is hereby amended and restated in its entirety to read as follows:
"(i) shall continue until the later to occur of the following:
(A) such time as Sullivan & Worcester LLP or other counsel for the
Company knowledgeable in securities law matters and reasonably
acceptable to such Stockholder has delivered a written opinion to the
Company and such Stockholder (or group of related Stockholders) to the
effect that such Stockholder has no further obligation to comply with
the registration requirements of the Securities Act or to deliver a
prospectus meeting the requirements of Section 10(a)(3) of the
Securities Act in connection with further sales by such Stockholder of
Registrable Securities, and (B) such Stockholder owns less than 3% of
the outstanding Common Stock and is able to sell all of the Registrable
Securities owned by him pursuant to the provisions of Rule 144 under
the Securities Act in a three-month period (but, notwithstanding the
foregoing, in no event will the Company's obligations with respect to
rights of registration of the Luger Stockholders and each Stockholder
who is a party to this Agreement on the date of this Amendment,
terminate as a result of this clause (i) until the third anniversary of
the date such Stockholder or group of related Stockholders became party
to this Agreement); and"
8. Each of the Existing Stockholders hereby consents, on behalf of all Stockholders, to the Resale Registration Statement and waives, on behalf of all Stockholders, any right it or he may have under the Registration Rights Agreement to include Registrable Securities in the Resale Registration Statement.
9. Each of the Existing Stockholders hereby waives, on behalf of all Stockholders, any right it or he may have under the Registration Rights Agreement to include Registrable Securities in any offering or offerings of Common Stock to be effected by the Company pursuant to the Universal Shelf so long as the Company offers to acquire from the Luger Stockholders all or any portion of Registrable Securities held by them as contemplated by clause (iii) of the sentence being added to the Registration Rights Agreement in accordance with Paragraph 6 hereof.
10. The provisions of Paragraph 9 hereof shall be effective upon the date first written above. The provisions of Paragraphs 1 through and including 8 hereof shall be effective upon the closing under the Stock Purchase Agreement.
11. Except to the extent specifically amended and supplemented hereby, the provisions of the Registration Rights Agreement shall remain unmodified. The Registration Rights Agreement, as amended and supplemented hereby, is confirmed as being in full force and effect. This Agreement may be executed in any number of counterparts, which together shall constitute one instrument, shall be governed by and construed in accordance with the laws (other than the conflict of laws rules) of the Commonwealth of Massachusetts and shall bind and inure to the benefit of the parties hereto and their respective permitted successors and assigns.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first above written.
IRON MOUNTAIN INCORPORATED
By: /s/ C. Richard Reese
Name:
Title:
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SCHOONER CAPITAL CORPORATION
By: /s/ Vincent J. Ryan Name: Vincent J. Ryan /s/ Vincent J. Ryan Vincent J. Ryan |
/s/ C. Richard Reese C. Richard Reese /s/ Eugene B. Doggett Eugene B. Doggett /s/ B. Thomas Golisano B. Thomas Golisano /s/ Kent P. Dauten Kent P. Dauten |
/s/ John J. Luger
John J. Luger
Mary Ann Montandon, George F. Luger and Lisa
Luger Frey, as co-trustees of the LISA LUGER
FREY GST TRUST
By: /s/ Mary Ann Montandon
Mary Ann Montandon, Trustee
By: /s/ George F. Luger
George F. Luger, Trustee
By: /s/ Lisa Luger Frey
Lisa Luger Frey, Trustee
Mary Ann Montandon, George F. Luger and Tanya
Luger Paszkeicz, as co-trustees of the TANYA
LUGER PASZKEICZ GST TRUST
By: /s/ Mary Ann Montandon
Mary Ann Montandon, Trustee
By: /s/ George F. Luger
George F. Luger, Trustee
By: /s/ Tanya Luger Paszkeicz
Tanya Luger Paszkeicz, Trustee
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Mary Ann Montandon, George F. Luger and John J. Luger, Jr., as co-trustees of the JOHN J.
LUGER, JR. GST TRUST
By: /s/ Mary Ann Montandon
Mary Ann Montandon, Trustee
By: /s/ George F. Luger
George F. Luger, Trustee
By: /s/ John J. Luger, Jr.
