As filed with the Securities and Exchange Commission on December 8, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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IRON MOUNTAIN INCORPORATED
(Exact name of registrant as specified in its charter)
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DELAWARE 4226 04-3107342
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
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745 ATLANTIC AVENUE, BOSTON, MA 02111
(617) 357-4455
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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C. RICHARD REESE
CHAIRMAN OF THE BOARD OF DIRECTORS
AND CHIEF EXECUTIVE OFFICER
IRON MOUNTAIN INCORPORATED
745 Atlantic Avenue
Boston, MA 02111
(617) 357-4455
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copy to:
SUSAN FOREST BARRETT, ESQ.
SULLIVAN & WORCESTER LLP
One Post Office Square
Boston, MA 02109
(617) 338-2800
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Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, as amended, check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
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CALCULATION OF REGISTRATION FEE
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Title of Each Class of Securities Amount to be Proposed Maximum Offering Proposed Maximum Aggregate Amount of
to be Registered Registered Price Per Unit Offering Price Registration Fee(1)
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8-3/4% Senior Notes Due 2009 $250,000,000 -- $250,000,000 $73,750
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Guarantees of the 8-3/4% Senior
Notes Due 2009 $250,000,000 (2) (2) (2)
================================================================================================================================
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(1) Pursuant to Rule 457(f)(2) of the Securities Act of 1933, as amended, the
registration fee has been estimated based on the book value of the
securities to be received by the Registrant in exchange for the securities
to be issued hereunder in the Exchange Offer described herein.
(2) Pursuant to Rule 457(n) of the Securities Act of 1933, as amended, no
separate registration fee is required as no additional consideration is
being paid for Guarantees.
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant will
file a further amendment which specifically states that the Registration
Statement will thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
will become effective on such date as the Securities and Exchange Commission,
acting pursuant to Section 8(a), may determine.
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[Iron Mountain Logo]
[RED HERRING]
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
[/RED HERRING]
SUBJECT TO COMPLETION, DATED DECEMBER 8, 1997
OFFER TO EXCHANGE
all outstanding
8-3/4% SENIOR NOTES DUE 2009
($250,000,000 principal amount outstanding)
for
8-3/4% SENIOR NOTES DUE 2009
of
Iron Mountain Incorporated
-----------
The Exchange Offer will expire at 5:00 p.m., New York City Time on
, 1998, unless extended
-----------
Iron Mountain Incorporated, a Delaware corporation ("Iron Mountain" or the
"Company"), hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), to exchange its 8-3/4% Senior Notes Due 2009 (the "New
Notes"), in an offering which has been registered under the Securities Act of
1933, as amended (the "Securities Act"), pursuant to a Registration Statement
of which this Prospectus constitutes a part, for an equal principal amount of
its outstanding 8-3/4% Senior Notes Due 2009 (the "Old Notes"), of which an
aggregate of $250,000,000 in principal amount is outstanding as of the date
hereof (the "Exchange Offer"). The New Notes and the Old Notes are sometimes
referred to herein collectively as the "Notes." The form and terms of the New
Notes will be the same as the form and terms of the Old Notes except that the
New Notes will not bear legends restricting the transfer thereof. The New Notes
will be obligations of the Company entitled to the benefits of the Indenture,
dated as of October 24, 1997 (the "Indenture"), by and among the Company, all
of the Company's subsidiaries as guarantors and The Bank of New York, as
trustee (the "Trustee"), relating to the Notes. See "Description of the New
Notes." Following the completion of the Exchange Offer, none of the New Notes
will be entitled to any rights under the Exchange and Registration Rights
Agreement, dated as of October 21, 1997 (the "Registration Rights Agreement"),
including, but not limited to, contingent increases in the interest rate
provided for pursuant thereto.
See "Risk Factors" beginning on page 11 for a discussion of certain
factors that should be considered in evaluating an investment in the New Notes.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------
The date of this Prospectus is .
