AGREEMENT AND PLAN OF MERGER by and among NATIONAL STORAGE AFFILIATES TRUST, NSA HOLDING COMPANY II, LLC DLAN CORPORATION, LAMB FAMILY TRUST OF 4/12/1982, and WENDY P. NORDHAGEN, individually February 24, 2020

Exhibit 2





by and among
NATIONAL STORAGE AFFILIATES TRUST,
NSA HOLDING COMPANY II, LLC
DLAN CORPORATION,
LAMB FAMILY TRUST OF 4/12/1982, and
XXXXX X. XXXXXXXXX, individually



February 24, 2020





Table of Contents
Page
Article I THE MERGER
1.01Β The Merger.
1.02Β Effect of the Merger
1.03Β Exchange Procedures.
1.04Β Termination of Rights
1.05Β No Liability
1.06Β Final Closing Calculations
1.07Β Post-Closing Undisclosed Liabilities Adjustment
1.08Β Transaction Adjustments
1.09Β Withholding
1.10Β Tax Treatment
6
Article II THE CLOSING
2.01Β The Closing
2.02Β The Closing Transactions
2.03Β Acknowledgment and Waiver
2.04Β Indemnification Holdback
7
Article III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01Β Organization and Power
3.02Β Subsidiaries
3.03Β Authorization; Valid and Binding Agreement; No Breach
3.04Β Capitalization
8
3.05Β REIT Units
3.06Β Undisclosed Liabilities
3.07Β Absence of Certain Developments
9
3.08Β Property and Assets
9
3.09Β Real Property
3.10Β Tax Matters
3.11Β Material Contracts
11
3.12Β Intellectual Property
3.13Β Litigation
3.14Β Governmental Consents, etc
14
3.15Β Employees
14
3.16Β Insurance
3.17Β Relationship with Customers
3.18Β Compliance with Laws
15
3.19Β Indebtedness
15
3.20Β Bank Accounts
15
3.21Β Affiliated Transactions
15
3.22Β Intentionally omitted
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3.23Β Brokerage
3.24Β Intentionally omitted
3.25Β Intentionally omitted
3.26Β Vote Required
3.27Β Privacy and Data Security
16
3.28Β Accredited Investor
17
3.29Β Investment Company Act
17
3.30Β Acknowledgment
17
3.31Β No Other Representations or Warranties
17
Article IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
4.01Β Organization and Power, REIT Status
4.02Β Authorization
18
4.03Β No Violation
18
4.04Β Governmental Consents, etc
18
4.05Β Absence of Certain Developments
4.06Β NYSE Compliance
4.07Β Brokerage
4.08Β Merger Sub
4.09Β Solvency
19
4.10Β United States Person
19
4.11Β Acknowledgment
19
4.12Β No Other Representations or Warranties
19
Article V COVENANTS OF THE COMPANY
20
5.01Β Conduct of the Business
20
5.02Β Access to Books and Records
5.03Β Efforts to Consummate
23
5.04Β Exclusive Dealing
23
5.05Β Written Consents
23
5.06Β Intentionally omitted
23
5.07Β Termination of Affiliate Agreements
23
5.08Β Notification
23
5.09Β Third Party Consents
24
Article VI COVENANTS OF PARENT
24
6.01Β Access to Books and Records
24
6.02Β Tax Reorganization Qualification
24
6.03Β Notification
24
6.05Β Efforts to Consummate
24
6.06Β Registration of Parent Common Shares
25
6.07Β NYSE Listing
25
Article VII CONDITIONS TO CLOSING
25
7.01Β Conditions to Parent's and Merger Sub's Obligations
25
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7.02Β Conditions to the Company's Obligations
Article VIII Survival; Indemnification
8.01Β Survival.
8.02Β Indemnification
28
8.03Β Certain Limitations
28
8.04Β No Contribution
8.05Β Tax Treatment of Indemnification Payments
8.06Β Defense of Third Party Claims
8.07Β Exclusive Remedies
30
8.08Β Retained Parent Common Shares
30
Article IX TERMINATION
31
9.01Β Termination
31
9.02Β Effect of Termination
32
Article X ADDITIONAL COVENANTS
32
10.01Β Due Diligence
32
10.02Β Disclosure Schedules
32
10.03Β Certain Tax Matters
32
Article XI DEFINITIONS
34
11.01Β Definitions
34
11.02Β Other Definitional Provisions
40
11.03Β Cross-Reference of Other Definitions
40
Article XII MISCELLANEOUS
42
12.01Β Press Releases and Communications
42
12.02Β Expenses
42
12.03Β Notices
42
12.04Β Assignment
44
12.05Β Severability
44
12.06Β References
44
12.07Β Construction
45
12.08Β Amendment and Waiver
45
12.09Β Complete Agreement
45
12.10Β Third-Party Beneficiaries
45
12.11Β Waiver of Trial by Jury
45
12.12Β Parent Deliveries
46
12.13Β Delivery by Email
46
12.14Β Counterparts
46
12.15Β Governing Law
46
12.16Β Jurisdiction
46
12.17Β Remedies Cumulative
47
12.18Β No Recourse
47
12.19Β Specific Performance
47
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12.20Β Confidentiality
47


iv


INDEX OF EXHIBITS
ExhibitΒ AΒ Β Form of Certificate of Merger
ExhibitΒ BΒ Β Form of Statement of Merger
ExhibitΒ CΒ Β Form of Letter of Transmittal





THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of February 24, 2020, is made by and among DLAN Corporation, a Colorado corporation (the "Company"), National Storage Affiliates Trust, a Maryland real estate investment trust ("Parent"), NSA Holding Company II, LLC, a Delaware limited liability company ("Merger Sub"), Lamb Family Trust of 4/12/1982, and Xxxxx X. Xxxxxxxxx, individually (collectively, the "Securityholders"). Parent, Merger Sub, the Company and the Securityholders shall be referred to herein from time to time as a "Party" and collectively as the "Parties." Capitalized terms used and not otherwise defined herein have the meanings set forth in Article XI below.
WHEREAS, Parent is a Maryland real estate investment trust that has elected to qualify as a real estate investment trust within the meaning, and under the provisions, of SectionsΒ 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code") (a "REIT") commencing with its taxable year ended December 31, 2015, and the Company intends to qualify to be taxed as a REIT with respect to its taxable year ending at the Closing Date;
WHEREAS, the Company currently owns (i)Β 225,550 Class A common units of limited partner interest (the "Class A OP Units") in NSA OP, LP, a Delaware limited partnership and wholly owned subsidiary of the Parent (the "OP"), and (ii)Β 225,657 Class X membership interests (the "Class X DownREIT Units" and together with the Class A OP Units, the "REIT Units") in SecurCare American Portfolio, LLC, a Delaware limited liability company and subsidiary of the OP;
WHEREAS, the OP, certain property owners that are subsidiaries of Parent (the "Owners"), SecurCare Self Storage, Inc., a Colorado corporation ("SecurCare") and Xxxxx Xxxxxx, Xxxxxx Xxxxxxxxx and Xxxxx Xxxxxxxxx, each individually (collectively, the "SecurCare Management"), are parties to that certain Facilities Portfolio Management Agreement, dated as of April 28, 2015 (as amended, the "FPMA");
WHEREAS, the OP, the Owners, and SecurCare are parties to those certain asset management agreements (the "AMAs"), whereunder SecurCare agrees to manage certain Managed Properties;
WHEREAS, the Owners and SecurCare are parties to that certain sales commission agreement (the "SCA") with the OP and NSA TRS, LLC, a Delaware limited liability company and subsidiary of the OP ("NSA TRS"), whereunder NSA TRS appoints SecurCare as the sales representative for merchandise sales at the Managed Properties;
WHEREAS, under the terms of the FPMA, at any time following the two-year anniversary of the initial public offering of Parent under the Securities Act of 1933, as amended (the "Securities Act"), SecurCare may initiate a management internalization transaction, referred to in the FPMA as a "Retirement Event," pursuant to which SecurCare and the SecurCare Management (each, a "Manager Party" and collectively, the "Manager Parties") would assign their rights and obligations under the FPMA, the AMAs and the SCA and all of the Manager Parties' intellectual property then owned by or registered in the name of any Manager Party, including, without limitation, all trade names, and trademarks associated with such Manager Party and/or the Managed Properties, to the OP in exchange for the issuance by the OP of a number of Class A OP Units determined in accordance with a formula specified in the FPMA (such assignment and exchange referred to herein as the "Management Internalization Transaction");
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WHEREAS, as a consequence of the Management Internalization Transaction, the OP would internalize and assume responsibility for the management of the Managed Properties;
WHEREAS, SecurCare, the SecurCare Management and Parent have agreed to implement the Management Internalization Transaction and the other transactions that are part of the Company Retirement Event through the merger of SecurCare with and into a newly formed, wholly owned subsidiary of Parent ("SC Merger Sub"), pursuant to which Parent will acquire one hundred percent (100%) of the issued and outstanding equity interests of SecurCare by way of effecting a merger between SC Merger Sub and SecurCare, in exchange for the issuance by Parent of newly issued common shares of Parent (each, a "Parent Common Share" and, collectively, "Parent Common Shares") (the "SecurCare Merger");
WHEREAS, in connection with the Retirement Event, the Company, the Securityholders and Parent have agreed to effectuate a merger of the Company with and into Merger Sub in accordance with the terms of this Agreement, pursuant to which, subject to the satisfaction or waiver by Parent and the Company of the conditions to closing described herein, and in connection with the Closing, Parent will acquire one hundred percent (100%) of the issued and outstanding equity interests of the Company (each, a "Company Share" and, collectively, "Company Shares"), by way of effecting a merger between Merger Sub and the Company, in exchange for the issuance of Parent Common Shares in accordance with SectionΒ 1.02(a);
WHEREAS, the board of directors of the Company has (i) determined that this Agreement and the transactions contemplated hereby (collectively, the "Transactions") are in the best interests of the Company and the Securityholders, (ii) approved this Agreement and declared that the Transactions, including the merger of the Company with and into Merger Sub (the "Merger"), are advisable, (iii) directed that the Merger and the other Transactions be submitted to the Securityholders, and (iv) recommended that the Securityholders approve the Merger and the other Transactions;
WHEREAS, the disinterested members of the board of trustees of Parent have unanimously (i) determined that this Agreement and the Transactions, including the Merger and the issuance of the Parent Common Shares pursuant to this Agreement (collectively, the "Parent Common Share Issuance"), are in the best interests of Parent and the holders of Parent Common Shares, and (ii) approved this Agreement and the Transactions, including the Merger and the Parent Common Share Issuance; and
WHEREAS, the authorizing bodies of Merger Sub have approved this Agreement and the Transactions, including the Merger, upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
Article I
THE MERGER
1.01Β The Merger.
(a)Β Upon the terms and subject to the conditions of this Agreement, at the Effective Time, the Company will be merged with and into Merger Sub in accordance with the
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provisions of the Delaware Limited Liability Company Act (6 Del. C. §§ 18-101 et seq.), as amended from time to time (the "Delaware Act"), and the Colorado Business Corporation Act (the "CBCA"). As a result of the Merger, the separate existence of the Company shall cease and Merger Sub shall continue its existence under the laws of the State of Delaware as the surviving company (in such capacity, Merger Sub is sometimes referred to herein as the "Surviving Company").
(b)Β At the Closing, the Company and Merger Sub shall cause a certificate of merger substantially in the form of ExhibitΒ A hereto (the "Certificate of Merger") to be executed, acknowledged and filed with the Secretary of State of the State of Delaware and make all other filings or recordings required by the Delaware Act in connection with the Merger. Additionally, at the Closing, the Company and Merger Sub shall cause a statement of merger substantially in the form of ExhibitΒ B hereto (the "Statement of Merger") to be executed, acknowledged and filed with the Secretary of State of the State of Colorado and make all other filings or recordings required by the CBCA in connection with the Merger. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware and the Statement of Merger is duly filed with the Secretary of State of the State of Colorado or at such other time as Parent and the Company shall agree and specify in the Certificate of Merger and Statement of Merger (the "Effective Time").
(c)Β From and after the Effective Time, the Surviving Company shall succeed to all the assets, rights, privileges, immunities, powers and franchises and be subject to all of the Liabilities, restrictions, disabilities and duties of the Company and Merger Sub, all as provided in this Agreement and under the Delaware Act and the CBCA.
1.02Β Effect of the Merger. Upon the terms and subject to the conditions of this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof:
(a)Β each Company Share issued and outstanding immediately prior to the Effective Time shall be cancelled in full and converted into the right of each Securityholder thereof to receive from Parent that number of validly issued, fully paid and nonassessable Parent Common Shares equal to the Exchange Ratio as set forth on ScheduleΒ A hereto provided that the number of Parent Common Shares to which each Securityholder will be entitled pursuant to this SectionΒ 1.02(a) will be rounded up to the next whole number of Parent Common Shares to the extent the Exchange Ratio yields any fractional amount of Parent Common Shares; and
(b)Β each unit of membership interest of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one (1) unit of validly issued, fully paid and nonassessable membership interest of the Surviving Company.
1.03Β Exchange Procedures.
(a)Β On the Closing Date, Parent shall deliver to each Securityholder (i)Β a letter of transmittal substantially in the form of ExhibitΒ C attached hereto ("Letter of Transmittal"), which shall specify that delivery shall be effected upon adherence to the procedures set forth in the Letter of Transmittal, and which shall be in a customary form and agreed to by Parent and the Company prior to the Closing, and (ii)Β instructions for use in effecting the surrender of such Company Shares for delivery of such Securityholder's Allocated Consideration.
(b)Β Upon surrender to Parent of Company Shares, together with the Letter of Transmittal, duly completed and validly executed in accordance with the instructions thereto, such
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Securityholders shall be entitled to receive in exchange therefor the Allocated Consideration pursuant to the provisions of this Article I (which Parent Common Shares shall be in uncertificated book-entry form). No interest shall be paid or accrued for the benefit of Securityholders on the Allocated Consideration payable in respect of such Company Shares. If delivery of the Allocated Consideration is to be made to a Person other than a Securityholder, it shall be a condition of delivery that Company Shares so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the Person requesting such delivery shall have paid any transfer and other Taxes required by reason of the delivery of the Allocated Consideration to a Person other than the Securityholder of such Company Shares surrendered or shall have established to the satisfaction of the Surviving Company that such Taxes either have been paid or are not applicable. Until surrendered as contemplated by this SectionΒ 1.03(b), each Company Share shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Allocated Consideration deliverable in respect of such Company Shares.
1.04Β Termination of Rights. All Allocated Consideration delivered upon the surrender of and in exchange for Company Shares in accordance with the terms hereof shall be deemed to have been delivered in full satisfaction of all rights pertaining to such Company Shares. If, after the Effective Time, Company Shares are presented to the Surviving Company or Parent for any reason, they shall be canceled and exchanged for the Allocated Consideration deliverable in respect of the Company Shares previously represented by such Company Shares without any interest thereon.
1.05Β No Liability. None of the Surviving Company or Parent shall be liable to any Securityholder for any Allocated Consideration or other amounts properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. If any Company Share has not been surrendered prior to the time that is immediately prior to the time at which the Allocated Consideration in respect of such Company Share would otherwise escheat to or become the property of any Governmental Entity, any such shares, cash, dividends or distributions in respect of such Company Share shall, to the extent permitted by applicable Law, become the property of Parent, free and clear of all claims or interest of any Person previously entitled thereto.
1.06Β Final Closing Calculations.
(a)Β As promptly as possible, but in any event within seventy-five (75) days after the Closing Date, Parent shall deliver to the Securityholders a statement showing Undisclosed Liabilities as of the Effective Time (the "Closing Statement").
(b)Β The Closing Statement shall be prepared and the Undisclosed Liabilities shall be determined, in accordance with this Agreement. After delivery of either the Closing Statement, the Securityholders and their accountants shall be permitted reasonable access at reasonable times to review the Surviving Company’s and its Subsidiaries’ books and records related to the preparation of the Closing Statement.
(c)Β If the Securityholders have any objections to the Closing Statement, the Securityholders shall deliver to Parent a statement setting forth its objections thereto (an "Objections Statement"). If an Objections Statement is not delivered to Parent within thirty (30) days following the date of delivery of the Closing Statement, the Closing Statement shall be final, binding and non-appealable by the Parties ("Final Closing Statement"). The Securityholders and Parent shall negotiate in good faith to resolve any objections contained in an Objection Statement, but if they do not reach a final resolution within fifteen (15) days after the delivery of the
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Objections Statement, the Securityholders and Parent shall submit such dispute to a nationally recognized independent accounting firm reasonably acceptable to Parent and the Securityholders (the "Dispute Resolution Expert"). Any submissions to the Dispute Resolution Expert must be written and delivered to each party to the dispute. The Dispute Resolution Expert shall act as an expert and not as an arbitrator and shall consider only those items and amounts that are identified in the Objections Statement as items which the Securityholders and Parent are unable to resolve. The Dispute Resolution Expert’s determination shall be based solely on the definition of Undisclosed Liabilities contained herein and the provisions of this Agreement, including this SectionΒ 1.06, and shall not assign a value to any item greater than the greatest value for such items claimed by either party or less than the smallest value for such items claimed by either party. The Securityholders and Parent shall use their commercially reasonable efforts to cause the Dispute Resolution Expert to resolve all disagreements as soon as practicable in amounts between the disputed amounts set forth in the Closing Statement, and the Objections Statement and by no later than thirty (30) days following appointment of the Dispute Resolution Expert. Further, the Dispute Resolution Expert’s determination shall be based solely on the presentations by Parent and the Securityholders that are in accordance with the terms and procedures set forth in this Agreement (i.e., not on the basis of an independent review). The resolution of the dispute by the Dispute Resolution Expert shall be the exclusive process for resolving such disputes and shall be final and binding on and non-appealable by the Parties hereto.
(d)Β The costs and expenses of the Dispute Resolution Expert shall be allocated between Parent, on the one hand, and the Securityholders, on the other hand, based upon the percentage that the portion of the contested amount not awarded to each Party bears to the amount actually contested by such Party. For example, if the Securityholders claim Undisclosed Liabilities are $1,000 greater than the amount determined by Parent, and Parent contests only $500 of the amount claimed by the Securityholders, and if the Dispute Resolution Expert ultimately resolves the dispute by awarding the Securityholders $300 of the $500 contested, then the costs and expenses of arbitration shall be allocated sixty percent (60%) (i.e., 300 Γ· 500) to Parent and forty percent (40%) (i.e., 200 Γ· 500) to the Securityholders. The Securityholders and Parent recognize that the Dispute Resolution Expert may resolve the Objections Statements on an item-by-item basis so that it may choose the Securityholders’ position on some items and Parent’s position on other items or a compromise position.
1.07Β Post-Closing Undisclosed Liabilities Adjustment. After the determination of the Final Closing Statement, if there are Final Undisclosed Liabilities, each Securityholder shall promptly (but in any event within five (5) Business Days following the final determination of the Final Closing Statement) deliver to Parent its Pro Rata Share of the cash equal to the amount of Final Undisclosed Liabilities.
1.08Β Transaction Adjustments. For the avoidance of doubt, the payments that are made between the Parties pursuant to SectionΒ 1.07 will be treated as purchase price adjustments for tax purposes with any payments made by the Securityholders pursuant to such sections treated as the purchase of additional Parent Common Shares.
1.09Β Withholding. Notwithstanding any provision contained herein to the contrary, each of the Surviving Company and Parent shall be entitled to deduct and withhold from the Allocated Consideration to be delivered, and any payment otherwise required to be paid, to any Securityholder, on behalf of the applicable Securityholder, pursuant to this Agreement such amounts as it is required to deduct and withhold with respect to the delivery of such Allocated Consideration or the making of such payment under any provision of applicable Tax Law. If the Surviving Company or Parent, as the case
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may be, so withholds any portion of the Allocated Consideration or any other payments owed to any Person, such amounts shall be treated for all purposes of this Agreement as having been delivered or paid to such Person in respect of which the Surviving Company, or Parent, as the case may be, made such deduction and withholding.
1.10Β Tax Treatment. The Parties intend and agree that, for U.S. federal income tax purposes, (a)Β the Merger is intended to qualify as a reorganization within the meaning of Section 368(a)(1)(A) of the Code, and (b)Β this Agreement be, and hereby is adopted as, a "plan of reorganization" for purposes of SectionΒ 354 and 361 of the Code. Unless otherwise required by applicable Law, the Parties shall file all U.S. federal, state and local Tax Returns in a manner consistent with the intended tax treatment of the Merger described in this SectionΒ 1.10, and no Party shall take a position inconsistent with such treatment.
Article II
THE CLOSING
2.01Β The Closing. The closing of the Transactions (the "Closing") shall take place at the offices of Xxxxxxxx Chance US LLP located at 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00Β a.m. on the second (2nd) Business Day following full satisfaction or due waiver of all of the closing conditions set forth in Article VII hereof (other than those to be satisfied at the Closing itself, but subject to the satisfaction or waiver of such conditions) or on such other date and/or time as is mutually agreed to in writing by Parent and the Securityholders. The date and time of the Closing are referred to herein as the "Closing Date."
2.02Β The Closing Transactions. Subject to the terms and conditions set forth in this Agreement, the Parties shall consummate the following transactions at the Closing:
(a)Β as soon as practicable following the Closing, the Company and Merger Sub shall cause the Certificate of Merger and Statement of Merger to be executed, acknowledged and filed with the Secretary of State of the State of Delaware and the Secretary of State of the State of Colorado, respectively;
(b)Β in accordance with SectionΒ 1.03, Parent shall issue and deliver, or cause to be delivered, to each Securityholder its Allocated Consideration (less the pro rata portion of the Retained Parent Common Shares);
(c)Β Parent and the Company shall make such other deliveries as are required by Article VI hereof.
2.03Β Acknowledgment and Waiver. The Securityholders each agree that the calculations set forth in the Payment Schedule can be relied on in full by Parent and Merger Sub, and that the aggregate Closing Consideration and the disbursement of the Allocated Consideration in accordance with the Payment Schedule is the full and final amount owed to the Securityholders in exchange for the conversion and cancellation of the Company Shares as set forth in SectionΒ 1.02, accounting for the value of the REIT Units and that upon satisfying its payment obligations pursuant to SectionΒ 2.02(b) subject to compliance with Sections 1.07 andΒ 8.08, Parent shall have satisfied in full any payment or other obligations in respect of the Company Shares of the Securityholders that would otherwise be outstanding pursuant to the terms of the FPMA or otherwise.
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2.04Β Indemnification Holdback. At the Closing, Parent shall deduct from the Closing Consideration the amount of Parent Common Shares equal to $750,000, based on the Value of such shares on December 31, 2019, rounded up to the nearest whole number to avoid any fractional shares (the "Retained Parent Common Shares"), which shall be held by Parent in a segregated brokerage account (the "Indemnification Account") along with quarterly dividends earned on the Retained Parent Common Shares (the "Retained Dividends"), for the benefit of the Securityholders, until such Retained Parent Common Shares and Retained Dividends are delivered to the Securityholders pursuant to the provisions of SectionΒ 8.08(b). For the avoidance of doubt, Retained Dividends shall be used first in satisfaction of any claims, prior to liquidating and using any Retained Parent Common Shares that are ultimately used for the satisfaction of any claim under Section 8.02, and any such Retained Dividends (including any Retained Dividends pertaining to any Retained Parent Common Shares where such shares are used for the satisfaction of any claim under Section 8.02, because for example at the time of payment in settlement of any such claim those dividends had not been declared and paid) will not be delivered to Securityholders, but rather shall be returned to, and remain the exclusive property of, Parent
Article III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as follows, except as set forth in the Disclosure Schedules (it being agreed that disclosure of any item in any section of the Disclosure Schedules shall be deemed disclosed with respect to any other section but only to the extent the relevance of a disclosure statement therein to a section of Article III is reasonably apparent on its face):
3.01Β Organization and Power. The Company is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Colorado, and the Company has all requisite corporate power and authority necessary to own, lease and operate its properties and assets and to carry on its businesses as now conducted. The Company is duly licensed, registered or qualified to do business in every jurisdiction in which its ownership of property and assets or the conduct of its business as now conducted requires it to be licensed, registered or qualified. The Company has made available to Parent prior to the date hereof true and complete copies of its articles of incorporation and all amendments thereto or restatements thereof and its bylaws or equivalent as currently in effect.
3.02Β Subsidiaries. The Company does not own, nor does it have any interest in, any shares or have an ownership interest in any other Person, other than the REIT Units.
3.03Β Authorization; Valid and Binding Agreement; No Breach.
(a)Β The execution, delivery and performance of this Agreement by the Company, and each other agreement or instrument to be executed in connection herewith, and the consummation and performance of the transactions contemplated hereby and thereby, have been duly and validly authorized by all requisite corporate action, other than the Company Requisite Approval, and, no other corporate action or authorization, other than the Company Requisite Approval, as the case may be, on behalf of the Company is necessary to authorize the execution, delivery or performance of this Agreement or the consummation by the Company of the Transactions, and assuming the due and valid authorization, execution and delivery of this Agreement by the Company and that this Agreement is a legal, valid, and binding obligation of each of Parent and Merger Sub, this Agreement constitutes a legal, valid and binding obligation of
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the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by bankruptcy Laws, other similar Laws affecting creditors’ rights, and general principles of equity affecting the availability of specific performance and other equitable remedies.
(b)Β Except for (x) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, and (y)Β the filing of the Statement of Merger with the Secretary of State of the State of Colorado, the execution, delivery, performance and compliance with the terms and conditions of this Agreement by the Company and Securityholders and the consummation of the transactions contemplated hereby and thereby by the Company and Securityholders will not (i)Β violate, conflict with, result in any breach of, or constitute a default under any of the provisions of the articles of incorporation or bylaws (or equivalent organizational documents) of the Company, (ii)Β other than as set forth on ScheduleΒ 3.03(b), violate or result in a breach of or constitute a violation or default under any Material Contract, (iii)Β violate any Law to which the Company is subject, or (iv)Β cause the suspension or revocation of any Permit.
3.04Β Capitalization.
(a)Β The authorized capital stock of the Company consists of 1,000,000 shares of common stock, of which 451,208 shares are issued and outstanding as of the close of business on the date of this Agreement. ScheduleΒ 3.04(a) sets forth a complete and accurate list of the name of each Securityholder, and the amount and type of Company Shares held by such Securityholder as of the date hereof, each of which are, and will be immediately prior to the Effective Time, solely held of record and beneficially by such Persons, free and clear of Liens. All Company Shares are duly authorized, validly issued, fully paid and nonassessable.
(b)Β Except as set forth on ScheduleΒ 3.04(b), there are no (i)Β options, warrants, stock appreciation rights, equity-based performance units, profits interests, calls, rights, phantom appreciation, profit participation or similar right, agreements, or convertible, exercisable or exchangeable securities to which the Company or any of its Subsidiaries is a party, in each case relating to the issuance of equity securities or other interests of the Company, (ii)Β other commitments pursuant to which the Company is or may become obligated to provide funds to, make an investment in, or contribute capital to, any Person, (iii)Β securities of the Company reserved by the Company for issuance for any purpose, (iv) statutory or contractual preemptive rights or rights of first refusal with respect to, or obligation to repurchase, redeem or otherwise acquire, the Company Shares, (v)Β rights, plans, anti-takeover plans, voting trusts or proxies with respect to any Company Shares to which the Company or any of its Subsidiaries is a party, or (vi)Β outstanding Contracts of the Company to make any distribution of any kind with respect to any Company Shares or any securities convertible, exercisable or exchangeable into any such equity interest.
3.05Β REIT Units. The Company owns REIT Units in the amounts set forth in the Recitals of this Agreement. All of the REIT Units are, and will be immediately prior to the Effective Time, held of record solely by the Company, free and clear of Liens.
3.06Β Undisclosed Liabilities. Except as set forth on ScheduleΒ 3.06, the Company does not have any Liabilities that would be required to be disclosed on financial statements (excluding footnotes) prepared under GAAP, whether known or unknown, direct or indirect, accrued or fixed, absolute or contingent, matured or unmatured or otherwise, other than Liabilities that (i) have been incurred in the
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ordinary course of business since December 31, 2019, and (ii) are expressly provided for under this Agreement or that have been incurred in connection with the Transactions.
3.07Β Absence of Certain Developments. Since the Company's date of incorporation, there has not been, with respect to the Company, any:
(a)Β event, occurrence or development that has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;
(b)Β action taken that, if taken during the period from the date of this Agreement through the Closing Date without Parent's consent, would constitute a breach of SectionΒ 5.01(a).
3.08Β Property and Assets.
(a)Β The Company has good and marketable title to, or other valid right to use, free and clear of any Liens (other than Permitted Liens), all of the assets, property and rights that it owns. The assets, property and rights set forth on ScheduleΒ 3.08(a), constitute all the material assets, property and rights owned by the Company and all of the material property used in, and required for the operation of, the business of the Company as currently conducted. Such assets, property and rights are sufficient for the Company to conduct its business as currently conducted. All material items of tangible property used in the operation of the business of the Company are in good operating condition, except for normal wear and tear.
(b)Β Except as set forth on ScheduleΒ 3.08(b), no approval or consent of any Person is required so that the interests of the Company and its Subsidiaries in such property shall continue in full force and effect and be enforceable by Parent following Closing.
3.09Β Real Property. The Company does not own or lease any real property.
3.10Β Tax Matters.
(a)Β The Company has timely filed (or has had timely filed on its behalf) with the appropriate taxing authority all Tax Returns that it was required to file (or that was required to have been filed on its behalf), taking into account any extensions of time to file, and all such Tax Returns were true, correct and complete in all respects. All Taxes of the Company (whether or not shown as owing by the Company on such Tax Returns) have been timely paid in full.
(b)Β The Company has not waived any statute of limitations with respect to the assessment of Taxes or consented to extend the time in which any Tax may be assessed or collected by any Tax authority, which extension is in effect as of the date hereof.
(c)Β The Company has not requested or been granted an extension of the time for filing any Tax Return to a date later than the Closing Date, other than customary automatic extensions to file any Tax Returns.
(d)Β The Company has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other Person and the Company has maintained records of such withholding as required under applicable Law.
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(e)Β There are no Liens for amounts of Taxes (other than Liens for Taxes not yet due and payable) upon the assets of the Company.
(f)Β The Company is not the subject of a Tax audit, examination or other administrative or judicial proceeding now in progress or threatened in writing with respect to Taxes or Tax Returns, and no such Tax audit, examination or other administrative or judicial proceedings have occurred since the date of incorporation of the Company. No deficiency for Taxes of the Company has been claimed, proposed or assessed, or threatened by any Governmental Entity, which deficiency has not yet been settled except for such deficiencies which are being contested in good faith.
(g)Β The Company is not a party to or bound by any Tax allocation or Tax sharing agreement or is liable for Tax of any Person, whether as a transferee or successor, by operation of Law, by Contract, or otherwise. After the Closing Date, the Company shall not be bound by any such Tax allocation or Tax sharing agreements or similar arrangements or have any liability thereunder for amounts due in respect of periods prior to the Closing Date.
(h)Β The Company is not, nor has it been, a party to any understanding or arrangement described in SectionΒ 6662(d)(2)(C)(ii) of the Code or a "reportable transaction" within the meaning of SectionΒ 6707A(c)(1) of the Code or Treasury Regulations SectionΒ 1.6011-4(b)(1).
(i)Β The Company has not requested, received and is not subject to any private letter ruling from the Internal Revenue Service or any similar ruling with any other Tax authority.