John J. Luger, Jr., Trustee
Mary Ann Montandon and George F. Luger, as
co-trustees of the JUSTIN T. LUGER GST TRUST
By: /s/ Mary Ann Montandon
Mary Ann Montandon, Trustee
By: /s/ George F. Luger
George F. Luger, Trustee
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EXHIBIT 10.3
IRON MOUNTAIN INCORPORATED(1)
1995 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of this 1995 Stock Incentive Plan (the "Plan") is to encourage key employees, directors, and consultants of Iron Mountain Incorporated (the "Company") and its Subsidiaries (as hereinafter defined) to continue their association with the Company, by providing favorable opportunities for them to participate in the ownership of the Company and in its future growth through the granting of awards ("Awards") of stock, stock options, and other rights to compensation in amounts determined by the value of the Company's stock. The term "Subsidiary" as used in the Plan means a corporation of which the Company owns, directly or indirectly through an unbroken chain of ownership, fifty percent (50%) or more of the total combined voting power of all classes of stock.
2. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board of Directors of the Company (the "Board") or, in the discretion of the Board, a committee or subcommittee of the Board (the "Committee"), appointed by the Board and composed of at least two (2) members of the Board. In the event that a vacancy on the Committee occurs on account of the resignation of a member or the removal of a member by vote of the Board, a successor member shall be appointed by vote of the Board. All references in the Plan to the "Committee" shall be understood to refer to the Committee or the Board, whoever shall administer the Plan.
For so long as Section 16 of the Securities Exchange Act of 1934, as amended from time to time (the "Exchange Act"), is applicable to the Company, each member of the Committee shall be a "non-employee director" or the equivalent within the meaning of Rule 16b-3 under the Exchange Act, and, for so long as Section 162(m) of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), is applicable to the Company, an "outside director" within the meaning of Section 162 of the Code and the regulations thereunder. The Committee shall select those persons to receive Awards under the Plan ("Participants") and determine the terms and conditions of all Awards.
The Committee shall select one of its members as Chairman and shall hold meetings at such times and places as it may determine. A majority of the Committee shall constitute a quorum, and acts of the Committee at which a quorum is present, or acts reduced to or approved in writing by all the members of the Committee, shall be the valid acts of the Committee. The Committee shall have the authority to adopt, amend, and rescind such rules and regulations as, in its opinion, may be advisable in the administration of the Plan. All questions of interpretation and application of such rules and regulations, of the Plan and of options granted thereunder (the "Options"), and of Common Stock transferred subject to restrictions under the Plan ("Restricted Stock"), and stock appreciation rights granted under the Plan ("SARs") (collectively, "Other Rights") shall be subject to the determination of the Committee, which shall be final and binding.
With respect to persons subject to Section 16 of the Exchange Act ("Insiders"), transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successor under the Exchange Act. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed to be modified so as to be in compliance with such Rule, or, if such modification is not possible, it shall be deemed to be null and void, to the extent permitted by law and deemed advisable by the Committee.
The Plan shall be administered in such a manner as to permit those Options granted hereunder and specially designated under Section 5 to qualify as incentive stock options as described in Section 422 of the Code.
3. STOCK SUBJECT TO THE PLAN
The total number of shares of stock which may be subject to Options and Other Rights under the Plan shall be 3,000,000(2) of the Company's outstanding Class A Common Stock, $0.01 par value per share, from either authorized but unissued shares or treasury shares. For purposes of the limitation set forth in the preceding sentence, options granted under the Iron Mountain Information Services, Inc. Stock Option Plan and outstanding on the effective date of this Plan shall be treated as Options. The number of shares stated in this Section 3 shall be subject to adjustment in accordance with the provisions of Section 11. Shares of Restricted Stock that fail to vest, and shares of Common Stock subject to an Option that is neither fully exercised prior to its expiration or other termination nor terminated by reason of the exercise of an SAR related to the Option, shall again become available for grant under the terms of the Plan.
The total amount of the Common Stock with respect to which Options and Other Rights may be granted to any single employee under the Plan shall not exceed in the aggregate 350,000 shares.
The Company intends that the Plan shall apply to "common stock" proposed to be issued as a result of the Company's recapitalization in connection with an offering of "common stock" proposed to be registered under the Securities Act of 1933, as amended (the "Securities Act"),
and intends that the provisions of Section 11 of the Plan shall be construed so as to achieve this result.
