UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
- --------------------------------------------------------------------------------
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarterly Period Ended September 30, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition Period from __________ to __________
Commission file number 0-27584
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IRON MOUNTAIN INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
Delaware 04-3107342
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
745 Atlantic Avenue, Boston, MA 02111
-------------------------------------
(Address of Principal Executive Offices, Including Zip Code)
(617) 357-4455
--------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
As of November 5, 1996, there were 9,652,959 shares of the Registrant's Common
Stock, par value $0.01 per share, and 477,295 shares of the Registrant's
Non-voting Common Stock, par value $0.01 per share outstanding.
<PAGE>
IRON MOUNTAIN INCORPORATED
INDEX
<TABLE>
<CAPTION>
Page
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PART I - FINANCIAL INFORMATION
<S> <C>
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets at December 31, 1995 and
September 30, 1996 (Unaudited) 3
Condensed Consolidated Statements of Operations for the Three Months Ended
September 30, 1995 and 1996 (Unaudited) 4
Condensed Consolidated Statements of Operations for the Nine Months Ended
September 30, 1995 and 1996 (Unaudited) 5
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 1995 and 1996 (Unaudited) 6
Notes to Condensed Consolidated Financial Statements (Unaudited) 7-10
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations 11-15
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 16
Item 6 - Exhibits and Reports on Form 8-K 16
Signatures 17
</TABLE>
2
<PAGE>
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1995 1996
-------------- --------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and Cash Equivalents $ 1,585 $ 3,812
Accounts Receivable (less allowance for doubtful
accounts of $651 and of $875, respectively) 16,936 21,194
Inventories 682 688
Deferred Income Taxes 1,943 2,205
Prepaid Expenses and Other Current Assets 1,862 548
---------- ----------
Total Current Assets 23,008 28,447
PROPERTY, PLANT AND EQUIPMENT:
Property, Plant and Equipment at Cost 125,240 153,426
Less: Accumulated Depreciation (32,564) (42,201)
---------- ----------
Property, Plant and Equipment, Net 92,676 111,225
OTHER ASSETS:
Goodwill 59,253 92,909
Customer Acquisition Costs 5,210 6,089
Deferred Financing Costs 2,638 2,077
Other 4,096 6,402
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Total Other Assets 71,197 107,477
---------- ----------
Total Assets $186,881 $ 247,149
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current Portion of Long-term Debt $ 2,578 $ 330
Accounts Payable 4,797 4,591
Accrued Expenses 10,917 13,302
Deferred Income 3,108 3,090
Other Current Liabilities 469 415
---------- ----------
Total Current Liabilities 21,869 21,728
LONG-TERM DEBT, NET OF CURRENT PORTION 119,296 151,647
DEFERRED RENT 7,983 7,804
DEFERRED INCOME TAXES 3,621 4,453
OTHER LONG-TERM LIABILITIES 6,769 6,769
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PUT WARRANT 6,332 --
STOCKHOLDERS' EQUITY:
Preferred Stock 5 --
Common Stock - Voting 0 96
Common Stock - Non-voting -- 5
Additional Paid-In Capital 28,809 62,033
Accumulated Deficit (7,803) (7,386)
---------- ----------
Total Stockholders' Equity 21,011 54,748
---------- ----------
Total Liabilities and Stockholders' Equity $186,881 $247,149
========== ==========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
3
<PAGE>
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------
1995 1996
-------------- --------------
<S> <C> <C>
REVENUES:
Storage $ 16,246 $ 22,056
Service and Storage Material Sales 10,324 13,963
-------- --------
Total Revenues 26,570 36,019
OPERATING EXPENSES:
Cost of Sales (Excluding Depreciation) 12,888 18,708
Selling, General and Administrative 6,358 8,695
Depreciation and Amortization 3,775 4,366
-------- --------
Total Operating Expenses 23,021 31,769
-------- --------
OPERATING INCOME 3,549 4,250
INTEREST EXPENSE 2,881 3,596
-------- --------
Income Before Provision for Income Taxes 668 654
PROVISION FOR INCOME TAXES 936 654
-------- --------
Net Income (Loss) (268) --
ACCRETION OF REDEEMABLE PUT WARRANT 554 --
-------- --------
Net Income (Loss) Applicable to Common
Stockholders $ (822) $ --
======== ========
NET INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT
SHARE $ (0.11) $ 0.00
======== ========
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 7,777 10,505
======= ========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
4
<PAGE>
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
------------------------------
1995 1996
------------- --------------
<S> <C> <C>
REVENUES:
Storage $ 46,994 $ 61,419
Service and Storage Material Sales 29,800 38,550
-------- --------
Total Revenues 76,794 99,969
OPERATING EXPENSES:
Cost of Sales (Excluding Depreciation) 38,000 51,091
Selling, General and Administrative 19,055 24,762
Depreciation and Amortization 9,203 11,896
-------- --------
Total Operating Expenses 66,258 87,749
-------- --------
OPERATING INCOME 10,536 12,220
INTEREST EXPENSE 8,817 9,981
-------- --------
Income Before Provision for Income Taxes 1,719 2,239
PROVISION FOR INCOME TAXES 1,567 1,542
-------- --------
Net Income 152 697
ACCRETION OF REDEEMABLE PUT WARRANT 1,507 280
-------- --------
Net Income (Loss) Applicable to Common
Stockholders $ (1,355) $ 417
======== ========
NET INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT
SHARE $ (0.17) $ 0.04
======== ========
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 7,786 10,101
======== ========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
5
<PAGE>
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
------------------------------
1995 1996
------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 152 $ 697
Adjustments to Reconcile Net Income to Net Cash
Provided by Operations:
Depreciation and Amortization 9,203 11,896
Amortization of Financing Costs 940 637
Provision for Deferred Income Taxes 783 370
Loss on Sale of Fixed Assets 264 --
Other -- (14)
Changes in Assets and Liabilities (Exclusive of
Acquisitions):
Accounts Receivable (2,247) (2,355)
Inventories (124) 20
Prepaid Expenses and Other Current Assets 98 1,233
Other Assets -- (221)
Accounts Payable 400 (438)
Accrued Expenses 4,212 169
Deferred Income (639) (1,143)
Other Current Liabilities (129) (55)
Deferred Rent (23) (179)
Other Long-term Liabilities (24) --
-------- --------
Cash Flows Provided by Operations 12,866 10,617
CASH FLOWS FROM INVESTING ACTIVITIES:
Net Cash Paid for Acquisitions (15,157) (45,638)
Capital Expenditures (11,774) (17,413)
Additions to Customer Acquisition Costs (871) (1,265)
Other (109) (25)
-------- --------
Cash Flows Used in Investing Activities (27,911) (64,341)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Borrowings 17,350 60,520
Repayment of Debt (622) (30,435)
Financing Costs (1,419) (824)
Proceeds from Initial Public Offering, Net of Costs
and Expenses -- 33,286
Retirement of Put Warrant -- (6,612)
Proceeds from Exercise of Stock Options 200 16
Repurchase of Stock (199) --
-------- --------
Cash Flows Provided by Financing Activities 15,310 55,951
-------- --------
INCREASE IN CASH AND CASH EQUIVALENTS 265 2,227
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,303 1,585
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,568 $ 3,812
======== ========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
6
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands except Per Share Data)
(Unaudited)
(1) GENERAL
The interim condensed consolidated financial statements presented herein have
been prepared by Iron Mountain Incorporated ("Iron Mountain" or the "Company")
without audit and, in the opinion of management, reflect all adjustments of a
normal recurring nature necessary for a fair presentation. Interim results are
not necessarily indicative of results for a full year.
The condensed consolidated balance sheet presented as of December 31, 1995, has
been derived from the consolidated financial statements that have been audited
by the Company's independent public accountants. The unaudited condensed
consolidated financial statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in the annual financial statements
prepared in accordance with generally accepted accounting principles have been
omitted pursuant to those rules and regulations, but the Company believes that
the disclosures are adequate to make the information presented not misleading.
The condensed consolidated financial statements and notes included herein should
be read in conjunction with the consolidated financial statements and notes
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1995.
(2) INITIAL PUBLIC OFFERING OF COMMON STOCK
On February 6, 1996, the Company completed the sale of 2,350 shares of its
common stock in an initial public offering at a price of $16.00 per share. The
proceeds from the public offering were $34,968 after underwriting discounts and
commissions, and $33,286 after other expenses of the offering totaling $1,682.
Such net proceeds were used to retire the redeemable put warrant for $6,612, to
fund acquisitions, to repay debt that had been incurred to make acquisitions and
for working capital.
(3) ACQUISITIONS AND DISPOSITIONS
During 1995, the Company purchased four records management businesses. During
the nine months ended September 30, 1996, the Company purchased eleven
additional records management businesses. Each of these acquisitions was
accounted for using the purchase method of accounting, and accordingly, the
results of operations for each acquisition have been included in the
consolidated results of the Company from the respective acquisition dates. The
purchase price for the 1996 acquisitions exceeded the underlying fair value of
the net assets acquired by $35,922, which has been assigned to goodwill and is
being amortized over the estimated benefit period of 25 years. Funds used to
make the various acquisitions were provided through the Company's acquisition
credit facility and, indirectly, a portion of the net proceeds of the Company's
initial public offering. A summary of the net cash consideration and allocation
of the purchase price as of the acquisition dates are as follows:
1996
---------
Fair Value of Assets Acquired in 1996 $ 49,410
Liabilities Assumed (3,772)
---------
Net Cash Paid $ 45,638
=========
7
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands except Per Share Data)
(Unaudited)
(Continued)
The following unaudited pro forma information shows the results of the Company's
operations for the year ended December 31, 1995 and the nine months ended
September 30, 1996, as though each of the completed acquisitions had occurred as
of January 1, 1995:
1995 1996
------------ ------------
Revenues $132,100 $107,425
Net Income (Loss) (1,751) 77
Accretion of Redeemable Put Warrant 2,107 280
-------- --------
Net Income (Loss) Applicable to
Stockholders $ (3,858) $ (203)
======== ========
Net Income (Loss) Per Share $ (0.50) $ (0.02)
======== ========
The pro forma results have been prepared for comparative purposes only and are
not necessarily indicative of the actual results of operations had the
acquisitions taken place as of January 1, 1995 or the results that may occur in
the future. Furthermore, the pro forma results do not give effect to all cost
savings or incremental costs which may occur as a result of the integration and
consolidation of the companies.
(4) LONG-TERM DEBT
During the third quarter of 1996, the Company increased the amount of its
Acquisition Credit Facility, from $50,000 to $55,000, with no significant change
in terms.
On September 30, 1996, the Company entered into a new $100,000 revolving credit
facility (the "New Credit Facility"). The availability of the New Credit
Facility was conditioned upon, among other things, the Company receiving at
least $125,000 from the issuance of its senior subordinated notes (see Note 6).
The New Credit Facility is a five year revolving credit facility maturing on
September 30, 2001.
The New Credit Facility specifies certain minimum or maximum relationships
between operating cash flows (earnings before interest, taxes, depreciation and
amortization) and interest, total debt and fixed charges. There are restrictions
on dividends declared by the Company, sales or pledging of assets, capital
expenditures and changes in business and ownership; cash dividends are
effectively prohibited. Loans under the New Credit Facility are secured by the
capital stock of all of the Company's subsidiaries.
The interest rate on loans under the New Credit Facility varies, at the
Company's option, on a choice of base rates plus an applicable margin. The
applicable margin varies depending on the base rate selected and certain debt
ratios. The timing of interest payments also varies with the base rate selected.
8
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands except Per Share Data)
(Unaudited)
(Continued)
Long-term debt as of December 31, 1995 and September 30, 1996, is as follows:
1995 1996
------------ ------------
Term Loans A and B $ 59,625 $ 58,000
$55,000 Acquisition Credit Facility 34,400 54,470
$15,000 Working Capital Facility 1,700 13,500
Chrysler Notes 14,772 14,824
Real Estate Mortgages 10,797 10,755
Other 580 428
---------- ----------
Total Long-term Debt 121,874 151,977
Less: Current Portion (2,578) (330)
---------- ----------
Long-term Debt, Net of Current Portion $ 119,296 $ 151,647
========= =========
(5) COMMITMENTS AND CONTINGENCIES
Litigation
Iron Mountain is presently involved as a defendant in various litigation which
has occurred in the normal course of business. Management believes it has
meritorious defenses in all such actions, and in any event, the amount of
damages, if such matters were decided adversely, would not have a material
adverse effect on Iron Mountain's financial condition or results of operations.
(6) SUBSEQUENT EVENTS
Debt Offering
On October 1, 1996, the Company successfully completed the sale of $165,000 of
10-1/8% Senior Subordinated Notes due 2006 (the "Notes"). The net proceeds to
the Company were $160,050 after underwriting discounts and commissions. The net
proceeds of the sale of the Notes, after payment of related expenses, were used
to repay outstanding bank debt under the existing credit agreement, the Chrysler
Notes and certain other indebtedness, to fund the purchase price of an
acquisition and for general corporate purposes. In connection with the
prepayment of the outstanding bank debt, the Chrysler Notes and certain other
indebtedness, the Company expects to incur an extraordinary charge, net of
related tax benefit, of approximately $2 million during the fourth quarter of
1996. The charge consists of, among other things, a prepayment penalty and the
write-off of deferred financing costs and original issue discount.
The Notes contain covenants and restrictions similar to, or less restrictive
than, the New Credit Facility (see Note 4). Subject to certain restrictions and
limitations, the Company, at its option, may redeem any or all of the Notes at
face value plus a premium ranging from approximately 2% to 9% through September
30, 2004. Thereafter, the Notes may be redeemed at face value. Additionally,
under certain circumstances, including a change of control or following certain
asset sales, the holders of the Notes may require the Company to repurchase the
Notes.
The Notes are fully and unconditionally guaranteed, on a joint and several
basis, by all of the Company's direct and indirect subsidiaries (the "Subsidiary
Guarantors"). The Company is a holding company, substantially all of the assets
of which are the stock of the Subsidiary Guarantors, and substantially all of
the
9
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands except Per Share Data)
(Unaudited)
(Continued)
operations of which are conducted by the Subsidiary Guarantors. Accordingly,
the aggregate assets, liabilities, earnings and equity of the Subsidiary
Guarantors are substantially equivalent to the assets, liabilities, earnings and
equity of the Company on a consolidated basis. Management of the Company
believes that separate financial statements of, and other disclosures with
respect to, the Subsidiary Guarantors are not meaningful or material to
investors.
Acquisitions
Subsequent to September 30, 1996, the Company acquired four records management
businesses for approximately $22,547 (not including contingent payments of up to
$4,000 based upon the achievement of certain revenue targets in 1997 and
1998), in transactions that were accounted for as purchases.
10
<PAGE>
IRON MOUNTAIN INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the Company's financial condition and
results of operations for the three and nine month periods ended September 30,
1995 and 1996 should be read in conjunction with the condensed consolidated
financial statements and footnotes for the three and nine month periods ended
September 30, 1996, included herein, and the consolidated financial statements
and footnotes for the year ended December 31, 1995, included in the Company's
Annual Report filed on Form 10-K.
Results of Operations
Three Months Ended September 30, 1996 Compared to Three Months Ended
September 30, 1995
Storage revenue increased from $16.3 million for the third quarter of 1995 to
$22.1 million for the third quarter of 1996, an increase of $5.8 million, or
35.8%. Fifteen acquisitions completed by the Company in 1995 and the first nine
months of 1996 accounted for $4.1 million, or 70.1%, of such increase. The
balance of the storage revenue growth resulted primarily from net increases in
Cartons stored by existing customers and from sales to new customers. The term
"Carton" is defined as a measurement of volume equal to a single standard
storage carton, approximately 1.2 cubic feet.
Service and storage material sales revenue increased from $10.3 million for the
third quarter of 1995 to $13.9 million for the third quarter of 1996, an
increase of $3.6 million, or 35.2%. Acquisitions accounted for $2.6 million, or
71.9%, of such increase. The balance of such increase resulted from increases in
service and storage material sales to existing customers and the addition of new
customer accounts.
For the reasons discussed above, total revenue increased from $26.6 million for
the third quarter of 1995 to $36.0 million for the third quarter of 1996, an
increase of $9.4 million, or 35.6%. Of such increase, $6.7 million, or 70.8%,
was attributable to acquisitions completed by the Company in 1995 and the first
nine months of 1996.
Cost of sales (excluding depreciation) increased from $12.9 million for the
third quarter of 1995 to $18.7 million for the third quarter of 1996, an
increase of $5.8 million, or 45.2%, and increased as a percentage of revenue
from 48.5% for the third quarter of 1995 to 51.9% for the third quarter of 1996.
The $5.8 million increase was primarily attributable to the increase in Cartons
stored and additional rent and moving expenses associated with certain facility
relocations. The increase as a percentage of revenue was primarily attributable
to recent acquisitions generally having lower gross margins than the rest of the
Company.
Selling, general and administrative expenses increased from $6.4 million for the
third quarter of 1995 to $8.7 million for the third quarter of 1996, an increase
of $2.3 million, or 36.8%, and increased as a percentage of revenue from 23.9%
for the third quarter of 1995 to 24.2% for the third quarter of 1996. The dollar
increase was primarily attributable to costs associated with the Company's
accelerated acquisition activity, including certain redundant transitional
expenses as new acquisitions are integrated into the Company and the addition of
personnel needed to support the Company's growth. A non-recurring charge of $0.1
million related to moving the corporate accounting function from Los Angeles to
Boston was recorded during the third quarter of 1996.
Depreciation and amortization expense increased from $3.8 million for the third
quarter of 1995 to $4.4 million for the third quarter of 1996, an increase of
$0.6 million, or 15.7%, and decreased as a percentage of revenue from 14.2% for
the third quarter of 1995 to 12.1% for the third quarter of 1996. The dollar
increase was primarily attributable to the additional depreciation and
amortization expense related to the aforementioned acquisitions, capital
expenditures and additions to customer acquisition costs. The decrease as a
percentage of revenue was primarily attributable to a one-time charge of $0.9
million recorded in the third quarter of 1995 in connection with the write-down
of the goodwill of a subsidiary due to the Company's
11
<PAGE>
IRON MOUNTAIN INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
decision to sell such subsidiary at an estimated price which was $0.9 million
less than such subsidiary's net book value and related goodwill. The Company
subsequently decided not to sell such subsidiary.
As a result of the foregoing factors, operating income increased from $3.5
million for third quarter of 1995 to $4.2 million for the third quarter of 1996,
an increase of $0.7 million, or 19.8%. As a percentage of revenue, operating
income decreased from 13.4% of revenue for the third quarter of 1995 to 11.8% of
revenue for the third quarter of 1996.
Interest expense increased from $2.9 million for the third quarter of 1995 to
$3.6 million for the third quarter of 1996, an increase of $0.7 million, or
24.8%. The increase was primarily attributable to increased indebtedness related
to financing acquisitions and capital expenditures, which was partially offset
by reduced interest rates.
As a result of the foregoing factors, income before provision for income taxes
was $0.7 million (2.5% of revenue) for the third quarter of 1995 and $0.7
million (1.8% of revenue) for the third quarter of 1996. Provision for income
taxes decreased from $0.9 million (3.5% of revenue) for the third quarter of
1995 to $0.7 million (1.8% of revenue) for the third quarter of 1996. The
Company's effective tax rate is higher than statutory rates primarily due to the
amortization of the non-deductible portion of goodwill associated with
acquisitions made prior to the change in tax laws which now generally permits
deduction of such expenses.
Net income (loss) was a loss of $0.3 million (1.0% of revenue) for the third
quarter of 1995 compared to breakeven (0.0% of revenue) for the third quarter of
1996, an increase of $0.3 million, or 100.0%. Net income (loss) applicable to
common stockholders was a $0.8 million loss (3.1% of revenue) for the third
quarter of 1995 compared to breakeven (0.0% of revenue) for the third quarter of
1996. The loss for the third quarter of 1995 included a charge of $0.5 million
for accretion related to a redeemable put warrant. The put warrant was redeemed
in full in February 1996, with a portion of the proceeds from the Company's
initial public offering of common stock. As a result of such redemption, there
will be no future charges for such accretion.
As a result of the foregoing factors, earnings before interest, taxes,
depreciation, amortization and extraordinary charges ("EBITDA") increased from
$7.3 million for the third quarter of 1995 to $8.6 million for the third quarter
of 1996, an increase of $1.3 million, or 17.6%. As a percentage of revenue,
EBITDA decreased from 27.6% for the third quarter of 1995 to 23.9% for the third
quarter of 1996.
During the third quarter of 1996, the Company acquired five records management
businesses, more than any other quarter in the Company's history. As a result of
the Company's acquisition activity, gross profit and EBITDA margins were lower
for the third quarter of 1996 compared to the same period for the prior year.
The decrease was primarily attributable to the acquired businesses initially
being less operationally efficient than the Company and that expected margin
increases are generally not realized immediately.
Nine Months Ended September 30, 1996 Compared to Nine Months Ended
September 30, 1995
Storage revenue increased from $47.0 million for the first nine months of 1995
to $61.4 million for the first nine months of 1996, an increase of $14.4
million, or 30.7%. Fifteen acquisitions completed by the Company in 1995 and the
first nine months of 1996 accounted for $9.6 million, or 66.8%, of such
increase.
12
<PAGE>
IRON MOUNTAIN INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
The balance of the storage revenue growth resulted primarily from net increases
in Cartons stored by existing customers and from sales to new customers.
Service and storage material sales revenue increased from $29.8 million for the
first nine months of 1995 to $38.6 million for the first nine months of 1996, an
increase of $8.8 million, or 29.4%. Acquisitions accounted for $6.0 million, or
68.9%, of such increase. The balance of such increase resulted from increases in
service and storage material sales to existing customers and the addition of new
customer accounts.
For the reasons discussed above, total revenue increased from $76.8 million for
the first nine months of 1995 to $100.0 million for the first nine months of
1996, an increase of $23.2 million, or 30.2%. Of such increase, $15.7 million,
or 67.6%, was attributable to acquisitions completed by the Company in 1995 and
the first nine months of 1996.
Cost of sales (excluding depreciation) increased from $38.0 million for the
first nine months of 1995 to $51.1 million for the first nine months of 1996, an
increase of $13.1 million, or 34.4%, and increased as a percentage of revenue
from 49.5% for the first nine months of 1995 to 51.1% for the first nine months
of 1996. The increase was primarily attributable to the increase in Cartons
stored, increased expenses related to the severe winter weather on the Atlantic
coast during the first quarter of 1996 and expenses related to certain facility
relocations. The increase as a percentage of revenue was primarily attributable
to recent acquisitions generally having lower gross margins than the rest of the
Company.
Selling, general and administrative expenses increased from $19.1 million for
the first nine months of 1995 to $24.8 million for the first nine months of
1996, an increase of $5.7 million, or 29.9%, and remained constant as a
percentage of revenues at 24.8% for the first nine months of 1995 and for the
first nine months of 1996. The $5.7 million increase was primarily attributable
to the costs associated with becoming a public company, with accelerated
acquisition activity, including certain redundant transitional expenses as new
acquisitions were integrated into the Company, and the addition of personnel
needed to support the Company's growth. A charge of $0.5 million related to
moving the corporate accounting function from Los Angeles to Boston was taken
during the first nine months of 1996. Additionally, the selling, general and
administrative expenses of acquired companies tend to be higher than Iron
Mountain's, and cost reductions and other possible synergies are not realized
immediately.
Depreciation and amortization expense increased from $9.2 million for the first
nine months of 1995 to $11.9 million for the first nine months of 1996, an
increase of $2.7 million, or 29.3%, and decreased as a percentage of revenue
from 12.0% for the first nine months of 1995 to 11.9% for the first nine months
of 1996. The $2.7 million increase was primarily attributable to the additional
depreciation and amortization expense related to the aforementioned
acquisitions, capital expenditures, including racking systems, information
systems and improvements to existing facilities, and additions to customer
acquisition costs. A one-time charge of $0.9 million was recorded in the nine
month period ended September 30, 1995 in connection with the write-down of the
goodwill of a subsidiary due to the Company's decision to sell such subsidiary
at an estimated price which was $0.9 million less than such subsidiary's net
book value and related goodwill. The Company subsequently decided not to sell
such subsidiary.
As a result of the foregoing factors, operating income increased from $10.5
million for the first nine months of 1995 to $12.2 million for the first nine
months of 1996, an increase of $1.7 million, or 16.0%. As a percentage of
revenue, operating income decreased from 13.7% for the first nine months of 1995
to 12.2% for the first nine months of 1996.
13
<PAGE>
IRON MOUNTAIN INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
Interest expense increased from $8.8 million for the first nine months of 1995
to $10.0 million for the first nine months of 1996, an increase of $1.2 million,
or 13.2%. The $1.2 million increase was primarily attributable to increased
indebtedness to finance acquisitions and capital expenditures. Such increase was
partially offset by a net decrease in interest rates.