(j)Β The Company is not treated, and has not been treated, for Tax purposes as a resident in a country other than the country of its organization and the Company does not have, nor has it had, a branch, agency, trade or business, or permanent establishment for Tax purposes in a country other than the country of its organization. No claim has been made by any Tax authority in a jurisdiction where the Company has not filed a Tax Return that it is or may be subject to Tax by such jurisdiction, and no reason for such a claim exists.
(k)Β Neither Parent nor Merger Sub, as a successor to the Company, will be required for Tax purposes to include any material item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i)Β change in method of accounting made on or prior to the Closing Date; (ii)Β "closing agreement" as described in SectionΒ 7121 of the Code (or any corresponding or similar provision of state, local, or foreign income Tax Law) executed on or prior to the Closing Date; (iii)Β installment sale or open transaction made or entered into on or prior to the Closing Date; (iv)Β prepaid amount received on or prior to the Closing Date; or (v)Β election under SectionΒ 108(i) of the Code made on or prior to the Closing Date.
(l)Β The Company (and any predecessor of the Company) has had in place a timely and valid election to be taxed as, and has qualified as, an S corporation within the meaning of SectionsΒ 1361 and 1362 of the Code (and any applicable provisions of state or local law) at all times since the Company's taxable year ended December 31, 2018 for all federal and applicable state and local income Tax purposes, and the Company has qualified as an S corporation at all times up to and including its taxable year ended December 31, 2019. The Company will elect and qualify (assuming Parent qualifies as a REIT) to be taxed as a REIT with respect to its taxable year commencing January 1, 2020 and ending on the Closing Date. Any existing or prior trust
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shareholder of the Company (including Lamb Family Trust of 4/12/1982) has qualified as an eligible S corporation shareholder (under Section 1361(c)(2) of the Code and Treasury Regulations thereunder) at all times since its formation.
(m)Β The Company has not taken any action or failed to take any action which action or failure would reasonably be expected to jeopardize or prevent the Merger from qualifying as a reorganization within the meaning of SectionΒ 368(a)(1)(A) of the Code.
(n)Β Each Securityholder is a United States Person within the meaning of SectionΒ 1445 of the Code, and accordingly no withholding applies for U.S. federal, state, or local Tax purposes with respect to any portion of the consideration received pursuant to the Merger.
(o)Β This SectionΒ 3.10 constitutes the sole and exclusive representations and warranties of the Company and its subsidiaries with respect to Taxes related to the Company and its subsidiaries, and no other representation or warranty contained in any other section of this Agreement shall apply to any such Tax matters and no other representation or warranty, express or implied, is being made with respect thereto.
3.11Β Material Contracts.
(a)Β Except as set forth on ScheduleΒ 3.11(a), or for any Contracts to which Parent or any of its Subsidiaries is party, the Company as of the date hereof is not party to or bound by any:
(i)Β agreement or indenture relating to the present or future borrowing of money or to mortgaging, pledging or otherwise placing a Lien on any portion of the assets of the Company;
(ii)Β (A) guaranty of any present or future obligation for borrowed money, or (B) other guaranty in excess of $100,000;
(iii)Β loan or credit agreement, mortgage, indenture, note or other Contract or instrument evidencing indebtedness for borrowed money by the Company or any Contract or instrument pursuant to which indebtedness for borrowed money may be incurred or is guaranteed by the Company;
(iv)Β lease or agreement under which it is lessee of, or holds or operates any property owned by any other party, for which the annual rental exceeds $100,000 (excluding the Real Property Leases);
(v)Β (A) product design or development Contract material to the business of the Company as currently conducted, (B) consulting Contract, (C) indemnification Contract (other than indemnity obligations provided in the ordinary course of business), (D) Intellectual Property rights, license or royalty Contract that requires the payment or potential payment by the Company in excess of $100,000 in the aggregate during any one (1)-year period, (E)Β merchandising, sales representative or distribution Contract for the business of the Company as currently conducted, or (F) Contract granting a right of first refusal or first negotiation;
(vi)Β Contract or group of related Contracts with the same party for the purchase or supply of products or services that provide for annual payments by or to the
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Company in excess of $100,000 during the trailing twelve (12)month period ending on December 31, 2019;
(vii)Β any Contract relating to the acquisition, disposition or lease by the Company of properties or assets for, in each case, aggregate consideration of more than $100,000;
(viii)Β material license agreement relating to the use of any material thirdparty Intellectual Property having a one-time or annual fee in excess of $100,000 (other than licenses (A) for commercially available software, (B) granted by vendors for purposes related to the vendor's provision of services to the Company or (C) obtained in the ordinary course of business);
(ix)Β Contract that purports to limit, curtail or restrict the ability of any of the Company or any Subsidiary to (A) compete in any geographic area or engage in any line of business, (B) sell products or deliver services to any person, (C) offer to supply any type of products or services, or (D) solicit potential customers, directors, managers, officers or employees;
(x)Β employment agreement or Contract with any independent contractors or consultants (or similar arrangements) to which the Company is a party and which are not cancellable either (i)Β without penalty or (ii)Β without more than thirty (30) days' notice;
(xi)Β Contract with any current or former director or officer of the Company or any Subsidiary or any Affiliate of the Company;
(xii)Β voting agreement or registration rights agreement;
(xiii)Β "standstill" agreement or similar Contract;
(xiv)Β Contract that restricts or otherwise limits the payment of dividends or other distributions on Company Shares;
(xv)Β Contract pursuant to which the Company or any Subsidiary is compelled to supply any of its present or future customers on the basis of a most favored customer principle;
(xvi)Β Contract that requires the Company to purchase its total requirements of any product or service from a third party;
(xvii)Β Contract that requires the payment or potential payment from the Company or any Subsidiary in excess of $100,000 per annum;
(xviii)Β Contract with any Governmental Entity;
(xix)Β Contract which provides for the indemnification of any director or officer of the Company;
(xx)Β Contract which provides for the sharing of revenues, profits, losses, costs or liabilities;
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(xxi)Β any joint venture, strategic alliance, reseller agreement, or partnership agreement related to the formation, creation, operation or management of any joint venture or partnership that is material to the Company; or any other referral, management or joint venture agreement; and
(xxii)Β any express written commitment or agreement to enter into any of the foregoing.
(b)Β Parent either has been supplied with, or has been given access to, a true and correct copy of all written Contracts together with any and all amendments thereto that are referred to on ScheduleΒ 3.11(a) (collectively, the "Material Contracts"). Each Material Contract, assuming due power and authority of, and due execution and delivery by, the other party or parties thereto, is valid and binding on the Company and is in full force and effect and enforceable against the Company and has been entered into in the ordinary course of business consistent with past practice.
(c)Β As of the date of this Agreement, the Company has not violated or breached, or committed any default under, any Material Contract; (i) to the Company's Knowledge, as of the date of this Agreement no other Person has violated or breached, or committed any material default under, any Material Contract; and (ii) as of the date of this Agreement to the CompanyΒ΄s Knowledge, no event has occurred that has violated or breached, nor does any condition exist that with or without notice or lapse of time or both would result in a violation or breach of, any of the provisions of any Material Contract.
(d)Β The Company has not received any written notice from any party to a Material Contract relating to such party's intent to adversely modify, terminate or fail to renew the arrangements and relationships set forth therein, or asserting a material breach by the Company of such arrangements. Entry into this Agreement by the Company, or the consummation by the Company of the Transactions, does not and will not give any party to a Material Contract the right to terminate such Material Contract under the terms of such contracts or condition or delay consummation of the Transactions.
3.12Β Intellectual Property.
(a)Β The Company does not own any patents, registrations and applications for registration (including patents, patent applications, registered trademarks and applications for registration, and domain names) or any other Intellectual Property.
(b)Β The conduct of the business of the Company as currently conducted (including products and services of the Company) does not infringe upon or constitute misappropriation of any thirdparty Intellectual Property.
(c)Β There is no pending Legal Proceeding or, to the Company's Knowledge, claim threatened in writing that the Company has, during the three (3)-year period prior to the date of this Agreement, infringed or misappropriated, or is infringing or misappropriating, upon any Intellectual Property rights of any third Person.
3.13Β Litigation. Except as set forth on Schedule 3.13, there is no, nor has there been for the past three (3) years, any Action pending, at law or in equity, or before or by any Governmental Entity, or threatened in writing against the Company or its properties, assets or business. The Company is not, and
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has not for the past three (3) years been, subject to any unsatisfied material settlement, stipulation, order, writ, judgment, injunction, decree, ruling, determination or award of any court or of any Governmental Entity.
3.14Β Governmental Consents, etc. Except (i)Β for the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, (ii)Β for the filing of the Statement of Merger with the Secretary of State of the State of Colorado, and (iii) as set forth on ScheduleΒ 3.14, neither the Company nor the Securityholders are required to submit any notice, report or other filing with any Governmental Entity in connection with the execution, delivery or performance by it of this Agreement or the consummation of the Transactions. Except as set forth on ScheduleΒ 3.14, no material consent, approval, license or authorization of or the designation, declaration or filing with any Governmental Entity is or will be required to be obtained by the Company in connection with its execution, delivery or performance of this Agreement or the consummation by the Company of any of the Transactions.
3.15Β Employees.
(a)Β Neither the Company nor any of its Subsidiaries has ever, directly or indirectly, (i) employed or engaged any employee, independent contractor, consultant, temporary employee, leased employee, or other service provider, (ii) had any Liability with respect to, or any obligation to pay compensation or provide benefits to, any employee, independent contractor, consultant, temporary employee, leased employee, or other service provider of any Person, or (iii) been a party to or otherwise bound by any collective bargaining agreement or other agreement with a labor union, works council or other labor organization. The Company and its Subsidiaries are in compliance in all material respects with all applicable Laws relating to employment and employment practices. There has never been any Action against the Company or any of its Subsidiaries, and no such Action is threatened, by or with any Governmental Entity or arbitrator relating to any current or former applicant, employee, consultant, volunteer, intern or independent contractor of any Person or alleging violations of any federal, foreign, state, local or other Laws relating to labor, employment and employment practices and no such Actions or allegations have been resolved by entering into a settlement agreement.
(b)Β Neither the Company nor any of its Subsidiaries has ever, directly or indirectly, sponsored, maintained, contributed to (or been required to contribute to) or had, or could have, any Liability (including any ERISA Affiliate Liability) with respect to any Plan. There has never been any Action against the Company or any of its Subsidiaries, and no such Action is threatened, relating to any Plan.
3.16Β Insurance. ScheduleΒ 3.16 sets forth a true, correct and complete list of each insurance policy maintained by the Company as of the date hereof. All of the insurance policies of the Company are in full force and effect, and the Company is not in material default with respect to its obligations under any of such insurance policies. There are currently no claims pending against the Company under any insurance policy currently in effect and covering the property or employees of the Company, and all premiums due and payable with respect to the policies maintained by the Company have been paid to date (or will be paid prior to the Closing Date).
3.17Β Relationship with Customers.
(a)Β Since January 1, 2019, the Company has had, and as of the date of this Agreement has, no material customers.
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(b)Β The Company has no material strategic partner, joint venture arrangement, or agency or similar relationship other than its relationship with Parent and its Affiliates.
3.18Β Compliance with Laws. The Company is, and for the past five (5) years, the Company has been in all material respects, in compliance with all Laws applicable to it. All approvals, filings, permits, licenses, consents, waivers, exemptions, registrations, or orders of Governmental Entities (collectively, "Permits") required to conduct the business of the Company are in the possession of the Company, are in full force and effect and are being complied with in all material respects and will not be affected by the consummation of the Transactions. The Company has in all material respects made all applicable filings with any Governmental Entity which are required to be filed, in each case where such filing is necessary for the lawful conduct of the business. As of the date hereof, there is no material investigation, proceeding or disciplinary action (including fines) currently pending, or to the Company's Knowledge, threatened in writing against the Company by a Governmental Entity. In the past five (5) years, the Company has not received written notice from a Governmental Entity that: (a) claimed or alleged that the Company was not in compliance with any Laws applicable to it, any of its properties or other assets or its business or operations; or (b) was considering the amendment, termination, suspension, revocation or cancellation of any Permit. ScheduleΒ 3.18 sets forth a true, complete and correct list of all material Permits maintained by the Company.
3.19Β Indebtedness. Except as set forth on ScheduleΒ 3.19, the Company has no Indebtedness. The Company is not in default in the payment of the principal of or interest or premium on any such Indebtedness, and no event has occurred or is continuing under the provisions of any instrument, document or agreement evidencing or relating to any such Indebtedness which with the lapse of time or the giving of notice, or both, would constitute an event of default thereunder.
3.20Β Bank Accounts. ScheduleΒ 3.20 sets forth each of the bank accounts of the Company as of the date hereof and the employees of the Company that are authorized signatories with respect to such accounts.
3.21Β Affiliated Transactions. Except as set forth on ScheduleΒ 3.21, no officer, member of the board of directors or Affiliate of the Company or any individual in such officer's or director's immediate family is a party to any Contract or transaction with the Company (other than any intercompany, equity or capital stock issuance, employment, indemnification or compensation-related Contracts, all of which have been disclosed to Parent) (an "Affiliate Agreement"). The Affiliate Agreements set forth on ScheduleΒ 3.21 represent the only Affiliate Agreements in existence and true, correct and complete copies of all such Affiliate Agreements have been provided to Parent.
3.22Β Intentionally omitted.
3.23Β Brokerage. There are no claims for brokerage commissions, finders' fees or similar compensation in connection with the Transactions based on any agreement made by or on behalf of the Company for which Parent or the Surviving Company would be liable following the Closing.
3.24Β Intentionally omitted.
3.25Β Intentionally omitted.
3.26Β Vote Required. The Company Requisite Approval, which will be obtained prior to the third (3rd) Business Day following the date of this Agreement, is the only vote of the Securityholders required to approve this Agreement and the Transactions, including the Merger.
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3.27Β Privacy and Data Security.
(a)Β Except with respect to systems utilized by the Company that are provided by Parent or its Affiliates (to which Company makes no representation or warranty) (theΒ "Parent IT Systems"), the Company is in material compliance with all applicable Data Protection Laws.
(b)Β Since January 1, 2017, the Company has not received any subpoenas, written demands, or other written notices from any Governmental Entity investigating, inquiring into, or otherwise relating to any actual or potential violation of any Data Protection Laws. To the Company's Knowledge, the Company is not under investigation by any Governmental Entity for any actual or potential violation of any Data Protection Laws, and no notice, complaint, claim, enforcement action, or litigation has been served on, or initiated against the Company alleging violation of any Data Protection Laws.
(c)Β Other than the Parent IT Systems, the Company owns or has a valid right to access and use all material computer systems, networks, hardware, software, databases, websites, and equipment used by the Company to process, store, maintain and operate data, information, and functions used in connection with the business of the Company (the "Company IT Systems"). Except as set forth on ScheduleΒ 3.27(c), the Company IT Systems: (i)Β are in satisfactory working order, are scalable to meet current and reasonably anticipated demand, and to the Company's Knowledge, are substantially free from reproducible programming errors or defects; (ii)Β have reasonably appropriate security, back-ups, disaster recovery arrangements, and hardware and software support and maintenance to minimize the risk of material error, breakdown, failure, or security breach occurring; and (iii) are configured and maintained in accordance with customary business practices to minimize the effects of viruses and, to the Company's Knowledge, do not contain viruses or other malicious code, faults or other errors or effects that disrupt or adversely affect in any material respect their functionality.
(d)Β The Company has taken commercially reasonable steps to implement and follow policies and procedures consistent with industry practices and designed to: (i)Β identify security breach risks relating to the Company IT Systems, including through periodic testing; (ii)Β prevent security breaches; (iii)Β identify, document and remediate actual or suspected security breaches relating to the Company IT Systems; and (iv)Β conduct training for all new and existing employees (at least annually), consultants, agents and contractors of the Company, with such training appropriate to their level and type of service to the Company, in recognizing and minimizing security breach risks relating to the Company IT Systems and the data held by the Company.
(e)Β The Company has taken commercially reasonable steps to protect Personal Data in the Company's possession and/or control from unauthorized use, access, disclosure, and modification.
(f)Β The Company has not experienced any material breakdown, failures, crashes, security breaches, unauthorized access or ransomware attack, unauthorized use, or disclosure, or other material adverse events related to the Company IT Systems or Personal Data that has caused disruption or damage to the operation of the business of the Company or that would require notification of individuals, law enforcement or any Governmental Entity in the last three (3) years. There are no pending complaints, actions, fines, or other penalties facing the Company in
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connection with any such failures, crashes, security breaches, unauthorized access, use, or disclosure, or other adverse events or incidents.
3.28Β Accredited Investor. Each Securityholder is an "accredited investor" (as defined in RegulationΒ D promulgated under the Securities Act).
3.29Β Investment Company Act. The Company is not, and as of immediately prior to the Effective Time will not be, required to be registered as an investment company under the Investment Company Act of 1940.
3.30Β Acknowledgment. In entering into this Agreement, the Company has relied solely upon its own investigation and analysis and the representations and warranties of Parent and Merger Sub set forth in this Agreement, and the Company acknowledges that, other than as set forth in this Agreement, none of Parent and Merger Sub or any of their respective directors, officers, employees, Affiliates, stockholders, agents or representatives makes or has made any representation or warranty, either express or implied, as to the accuracy or completeness of any of the information provided or made available to the Company and its agents or representatives prior to the execution of this Agreement.
3.31Β No Other Representations or Warranties. NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT TO THE CONTRARY, except for the representations and warranties EXPRESSLY made by THE COMPANY in this Article III AND ANY OTHER REPRESENTATION SET FORTH BY THE COMPANY IN ANY OTHER DOCUMENT OR CERTIFICATE EXECUTED OR DELIVERED ON OR AFTER THE DATE HEREOF IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS, NEITHER THE COMPANY OR ANY AFFILIATE THEREOF nor any other Person makes any representation or warranty with respect to the Company or any other Person or their respective businesses, operations, assets, liabilities, condition (financial or otherwise) or prospects, notwithstanding the delivery or disclosure to PARENT, MERGER SUB or any of THEIR RESPECTIVE Affiliates or representatives of any documentation, forecasts, projections or other information with respect to any one or more of the foregoing. except for the representations and warranties EXPRESSLY made by THE company in this Article III AND ANY OTHER REPRESENTATION SET FORTH BY THE COMPANY IN ANY OTHER DOCUMENT OR CERTIFICATE EXECUTED OR DELIVERED ON OR AFTER THE DATE HEREOF IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS, ALL OTHER REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, ARE EXPRESSLY DISCLAIMED BY THE company.
Article IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
Parent and Merger Sub, jointly and severally, represent and warrant to the Company that:
4.01Β Organization and Power, REIT Status. Parent is a Maryland real estate investment trust within the meaning of Section 856(a) of the Code and is duly formed, organized, validly existing and in good standing under the Laws of the State of Maryland, with full power and authority necessary to enter into this Agreement and perform its obligations hereunder. Merger Sub is a limited liability company duly formed, organized, validly existing and in good standing under the Laws of the State of Delaware, with full power and authority necessary to enter into this Agreement and perform its obligations hereunder.
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4.02Β Authorization. The execution, delivery and performance of this Agreement by each of Parent and Merger Sub and each other agreement or instrument to be executed in connection herewith and the consummation and performance of the transactions contemplated hereby and thereby have been duly and validly authorized by all requisite corporate or limited liability company action, as the case may be, and no other action or authorization, as the case may be, on behalf of Parent or Merger Sub is necessary to authorize the execution, delivery or performance of this Agreement or the consummation by Parent or Merger Sub of the Transactions. This Agreement has been duly executed and delivered by Parent and Merger Sub and, assuming that this Agreement is a legal, valid and binding obligation of the Company, this Agreement constitutes a legal, valid and binding obligation of each of Parent and Merger Sub, enforceable against such party in accordance with its terms, except as enforceability may be limited by bankruptcy Laws, other similar Laws affecting creditors' rights and general principles of equity affecting the availability of specific performance and other equitable remedies.
4.03Β No Violation. Except for (i) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, and (ii)Β the filing of the Statement of Merger with the Secretary of State of the State of Colorado, the execution, delivery, performance and compliance with the terms and conditions of this Agreement by Parent and Merger Sub and the consummation of the transactions contemplated hereby and thereby by Parent and Merger Sub will not (w) violate, conflict with, result in any breach of, or constitute a default under any of the provisions of the articles of incorporation or bylaws (or equivalent organizational documents) of Parent or Merger Sub, (x) other than as set forth on Schedule 4.03, violate or result in a breach of or constitute a violation or default under any material contract to which Parent or Merger Sub is a party, (y) violate any Law to which either of Parent or Merger Sub is subject, or (z) cause the suspension or revocation of any Permit of Parent or Merger Sub.
4.04Β Governmental Consents, etc. Except for (i)Β the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, and (ii)Β the filing of the Statement of Merger with the Secretary of State of the State of Colorado, neither Parent nor Merger Sub is required to submit any notice, report or other filing with any Governmental Entity in connection with the execution, delivery or performance by it of this Agreement or the consummation of the Transactions and no material consent, approval, license or authorization of or the designation, declaration or filing with any Governmental Entity or any other party or Person is required to be obtained by Parent or Merger Sub in connection with its execution, delivery and performance of this Agreement or the consummation of the Transactions. Except as set forth on Schedule 4.04, no material consent, approval, license or authorization of or the designation, declaration or filing with any Governmental Entity is or will be required to be obtained by Parent or Merger Sub in connection with its execution, delivery or performance of this Agreement or the consummation by Parent or Merger Sub of any Transactions.
4.05Β Absence of Certain Developments. There has not been, with respect to the Parent, it subsidiaries or Merger Sub, any event, occurrence or development that has had, or could reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
4.06Β NYSE Compliance. To the Parent's knowledge, it is in compliance with all applicable listing requirements of NYSE.
4.07Β Brokerage. Except for fees and expenses of the Persons set forth on ScheduleΒ 4.07, there are no claims for brokerage commissions, finders' fees or similar compensation in connection with the Transactions based on any agreement made by or on behalf of Parent or Merger Sub.
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4.08Β Merger Sub. Merger Sub is a newly organized limited liability company, formed solely for the purpose of engaging in the Transactions. Merger Sub has not engaged in any business activities or conducted any operations other than in connection with the Transactions. Merger Sub is a wholly owned Subsidiary of Parent.
4.09Β Solvency. Assuming (a)Β the representations and warranties set forth in Article III are true and correct, (b)Β compliance in all material respects by the Company with the obligations set forth in SectionΒ 5.01, and (c)Β immediately prior to the Closing Date, the Company is Solvent (as defined below), then immediately after giving effect to the Transactions, the Surviving Company and its Subsidiaries shall be Solvent. For the purposes of this SectionΒ 4.09, the term "Solvent" when used with respect to a Person means that, as of the date of determination, such Person shall be able to pay their respective debts as they become due and shall own property which has a fair saleable value greater than the amounts required to pay its debts (including a reasonable estimate of the amount of all contingent Liabilities), and have adequate capital to carry on its respective businesses.
4.10Β United States Person. None of the transactions, including the Merger, are "covered transactions" (as defined in SectionΒ 721 of the Defense Production Act of 1950, as amended, including the implementing regulations thereof codified at 31Β C.F.R.Β PartΒ 800) or a "pilot program covered transaction" (as defined by SectionΒ 1727(c) of the Foreign Risk Review Modernization Act of 2018, including implementing regulations thereof codified at 31Β C.F.R.Β PartΒ 801).
4.11Β Acknowledgment. Each of Parent and Merger Sub acknowledges and agrees that it has conducted its own independent review and analysis of the business, assets, condition and operations of the Company. In entering into this Agreement, Parent and Merger Sub have relied solely upon their own investigation and analysis and the representations and warranties of the Company set forth in this Agreement, and each of Parent and Merger Sub acknowledges that, other than as set forth in this Agreement, neither the Company, nor any of their respective directors, officers, employees, Affiliates, stockholders, agents or representatives, makes or has made any representation or warranty, either express or implied, as to the accuracy or completeness of any of the information provided or made available to each of Parent and Merger Sub and their respective agents or representatives prior to the execution of this Agreement.
4.12Β No Other Representations or Warranties. NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT TO THE CONTRARY, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY MADE BY PARENT AND MERGER SUB IN THIS Article IV, NONE OF PARENT OR MERGER SUB, ANY AFFILIATE THEREOF OR ANY OTHER PERSON MAKES ANY REPRESENTATION OR WARRANTY WITH RESPECT TO PARENT AND MERGER SUB OR ANY OTHER PERSON OR THEIR RESPECTIVE BUSINESSES, OPERATIONS, ASSETS, LIABILITIES, CONDITION (FINANCIAL OR OTHERWISE) OR PROSPECTS, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE COMPANY OR ANY OF ITS AFFILIATES OR REPRESENTATIVES OF ANY DOCUMENTATION, FORECASTS, PROJECTIONS OR OTHER INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY MADE BY PARENT AND MERGER SUB IN THIS Article IV, ALL OTHER REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, ARE EXPRESSLY DISCLAIMED BY PARENT AND MERGER SUB.
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Article V
COVENANTS OF THE COMPANY
5.01Β Conduct of the Business.
(a)Β From the date hereof until the earlier of the termination of this Agreement and the Closing Date, except (i) as set forth on ScheduleΒ 5.01(a), (ii)Β if Parent shall have consented in writing, or (iii)Β as expressly permitted by this Agreement, (1)Β the Company shall conduct its business only in the ordinary course of business, in all material respects consistent with past practice and at all times in compliance with applicable Law and its contractual obligations and use commercially reasonable efforts to maintain and preserve intact its business organization and the goodwill of those having material business relationships with it and retain the services of its present officers and key employees; and (2)Β without limiting the generality of the foregoing, the Company shall not:
(i)Β issue, sell, grant, dispose of, pledge, otherwise encumber or deliver any of its shares, profit certificates, voting or equity securities, or any securities, options, warrants, calls commitments or other agreements or rights convertible into, exchangeable or exercisable for, or evidencing the right to subscribe for any shares, profit certificates, voting or equity securities;