4. ELIGIBILITY
The individuals who shall be eligible for grant of Options and Other Rights under the Plan shall be key employees, directors and other individuals who render services of special importance to the management, operation, or development of the Company or a Subsidiary, and who have contributed or may be expected to contribute materially to the success of the Company or a Subsidiary. Incentive stock options ("ISOs") shall not be granted to any individual who is not an employee of the Company or a Subsidiary. The term "Optionee," as used in the Plan, refers to any individual to whom an Option or Other Right has been granted.
5. TERMS AND CONDITIONS OF OPTIONS
Every Option shall be evidenced by a written Stock Option Agreement in such form as the Committee shall approve from time to time, specifying the number of shares of Common Stock that may be purchased pursuant to the Option, the time or times at which the Option shall become exercisable in whole or in part, whether the Option is intended to be an ISO or a non-qualified stock option ("NSO"), and such other terms and conditions as the Committee shall approve, and containing or incorporating by reference the following terms and conditions:
(a) Duration. The duration of each Option shall be as specified by the Committee in its discretion; provided, however, that no ISO shall expire later than ten (10) years from its date of grant, and no ISO granted to an employee who owns (directly or under the attribution rules of Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Subsidiary shall expire later than five (5) years from its date of grant.
(b) Exercise Price. The exercise price of each Option shall be any lawful consideration, as specified by the Committee in its discretion; provided, however, that the price with respect to an ISO shall be at least one hundred percent (100%) of the fair market value of the shares on the date on which the Committee awards the Option, which shall be considered the date of grant of the Option for purposes of fixing the price; and provided further that the price with respect to an ISO granted to an employee who at the time of grant owns (directly or under the attribution rules of Section 424(d) of the Code) stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or of any Subsidiary shall be at least one hundred ten percent (110%) of the fair market value of the shares on the date of grant of the ISO. For purposes of the Plan, except as may be otherwise explicitly provided in the Plan or in any Stock Option Agreement, Restricted Stock Agreement, SAR Agreement or similar document, the "fair market value" of a share of Common Stock at any particular date shall be determined according to the following rules: (i) if the Common Stock is not at the time listed or admitted to trading on a stock exchange or the Nasdaq National Market, the fair market value shall be the closing price of the Common Stock on the date in question in the over-
the-counter market, as such price is reported in a publication of general circulation selected by the Board and regularly reporting the price of the Common Stock in such market; provided, however, that if the price of the Common Stock is not so reported, the fair market value shall be determined in good faith by the Board, which may take into consideration (1) the price paid for the Common Stock in the most recent trade of a substantial number of shares known to the Board to have occurred at arm's length between willing and knowledgeable investors, or (2) an appraisal by an independent party, or (3) any other method of valuation undertaken in good faith by the Board, or some or all of the above as the Board shall in its discretion elect; or (ii) if the Common Stock is at the time listed or admitted to trading on any stock exchange or the Nasdaq National Market, then the fair market value shall be the mean between the lowest and highest reported sale prices (or the lowest reported bid price and the highest reported asked price) of the Common Stock on the date in question on the principal exchange on which the Common Stock is then listed or admitted to trading. If no reported sale of Common Stock takes place on the date in question on the principal exchange or the Nasdaq National Market, as the case may be, then the reported closing sale price (or the reported closing asked price) of the Common Stock on such date on the principal exchange or the Nasdaq National Market, as the case may be, shall be determinative of fair market value.
(c) Method of Exercise. To the extent that it has become exercisable under the terms of the Stock Option Agreement, an Option may be exercised from time to time by written notice to the Chief Financial Officer of the Company or his designee stating the number of shares with respect to which the Option is being exercised and accompanied by payment of the exercise price in cash or check payable to the Company, or, if the Stock Option Agreement so provides, other payment or deemed payment described in this subsection 5(c). Such notice shall be delivered in person or by facsimile transmission to the Chief Financial Officer of the Company or his designee or shall be sent by registered mail, return receipt requested, to the Chief Financial Officer of the Company or his designee, in which case delivery shall be deemed made on the date such notice is deposited in the mail.