As a result of the foregoing factors, income before provision for income taxes
increased from $1.7 million (2.2% of revenue) for the first nine months of 1995
to $2.2 million (2.2% of revenue) for the first nine months of 1996, an increase
of $0.5 million, or 30.3%. Provision for income taxes decreased from $1.6
million (2.0% of revenue) for the first nine months of 1995 to $1.5 million
(1.5% of revenue) for the first nine months of 1996. The Company's effective tax
rate is higher than statutory rates primarily due to the amortization of the
non-deductible portion of goodwill associated with acquisitions made prior to
the change in tax laws which now generally permits deduction of such expenses.
Net income increased from $0.2 million (0.2% of revenue) for the first nine
months of 1995 to $0.7 million (0.7% of revenue) for the first nine months of
1996, an increase of $0.5 million, or 358.6%. Net income (loss) applicable to
common stockholders was a $1.4 million loss (1.8% of revenue), after accretion
of $1.5 million related to a redeemable put warrant, for the first nine months
of 1995 compared to net income of $0.4 million (0.4% of revenue), after
accretion of $0.3 million related to the redeemable put warrant, for the first
nine months of 1996. The put warrant was redeemed in full in February 1996, with
a portion of the proceeds from the Company's initial public offering of common
stock. As a result of such redemption, there will be no future charges for such
accretion.
As a result of the foregoing factors, EBITDA increased from $19.7 million for
the first nine months of 1995 to $24.1 million for the first nine months of
1996, an increase of $4.4 million, or 22.2%. As a percentage of revenue, EBITDA
decreased from 25.7% for the first nine months of 1995 to 24.1% for the first
nine months of 1996.
During the first nine months of 1996, the Company acquired eleven records
management businesses compared to one records management business during the
first nine months of 1995. As a result of the Company's acquisition activity,
gross profit and EBITDA margins were lower for the first nine months of 1996
compared to the same period for the prior year. The decrease was primarily
attributable to the acquired businesses initially being less operationally
efficient than the Company and that expected margin increases are generally not
realized immediately.
Liquidity and Capital Resources
In February 1996, the Company raised $33.3 million, net of underwriting
discounts and commissions and associated costs, in an initial public offering of
the Company's common stock (the "Offering"). The net proceeds from the Offering
were used to retire a redeemable put warrant, to fund acquisitions, to repay
debt that had been incurred to make acquisitions and for working capital.
As the Company has sought to increase its EBITDA, it has made significant
capital investments, consisting primarily of acquisitions; growth-related
capital expenditures, including racking systems, information systems and
improvements to existing facilities; and customer acquisition costs. Cash paid
for these investments during the first nine months of 1996 amounted to $45.6
million, $17.4 million and $1.3 million, respectively. These investments have
been primarily funded through a portion of the net proceeds of the Offering,
cash flows from operations and borrowings under the Company's principal credit
agreement.
14
<PAGE>
IRON MOUNTAIN INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
During the nine months ended September 30, 1996, the Company generated $10.6
million in net cash from operations compared to $12.9 million for the same
period in 1995. The decrease in net cash provided by operations resulted from a
$4.2 million increase in accrued expenses, primarily related to the timing of
certain interest payments, for the first nine months of 1995 compared to a $0.2
million increase for the same period in 1996 and other changes in working
capital accounts, which were partially offset by a $4.4 million increase in
EBITDA and a decrease in prepaid expenses.
Net cash provided by financing activities was $56.0 million for the nine months
ended September 30, 1996, consisting primarily of the net proceeds from the
Offering of $33.3 million and increased indebtedness of $60.5 million offset by
the repayment of certain indebtedness of $30.4 million and the retirement of the
put warrant for $6.6 million.
On September 30, 1996, the Company entered into a new $100.0 million revolving
credit facility (the "New Credit Facility"). The availability of the New Credit
Facility was conditioned upon, among other things, the Company receiving at
least $125.0 million from the issuance of its senior subordinated notes. The
New Credit Facility is a five year revolving credit facility maturing on
September 30, 2001.
On October 1, 1996, the Company successfully completed the sale of $165.0
million of 10-1/8% Senior Subordinated Notes due 2006. The net proceeds to the
Company were $160.1 million after underwriting discounts and commissions. The
net proceeds of the sale of the Notes, after payment of related expenses, were
used to repay outstanding bank debt under the existing credit agreement, the
Chrysler Notes and certain other indebtedness, to fund the purchase price of an
acquisition and for general corporate purposes. In connection with the
prepayment of the outstanding bank debt, the Chrysler Notes and certain other
indebtedness, the Company expects to incur an extraordinary charge, net of
related tax benefit, of approximately $2 million during the fourth quarter of
1996. The charge consists of, among other things, a prepayment penalty and the
write-off of deferred financing costs and original issue discount. This charge,
when recorded, will not impact the Company's EBITDA.
As a result of the aforementioned receipt of proceeds from the sale of the Notes
and the repayment of certain indebtedness, the New Credit Facility became
available on October 1, 1996. As of November 8, 1996, the Company had $91.0
million available under the New Credit Facility.
15
<PAGE>
IRON MOUNTAIN INCORPORATED
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
The Company is presently involved as a defendant in various litigation which has
occurred in the normal course of business. Management believes that it has
meritorious defenses in all such actions, and in any event, the amount of
damages, if such matters were decided adversely, would not have a material
adverse effect on the Company's financial condition or results of operations.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibit Description
------ -----------------------------------------------
10 Credit Agreement, dated as of September 30, 1996, among the
Company, the lenders party thereto and The Chase Manhattan Bank,
as Agent.
11 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
16
<PAGE>
IRON MOUNTAIN INCORPORATED
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IRON MOUNTAIN INCORPORATED
November 14, 1996 By: /s/ Jean A. Bua
- ----------------- --------------------------
(date) Jean A. Bua
Vice President and Corporate Controller
(Principal Accounting Officer)
17
================================================================================
IRON MOUNTAIN INCORPORATED
CREDIT AGREEMENT
Dated as of September 30, 1996
$100,000,000
THE CHASE MANHATTAN BANK,
as Administrative Agent
================================================================================
[Exhibits E and F are photocopies of the opinions as delivered.]
<PAGE>
TABLE OF CONTENTS
Page
RECITALS.................................................................... 1
Section 1. Definitions and Accounting Matters.............................. 1
1.01 Certain Defined Terms.......................................... 1
1.02 Accounting Terms and Determinations............................ 23
1.03 Types of Loans................................................. 24
Section 2. Loans, Etc...................................................... 24
2.01 Loans.......................................................... 24
2.02 Reductions of Commitments...................................... 24
2.03 Fees........................................................... 25
2.04 Lending Offices................................................ 25
2.05 Several Obligations; Remedies Independent...................... 25
2.06 Notes.......................................................... 26
2.07 Use of Proceeds................................................ 26
2.08 Letters of Credit.............................................. 26
Section 3. Borrowings, Conversions and Prepayments......................... 31
3.01 Borrowings..................................................... 31
3.02 Prepayments and Conversions.................................... 32
Section 4. Payments of Principal and Interest.............................. 33
4.01 Repayment of Loans............................................. 33
4.02 Interest....................................................... 33
Section 5. Payments; Pro Rata Treatment; Computations; Etc................. 35
5.01 Payments....................................................... 35
5.02 Pro Rata Treatment............................................. 36
5.03 Computations................................................... 36
5.04 Minimum and Maximum Amounts; Types............................. 36
5.05 Certain Notices................................................ 37
5.06 Non-Receipt of Funds by the Administrative Agent............... 38
5.07 Sharing of Payments; Waiver of Enforcement
Without Consent, Etc......................................... 38
5.08 Withholding Tax Exemption...................................... 39
Section 6. Yield Protection and Illegality................................. 40
6.01 Additional Costs............................................... 40
6.02 Limitation on Types of Loans................................... 42
6.03 Illegality..................................................... 42
6.04 Substitute ABR Loans........................................... 42
6.05 Compensation................................................... 43
6.06 Capital Adequacy............................................... 43
6.07 Substitution of Lender......................................... 44
6.08 Additional Costs in Respect of Letters of Credit............... 44
Section 7. Conditions Precedent............................................ 45
7.01 Initial Extension of Credit.................................... 45
7.02 Initial and Subsequent Loans................................... 48
<PAGE>
Section 8. Representations and Warranties.................................. 48
8.01 Corporate Existence............................................ 48
8.02 Information.................................................... 49
8.03 Litigation..................................................... 50
8.04 No Breach...................................................... 50
8.05 Corporate Action............................................... 51
8.06 Approvals...................................................... 51
8.07 Regulations U and X............................................ 51
8.08 ERISA.......................................................... 51
8.09 Taxes.......................................................... 51
8.10 Subsidiaries; Agreements; Etc.................................. 52
8.11 Investment Company Act......................................... 52
8.12 Public Utility Holding Company Act............................. 53
8.13 Ownership and Use of Properties................................ 53
8.14 Environmental Compliance....................................... 53
8.15 Solvency....................................................... 55
8.16 Capitalization................................................. 55
8.17 Senior Debt.................................................... 55
Section 9. Covenants....................................................... 55
9.01 Financial Statements and Other Information..................... 55
9.02 Taxes and Claims............................................... 58
9.03 Insurance...................................................... 58
9.04 Maintenance of Existence; Conduct of Business.................. 59
9.05 Maintenance of and Access to Properties........................ 60
9.06 Compliance with Applicable Laws................................ 60
9.07 Litigation..................................................... 60
9.08 Indebtedness................................................... 60
9.09 Leverage Ratio................................................. 61
9.10 Interest Coverage Ratio........................................ 61
9.11 Fixed Charges Coverage Ratio................................... 62
9.12 Mergers, Asset Dispositions, Etc............................... 63
9.13 Liens.......................................................... 64
9.14 Investments.................................................... 65
9.15 Restricted Payments............................................ 67
9.16 Transactions with Affiliates................................... 68
9.17 Subordinated Indebtedness...................................... 68
9.18 Lines of Businesses............................................ 69
9.19 Capital Expenditures........................................... 69
9.20 Modification of Other Agreements............................... 69
9.21 Interest Rate Protection....................................... 69
9.22 Certain Obligations Respecting Subsidiaries.................... 69
9.23 Environmental Matters.......................................... 71
9.24 Residual Assurances............................................ 71
Section 10. Defaults....................................................... 72
10.01 Events of Default............................................. 72
Section 11. The Administrative Agent....................................... 75
11.01 Appointment, Powers and Immunities............................ 75
11.02 Reliance by Administrative Agent.............................. 76
11.03 Defaults...................................................... 76
11.04 Rights as a Lender............................................ 77
11.05 Indemnification............................................... 77
ii
<PAGE>
11.06 Non-Reliance on Administrative Agent and Other
Lenders..................................................... 78
11.07 Failure to Act................................................ 78
11.08 Resignation or Removal of Administrative Agent................ 78
11.09 Consents under Basic Documents................................ 79
11.10 Collateral Sub-Agents......................................... 79
Section 12. Miscellaneous.................................................. 79
12.01 Waiver........................................................ 79
12.02 Notices....................................................... 80
12.03 Expenses, Etc................................................. 80
12.04 Indemnification............................................... 80
12.05 Amendments, Etc............................................... 81
12.06 Successors and Assigns........................................ 81
12.07 Confidentiality............................................... 83
12.08 Survival...................................................... 83
12.09 Captions...................................................... 83
12.10 Counterparts; Integration..................................... 83
12.11 Additional Lenders............................................ 84
12.12 GOVERNING LAW; SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL........................................ 84
iii
<PAGE>
Schedules
SCHEDULE I - Commitments
SCHEDULE II - Subsidiaries; Investments in Joint Ventures
and Other Persons
SCHEDULE III - Credit Agreements, Indentures, Leases
SCHEDULE IV - Equity Rights
SCHEDULE V - Existing Letters of Credit
Exhibits
EXHIBIT A - Form of Note
EXHIBIT B - Form of Subsidiary Guaranty
EXHIBIT C - Form of Company Pledge Agreement
EXHIBIT D - Form of Subsidiary Pledge Agreement
EXHIBIT E - Form of Opinion of Special New York Counsel
to the Company
EXHIBIT F - Form of Opinion of Special New York Counsel
to the Administrative Agent
iv
<PAGE>
CREDIT AGREEMENT dated as of September 30, 1996, among: IRON
MOUNTAIN INCORPORATED, a corporation duly organized and validly existing under
the laws of the State of Delaware (together with its successors, the "Company");
each of the lenders which is or which may from time to time become a signatory
hereto (individually, together with its successors, a "Lender" and,
collectively, together with their respective successors, the "Lenders"); and THE
CHASE MANHATTAN BANK, as agent for the Lenders (in such capacity, together with
its successors in such capacity, the "Administrative Agent").
The Company has requested that the Lenders extend credit to the
Company (to be made available by the Company to the Subsidiary Guarantors, as
defined below) in an aggregate principal or face amount at any one time
outstanding not exceeding $100,000,000 to finance the operations of the Company
and such Subsidiary Guarantors, to refinance certain of their existing
indebtedness and to enable certain acquisitions and capital expenditures by
them, and for other purposes permitted hereunder.
Accordingly, the parties hereto agree as follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Section 1.01 or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and vice versa):
"ABR Loans" shall mean Loans which bear interest at a rate based
upon the Alternate Base Rate.
"Acquisition" shall mean an acquisition of assets of, or all or
substantially all of the Capital Stock of, another business by the Company
and/or one or more of its Subsidiaries.
"Acquisition Consideration" shall mean, with respect to any
Acquisition, the aggregate amount of consideration paid by the Company and its
Subsidiaries in connection therewith, inclusive of (a) Stock Consideration and
(b) other consideration on account of (i) any expenses incurred in connection
with such Acquisition, (ii) liabilities under agreements not to compete incurred
in connection with such Acquisition, (iii) the principal amount of Indebtedness
assumed in connection with such Acquisition and (iv) Additional Expenditures
related to such Acquisition.
"Additional Expenditures" shall mean, with respect to
any Acquisition, amounts expended or to be expended by the
Credit Agreement
<PAGE>
- 2 -
Company and its Subsidiaries within twelve months after the date of such
Acquisition to acquire or construct facilities and equipment that are not part
of the assets acquired pursuant to such Acquisition but which are deemed by the
Company to be essential for the integration or restructuring of the assets so
acquired.
"Additional Subordinated Indebtedness" shall mean Indebtedness
payable to sellers in connection with Permitted Acquisitions that by its terms
is subordinated to the payment of the principal of and interest on the Loans and
Reimbursement Obligations.
"Adjusted EBITDA" shall mean, for any period, EBITDA for such
period, minus the tax provision for such period currently payable.
"Administrative Questionnaire" shall mean an
administrative questionnaire in a form supplied by the
Administrative Agent.
"Affiliate" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person and, if such Person is an individual, any member of
the immediate family (including parents, siblings, spouse, children,
stepchildren, nephews, nieces and grandchildren) of such individual and any
trust whose principal beneficiary is such individual or one or more members of
such immediate family and any Person who is controlled by any such member or
trust. As used in this definition, "control" (including, with correlative
meanings, "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise), provided that, in any
event, any Person which owns directly or indirectly more than 5% of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or more than 5% of the partnership or other
ownership interests of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person.
Notwithstanding the foregoing, (a) no individual shall be deemed to be an
Affiliate of a corporation solely by reason of his or her being an officer or
director of such corporation and (b) Subsidiary Guarantors shall be deemed not
to be Affiliates of the Company or any of the Subsidiary Guarantors.
"Alternate Base Rate" shall mean, for any day, a rate per annum
equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base
CD Rate in effect on such day plus 1%
Credit Agreement
<PAGE>
- 3 -
and (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%.
Any change in the Alternate Base Rate due to a change in the Prime Rate, the
Base CD Rate or the Federal Funds Effective Rate shall be effective from and
including the effective date of such change in the Prime Rate, the Base CD Rate
or the Federal Funds Effective Rate, respectively.
"Applicable Commitment Fee Rate" shall mean, at any time, the
percentage per annum set forth in the schedule below opposite the Pricing Level
in effect at such time:
- -------------------------------------------------------------------------
Applicable Commitment
Pricing Level Fee Rate
- -------------------------------------------------------------------------
Level 6 0.500%
- -------------------------------------------------------------------------
Level 5 0.500%
- -------------------------------------------------------------------------
Level 4 0.375%
- -------------------------------------------------------------------------
Level 3 0.250%
- -------------------------------------------------------------------------
Level 2 0.150%
- -------------------------------------------------------------------------
Level 1 0.100%
- -------------------------------------------------------------------------
For purposes of this definition, the "Pricing Level" in effect at any time shall
be (i) during the Initial Period, Level 4, and (ii) at any time thereafter, the
level (either Level 1, Level 2, Level 3, Level 4, Level 5 or Level 6) indicated
in the schedule set forth in the definition of "Applicable Margin" in this
Section 1.01 corresponding to the Applicable Leverage Ratio in effect at such
time.
"Applicable L/C Percentage" shall mean, at any time,
the Applicable Margin in effect at such time with respect to
Credit Agreement
<PAGE>
- 4 -
Eurodollar Loans (irrespective of whether at the time any Eurodollar Loan is
outstanding).
"Applicable Lending Office" shall mean, for each Lender and for each
Type of Loan, the lending office of such Lender (or of an affiliate of such
Lender) designated for such Type of Loan in the Administrative Questionnaire of
such Lender or such other lending office of such Lender (or of an affiliate of
such Lender) as such Lender may from time to time specify to the Administrative
Agent and the Company as the office by which its Loans of such Type are to be
made and maintained.
"Applicable Leverage Ratio" shall mean, at any time, the Leverage
Ratio as at the end of the most recent fiscal quarter of the Company in respect
of which financial statements have been delivered by the Company pursuant to
either Section 9.01(a) or 9.01(b) hereof; provided that no change in the
Applicable Leverage Ratio will take effect until the date five Business Days
following receipt by the Administrative Agent of the applicable financial
statements.
"Applicable Margin" shall mean:
(a) during the Initial Period, (i) with respect to ABR Loans, 1.25%
per annum; and (ii) with respect to Eurodollar Loans, 2.25% per annum; and
(b) at any time thereafter, the rate for the respective Type of Loan
set forth below opposite the level (either Level 1, Level 2, Level 3,
Level 4, Level 5 or Level 6) indicated in the schedule set forth below
corresponding to the Applicable Leverage Ratio in effect at such time:
- --------------------------------------------------------------------------------
Applicable Margin
Range of Applicable
Leverage Ratio
ABR Eurodollar
Loans Loans
- --------------------------------------------------------------------------------
Level 6
Greater than 4.25 to 1.00 1.75% 2.75%
- --------------------------------------------------------------------------------
Level 5
Less than or equal to 4.25 to 1.00 and 1.50% 2.50%
greater than 3.75 to 1.00
Credit Agreement
<PAGE>
- 5 -
- --------------------------------------------------------------------------------
Level 4
Less than or equal to 3.75 to 1.00 and 1.25% 2.25%
greater than 3.25 to 1.00
- --------------------------------------------------------------------------------
Level 3
Less than or equal to 3.25 to 1.00 and 1.00% 2.00%
greater than 2.75 to 1.00
- --------------------------------------------------------------------------------
Level 2
Less than or equal to 2.75 to 1.00 and 0.75% 1.75%
greater than 2.25 to 1.00
- --------------------------------------------------------------------------------
Level 1
Less than or equal to 2.25 to 1.00 0.50% 1.50%
- --------------------------------------------------------------------------------
"Assessment Rate" shall mean, for any day, the annual assessment
rate in effect on such day that is payable by a member of the Bank Insurance
Fund classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in Dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Administrative Agent to be representative of
the cost of such insurance to the Lenders.
"Bankruptcy Code" shall mean the United States Bankruptcy Code, as
now or hereafter in effect, or any successor statute.
"Base CD Rate" shall mean the sum of (a) the Three- Month Secondary
CD Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
Credit Agreement
<PAGE>
- 6 -
"Basic Documents" shall mean this Agreement, the Notes, the Letter
of Credit Documents, the Subsidiary Guaranty, the Security Documents, the Senior
Subordinated Debt Documents and any instruments evidencing or agreements
providing for the issuance of Additional Subordinated Indebtedness.
"Board" means the Board of Governors of the Federal
Reserve System of the United States of America.
"Business Day" shall mean any day other than a day on which
commercial banks are authorized or required to close in New York City or Boston,
Massachusetts and, where such term is used in the definition of "Quarterly Date"
in this Section 1.01 or if such day relates to a borrowing of, a payment or
prepayment of principal of or interest on, a conversion of or into, or an
Interest Period for, a Eurodollar Loan or a notice by the Company with respect
to any such borrowing, payment, prepayment, conversion or Interest Period, which
is also a day on which dealings in Dollar deposits are carried out in the London
interbank market.
"Calculation Period" shall mean (a) initially, the twelve-month
period commencing on October 1, 1996 and (b) thereafter, each successive
twelve-month period.
"Capital Expenditures" shall mean expenditures in respect of fixed
assets by the Company or any of its Subsidiaries, including the capitalized
amount of Capital Lease Obligations incurred during the relevant period, other
than (i) expenditures for the restoration or replacement of fixed assets to the
extent financed by the proceeds of an insurance policy described in clause (1)
of Section 9.03 hereof or through a condemnation award, (ii) Permitted
Acquisitions, (iii) Qualifying Sale-Leaseback Transactions (except to the extent
any lease of Property by the Company or any of its Subsidiaries in connection
therewith would constitute a capital lease), (iv) Additional Expenditures
related to Permitted Acquisitions and (v) Large Volume Account Capitalized
Expenditures.
"Capital Lease Obligations" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board) and,
for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP (including such
Statement No. 13).
Credit Agreement
<PAGE>
- 7 -
"Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's capital stock or other ownership
interests, including, without limitation, all common stock and all preferred
stock.
"Casualty Event" shall mean, with respect to any property of any
Person, any loss of or damage to, or any condemnation or other taking of, such
property for which such Person or any of its Subsidiaries receives insurance
proceeds, or proceeds of a condemnation award or other compensation.
"Chase" shall mean The Chase Manhattan Bank and its
successors.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Change of Control" shall mean that:
(a) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act), other than the Principal
Stockholders (or any of them), is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of more than 50% of the voting power of all classes of Voting
Stock of the Company; or
(b) during any consecutive 25-month period, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election to such Board of
Directors, or whose nomination for election by the stockholders of the
Company, was approved by a vote of at least 66-2/3% of the directors still
in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of Directors
then in office; or
(c) the Company shall be required pursuant to the provisions of the
Senior Subordinated Debt Documents (or any other agreement or instrument
relating to or providing for any other Subordinated Indebtedness) to
redeem or repurchase, or make an offer to redeem or repurchase, all or any
portion of the Senior Subordinated Debt (or such Subordinated
Indebtedness, as the case may be) as a result of a change of control
(however defined).
Credit Agreement
<PAGE>
- 8 -
"Closing Date" shall mean the date upon which the initial extension
of credit hereunder is made.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or
any successor statute.
"Collateral Account" shall mean a cash collateral account in the
name and under the control of the Administrative Agent maintained in accordance
with the terms of the Security Documents.
"Commitment" shall mean, as to each Lender, the obligation of such
Lender to make Loans, and to issue or participate in Letters of Credit pursuant
to Section 2.08 hereof, in an aggregate principal or face amount at any one time
outstanding up to but not exceeding the amount set opposite the name of such
Lender on Schedule I hereto under the caption "Commitment" or, in the case of a
Person that becomes a Lender pursuant to an assignment permitted under Section
12.06 hereof, as specified in the respective instrument of assignment pursuant
to which such assignment is effected (as the same may be reduced at any time or
from time to time pursuant to Section 2.02 or 3.02 hereof).
"Commitment Percentage" shall mean, with respect to any Lender at
any time, the ratio of (a) the amount of the Commitment of such Lender at such
time to (b) the aggregate amount of the Commitments of all of the Lenders at
such time.
"Commitment Termination Date" shall mean September 25, 2001 (or, if
such day is not a Business Day, the next preceding Business Day).
"Company Pledge Agreement" shall mean a Pledge Agreement
substantially in the form of Exhibit C hereto between the Company and the
Administrative Agent, as the same shall be modified and supplemented and in
effect from time to time.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Company, are treated as a single
employer under Section 414 of the Code.
"Default" shall mean an Event of Default or an event which with
notice or lapse of time or both would, unless cured or waived, become an Event
of Default.
"Dollars" and "$" shall mean lawful money of the United
States of America.