<PAGE>
The Company will accept for exchange any and all Old Notes that are
validly tendered on or prior to 5:00 p.m., New York City time, on the date the
Exchange Offer expires, which will be , 1998 unless the Exchange Offer is
extended (the "Expiration Date"). Tenders of Old Notes may be withdrawn at any
time prior to 5:00 p.m., New York City time, on the Expiration Date. The
Exchange Offer is not conditioned upon any minimum principal amount of Old
Notes being tendered for exchange.
The Old Notes, whether sold in offshore transactions in reliance on
Regulation S under the Securities Act or in the United States in reliance on
Rule 144A under the Securities Act ("Rule 144A"), were initially represented by
a single, permanent global note (the "Global Note"), which was deposited with
the Trustee, as custodian for The Depository Trust Company ("DTC"), and
registered in the name of Cede & Co., DTC's nominee, for credit to an account
of a direct or indirect participant in DTC, including Morgan Guaranty Trust
Company of New York, Brussels Office, as operator of the Euroclear System
("Euroclear"), and Citibank, N.A., as depositary for Cedel Bank, societe
anonyme ("Cedel Bank"). The New Notes exchanged for the Old Notes that are
represented by the Global Note will continue to be represented by a permanent
global note in definitive, fully registered form, registered in the name of a
nominee of DTC and deposited with the Trustee as custodian, unless the
beneficial holders thereof request otherwise. See "Description of the New
Notes--Book Entry, Delivery and Form." Notes may be tendered only in
denominations of $1,000 and integral multiples in excess thereof.
Interest on the New Notes will be payable semi-annually in arrears on
March 31 and September 30 of each year (each an "Interest Payment Date"),
commencing March 31, 1998 to holders of record on the immediately preceding
March 15 and September 15. Interest on the New Notes will accrue from the last
Interest Payment Date on which interest was paid on the Old Notes that are
accepted for exchange or, if no interest has been paid, from October 24, 1997.
Accordingly, interest that has accrued since the last Interest Payment Date or
October 24, 1997 (as the case may be) on the Old Notes accepted for exchange
will cease to be payable upon issuance of the New Notes. Untendered Old Notes
that are not exchanged for New Notes pursuant to the Exchange Offer will remain
outstanding and bear interest at a rate of 8-3/4% per annum after the Expiration
Date.
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the "Commission") to third parties, the Company believes
the New Notes issued pursuant to the Exchange Offer may be offered for resale,
resold and otherwise transferred by a holder thereof (other than (i) a
broker-dealer who acquires such New Notes directly from the Company to resell
pursuant to Rule 144A or any other available exemption under the Securities Act
or (ii) a person that is an affiliate of the Company (within the meaning of
Rule 405 under the Securities Act)) without compliance with the registration
and prospectus delivery provisions of the Securities Act, provided that the
holder is acquiring the New Notes in the ordinary course of such holder's
business and is not participating, and has no arrangement or understanding with
any person to participate, in the distribution of the New Notes. Holders of Old
Notes wishing to accept the Exchange Offer must represent to the Company that
such conditions have been met. Each broker-dealer that receives New Notes for
its own account pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New Notes. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Old Notes where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that it will make this Prospectus available to any broker-dealer for use in
connection with any such resale for a period of 180 days from the consummation
of the Exchange Offer or such shorter period as will terminate when all Old
Notes acquired by broker-dealers for their own accounts as a result of
market-making activities or other trading activities have been exchanged for
New Notes and resold by such broker-dealers. See "Plan of Distribution."
Prior to the Exchange Offer, there has been no public market for the
Notes. The Company does not intend to list the New Notes on any securities
exchange or to seek approval for quotation through any automated quotation
system. There can be no assurance that an active market for the New Notes will
develop. To the extent that a market for the New Notes develops, the market
value of the New Notes will depend on market conditions (such as yields on
alternative investments), general economic conditions, the Company's financial
condition and other conditions. Such conditions might cause the New Notes, to
the extent that they are actively traded, to trade at a significant discount
from the face value. See "Risk Factors--Lack of Public Market."