Alternatively, payment of the exercise price may be made:
(1) In whole or in part, in shares of Common Stock already owned by the Optionee or to be received upon exercise of the Option, provided that such shares are fully vested and free of all liens, claims, and encumbrances of any kind; provided, further, that the Optionee may not make payment in shares of Common Stock that he acquired upon the earlier exercise of any ISO, unless he has held the shares until at least two (2) years after the date the ISO was granted and at least one (1) year after the date the ISO was exercised. If payment is made in whole or in part in shares of Common Stock, then the Optionee shall deliver to the Company certificates registered in his name representing a number of shares of Common Stock legally and beneficially owned by him, fully vested and free of all liens, claims, and encumbrances of every kind and having a fair market value on the date of delivery that is not greater than the exercise price, such certificates to be duly endorsed, or accompanied by stock powers duly endorsed, by the record
holder of the shares represented by such certificates. If the exercise price exceeds the fair market value of the shares for which certificates are delivered, the Optionee shall also deliver cash or a check payable to the order of the Company in an amount equal to the amount of that excess, or, if the Stock Option Agreement so provides, his promissory note as described in the next following paragraph of this subsection 5(c); or
(2) In whole or in part by delivery of the Optionee's recourse promissory note, in a form specified by the Company, secured by the Common Stock acquired upon exercise of the Option and such other security as the Committee may require.
Alternatively, Options may be exercised by means of a
"cashless exercise" procedure in which a broker: (i) transmits the
option price to the Company in cash or acceptable cash equivalents,
either (1) against the Optionee's notice of exercise and the
Company's confirmation that it will deliver to the broker stock
certificates issued in the name of the broker for at least that
number of shares having a fair market value equal to the option
price, or (2) as the proceeds of a margin loan to the Optionee; or
(ii) agrees to pay the option price to the Company in cash or
acceptable cash equivalents upon the broker's receipt from the
Company of stock certificates issued in the name of the broker for at
least that number of shares having a fair market value equal to the
option price.
At the time specified in an Optionee's notice of exercise, the Company shall, without issue or transfer tax to the Optionee, deliver to him at the main office of the Company, or such other place as shall be mutually acceptable, a certificate for the shares as to which his Option is exercised. If the Optionee fails to pay for or to accept delivery of all or any part of the number of shares specified in his notice upon tender of delivery thereof, his right to exercise the Option with respect to those shares shall be terminated, unless the Company otherwise agrees.
(d) Reload Options. The Committee may, in its discretion, provide in the terms of any Stock Option Agreement that if the Optionee delivers shares of Common Stock already owned or to be received upon exercise of the Option in full or partial payment of the option price, or in full or partial payment of the tax withholding obligations incurred on account of the exercise of the Option, the Optionee shall, either automatically and immediately upon such exercise, or in the discretion of the Committee upon such exercise, be granted a new option (a "Reload Option") to purchase that number of shares of Common Stock delivered by the Optionee to the Company, on such terms and conditions as the Committee may determine under the terms of the Plan. The exercise price for shares subject to a Reload Option shall be not less than one hundred percent (100%) of the fair market value of the shares on the date of grant of the Reload Option, and the duration of a Reload Option shall be equal to the unexpired term of the exercised Option on the date of exercise.
(e) Notice of ISO Stock Disposition. The Optionee must notify the Company promptly in the event that he sells, transfers, exchanges or otherwise disposes of any shares of Common Stock issued upon exercise of an ISO, before the later of (i) the
second anniversary of the date of grant of the ISO, and (ii) the first anniversary of the date the shares were issued upon his exercise of the ISO.
(f) Effect of Cessation of Employment. The Committee shall determine in its discretion and specify in each Stock Option Agreement the effect, if any, of the termination of the Optionee's employment upon the exercisability of the Option.
(g) No Rights as Stockholder. An Optionee shall have no rights as a stockholder with respect to any shares covered by an Option until the date of issuance of a certificate to him for the shares. No adjustment shall be made for dividends or other rights for which the record date is earlier than the date the certificate is issued, other than as required or permitted pursuant to Section 11.
(h) Substituted Option. With the consent of the Optionee, the Committee shall have the authority at any time and from time to time to terminate any outstanding Option and grant in substitution for it a new Option covering the same number or a different number of shares, provided that the option price under the new Option shall be no less than the fair market value of the Common Stock on the date of grant of the new Option.