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"EBITDA" shall mean, for any period, the sum (without duplication),
determined on a consolidated basis for the Company and its Subsidiaries, of (a)
net income for such period plus (b) to the extent deducted in determining net
income for such period, the sum of (i) depreciation and amortization (including
deferred financing costs, organization costs, goodwill and non-compete
amortization) for such period, (ii) other non-cash expenses for such period,
(iii) interest expense for such period, (iv) provision for income taxes for such
period, (v) extraordinary losses (including without limitation losses arising
from any natural disasters) for such period, (vi) non-compete expenses for such
period to the extent not capitalized in accordance with GAAP and (vii) losses on
sales of fixed assets not in the ordinary course of business for such period
after giving effect to any related charges for, reductions of or provisions for
taxes thereon minus (c) to the extent included in the calculation of net income
for such period, the sum of (i) other income (including interest income) for
such period, (ii) extraordinary gains for such period and (iii) gains on sales
of fixed assets not in the ordinary course of business for such period after
giving effect to any related charges for, reductions of or provisions for taxes
thereon.
For the purposes of calculating the ratios set forth in Sections
9.09, 9.10 and 9.11 there may, at the Company's option, be included in EBITDA
for any relevant period, on a pro forma basis (adjusted to give effect to
expenses that will not be ongoing), the net income (and the additions and
subtractions thereto referred to above) for such period of any Person (or
assets) acquired after the commencement of such period in connection with any
Permitted Acquisition having Acquisition Consideration of more than $750,000.
The net income (and the related additions and substractions) of the Person or
assets acquired pursuant to such Acquisition for such period shall be calculated
by reference to the most recent available quarterly financial statements of the
acquired business, annualized.
"Environmental Laws" shall mean any and all federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, codes, plans, injunctions, permits, concessions, grants, franchises,
licenses or other governmental restrictions, contracts, indemnities, assumptions
of liability or agreements relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment including, without limitation, ambient air, surface water,
ground water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum
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products, chemicals or industrial, toxic or hazardous substances or wastes or
the clean-up or other remediation thereof.
"Environmental Liabilities" shall mean all liabilities of the
Company and each Subsidiary, whether vested or unvested, contingent or fixed,
actual or potential which arise under or relate to Environmental Laws.
"Equity Rights" shall mean, with respect to any Person, any
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including, without limitation, any stockholders' or voting trust
agreements) for the issuance, sale, registration or voting of, or securities
convertible into, any additional shares of Capital Stock of any class, or
partnership or other ownership interests of any type in, such Person.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Eurodollar Base Rate" shall mean, with respect to any Eurodollar
Loans, the rate per annum determined by the Administrative Agent to be the
average of the rates quoted by the Reference Lenders at approximately 11:00 a.m.
London time (or as soon thereafter as practicable) on the day two Business Days
prior to the first day of the Interest Period for such Loans for the offering by
the Reference Lenders to leading banks in the London interbank market of Dollar
deposits having a term comparable to such Interest Period and in an amount
comparable to the principal amount of the respective Eurodollar Loans of the
Reference Lenders to which such Interest Period relates. If any Reference Lender
is not participating in any Eurodollar Loans during the Interest Period therefor
(pursuant to Section 6.04 hereof or for any other reason), the Eurodollar Base
Rate for such Loans for such Interest Period shall be determined by reference to
the amount of the Loan which such Reference Lender would have made had it been
participating in such Loans. If any Reference Lender does not furnish a timely
quotation, the Administrative Agent shall determine the relevant interest rate
on the basis of the quotation or quotations furnished by the remaining Reference
Lender or Lenders or, if none of such quotations is available on a timely basis,
the provisions of Section 6.02 shall apply.
"Eurodollar Loans" shall mean Loans the interest on which is
determined on the basis of rates referred to in the definition of "Eurodollar
Base Rate" in this Section 1.01.
"Eurodollar Rate" shall mean, for any Eurodollar Loans, a rate per
annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) determined by
the Administrative Agent to be equal to
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(i) the Eurodollar Base Rate for such Loans for the Interest Period for such
Loans divided by (ii) 1 minus the Reserve Requirement for such Loans for such
Interest Period.
"Events of Default" shall have the meaning assigned to such term in
Section 10.01 hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Excluded Subsidiary" shall mean any Subsidiary of the Company
principally engaged in the records management business domiciled (within the
meaning of the Code) outside the United States of America.
"Existing Letters of Credit" shall mean, collectively, all letters
of credit identified on Schedule V hereto and outstanding on the Closing Date.
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of l%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Fixed Charges" shall mean for any period the sum of (i) Scheduled
Amortization for such period plus (ii) Interest Expense for such period plus
(iii) the aggregate amount of Maintenance Capital Expenditures for such period
plus (iv) the aggregate amount of non-compete expenses for such period to the
extent not capitalized in accordance with GAAP.
"Funded Indebtedness" shall mean, without duplication, (a)
Indebtedness that matures or otherwise becomes due more than one year after the
incurrence thereof or is extendible, renewable or refundable, at the option of
the obligor, to a date more than one year after the incurrence thereof
(including the current portion thereof) and (b) Indebtedness outstanding
hereunder.
"GAAP" shall mean generally accepted accounting principles as in
effect from time to time consistently applied.
"Guaranty" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
of any other Person and, without
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limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness (whether arising
by virtue of partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise, other than agreements to purchase goods at an
arm's length price in the ordinary course of business) or (ii) entered into for
the purpose of assuring in any other manner the holder of such Indebtedness of
the payment thereof or to protect such holder against loss in respect thereof
(in whole or in part), provided that the term Guaranty shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Substances" shall mean any toxic, caustic or otherwise
hazardous substance, including petroleum, its derivatives, by-products and other
hydrocarbons, including any substance regulated under Environmental Laws.
"Indebtedness" shall mean, as to any Person (determined
without duplication):
(i) indebtedness of such Person for borrowed money (whether by loan
or the issuance and sale of debt securities) or for the deferred purchase
or acquisition price of property or services (including amounts payable
under agreements not to compete and other similar arrangements), other
than accounts payable (other than for borrowed money) incurred in the
ordinary course of business and accrued expenses incurred in the ordinary
course of business;
(ii) obligations of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial
institutions for the account of such Person;
(iii) Capital Lease Obligations of such Person;
(iv) obligations of such Person to redeem or otherwise
retire shares of Capital Stock of such Person;
(v) indebtedness of others of the type described in clauses (i)
through (iv) above secured by a Lien on the property of such Person,
whether or not the respective obligation so secured has been assumed by
such Person; and
(vi) indebtedness of others of the type described in clauses (i)
through (v) above Guaranteed by such Person.
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Notwithstanding anything to the contrary contained in clause (i) of the
preceding sentence, indebtedness of any Person in respect of amounts payable
under an agreement not to compete shall be the amount carried on the balance
sheet of such Person in respect of such agreement in accordance with GAAP.
"Initial Period" shall mean the period from and including the
Closing Date to but excluding the date five Business Days after the date on
which the Company first delivers financial statements to the Administrative
Agent pursuant to Section 9.01(b) hereof.
"Interest Expense" shall mean, for any period, the sum (determined
without duplication) of the aggregate amount of interest accruing during such
period on Indebtedness of the Company and its Subsidiaries (on a consolidated
basis), including the interest portion of payments under Capital Lease
Obligations and any capitalized interest, and excluding amortization of debt
discount and expense and interest paid in kind.
"Interest Period" shall mean, with respect to any Eurodollar Loans,
the period commencing on the date such Loans are made or converted from ABR
Loans or the last day of the next preceding Interest Period with respect to such
Loans and ending on the numerically corresponding day in the first, second,
third, sixth or (if acceptable to all Lenders) twelfth calendar month
thereafter, as the Company may select as provided in Section 5.05 hereof, except
that each such Interest Period which commences on the last Business Day of a
calendar month (or on any day for which there is no numerically corresponding
day in the appropriate subsequent calendar month) shall end on the last Business
Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing:
(i) if any Interest Period would otherwise end after
the Commitment Termination Date, such Interest Period shall
end on the Commitment Termination Date;
(ii) each Interest Period that would otherwise end on a day that is
not a Business Day shall end on the next succeeding Business Day (or, if
such next succeeding Business Day falls in the next succeeding calendar
month, on the next preceding Business Day); and
(iii) notwithstanding clause (i) above, no Interest Period shall
have a duration of less than one month and, if the Interest Period for any
Eurodollar Loan would otherwise be a shorter period, such Loans shall not
be available hereunder for such period.
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"Interest Rate Agreement" shall mean (i) an interest rate swap
agreement, interest rate cap agreement or similar arrangement between the
Company and one or more of the Lenders or (ii) an interest rate swap agreement,
interest rate cap agreement or similar arrangement between the Company and one
or more financial institutions (other than a Lender) approved by the
Administrative Agent (which approval shall not be unreasonably withheld)
pursuant to which the Company is not required in the absence of default to make
any payments other than initial fees.
"Investments" shall have the meaning assigned to such term in
Section 9.14 hereof.
"Issuing Bank" shall mean Chase, as the issuer of Letters of Credit
under Section 2.08 hereof, together with its successors and assigns in such
capacity.
"Large Volume Account Capitalized Expenditures" shall mean any
expenditures incurred by the Company or its Subsidiaries in connection with new
customers initially storing with the Company or its Subsidiaries in excess of
10,000 boxes, to the extent that such expenditures are capitalized in accordance
with GAAP.
"Letter of Credit Documents" shall mean, with respect to any Letter
of Credit, collectively, any application therefor and any other agreements,
instruments, guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing for (a) the
rights and obligations of the parties concerned or at risk with respect to such
Letter of Credit or (b) any collateral security for any of such obligations,
each as the same may be modified and supplemented and in effect from time to
time.
"Letter of Credit Liability" shall mean, without duplication, at any
time and in respect of any Letter of Credit, the sum of (a) the undrawn face
amount of such Letter of Credit plus (b) the aggregate unpaid principal amount
of all Reimbursement Obligations of the Company at such time due and payable in
respect of all drawings made under such Letter of Credit. For purposes of this
Agreement, a Lender (other than the Issuing Bank) shall be deemed to hold a
Letter of Credit Liability in an amount equal to its participation interest in
the related Letter of Credit under Section 2.08 hereof, and the Issuing Bank
shall be deemed to hold a Letter of Credit Liability in an amount equal to its
retained interest in the related Letter of Credit after giving effect to the
acquisition by the Lenders other than the Issuing Bank of their participation
interests under said Section 2.08.
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"Letters of Credit" shall have the meaning assigned to such term in
Section 2.08 hereof.
"Leverage Ratio" shall have the meaning assigned to such term in
Section 9.09 hereof.
"Lien" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset. For the purposes of this Agreement, the Company and each of its
Subsidiaries shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Liquid Investments" shall mean:
(i) certificates of deposit maturing within 90 days of the
acquisition thereof denominated in Dollars and issued by (X) a Lender or
(Y) a bank or trust company having combined capital and surplus of at
least $500,000,000 and which has (or which is a Subsidiary of a bank
holding company which has) publicly traded debt securities rated A or
higher by Standard & Poor's Ratings Services or A-2 or higher by Moody's
Investors Service, Inc.;
(ii) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (i) above
entered into with (x) any Lender or (y) any bank or trust company meeting
the qualifications specified in clause (i)(Y) above;
(iii) obligations issued or guaranteed by the United States of
America, with maturities not more than one year after the date of issue;
(iv) commercial paper with maturities of not more than 90 days and a
published rating of not less than A-2 and P-2 (or the equivalent rating);
and
(v) investments in money market funds substantially all of whose
assets are comprised of securities and other obligations of the types
described in clauses (i) through (iv) above.
"Loans" shall mean the loans provided for in Section 2.01 hereof,
which may be ABR Loans and/or Eurodollar Loans.
"Maintenance Capital Expenditures" shall mean Capital
Expenditures required to maintain, reconfigure, or replace
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existing assets (as distinguished from Capital Expenditures relating to growth
and as distinguished from Additional Expenditures), as certified pursuant to
Section 9.01(i) hereof.
"Majority Lenders" shall mean Lenders having at least 51% of the
aggregate amount of the Commitments (or, if the Commitments shall have
terminated, the aggregate unpaid principal amount of Loans and Letter of Credit
Liabilities).
"Material Adverse Effect" shall mean a material adverse effect on
(a) the business, assets, property, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries taken as a whole, (b) the validity
or enforceability of any of the Basic Documents, (c) the rights and remedies of
the Lenders and the Administrative Agent under any of the Basic Documents or (d)
the timely payment of the principal of or interest on the Loans or the
Reimbursement Obligations or other amounts payable in connection therewith.
"Multiemployer Plan" shall mean at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which the
Company or any member of the Controlled Group is then making or accruing an
obligation to make contributions or has within the preceding five plan years
made contributions, including for these purposes any Person which ceased to be a
member of the Controlled Group during such five year period.
"Net Cash Proceeds" shall mean, in each case as set forth in a
statement in reasonable detail delivered to the Administrative Agent:
(a) with respect to the disposition of any asset by the Company or
any of its Subsidiaries, the excess, if any, of (i) the cash received in
connection with such disposition over (ii) the sum of (A) the principal
amount of any Indebtedness which is secured by such asset and which is
required to be repaid in connection with the disposition thereof, plus (B)
the reasonable out-of-pocket expenses incurred by the Company or such
Subsidiary, as the case may be, in connection with such disposition, plus
(C) provision for taxes, including income taxes, attributable to the
disposition of such asset;
(b) with respect to the issuance of any Indebtedness of the Company
or any its Subsidiaries the gross proceeds received by the Company or such
Subsidiary from such issuance less all reasonable legal expenses,
discounts and commissions and other fees and expenses incurred or to be
incurred and all federal, state, local and foreign taxes assessed or to be
assessed in connection therewith; and
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(c) in the case of any Casualty Event, the aggregate amount of
proceeds of insurance, condemnation awards and other compensation received
by the Company and its Subsidiaries in respect of such Casualty Event net
of (i) reasonable expenses incurred by the Company and its Subsidiaries in
connection therewith and (ii) contractually required repayments of
Indebtedness to the extent secured by a Lien on such property and any
income and transfer taxes payable by the Company or any of its
Subsidiaries in respect of such Casualty Event.
"Notes" shall mean the promissory notes provided for by Section 2.06
hereof and all promissory notes delivered in substitution or exchange therefor,
in each case as the same shall be modified and supplemented and in effect from
time to time.
"Obligor" shall mean, collectively, the Company and
each of the Subsidiary Guarantors.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" has the meaning set forth in
Section 9.12.
"Permitted Indebtedness" shall mean, without
duplication:
(i) Additional Subordinated Indebtedness;
(ii) Indebtedness secured by Permitted Mortgages;
(iii) Indebtedness in respect of agreements not to
compete;
(iv) Capitalized Lease Obligations;
(v) Indebtedness consisting of reimbursement obligations in
respect of letters of credit issued by any bank for the account of the
Company or any of its Subsidiaries, the aggregate amount available to be
drawn under which may not exceed $1,500,000 at any time;
(vi) Indebtedness in respect of any Interest Rate
Agreement;
(vii) unsecured Indebtedness of the Company in an
aggregate outstanding principal amount not at any time
exceeding $3,000,000;
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(viii) Indebtedness of Excluded Subsidiaries in an aggregate
outstanding principal amount not at any time exceeding $5,000,000 (and any
guaranty by the Company of such Indebtedness to the extent constituting an
Investment permitted under Section 9.14(vii) hereof); and
(ix) any guaranty by the Company of Indebtedness
incurred pursuant to the foregoing clauses (ii), (iii), (iv)
or (v) by a Subsidiary of the Company;
provided that (A) Permitted Indebtedness incurred pursuant to the foregoing
clauses (i) and (iii) may be incurred only in connection with Permitted
Acquisitions; and (B) Permitted Indebtedness incurred pursuant to the foregoing
clauses (i), (ii), (iii) and (viii) shall be incurred on terms and pursuant to
documentation in all respects reasonably satisfactory to the Administrative
Agent.
"Permitted Mortgage" means any mortgage subjecting property of any
Subsidiary of the Company to a Lien where (i) the outstanding Capital Stock of
such Subsidiary has been pledged to the Administrative Agent for the benefit of
the Lenders pursuant to the Company Pledge Agreement, the Subsidiary Pledge
Agreement or another pledge agreement that is in form and substance reasonably
acceptable to the Administrative Agent, (ii) the Company shall agree, for the
benefit of the Administrative Agent and the Lenders, not to permit any
Subsidiary owning any interest in such property to create, incur or suffer to
exist any Indebtedness other than Indebtedness permitted hereunder (determined
without giving effect to clause (ii) of the definition of "Permitted
Indebtedness" in this Section 1.01) and other Indebtedness secured by such
mortgage, (iii) such mortgage (and the other documentation, if any, relating
thereto) does not contain any cross-default provisions referring to any other
indebtedness of the Company or its Subsidiaries and (iv) such mortgage (and the
other documentation, if any, relating thereto) does not contain any covenants
subjecting the Company or its Subsidiaries to financial tests of any nature.
"Person" shall mean an individual, a corporation, a company, a
voluntary association, a partnership, a limited liability company, a trust, an
unincorporated organization or a government or any agency, instrumentality or
political subdivision thereof.
"Plan" shall mean an employee pension benefit plan which is covered
by Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Code and is either (a) maintained by the Company or any member of the
Controlled Group for employees of the Company or any member of the Controlled
Group or (b) maintained pursuant to a collective
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bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which the Company or any member of the Controlled
Group is then making or accruing an obligation to make contributions or has
within the preceding five plan years made contributions.
"Post-Default Rate" shall mean a rate equal to the sum of 2% plus
the higher of (i) the rate of interest applicable to ABR Loans and (ii) in the
case of any Loan, the rate of interest (if any) otherwise applicable to such
Loan.
"Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by The Chase Manhattan Bank as its prime rate in
effect at its principal office in New York City; each change in the Prime Rate
shall be effective from and including the date such change is publicly announced
as being effective.
"Principal Stockholders" shall mean each of Vincent J.
Ryan, Schooner Capital Corporation, C. Richard Reese, Eugene B.
Doggett, and their respective Affiliates.
"Qualifying Sale-Leaseback Transaction" shall mean any arrangement
by which the Company or any of its Subsidiaries enters into an arrangement with
any bank, insurance company or other lender or investor providing for the
leasing to the Company or a Subsidiary thereof of any real property which has
been or is to be sold or transferred by the Company or such Subsidiary to such
lender or investor or to any Person to whom funds have been or are to be
advanced by such lender or investor and where the real property in question has
been constructed after the Closing Date.
"Quarterly Dates" shall mean the last Business Day of
each March, June, September and December.
"RCRA" means the Resource Conservation and Recovery
Act, as amended.
"Reference Lenders" shall mean each of Chase and such other Lenders
as the Administrative Agent may designate with the consent of the Company, such
consent not to be unreasonably withheld.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as the same may be amended or supplemented from time
to time.
"Regulatory Change" shall mean, with respect to any Lender, any
change on or after the date of this Agreement in United States federal, state or
foreign laws or regulations,
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including Regulation D, or the adoption or making on or after such date of any
interpretations, directives or requests applying to a class of lenders including
such Lender of or under any United States federal or state, or any foreign, laws
or regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
"Reimbursement Obligations" shall mean, at any time, the obligations
of the Company then outstanding to reimburse amounts paid by the Issuing Bank in
respect of any drawings under a Letter of Credit.
"Release" shall have the meaning set forth in 42 U.S.C. Section
9601(22), but shall not include any "federally permitted release" as defined in
42 U.S.C. Section 9601(10). The term "Released" shall have a corresponding
meaning.
"Reserve Requirement shall mean, for any Eurodollar Loans for any
Interest Period therefor, the average maximum rate at which reserves (including
any marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding one billion Dollars
against "Eurocurrency liabilities" (as such term is used in Regulation D).
Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks by
reason of any Regulatory Change against (i) any category of liabilities which
includes deposits by reference to which the Eurodollar Rate is to be determined
as provided in the definition of "Eurodollar Base Rate" in this Section 1.01 or
(ii) any category of extensions of credit or other assets which include
Eurodollar Loans.
"Residual Assurances" shall mean any commitment or undertaking by
the Company required as a condition to any financing made available by any
Person to an Affiliate of the Company to finance the costs of construction or
acquisition by such Affiliate of records management facilities (including the
acquisition of real estate for development purposes), where such facility is
intended to be leased to the Company or a Subsidiary of the Company, which
commitment or undertaking is intended to provide such Person with an additional
assurance that it will receive a minimum return under such financing (and which
does not constitute a Guaranty of the principal amount of such financing);
provided that no payment under any such commitment or undertaking may be made
prior to July 31, 2002, and that such commitment or undertaking shall be entered
into on terms and pursuant to documentation in all respects reasonably
satisfactory to the Administrative Agent.
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"Restricted Payment" shall mean dividends (in cash, property or
obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for the purchase,
redemption, retirement or other acquisition of, any shares of any class of
Capital Stock of the Company, or any payment in respect of any option or warrant
to purchase any shares of any class of Capital Stock of the Company or the
exchange or conversion of any shares of any class of Capital Stock of the
Company for or into any obligations of or shares of any other class of Capital
Stock of the Company or any other property, but excluding dividends payable
solely in, or exchanges or conversions for or into, shares of common stock of
the Company.
"Scheduled Amortization" shall mean, for any period, the sum
(calculated without duplication) of all payments of principal of Indebtedness of
the Company (other than Indebtedness hereunder) scheduled to be made during such
period.
"Security Documents" shall mean, collectively, the Company Pledge
Agreement, the Subsidiary Pledge Agreement and all Uniform Commercial Code
financing statements required by said agreements to be filed with respect to the
security interests in
personal Property created pursuant thereto.
"Senior Subordinated Debt" shall mean the Indebtedness of the
Company in respect of the 10-1/8% Senior Subordinated Notes of the Company due
October 1, 2006 issued pursuant to Senior Subordinated Debt Indenture.
"Senior Subordinated Debt Documents" shall mean all documents and
agreements executed and delivered in connection with the original issuance of
the Senior Subordinated Debt, including the Senior Subordinated Debt Indenture
and the promissory notes evidencing Indebtedness thereunder, in each case as the
same may be amended or modified, without prejudice to the provisions of Section
9.20 hereof.
"Senior Subordinated Debt Indenture" shall mean the Indenture dated
as of October 1, 1996 among the Company and First Bank National Association, as
Trustee, as the same may be amended or modified, without prejudice to the
provisions of Section 9.20 hereof.
"Statutory Reserve Rate" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board to which Chase is subject for new
negotiable nonpersonal time deposits in dollars of over
Credit Agreement
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$100,000 with maturities approximately equal to three months. The Statutory
Reserve Rate shall be adjusted automatically on and as of the effective date of
any change in any reserve percentage.
"Stock Consideration" shall mean, with respect to any Acquisition,
the aggregate amount of consideration paid by the Company and its Subsidiaries
in connection therewith consisting of the Company's common stock or with
proceeds of the issuance of the Company's common stock within twelve months
prior to the date of such Acquisition. For purposes hereof, the amount of Stock
Consideration paid by the Company in respect of any Acquisition shall be deemed
to be equal to the fair market value of the Company's common stock so paid,
determined in good faith by the Company at the time of such Acquisition.
"Subordinated Indebtedness" shall mean, collectively,
(a) Senior Subordinated Debt and (b) Additional Subordinated
Indebtedness.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership, limited liability company or other entity of which at
least a majority of the securities or other ownership interests having by the
terms thereof ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions of such corporation,
partnership, limited liability company or other entity (irrespective of whether
or not at the time securities or other ownership interests of any other class or
classes of such corporation, partnership, limited liability company or other
entity shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by such
Person or one or more Subsidiaries of such Person or by such Person and one or
more Subsidiaries of such Person.
"Subsidiary Guarantor" shall mean (i) each of the Subsidiaries of
the Company listed in Part 1 of Schedule II hereto other than those Subsidiaries
identified in Part 1 of Schedule II as not being a Subsidiary Guarantor and (ii)
each other Subsidiary of the Company that from time to time becomes a party to
the Subsidiary Guaranty or otherwise guarantees the obligations of the Company
hereunder pursuant to Section 9.22.
"Subsidiary Guaranty" shall mean the Subsidiary Guaranty dated as of
the Closing Date, in substantially the form of Exhibit B hereto, as said
agreement shall be modified and supplemented and in effect from time to time.
"Subsidiary Pledge Agreement" shall mean a Pledge Agreement
substantially in the form of Exhibit D hereto between the Subsidiary Guarantors
and the Administrative Agent, as the
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same shall be modified and supplemented and in effect from time
to time.
"Three-Month Secondary CD Rate" shall mean, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day is not a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day) or, if such rate is not so reported on such
day or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day is not a Business Day, on the next preceding Business
Day) by the Administrative Agent from three negotiable certificate of deposit
dealers of recognized standing selected by it.
"Type" shall have the meaning assigned to such term in Section 1.03
hereof.
"Unfunded Liabilities" shall mean, with respect to any Plan, at any
time, the amount (if any) by which (a) the present value of all benefits under
such Plan exceeds (b) the fair market value of all Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a potential liability
of the Company or any member of the Controlled Group to the PBGC or such Plan
under Title IV of ERISA.