(ii)Β redeem, repurchase or otherwise acquire any of its outstanding shares, profit certificates, voting or equity securities, or any rights, warrants, calls, options, commitments or any other agreements to acquire any shares, profit certificates, or voting or equity securities;
(iii)Β declare, set aside for payment or pay any dividend on, or make any other distribution in respect of, any shares, profit certificates, or voting or equity interests or otherwise make any payments to its holders of shares, profit certificates, and voting or equity interests in their capacity as such;
(iv)Β effect any recapitalization, reclassification, partial liquidation, dissolution, merger, amalgamation, consolidation, restructuring, equity split, combination, subdivision or like change in its capitalization;
(v)Β amend the Company Organizational Documents;
(vi)Β sell, assign or transfer any material portion of its tangible assets, except in the ordinary course of business and except for sales of obsolete assets or assets with de minimis or no book value;
(vii)Β amend, voluntarily terminate or enter into any Material Contract other than in the ordinary course of business or as required by Law;
(viii)Β make any material capital expenditures or commitments therefor, except (1)Β in the ordinary course of business and (2)Β for such capital expenditures or commitments therefor that are reflected in the Company's current budget;
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(ix)Β incur or assume any indebtedness for borrowed money or guarantee any indebtedness (or enter into a "keep well" or similar agreement) other than in connection with financing arrangements as in existence as of the date of this Agreement or financing of ordinary course trade payables or issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of the Company;
(x)Β enter into any other material transaction with any of its shareholders, managers, officers, or directors except pursuant to any agreement set forth on the Disclosure Schedules;
(xi)Β (1)Β hire, engage or incur any Liability with respect to any employee, independent contractor, consultant, temporary employee, leased employee, or other service provider of any Person, (2) enter into any offer letter or employment, consulting, independent contractor or other similar agreement with any Person; (3)Β establish, adopt, or incur any Liability with respect to any Plan; or (4)Β become a party to or otherwise be bound by any collective bargaining agreement or other agreement with a labor union, works council or other labor organization;
(xii)Β adopt any material change in the cash management practices and the policies, practices and procedures with respect to collection of accounts receivable, establishment of reserves for uncollectible accounts or credit notes, accrual of accounts receivable, prepayment of expenses, accruals under Plans, accruals and settlements related to Taxes, payment of trade accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer deposits;
(xiii)Β sell, transfer, lease, sublease, license, mortgage, encumber or otherwise dispose of or subject to any Lien (including pursuant to a sale-leaseback transaction or an asset securitization transaction) any material portion of its properties or assets;
(xiv)Β directly or indirectly acquire (x)Β by merging or consolidating with, or by purchasing all of or a substantial equity interest in, or by any other manner, any person or division, business or equity interest of any person (other than with or among Subsidiaries) or (y)Β any material business or assets;
(xv)Β make any investment (by contribution to capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any person other than in the ordinary course of business;
(xvi)Β enter into any material commitment or transaction other than in the ordinary course of business;
(xvii)Β make any material changes in financial or Tax accounting methods, principles or practices (or change an annual accounting period), except insofar as may be required by a change in GAAP;
(xviii)Β make or change any material election in respect of Taxes or material accounting policies of any of the Company, file any amended Tax Return, enter into any closing agreement, settle or compromise any Tax claim or assessment, agree to extend or waive any statute of limitations for the assessment or assertion of Taxes, extend the due date for the payment of any Tax or filing of any Tax Return, forego or waive any Tax credit or refund, or
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apply for or obtain a ruling from (or enter into an agreement with) a Tax authority, in each case except in connection with the Merger and unless required by Law or (in the case of accounting policies) by GAAP;
(xix)Β take any action, or fail to take any action, which action or failure could reasonably be expected to cause the Company to fail to have qualified as an S corporation for its taxable years ended prior to January 1, 2020 (or fail to qualify as a REIT for its taxable year ending at the Closing Date) for U.S. federal or applicable state or local Tax purposes;
(xx)Β take any action, or fail to take any action, which action or failure could reasonably be expected to prevent or impede the Merger from qualifying as a reorganization within the meaning of SectionΒ 368(a)(1)(A) of the Code;
(xxi)Β commence, compromise, settle or grant any release of a claim relating to any Action if the amount payable by the Company in connection therewith would exceed $100,000;
(xxii)Β cancel or materially modify any of the insurance policies of the Company or whether through action or omission cause them to lapse or expire;
(xxiii)Β cancel any Indebtedness or waive any claims or rights of substantive value in respect of Indebtedness; or
(xxiv)Β authorize, commit, resolve, propose or agree in writing or otherwise to take any of the foregoing actions.
(b)Β Nothing contained in this Agreement shall give Parent or Merger Sub, directly or indirectly, the right to control or direct the Company's operations prior to the Closing.
5.02Β Access to Books and Records. From the date hereof until the earlier of the termination of this Agreement and the Closing Date, the Company shall provide Parent and its authorized representatives (the "Parent's Representatives") with reasonable access to, during normal business hours, and upon reasonable notice, the offices, properties, personnel, data, files, information, Tax Returns and all books and records of the Company in order for Parent to have the opportunity to make such investigation as it shall reasonably desire in connection with the consummation of the Transactions, and to the extent consented to in advance by the Company (such consent not to be unreasonably withheld, conditioned or delayed), and provide reasonable access to the Company's customers and suppliers; provided, however, that (a)Β in exercising access rights under this SectionΒ 5.02, Parent and Parent's Representatives shall not be permitted to interfere unreasonably with the conduct of the business of the Company, and (b)Β the Company may elect to limit disclosure of any information to certain Persons designated as a "clean team" by Parent. Notwithstanding anything contained herein to the contrary, no access or examination provided pursuant to this SectionΒ 5.02 shall qualify or limit any representation or warranty set forth herein or the conditions to Closing set forth in SectionΒ 7.01(a). If the Company or any controlled Affiliate or their respective representatives are compelled to disclose any information by judicial or administrative process or by other requirements of applicable Law, the Company shall, to the extent permitted by applicable Law or the rules or regulations of any stock exchange, promptly notify Parent in writing and shall disclose, or cause the disclosing party to disclose, only that portion of such information which the disclosing party is advised by its counsel is legally required to be disclosed, provided, that the Company shall use its commercially reasonable efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded to such information.
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5.03Β Efforts to Consummate. Subject to the terms and conditions herein provided, from the date hereof until the earlier of the termination of this Agreement and the Closing Date, the Company and the Securityholders shall use their commercially reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective as promptly as practicable the Transactions (including the satisfaction, but not a waiver, of the closing conditions set forth in SectionΒ 7.02); provided that such efforts shall not require agreeing to any obligations or accommodations (financial or otherwise) binding on the Company in the event the Closing does not occur.
5.04Β Exclusive Dealing. During the period from the date of this Agreement through the Closing or the earlier termination of this Agreement, neither the Company nor any Securityholder shall take any action to knowingly initiate, solicit or engage in discussions or negotiations with, or knowingly provide any information to or respond to the submission of any proposal or offer from, any Person (other than Parent and Parent’s Representatives) concerning any purchase of a majority of the outstanding equity interest or any merger, sale of substantially all of the assets of the Company or similar transactions involving the Company (each such transaction, an "Acquisition Transaction"). The Company shall, and shall cause any of its representatives to, cease and cause to be terminated any existing discussions, communications or negotiations with any Person (other than Parent and its authorized representatives) conducted heretofore with respect to any Acquisition Transaction. The Company will promptly (and in any event, within one (1) Business Day) notify Parent of the receipt by any of the Company or its Affiliates or, to the Company’s Knowledge, any of the Company’s or its Affiliates’ representatives, of any offer or other communication from any person relating in any respect to an Acquisition Transaction.
5.05Β Written Consents.
(a)Β Concurrent with the execution and delivery of this Agreement, the Company shall deliver to Parent copies of the resolutions or written consent of the board of directors of the Company adopting and recommending the Agreement to the Securityholders in accordance with the CBCA and the Company Organizational Documents.
(b)Β The Company Requisite Approval will be obtained prior to the third (3rd) Business Day following the date of this Agreement.
5.06Β Intentionally omitted.
5.07Β Termination of Affiliate Agreements. At or prior to the Closing Date, except as set forth on Schedule 5.07, unless otherwise directed in writing by Parent or provided elsewhere herein, the Company shall terminate, or cause termination of, all Affiliate Agreements, and all amounts due and payable thereunder and any and all future obligations owing thereunder shall be cancelled, in each case with no further Liabilities surviving the Closing.
5.08Β Notification. From the date hereof until the earlier of the termination of this Agreement and the Closing Date, if after the date of this Agreement the Company has actual knowledge of any fact or condition that constitutes a breach of any representation or warranty made in Article III or any covenant that would cause the conditions set forth in SectionΒ 7.01(a) or SectionΒ 7.01(b), as applicable, not to be satisfied as of the Closing Date, the Company shall disclose to Parent such breach. The Company, or if after the Closing, the Securityholders, shall give prompt notice to Parent of: (a) any notice or other communication received by, as the case may be any of the Securityholders, and prior to the Closing, the Company, from any Governmental Entity in connection with the Transactions, (b) any notice or other
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communication received by the Persons referred to in clause (a) above from any person alleging that the consent of such Person is or may be required in connection with the Transactions, and (c) any actions, suits, claims, investigations or proceedings commenced or, to such party's knowledge, threatened against, relating to or involving or otherwise affecting, the Persons referred to in clause (a) above or any of their respective Affiliates which relate to the Transactions or might have a Material Adverse Effect on its consummation.
5.09Β Third Party Consents. Promptly following the date hereof, the Company shall use reasonable best efforts to obtain (a) all required approvals, consents, waivers or authorizations from third parties under any Contract required in connection with the consummation of the Transactions and (b) the consents set out in ScheduleΒ 5.09 ("Third Party Consents").
Article VI
COVENANTS OF PARENT
6.01Β Access to Books and Records. From and after the Closing until the five (5)year anniversary of the Closing Date, Parent shall, and shall cause the Surviving Company to, provide the Securityholders and its authorized representatives with reasonable access (for the purpose of examining and copying), during normal business hours, upon reasonable notice, to the books and records of the Company with respect to periods or occurrences prior to or on the Closing Date, for the purposes of complying with bona fide Tax audits, Tax Returns, insurance claims, governmental investigations, legal compliance or financial statement preparation obligations. Notwithstanding anything herein to the contrary, no such access or examination shall be permitted to the extent that it would require Parent, the Surviving Company or the Company to disclose information the disclosure of which would reasonably be expected to result in the waiver of attorney-client privilege or attorney work-product privilege, conflict with any third party confidentiality obligations to which any such Person is bound, or violate any applicable Law.
6.02Β Tax Reorganization Qualification. Parent and Merger Sub shall not, and Parent shall not permit any of its Subsidiaries to, take any action, or fail to take any action, which action or failure could reasonably be expected to prevent or impede the Merger from qualifying as a reorganization within the meaning of Section 368(a)(1)(A) of the Code.
6.03Β Notification. From the date hereof until the earlier of the termination of this Agreement and the Closing Date, if after the date of this Agreement, Parent has actual knowledge of any fact or condition that constitutes a breach of any representation or warranty made in Article IV or any covenant that would cause the conditions set forth in SectionΒ 7.02(a) or SectionΒ 7.02(b), as applicable, not to be satisfied as of the Closing Date, Parent shall disclose to the Company such breach.
6.04Β Intentionally omitted.
6.05Β Efforts to Consummate. Subject to the terms and conditions herein provided, from the date hereof until the earlier of the termination of this Agreement and the Closing Date, Parent and Merger Sub shall use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective as promptly as practicable the Transactions (including the satisfaction, but not waiver, of the Closing conditions set forth in SectionΒ 7.01); provided that such efforts shall not require agreeing to any obligations or accommodations (financial or otherwise) binding on Parent or Merger Sub in the event the Closing does not occur.
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6.06Β Registration of Parent Common Shares. To the extent that such shares are not registered, as promptly as practicable following the date hereof, and in any event within 90 days following the date of this Agreement, Parent shall prepare and file with the SEC a registration statement or prospectus supplement to its existing registration statement to register the resale of the Parent Common Shares. Each of Parent and the Company shall use its reasonable best efforts to cause such registration statement to comply with the rules and regulations promulgated by the SEC, and to have such registration statement declared effective under the Securities Act as promptly as practicable after such fling.
6.07Β NYSE Listing. Parent will use its commercially reasonable efforts to list, subject to notice of issuance, the Parent Common Shares on the NYSE.
Article VII
CONDITIONS TO CLOSING
7.01Β Conditions to Parent's and Merger Sub's Obligations. The obligations of Parent and Merger Sub to consummate the Transactions are subject to the satisfaction (or, if permitted by applicable Law, waiver by Parent and Merger Sub in writing) of the following conditions as of the Closing Date:
(a)Β (i)Β the Company Fundamental Representations shall be true and correct in all respects at and as of the Closing Date as though made at and as of the Closing Date (except to the extent expressly made as of an earlier date, in which case only as of such date) and (ii)Β all other representations and warranties of the Company contained in Article III of this Agreement shall be true and correct (without giving effect to any limitation as to "materiality" or "Material Adverse Effect" set forth therein, other than with respect to SectionΒ 3.07 and other than to the extent that such "materiality" or "Material Adverse Effect" qualifier defines the scope of items or matters disclosed in the Disclosure Schedules) at and as of the Closing Date as though made at and as of the Closing Date (except to the extent expressly made as of an earlier date, in which case only as of such date), except, in the case of this clause (ii), where the failure of such representations and warranties to be so true and correct (giving effect to the applicable exceptions set forth in the Disclosure Schedules but without giving effect to any limitation as to "materiality" or "Material Adverse Effect" set forth therein, other than with respect to SectionΒ 3.07 and other than to the extent that such "materiality" or "Material Adverse Effect" qualifier defines the scope of items or matters disclosed in the Disclosure Schedules) has not had a Material Adverse Effect;
(b)Β the Company shall have performed and complied with in all material respects all of the covenants and agreements required to be performed by it under this Agreement at or prior to the Closing;
(c)Β the Merger and the Transactions shall have been approved and this Agreement shall have been adopted by the unanimous affirmative written consent of the Securityholders in accordance with the CBCA and the Company Organizational Documents (the "Company Requisite Approval") prior to the third (3rd) Business Day following the date of this Agreement;
(d)Β the SecurCare Merger and all transactions contemplated thereunder shall have been consummated;
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(e)Β no judgment, decree or order from any Governmental Entity shall have been entered which would prevent the performance of this Agreement or the consummation of any of the Transactions, declare unlawful the Transactions or cause such transactions to be rescinded;
(f)Β since the date of this Agreement there shall not have been any Material Adverse Effect;
(g)Β the Company shall have received or obtained the Third Party Consents in a form and substance reasonably acceptable to Parent;
(h)Β the Company shall have delivered to Parent each of the following:
(i)Β a certificate of an authorized officer of the Company in his or her capacity as such, dated as of the Closing Date, stating that the conditions specified in SectionsΒ 7.01(a) and 7.01(b), as they relate to the Company, have been satisfied;
(ii)Β certified copies of resolutions (or a written consent) of the board of directors of the Company approving the Transactions; and
(iii)Β certified copies of resolutions (or a written consent) for the Company Requisite Approval;
(i)Β the Parent Common Shares to be issued in the Merger shall have been approved for listing on the NYSE, subject to official notice of issuance;
(j)Β each Securityholder receiving Allocated Consideration pursuant to SectionΒ 1.02(a) shall have provided to Parent a certification that satisfies the requirements of (A)Β SectionΒ 1446(f)(2) of the Code and SectionΒ 6.01 of NoticeΒ 2018-29 or any successor guidance or (B)Β any other exception to withholding under SectionΒ 1446(f)(1) of the Code under SectionΒ 6 of NoticeΒ 2018-29 or any successor guidance; and
(k)Β each Securityholder receiving Allocated Consideration pursuant to SectionΒ 1.02(a) shall have provided to Parent a fully completed and accurate Investor Questionnaire.
If the Closing occurs, all Closing conditions set forth in this SectionΒ 7.01 which have not been fully satisfied as of the Closing shall be deemed to have been waived by Parent and Merger Sub.
7.02Β Conditions to the Company's Obligations. The obligation of the Company to consummate the Transactions is subject to the satisfaction (or, if permitted by applicable Law, waiver by the Company and the Securityholders in writing) of the following conditions as of the Closing Date:
(a)Β (i)Β the Parent Fundamental Representations shall be true and correct in all material respects at and as of the Closing Date as though made at and as of the Closing Date (except to the extent expressly made as of an earlier date, in which case only as of such date) and (ii)Β all other representations and warranties contained in Article IV of this Agreement shall be true and correct (without giving effect to any limitation as to "materiality" or "Parent Material Adverse Effect" set forth therein) at and as of the Closing Date as though made at and as of the Closing Date (except to the extent expressly made as of an earlier date, in which case only as of such date), except, in the case of this clause (ii), where the failure of such representations and warranties to be
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so true and correct (without giving effect to any limitation as to "materiality" or "Parent Material Adverse Effect" set forth therein) has not had a Parent Material Adverse Effect;
(b)Β Parent and Merger Sub shall have performed and complied with in all material respects all the covenants and agreements required to be performed by them under this Agreement at or prior to the Closing;
(c)Β no judgment, decree or order from any Governmental Entity shall have been entered which would prevent the performance of this Agreement or the consummation of any of the Transactions, declare unlawful the Transactions or cause such transactions to be rescinded; and
(d)Β Parent shall have delivered to the Company each of the following:
(i)Β a certificate of an authorized officer of Parent and Merger Sub in his or her capacity as such, dated as of the Closing Date, stating that the preconditions specified in SectionsΒ 7.02(a) and 7.02(b), as they relate to such entity, have been satisfied;
(ii)Β certified copies of resolutions (or a written consent), of the requisite members of Merger Sub approving the consummation of the Transactions; and
(iii)Β certified copies of the resolutions duly adopted by Parent's board of directors (or its equivalent governing body) authorizing the execution, delivery and performance of this Agreement;
(e)Β the annual audited financial statements for the year ending December 31, 2019 for the Parent shall have been completed;
(f)Β since the date of this Agreement there shall not have been any Parent Material Adverse Effect; and
(g)Β the Parent Common Shares to be issued in the Merger shall have been approved for listing on the NYSE, subject to official notice of issuance.
If the Closing occurs, all closing conditions set forth in this SectionΒ 7.02 which have not been fully satisfied as of the Closing shall be deemed to have been waived by the Company.
Article VIII
Survival; Indemnification
8.01Β Survival.
(a)Β Subject to the limitations and other provisions of this Agreement, all of the representations and warranties, covenants and agreements contained herein, to the extent given by the Company, shall survive the Closing and shall remain in full force and effect until the Release Date, except that each covenant or agreement of any Party that is to be performed after the Closing shall survive the Closing and shall remain in full force and effect until fully performed in accordance with its terms. Parent may not make a claim against the Securityholders for the breach of a representation or warranty or covenant after the applicable survival period. The
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Securityholders may not make any claim against Parent or Merger Sub for breach of a representation or warranty or covenants after the Closing, and thereafter there shall be no liability on the part of, nor shall any claim be made by, any Party, Securityholder or any of their respective Affiliates in respect thereof, except, in each case, in respect of Fraud or willful breaches by Parent with respect to its obligations under this Agreement and except for a covenant that is to be performed after the Closing.
(b)Β Notwithstanding anything in this SectionΒ 8.01 to the contrary, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non-breaching Party to the breaching Party prior to the expiration date of the applicable survival period shall not be barred by the expiration of such survival period and such claims shall survive until finally resolved.
8.02Β Indemnification. Subject to the other terms and conditions of this Article VIII, the Securityholders, jointly and severally, shall indemnify and defend each of Parent and its Affiliates (including the Surviving Company) and their respective directors, officers, employees, advisors, representatives and other authorized persons (each, a "Parent Indemnitee") against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Parent Indemnitees based upon, arising out of, with respect to or by reason of:
(a)Β any inaccuracy in or breach of any of the representations or warranties of the Company or the Securityholders contained in this Agreement or in any certificate, instrument, or other document delivered by or on behalf of the Company or any Securityholder pursuant to this Agreement (including for the avoidance of doubt, any letter of transmittal delivered pursuant to SectionΒ 1.03(a)), as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date) and in each case, other than for the representations contained in Section 3.07(a), determined without giving effect to any "material", "materiality", "in any material respect", "material adverse effect", "Material Adverse Effect" or any similar qualification or words of similar import or other similar qualifiers contained therein;
(b)Β any breach or non-fulfillment of any covenant, agreement or obligation to be performed by the Company pursuant to this Agreement; or
(c)Β (i)Β any Excluded Taxes; and (ii)Β any Transfer Taxes that are the responsibility of Securityholders pursuant to SectionΒ 10.03(a).
8.03Β Certain Limitations. The indemnification provided for in SectionΒ 8.02 is subject to the following limitations:
(a)Β A Securityholder will not be liable to the Parent Indemnitees under SectionΒ 8.02(a) until the aggregate amount of all Losses in respect of indemnification under SectionΒ 8.02(a) equals or exceeds $25,000 (the "Deductible"), and once this threshold is met, then only for amounts above the Deductible, up to the Cap; provided, however, that the Deductible shall not apply with respect to any breach of any Company Fundamental Representation, any claims made pursuant to SectionsΒ 3.10, or any claim for Fraud.
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(b)Β The aggregate amount of all Losses for which the Securityholders will be liable pursuant to SectionΒ 8.02, will not exceed an amount equivalent to the Value of the Retained Parent Common Shares on the Release Date plus any other amounts held in the Indemnification Account from time to time (the "Cap") and, with respect to SectionΒ 8.02, shall be solely and exclusively recoverable from the Retained Parent Common Shares plus any other amounts held in the Indemnification Account from time to time; provided, however, that the foregoing provision shall not apply with respect to payments required to be made by the Securityholders pursuant to any breach of the representations made in SectionsΒ 3.04 and 3.05, and with respect to breach of any post-closing covenants that are to be performed after the Release Date, for which the cap will be the Closing Consideration actually received by the Securityholders plus the Retained Common Shares (including any other amounts held in the Indemnification Account from time to time) and to the extent such Losses exceed the amount of Retained Parent Common Shares and any other amounts available in the Indemnification Account at such time, the excess amount will be recoverable in cash from the Securityholders.
(c)Β The amount of any Loss for which indemnification is available to any Parent Indemnitee under this Article VIII shall be calculated after giving effect to, and to the extent of, any such amounts (i)Β actually recovered by such Party (A) under any insurance policies with respect to such Loss or (B) from third parties, in each case, net of any cost and expenses incurred by such Parent Indemnitee in procuring such recovery (including any retention or deductible with respect to insurance policies, and (ii) specifically taken into account as a deduction to the Closing Consideration in the reconciliation of working capital. The Parent Indemnitees shall use their commercially reasonable efforts to recover under available insurance policies or indemnity, contribution or other similar agreements for any Losses, but any such efforts shall not be a condition of seeking indemnification under this Agreement.
8.04Β No Contribution. Each Securityholder waives, and acknowledges and agrees that such Securityholder shall not have and shall not exercise or assert (or attempt to exercise or assert), any right of contribution, right of indemnity, right of subrogation or advancement of expenses or other right or remedy against the Surviving Company or any Subsidiary in connection with any indemnification obligation or any other liability to which such Securityholder may become subject under or in connection with this Agreement or any other agreement or document delivered to Parent in connection with this Agreement.
8.05Β Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the Parties for Tax purposes, unless otherwise required by Law, and in the case of a payment by the Securityholders, as a reduction to the Closing Consideration and the purchase of Company Shares in an amount equal to such reduction by the Securityholders.
8.06Β Defense of Third Party Claims. In the event of the assertion or commencement by any Person (other than Parent, Parent’s Affiliates, the Surviving Company or any other Parent Indemnitee) of any claim or Legal Proceeding (whether against the Surviving Company, Parent or any other Person) with respect to which any Securityholder may become obligated to hold harmless, indemnify, compensate or reimburse any Parent Indemnitee pursuant to this Article VIII, Parent shall have the right, at its election, to proceed with the defense of such claim or Legal Proceeding on its own with counsel reasonably satisfactory to the Securityholders. If Parent so proceeds with the defense of any such claim or Legal Proceeding:
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(a)Β subject to the other provisions of this Article VIII, all reasonable expenses relating to the defense of such claim or Legal Proceeding shall be borne and paid exclusively by the Securityholders;
(b)Β each Securityholder shall use commercially reasonable efforts to cooperate with Parent in connection with the defense of such claim or Legal Proceeding (provided that no Securityholder shall be required to make any admissions against interest); and
(c)Β Parent shall have the right to settle, adjust or compromise such claim or Legal Proceeding; provided, however, that if Parent settles, adjusts or compromises any such claim or Legal Proceeding without the consent of the Securityholders, such settlement, adjustment or compromise shall not be conclusive evidence of the amount of damages incurred by the Parent Indemnitee in connection with such claim or Legal Proceeding or determinative of whether a Parent Indemnitee is entitled to indemnification or other relief with respect to damages related to such claim or Legal Proceeding (it being understood that if Parent requests that the Securityholders consent to a settlement, adjustment or compromise, the Securityholders shall not unreasonably withhold or delay such consent).
If Parent does not elect to proceed with the defense of any such claim or Legal Proceeding, the Securityholders may proceed with the defense of such claim or Legal Proceeding with counsel reasonably satisfactory to Parent; provided, however, that the Securityholders may not settle, adjust or compromise any such claim or Legal Proceeding without the prior written consent of Parent (which consent may not be unreasonably withheld or delayed). Parent shall give the Securityholders prompt notice of the commencement of any such Legal Proceeding against Parent, Merger Sub or the Company; provided, however, that any failure on the part of Parent to so notify the Securityholders shall not limit any of the obligations of the Securityholders under this Article VIII (except to the extent such failure materially prejudices the defense of such Legal Proceeding).