6. STOCK APPRECIATION RIGHTS
The Committee may grant SARs in respect of such number of shares of Common Stock subject to the Plan as it shall determine, in its discretion, and may grant SARs either separately or in connection with Options, as described in the following sentence. An SAR granted in connection with an Option may be exercised only to the extent of the surrender of the related Option, and to the extent of the exercise of the related Option the SAR shall terminate. Shares of Common Stock covered by an Option that terminates upon the exercise of a related SAR shall cease to be available under the Plan. The terms and conditions of an SAR related to an Option shall be contained in the Stock Option Agreement, and the terms of an SAR not related to any Option shall be contained in an SAR Agreement.
Upon exercise of an SAR, the Optionee shall be entitled to receive from the Company an amount equal to the excess of the fair market value, on the exercise date, of the number of shares of Common Stock as to which the SAR is exercised, over the exercise price for those shares under a related Option, or if there is no related Option, over the base value stated in the SAR Agreement. The amount payable by the Company upon exercise of an SAR shall be paid in the form of cash or other property (including Common Stock of the Company), as provided in the Stock Option Agreement or SAR Agreement governing the SAR.
All grants of SARs to Insiders shall be capable of being settled only for cash and may not be granted in connection with an Option. If an SAR is awarded to a person who is not an Insider at the time of award but subsequently becomes an Insider, it shall be deemed to be amended to provide that it may be settled only in cash while such person is an Insider.
7. RESTRICTED STOCK
The Committee may grant or award shares of Restricted Stock in respect of such number of shares of Common Stock, and subject to such terms or conditions, as it shall determine and specify in a Restricted Stock Agreement.
A holder of Restricted Stock shall have all of the rights of a stockholder of the Company, including the right to vote the shares and the right to receive any cash dividends, unless the Committee shall otherwise determine. Certificates representing Restricted Stock shall be imprinted with a legend to the effect that the shares represented may not be sold, exchanged, transferred, pledged, hypothecated or otherwise disposed of except in accordance with the terms of the Restricted Stock Agreement, and, if the Committee so determines, the Optionee may be required to deposit the certificates with an escrow agent designated by the Committee, together with a stock power or other instrument of transfer appropriately endorsed in blank.
8. SPECIAL BONUS GRANTS AND LOANS
In its discretion, the Committee may grant in connection with any NSO or grant of Restricted Stock a special cash bonus in an amount not to exceed the lesser of (i) the combined federal, state and local income tax liability incurred by the Optionee as a consequence of his acquisition of stock pursuant to the exercise of the NSO or the grant or vesting of the Restricted Stock, and the related special bonus, or (ii) thirty percent (30%) of the imputed income realized by the Optionee on account of such exercise or vesting and the related special bonus. The Committee may, in its discretion, estimate the amount of the tax liability described in clause (i) of the immediately preceding sentence, using formulae or methods uniformly applied to Optionees in similar circumstances, without regard to the particular circumstances of an individual Optionee. A special bonus shall be payable solely to federal, state, and local taxing authorities for the benefit of the Optionee at such time or times as withholding payments of income tax may be required. A special bonus may be granted simultaneously with a related NSO or Restricted Stock grant or separately with respect to an outstanding NSO or Restricted Stock granted at an earlier date. In the event that an NSO with respect to which a special bonus has been granted becomes exercisable by the personal representative of the estate of the Optionee, or that Restricted Stock with respect to which a special bonus has been granted shall vest after the death of an Optionee, the bonus shall be payable to or for the benefit of the estate in the same manner and to the same extent as it would have been payable for the benefit of the Optionee had he survived to the date of exercise or vesting.
In the Committee's discretion, a Stock Option Agreement or Restricted Stock Agreement may provide that to the extent that an Optionee does not receive a special bonus of the maximum amount permissible under this Section 8, the Company shall lend the Optionee an amount no greater than the excess of such maximum over the special bonus (if any) paid to the Optionee, for such term and at such rate of interest (or no interest) and on such further terms and conditions as the Committee determines.
9. OPTIONS AND OTHER RIGHTS VOIDABLE
If an individual to whom a grant has been made fails to execute and deliver to the Committee a Stock Option Agreement, SAR Agreement or Restricted Stock Agreement within thirty (30) days after it is submitted to him, the Option or Other Rights granted under the agreement shall be voidable by the Company at its election, without further notice to the Optionee.