The Company will not receive any proceeds from the Exchange Offer. The
Company has agreed to bear the expenses of the Exchange Offer. No underwriter
is being used in connection with the Exchange Offer.
ii
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THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH
THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH
THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
----------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements, and other information with the
Commission. Such reports, proxy statements, and other information concerning
Iron Mountain can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and at the Commission's Regional Offices at Seven World Trade
Center, 13th Floor, New York, New York 10048, and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials
can be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. The
Commission maintains a site on the Internet's World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission, including Iron Mountain on and after August 14, 1996. In addition,
reports, proxy statements and other information concerning Iron Mountain may
also be inspected at the offices of Nasdaq Operations, 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the Commission a registration statement on Form
S-4 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act with respect to the New
Notes offered hereby. This Prospectus does not contain all of the information
set forth in the Registration Statement and the exhibits thereto, certain parts
of which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and the New
Notes offered hereby, reference is hereby made to the Registration Statement,
including the exhibits thereto, which is available for inspection and copying
as set forth above. Statements contained in this Prospectus as to the contents
of any contract or other document referred to herein or therein are not
necessarily complete (although to the extent of the provisions referred to
herein, such statements are complete in all material respects), and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement or such other document, each such
statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission (File No. 0-27584), are incorporated herein by reference: (i) Annual
Report on Form 10-K for the year ended December 31, 1996, (ii) Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1997, June 30, 1997 and
September 30, 1997 and (iii) Current Reports on Form 8-K dated June 25, 1997
(as amended August 26, 1997), October 1, 1997, October 16, 1997 (as amended
November 10, 1997), October 30, 1997 and November 25, 1997. In addition, the
financial information contained in Iron Mountain's Registration Statement on
Form S-4 (File No. 333-24635), filed with the Commission on April 4, 1997, as
amended on May 7, 1997 and May 13, 1997, as made effective by the Commission on
May 14, 1997, is incorporated herein by reference. All documents filed by Iron
Mountain pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the initial Registration Statement and prior to the
effectiveness of the Registration Statement and subsequent to the date of this
Prospectus shall be deemed to be incorporated by reference into the
Registration Statement and to be a part hereof from the date any such document
is filed.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
(or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein) modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
iii
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The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon written or oral request of such person, by
first class mail or other equally prompt means within one business day of
receipt of such request, a copy of any or all of the documents that are
incorporated by reference herein, other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference into such documents).
Requests should be directed to Iron Mountain Incorporated, 745 Atlantic Avenue,
Boston, Massachusetts 02111, Attention: John F. Kenny, Jr., Executive Vice
President and Chief Financial Officer. In order to ensure timely delivery of
such documents, any request should be made before December , 1997.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND THE
ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR
BOTH TOGETHER, NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF. NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF
TRANSMITTAL, OR BOTH TOGETHER, CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
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Page
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Available Information .......................................... iii
Incorporation of Certain Documents by Reference ............... iii
Prospectus Summary ............................................. 1
Risk Factors ................................................... 11
Use of Proceeds ................................................ 16
The Exchange Offer ............................................. 17
Pro Forma Condensed Consolidated Financial Information ......... 24
Selected Consolidated Financial and Operating Information ...... 39
Description of Certain Existing Indebtedness .................. 41
Description of the New Notes .................................... 42
Certain U.S. Federal Income Tax Considerations .................. 66
Plan of Distribution .......................................... 69
Transfer Restrictions .......................................... 69
Legal Matters ................................................... 71
Experts ......................................................... 71
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iv
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PROSPECTUS SUMMARY
The following summary is not intended to be complete and is qualified in
its entirety by reference to the more detailed information set forth elsewhere
in this Prospectus, which should be reviewed carefully. Unless the context
indicates otherwise, the term "Recent Acquisitions" means the acquisitions
consummated since January 1, 1996. The term "Arcus Acquisition" means the
pending acquisition of (i) Arcus Technology Services, Inc. ("Arcus") and
related entities. The term "HIMSCORP Acquisition" means the acquisition of
HIMSCORP, Inc. ("HIMSCORP"). References to "Iron Mountain" and the "Company"
include Iron Mountain Incorporated (including predecessor entities) and its
consolidated subsidiaries, unless the context otherwise requires.