8.07Β Exclusive Remedies. Subject to SectionΒ 12.19, the Parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims for any breach of any representation, warranty, covenant, agreement or obligation set forth in this Agreement or otherwise relating to the Transactions, shall be pursuant to the indemnification provisions set forth in this Article VIII. Each Party waives, to the fullest extent permitted under Law, any and all rights, claims and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set forth in this Agreement or otherwise relating to the Transactions it may have against the other Parties and their Affiliates and each of their respective representatives arising under or based upon any Law, except pursuant to the indemnification provisions set forth in this Article VIII. Nothing in this SectionΒ 8.07 shall limit any Person’s right to seek and obtain any equitable relief to which any Person shall be entitled pursuant to SectionΒ 12.19 or to seek any remedy on account of Fraud.
8.08Β Retained Parent Common Shares.
(a)Β In respect of a claim brought by a Parent Indemnitee against a Securityholder, pursuant to SectionΒ 8.02, payment by a Securityholder shall be settled solely and exclusively by Parent having recourse to the Retained Parent Common Shares that have yet to be delivered to the Securityholders and any other amounts held in the Indemnification Account from time to time. To the extent there are not enough Retained Parent Common Shares or any other amounts held in the Indemnification Account from time to time remaining to satisfy a Securityholder's indemnification obligation pursuant to SectionΒ 8.02, no Securityholder shall have
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any monetary obligation or liability, except that the Securityholders shall be jointly and severally liable for the remainder of any indemnification claims for breach of the representations made in SectionsΒ 3.04 andΒ 3.05 validly made in accordance with this Article VIII against any Securityholder.
(b)Β On the Release Date, Parent shall deliver to each Securityholder, to an account or accounts specified in writing by such Securityholder, such Securityholder's pro rata percentage (as determined by reference to the Payment Schedule) of any amount remaining of the Retained Parent Common Shares in excess of the sum of all amounts on account of any outstanding and unpaid or unresolved claims for indemnification under SectionΒ 8.02. After the resolution and payment of all such claims, Parent shall deliver to each Securityholder, to an account or accounts specified in writing by such Securityholder, such Securityholder's pro rata percentage (as determined by reference to the Payment Schedule) of any amount remaining of the Retained Parent Common Shares.
Article IX
TERMINATION
9.01Β Termination. This Agreement may be terminated at any time prior to the Closing:
(a)Β by the mutual written consent of Parent and the Company;
(b)Β by either Parent or the Company if there shall be in effect a final non-appealable order of a Governmental Entity restraining, enjoining or otherwise prohibiting the consummation of the Merger or making the consummation of the Transactions illegal, provided, however that the right to terminate this Agreement pursuant to this SectionΒ 9.01(b) shall not be available to any party whose breach of any provision of this Agreement results in or causes such order or other action or if it has breached its obligations under this Agreement in any material respect.
(c)Β by Parent, if any of the representations or warranties of the Company set forth in Article III shall not be true and correct, or if the Company has failed to perform any covenant or agreement on the part of the Company set forth in this Agreement (including an obligation to consummate the Closing), such that the conditions to the Closing set forth in either SectionΒ 7.01(a) or SectionΒ 7.01(b) would not be satisfied as of the Closing Date and the breach or breaches causing such representations or warranties not to be true and correct, or the failure to perform any covenant or agreement, as applicable, are not cured within twenty (20) Business Days after written notice thereof is delivered to the Company; provided that a failure to obtain Company Requisite Approval within three (3) Business Days after the date of this Agreement, pursuant to SectionΒ 5.05(b), will give rise to an immediate right to terminate on behalf of Parent; provided, further, that Parent and/or Merger Sub is not then in breach of this Agreement so as to cause the conditions to the Closing set forth in either SectionΒ 7.02(a) or SectionΒ 7.02(b) to not be satisfied as of the Closing Date;
(d)Β by the Company, if any of the representations or warranties of Parent or Merger Sub set forth in Article IV shall not be true and correct, or if Parent or Merger Sub has failed to perform any covenant or agreement on the part of Parent or Merger Sub, respectively, set forth in this Agreement (including an obligation to consummate the Closing), such that the conditions to the Closing set forth in either SectionΒ 7.02(a) or SectionΒ 7.02(b) would not be satisfied
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as of the Closing Date and the breach or breaches causing such representations or warranties not to be true and correct, or the failures to perform any covenant or agreement, as applicable, are not cured within twenty (20) Business Days after written notice thereof is delivered to Parent or Merger Sub; provided that the Company is not then in breach of this Agreement so as to cause the conditions to the Closing set forth in SectionΒ 7.01(a) or SectionΒ 7.01(b) to not be satisfied as of the Closing Date;
(e)Β by the Company, if the Transactions shall not have been consummated on or prior to three (3) months following the date of this Agreement (such date, the "Outside Date") and the Company and the Securityholders shall not have breached in any material respect any of their obligations under this Agreement in any manner that shall have proximately caused the failure to consummate the Transactions on or before the Outside Date; and
(f)Β by Parent, if the Transactions shall not have been consummated on or prior to the Outside Date and Parent shall not have breached in any material respect its obligations under this Agreement in any manner that shall have proximately caused the failure to consummate the Transactions on or before the Outside Date.
9.02Β Effect of Termination. In the event this Agreement is terminated by Parent or the Company as provided above, the provisions of this Agreement shall immediately become void and of no further force and effect (this SectionΒ 9.02, and Article XI and Article XII hereof shall survive the termination of this Agreement (other than the provisions of SectionΒ 12.19, which shall terminate)), and there shall be no liability on the part of Parent, the OP, Merger Sub, the Company or the Securityholders to one another, except for Fraud or willful breaches of this Agreement prior to the time of such termination. For purposes of this Agreement, the failure to consummate the Closing pursuant to, and when required by, the terms of this Agreement shall constitute a willful breach hereunder.
Article X
ADDITIONAL COVENANTS
10.01Β Due Diligence. The rights of Parent or its Subsidiaries to indemnification or any other remedy, or to assert or recover any claim under this Agreement, shall not be affected or otherwise limited by any investigation or due diligence conducted by, or on behalf of, Parent or any knowledge that Parent, any of its Affiliates or any of their respective representatives may have acquired, or could have acquired, whether before or after the execution and delivery of this Agreement or the Closing.
10.02Β Disclosure Schedules. All Disclosure Schedules attached hereto (each, a "Schedule" and, collectively, the "Disclosure Schedules") are incorporated herein and expressly made a part of this Agreement as though completely set forth herein. All references to this Agreement herein or in any of the Disclosure Schedules shall be deemed to refer to this entire Agreement, including all Disclosure Schedules.
10.03Β Certain Tax Matters.
(a)Β Transfer Taxes. All transfer, documentary, sales, use, stamp, registration and other such Taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with consummation of the Transactions (collectively, the "Transfer Taxes"), shall be borne by the Securityholders. Parent and the Securityholders shall cooperate in the timely making of all filings, returns, reports and forms as
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necessary or appropriate to comply with the provisions of all applicable Laws in connection with the payment of such Transfer Taxes, and shall cooperate in good faith to minimize, to the fullest extent possible under such Laws, the amount of any such Transfer Taxes payable in connection therewith.
(b)Β Tax Returns.
(i)Β The Securityholders shall prepare or cause to be prepared any Tax Returns of the Company that relate to any Tax period ending on or before the Closing that are due after the Closing Date. All such Tax Returns shall be prepared on a basis that is consistent with past practice, except to the extent such basis is inconsistent with applicable Law. Notwithstanding the foregoing, the Securityholders shall cause the Company to elect and qualify to be taxed as a REIT including by filing the necessary forms to make any election under Section 856(c)(1) to be taxed as a REIT for the Company's taxable year ending at the Closing Date by timely and properly filing IRS Form 1120-REIT. The Securityholders shall provide drafts of any such Tax Returns to Parent at least thirty (30) days prior to the due date of such Tax Returns. Parent shall have the right to review and provide comments to the Securityholders with respect to such Tax Returns, and the Securityholders shall accept all reasonable comments to the Tax Returns provided by Parent. In the event that the Securityholders do not accept any proposed comments of Parent, the parties shall work together and cooperate to resolve any dispute regarding such Tax Returns and proposed comments and if the parties are unable to mutually agree on a resolution, the inclusion of such proposed comments to the Tax Returns will be determined by a mutually agreeable third-party arbitrator, the cost of such arbitrator to be shared equally between Parent and the Securityholders. The Securityholders shall be responsible for, and shall promptly pay to the Surviving Company, all Taxes payable by the Company with respect to the Company and its assets and any of its subsidiaries attributable to any Tax period ending on or before the Closing upon request of the Surviving Company; provided, however, that such payment shall not include any Taxes included as a liability in the computation of Undisclosed Liabilities. Parent shall prepare and file or cause to be prepared and filed any Tax Returns of the Company or any of its subsidiaries that relate to any taxable period ending after the Closing Date (including Tax Returns for any Straddle Period).
(ii)Β The Parties agree that, in the case of any Straddle Period, for income Tax purposes, the items of income, gain, deduction, loss and credit, and other items, of the Company or its subsidiaries that are allocable to the portion of the Straddle Period that constitutes a Pre-Closing Tax Period shall be computed as if such taxable period ended as of the close of business on the Closing Date (and for such purpose, the Tax period of any partnership or other pass-through entity in which the Company or its subsidiaries holds a beneficial interest shall be deemed to terminate at such time), and the amount of other Taxes of the Company or its subsidiaries attributable to the Pre-Closing Tax Period shall be deemed to be the amount of such Tax for the entire taxable period multiplied by a fraction the numerator of which is the number of days in the taxable period ending on the day before the Closing Date and the denominator of which is the number of days in the Straddle Period.
(c)Β Tax Contests.
(i)Β Securityholders shall have the sole right to control any audit, examination, contest, litigation or other proceeding with or against any taxing authority (a "Tax Proceeding") that relates in whole or in part to any Tax that is an Excluded Tax and for which
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the Securityholders agree to be bound by Section 8.02(c); provided, however, that (1)Β Securityholders shall inform Parent in a timely manner and in reasonable detail about the conduct of such Tax Proceeding; (2)Β Securityholders shall consider in good faith any reasonable comments provided by Parent with respect to the conduct of such Tax Proceeding; and (3)Β Securityholders shall not, without Parent's consent, agree to any settlement with respect to any Tax Proceeding if such settlement could adversely affect the Tax liability of any Parent Indemnitee.
(ii)Β Parent shall have the sole right to control, at its own expense, any Tax Proceeding involving the Company or any of its subsidiaries (other than any Tax Proceeding described in SectionΒ 10.03(c)(i)).
(d)Β Cooperation. Parent, the Securityholders, and their assignees and successors shall cooperate fully, as and to the extent reasonably requested by the other Party, in connection with the filing of Tax Returns pursuant to this SectionΒ 10.03 and any audit, litigation, or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other Party's reasonable request) the provision of records and information that are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.
Article XI
DEFINITIONS
11.01Β Definitions. For purposes hereof, the following terms when used herein shall have the respective meanings set forth below:
"Action" means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, by or before any Governmental Entity whether at Law or in equity.
"Affiliate" of any particular Person means any other Person controlling, controlled by or under common control with such particular Person, where "control" means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise.
"Allocated Consideration" means the pro rata portion of the Closing Consideration due to each Securityholder calculated based on the Exchange Ratio in ScheduleΒ A attached hereto.
"Business Day" means a day which is neither a Saturday or Sunday, nor any other day on which banking institutions in New York, New York or Denver, Colorado are authorized or obligated by Law to close.
"Closing Consideration" means the number of Parent Common Shares equal to (i)Β the sum of (a)Β Merger Consideration, minus (b) the Discount Amount.
"Company Articles of Incorporation" means the articles of incorporation of the Company, dated as of June 2, 2018, including any amendment thereto.
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"Company Bylaws" means the bylaws of the Company, adopted on September 1,Β 2018, including any amendment thereto.
"Company Fundamental Representations" means the representations and warranties of the Company set forth in SectionΒ 3.01, SectionΒ 3.02, SectionΒ 3.03(a), Section 3.03(b)(i), SectionΒ 3.04, SectionΒ 3.05, SectionΒ 3.08, SectionΒ 3.10 and SectionΒ 3.23.
"Company Organizational Documents" means the Company Articles of Incorporation and the Company Bylaws, as amended through the date hereof.
"Company's Knowledge" means the actual knowledge after reasonable enquiry of any of Xxxxx Xxxx or Xxxxx Xxxxxxxxx, as of the applicable date.
"Contract" means any written or oral agreement, contract, arrangement, commitment, understanding, lease, loan agreement, security agreement, license, indenture or other similar instrument or obligation or undertaking to which the party in question is a party.
"Data Protection Laws" means all applicable laws pertaining to data protection, data privacy, data security, data breach notification, and cross-border data transfer (including to the extent applicable, the General Data Protection Regulation of the European Union).
"Discount Amount" means 4,512 Parent Common Shares, which is equal to 1% of the aggregate of the Merger Consideration Amount.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate" means all Persons (whether or not incorporated) that would be treated together with the Company or any of their Affiliates as a "single employer" within the meaning of SectionΒ 414(b), (c), (m) or (o) of the Code or under common control within the meaning of SectionsΒ 4001(a)(14) and 4001(b)(1) of ERISA.
"ERISA Affiliate Liability" means any Liability, fine, lien or penalty imposed by Title IV of ERISA, any excise tax imposed by ChapterΒ 43 of the Code, or any similar non-U.S. applicable Law with respect to any Plan by reason of the Company having been an ERISA Affiliate of any Person prior to the Closing.
"Exchange Ratio" means the number of Parent Common Shares per Company Share to which each Securityholder is entitled, as set forth on the Payment Schedule attached hereto as ScheduleΒ A.
"Excluded Taxes" means any liability, obligation or commitment for, without duplication, (a)Β any Taxes for which the Company (or the Surviving Company following the Closing) or any of its subsidiaries is liable (i)Β under Treasury Regulations SectionΒ 1.1502-6 (or any similar provision of state, local or foreign Law) by virtue of having been a member of a consolidated, combined, unitary or other similar Tax group on or prior to the Closing, (ii)Β as a transferee or successor of any Person as a result of a transaction occurring on or prior to the Closing, or (iii)Β pursuant to an agreement entered into on or prior to the Closing, (b)Β Taxes of the Company (or the Surviving Company following the Closing) or any of its subsidiaries for a Pre-Closing Tax Period (it being understood that, in the case of a Straddle Period, the Taxes for the Pre-Closing Tax Period portion of that Straddle Period shall be determined based on a "closing of the books" as if the applicable taxable period had ended as of the close of business on the
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Closing Date (including the applicable taxable period of any fiscally transparent entity owned by the Company (or the Surviving Company following the Closing))), (c)Β Taxes resulting from actions taken pursuant to SectionΒ 5.01, or (d)Β Taxes imposed on Securityholders; provided, however, the Excluded Taxes shall not include any liability included as a liability in the computation of Undisclosed Liabilities.
"Fraud" means common law fraud, as it is interpreted under the Laws of the State of Delaware.
"GAAP" means U.S. generally accepted accounting principles consistently applied.
"Governmental Entity" means any federal, national, state, foreign, provincial, local or other government or any governmental, regulatory, administrative or self-regulatory authority, agency, bureau, board, commission, court, judicial or arbitral body, department, political subdivision, tribunal or other instrumentality thereof.
"Indebtedness" means, as of any particular time with respect to the Company, without duplication, (i)Β the unpaid principal amount of and accrued interest on all indebtedness for borrowed money, (ii)Β all obligations of the Company under leases required in accordance with the GAAP to be capitalized on a balance sheet of the Company, (iii)Β all obligations for the payment of deferred lease or rental payments, (iv)Β all obligations for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar transaction, (v)Β obligations of such Person in respect of any derivative instruments including interest rate swap, cap or collar agreements, interest rate future or option contracts, commodity future or option contracts, currency swap agreements, take-or-pay agreements, currency future or option contracts and similar agreements, (vi)Β indebtedness secured by (or for which the holder of such indebtedness has an existing right to be secured by) any Liens on property owned by such Person, whether or not the indebtedness secured thereby has been assumed by that Person, (vii)Β all obligations of such Persons evidenced by bonds, debentures, notes or other similar instruments, and (viii)Β all guarantees provided by the Company in respect of the indebtedness or obligations referred to in clauses (i) to (vii) (inclusive). Notwithstanding the foregoing, "Indebtedness" shall not include any letters of credit to the extent not drawn upon.
"Intellectual Property" means all intellectual property rights, including: (i)Β patents and patent applications, including continuations, divisionals, continuations-in-part, reexaminations, renewals, reissues and extensions; (ii)Β trademarks, service marks, trade dress, logos, domain names and registrations and applications for registration thereof together with all of the goodwill associated therewith; (iii)Β copyrights (registered or unregistered) and registrations and applications for registration thereof, including copyrights in software; and (iv)Β trade secrets.
"Law" means any law, statute, constitutional provision, code, Permit, directive, binding guideline or policy, rule, regulation, judgment, ruling, decision, injunction, writ, order or decree or any other governmental restriction of any Governmental Entity or any interpretation of the foregoing by any Governmental Entity.
"Legal Proceeding" means any judicial, administrative or arbitral actions, suits, hearings, inquiries, investigations or other proceedings (public or private) commenced, brought, conducted or heard before, or otherwise involving, any Governmental Entity or arbitrator.
"Liabilities" means with respect to any Person, any indebtedness, obligation or other liability of such Person, including without limitation any debt, loss, damage, adverse claim, cost, fine, liability, Tax, Lien, judgment, penalty, assessment, order, decree, ruling, fee, deficiencies or obligation,
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including all actual and reasonable out-of-pocket costs and expenses included in the investigation, collection, prosecution, enforcement and defense relating thereto.
"Liens" means mortgages, pledges, real property, title defects, rights of first refusal, options, preemptive rights, restrictions, hypothecations, claims, easements, liens, security interests, charges or encumbrances of any kind.
"Losses" means all damages, claims, losses, fees, expenses, Taxes, costs, interest, awards, judgments, penalties, dues, fines, obligations and Liabilities (including reasonable fees and expenses of attorneys, experts and accountants), but excluding all exemplary and punitive damages (save to the extent awarded to third parties).
"Managed Properties" means the self-storage and/or mini-warehouse facilities listed on ExhibitΒ B-1 and ExhibitΒ B-2 of the FPMA.
"Material Adverse Effect" means any change, effect, event, occurrence, state of facts or development (each, an "Effect") that, individually or in the aggregate with all other Effects, has had or would reasonably be expected to have a materially adverse effect on the business, assets, properties or condition (financial or otherwise) of the Company, taken as a whole; provided, however, that none of the following shall be deemed in and of themselves, either alone or in combination, to constitute, and none of the following shall be taken into account in determining whether there has been or will be, a Material Adverse Effect: any adverse Effect solely attributable to (i)Β general economic conditions attributable to the U.S. economy or financial or credit markets, or changes therein (including changes in prevailing interest rates, credit availability and liquidity, currency exchange rates, price levels, or trading volumes in the United States or foreign securities markets; (ii)Β operating, business, regulatory or other conditions in the industry in which the Company operate; (iii)Β any stoppage or shutdown of any U.S. government activity (including any default by the U.S. government or delays in payments by government agencies or delays or failures to act by any Governmental Entity); (iv)Β the negotiation, execution, announcement or pendency of the Transactions (including the identification of Parent), or taking or omitting to take any action permitted by this Agreement or with Parent's consent or any action brought or threatened by securityholders of Parent or OP or derivative action brought or threatened asserting allegations of breach of fiduciary duty relating to this Agreement or the Transactions; (v)Β changes in GAAP or any changes in applicable Laws after the date hereof; (vi)Β the failure in and of itself of the Company to meet or achieve the results set forth in any projection or forecast; (vii)Β global, national or regional political, conditions, including hostilities, acts of war, sabotage or terrorism or military or police actions or any escalation, worsening or diminution of any such hostilities, acts of war, sabotage or terrorism or military or police actions existing or underway; and (viii)Β hurricanes, earthquakes, floods or other natural disasters; provided, further, that in the case of the foregoing clauses (ii), (iii), (v), and (vii), such Effect referred to therein shall be taken into account in determining whether there has been, or will be, a material adverse effect to the extent such Effect has a disproportionate effect on the Company taken as a whole compared to other participants in the industries or markets in which the Company conduct their business.
"Merger Consideration Amount" means 451,208 Parent Common Shares, which is equal to the aggregate number of REIT Units.
"Non-Recourse Party" means, with respect to a Party to this Agreement, any of such Party's former, current and future equityholders, controlling persons, directors, officers, employees, agents, representatives, Affiliates, members, managers, general or limited partners, or assignees (or any former, current or future equityholder, controlling person, director, officer, employee, agent,
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representative, Affiliate, member, manager, general or limited partner, or assignee of any of the foregoing); provided that, for the avoidance of doubt, no Party to this Agreement will be considered a Non-Recourse Party.
"NYSE" means the New York Stock Exchange.
"Parent Fundamental Representations" means the representations and warranties of Parent set forth in SectionsΒ 4.01, 4.02 and 4.05.
"Parent Material Adverse Effect" means any change, effect, event or development that, individually or in the aggregate, has had or would have a material adverse effect on the ability of Parent or Merger Sub to consummate the Transactions.
"Payment Schedule" means ScheduleΒ A, which shall set forth for each Securityholder, (i)Β its name and address as included in the books and records of the Company, (ii)Β its Pro Rata Share, (iii)Β the Exchange Ratio, and (iii)Β the Allocated Consideration, as determined in accordance with the Company Organizational Documents and any applicable Contract pursuant to which a Securityholder was granted an equity interest in the Company. The parties hereto agree and acknowledge that the Securityholder Representative will update the Payment Schedule in accordance with the Closing Statement as finally determined pursuant to SectionΒ 1.06.
"Permitted Liens" means (i)Β statutory liens for Taxes, assessments or other similar charges by Governmental Entities securing payments not yet due and payable or the amount or validity of which is being contested in good faith by appropriate proceedings by the Company and for which appropriate reserves have been made in the Company’s books and records (in accordance with GAAP); (ii)Β mechanics', materialmens', carriers', workers', warehousemens', repairers' and similar statutory liens arising or incurred in the ordinary course of business for Liabilities which are not delinquent; (iii)Β zoning, entitlement, building and other land use regulations imposed by Governmental Entities having jurisdiction over any leased real property; (iv)Β covenants, conditions, restrictions, easements and other similar matters of record affecting title to any leased real property which do not materially impair the occupancy or use of such real property for the purposes for which it is currently used or proposed to be used in connection with the Company's and its Subsidiaries' businesses; (v)Β matters which would be disclosed by an inspection, a current title commitment, or accurate survey of each parcel of real property; (vi)Β to the extent not arising from a failure to comply with the requirements of applicable Law, liens arising under worker's compensation, unemployment insurance, social security, retirement and similar legislation; and (vii)Β other liens arising in the ordinary course of business and not incurred in connection with the borrowing of money, in each case that individually and in the aggregate do not materially impair the value of the business conducted by the Company and its Subsidiaries as carried out as at the date of this Agreement.
"Person" includes any individual, corporation, limited liability company, unlimited liability company, body corporate, partnership, limited partnership, limited liability partnership, firm, joint venture, syndicate, association, capital venture fund, trust, trustee, executor, administrator, legal personal representative, estate, government, Governmental Entity and any other form of entity or organization, whether or not having legal status.
"Personal Data" has the same meaning as the terms "personal data," "personal information," or the equivalent under the applicable Data Protection Law.
"Plan" means each "employee benefit plan" within the meaning of SectionΒ 3(3) of ERISA (whether or not subject to ERISA), and each other compensation or benefits plan or agreement, including,
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but not limited to, each stock purchase, stock option, restricted stock, performance award, phantom equity, equity or equity-based, profit-sharing, pension, retirement, savings, severance, retention, employment, consulting, independent contractor, commission, change-of-control, retention, transaction, bonus, incentive, deferred compensation, collective bargaining, welfare, disability, vacation, excess, supplemental, unemployment, paid time off, medical, dental, vision, disability, health, welfare, workers compensation, Code SectionΒ 125 cafeteria, fringe, termination and other benefit plan or agreement and any plan maintained by a Governmental Entity or any plan, agreement, or arrangement that is otherwise required to be maintained or provided by applicable Law, in each case, whether or not reduced to writing, whether or not tax-qualified, whether funded or unfunded, and whether or not subject to ERISA.
"Pre-Closing Tax Period" means any taxable period ending on or before the Closing Date and the portion ending on and including the Closing Date of any Straddle Period.
"Pro Rata Share" means, with respect to each Securityholder, the percentage set forth next to such Securityholder's name on the Payment Schedule in the column entitled "Pro Rata Share."
"Release Date" means March 31, 2022.
"Straddle Period" means any taxable period that includes (but does not end on) the Closing Date.
"Subsidiary" means, with respect to any Person, any corporation of which a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof, or any partnership, limited liability company, association, trust, or other business entity of which a majority of the partnership, limited liability company or other similar ownership interest is at the time owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries of such Person or a combination thereof. For purposes of this definition, a Person is deemed to have a majority ownership interest in a partnership, limited liability company, association or other business entity if such Person is allocated a majority of the gains or losses of such partnership, limited liability company, association or other business entity or is or controls the managing member or general partner or similar position of such partnership, limited liability company, association or other business entity.
"Tax" or "Taxes" means any federal, state, local or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, real property gains, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, customs, duties, real property, special assessment, personal property, capital stock, social security, unemployment, disability, payroll, license, employee or other withholding, or other tax, of any kind whatsoever, including any interest, penalties or additions to tax or additional amounts in respect of the foregoing.
"Tax Returns" means any return, report, information return or other document (including schedules or any related or supporting information) filed or required to be filed with any Governmental Entity or other authority in connection with the determination, assessment or collection of any Tax or the administration of any Laws or administrative requirements relating to any Tax.
"Transaction Expenses" means the sum of (i)Β all fees, costs and expenses of investment bankers, attorneys, accountants and other consultants and advisors retained by any Group Company in connection with the preparation, negotiation, execution and delivery of this Agreement and the
39