10. REQUIREMENTS OF LAW
The Company shall not be required to transfer any Restricted Stock or to sell or issue any shares upon the exercise of any Option or SAR if the issuance of such shares will result in a violation by the Optionee or the Company of any provisions of any law, statute or regulation of any governmental authority. Specifically, in connection with the Securities Act, upon the transfer of Restricted Stock or the exercise of any Option or SAR the Company shall not be required to issue shares unless the Board has received evidence satisfactory to it to the effect that the holder of the Option or Other Right will not transfer such shares except pursuant to a registration statement in effect under the Securities Act or unless an opinion of counsel satisfactory to the Company has been received by the Company to the effect that such registration is not required. Any determination in this connection by the Board shall be conclusive. The Company shall not be obligated to take any other affirmative action in order to cause the transfer of Restricted Stock or the exercise of an Option or SAR to comply with any law or regulations of any governmental authority, including, without limitation, the Securities Act or applicable state securities laws.
11. CHANGES IN CAPITAL STRUCTURE
In the event that the outstanding shares of Common Stock are hereafter changed for a different number or kind of shares or other securities of the Company, by reason of a reorganization, recapitalization, exchange of shares, stock split, combination of shares or dividend payable in shares or other securities, a corresponding adjustment shall be made by the Committee in the number and kind of shares or other securities covered by outstanding Options and Other Rights, and for which Options or Other Rights may be granted under the Plan. Any such adjustment in outstanding Options or Other Rights shall be made without change in the total price applicable to the unexercised portion of the Option, but the price per share specified in each Stock Option Agreement or agreement as to Other Rights shall be correspondingly adjusted; provided, however, that no adjustment shall be made with respect to an ISO that would constitute a modification as defined in Section 424 of the Code. Any such adjustment made by the Committee shall be conclusive and binding upon all affected persons, including the Company and all Optionees.
If while unexercised Options or SARs remain outstanding under the Plan the Company merges or consolidates with a wholly-owned subsidiary for the purpose of reincorporating itself under the laws of another jurisdiction, the Optionees will be entitled to acquire shares of Common Stock of the reincorporated Company upon the same terms and conditions as were in
effect immediately prior to such reincorporation (unless such reincorporation involves a change in the number of shares or the capitalization of the Company, in which case proportional adjustments shall be made as provided above) and the Plan, unless otherwise rescinded by the Board, will remain the Plan of the reincorporated Company.
Except as otherwise provided in the preceding paragraph, if while unexercised Options or SARs remain outstanding under the Plan the Company merges or consolidates with one or more corporations (whether or not the Company is the surviving corporation), or is liquidated or sells or otherwise disposes of substantially all of its assets to another entity, or upon a Change of Control (as defined herein), then, except as otherwise specifically provided to the contrary in an Optionee's Stock Option Agreement, SAR Agreement or Restricted Stock Agreement, the Committee, in its discretion, shall amend the terms of all outstanding Options and SARs so that either:
(i) after the effective date of such merger, consolidation, sale or Change of Control, as the case may be, each Optionee shall be entitled, upon exercise of an Option or SAR, to receive in lieu of shares of Common Stock the number and class of shares of such stock or other securities to which he would have been entitled pursuant to the terms of the merger, consolidation, sale or Change of Control if he had been the holder of record of the number of shares of Common Stock as to which the Option or SAR is being exercised, or shall be entitled to receive from the successor entity a new stock option or stock appreciation right of comparable value; or
(ii) all outstanding Options and SARs shall be cancelled as
of the effective date of any such merger, consolidation,
liquidation, sale or Change of Control, provided that each
Optionee shall have the right to exercise his Option or SAR
according to its terms during the period of twenty (20)
days ending on the day preceding the effective date of such
merger, consolidation, liquidation, sale or Change of
Control; and in addition to the foregoing, the Committee
may in its discretion amend the terms of an Option or SAR
by cancelling some or all of the restrictions on its
exercise, to permit its exercise pursuant to this paragraph
(ii) to a greater extent than that permitted on its
existing terms; or
(iii) all outstanding Options and SARs shall be cancelled as of the effective date of any such merger, consolidation, liquidation, sale or Change of Control in exchange for consideration in cash or in kind, which consideration in both cases shall be equal in value to the value of those shares of stock or other securities the Optionee would have received had the Option been exercised (to the extent then exercisable) and no disposition of the shares acquired upon such exercise had been made prior to such merger, consolidation, liquidation, sale or Change in Control, less the option price therefor. Upon receipt of such consideration by the Optionee, his or her Option shall immediately terminate and be of no further force and effect. The value of the stock or other securities the Optionee would have received if the Option had been exercised shall be determined in good faith by the Committee, and in the case of shares of the Common Stock of the Company, in accordance with the provisions of Section 5(b).