The Company
Iron Mountain is America's largest records management company, as measured
by its revenues. The Company is a national, full-service provider of records
management and related services, enabling customers to outsource records
management functions. Iron Mountain has a diversified customer base, which
includes more than half of the Fortune 500 and numerous commercial, legal,
banking, healthcare, accounting, insurance, entertainment and government
organizations. The Company provides storage for all major media, including
paper (the dominant form of records storage), computer disks and tapes,
microfilm and microfiche, master audio and video tapes, film and optical disks,
X-rays and blueprints. Iron Mountain's principal services provided to its
storage customers include courier pick-up and delivery, filing, retrieval and
destruction of records, database management, customized reporting and disaster
recovery support. The Company also sells storage materials and provides
consulting, facilities management and other outsourcing services.
The completion of the HIMSCORP Acquisition has, and the completion of the
Arcus Acquisition will, significantly increase the Company's presence in
medical records management and off-site data protection services (the
management of electronic records), which management believes will make the
Company the industry leader in both of these specialized records management
activities. The HIMSCORP Acquisition has, and the completion of the Arcus
Acquisition will, also expand the ancillary services offered by the Company to
include information technology ("IT") staffing and enhance its range of
facilities management services. As of November 20, 1997, giving effect to the
Arcus Acquisition, Iron Mountain managed over 50,000 customer accounts and
operated 220 records management facilities in 52 markets. For the nine months
ended September 30, 1997, giving effect to the Recent Acquisitions and the
Arcus Acquisition, the Company had revenues of $265.3 million and earnings
before interest, taxes, depreciation, amortization and extraordinary items
("EBITDA") of $65.4 million, after adjustments for certain cost reductions from
the integration of the Recent Acquisitions and the Arcus Acquisition.
Recent Developments
Since mid-1994, the Company has acquired 41 records management businesses,
of which 30 stored primarily paper records (including four that focused on
medical records management) and 11 focused primarily on data protection
services. The Company recently completed or anticipates completing by the first
quarter of 1998, three significant acquisitions (discussed below). These
acquisitions significantly increase the Company's presence in the data
protection services and medical records management markets.
Safesite Acquisition
On June 12, 1997, the Company acquired Safesite Records Management
Corporation ("Safesite") and related real estate for total consideration of
$70.9 million, consisting of $53.6 million in value of the Company's Voting
Common Stock, par value $.01 per share (the "Common Stock"), and options to
acquire Common Stock and the balance in cash. Safesite has a significant
presence in both off-site data protection services and paper records storage,
including medical records management. At the time of acquisition, Safesite had
over 7,000 customer accounts with 26 facilities in 14 markets, including four
markets in which the Company previously had no operations. With the acquisition
of Safesite, Iron Mountain added 27 new sales people, an increase of 75% to its
then existing sales force. Safesite's revenue was $19.0 million for the year
ended December 31, 1996 and approximately $10 million for the period from
January 1, 1997 through June 12, 1997, the closing date of the acquisition.
1
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HIMSCORP Acquisition
On October 31, 1997, with an effective date of November 1, 1997, the
Company acquired HIMSCORP for total consideration, including transaction costs,
of approximately $98.8 million including approximately $46.2 million in the
form of Common Stock. Management believes that HIMSCORP, which operates under
the trade name Record Masters, is the leading provider of medical records
management services. In addition to storage, HIMSCORP also provides related
services including file retrieval and delivery, release of information,
temporary staffing, contract coding, facilities management and imaging.
HIMSCORP acquired three companies in each of 1996 and 1997. As of September 30,
1997, HIMSCORP operated 20 facilities in 12 markets (including three in which
the Company does not have operations) and had over 700 customer accounts.
HIMSCORP's revenue was $15.7 million for the year ended December 31, 1996 and
$20.5 million for the nine months ended September 30, 1997 and for the same
periods, giving pro forma effect to HIMSCORP's acquisitions, $23.8 million and
$21.4 million, respectively.