"Voting Stock" shall mean, with respect to any Person, any class or
classes of Capital Stock pursuant to which the holders thereof have the general
voting power under ordinary circumstances to elect at least a majority of the
board of directors, managers or trustees of such Person (irrespective of whether
or not, at the time, stock of any other class or classes has, or might have,
voting power by reason of the happening of any contingency).
"Wholly-Owned Subsidiary" shall mean as to any Person, a Subsidiary
of such Person all of whose outstanding shares of Capital Stock (except
directors' qualifying shares) are directly or indirectly owned by such Person.
1.02 Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein
shall be interpreted, all determinations with respect to
accounting matters hereunder shall be made, and all financial
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statements and certificates and reports as to financial matters required to be
delivered hereunder shall be prepared, in accordance with GAAP; provided that if
any change in GAAP proposed after the Closing Date in itself materially affects
the calculation of any financial covenant in Section 9, the Company may by
notice to the Administrative Agent, or the Administrative Agent (at the request
of the Majority Lenders) may by notice to the Company, require that such
covenant thereafter be calculated in accordance with GAAP as in effect, and
applied by the Company, immediately before such change in GAAP occurs. If such
notice is given, the compliance certificates delivered pursuant to Section 9.01
after such change occurs shall be accompanied by reconciliations of the
difference between the calculation set forth therein and a calculation made in
accordance with GAAP as in effect from time to time after such change occurs. To
enable the ready determination of compliance with the covenants set forth in
Section 9 hereof, the Company will not change from December 31 in each year the
date on which its fiscal year ends, nor from March 31, June 30 and September 30
the dates on which the first three fiscal quarters in each fiscal year end.
1.03 Types of Loans. Loans hereunder are distinguished by "Type".
The "Type" of a Loan refers to the determination whether such Loan is a
Eurodollar Loan or an ABR Loan.
Section 2. Loans, Etc.
2.01 Loans. Each Lender severally agrees, on the terms and
conditions of this Agreement, to make loans to the Company in Dollars during the
period from and including the Closing Date to but not including the Commitment
Termination Date in an aggregate principal amount at any one time outstanding up
to but not exceeding the amount of the Commitment of such Lender as in effect
from time to time, provided that in no event shall the aggregate principal
amount of all Loans, together with the aggregate amount of all Letter of Credit
Liabilities, exceed the aggregate amount of the Commitments as in effect from
time to time. Subject to the terms and conditions of this Agreement, during such
period the Company may borrow, repay and reborrow the amount of the Commitments
by means of ABR Loans and Eurodollar Loans and may convert Loans of one Type
into Loans of the other Type (as provided in Section 3.02(a) hereof) or continue
Eurodollar Loans for subsequent Interest Periods.
2.02 Reductions of Commitments.
(a) Mandatory. The Commitments shall terminate on the
Commitment Termination Date. In addition, the Commitments shall
be reduced in the amount and on the date of each prepayment
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applied to the Loans (or to reduce Commitments) pursuant to
Section 3.02(b).
(b) Optional. The Company shall have the right to terminate or
reduce the unused Commitments (for which purpose use of the Commitments shall be
deemed to include the aggregate amount of Letter of Credit Liabilities) at any
time or from time to time, provided that (i) the Company shall give notice of
each such termination or reduction to the Administrative Agent as provided in
Section 5.05 hereof and (ii) each partial reduction shall be in an aggregate
amount at least equal to $1,000,000.
(c) No Reinstatement. Commitments once terminated or
reduced may not be reinstated.
2.03 Fees. The Company shall pay to the Administrative Agent for the
account of each Lender commitment fees on the daily average unused amount of
such Lender's Commitment (for which purpose the aggregate amount of any Letter
of Credit Liabilities shall be deemed to be a pro rata (based on the
Commitments) use of each Lender's Commitment) for the period from the Closing
Date to and including the earlier of the date the Commitments are terminated and
the Commitment Termination Date, at a rate per annum equal to the Applicable
Commitment Fee Rate in effect from time to time. Accrued commitment fees under
this Section 2.03 shall be payable on the Quarterly Dates and on the earlier of
the date the Commitments are terminated and the Commitment Termination Date. The
Company shall pay to Chase on the Closing Date syndication, agency and
additional commitment fees in the amounts heretofore mutually agreed in writing.
The Company shall pay to the Administrative Agent on the Closing Date and on
each anniversary thereof, so long as any of the Commitments are in effect and
until payment in full of all Loans hereunder, all interest thereon and all other
amounts payable hereunder, an annual agency fee in the amount heretofore
mutually agreed in writing.
2.04 Lending Offices. The Loans of each Type made by each Lender
shall be made and maintained at such Lender's Applicable Lending Office for
Loans of such Type.
2.05 Several Obligations; Remedies Independent. The failure of any
Lender to make any Loan to be made by it on the date specified therefor shall
not relieve any other Lender of its obligation to make its Loan on such date,
but neither the Administrative Agent nor any Lender shall be responsible for the
failure of any other Lender to make a Loan to be made by such other Lender. The
amounts payable by the Company at any time hereunder and under the Notes to each
Lender shall be a separate and independent debt and each Lender shall be
entitled to protect and enforce its rights arising out of this Agreement and the
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Notes, and it shall not be necessary for any other Lender or the Administrative
Agent to consent to, or be joined as an additional party in, any proceedings for
such purposes.
2.06 Notes. The Loans made by each Lender shall be evidenced by a
single promissory note of the Company (each, a "Note") in substantially the form
of Exhibit A hereto, dated the Closing Date, payable to such Lender in a
principal amount equal to such Lender's Commitment as in effect on the Closing
Date and otherwise duly completed. Each Lender is hereby authorized by the
Company to endorse on the schedule (or a continuation thereof) attached to each
Note of such Lender, to the extent applicable, the date, amount and Type of and
the Interest Period (if any) for each Loan made by such Lender to the Company
hereunder, and the date and amount of each payment or prepayment of principal of
such Loan received by such Lender, provided that any failure by such Lender to
make any such endorsement shall not affect the obligations of the Company under
such Note or hereunder in respect of such Loan.
2.07 Use of Proceeds. The proceeds of the Loans shall be used for
the general corporate purposes of the Company and its Subsidiaries, including,
without limitation, the making of Permitted Acquisitions and the refinancing of
existing Indebtedness of the Company and its Subsidiaries. Neither the
Administrative Agent nor any Lender shall have any responsibility as to the use
of any of the proceeds of any of the Loans or Letters of Credit.
2.08 Letters of Credit. Subject to the terms and conditions of this
Agreement, the Commitments may be utilized, upon the request of the Company, in
addition to the Loans provided for by Section 2.01 hereof, by the issuance by
the Issuing Bank of standby letters of credit (collectively with the Existing
Letters of Credit, "Letters of Credit") for account of the Company or any of its
Subsidiaries (as specified by the Company), provided that in no event shall (i)
the aggregate amount of all Letter of Credit Liabilities, together with the
aggregate outstanding principal amount of the Loans, exceed the aggregate amount
of the Commitments as in effect from time to time, (ii) the aggregate
outstanding amount of all Letter of Credit Liabilities exceed $2,000,000 and
(iii) the expiration date of any Letter of Credit extend beyond the earlier of
the Commitment Termination Date and the date twelve months following the
issuance of such Letter of Credit (provided that any Letter of Credit with a
twelve-month tenor may provide for the renewal thereof for additional
twelve-month periods, which periods shall in any event not extend beyond the
Commitment Termination Date). On the Closing Date, all Existing Letters of
Credit shall automatically, without any action on the part of any Person, be
deemed to be Letters of Credit issued and outstanding hereunder.
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The following additional provisions shall apply to Letters of
Credit:
(a) The Company shall give the Administrative Agent at least three
Business Days' irrevocable prior notice (effective upon receipt)
specifying the Business Day (which shall be no later than 30 days
preceding the Commitment Termination Date) on which each Letter of Credit
is to be issued and the account party or parties therefor and describing
in reasonable detail the proposed terms of such Letter of Credit
(including the beneficiary thereof) and the nature of the transactions or
obligations proposed to be supported thereby (including whether such
Letter of Credit is to be a commercial letter of credit or a standby
letter of credit). Upon receipt of any such notice, the Administrative
Agent shall advise the Issuing Bank of the contents thereof.
(b) On each day during the period commencing with the issuance by
the Issuing Bank of any Letter of Credit and until such Letter of Credit
shall have expired or been terminated, the Commitment of each Lender shall
be deemed to be utilized for all purposes of this Agreement in an amount
equal to such Lender's Commitment Percentage of the then undrawn face
amount of such Letter of Credit. Each Lender (other than the Issuing Bank)
agrees that, upon the issuance of any Letter of Credit hereunder, it shall
automatically acquire a participation in the Issuing Bank's liability
under such Letter of Credit in an amount equal to such Lender's Commitment
Percentage of such liability, and each Lender (other than the Issuing
Bank) thereby shall automatically absolutely, unconditionally and
irrevocably assume, as primary obligor and not as surety, and be
unconditionally obligated to the Issuing Bank to pay and discharge when
due, its Commitment Percentage of the Issuing Bank's liability under such
Letter of Credit.
(c) Upon receipt from the beneficiary of any Letter of Credit of any
demand for payment under such Letter of Credit, the Issuing Bank shall
promptly notify the Company (through the Administrative Agent) of the
amount to be paid by the Issuing Bank as a result of such demand and the
date on which payment is to be made by the Issuing Bank to such
beneficiary in respect of such demand. Notwithstanding the identity of the
account party of any Letter of Credit, the Company hereby unconditionally
agrees to pay and reimburse the Administrative Agent for account of the
Issuing Bank for the amount of each demand for payment under such Letter
of Credit that is in substantial compliance with the provisions of such
Letter of Credit at or prior to the date on which payment is to be made by
the Issuing Bank to the beneficiary
Credit Agreement
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thereunder, without presentment, demand, protest or other
formalities of any kind.
(d) Forthwith upon its receipt of a notice referred to in paragraph
(c) of this Section 2.08, the Company shall advise the Administrative
Agent whether or not the Company intends to borrow hereunder to finance
its obligation to reimburse the Issuing Bank for the amount of the related
demand for payment and, if it does, submit a notice of such borrowing as
provided in Section 5.05 hereof.
(e) Each Lender (other than the Issuing Bank) shall pay to the
Administrative Agent for account of the Issuing Bank at an account in New
York, New York specified by the Administrative Agent in Dollars and in
immediately available funds the amount of such Lender's Commitment
Percentage of any payment under a Letter of Credit upon notice by the
Issuing Bank (through the Administrative Agent) to such Lender requesting
such payment and specifying such amount. Each such Lender's obligation to
make such payment to the Administrative Agent for account of the Issuing
Bank under this paragraph (e), and the Issuing Bank's right to receive the
same, shall be absolute and unconditional and shall not be affected by any
circumstance whatsoever, including, without limitation, the failure of any
other Lender to make its payment under this paragraph (e), the financial
condition of the Company (or any other account party), any failure to
satisfy any condition precedent to any Loan, the existence of any Default
or the termination of the Commitments. Each such payment to the Issuing
Bank shall be made without any offset, abatement, withholding or reduction
whatsoever. If any Lender shall default in its obligation to make any such
payment to the Administrative Agent for account of the Issuing Bank, for
so long as such default shall continue the Administrative Agent may at the
request of the Issuing Bank withhold from any payments received by the
Administrative Agent under this Agreement or any Note for account of such
Lender the amount so in default and, to the extent so withheld, pay the
same to the Issuing Bank in satisfaction of such defaulted obligation.
(f) Upon the making of each payment by a Lender to the Issuing Bank
pursuant to paragraph (e) above in respect of any Letter of Credit, such
Lender shall, automatically and without any further action on the part of
the Administrative Agent, the Issuing Bank or such Lender, acquire (i) a
participation in an amount equal to such payment in the Reimbursement
Obligation owing to the Issuing Bank by the Company hereunder and under
the Letter of Credit Documents relating to such Letter of Credit and (ii)
a participation in a percentage equal to such Lender's Commitment
Percentage
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in any interest or other amounts payable by the Company hereunder and
under such Letter of Credit Documents in respect of such Reimbursement
Obligation (other than the commissions, charges, costs and expenses
payable to the Issuing Bank pursuant to paragraph (g) of this Section
2.08). Upon receipt by the Issuing Bank from or for account of the Company
of any payment in respect of any Reimbursement Obligation or any such
interest or other amount (including by way of setoff or application of
proceeds of any collateral security) the Issuing Bank shall promptly pay
to the Administrative Agent for account of each Lender entitled thereto
such Lender's Commitment Percentage of such payment, each such payment by
the Issuing Bank to be made in the same money and funds in which received
by the Issuing Bank. In the event any payment received by the Issuing Bank
and so paid to the Lenders hereunder is rescinded or must otherwise be
returned by the Issuing Bank, each Lender shall, upon the request of the
Issuing Bank (through the Administrative Agent), repay to the Issuing Bank
(through the Administrative Agent) the amount of such payment paid to such
Lender, with interest at the rate specified in paragraph (j) of this
Section 2.08.
(g) The Company shall pay to the Administrative Agent for account of
each Lender (ratably in accordance with their respective Commitment
Percentages) a letter of credit fee in respect of each Letter of Credit in
an amount equal to the Applicable L/C Percentage of the daily average
undrawn face amount of such Letter of Credit for the period from and
including the date of issuance of such Letter of Credit (i) in the case of
a Letter of Credit that expires in accordance with its terms, to and
including such expiration date and (ii) in the case of a Letter of Credit
that is drawn in full or is otherwise terminated other than on the stated
expiration date of such Letter of Credit, to but excluding the date such
Letter of Credit is drawn in full or is terminated (such fee to be
non-refundable, to be paid in arrears on each Quarterly Date and on the
Commitment Termination Date and on the date of expiry or termination or
full utilization of such Letter of Credit and to be calculated for any day
after giving effect to any payments made under such Letter of Credit on
such day). In addition, the Company shall pay to the Administrative Agent
for account of the Issuing Bank a fronting fee in respect of each Letter
of Credit in an amount equal to 0.25% per annum of the daily average
undrawn face amount of such Letter of Credit for the period from and
including the date of issuance of such Letter of Credit (i) in the case of
a Letter of Credit that expires in accordance with its terms, to and
including such expiration date and (ii) in the case of a Letter of Credit
that is drawn in full or is otherwise
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terminated other than on the stated expiration date of such Letter of
Credit, to but excluding the date such Letter of Credit is drawn in full
or is terminated (such fee to be non-refundable, to be paid in arrears on
each Quarterly Date and on the Commitment Termination Date and to be
calculated for any day after giving effect to any payments made under such
Letter of Credit on such day) plus all commissions, charges, costs and
expenses in the amounts customarily charged by the Issuing Bank from time
to time in like circumstances with respect to the issuance of each Letter
of Credit and drawings and other transactions relating thereto.
(h) Promptly following the end of each calendar month, the Issuing
Bank shall deliver (through the Administrative Agent) to each Lender and
the Company a notice describing the aggregate amount of all Letters of
Credit outstanding at the end of such month. Upon the request of any
Lender from time to time, the Issuing Bank shall deliver any other
information reasonably requested by such Lender with respect to each
Letter of Credit then outstanding.
(i) The issuance by the Issuing Bank of each Letter of Credit shall,
in addition to the conditions precedent set forth in Section 7 hereof, be
subject to the conditions precedent that (i) such Letter of Credit shall
be in such form, contain such terms and support such transactions as shall
be satisfactory to the Issuing Bank consistent with its then current
practices and procedures with respect to letters of credit of the same
type and (ii) the Company shall have executed and delivered such
applications, agreements and other instruments relating to such Letter of
Credit as the Issuing Bank shall have reasonably requested consistent with
its then current practices and procedures with respect to letters of
credit of the same type, provided that in the event of any conflict
between any such application, agreement or other instrument and the
provisions of this Agreement or any Security Document, the provisions of
this Agreement and the Security Documents shall control.
(j) To the extent that any Lender shall fail to pay any amount
required to be paid pursuant to paragraph (e) or (f) of this Section 2.08
on the due date therefor, such Lender shall pay interest to the Issuing
Bank (through the Administrative Agent) on such amount from and including
such due date to but excluding the date such payment is made at a rate per
annum equal to the Federal Funds Effective Rate, provided that if such
Lender shall fail to make such payment to the Issuing Bank within three
Business Days of such due date, then, retroactively to the due date, such
Lender shall
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be obligated to pay interest on such amount at the
Post-Default Rate.
(k) The issuance by the Issuing Bank of any modification or
supplement to any Letter of Credit hereunder shall be subject to the same
conditions as are applicable under this Section 2.08 to the issuance of
new Letters of Credit, and no such modification or supplement shall be
issued hereunder unless either (i) the respective Letter of Credit
affected thereby would have complied with such conditions had it
originally been issued hereunder in such modified or supplemented form or
(ii) each Lender shall have consented thereto.
The Company hereby indemnifies and holds harmless each Lender (including the
Issuing Bank) and the Administrative Agent from and against any and all claims
and damages, losses, liabilities, costs or expenses that such Lender or the
Administrative Agent may incur (or that may be claimed against such Lender or
the Administrative Agent by any Person whatsoever) by reason of or in connection
with the execution and delivery or transfer of or payment or refusal to pay by
the Issuing Bank under any Letter of Credit; provided that the Company shall not
be required to indemnify any Lender or the Administrative Agent for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to the
extent, caused by (x) the willful misconduct or gross negligence of the Issuing
Bank in determining whether a request presented under any Letter of Credit
complied with the terms of such Letter of Credit or (y) in the case of the
Issuing Bank, such Lender's failure to pay under any Letter of Credit after the
presentation to it of a request strictly complying with the terms and conditions
of such Letter of Credit. Nothing in this Section 2.08 is intended to limit the
other obligations of the Company, any Lender or the Administrative Agent under
this Agreement.
Section 3. Borrowings, Conversions and Prepayments.
3.01 Borrowings. The Company shall give the Administrative Agent
notice of each Loan to be made hereunder as provided in Section 5.05 hereof. Not
later than 11:00 a.m. New York time on the date specified for each such
borrowing hereunder, each Lender shall make available the amount of the Loan to
be made by it on such date to the Administrative Agent, at an account in New
York, New York specified by the Administrative Agent, in immediately available
funds, for account of the Company. The amount so received by the Administrative
Agent shall, subject to the terms and conditions of this Agreement, be made
available to the Company by depositing the same, in immediately available funds,
in an account of the
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Company designated by the Company and maintained with Chase in New York, New
York.
3.02 Prepayments and Conversions.
(a) Optional Prepayments and Conversions. The Company shall have the
right to prepay Loans and to convert Loans of one Type into Loans of the other
Type, at any time or from time to time, provided that: (i) the Company shall
give the Administrative Agent notice of each such prepayment as provided in
Section 5.05 hereof and (ii) except to the extent required pursuant to Section
3.02(b) hereof, Eurodollar Loans may be prepaid or converted only on the last
day of an Interest Period for such Loans.
(b) Mandatory Prepayments.
(1) Casualty Events; Condemnation Awards. On the date twelve months
following the receipt by the Company or any of its Subsidiaries of any
proceeds of insurance, condemnation award or other compensation in respect
of any Casualty Event affecting any property of the Company or any of its
Subsidiaries (or upon such earlier date as the Company or such Subsidiary,
as the case may be, shall have determined not to repair or replace the
property affected by such Casualty Event), the Company shall prepay the
Loans (and/or provide cover for Letter of Credit Liabilities as specified
in paragraph (c) below), and the Commitments shall be subject to automatic
reduction, in an aggregate amount, if any, equal to 100% of the Net Cash
Proceeds of such Casualty Event not theretofore applied to the repair or
replacement of such property.
(2) Issuance of Indebtedness. The Company shall prepay the Loans
(and/or provide cover for Letter of Credit Liabilities as specified in
paragraph (c) below) in the amount of and on the date of each receipt by
the Company or any Subsidiary of the Company of Net Cash Proceeds from
issuance subsequent to the Closing Date of Indebtedness other than
Indebtedness incurred pursuant to Section 9.08 (it being understood that
this Section 3.02(b)(2) shall not constitute a waiver of any provision of
Section 9.08).
(3) Asset Dispositions. During each fiscal year of the Company, the
Company shall prepay the Loans (and/or provide cover for Letter of Credit
Liabilities as specified in paragraph (c) below), in an amount equal to
the excess of (a) the sum of (x) the Net Cash Proceeds received by the
Company or any Subsidiary of the Company from any disposition by such
Person of any assets during such fiscal year, other than a disposition
permitted by clause (i) or
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(ii) of Section 9.12 plus (y) any payments with respect to receivables
retained by such Person arising from the sale of goods or services at
facilities disposed of in asset dispositions during such fiscal year over
(b) $1,000,000. Such prepayments shall be made from time to time on the
first Business Day that the excess amount referred to above (less all
amounts previously applied to the prepayment of the Loans pursuant to this
paragraph (3) during such fiscal year) is $100,000 or more.
Any prepayment pursuant to paragraphs (1) through (3) above shall automatically
reduce the Commitments in an amount equal to the amount specified in such
paragraphs (and to the extent that, after giving effect to such reduction, the
aggregate principal amount of Loans and the aggregate amount of Letter of Credit
Liabilities would exceed the Commitments, the Company shall, first, prepay Loans
and, second, provide cover for Letter of Credit Liabilities as specified in
paragraph (c) below, in an aggregate amount equal to such excess). The Company
shall notify the Administrative Agent promptly upon the occurrence of any event
giving rise to a prepayment or Commitment reduction under this Section 3.02(b).
(c) Cover for Letter of Credit Liabilities. In the event that the
Loans have been repaid in full, amounts payable under Section 3.02(b) shall be
applied to provide cash cover for outstanding Letters of Credit, in which event
the Company shall effect the same by paying to the Administrative Agent
immediately available funds in an amount equal to the required amount, which
funds shall be retained by the Administrative Agent in the Collateral Account as
collateral security in the first instance for the Letter of Credit Liabilities
until such time as the Letters of Credit shall have been terminated and all of
the Letter of Credit Liabilities paid in full.
Section 4. Payments of Principal and Interest.
4.01 Repayment of Loans. The Company hereby promises to pay to the
Administrative Agent for account of each Lender the entire outstanding principal
amount of such Lender's Loans, and each Loan shall mature, on the Commitment
Termination Date.
4.02 Interest. The Company will pay to the Administrative Agent for
the account of each Lender interest on the unpaid principal amount of each Loan
made by such Lender for the period commencing on the date of such Loan to but
excluding the date such Loan shall be paid in full, at the following rates per
annum:
(a) if such Loan is an ABR Loan, the Alternate Base
Rate plus the Applicable Margin; and
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(b) if such Loan is a Eurodollar Loan, the Eurodollar
Rate plus the Applicable Margin.
Notwithstanding the foregoing, the Company hereby promises to pay to the
Administrative Agent for account of each Lender interest at the applicable
Post-Default Rate
(x) on any principal of any Loan made by such Lender, on any
Reimbursement Obligation held by such Lender and on any other amount
payable by the Company hereunder or under the Note held by such Lender to
or for account of such Lender (but, if such amount is interest, only to
the extent legally enforceable), that shall not be paid in full when due
(whether at stated maturity, by acceleration, by mandatory prepayment or
otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full and
(y) on any principal of any Loan made by such Lender during any
period when an Event of Default shall have occurred under Section 10.01(a)
hereof and for so long as such Event of Default shall be continuing.
Accrued interest on each Loan shall be payable (i) if such Loan is an ABR Loan,
on each Quarterly Date, (ii) if such Loan is a Eurodollar Loan, on the last day
of each Interest Period for such Loan (and, if such Interest Period exceeds
three months' duration, quarterly, commencing on the first quarterly anniversary
of the first day of such Interest Period), and (iii) in any event, upon the
payment, prepayment or conversion thereof, but only on the principal so paid or
prepaid or converted; provided that interest payable at the Post-Default Rate
shall be payable from time to time on demand of the Administrative Agent or the
Majority Lenders. Promptly after the determination of any interest rate provided
for herein or any change therein, the Administrative Agent shall notify the
Lenders and the Company thereof.
Notwithstanding the foregoing provisions of this Section 4.02, if at
any time the rate of interest set forth above on any Loan of any Lender (the
"Stated Rate" for such Loan) exceeds the maximum non-usurious interest rate
permissible for such Lender to charge commercial borrowers under applicable law
(the "Maximum Rate" for such Lender), the rate of interest charged on such Loan
of such Lender hereunder shall be limited to the Maximum Rate for such Lender.
In the event the Stated Rate for any Loan of a Lender that has
theretofore been subject to the preceding paragraph at any time is less than the
Maximum Rate for such Lender, the principal amount of such Loan shall bear
interest at the Maximum
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Rate for such Lender until the total amount of interest paid to such Lender or
accrued on its Loans hereunder equals the amount of interest which would have
been paid to such Lender or accrued on such Lender's Loans hereunder if the
Stated Rate had at all times been in effect.