A "Change of Control" of the Company shall be deemed to have occurred if any person (as such term is used in Section 13(d) and 14(d)(2) of the Exchange Act) other than a trust related to an employee benefit plan maintained by the Company becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of fifty percent (50%) or more of the Company's outstanding Common Stock, and within the period of twenty-four (24) consecutive months immediately thereafter, individuals other than (a) individuals who at the beginning of such period constitute the entire Board of Directors or (b) individuals whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period, become a majority of the Board of Directors.
Notwithstanding any provision of this Section 11 to the contrary, if while unexercised Options or SARs remain outstanding under the Plan the Company or a wholly owned subsidiary of the Company merges or consolidates with one or more corporations (whether or not the Company is the surviving corporation) in any transaction or series of related transactions and there is a Limited Change of Control (as defined herein), then the terms of all outstanding Options and SARs shall be amended so that any vesting restrictions on the exercise of the Option or SAR shall be cancelled as of the effective date of the merger or consolidation and, if the Company is not the surviving corporation, after the effective date of such merger or consolidation each Optionee shall be entitled, upon exercise of an Option or SAR, to receive in lieu of shares of Common Stock the number and class of shares of such stock or other securities and such other consideration to which he would have been entitled as a result of the terms of the merger or consolidation if he had been the holder of record of the number of shares of Common Stock as to which the Option or SAR is being exercised. A "Limited Change of Control" shall be deemed to have occurred if (i) following the merger or consolidation individuals serving as members of the Board immediately prior to the merger or consolidation no longer constitute a majority of the individuals serving as members of the Board (or the board of directors of the surviving corporation) and (ii) the voting securities of the Company outstanding immediately prior to the merger or consolidation fail to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the voting power of the securities of the Company or the surviving entity outstanding immediately after the merger or consolidation.
Except as expressly provided to the contrary in this Section 11, the issuance by the Company of shares of stock of any class for cash or property or for services, either upon direct sale or upon the exercise of rights or warrants, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect the number, class or price of shares of Common Stock then subject to outstanding Options or SARs.
12. FORFEITURE FOR DISHONESTY
Notwithstanding anything to the contrary in the Plan, if the Board determines, after full consideration of the facts presented on behalf of both the Company and an Optionee, that the Optionee has been engaged in fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his employment by the Company or a Subsidiary, which damaged the Company or Subsidiary, or has disclosed trade secrets or other proprietary information of the
Company or a Subsidiary, (a) the Optionee shall forfeit all unexercised Options and all exercised Options under which the Company has not yet delivered the certificates, and (b) the Company shall have the right to repurchase all or any part of the shares of Common Stock acquired by the Optionee upon the earlier exercise of any Option, at a price equal to the amount paid to the Company upon such exercise, increased by an amount equal to the interest that would have accrued in the period between the date of exercise of the Option and the date of such repurchase upon a debt in the amount of the exercise price, at the prime rate(s) announced from time to time during such period in the Federal Reserve Statistical Release Selected Interest Rates. The decision of the Board as to the cause of an Optionee's discharge and the damage done to the Company or a Subsidiary shall be final, binding, and conclusive. No decision of the Board, however, shall affect in any manner the finality of the discharge of an Optionee by the Company or a Subsidiary.
13. MISCELLANEOUS
(a) Nonassignability of Other Rights. No Other Rights shall be assignable or transferable by the Optionee except by will or the laws of descent and distribution. During the life of the Optionee, Other Rights shall be exercisable only by the Optionee.