Pending Arcus Acquisition
On September 26, 1997, the Company entered into a definitive merger
agreement with Arcus Group, Inc. ("AGI") and certain of its subsidiaries to
acquire Arcus for total consideration of approximately $160 million, consisting
of approximately $62 million in value in Common Stock and options to acquire
Common Stock and the balance in cash and the assumption of debt. In addition to
the stated purchase price of $160 million, the Company will record
approximately $3 million in capitalized transaction costs and approximately $2
million in additional equity resulting from a higher financial valuation of the
options to acquire shares of the Common Stock for accounting purposes. Arcus's
data protection services consist primarily of storage and off-site rotation of
back-up copies of magnetic media, as well as disaster recovery support and
testing, media library moves and product sales. In addition to data protection
services, Arcus provides IT staffing services. As of September 30, 1997, Arcus
operated 31 data storage facilities in 25 markets in the U.S. and one in the
United Kingdom (including five in which the Company does not have operations),
and had over 6,000 customer accounts. Arcus acquired eight companies in 1996
and one in 1997. Arcus had revenue of $66.0 million for the year ended December
31, 1996 and $69.0 million for the nine months ended September 30, 1997 and for
the same periods, giving pro forma effect to Arcus's acquisitions, $89.2
million and $74.6 million, respectively. The closing of the Arcus Acquisition
is subject to various customary conditions and is expected to occur early in
the first quarter of 1998, although no assurance can be given that the Arcus
Acquisition will be completed. The Exchange Offer is not conditioned upon
completion of the Arcus Acquisition, and the Arcus Acquisition is not
conditioned upon the completion of the Exchange Offer.
Amendment to the Credit Agreement
In September 1997 the Company amended and restated (the "Credit Agreement
Amendment") its bank credit facility, dated as of September 30, 1996, among the
Company, the lenders party thereto and The Chase Manhattan Bank, as
Administrative Agent (the "Credit Agreement"), pursuant to which, among other
things, the facility was increased from $150 million to $250 million and its
maturity was extended from September 2001 to September 2002, at which time all
outstanding revolving credit loans and other amounts payable thereunder would
become due. See "Description of Certain Existing Indebtedness--Credit
Agreement."
----------------
Iron Mountain was incorporated in Delaware in 1990 but its predecessor
operations date from 1951. The principal executive offices of the Company are
located at 745 Atlantic Avenue, Boston, Massachusetts 02111. Its telephone
number is (617) 357-4455.
2
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Summary of the Terms of the Exchange Offer
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The Exchange Offer ..................... The Company is offering to exchange $1,000 in principal
amount (and integral multiples in excess thereof) of New Notes
for each $1,000 in principal amount (and any integral multiples
in excess thereof) of Old Notes that are validly tendered
pursuant to the Exchange Offer. The Company will issue the
New Notes promptly after the Expiration Date. As of the date
of this Prospectus, $250,000,000 in aggregate principal amount
of Old Notes are outstanding.
Resale ................................. The Company believes, based on no-action letters issued by the
Commission to third parties, that the New Notes issued pursuant
to the Exchange Offer generally will be freely transferable by
the holders thereof without registration or any prospectus
delivery requirement under the Securities Act, except that a
"dealer" or any of the Company's "affiliates," as such terms are
defined under the Securities Act, that exchanges Old Notes held
for its own account may be required to deliver copies of this
Prospectus in connection with any resale of the New Notes
issued in exchange for such Old Notes. See "The Exchange
Offer--General" and "Plan of Distribution."
Expiration Date ........................ The Exchange Offer will expire at 5:00 p.m., New York City
time, on , 1998, unless extended, in which case the
term "Expiration Date" means the latest date and time to which
the Exchange Offer is extended. The Company will accept for
exchange any and all Old Notes that are validly tendered in the
Exchange Offer prior to 5:00 p.m., New York City time, on the
Expiration Date.
Accrued Interest on the New Notes and the
Old Notes ........................... Each New Note will bear interest from the last Interest Payment
Date on which interest was paid on the Old Notes, or if interest
has not yet been paid on the Old Notes, from October 24, 1997.
Such interest will be paid with the first interest payment on the
New Notes. Accordingly, interest which has accrued since the
last Interest Payment Date or October 24, 1997 (as the case may
be) on the Old Notes accepted for exchange will cease to be
payable upon issuance of the New Notes. Untendered Old Notes
that are not exchanged for New Notes pursuant to the Exchange
Offer will bear interest at a rate of 8-3/4% per annum after the
Expiration Date.