consummation of the Transactions on or before the Closing that are unpaid as of the Closing, including any known or unknown fees and expenses of the Company incurred or payable by the Company as of the Effective Time and not paid prior to the Effective Time; and (ii) (a)Β the amount of any retention bonus, change of control payment, transaction bonus, tax gross-up bonus, discretionary bonus or other similar payment that is or becomes payable to any employee, officer, director, or consultant, of the Company in connection with the Transactions, (b)Β  severance payable as a result of a right to resign and receive severance due to the occurrence of the Transactions, and (c)Β the employer's share of Taxes attributable to the payment of the amounts referred to in the preceding clauses (ii)(a) through (ii)(b).
"Treasury Regulations" means regulations promulgated under the Code.
"Undisclosed Liabilities" means all current Liabilities (including all deferred revenue Transaction Expenses and Indebtedness) of the Group Companies as of the Effective Time, in each case, determined in accordance with GAAP.
"Value" means, on the applicable date of determination or the Release Date, the average of the daily Market Prices (as defined below) for ten (10) consecutive trading days immediately preceding such date. The term "Market Price" on any date shall mean, with respect to Parent Common Shares, the Closing Price (as defined below) for such Parent Common Shares on such date. The "Closing Price" on any date shall mean the last sale price for such Parent Common Shares, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such Parent Common Shares, in either case as reported on the principal national securities exchange on which such Parent Common Shares are listed or admitted to trading or, if such Parent Common Shares are not listed or admitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the principal other automated quotation system that may then be in use or, if such Parent Common Shares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such Parent Common Shares selected by the board of trustees of Parent or, in the event that no trading price is available for such Parent Common Shares, the fair market value of the Parent Common Shares, as determined in good faith by the Company and the board of trustees of Parent.
11.02Β Other Definitional Provisions.
(a)Β Accounting Terms. Accounting terms that are not otherwise defined in this Agreement have the meanings given to them under GAAP. To the extent that the definition of an accounting term defined in this Agreement is inconsistent with the meaning of such term under GAAP, the definition set forth in this Agreement shall control.
(b)Β Successor Laws. Any reference to any particular Code section or Law shall be interpreted to include any revision of or successor to that section regardless of how it is numbered or classified.
11.03Β Cross-Reference of Other Definitions. Each capitalized term listed below is defined in the corresponding Section of this Agreement:
TermSectionΒ No.
Acquisition Transaction
5.04
Affiliate Agreement
3.21
40