In the event, upon payment in full of all amounts payable hereunder,
the total amount of interest paid to any Lender or accrued on such Lender's
Loans under the terms of this Agreement is less than the total amount of
interest which would have been paid to such Lender or accrued on such Lender's
Loans if the Stated Rate had, at all times, been in effect, then the Company
shall, to the extent permitted by applicable law, pay to the Administrative
Agent for the account of such Lender an amount equal to the difference between
(a) the lesser of (i) the amount of interest which would have accrued on such
Lender's Loans if the Maximum Rate for such Lender had at all times been in
effect or (ii) the amount of interest which would have accrued on such Lender's
Loans if the Stated Rate had at all times been in effect and (b) the amount of
interest actually paid to such Lender or accrued on its Loans under this
Agreement.
In the event any Lender ever receives, collects or applies as
interest any sum in excess of the Maximum Rate for such Lender, such excess
amount shall be applied to the reduction of the principal balance of its Loans
or to other amounts (other than interest) payable hereunder, and if no such
principal is then outstanding, such excess or part thereof remaining shall be
paid to the Company.
Section 5. Payments; Pro Rata Treatment; Computations;
Etc.
5.01 Payments. Except to the extent otherwise provided herein, all
payments of principal, interest, Reimbursement Obligations and other amounts to
be made by the Company hereunder and under the Notes shall be made in Dollars,
in immediately available funds, to the Administrative Agent at an account in New
York, New York specified by the Administrative Agent, not later than 11:00 a.m.
New York time on the date on which such payment shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day). The Administrative Agent, or any Lender for
whose account any such payment is made, may (but shall not be obligated to)
debit the amount of any such payment which is not made by such time to any
ordinary deposit account of the Company with the Administrative Agent or such
Lender, as the case may be. The Company shall, at the time of making each
payment hereunder or under any Note, specify to the Administrative Agent the
Loans or other amounts payable by the Company hereunder to which such payment is
to be applied (and in the event that it
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fails to so specify, or if an Event of Default has occurred and is continuing,
the Administrative Agent may apply such payment for the benefit of the Lenders
as it may elect in its sole discretion, but subject to the other terms and
conditions of this Agreement, including without limitation, Section 5.02
hereof). Each payment received by the Administrative Agent hereunder or under
any Note for the account of a Lender shall be paid promptly to such Lender, in
immediately available funds, for the account of such Lender's Applicable Lending
Office. If the due date of any payment hereunder or under any Note would
otherwise fall on a day which is not a Business Day such date shall be extended
to the next succeeding Business Day and interest shall be payable for any
principal so extended for the period of such extension.
5.02 Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) each borrowing from the Lenders under Section 2.01 hereof shall be
made from the Lenders, each payment of commitment fees under Section 2.03 hereof
shall be made for the account of the Lenders, and each termination or reduction
of the Commitments under Section 2.02 hereof shall be applied to the Commitments
of the Lenders, pro rata according to the Lenders' respective percentages of the
Commitments, (b) each payment by the Company of principal of or interest on
Loans of a particular Type (other than payments in respect of Loans of
individual Lenders provided for by Section 6 hereof) shall be made to the
Administrative Agent for the account of the Lenders pro rata in accordance with
the respective unpaid principal amounts of such Loans held by the Lenders and
(c) each conversion of Loans of a particular Type (other than conversions of
Loans of individual Lenders pursuant to Section 6.04 hereof) shall be made pro
rata among the Lenders in accordance with the respective principal amounts of
such Loans held by the Lenders.
5.03 Computations. Interest and fees shall be computed on the basis
of a year of 360 days (or 365 or 366 days, as the case may be, in the case of
ABR Loans the interest rate payable on which is then based on the Prime Rate)
and actual days elapsed (including the first day but excluding the last day)
occurring in the period for which payable.
5.04 Minimum and Maximum Amounts; Types. Except for prepayments made
pursuant to Section 3.02(b) hereof, each borrowing, conversion and prepayment of
principal of Loans shall be in an aggregate principal amount equal to (a) in the
case of Eurodollar Loans, $1,000,000 or a larger multiple of $100,000, and (b)
in the case of ABR Loans, $500,000 or a larger multiple of $100,000 (borrowings,
conversions or prepayments of Loans of different Types or, in the case of
Eurodollar Loans, having different Interest Periods, at the same time hereunder
to be deemed separate borrowings, conversions and prepayments for purposes of
the foregoing, one for Type or Interest Period);
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provided that (i) any Loan may be in the aggregate amount of the unused portion
of the relevant Commitments, (ii) Loans may be prepaid in full and (ii) any
borrowing or prepayment of Loans that are ABR Loans may be in an aggregate
principal amount equal to $100,000 or a larger multiple of $100,000.
5.05 Certain Notices. Notices to the Administrative Agent of
terminations or reductions of Commitments, of borrowings, conversions and
prepayments of Loans and of the duration of Interest Periods shall be
irrevocable and shall be effective only if received by the Administrative Agent
not later than 1:00 p.m. New York time on the number of Business Days prior to
the date of the relevant termination, reduction, borrowing, conversion and/or
prepayment specified below:
Number of
Business
Notice Days Prior
Termination or reduction of
Commitments 3
Borrowing or prepayment of
ABR Loans 1
Borrowing or prepayment of,
conversion of or into, or
duration of Interest Period
for, Eurodollar Loans 3
Prepayments required pursuant
to Section 3.02(b) 1
Each such notice of termination or reduction shall specify the amount thereof to
be terminated or reduced. Each such notice of borrowing, conversion or
prepayment shall specify the amount and Type of the Loans to be borrowed,
converted or prepaid (subject to Sections 3.02(a) and 5.04 hereof), the date of
borrowing, conversion or prepayment (which shall be a Business Day) and, in the
case of Eurodollar Loans, the duration of the Interest Period therefor (subject
to the definition of Interest Period). Each such notice of duration of an
Interest Period shall specify the Loans to which such Interest Period is to
relate. The Administrative Agent shall promptly notify the affected Lenders of
the contents of each such notice. In the event that the Company fails to select
the duration of any Interest Period for any Eurodollar Loans within the time
period and otherwise as provided in this Section 5.05, such Loans (if
outstanding as Eurodollar Loans) will be automatically converted into ABR Loans
on the last day of the then current Interest Period for such
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Loans or (if outstanding as ABR Loans) will remain as, or (if not then
outstanding) will be made as, ABR Loans.
5.06 Non-Receipt of Funds by the Administrative Agent. Unless the
Administrative Agent shall have been notified by a Lender or the Company (the
"Payor") prior to the date on which such Lender is to make payment to the
Administrative Agent of the proceeds of a Loan to be made by it hereunder or the
Company is to make a payment to the Administrative Agent for the account of one
or more of the Lenders, as the case may be (such payment being herein called the
"Required Payment"), which notice shall be effective upon receipt, that the
Payor does not intend to make the Required Payment to the Administrative Agent,
the Administrative Agent may assume that the Required Payment has been made and
may, in reliance upon such assumption (but shall not be required to), make the
amount thereof available to the intended recipient on such date and, if the
Payor has not in fact made the Required Payment to the Administrative Agent, the
recipient of such payment shall, on demand, pay to the Administrative Agent the
amount made available to it together with interest thereon in respect of the
period commencing on the date such amount was so made available by the
Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to the Federal Funds Effective Rate for such
period.
5.07 Sharing of Payments; Waiver of Enforcement Without Consent,
Etc. (a) The Company agrees that, in addition to (and without limitation of) any
right of set-off, banker's lien or counterclaim a Lender may otherwise have,
each Lender shall be entitled, at its option, to offset balances held by it for
the account of the Company at any of its offices, in Dollars or in any other
currency, against any principal of or interest on any of such Lender's Loans or
Reimbursement Obligations to the Company hereunder, or any other obligation of
the Company hereunder, which is not paid when due (regardless of whether such
balances are then due to the Company), in which case it shall promptly notify
the Company and the Administrative Agent thereof, provided that such Lender's
failure to give such notice shall not affect the validity thereof. The Company
agrees, to the fullest extent it may effectively do so under applicable law,
that any Person purchasing a participation in the Loans made, or other
obligations held, by another Person, whether or not acquired pursuant to the
foregoing arrangements, may exercise all rights of set-off, banker's lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans or other obligations in the amount of
such participation.
(b) If a Lender shall obtain payment of any principal
of or interest on any Loan made by it under this Agreement, or on
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any other obligation then due to such Lender hereunder, through the exercise of
any right of set-off, banker's lien, counterclaim or similar right, or
otherwise, it shall promptly notify the Administrative Agent and purchase from
the other Lenders participations in the Loans made, or other obligations held,
by the other Lenders in such amounts, and make such other adjustments from time
to time as shall be equitable to the end that all the Lenders shall share the
benefit of such payment (net of any expenses which may be incurred by such
Lender in obtaining or preserving such benefit) pro rata in accordance with the
unpaid principal and interest on the Loans or other obligations then due to each
of them. To such end all the Lenders shall make appropriate adjustments among
themselves (by the resale of participations sold or otherwise) if such payment
is rescinded or must otherwise be restored (including the payment of interest to
the extent that the Lender obligated to return such funds is obligated to return
interest).
(c) Nothing contained herein shall require any Lender to exercise
any right of set-off, banker's lien, counterclaim or similar right or shall
affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness or obligation
of the Company.
(d) This Section 5.07 is for the benefit of the Lenders only and
does not constitute a waiver of any rights against the Company or any of its
Subsidiaries or against any property held as security for any obligations
hereunder or under any other Basic Document.
5.08 Withholding Tax Exemption. At least five Business Days prior to
the first date on which interest or fees are payable hereunder for the account
of any Lender, each Lender that is not incorporated under the laws of the United
States of America or a state thereof agrees that it will deliver to each of the
Company and the Administrative Agent two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, certifying in either case that such
Lender is entitled to receive payments under this Agreement and the Notes
without deduction or withholding of any United States federal income taxes. Each
Lender which so delivers a Form 1001 or 4224 further undertakes to deliver to
each of the Company and the Administrative Agent two additional copies of such
form (or a successor form) on or before the date that such form expires or
becomes obsolete or after the occurrence of any event requiring a change in the
most recent form so delivered by it, and such amendments thereto or extensions
or renewals thereof as may be reasonably requested by the Company or the
Administrative Agent, in each case certifying that such Lender is entitled to
receive payments under this Agreement and the Notes without deduction or
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withholding of any United States federal income taxes, unless an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it and
such Lender advises the Company and the Administrative Agent that it is not
capable of receiving payments without any deduction or withholding of United
States federal income tax.
Section 6. Yield Protection and Illegality.
6.01 Additional Costs.
(a) The Company shall pay to the Administrative Agent for the
account of each Lender from time to time such amounts as such Lender may
determine to be necessary to compensate it for any costs incurred by such Lender
which such Lender determines are attributable to its making or maintaining of
any Eurodollar Loans hereunder or its obligation to make any of such Loans
hereunder, or any reduction in any amount receivable by such Lender in respect
of any of such Loans or such obligation (such increases in costs and reductions
in amounts receivable being herein called "Additional Costs"), in each case
resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to such
Lender under this Agreement or its Notes in respect of any of such Loans
(other than changes which affect taxes measured by or imposed on the
overall net income of such Lender or of its Applicable Lending Office for
any of such Loans by the jurisdiction in which such Lender has its
principal office or such Applicable Lending Office); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements relating to any extensions of credit or other assets of, or
any deposits with or other liabilities of, such Lender (including any of
such Loans or any deposits referred to in the definition of "Eurodollar
Base Rate" in Section 1.01 hereof); or
(iii) imposes any other condition affecting this Agreement (or any of
such extensions of credit or liabilities).
Each Lender will notify the Company through the Administrative Agent of any
event occurring after the date of this Agreement which will entitle such Lender
to compensation pursuant to this Section 6.01(a) as promptly as practicable
after it obtains knowledge thereof and determines to request such compensation,
and (if so requested by the Company through the Administrative Agent) will
designate a different Applicable Lending Office for
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the Eurodollar Loans of such Lender if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the sole opinion of
such Lender, be disadvantageous to such Lender (provided that such Lender shall
have no obligation to so designate an Applicable Lending Office located in the
United States of America). Each Lender will furnish the Company with a statement
setting forth the basis and amount of each request by such Lender for
compensation under this Section 6.01(a). If any Lender requests compensation
from the Company under this Section 6.01(a), the Company may, by notice to such
Lender through the Administrative Agent, suspend the obligation of such Lender
to make additional Eurodollar Loans to the Company until the Regulatory Change
giving rise to such request ceases to be in effect (in which case the provisions
of Section 6.04 hereof shall be applicable).
(b) Without limiting the effect of the foregoing provisions of this
Section 6.01, in the event that, by reason of any Regulatory Change, any Lender
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Lender which includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Lender which includes Eurodollar
Loans or (ii) becomes subject to restrictions on the amount of such a category
of liabilities or assets which it may hold, then, if such Lender so elects by
notice to the Company (with a copy to the Administrative Agent), the obligation
of such Lender to make Eurodollar Loans hereunder shall be suspended until the
date such Regulatory Change ceases to be in effect (in which case the provisions
of Section 6.04 hereof shall be applicable).
(c) Determinations and allocations by any Lender for purposes of
this Section 6.01 of the effect of any Regulatory Change on its costs of
maintaining its obligations to make Loans or of making or maintaining Loans or
on amounts receivable by it in respect of Loans, and of the additional amounts
required to compensate such Lender in respect of any Additional Costs, shall be
conclusive absent manifest error, provided that such determinations and
allocations are made on a reasonable basis.
(d) If any Lender demands compensation under this Section, the
Company may, at any time upon at least three (3) Business Days' prior notice to
such Lender through the Administrative Agent, convert in full the then
outstanding Eurodollar Loans of such Lender (in which case the Company shall be
obligated, if such conversion is made on a day that is not the last day of the
then current Interest Period applicable to such affected Eurodollar Loan, to
reimburse such Lender, in accordance
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with Section 6.05, for any resulting loss or expense incurred by
it) to an ABR Loan.
6.02 Limitation on Types of Loans. Anything herein to
the contrary notwithstanding, if, with respect to any Eurodollar
Loans:
(a) the Administrative Agent determines (which determination shall
be conclusive) that quotations of interest rates for the relevant deposits
referred to in the definition of "Eurodollar Base Rate" in Section 1.01
hereof are not being provided by the Reference Lenders in the relevant
amounts or for the relevant maturities for purposes of determining the
rate of interest for such Loans for Interest Periods therefor as provided
in this Agreement; or
(b) the Majority Lenders determine (which determination shall be
conclusive) and notify the Administrative Agent that the relevant rates of
interest referred to in the definition of "Eurodollar Base Rate" in
Section 1.01 thereof upon the basis of which the rates of interest for
such Loans are to be determined do not accurately reflect the cost to such
Lenders of making or maintaining such Loans for Interest Periods therefor;
then the Administrative Agent shall promptly notify the Company and each Lender
thereof, and so long as such condition remains in effect, the Lenders shall be
under no obligation to make Eurodollar Loans or to convert ABR Loans into
Eurodollar Loans and the Company shall, on the last day(s) of the then current
Interest Period(s) for the outstanding Eurodollar Loans, either prepay such
Loans or convert such Loans into ABR Loans in accordance with Section 3.02
hereof.
6.03 Illegality. Notwithstanding any other provision of this
Agreement to the contrary, in the event that it becomes unlawful for any Lender
or its Applicable Lending Office to (a) honor its obligation to make Eurodollar
Loans hereunder, or (b) maintain Eurodollar Loans hereunder, then such Lender
shall promptly notify the Company thereof through the Administrative Agent and
such Lender's obligation to make Eurodollar Loans hereunder shall be suspended
until such time as such Lender may again make and maintain Eurodollar Loans (in
which case the provisions of Section 6.04 hereof shall be applicable).
6.04 Substitute ABR Loans. If the obligation of any Lender to make
Eurodollar Loans shall be suspended pursuant to Section 6.01, 6.02 or 6.03
hereof, all Loans which would otherwise be made by such Lender as Eurodollar
Loans shall be made instead as ABR Loans (and, if an event referred to in
Section 6.01(b) or 6.03 hereof has occurred and such Lender so
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requests by notice to the Company with a copy to the Administrative Agent, each
Eurodollar Loan of such Lender then outstanding shall be automatically converted
into an ABR Loan on the date specified by such Lender in such notice) and, to
the extent that Eurodollar Loans are so made as (or converted into) ABR Loans,
all payments of principal which would otherwise be applied to such Eurodollar
Loans shall be applied instead to such ABR Loans.
6.05 Compensation. The Company shall pay to the Administrative Agent
for the account of each Lender, upon the request of such Lender through the
Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost or
expense incurred by it as a result of:
(a) any payment, prepayment or conversion of a Eurodollar Loan made
by such Lender on a date other than the last day of an Interest Period for
such Loan; or
(b) any failure by the Company to borrow a Eurodollar Loan to be
made by such Lender on the date for such borrowing specified in the
relevant notice of borrowing under Section 5.05 hereof
but excluding, in any event, loss of margin for the period after any such
payment, prepayment or conversion or failure to borrow; provided that such
Lender shall have delivered to the Company a certificate as to the amount of
such loss and expense along with the basis for calculation thereof.
6.06 Capital Adequacy. If any Lender shall determine
that the adoption or implementation of any applicable law, rule,
regulation or treaty regarding capital adequacy, or any change
therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof,
or compliance by any Lender (or its Applicable Lending Office)
with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of
reducing the rate of return on capital of such Lender or any
Person controlling such Lender (a "Parent") as a consequence of
its obligations hereunder to a level below that which such Lender
(or its Parent) could have achieved but for such adoption, change
or compliance (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such Lender
to be material, then from time to time, within 15 days after
demand by such Lender (with a copy to the Administrative Agent),
the Company shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction. A
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statement of any Lender claiming compensation under this Section and setting
forth the additional amount or amounts to be paid to it hereunder shall be
conclusive absent manifest error; provided that the determination thereof is
made on a reasonable basis; and provided further that the Company shall not be
obligated to compensate such Lender for any such reduction occurring more than
180 days prior to the time such Lender first notifies the Company of such
adoption, implementation, change or compliance. In determining such amount, such
Lender may use any reasonable averaging and attribution methods.
6.07 Substitution of Lender. If (i) the obligation of any Lender to
make Eurodollar Loans or the right of the Company to convert ABR Loans of any
Lender to Eurodollar Loans has been suspended pursuant to Section 6.03, or (ii)
any Lender has demanded compensation under Section 6.01 or 6.06, the Company
shall have the right, with the assistance of the Administrative Agent, to seek a
substitute bank or banks (which may be one or more of the Lenders) satisfactory
to the Company and the Administrative Agent to purchase the Notes and assume the
Commitments of such Lender. Any such Lender shall be obligated to sell the Notes
for cash without recourse to such substitute bank or banks and to execute and
deliver an appropriately completed assignment and assumption agreement
reasonably satisfactory to the Administrative Agent and the Company and any
other document or perform any act reasonably necessary to effect the assumption
of the rights and obligations of such substitute bank or banks.
6.08 Additional Costs in Respect of Letters of Credit. Without
limiting the obligations of the Company under Section 6.01 hereof (but without
duplication), if as a result of any Regulatory Change or any risk-based capital
guideline or other requirement heretofore or hereafter issued by any government
or governmental or supervisory authority implementing at the national level the
Basle Accord there shall be imposed, modified or deemed applicable any tax,
reserve, special deposit, capital adequacy or similar requirement against or
with respect to or measured by reference to Letters of Credit issued or to be
issued hereunder and the result shall be to increase the cost to any Lender or
Lenders of issuing (or purchasing participations in) or maintaining its
obligation hereunder to issue (or purchase participations in) any Letter of
Credit hereunder or reduce any amount receivable by any Lender hereunder in
respect of any Letter of Credit (which increases in cost, or reductions in
amount receivable, shall be the result of such Lender's or Lenders' reasonable
allocation of the aggregate of such increases or reductions resulting from such
event), then, upon demand by such Lender or Lenders (through the Administrative
Agent), the Company shall pay immediately to the Administrative Agent for
account of such Lender or Lenders, from time to time as specified
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by such Lender or Lenders (through the Administrative Agent), such additional
amounts as shall be sufficient to compensate such Lender or Lenders (through the
Administrative Agent) for such increased costs or reductions in amount. A
statement as to such increased costs or reductions in amount incurred by any
such Lender or Lenders, submitted by such Lender or Lenders to the Company,
shall be conclusive in the absence of manifest error as to the amount thereof.
Section 7. Conditions Precedent.
7.01 Initial Extension of Credit. The obligation of any Lender to
make its initial extension of credit hereunder (whether by making a Loan or
issuing a Letter of Credit) is subject to the conditions precedent that (i) such
extension of credit shall be made on or before October 31, 1996, and (ii) the
Administrative Agent shall have received the following documents and other
evidence (with, in the case of clauses (a), (b), (c) and (d) below, sufficient
copies for each Lender), each of which shall be satisfactory to the
Administrative Agent (and to the extent specified below, to each Lender) in form
and substance (delivery to the Administrative Agent by a Lender of a signature
page hereto constituting conclusive evidence of such Lender's satisfaction as to
the fulfillment of the conditions precedent hereto):
(a) Corporate Documents. Certified copies of the charter and by-laws
(or equivalent documents) of each Obligor and of all corporate authority
for each Obligor (including, without limitation, board of director
resolutions and evidence of the incumbency, including specimen signatures,
of officers) with respect to the execution, delivery and performance of
such of the Basic Documents to which such Obligor is intended to be a
party and each other document to be delivered by such Obligor from time to
time in connection herewith and the extensions of credit hereunder (and
the Administrative Agent and each Lender may conclusively rely on such
certificate until it receives notice in writing from such Obligor to the
contrary).
(b) Officer's Certificate. A certificate of a senior
officer of the Company, dated the Closing Date, to the
effect set forth in the first sentence of Section 7.02
hereof.
(c) Opinion of Special New York Counsel to the
Obligors. An opinion, dated the Closing Date, of Sullivan &
Worcester LLP, special New York counsel to the Obligors,
substantially in the form of Exhibit E hereto and covering
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such other matters as the Administrative Agent or any Lender
may reasonably request.
(d) Opinion of Special New York Counsel to the
Administrative Agent. An opinion, dated the Closing Date,
of Milbank, Tweed, Hadley & McCloy, special New York counsel
to the Administrative Agent, substantially in the form of
Exhibit F hereto.
(e) Notes. The Notes, duly completed and executed for
each Lender.
(f) Counterparts. This Agreement, duly executed and
delivered by the Company and each of the Lenders.
(g) Subsidiary Guaranty. The Subsidiary Guaranty,
duly executed and delivered by each Subsidiary Guarantor and
the Administrative Agent.
(h) Security Documents.
(i) The Company Pledge Agreement, duly executed and delivered
by the Company and the Administrative Agent, together with the
certificates identified in Annex I thereto, accompanied by undated
stock powers executed in blank.
(ii) The Subsidiary Pledge Agreement duly executed and
delivered by each Subsidiary Guarantor and the Administrative Agent,
in each case together with the certificates identified in Annex I
thereto under the names of the respective Subsidiary Guarantor, in
each case accompanied by undated stock powers executed in blank.
In addition, each of the Obligors shall have taken such other action
(including, without limitation, delivering to the Administrative Agent,
for filing, appropriately completed and duly executed copies of Uniform
Commercial Code financing statements) as the Administrative Agent shall
have requested in order to perfect the security interests created pursuant
to the Company Pledge Agreement and the Subsidiary Pledge Agreement.
(i) Senior Subordinated Debt. Evidence that the Senior Subordinated
Debt Documents shall have been duly authorized, executed and delivered,
and that the Notes evidencing the Senior Subordinated Debt shall have been
duly issued, in each case containing terms in form and substance
satisfactory to each Lender, and the Administrative Agent shall have
received copies of each of the Senior
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Subordinated Debt Documents certified by a senior financial officer of the
Company. In addition, the Administrative Agent shall have received a
certificate of a senior financial officer of the Company to the effect
that the Company has received net cash proceeds (prior to the payment of
any transaction expenses) from the issuance of the Senior Subordinated
Debt pursuant to the Senior Subordinated Debt Documents in an aggregate
amount at least equal to $125,000,000.
(j) Repayment of Existing Indebtedness. Evidence that the principal
of and interest on, and all other amounts owing in respect of, the
Indebtedness (including, without limitation, any contingent or other
amounts payable in respect of letters of credit, but excluding Existing
Letters of Credit) indicated on Schedule III hereto that is to be repaid
on the Closing Date shall have been (or shall be simultaneously) paid in
full, that any commitments to extend credit under the agreements or
instruments relating to such Indebtedness shall have been canceled or
terminated and that all Guarantees in respect of, and all Liens securing,
any such Indebtedness shall have been released (or arrangements for such
release satisfactory to the Majority Lenders shall have been made); in
addition, the Administrative Agent shall have received from any Person
holding any Lien securing any such Indebtedness, such Uniform Commercial
Code termination statements, mortgage releases and other instruments, in
each case in proper form for recording, as the Administrative Agent shall
have requested to release and terminate of record the Liens securing such
Indebtedness (or arrangements for such release and termination
satisfactory to the Majority Lenders shall have been made).