(b) No Guarantee of Employment. Neither the Plan nor any Stock Option Agreement, SAR Agreement or Restricted Stock Agreement shall give an employee the right to continue in the employment of the Company or a Subsidiary, or give the Company or a Subsidiary the right to require an employee to continue in employment.
(c) Tax Withholding. To the extent required by law, the Company shall withhold or cause to be withheld income and other taxes with respect to any income recognized by an Optionee by reason of the exercise or vesting of an Option or Other Right, or a cash bonus paid in connection with such exercise or vesting, and as a condition to the receipt of any Option or Other Right or related cash bonus the Optionee shall agree that if the amount payable to him by the Company and any Subsidiary in the ordinary course is insufficient to pay such taxes, then he shall upon the request of the Company pay to the Company an amount sufficient to satisfy its tax withholding obligations.
Without limiting the foregoing, the Committee may in its discretion
permit any Optionee's withholding obligation to be paid in whole or in part in
the form of shares of Common Stock, by withholding from the shares to be issued
or by accepting delivery from the Optionee of shares already owned by him. The
fair market value of the shares for such purposes shall be determined as set
forth in Section 5(b). An Optionee may not make any such payment in the form of
shares of Common Stock acquired upon the exercise of an ISO until the shares
have been held by him for at least two (2) years after the date the ISO was
granted and at least one (1) year after the date the ISO was exercised. If
payment of withholding taxes is made in whole or in part in shares of Common
Stock, the Optionee shall deliver to the Company certificates registered in his
name representing shares of Common Stock legally and beneficially owned by him,
fully vested and free of all liens, claims, and encumbrances of every kind, duly
endorsed or accompanied by stock powers duly endorsed by the record holder of
the shares represented by such certificates. If the Optionee is subject to
Section 16(a) of the Exchange Act, his ability to
pay his withholding obligation in the form of shares of Common Stock shall be subject to such additional restrictions as may be necessary to avoid any transaction that might give rise to liability under Section 16(b) of the Exchange Act.
(d) Use of Proceeds. The proceeds from the sale of shares pursuant to Options or Other Rights shall constitute general funds of the Company.
14. EFFECTIVE DATE, DURATION, AMENDMENT AND TERMINATION OF PLAN
The Plan shall be effective as of November 30, 1995, subject to ratification by (a) the holders of a majority of the outstanding shares of capital stock present, or represented, and entitled to vote thereon (voting as a single class) at a duly held meeting of the shareholders of the Company, or (b) by the written consent of the holders of a majority (or such greater degree as may be prescribed under the Company's charter, by-laws, and applicable state law) of the capital stock of the issuer entitled to vote thereon (voting as a single class) within twelve (12) months after such date. Options that are conditioned upon such ratification of the Plan by the shareholders may be granted prior to such ratification. The Committee may grant Options and Other Rights under the Plan from time to time until the close of business on November 26, 2005. The Board may at any time amend the Plan, provided, however, that without approval of the Company's stockholders there shall be no: (i) increase in the total number of shares covered by the Plan, except by operation of the provisions of Section 11, or the aggregate number of shares of Common Stock which may be issued to any single employee; (ii) change in the class of individuals eligible to receive Options or Other Rights; (iii) reduction in the exercise price of any ISO; (iv) extension of the latest date upon which any ISO may be exercised; (v) material increase of the obligations of the Company or rights of any Optionee under the Plan or any Option or Other Rights granted pursuant to the Plan; or (vi) other change in the Plan that requires stockholder approval under applicable law. No amendment shall adversely affect outstanding Options or Other Rights without the consent of the Optionee. The Plan may be terminated at any time by action of the Board, but any such termination will not terminate Options and Other Rights then outstanding, without the consent of the Optionee.
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference, in the previously filed registration statements on Forms S-3 (File No. 333-44185), S-4 (File Nos. 333-44187 and 333-67765) and S-8 (File Nos. 333-24803, 333-33191, 333-43901, 333-60919, 333-60921 and 333-67499) of Iron Mountain Incorporated, of our report dated April 8, 1999 with respect to the combined financial statements of Data Base, Inc. and Affiliate as of December 31, 1996, 1997, and 1998, and for each of the three years ended December 31, 1998, which appears in this Form 8-K of Iron Mountain Incorporated.
/s/ Moss Adams LLP Seattle, Washington April 14, 1999 |