AgreementPreface
AMARecitals
Cap
8.03(b)
CBCARecitals
Certificate of Merger
1.01(b)
Class A Op UnitsRecitals
Class X DownREIT UnitsRecitals
Closing
2.01
Closing Date
2.01
CodeRecitals
CompanyPreface
Company IT Systems
3.27(c)
Company Requisite Approval
7.01(c)
Company ShareRecitals
Confidential Information
12.19
Deductible
8.03(a)
Delaware Act
1.01(a)
Disclosure Schedules
Article X
Effective Time
1.01(b)
FPMARecitals
Letter of Transmittal
1.03(a)
Management Internalization TransactionRecitals
Manager PartiesRecitals
Material Contracts
3.11(b)
MergerRecitals
Merger SubPreface
NSA TRSRecitals
OPRecitals
Outside Date
9.01(e)
OwnersRecitals
ParentPreface
Parent Common ShareRecitals
Parent Common Share IssuanceRecitals
Parent Indemnitees
8.02
Parent's Representatives
5.02
PartiesPreface
Permits
3.18
REITRecitals
REIT UnitsRecitals
Retained Parent Common Shares
2.04
Retirement EventRecitals
41

SC Merger SubRecitals
SCARecitals
Schedule
10.01
SEC
12.19
SecurCare MergerRecitals
Securities ActRecitals
SecurityholderPreface
Solvent
4.09
Statement of Merger
1.01(b)
Surviving Company
1.01(a)
Tax Proceeding
10.03(c)
Third Party Consents
5.09
TransactionsRecitals
Transfer Taxes
10.03(a)
Article XII
MISCELLANEOUS
12.01Β Press Releases and Communications. No press release or public announcement related to this Agreement or the Transactions, or, prior to the Closing, any other announcement or communication to the employees, customers or vendors of the Company, shall be issued or made by the Company, the Securityholders or any of their respective Affiliates without the prior written consent of Parent and the Company, except such release or announcement as may be required by Law, or the rules or regulations of any stock exchange (in the reasonable opinion of counsel), in which case the Party required to issue or make the release or announcement shall (or cause its Affiliate to) allow Parent and/or the Company reasonable time to review and comment on such release or announcement in advance of such issuance or the making thereof.
12.02Β Expenses. Except as otherwise expressly provided herein, the Company, the Securityholders, Parent and Merger Sub shall pay all of their own fees and expenses incurred in connection with the preparation, negotiation, execution and delivery of this Agreement, the performance of their respective obligations hereunder and the consummation of the Transactions, including the fees and disbursements of counsel, financial advisors and accountants.
12.03Β Notices. All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (a)Β when personally delivered, (b)Β when transmitted (except if not a Business Day, then the next Business Day) via email to the email address set out below (provided that no "error" message or other notification of non-delivery is generated), (c)Β the day following the day (except if not a Business Day then the next Business Day) on which the same has been delivered prepaid to a reputable national overnight air courier service or (d)Β the third (3rd) Business Day following the day on which the same is sent by certified or registered mail, postage prepaid. Notices, demands and communications, in each case to the respective Parties, shall be sent to the applicable address set forth below, unless another address has been previously specified in writing by such Party:
42