(k) Insurance. Certificates of insurance evidencing the existence of
all insurance required to be maintained by the Company pursuant to Section
9.03 hereof, such certificates to be in such form and contain such
information as is specified in said Section 9.03. In addition, the Company
shall have delivered a certificate of a senior financial officer of the
Company setting forth the insurance obtained by it in accordance with the
requirements of said Section 9.03 and stating that such insurance is in
full force and effect and that all premiums then due and payable thereon
have been paid.
(l) Other Documents. Such other documents as the
Administrative Agent or any Lender or special New York
counsel to the Administrative Agent may reasonably request.
The obligation of any Lender to make its initial extension of credit hereunder
is also subject to the payment by the Company of
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such fees as the Company shall have agreed to pay or deliver to any Lender or
the Administrative Agent in connection herewith, including, without limitation,
the reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy, special New
York counsel to the Administrative Agent, in connection with the negotiation,
preparation, execution and delivery of this Agreement and the Notes and the
other Basic Documents and the extensions of credit hereunder (to the extent that
statements for such fees and expenses have been delivered to the Company).
7.02 Initial and Subsequent Loans. The obligation of each Lender to
make any Loan to be made by it hereunder, and the obligation of the Issuing Bank
to issue any Letter of Credit hereunder, is subject to the conditions precedent
that, as of the date of such Loan or such issuance, and before and after giving
effect thereto:
(a) no Default shall have occurred and be continuing;
(b) the representations and warranties made by each of the Company
and the Subsidiary Guarantors in each Basic Document to which it is a
party shall be true on and as of the date of the making of such Loan or
such issuance, with the same force and effect as if made on and as of such
date; provided that the representations and warranties set forth in
Section 8.10 hereof need only be true as of the Closing Date; and
(c) the borrowing of such Loan by the Company hereunder or the
issuance of such Letter of Credit, as the case may be, and the related
incurrence of obligations by the Company, does not violate the provisions
of the Senior Subordinated Debt Indenture or any other Senior Subordinated
Debt Document.
Each notice of borrowing by the Company hereunder shall constitute a
certification by the Company to the effect set forth in the preceding sentence
(both as of the date of such notice and, unless the Company otherwise notifies
the Administrative Agent prior to the date of such borrowing or issuance, as of
the date of such borrowing or issuance).
Section 8. Representations and Warranties. The
Company represents and warrants to the Lenders and the
Administrative Agent as follows:
8.01 Corporate Existence. Each of the Company and its
Subsidiaries: (a) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation; (b) has all requisite corporate power, and
has all governmental licenses, authorizations, consents, permits
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and approvals (including any license, authorization, consent, permit and
approval required under any Environmental Law) necessary to own its assets and
carry on its business as now being or as proposed to be conducted (except such
licenses, authorizations, consents and approvals the lack of which, in the
aggregate, will not have a Material Adverse Effect); and (c) is qualified to do
business in all jurisdictions in which the nature of the business conducted by
it makes such qualification necessary and where failure so to qualify would have
a Material Adverse Effect.
8.02 Information.
(a) The Company has heretofore furnished to each of the Lenders
consolidated balance sheets of the Company and its Subsidiaries as at December
31, 1994 and December 31, 1995 and the related consolidated statements of
income, retained earnings and cash flows of the Company and its Subsidiaries for
the fiscal years respectively ended on said dates, with the opinion thereon of
Arthur Andersen L.L.P., and the unaudited consolidated balance sheets of the
Company and its Subsidiaries as at March 31, 1996 and June 30, 1996 and the
related consolidated statements of income, retained earnings and cash flows of
the Company and its Subsidiaries for the three and six month periods
respectively ended on such dates. All such financial statements are complete and
correct and fairly present the consolidated financial condition of the Company
and its Subsidiaries as at said dates and the consolidated results of their
operations for the fiscal years and three and six month periods ended on said
dates (subject, in the case of such financial statements as at March 31, 1996
and June 30, 1996, to normal year-end audit adjustments), all in accordance with
generally accepted accounting principles and practices applied on a consistent
basis.
(b) The Company has disclosed to the Lenders in writing any and all
facts (other than general economic conditions) which materially and adversely
affect or may materially and adversely affect (to the extent it can reasonably
foresee) the business, assets, property, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries taken as a whole, or the ability
of the Company or any of the Subsidiary Guarantors to perform its obligations
under each Basic Document to which it is a party or the ability of the Company
or any Subsidiary of the Company to conduct its activities or operations in the
normal course of business at any of its owned or leased properties. The
information, reports, financial statements, exhibits and schedules furnished in
writing by or on behalf of the Obligors to the Administrative Agent or any
Lender in connection with the negotiation, preparation or delivery of this
Agreement and the other Basic Documents or included herein
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or therein or delivered pursuant hereto or thereto, when taken as a whole do not
contain any untrue statement of material fact or omit to state any material fact
necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. All written
information furnished after the date hereof by the Company and its Subsidiaries
to the Administrative Agent and the Lenders in connection with this Agreement
and the other Basic Documents and the transactions contemplated hereby and
thereby will be true, complete and accurate in every material respect, or (in
the case of projections) based on reasonable estimates, on the date as of which
such information is stated or certified.
(c) Since December 31, 1995, there has been no material adverse
change in the business, assets, property, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries taken as a whole or, to the
knowledge of the Company, in the ability of the Company or any of the Subsidiary
Guarantors to perform its obligations under each Basic Document to which it is a
party.
8.03 Litigation. There are no legal or arbitral proceedings or any
proceedings by or before any governmental or regulatory authority or agency, now
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries in which there is a reasonable possibility of
an adverse decision which could have a Material Adverse Effect or, to the
knowledge of the Company, which could have a material adverse effect on the
ability of the Company or any of the Subsidiary Guarantors to perform its
obligations under each Basic Document to which it is a party.
8.04 No Breach. None of the execution and delivery of the Basic
Documents, the consummation of the transactions therein contemplated or
compliance with the terms and provisions thereof will conflict with or result in
a breach of, or require any consent under, the certificate of incorporation or
by-laws of the Company or any of its Subsidiaries, or any applicable law or
regulation, or any order, writ, injunction or decree of any court or
governmental authority or agency, or any Basic Document, any other material
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which it is bound or to which it is subject, or constitute a default
under any such lease, agreement or instrument, or (except for the Liens created
pursuant to, or permitted by, this Agreement and the Security Documents) result
in the creation or imposition of any Lien upon any of the revenues or assets of
the Company or any of its Subsidiaries pursuant to the terms of any such
agreement or instrument.
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8.05 Corporate Action. Each of the Company and the Subsidiary
Guarantors has all necessary corporate power and authority to execute, deliver
and perform its obligations under the Basic Documents to which it is a party;
the execution, delivery and performance by the Company and the Subsidiary
Guarantors of the Basic Documents to which they are parties have been duly
authorized by all necessary corporate action; and this Agreement has been duly
and validly executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company and each of the other Basic
Documents to which the Company or any of the Subsidiary Guarantors is to be a
party constitute its legal, valid and binding obligation, in each case
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization or moratorium or other
similar laws relating to the enforcement of creditors' rights generally and by
general equitable principles.
8.06 Approvals. Each of the Company and the Subsidiary Guarantors
has obtained all authorizations, approvals and consents of, and has made all
filings and registrations with, any governmental or regulatory authority or
agency necessary for the execution, delivery or performance by it of any Basic
Document to which it is a party, or for the validity or enforceability thereof,
except for filings and recordings of the Liens created pursuant to, or permitted
by, the Security Documents.
8.07 Regulations U and X. None of the Company or any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U or X of the Board of Governors
of the Federal Reserve System) and no part of the proceeds of any Loan hereunder
will be used to purchase or carry any such margin stock.
8.08 ERISA. The Company and each member of the Controlled Group have
fulfilled their obligations under the minimum funding standards of ERISA and the
Code with respect to each Plan and are in compliance in all material respects
with the presently applicable provisions of ERISA and the Code, and have not
incurred any liability to the PBGC or a Plan under Title IV of ERISA (other than
to make contributions or premium payments in the ordinary course).
8.09 Taxes. Each of the Company and its Subsidiaries has filed all
United States Federal income tax returns and all other material tax returns
which are required to be filed by it and has paid all taxes due pursuant to such
returns or pursuant to any assessment received by it, except to the extent the
same
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may be contested as permitted by Section 9.02 hereof. The charges, accruals and
reserves on the books of such Persons in respect of taxes and other governmental
charges are, in the opinion of the Company, adequate.
8.10 Subsidiaries; Agreements; Etc.
(a) Schedule II hereto is a complete and correct list of all
Subsidiaries of the Company and of all Investments held by the Company or any of
its Subsidiaries in any joint venture or other Person. Except for the Liens
created by the Security Documents, the Company owns, free and clear of Liens,
all outstanding shares of such Subsidiaries and all such shares are validly
issued, fully paid and non-assessable and the Company (or the respective
Subsidiary of the Company) also owns, free and clear of Liens, all such
Investments.
(b) Schedule III hereto is a complete and correct list of all credit
agreements, indentures, capitalized leases, obligations in respect of letters of
credit, guaranties, joint venture agreements, and other material instruments in
effect as of the date hereof providing for, evidencing, securing or otherwise
relating to any Indebtedness or any Material Lease Obligations (as hereinafter
defined) of the Company or any of its Subsidiaries, and all obligations of the
Company or any of its Subsidiaries to issuers of surety or appeal bonds issued
for account of the Company or any of its Subsidiaries, and such list correctly
sets forth the names of the debtor or lessee and creditor or lessor with respect
to the Indebtedness or Material Lease Obligations outstanding or to be
outstanding and the property subject to any Lien securing such Indebtedness or
Material Lease Obligation. The Company has heretofore delivered to the
Administrative Agent a complete and correct copy of all such credit agreements,
indentures, capitalized leases, letter of credit obligations, guaranties, joint
venture agreements and other material instruments, including any modifications
or supplements thereto, as in effect on the date hereof. As used herein, the
term "Material Lease Obligations" shall mean any operating lease which requires
aggregate annual rentals during any period of twelve months during the term of
such lease in an amount in excess of $100,000.
(c) None of the Subsidiaries of the Company is, on the date hereof,
subject to any indenture, agreement, instrument or other arrangement of the type
described in Section 9.22(d) hereof (other than the Senior Subordinated Debt
Indenture).
8.11 Investment Company Act. None of the Company or
its Subsidiaries is an investment company within the meaning of
the Investment Company Act of 1940, as amended, or, directly or
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indirectly, controlled by or acting on behalf of any Person which is an
investment company, within the meaning of said Act.
8.12 Public Utility Holding Company Act. None of the Company or its
Subsidiaries is a "holding company", or an "affiliate" of a "holding company" or
a "subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
8.13 Ownership and Use of Properties. Each of the Company and its
Subsidiaries will at all times have legal title to or ownership of, or the right
to use pursuant to enforceable and valid agreements or arrangements, all
tangible property, both real and personal, and all franchises, licenses,
copyrights, patents and know-how which are material to the operation of its
business as proposed to be conducted.
8.14 Environmental Compliance.
(i) No notice, notification, demand, request for information,
citation, summons, complaint or order has been issued, no complaint has
been filed, no penalty has been assessed and no investigation or review is
pending or, to the Company's knowledge, threatened by any governmental or
other entity with respect to any (A) alleged violation by the Company or
any Subsidiary of any Environmental Law, (B) alleged failure by the
Company or any Subsidiary to have any environmental permit, certificate,
license, approval, registration or authorization required in connection
with the conduct of its business or (C) generation, treatment, storage,
recycling, transportation or disposal or Release (each a "Regulated
Activity") of any Hazardous Substances;
(ii) neither the Company nor any Subsidiary has engaged in any
Regulated Activity other than as a generator (as such term is used in
RCRA) in compliance with all applicable Environmental Laws, and no
Regulated Activity, other than generation by the Company or any Subsidiary
in compliance with all applicable Environmental Laws, has occurred on any
property now or previously owned or leased by the Company or any
Subsidiary. No polychlorinated biphenyls, urea formaldehyde, lead,
asbestos or asbestos-containing material is or has been present at any
property now or previously owned or leased by the Company or any other
Subsidiary. There are no underground storage tanks for Hazardous
Substances, active or abandoned, at any property now or previously owned
or leased by the Company or any Subsidiary. No Hazardous Substance has
been Released at, on or under any property now or previously owned or
leased by the Company or any Subsidiary. No Hazardous Substance is present
in a reportable or threshold planning quantity where such a
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quantity has been established by any Environmental Law at,
on or under, any property now or previously owned or leased
by the Company or any Subsidiary;
(iii) no real property now or previously owned or leased by the Company
or any Subsidiary is listed or, to the Company's knowledge, proposed for
listing, on the National Priorities List promulgated pursuant to CERCLA,
on CERCLIS, as defined in CERCLA, or on any similar state list of sites
requiring investigation or clean-up;
(iv) neither the Company nor any Subsidiary has transported or arranged
for the transportation (directly or indirectly) of any Hazardous Substance
to any location which is listed or to the Company's knowledge, proposed
for listing, under CERCLA (including on CERCLIS, as defined in CERCLA) or
on any similar state list or which is the subject of federal, state or
local enforcement actions or to the Company's knowledge, other
investigations which may lead to claims against the Company or any
Subsidiary for clean-up costs, remedial work, damages to natural resources
or for personal injury claims, including, but not limited to, claims under
CERCLA;
(v) there are no liens under Environmental Laws on any of the real
property or other assets owned or leased by the Company or any Subsidiary,
and no government actions have been taken or are in process which could
subject any of such properties or assets to such liens. Neither the
Company nor any Subsidiary would be required to place any notice or
restriction relating to Hazardous Substances at any property owned by it
in any deed to such property;
(vi) there has been no environmental investigation, study, audit, test,
review or other analysis conducted of which the Company has knowledge in
relation to the current or prior business of the Company or any property
or facility now or previously owned or leased by the Company or any
Subsidiary, which has not been delivered to the Lenders prior to the date
hereof; and
(vii) neither the Company nor any Subsidiary has assumed from any third
party, or indemnified any third party for, any Environmental Liability,
except for Environmental Liabilities of the Company and its Subsidiaries
(without duplication) that relate to or result from any matter referred to in
clauses (i) through (vii) (without duplication), which do not exceed in the
aggregate, at any time, $6,000,000.
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8.15 Solvency. At the Closing Date and after giving effect to the
consummation of the transactions contemplated by this Agreement, the Company
will (i) have capital, cash flows and sources of working capital financing
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage, (ii) be able to pay its debts as
they mature, and (iii) have assets (tangible and intangible) whose fair salable
value exceeds its total liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities).
8.16 Capitalization. The authorized Capital Stock of the Company
consists, on the date hereof, of an aggregate of 16,000,000 shares consisting of
(i) 13,000,000 shares of Common Stock, par value $0.01 per share, of which
9,627,141 shares are duly and validly issued and outstanding, (ii) 1,000,000
shares of Nonvoting Common Stock, par value $0.01 per share, of which 500,000
shares are duly and validly issued and outstanding and (iii) 2,000,000 shares of
Preferred Stock, par value $0.01 per share, none of which is outstanding. As of
the date hereof, except as disclosed on Schedule IV hereto, (x) there are no
outstanding Equity Rights with respect to the Company and (y) there are no
outstanding obligations of the Company or any of its Subsidiaries to repurchase,
redeem, or otherwise acquire any shares of Capital Stock of the Company nor are
there any outstanding obligations of the Company or any of its Subsidiaries to
make payments to any Person, such as "phantom stock" payments, where the amount
thereof is calculated with reference to the fair market value or equity value of
the Company or any of its Subsidiaries.
8.17 Senior Debt. The Indebtedness of the Company to the Lenders
hereunder and the Guarantees of such Indebtedness by the Subsidiaries of the
Company under the Subsidiary Guaranty constitute "Senior Debt" and "Senior Bank
Debt" (and, accordingly, "Designated Senior Debt") under and as defined in, and
for all purposes of, the Senior Subordinated Debt Indenture and the other Senior
Subordinated Debt Documents.
Section 9. Covenants. The Company agrees that, so long as any of the
Commitments are in effect and until payment in full of all Loans hereunder, all
interest thereon and all other amounts payable hereunder, unless the Majority
Lenders shall agree otherwise pursuant to Section 12.05 hereof:
9.01 Financial Statements and Other Information. The
Company shall deliver to each of the Lenders:
(a) as soon as available and in any event within 90
days after the end of each fiscal year of the Company,
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consolidated statements of income, retained earnings and cash flow of the
Company and its Subsidiaries for such year and the related consolidated
balance sheet as at the end of such year, setting forth in each case in
comparative form the corresponding figures for the preceding fiscal year,
and accompanied by an opinion thereon of Arthur Andersen L.L.P. or other
independent certified public accountants of recognized national standing,
which opinion shall state that said consolidated financial statements
fairly present the consolidated financial condition and results of
operations of the Company and its Subsidiaries as at the end of, and for,
such fiscal year, and stating (or indicating in a footnote to such
financial statements) that, in making the examination necessary for their
above-described opinion (but without any special or additional procedures
for that purpose), they obtained no knowledge, except as specifically
stated, of any Default;
(b) as soon as available and in any event within 45 days after the
end of each fiscal quarter of the Company (or, in the case of the last
fiscal quarter in each fiscal year, within 90 days) consolidated
statements of income, retained earnings and cash flow of the Company and
its Subsidiaries for such fiscal quarter and for the portion of the fiscal
year ended at the end of such fiscal quarter, and the related consolidated
balance sheet as at the end of such fiscal quarter, setting forth in each
case in comparative form the corresponding figures from the Company's
operating budget for such fiscal year and accompanied, in each case, by a
certificate of the chief financial officer or vice president-treasurer of
the Company which certificate shall state that said consolidated financial
statements fairly present the consolidated financial condition and results
of operations of the Company in accordance with GAAP (except for the
absence of footnotes) consistently applied as at the end of, and for, such
fiscal quarter (subject to normal year-end audit adjustments);
(c) within 30 days after the beginning of each fiscal year of the
Company, a copy of the consolidated operating budget, including, without
limitation, projection of the anticipated cash flow, of the Company and
its Subsidiaries for such fiscal year, such budget to be accompanied by a
certificate of the chief financial officer or vice president-treasurer of
the Company specifying the assumptions on which such budget was prepared,
stating that such officer has no reason to question the reasonableness of
any material assumptions on which such budget was prepared and providing
such other details as the Administrative Agent may reasonably request;
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(d) promptly upon the mailing thereof to the shareholders or
creditors of the Company generally, copies of all financial statements,
reports and proxy statements so mailed;
(e) promptly upon the filing thereof, copies of all registration
statements (other than any registration statements on Form S-8 or its
equivalent) and any reports which the Company shall have filed with the
Securities and Exchange Commission;
(f) if and when the Company or any member of the Controlled Group
(i) gives or is required to give notice to the PBGC of any "reportable
event" (as defined in Section 4043 of ERISA) with respect to any Plan
which might constitute grounds for a termination of such Plan under Title
IV of ERISA, or knows that the plan administrator of any Plan has given or
is required to give notice of any such reportable event, a copy of the
notice of such reportable event given or required to be given to the PBGC;
(ii) receives notice of complete or partial withdrawal liability under
Title IV of ERISA, a copy of such notice; or (iii) receives notice from
the PBGC under Title IV of ERISA of an intent to terminate or appoint a
trustee to administer the Plan, a copy of such notice;
(g) promptly following the delivery thereof to the Company or to the
Board of Directors or management of the Company, a copy of any management
letter or similar written report by independent public accountants with
respect to the financial condition, operations, business or prospects of
the Company;
(h) promptly after management of the Company knows or has reason to
know that any Default has occurred and is continuing, a notice of such
Default, describing the same in reasonable detail;
(i) within 45 days after the end of each fiscal quarter of the
Company, a report, certified by the Chief Financial Officer of the
Company, specifying the Capital Expenditures made by the Company during
the previous fiscal quarter (broken down to identify Maintenance Capital
Expenditures and other Capital Expenditures) and the Additional
Expenditures made by the Company during the previous fiscal quarter; and
(j) from time to time such other information regarding the financial
condition, operations, prospects or business of the Company as the
Administrative Agent or any Lender through the Administrative Agent may
reasonably request.
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The Company will furnish to each Lender, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate of
its chief executive officer, chief financial officer or vice president-treasurer
(i) to the effect that, to the best of such Person's knowledge after due
inquiry, no Default has occurred and is continuing (or, if any Default has
occurred and is continuing, describing the same in reasonable detail) and (ii)
setting forth in reasonable detail the computations necessary to determine the
Applicable Leverage Ratio and to determine whether it was in compliance with
Sections 9.08 through 9.15 and 9.19 hereof as of the end of the respective
fiscal quarter or fiscal year.
9.02 Taxes and Claims. The Company will pay and discharge, and will
cause each of its Subsidiaries to pay and discharge, all material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any property belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, might
become a Lien upon the property of the Company or such Subsidiary, provided that
neither the Company nor such Subsidiary shall be required to pay any such tax,
assessment, charge, levy or claim the payment of which is being contested in
good faith and by proper proceedings if it maintains adequate reserves with
respect thereto.
9.03 Insurance. The Company will maintain, and will cause each of
its Subsidiaries to maintain, insurance with responsible companies in such
amounts and against such risks as is usually carried by owners of similar
businesses and properties in the same general areas in which the Company and its
Subsidiaries operate, provided that in any event the Company shall maintain or
cause to be maintained:
(1) Property Insurance -- insurance against loss or damage covering
all of the tangible real and personal property and improvements of the
Company and its Subsidiaries, by reason of any Peril (as defined below),
in amounts as shall be reasonable and customary, but in no event less than
the greater of (A) the functional replacement cost of all such real and
personal property and improvements and (B) the amounts necessary to avoid
the insured named therein from becoming a co-insurer of any loss under
such policy, except that (x) the minimum annual aggregate limits for
earthquake perils shall be $5,000,000 in California, and $5,000,000 in all
other states and (y) the minimum aggregate limit for flood perils shall be
$5,000,000. Such insurance shall be subject to the following maximum
deductibles: In the case of earthquake perils in California, the greater
of 10% of the insurable value of the property insured and $500,000 per
occurrence;
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in the case of earthquake perils outside California and flood perils in
all places, the greater of 3% of the insurable value of the property
insured and $350,000 per occurrence; and in all other cases $300,000 per
occurrence.
(2) Business Interruption Insurance -- insurance against loss of
operating income earned from the operation of the business of the Company
and its Subsidiaries, by reason of any Peril affecting the operation
thereof, and insurance against any other insurable loss of operating
income by reason of any business interruption affecting the Company to the
extent covered by standard business interruption policies in the States in
which the Properties are located, but in any event in an amount of at
least $5,000,000 per policy period, which insurance shall in each case
cover gross earnings by reason of the particular Peril or other insurable
business interruption and with a deductible (or self-insured amount) not
in excess of $300,000 or, in California, 5% of the insured value of the
property.
Such insurance shall be written by financially responsible companies selected by
the Company, having an A.M. Best rating of "A-" or better and in a financial
size category acceptable to the Majority Lenders, or by other companies
acceptable to the Majority Lenders.
For purposes hereof, the term "Peril" shall mean, collectively, (i)
earthquake, (ii) fire, lightning, flood, windstorm, hail, explosion, riot and
civil commotion, vandalism and malicious mischief, damage from aircraft,
vehicles and smoke and (iii) all other perils covered by the "all-risk"
endorsement then in use in the States in which the Properties are located.
9.04 Maintenance of Existence; Conduct of Business. The Company will
preserve and maintain, and will cause each of its Subsidiaries to preserve and
maintain, its corporate existence and all of its rights, privileges and
franchises necessary or desirable in the normal conduct of its business, and
will conduct its business in a regular manner; provided that nothing herein
shall prevent (i) the merger and dissolution of any Subsidiary of the Company
into the Company or any Wholly-Owned Subsidiary of the Company so long as the
Company or such Wholly-Owned Subsidiary is the surviving corporation or (ii) the
abandonment of any right, privilege or franchise (including any lease) not
material in the aggregate to the business of the Company and its Subsidiaries.
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9.05 Maintenance of and Access to Properties.
(a) The Company will keep, and will cause each of its Subsidiaries
to keep, all of its properties necessary in its business in good working order
and condition (having regard to the condition of such properties at the time
such properties were acquired by the Company or such Subsidiary), ordinary wear
and tear excepted, and will permit representatives of the Lenders to inspect
such properties and, upon reasonable notice and at reasonable times, to examine
and make extracts and copies from the books and records of the Company and any
such Subsidiary.