Notices to Parent, the Surviving Company and/or Merger Sub:

National Storage Affiliates Trust
0000 Xxxx Xxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Email: xxxxxxxx@xxxxxxx.xxx

with a copy to (which shall not constitute notice):

Xxxxxxxx Chance US LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Β Xxx Xxxxxxxxx and Xxxxxx Xxxxxxx
Email: Β Β Xxx.Xxxxxxxxx@XxxxxxxxXxxxxx.xxx
Email: Β Β Xxxxxx.Xxxxxxx@XxxxxxxxXxxxxx.xxx


Notices to the Securityholders:

Xxxxx X. Xxxxxxxxx
0000 Xxxxx Xxxx Xxx
Xxxxxx, XX 00000

Lamb Family Trust of 4/12/1982
x/x Xxxxx Xxxx, Xxxxxxx
Xxxxxxxx Homes
0000 Xxxxxx Xxxxx, Xxx 000
Xxxxxx, XX 00000

with a copy to (which shall not constitute notice):

Xxxxxxx & Xxxxxx L.L.C.
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention:Β Xxxxxx X. Xxxxxx
Email:Β Β xxxxxxx@xxxxxxxxxxxxx.xxx

Notices to the Company:

Xxxxx X. Xxxxxxxxx
0000 X. Xxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
Email: xxxxxxxxxx@xxxxxxx.xxx

with copies to (before the Closing) (which shall not constitute notice):
43

Xxxxxxx & Xxxxxx L.L.C.
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention:Β Xxxxxx X. Xxxxxx
Email:Β Β xxxxxxx@xxxxxxxxxxxxx.xxx


12.04Β Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns, except that neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned or delegated by Parent, Merger Sub or the Securityholders without the prior written consent of the non-assigning Parties; provided that Parent may assign any or all of its rights, interests and obligations under this Agreement before or after the Closing Date to any Affiliate; provided, further, that Parent will nonetheless remain liable for all of its obligations hereunder.
12.05Β Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the Parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision. Upon any such determination, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the Transactions be consummated as originally contemplated to the fullest extent possible.
12.06Β References. The table of contents and the section and other headings and subheadings contained in this Agreement and the exhibits hereto are solely for the purpose of reference, are not part of the agreement of the Parties, and shall not in any way affect the meaning or interpretation of this Agreement or any exhibit hereto. All references to days (excluding Business Days) or months shall be deemed references to calendar days or months. All references to "$" shall be deemed references to U.S. dollars. Unless the context otherwise requires, any reference to a "Section," "Exhibit," "Disclosure Schedule" or "Schedule" shall be deemed to refer to a section of this Agreement, an exhibit to this Agreement or a schedule to this Agreement, as applicable. Unless context otherwise requires, any references to any statute, regulation, or agreement are to such statute, regulation, or agreement as amended and supplemented from time to time (and, in the case of a statute or regulation, to any successor provisions). The words "hereof," "herein" and "hereunder" and words of similar import referring to this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. The word "including" or any variation thereof means "including, without limitation" and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it. Unless the context requires otherwise, words in this Agreement using the singular or plural number also include the plural or singular number, respectively, and the use of any gender herein shall be deemed to include the other genders. The words "to the extent" shall mean the degree to which a subject or other thing extends, and shall not simply mean "if." The term "or" has the inclusive meaning represented by the phrase "and/or." When calculating the period of time before which, within which or following which any act is to be done or step taken under this Agreement, the date that is the reference date in calculating such period will be excluded. If the last day of such period is a non-
44

Business Day, the period in question will end on the next succeeding Business Day. The words "shall" and "will" shall be construed as creating a mandatory obligation. Any Law referred to herein means such Law as from time to time amended, modified or supplemented. The phrase "ordinary course of business" shall be deemed to be followed by the phrase "consistent with past practice" (to the extent not already so followed). The phrase "made available" to Parent (or other similar phrases) means the information or other material has been posted prior to the date hereof in the electronic data room established on behalf of the Securityholders to which Parent and Parent's Representatives have access.
12.07Β Construction. The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against any Person. The specification of any dollar amount or the inclusion of any item in the representations and warranties contained in this Agreement or the Disclosure Schedules or Exhibits attached hereto is not intended to imply that the amounts, or higher or lower amounts, or the items so included, or other items, are or are not required to be disclosed under other provisions of this Agreement (including whether such amounts or items are required to be disclosed as material or threatened) or are within or outside of the ordinary course of business, and no Party shall use the fact of the setting of the amounts or the fact of the inclusion of any item in this Agreement or the Disclosure Schedules or Exhibits in any dispute or controversy between the Parties as to whether any obligation, item or matter not described or included in this Agreement or in any Schedule or Exhibit is or is not required to be disclosed (including whether the amount or items are required to be disclosed as material or threatened) or is within or outside of the ordinary course of business for purposes of this Agreement. The information contained in this Agreement and in the Disclosure Schedules and Exhibits hereto is disclosed solely for purposes of this Agreement, and no information contained herein or therein shall be deemed to be an admission by any Party to any third party of any matter whatsoever (including any violation of Law or breach of contract).
12.08Β Amendment and Waiver. Any provision of this Agreement or the Disclosure Schedules hereto may be amended or waived only in a writing signed (a)Β in the case of any amendment, by Parent, the Company (or the Surviving Company following the Closing) and the Securityholders and (b)Β in the case of a waiver, by the Party or Parties waiving rights hereunder; provided, however, that after the receipt of the Company Requisite Approval, no amendment to this Agreement shall be made which by Law requires further approval by the shareholders of the Company without such further approval by such Persons. No waiver of any provision hereunder or any breach or default thereof shall extend to or affect in any way any other provision or prior or subsequent breach or default.
12.09Β Complete Agreement. This Agreement and the documents referred to herein and other documents executed in connection herewith or at the Closing contain the complete agreement between the Parties and supersede any prior understandings, agreements or representations by or between the Parties, written or oral, which may have related to such subject matter in any way, including any data room agreements, bid letters, term sheets, summary issues lists or other agreements.
12.10Β Third-Party Beneficiaries. Except as otherwise expressly provided herein, nothing expressed or referred to in this Agreement shall be construed to give any Person other than the Parties to this Agreement any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement.
12.11Β Waiver of Trial by Jury. THE PARTIES TO THIS AGREEMENT EACH HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS
45

AGREEMENT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
12.12Β Parent Deliveries. Parent agrees and acknowledges that all documents or other items delivered or made available to Parent's Representatives shall be deemed to be delivered or made available, as the case may be, to Parent for all purposes hereunder.
12.13Β Delivery by Email. This Agreement and any signed agreement entered into in connection herewith or contemplated hereby, and any amendments hereto or thereto, to the extent signed and delivered by means of scanned pages via electronic mail, shall be treated in all manner and respects as original contracts and shall be considered to have the same binding legal effects as if they were the original signed versions thereof delivered in person. At the request of any Party hereto or to any such contract, each other Party hereto or thereto shall re-execute original forms thereof and deliver them to all other Parties. No Party hereto or to any such contract shall raise the use of email to deliver a signature or the fact that any signature or contract was transmitted or communicated through the use of email as a defense to the formation of a contract and each such Party forever waives any such defense. This Agreement is not binding unless and until signature pages are executed and delivered by each of the Company, Parent, Merger Sub and the Securityholders.
12.14Β Counterparts. This Agreement may be executed in multiple counterparts, any one of which need not contain the signature of more than one (1) Party, but all such counterparts taken together shall constitute one and the same instrument.
12.15Β Governing Law. All issues and questions concerning the construction, validity, interpretation and enforceability of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to any choice of Law or conflict of Law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware.
12.16Β Jurisdiction. Any suit, Action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the Transactions shall be brought and determined exclusively in the Delaware Court of Chancery of the State of Delaware; provided that if the Delaware Court of Chancery does not have jurisdiction, any such suit, Action or proceeding shall be brought exclusively in the United States District Court for the District of Delaware or any other court of the State of Delaware, and each of the Parties hereby consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, Action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection which it may now or hereafter have to the laying of the venue of any such suit, Action or proceeding in any such court or that any such suit, Action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, Action or proceeding may be served on any Party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the
46

foregoing, each Party agrees that service of process on such Party as provided in SectionΒ 12.03 shall be deemed effective service of process on such Party.
12.17Β Remedies Cumulative. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a Party shall be deemed cumulative with, and not exclusive of, any other remedy conferred hereby, or by Law or equity upon such Party, and the exercise by a Party of any one remedy shall not preclude the exercise of any other remedy, except as expressly set forth herein.
12.18Β No Recourse. Notwithstanding any provision of this Agreement or otherwise, the Parties to this Agreement agree on their own behalf and on behalf of their respective Subsidiaries and Affiliates that this Agreement may only be enforced against, and any action, suit or claim for breach of this Agreement may only be made against, the Parties to this Agreement, and no Non-Recourse Party of a Party to this Agreement shall have any liability relating to this Agreement or any of the Transactions.
12.19Β Specific Performance. Each of the Parties acknowledges and agrees that in the event of a breach of this Agreement by any Party, money damages may be inadequate and the non-breaching Party may have no adequate remedy at law. Accordingly, the Parties agree that prior to a valid termination of this Agreement in accordance with this Agreement, such non-breaching Party shall have the right, in addition to any other rights and remedies existing in its favor at law or in equity, to enforce its rights and the other Party's obligations hereunder not only by an Action or Actions for damages but also by an Action or Actions for specific performance, injunctive and/or other equitable relief (without posting of bond or other security).
12.20Β Confidentiality. This Agreement, as well as any information related to the Transactions (the "Confidential Information"), shall be maintained by each Party (and each such Party shall cause its Affiliates to maintain), in strict confidence and may not be disclosed to third parties without the prior written consent of Parent or the Securityholders (as applicable); provided that nothing in this sentence shall limit the disclosure by the receiving Party of any Confidential Information (a)Β to the extent required by applicable Law or the rules or regulations of any stock exchange, or in the case of Parent, by the U.S. Securities and Exchange Commission (the "SEC") (provided, further, that, to the extent permitted by applicable Law, the rules or regulations of any stock exchange or the SEC (as applicable), the receiving Party agrees to give Parent or the Securityholders (as applicable) prior notice of such disclosure and reasonably cooperate, at Parent's or the Securityholders' (as applicable) sole cost and expense, with any efforts to seek confidential treatment of any such information required by applicable Law, the rules or regulations of any stock exchange or the SEC to be disclosed), (b)Β in a dispute brought by a Party in pursuit of its rights or in the exercise of its remedies under this Agreement, and (c)Β to the extent that such information can be shown to have come within the public domain through no fault of the disclosing Party in violation hereof. This SectionΒ 12.20 shall not apply to any public announcement made in accordance with SectionΒ 12.01.
* * * *

47

IN WITNESS WHEREOF, the Parties have executed this Agreement and Plan of Merger on the day and year first above written.

Company:DLAN CORPORATION

/s/ Xxxxx X. Xxxxxxxxx

By: Xxxxx X. Xxxxxxxxx

Its: President


Securityholders:
LAMB FAMILY TRUST OF 4/12/1982

/s/ Xxxxx Xxxx

By: Xxxxx Xxxx

Its: Trustee



XXXXX X. XXXXXXXXX

/s/ Xxxxx X. Xxxxxxxxx

Xxxxx X. Xxxxxxxxx








Parent:NATIONAL STORAGE AFFILIATES TRUST

By: /s/ Xxxxxx X. Xxxxxxx

Its: President and CEO








Merger Sub:NSA HOLDING COMPANY II, LLC

By: /s/ Xxxxxx X. Xxxxxxx

Its: Authorized Person
















ScheduleΒ A
Payment Schedule
[Intentionally Omitted]


Exhibit A
Form of Certificate of Merger
[Intentionally Omitted]
















































Exhibit B
Form of Statement of Merger
[Intentionally Omitted]
















































Exhibit C
Form of Letter of Transmittal
[Intentionally Omitted]

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Filed: April 10th, 2020
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