(b) The Company will, and will cause its Subsidiaries to, do all
things necessary to preserve and keep in full force and effect all trademarks,
patents, service marks, trade names, copyrights, franchises and Licenses, and
any rights with respect thereto, which are necessary for and material to the
conduct of the business of the Company and its Subsidiaries taken as a whole.
9.06 Compliance with Applicable Laws. The Company will comply, and
will cause each of its Subsidiaries to comply, with the requirements of all
applicable laws, rules, regulations and orders of any governmental body or
regulatory authority (including, without limitation, ERISA and all Environmental
Laws), a breach of which would have a Material Adverse Effect, except where
contested in good faith and by proper proceedings.
9.07 Litigation. The Company will promptly give to the
Administrative Agent (which shall promptly notify each Lender) notice in writing
of (i) all judgments against it or any of its Subsidiaries (other than judgments
fully covered by insurance) which individually exceed $100,000 or in the
aggregate exceed $1,000,000 and (ii) all litigation and of all proceedings of
which it is aware before any courts, arbitrators or governmental or regulatory
agencies affecting the Company or any of its Subsidiaries except litigation or
proceedings which, if adversely determined, would not in the reasonable opinion
of the Company have a Material Adverse Effect.
9.08 Indebtedness. The Company will not, and will not permit any of
its Subsidiaries to, create, incur or suffer to exist any Indebtedness except:
(i) Indebtedness to the Lenders hereunder; (ii) the Indebtedness existing on the
Closing Date and set forth in Schedule III hereto (including any extensions,
renewals or refunding of such Indebtedness, so long as the principal amount of
such Indebtedness is not increased); (iii) Senior Subordinated Debt in an
aggregate outstanding principal amount not exceeding $165,000,000; and (iv) so
long as no Default shall have occurred or be continuing hereunder at the time of
such creation or incurrence, Permitted Indebtedness.
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9.09 Leverage Ratio. The Company will not, as at the end of any
fiscal quarter, permit the ratio, calculated as at the end of such fiscal
quarter for the four fiscal quarters then ended, of (i) the excess of (x) the
aggregate outstanding principal amount of Funded Indebtedness of the Company and
its Subsidiaries at such date over (y) the aggregate amount of cash and Liquid
Investments of the Company and Subsidiaries as of such date to (ii) EBITDA for
such period (the "Leverage Ratio") to exceed the ratio set forth below for the
period in which such fiscal quarter ends:
Period Leverage Ratio
From the Closing Date
through December 31, 1996 5.00 to 1
From January 1, 1997
through December 31, 1997 5.00 to 1
From January 1, 1998
through December 31, 1998 4.75 to 1
From January 1, 1999
through December 31, 1999 4.50 to 1
From January 1, 2000
through December 31, 2000 4.00 to 1
From January 1, 2001
and at all times thereafter 3.50 to 1
9.10 Interest Coverage Ratio. The Company will not, as at the end of
any fiscal quarter, permit the ratio, calculated as at the end of such fiscal
quarter for the four fiscal quarters then ended, of (i) EBITDA for such period
to (ii) Interest Expense for such period to be less than the ratio set forth
below for the period in which such fiscal quarter ends:
Period Interest Coverage Ratio
From the Closing Date
through December 31, 1996 1.80 to 1
From January 1, 1997
through December 31, 1997 1.80 to 1
From January 1, 1998
through September 30, 1998 1.90 to 1
From October 1, 1998
through December 31, 1998 2.00 to 1
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From January 1, 1999
through June 30, 1999 2.00 to 1
From July 1, 1999
through December 31, 1999 2.25 to 1
From January 1, 2000
through June 30, 2000 2.35 to 1
From July 1, 2000
through December 31, 2000 2.50 to 1
From January 1, 2001
and at all times thereafter 2.50 to 1
For purposes of calculating any ratio set forth in this Section, if
the Company elects pursuant to the penultimate sentence of the definition of
EBITDA to include in EBITDA for the period to which such ratio relates the pro
forma amounts referred to in such sentence, there shall be included in Interest
Expense for such period, on a pro forma basis, interest accruing during such
period on Indebtedness (and the interest portion of payments under Capitalized
Lease Obligations) assumed or incurred by the Company and its Subsidiaries (on a
consolidated basis) in connection with any Permitted Acquisition having
Acquisition Consideration of more than $750,000 during such period.
9.11 Fixed Charges Coverage Ratio. The Company will not, as at the
end of any fiscal quarter, permit the ratio, calculated as at the end of such
fiscal quarter for the four fiscal quarters then ended, of (i) Adjusted EBITDA
for such period to (ii) Fixed Charges for such period to be less than the ratio
set forth below for the period in which such fiscal quarter ends:
Fixed Charges
Period Coverage Ratio
From the Closing Date
through December 31, 1996 1.20 to 1
From January 1, 1997
through December 31, 1997 1.20 to 1
From January 1, 1998
through December 31, 1998 1.20 to 1
From January 1, 1999
through December 31, 1999 1.40 to 1
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From January 1, 2000
through December 31, 2000 1.75 to 1
From January 1, 2001
and at all times thereafter 1.75 to 1
For purposes of calculating any ratio set forth in this Section, if
the Company elects pursuant to the penultimate sentence of the definition of
EBITDA to include in EBITDA for the period to which such ratio relates the pro
forma amounts referred to in such sentence, there shall be included in Fixed
Charges for such period, on a pro forma basis, principal payable and interest
accruing during such period on Indebtedness (and the interest portion of
payments under Capitalized Lease Obligations) assumed or incurred by the Company
and its Subsidiaries (on a consolidated basis) in connection with any Permitted
Acquisition having Acquisition Consideration of more than $750,000 during such
period.
9.12 Mergers, Asset Dispositions, Etc. Except as expressly permitted
by Section 9.04, the Company will not, and will not permit any of its
Subsidiaries to, be a party to any merger or consolidation, or sell, lease,
assign, transfer or otherwise dispose of any assets, or acquire assets from any
Person, except:
(i) dispositions and acquisitions of inventory in
the ordinary course of business;
(ii) dispositions of worn out or obsolete tools or equipment no
longer used or useful in the business of the Company and its Subsidiaries,
provided that no single disposition of tools or equipment shall have a
fair market value (determined in good faith by the Company at the time of
such disposition) in excess of $1,000,000;
(iii) Capital Expenditures to the extent permitted
under Section 9.19 hereof;
(iv) acquisitions of Investments permitted under Section 9.14
hereof and dispositions thereof (other than (x) dispositions of
Investments in any Subsidiary of the Company not otherwise permitted
hereunder and (y) dispositions of Investments referred to in clause (viii)
of said Section 9.14);
(v) other dispositions of assets during any fiscal year having an
aggregate fair market value (determined in good faith at the time of such
disposition by the Board of Directors of the Company) not exceeding
$5,000,000 in
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respect of Qualifying Sale-Leaseback Transactions or
$5,000,000 in respect of all other dispositions;
(vi) subject to compliance with the provisions of Section 9.22(b)
hereof, the sale, lease, assignment, transfer or other disposition of any
assets by any Subsidiary of the Company to the Company or any Wholly-Owned
Subsidiary thereof;
(vii) Large Volume Account Capitalized Expenditures;
and
(viii) so long as no Default shall have occurred or be continuing
hereunder at the time of such Acquisition, Permitted Acquisitions and
related Additional Expenditures.
For purposes of this Section 9.12, "Permitted Acquisition" shall
mean Acquisitions complying with the following:
(a) Maximum Periodic Consideration. Without the consent of the
Majority Lenders, the aggregate amount of Acquisition Consideration paid
in respect of Acquisitions shall not exceed $75,000,000 in any Calculation
Period (provided that the aggregate amount of Acquisition Consideration
(excluding, for purposes of this proviso, Stock Consideration) paid in
respect of Acquisitions shall not exceed $50,000,000 in any Calculation
Period).
(b) Maximum Individual Consideration. Without the
consent of the Majority Lenders, the Acquisition
Consideration payable in respect of any single Acquisition
or series of related Acquisitions shall not exceed
$30,000,000.
(c) Lines of Business, Etc. All such Acquisitions shall be of assets
relating to the records management business (or of 100% of the stock of
corporations whose assets consist substantially of such assets) or through
the merger of such a corporation into a Subsidiary of the Company, which
shall be the surviving corporation.
For purposes of this definition, any deferred non-contingent consideration
payable in respect of an Acquisition shall be discounted to net present value at
the rate of 10% per annum.
9.13 Liens. The Company will not, and will not permit any of its
Subsidiaries to, create or suffer to exist any Lien upon any property or assets,
now owned or hereafter acquired, securing any Indebtedness or other obligation,
except: (i) the Liens created pursuant to the Security Documents; (ii) the Liens
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existing on the Closing Date set forth in Schedule III and Liens arising out of
the refinancing, extension, renewal or refunding of any Indebtedness secured by
any Lien set forth on Schedule III, provided that the principal amount of such
Indebtedness is not increased and is not secured by any additional assets; (iii)
Liens contemplated by clauses (ii), (iv) and (v) of the definition of Permitted
Indebtedness; (iv) attachment, judgment or other similar Liens arising in
connection with litigation or other legal proceedings, provided that either (A)
the claims in respect of such Liens are fully covered by insurance or (B) the
execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are in an amount not to exceed $1,000,000 in the
aggregate and are being contested in good faith by appropriate proceedings
diligently prosecuted; (v) Liens on properties or assets of an Excluded
Subsidiary securing Indebtedness of such Excluded Subsidiary permitted
hereunder; and (vi) other Liens arising in the ordinary course of the business
of the Company or such Subsidiary which are not incurred in connection with the
borrowing of money or the obtaining of advances or credit and which do not
materially detract from the value of its property or assets or materially impair
the use thereof in the operation of its business.
9.14 Investments. The Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, make or permit to remain
outstanding any advances, loans or other extensions of credit or capital
contributions (other than prepaid expenses in the ordinary course of business)
to (by means of transfers of property or assets or otherwise), or purchase or
own any stocks, bonds, notes, debentures or other securities of, any Person (all
such transactions being herein called "Investments"), except:
(i) operating deposit accounts with any bank or
financial institution;
(ii) Liquid Investments (including Liquid Investments in the name
and under the control of the Administrative Agent (or a collateral
sub-agent for the Administrative Agent) as contemplated by the Security
Documents);
(iii) subject to Section 9.16 hereof, Investments in accounts and
chattel paper as defined in the Uniform Commercial Code) and notes
receivable acquired in the ordinary course of business as presently
conducted;
(iv) Investments in an insurer required as a condition to the
provision by such insurer of insurance coverage contemplated by Section
9.03; provided that the aggregate amount of Investments outstanding
pursuant to this
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clause (iv) during the term of this Agreement shall not
exceed $1,500,000;
(v) (x) equity Investments in Wholly-Owned Subsidiaries of the
Company, (y) additional equity Investments in Subsidiaries of the Company
(other than Wholly-Owned Subsidiaries) with the prior written consent of
the Majority Lenders, and (z) Investments in the form of loans, advances
or other obligations owed by any Wholly-Owned Subsidiary to the Company,
and Investments in the form of loans, advances or other obligations owed
by the Company to any Wholly-Owned Subsidiary; provided that the aggregate
amount of Investments by the Company permitted by subclauses (x) or (z) of
this clause (v) in any Subsidiary of the Company that is a mortgagor under
any Permitted Mortgage shall not exceed, in the aggregate for all such
Subsidiaries, $10,000,000 at any one time outstanding;
(vi) Investments consisting of loans or advances to officers and
directors of the Company and its Subsidiaries in an amount not to exceed
$350,000 in the aggregate during any fiscal year (and in any event not to
exceed $750,000 at any one time outstanding) and loans or advances made to
employees of the Company to permit such employees to exercise options to
purchase Capital Stock of the Company;
(vii) (x) Investments in Persons that are not Subsidiaries or
Affiliates of the Company, (y) Investments in Excluded Subsidiaries, and
guarantees by the Company of Indebtedness of Excluded Subsidiaries to the
extent such Indebtedness is permitted hereunder and (z) other Investments
in Subsidiaries of the Company (to the extent such Investments are not
permitted under clause (v) of this Section 9.14); provided that the
aggregate outstanding amount of Investments made pursuant to this clause
(vii) shall not at any time exceed $5,000,000;
(viii) Investments consisting of Permitted
Acquisitions under Section 9.12 hereof;
(ix) subject to Section 9.16 hereof and on terms and pursuant to
documentation in all respects reasonably satisfactory to the
Administrative Agent, Investments in Affiliates of the Company (which are
not Wholly-Owned Subsidiaries of the Company) to facilitate the
construction or acquisition of records management facilities including,
without limitation, the acquisition of real estate for development
purposes; and
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(x) subordinated Guarantees of Senior Subordinated
Debt by Subsidiaries of the Company pursuant to the Senior
Subordinated Debt Documents.
9.15 Restricted Payments. The Company will not, and
will not permit any of its Subsidiaries to, declare or make any
Restricted Payment, except that the Company may:
(i) provided that no Default has occurred and is continuing,
purchase shares of any class of Capital Stock, or options to purchase such
shares, of the Company from employees or former employees of the Company
or its Subsidiaries in amounts not to exceed $500,000 in any fiscal year
and $1,000,000 in the aggregate after the Closing Date;
(ii) make additional Restricted Payments constituting the purchase,
redemption, retirement or other acquisition of shares of any class of
Capital Stock of the Company (such Restricted Payments, "Stock
Repurchases"), subject to the satisfaction of each of the following
conditions on the date of such Stock Repurchase and after giving effect
thereto:
(a) no Default shall have occurred and be
continuing; and
(b) the aggregate amount of Stock Repurchases made during each
period set forth in the schedule below shall not exceed the amount
set forth below opposite such period:
Cumulative
Period Amount
From the Closing Date to and
including December 31, 1997 $ 5,000,000
From the Closing Date to and
including December 31, 1998 $10,000,000
From the Closing Date to and
including December 31, 1999 $15,000,000
In addition, the aggregate amount of all Stock Repurchases made after the
Closing Date shall not in any event exceed $20,000,000.
Nothing herein shall be deemed to prohibit the payment of dividends by any
Subsidiary of the Company to the Company or to any other Subsidiary of the
Company.
Credit Agreement
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9.16 Transactions with Affiliates. Except as otherwise expressly
permitted by this Agreement, the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly:
(i) make any Investment in an Affiliate of the
Company;
(ii) transfer, sell, lease, assign or otherwise
dispose of any assets to an Affiliate of the Company;
(iii) merge into or consolidate with or purchase or
acquire assets from an Affiliate of the Company; or
(iv) enter into any other transaction directly or indirectly with or
for the benefit of an Affiliate of the Company (including, without
limitation, guarantees and assumptions of obligations of an Affiliate of
the Company);
provided that (a) any Affiliate of the Company who is an individual may serve as
a director, officer or employee of the Company and receive reasonable
compensation or indemnification in connection with his or her services in such
capacity; (b) the Company or a Subsidiary of the Company may enter into any
transaction with an Affiliate of the Company providing for the leasing of
property, the rendering or receipt of services or the purchase or sale of
inventory and other assets in the ordinary course of business if the monetary or
business consideration arising therefrom would be substantially as advantageous
to the Company or such Subsidiary as the monetary or business consideration
which would obtain in a comparable arm's length transaction with a Person
similarly situated to the Company but not an Affiliate of the Company; and (c)
the Company may make Investments in Affiliates permitted by Section 9.14(ix)
hereof and may create Residual Assurances for the benefit of an Affiliate
permitted by Section 9.24 hereof in either case in connection with the
construction and/or acquisition of records management facilities to be leased to
the Company or a Subsidiary, so long as, taking such transaction as a whole
(giving effect to such Investment or Residual Assurance, and the lease of such
facility to the Company or such Subsidiary) such Affiliate is not
disproportionately benefitted.
9.17 Subordinated Indebtedness. The Company will not, nor will it
permit any of its Subsidiaries to, purchase, redeem, retire or otherwise acquire
for value, or set apart any money for a sinking, defeasance or other analogous
fund for the purchase, redemption, retirement or other acquisition of, or make
any voluntary payment or prepayment of the principal of or interest on, or any
other amount owing in respect of, any Subordinated Indebtedness, except for:
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(i) regularly scheduled payments or prepayments of principal and
interest in respect thereof required pursuant to the instruments
evidencing such Subordinated Indebtedness; and
(ii) so long as no Default has occurred and is continuing, scheduled
payments of principal of (not to exceed $2,000,000 during each fiscal year
of the Company) and interest on, and expenses and indemnities incurred in
connection with, Additional Subordinated Indebtedness.
9.18 Lines of Businesses. Neither the Company nor any of its
Subsidiaries shall engage to any substantial extent in any business activity
other than the records management business or activities related thereto.
9.19 Capital Expenditures. The Company will not permit the aggregate
amount of Capital Expenditures made in any fiscal year of the Company to exceed
$25,000,000. If the aggregate amount of Capital Expenditures for any fiscal year
shall be less than the amount permitted to be made in such fiscal year, then the
shortfall shall be added to the amount of Capital Expenditures permitted for the
immediately succeeding fiscal year.
9.20 Modification of Other Agreements. The Company will not request
or consent to any modification, supplement or waiver of any of the provisions of
any instrument or document evidencing or governing Subordinated Indebtedness
except on terms and pursuant to documentation in all respects reasonably
satisfactory to the Administrative Agent.
9.21 Interest Rate Protection. The Company shall at
all times maintain a program reasonably acceptable to the
Administrative Agent providing for the hedging or mitigation of
interest rate risk.
9.22 Certain Obligations Respecting Subsidiaries.
(a) The Company will, and will cause each of its Subsidiaries to,
take such action from time to time as shall be necessary to ensure that the
Company and each of its Subsidiaries at all times owns (subject only to the Lien
of the Security Documents) all of the issued and outstanding shares of each
class of Capital Stock of each of such Person's Subsidiaries (other than, in
each case, Capital Stock of Excluded Subsidiaries). Without limiting the
generality of the foregoing, the Company shall not, and shall not permit any of
its Subsidiaries to, sell, transfer or otherwise dispose of any shares of stock
in any Subsidiary (other than an Excluded Subsidiary) owned by them, nor permit
any Subsidiary of the Company (other than an Excluded
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Subsidiary) to issue any shares of Capital Stock of any class whatsoever to any
Person (other than to the Company or to another Wholly-Owned Subsidiary or
pursuant to Section 9.12 hereof). In the event that any such additional shares
of Capital Stock shall be issued by any Subsidiary of the Company, the Company
agrees forthwith to deliver to the Administrative Agent pursuant to the Security
Documents the certificates evidencing such shares of stock, accompanied by
undated stock powers executed in blank and shall take such other action as the
Administrative Agent shall request to perfect the security interest created
therein pursuant to the Security Documents.
(b) The Majority Lenders shall have the right from time to time to
require the Company, pursuant to a written request from the Administrative
Agent, to cause such Subsidiaries of the Company as may be specified in such
request to become parties to the Subsidiary Guaranty or to execute and deliver
such other guaranties, in form and substance satisfactory to the Majority
Lenders, guaranteeing payment of the Company's obligations hereunder. Any such
request shall be made by the Majority Lenders in the good faith and reasonable
exercise of their discretion. Within 30 days after any such request, the Company
shall, and shall cause the appropriate Subsidiaries of the Company to, (i)
execute and deliver to the Administrative Agent such number of copies as the
Administrative Agent may specify of documents creating such guaranties and (ii)
do all other things which may be necessary or which the Administrative Agent may
reasonably request in order to confer upon and confirm to the Lenders the
benefits of such security.
(c) Notwithstanding anything to the contrary in this
Section 9.22, if:
(x) the obligations of an Excluded Subsidiary under
the Subsidiary Guaranty; or
(y) the pledge by the Company or any of its
Subsidiaries of more than 66% of the aggregate Voting Stock
of an Excluded Subsidiary
would, as determined in a resolution of the Board of Directors of the Company
delivered to the Administrative Agent, create a tax disadvantage that is
material in relation to the aggregate amount of the Investment or proposed
Investment therein by the Company and its Subsidiaries, then:
(I) such Excluded Subsidiary shall not be required to be or become a
party to the Subsidiary Guaranty or otherwise Guarantee the obligations of
the Company hereunder; and
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(II) the Company and its Subsidiaries shall not be required to
pledge more than 66% of the aggregate Voting Stock of such Excluded
Subsidiary to the Administrative Agent under the Security Documents.
(d) The Company will not permit any of its Subsidiaries (other than
Excluded Subsidiaries) to enter into, after the date hereof, any indenture,
agreement, instrument or other arrangement (other than the Senior Subordinated
Debt Indenture) that, directly or indirectly, prohibits or restrains, or has the
effect of prohibiting or restraining, or imposes materially adverse conditions
upon, the incurrence or payment of Indebtedness, the granting of Liens, the
declaration or payment of dividends, the making of loans, advances or
Investments or the sale, assignment, transfer or other disposition of Property.
9.23 Environmental Matters. The Company will promptly give to the
Lenders notice in writing of any complaint, order, citation, notice or other
written communication from any Person with respect to, or if the Company becomes
aware after due inquiry of, (i) the existence or alleged existence of a
violation of any applicable Environmental Law or the incurrence of any
liability, obligation, remedial action, loss, damage, cost, expense, fine,
penalty or sanction resulting from any air emission, water discharge, noise
emission, asbestos, Hazardous Substance or any other environmental, health or
safety matter at, upon, under or within any property now or previously owned,
leased, operated or used by the Company or any of its Subsidiaries or any part
thereof, or due to the operations or activities of the Company, any Subsidiary
or any other Person on or in connection with such property or any part thereof
(including receipt by the Company or any Subsidiary of any notice of the
happening of any event involving the Release or cleanup of any Hazardous
Substance), (ii) any Release on such property or any part thereof in a quantity
that is reportable under any applicable Environmental Law, (iii) the
commencement of any cleanup pursuant to or in accordance with any applicable
Environmental Law of any Hazardous Substances on or about such property or any
part thereof and (iv) any pending or threatened proceeding for the termination,
suspension or non-renewal of any permit required under any applicable
Environmental Law, in each of the cases (i), (ii), (iii) and (iv), (x) which
could result in liability or expenses in excess of $1,000,000 or (y) which
individually or in the aggregate could have a Material Adverse Effect.
9.24 Residual Assurances. The Company will not, and will not permit
any of its Subsidiaries to, create, incur or suffer to exist any Residual
Assurances, except that (notwithstanding Sections 9.08 and 9.14) the Company may
create a Residual Assurance with respect of the construction or
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acquisition of any records management facility by any Affiliate of the Company
so long as (a) the maximum liability of the Company in respect of such Residual
Assurance does not exceed 15% of the fair market value (as determined in good
faith by the Board of Directors of the Company) of the completed records
management facility, and (b) the maximum liability of the Company in respect of
all Residual Assurances does not exceed $3,000,000 in the aggregate.
Section 10. Defaults.
10.01 Events of Default. If one or more of the following events
(herein called "Events of Default") shall occur and be continuing:
(a) default in the payment of any principal of or
interest on any Loan, any Reimbursement Obligation or any
other amount payable hereunder when due; or
(b) the Company or any of its Subsidiaries shall default in the
payment when due of any principal of or interest on any Indebtedness
having an outstanding principal amount of at least $1,000,000 (other than
the Loans); or any event or condition shall occur which results in the
acceleration of the maturity of any such Indebtedness or enables (or, with
the giving of notice or lapse of time or both, would enable) the holder of
any such Indebtedness or any Person acting on such holder's behalf to
accelerate the maturity thereof; or
(c) any representation or warranty made or deemed made by the
Company or any Subsidiary Guarantor in any Basic Document, or in any
certificate or financial information furnished to any Lender or the
Administrative Agent pursuant to the provisions of any Basic Document,
shall prove to have been false or misleading in any material respect as of
the time made or furnished; or
(d) (i) the Company shall default in the performance of any of its
obligations under Sections 9.08 through 9.24 hereof; (ii) any Subsidiary
Guarantor shall default in the performance of any of its obligations under
the Subsidiary Guaranty beyond any applicable grace period; (iii) the
Company or any Subsidiary Guarantor shall default in the performance of
any of its other obligations in any Basic Document, and such default
described in this subclause (iii) shall continue unremedied for a period
of 25 days after notice thereof to the Company by the Administrative Agent
or the Majority Lenders (through the Administrative Agent); or
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(e) the Company or any of its Subsidiaries shall admit
in writing its inability to, or be generally unable to, pay
its debts as such debts become due; or
(f) the Company or any of its Subsidiaries shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part
of its property, (ii) make a general assignment for the benefit of its
creditors, (iii) commence a voluntary case under the Bankruptcy Code, (iv)
file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
readjustment of debts, (v) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in an
involuntary case under the Bankruptcy Code, or (vi) take any corporate
action for the purpose of effecting any of the foregoing; or
(g) a proceeding or case shall be commenced, without the application
or consent of the Company or any of its Subsidiaries in any court of
competent jurisdiction, seeking (i) its liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of its
debts, (ii) the appointment of a trustee, receiver, custodian, liquidator
or the like of such Person or of all or any substantial part of its
assets, or (iii) similar relief in respect of such Person under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or case shall
continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and
in effect, for a period of 60 days; or an order for relief against such
Person shall be entered in an involuntary case under the Bankruptcy Code;
or
(h) a final judgment or judgments for the payment of money shall be
rendered by a court or courts against the Company or any of its
Subsidiaries in excess of $500,000 in the aggregate, and the same shall
not be discharged (or provision shall not be made for such discharge), or
a stay of execution thereof shall not be procured, within 30 days from the
date of entry thereof, or the Company or such Subsidiary shall not, within
said period of 30 days, or such longer period during which execution of
the same shall have been stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal; or
(i) the Company or any member of the Controlled Group shall fail to
pay when due an amount or amounts aggregating in excess of $500,000 which
it shall have become liable to
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pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent
to terminate a Plan or Plans having aggregate Unfunded Liabilities in
excess of $500,000 shall be filed under Title IV of ERISA by the Company
or any member of the Controlled Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate or to cause a trustee to be appointed
to administer any such Plan or Plans or a proceeding shall be instituted
by a fiduciary of any such Plan or Plans against the Company or any member
of the Controlled Group to enforce Section 515 or 4219(c)(5) of ERISA; or
a condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any such Plan or Plans must be
terminated; or there shall occur a complete or partial withdrawal from, or
a default, within the meaning of Section 4219(c)(5) of ERISA, with respect
to, one or more Multiemployer Plans which could cause the Company or one
or more members of the Controlled Group to incur a current payment
obligation in excess of $500,000; or
(j) without limiting the generality of clause (d) above, any of the
insurance required to be maintained (or caused to be maintained) by the
Company under Section 9.03 hereof shall be terminated and not
simultaneously replaced with other insurance satisfactory to the Majority
Lenders; or
(k) any Change of Control shall occur; or
(l) (i) any Security Document or the Subsidiary Guaranty shall
cease, for any reason, to be in full force and effect (other than as
provided therein) or any party thereto (other than the Lenders) shall so
assert in writing; or (ii) any Security Document shall cease to be
effective to grant a Lien on the collateral described therein with the
priority purported to be created thereby; or
(m) the Company and/or any Subsidiary of the Company has incurred or
incurs Environmental Liabilities (without duplication) in excess of
$5,000,000 in the aggregate at any time, which Environmental Liabilities
would, under GAAP, be reflected in the financial statements (or the
footnotes thereto) of the Company.
THEREUPON: the Administrative Agent may (and, if directed by the Majority
Lenders, shall) (a) declare the Commitments terminated (whereupon the
Commitments shall be terminated) and/or (b) declare the principal amount then
outstanding of and the accrued interest on the Loans, the Reimbursement
Obligations, and commitment fees and all other amounts payable hereunder and
under
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the Notes to be forthwith due and payable, whereupon such amounts shall be and
become immediately due and payable, without notice (including, without
limitation, notice of intent to accelerate), presentment, demand, protest or
other formalities of any kind, all of which are hereby expressly waived by the
Company; provided that in the case of the occurrence of an Event of Default with
respect to the Company referred to in clause (f) or (g) of this Section 10.01,
the Commitments shall be automatically terminated and the principal amount then
outstanding of and the accrued interest on the Loans, the Reimbursement
Obligations, and commitment fees and all other amounts payable hereunder and
under the Notes shall be and become automatically and immediately due and
payable, without notice (including, without limitation, notice of intent to
accelerate), presentment, demand, protest or other formalities of any kind, all
of which are hereby expressly waived by the Company.
In addition, upon the occurrence and during the continuance of any
Event of Default (if the Administrative Agent has declared the principal amount
then outstanding of, and accrued interest on, the Loans and all other amounts
payable by the Company hereunder and under the Notes to be due and payable), the
Company agrees that it shall, if requested by the Administrative Agent or the
Majority Lenders through the Administrative Agent (and, in the case of any Event
of Default referred to in clause (f) or (g) of this Section 10.01 with respect
to the Company, forthwith, without any demand or the taking of any other action
by the Administrative Agent or such Lenders) provide cover for the Letter of
Credit Liabilities by paying to the Administrative Agent immediately available
funds in an amount equal to the then aggregate undrawn face amount of all
Letters of Credit, which funds shall be held by the Administrative Agent in the
Collateral Account as collateral security in the first instance for the Letter
of Credit Liabilities.
Section 11. The Administrative Agent.
11.01 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder and under the other Basic Documents with such powers as are
specifically delegated to the Administrative Agent by the terms hereof and
thereof, together with such other powers as are reasonably incidental thereto.
The Administrative Agent (which term as used in this Section 11 shall include
reference to its affiliates and its own and its affiliates' officers, directors,
employees and agents): (a) shall have no duties or responsibilities except those
expressly set forth in this Agreement and the other Basic Documents, and shall
not by reason of this Agreement or any other Basic Document be a trustee for any
Lender; (b) shall not be
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responsible to the Lenders for any recitals, statements, representations or
warranties contained in this Agreement or any other Basic Document, or in any
certificate or other document referred to or provided for in, or received by any
of them under, this Agreement or any other Basic Document, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Basic Document or any other document referred to or
provided for herein or therein or for any failure by the Company or any of the
Subsidiary Guarantors or any other Person to perform any of its obligations
hereunder or thereunder; (c) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder or under any other Basic Document
except to the extent requested by the Majority Lenders; and (d) shall not be
responsible for any action taken or omitted to be taken by it hereunder or under
any other Basic Document or any other document or instrument referred to or
provided for herein or therein or in connection herewith or therewith, except
for its own gross negligence or willful misconduct. The Administrative Agent may
employ agents and attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care.
11.02 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely upon any certification, notice or other communication
(including any thereof by telephone, telex, telegram or cable) believed by it to
be genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Administrative Agent.
As to any matters not expressly provided for by this Agreement or any other
Basic Document, the Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, hereunder and thereunder in accordance
with instructions signed by the Majority Lenders and such instructions of the
Majority Lenders and any action taken or failure to act pursuant thereto shall
be binding on all of the Lenders.
11.03 Defaults. The Administrative Agent shall not be deemed to have
knowledge of the occurrence of a Default unless the Administrative Agent has
received notice from a Lender or the Company specifying such Default and stating
that such notice is a "Notice of Default". In the event that the Administrative
Agent receives such a notice of the occurrence of a Default, the Administrative
Agent shall give prompt notice thereof to the Lenders. The Administrative Agent
shall (subject to Section 11.07 hereof) take such action with respect to such
Default as shall be directed by the Majority Lenders, provided that, unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall
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not be obligated to) take such action, or refrain from taking such action, with
respect to such Default as it shall deem advisable in the best interests of the
Lenders. The Administrative Agent shall deliver to the Lenders a copy of any
written declaration made pursuant to the last paragraph of Section 10.01 hereof.
11.04 Rights as a Lender. With respect to its Commitments and the
Loans made by it, Chase in its capacity as a Lender hereunder shall have the
same rights and powers hereunder as any other Lender and may exercise the same
as though it were not acting as the Administrative Agent and the term "Lender"
or "Lenders" shall, unless the context otherwise indicates, include the
Administrative Agent in its individual capacity. The Administrative Agent may
(without having to account therefor to any Lender) accept deposits from, lend
money to and generally engage in any kind of banking, trust or other business
with the Company and the Subsidiary Guarantors (and their respective Affiliates)
as if it were not acting as the Administrative Agent, and the Administrative
Agent may accept fees and other consideration from the Company (in addition to
the agency fees and arrangement fees heretofore agreed to between the Company
and the Administrative Agent) for services in connection with this Agreement or
otherwise without having to account for the same to the Lenders.
11.05 Indemnification. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 12.03 or 12.04
hereof, but without limiting the obligations of the Company under said Sections
12.03 and 12.04), ratably in accordance with the principal amount of their
respective Loans and Reimbursement Obligations outstanding, or if no Loans or
Reimbursement Obligations are outstanding, ratably in accordance with their
respective Commitments, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or arising out
of this Agreement or any other Basic Document or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including, without limitation, the costs and
expenses which the Company is obligated to pay under Sections 12.03 and 12.04
hereof but excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms hereof or thereof or of
any such other documents, provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the party to be indemnified.
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11.06 Non-Reliance on Administrative Agent and Other Lenders. Each
Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Company and decision to enter into this Agreement and that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement or any of the other Basic Documents. The
Administrative Agent shall not be required to keep itself informed as to the
performance or observance by the Company and the Subsidiary Guarantors of this
Agreement or any of the other Basic Documents or any other document referred to
or provided for herein or therein or to inspect the properties or books of the
Company or any of the Subsidiary Guarantors. Except for notices, reports and
other documents and information expressly required to be furnished to the
Lenders by the Administrative Agent hereunder or the other Basic Documents, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the affairs, financial
condition or business of the Company or any of the Subsidiary Guarantors (or any
of their affiliates) which may come into the possession of the Administrative
Agent.
11.07 Failure to Act. Except for action expressly required of the
Administrative Agent hereunder and under the other Basic Documents, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction by the Lenders of their indemnification
obligations under Section 11.05 hereof against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action.
11.08 Resignation or Removal of Administrative Agent. Subject to the
appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Lenders and the Company and the Administrative Agent may be removed at
any time with or without cause by the Majority Lenders. Upon any such
resignation or removal the Majority Lenders shall have the right to appoint a
successor Administrative Agent reasonably acceptable to the Company. Upon any
such resignation or removal, the Administrative Agent that resigned or was
removed shall, to the extent that its annual agency fee was paid in advance, pay
to the Company an amount equal to such fee multiplied by a fraction the
numerator of which shall be the number of days remaining on the date of such
resignation or removal until the next anniversary of the Closing Date, and the
denominator of which
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shall be 365. If no successor Administrative Agent shall have been so appointed
by the Majority Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent's giving of notice of resignation or the
Majority Lenders' removal of the retiring Administrative Agent (the "Notice
Date"), then the retiring Administrative Agent may, on behalf of the Lenders,
appoint a successor Administrative Agent reasonably acceptable to the Company.
Any successor Administrative Agent shall be (i) a Lender or (ii) if no Lender
has accepted such appointment within 30 days after the Notice Date, a bank which
has an office in New York, New York with a combined capital and surplus of at
least $250,000,000. Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After any retiring Administrative Agent's resignation or
removal hereunder as Administrative Agent, the provisions of this Section 11
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Administrative Agent.
11.09 Consents under Basic Documents. Without the prior written
consent of the Majority Lenders, the Administrative Agent will not consent to
any modification, supplement or waiver under any of the Basic Documents or any
of the other documents described in Section 9.20 hereof.
11.10 Collateral Sub-Agents. Each Lender by its execution and
delivery of this Agreement agrees, as contemplated by the Security Documents,
that, in the event it shall hold any Liquid Investments referred to therein,
such Liquid Investments shall be held in the name and under the control of such
Lender and such Lender shall hold such Liquid Investments as a collateral
sub-agent for the Administrative Agent thereunder.
Section 12. Miscellaneous.
12.01 Waiver. No failure on the part of the Administrative Agent or
any Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under any Basic Document shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
power or privilege thereunder preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The remedies provided in
the Basic Documents are cumulative and not exclusive of any remedies provided by
law.
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12.02 Notices. All notices and other communications provided for
herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made by telecopy or other
writing and telecopied, mailed or delivered to the intended recipient (a) in the
case of the Company or the Administrative Agent, at the "Address for Notices"
specified below its name on the signature pages hereof and (b) in the case of
any Lender, at its address (or telecopy number) set forth in its Administrative
Questionnaire; or, as to any party, at such other address as shall be designated
by such party in a notice to the Company and the Administrative Agent given in
accordance with this Section 12.02. Except as otherwise provided in this
Agreement, all such communications shall be deemed to have been duly given when
transmitted by telecopier (and receipt is electronically confirmed), personally
delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid.
12.03 Expenses, Etc. The Company agrees to pay or reimburse each of
the Lenders and the Administrative Agent for paying: (a) the reasonable fees and
expenses of Milbank, Tweed, Hadley & McCloy, special counsel to the
Administrative Agent, in connection with (i) the preparation, execution and
delivery of this Agreement (including the Exhibits hereto) and the Security
Documents and the making of the Loans hereunder and (ii) any modification,
supplement or waiver of any of the terms of this Agreement or any other Basic
Document (including, without limitation, the amendment and restatement evidenced
hereby); (b) all reasonable costs and expenses of the Lenders and the
Administrative Agent (including reasonable counsels' fees in connection with the
enforcement of this Agreement or any other Basic Document or any bankruptcy,
insolvency or other proceedings); (c) all mortgage, intangible, transfer, stamp,
documentary or other similar taxes, assessments or charges levied by any
governmental or revenue authority in respect of this Agreement or any other
Basic Document or any other document referred to herein or therein; and (d) all
costs, expenses, taxes, assessments and other charges incurred in connection
with any filing, registration, recording or perfection of any security interest
contemplated by this Agreement, any Security Document or any document referred
to herein or therein.
12.04 Indemnification. The Company shall indemnify the
Administrative Agent, the Lenders and each affiliate thereof and their
respective directors, officers, employees and agents from, and hold each of them
harmless against, any and all losses, liabilities, claims or damages to which
any of them may become subject, insofar as such losses, liabilities, claims or
damages arise out of, relate to or result from any (i) Loan by any Lender
hereunder or (ii) breach by the Company of this Agreement or any
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other Basic Document or (iii) any Environmental Liabilities (whether known or
unknown) or (iv) any investigation, litigation or other proceeding (including
any threatened investigation or proceeding) relating to the foregoing, and the
Company shall reimburse the Administrative Agent and each Lender, and each
affiliate thereof and their respective directors, officers, employees and
agents, upon demand for any reasonable expenses (including legal fees) incurred
in connection with any such investigation or proceeding; but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified.
12.05 Amendments, Etc. No amendment or waiver of any provision of
this Agreement or the Notes, nor any consent to any departure by the Company
therefrom, shall in any event be effective unless the same shall be agreed or
consented to by the Majority Lenders and the Company, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided that no amendment, waiver or consent shall,
unless in writing and signed by all the Lenders, do any of the following: (i)
increase any Commitment of any of the Lenders or subject the Lenders to any
additional obligations; (ii) reduce the principal of, or interest on, any Loan,
Reimbursement Obligation or fee hereunder; (iii) postpone any date fixed for any
payment of principal of, or interest on, any Loan, Reimbursement Obligation or
fee hereunder pursuant to Sections 2.03, 2.08, 4.01 or 4.02 hereof; (iv) change
the percentage of any of the Commitments or of the aggregate unpaid principal
amount of any of the Loans or Letter of Credit Liabilities, or the number of
Lenders, which shall be required for the Lenders or any of them to take any
action under this Agreement; (v) change any provision contained in Sections
2.07, 6, 7.01, 12.03 or 12.04 hereof or this Section 12.05 or Section 12.08
hereof; (vi) change any provision of Section 3.02(b) hereof; (vii) release all
or substantially all of the security for the obligations of the Company under
this Agreement or any Note; or (viii) release all or substantially all of the
Subsidiary Guarantors from their obligations under the Subsidiary Guaranty.
Notwithstanding anything in this Section 12.05 to the contrary, no amendment,
waiver or consent shall be made with respect to Section 11 without the consent
of the Administrative Agent.
12.06 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns except that the Company may not assign its rights or obligations
hereunder or under the Notes without the prior written consent of all of the
Lenders. Each Lender may assign all or a portion of its rights and obligations
under this Agreement and the Notes (i) to any
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affiliate thereof, (ii) to any other Lender or (iii) with the consent of the
Administrative Agent, of the Issuing Bank and of the Company, which consents
shall not be unreasonably withheld, to any other bank or financial institution
(provided that any such partial assignment shall not, unless the Company and the
Administrative Agent otherwise agree, be less than $5,000,000). Upon execution
by the assignor and the assignee of an instrument pursuant to which the assignee
assumes such rights and obligations, payment by such assignee to such assignor
of an amount equal to the purchase price agreed between such assignor and such
assignee and delivery to the Administrative Agent and the Company of an executed
copy of such instrument together with payment by such assignee to the
Administrative Agent of a processing fee of $2,500, such assignee shall have, to
the extent of such assignment (unless otherwise provided therein), the same
rights and benefits as it would have if it were a Lender hereunder and the
assignor shall be, to the extent of such assignment (unless otherwise provided
therein), released from its obligations under this Agreement. Each Lender may
(without the consent of any other party to this Agreement) sell participations
in all or any part of any Loan or Loans made by it to another bank or other
entity, in which event the participant shall not have any rights under this
Agreement (except as provided in the next succeeding sentence hereof), or in the
case of a Loan, such Lender's Note (the participant's rights against such Lender
in respect of such participation to be those set forth in the agreement executed
by such Lender in favor of the participant relating thereto, which agreement
shall not give the participant the right to consent to any modification,
amendment or waiver other than one described in clause (i), (ii), (iii) or (vi)
of Section 12.05 hereof). The Company agrees that each participant shall be
entitled to the benefits of Sections 5.07 and 6 with respect to its
participation; provided that no participant shall be entitled to receive any
greater amount pursuant to such Sections than the transferor Lender would have
been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such participant had no such transfer
occurred. Each Lender may furnish any information concerning the Company and its
Subsidiaries in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants) which have
agreed in writing to be bound by the provisions of Section 12.07 hereof. The
Administrative Agent and the Company may, for all purposes of this Agreement,
treat any Lender as the holder of any Note drawn to its order (and owner of the
Loans evidenced thereby) until written notice of assignment, participation or
other transfer shall have been received by them from such Lender.
In addition to the assignments and participations permitted under
the foregoing provisions of this Section 12.06, any Lender may (without notice
to the Company, the Administrative
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Agent, the Issuing Bank or any other Lender and without payment of any fee)
assign and pledge all or any portion of its Loans and its Notes to any Federal
Reserve Bank as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any Operating Circular issued by
such Federal Reserve Bank, and such Loans and Notes shall be fully transferrable
as provided therein. No such assignment pursuant to the preceding sentence shall
release the assigning Lender from its obligations hereunder.
12.07 Confidentiality. Each Lender agrees to exercise all reasonable
efforts to keep any information delivered or made available by the Company to it
which has not been publicly disclosed confidential from anyone other than
persons employed or retained by such Lender who are or are expected to become
engaged in evaluating, approving, structuring or administering the Loans;
provided that nothing herein shall prevent any Lender from disclosing such
information (i) to any other Lender, (ii) to its officers, directors, employees,
agents, attorneys and accountants who have a need to know such information in
accordance with customary banking practices and who receive such information
having been made aware of the restrictions set forth in this Section, (iii) upon
the order of any court or administrative agency, (iv) upon the request or demand
of any regulatory agency or authority having jurisdiction over such Lender, (v)
to the extent reasonably required in connection with any litigation to which the
Administrative Agent, any Lender, the Company, any Subsidiary Guarantor or their
respective affiliates may be a party, (vi) to the extent reasonably required in
connection with the exercise of any remedy hereunder, (vii) to such Lender's
legal counsel and independent auditors, and (viii) to any actual or proposed
participant or assignee of all or part of its rights hereunder which has agreed
in writing to be bound by the provisions of this Section 12.07.
12.08 Survival. The obligations of the Company under Sections 6.01,
6.05, 6.06, 6.08, 12.03 and 12.04 hereof and the obligations of the Lenders
under Section 11.05 shall survive the repayment of the Loans and the termination
of the Commitments.
12.09 Captions. Captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
12.10 Counterparts; Integration. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart. This Agreement constitutes the entire agreement
and understanding among the parties hereto and supersedes any and all
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prior agreements and understandings, oral and written, relating
to the subject matter hereof.
12.11 Additional Lenders. The Company, each of the Lenders and the
Administrative Agent may at any time agree to add one or more lenders to this
Agreement pursuant to an instrument in writing specifying such new lender's
Commitments (and the reduction in Commitments of the existing Lenders as a
result thereof in such manner as the Company, each of the Lenders and the
Administrative Agent agree) and under which such new lender would agree to be
bound by the provisions of this Agreement. Upon the execution of such instrument
(and the satisfaction of such conditions and other terms as shall therein be
specified) such additional lender or lenders shall be deemed a "Lender" or
"Lenders" for the purposes of this Agreement and shall enjoy all rights and
assume all obligations on the part of the Lenders set forth in this Agreement
and the Lenders whose Commitments are then being reduced shall be released from
their Commitments to the extent of such reduction.
12.12 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. THE COMPANY HEREBY SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE COMPANY 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 PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE COMPANY, THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
IRON MOUNTAIN INCORPORATED
By /s/ Eugene B. Doggett
------------------------------
Title: EVP & CFO
Address for Notices:
745 Atlantic Avenue
Boston, Massachusetts 02111
Attention: Eugene B. Doggett,
Executive Vice President
and Chief Financial Officer
Telecopy Number: (617) 350-7881
Copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Harry E. Ekblom, Jr.
Telecopy Number: (617) 338-2880
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THE LENDERS
-----------
THE CHASE MANHATTAN BANK
By /s/ Bruce S. Borden
-------------------
Title: Vice President
THE BANK OF NEW YORK
By /s/ David Judge
-----------------------------
Title: Vice President
CIBC INC.
By /s/ Deborah Strek
------------------------------
Title: Director of Media
THE FIRST NATIONAL BANK OF BOSTON
By /s/ Virginia Dennett
-------------------------------
Title: Vice President
FLEET NATIONAL BANK
By /s/ Michael A. Palmer
------------------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By /s/ Terry M. Pitcher
-------------------------------
Title: Vice President/Authorized
Signatory
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NATIONAL CITY BANK
By /s/ Renold D. Thompson
------------------------------
Title: Senior Vice President
THE SUMITOMO BANK, LIMITED
By /s/ Daniel G. Eastman
------------------------------
Title: Vice President and Manager
By /s/ Alfred DeGemmis
------------------------------
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
By /s/ Charles R. Donner
------------------------------
Title: Vice President & Regional Manager
BANK OF IRELAND GRAND CAYMAN
By /s/ Paddy Dowling
------------------------------
Title: Account Manager
GIROCREDIT BANK AG DER SPARKASSEN,
GRAND CAYMAN ISLAND BRANCH
By /s/ John P. Redding
------------------------------
Title: Vice President Corporate
Finance
By /s/ Richard F. Stone
------------------------------
Title: First Vice President
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THE ADMINISTRATIVE AGENT
THE CHASE MANHATTAN BANK,
as Administrative Agent
By /s/ Bruce S. Borden
------------------------------
Title: Vice President
Address for Notices:
The Chase Manhattan Bank
Agent Bank Services Group
140 East 45th Street, 29th Floor
New York, New York 10017
Attention: Sandra Miklave
Telecopier No.: (212) 622-0122
Telephone No.: (212) 622-0004
Credit Agreement
EXHIBIT 11
IRON MOUNTAIN INCORPORATED
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(Amounts in Thousands except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------------------
1995 1996 1995 1996
----------------------------------------------
<S> <C> <C> <C> <C>
Net income (loss) applicable to
common stockholders $ (822) $ -- $ (1,355) $ 417
======= ====== ======== =======
Weighted Average Shares:
Common Stock - Voting -- 9,627 -- 8,538
Common Stock - Non-voting -- 500 -- 443
Class A Common Stock 45 -- 36 5
Series A1 Preferred Stock 987 -- 987 15
Series A2 Preferred Stock 1,935 -- 1,953 219
Series A3 Preferred Stock -- -- -- 97
Series C Preferred Stock 4,810 -- 4,810 544
------- ------ -------- ------
Weighted average shares outstanding 7,777 10,127 7,786 9,861
Dilutive effect of stock options
considered common stock equivalents
computed under the treasury stock
method using the average price -- 378 -- 240
------- ------ -------- ------
Weighted average common and common
equivalent shares outstanding 7,777 10,505 7,786 10,101
======= ====== ======== =======
Net income (loss) per common and
common equivalent share $(0.11) $ 0.00 $ (0.17) $ 0.04
======= ====== ======== =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1996 AND THE
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS
THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0001004317
<NAME> IRON MOUNTAIN INCORPORATED
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1.000
<CASH> 3,812
<SECURITIES> 0
<RECEIVABLES> 22,069
<ALLOWANCES> (875)
<INVENTORY> 688
<CURRENT-ASSETS> 28,447
<PP&E> 153,426
<DEPRECIATION> (42,201)
<TOTAL-ASSETS> 247,149
<CURRENT-LIABILITIES> 21,728
<BONDS> 151,977
0
0
<COMMON> 101
<OTHER-SE> 54,647
<TOTAL-LIABILITY-AND-EQUITY> 247,149
<SALES> 99,969
<TOTAL-REVENUES> 99,969
<CGS> 51,091
<TOTAL-COSTS> 87,749
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,981
<INCOME-PRETAX> 2,239
<INCOME-TAX> 1,542
<INCOME-CONTINUING> 697
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 697
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.04
</TABLE>