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3
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Termination .............................. The Company may terminate the Exchange Offer if it
determines that its ability to proceed with the Exchange Offer
could be materially impaired due to any legal or governmental
action, any new law, statute, rule or regulation or any
interpretation by the staff of the Commission of any existing
law, statute, rule or regulation. Holders of Old Notes will have
certain rights against the Company under the Registration
Rights Agreement should the Company fail to consummate the
Exchange Offer. See "The Exchange Offer--Termination." No
federal or state regulatory requirements must be complied with
or approvals obtained in connection with the Exchange Offer,
other than applicable requirements under federal and state
securities laws.
Procedures for Tendering Old Notes ...... Each holder of Old Notes wishing to accept the Exchange Offer
must complete, sign and date the Letter of Transmittal, or a
facsimile thereof, in accordance with the instructions contained
herein and therein, and mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with such Old Notes and
any other required documentation to The Bank of New York, as
Exchange Agent (the "Exchange Agent"), at the address set forth
herein and therein, or effect a tender of Old Notes pursuant to
the procedure for book-entry transfer as provided for herein. By
executing the Letter of Transmittal, each holder will represent
to the Company that, among other things, the New Notes
acquired pursuant to the Exchange Offer are being obtained in
the ordinary course of business of the person receiving such
New Notes, whether or not such person is the holder, that neither
the holder nor any such other person has an arrangement or
understanding with any person to participate in the distribution
of such New Notes and, except as otherwise disclosed in writing
to the Company, that neither the holder nor any such other
person is an "affiliate," as defined in Rule 405 under the
Securities Act, of the Company.
Special Procedures for Beneficial Owners . Any beneficial owner whose Old Notes are registered in the
name of a broker, dealer, commercial bank, trust company or
other nominee and who wishes to tender such Old Notes in the
Exchange Offer should contact such registered holder promptly
and instruct such registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to tender on
such owner's own behalf, such owner must, prior to completing
and executing the Letter of Transmittal and delivering his Old
Notes, either make appropriate arrangements to register
ownership of the Old Notes in such owner's name or obtain a
properly completed bond power from the registered holder. The
transfer of record ownership may take considerable time and
may not be able to be completed prior to the Expiration Date.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Guaranteed Delivery Procedures ...... Holders of Old Notes who wish to tender their Old Notes and
whose Old Notes are not immediately available or who cannot
deliver their Old Notes, the Letter of Transmittal or any other
documents required by the Letter of Transmittal to the Exchange
Agent prior to the Expiration Date must tender their Old Notes
according to the guaranteed delivery procedures set forth in
"The Exchange Offer--Guaranteed Delivery Procedures."
Withdrawal Rights .................. Tenders of Old Notes may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date.
Acceptance of Old Notes and Delivery of
New Notes ........................... Subject to certain conditions (as summarized above in
"Termination" and described more fully in "The Exchange
Offer--Termination"), the Company will accept for exchange
any and all Old Notes that are validly tendered in the Exchange
Offer prior to 5:00 p.m., New York City time, on the Expiration
Date. The New Notes issued pursuant to the Exchange Offer will
be delivered promptly following the Expiration Date. See "The
Exchange Offer--General."
Certain Federal Income Tax
Considerations ..................... The exchange pursuant to the Exchange Offer will generally not
be a taxable event for federal income tax purposes. For a
discussion of certain federal income tax considerations relating
to the exchange of the Old Notes for the New Notes, see "Certain
Federal Income Tax Considerations."
Exchange Agent ..................... The Trustee is also the Exchange Agent. The mailing address of
the Exchange Agent and address for deliveries by registered or
certified mail is: The Bank of New York, 101 Barclay Street--
7E, New York, New York 10286, Attention: Natalie Simon,
Reorganization Section. Hand deliveries or overnight deliveries
should be directed to The Bank of New York, 101 Barclay Street,
Corporate Trust Services Window, Ground Level, New York,
New York 10286, Attention: Natalie Simon, Reorganization
Section. For information with respect to the Exchange Offer, the
telephone number for the Exchange Agent is (212) 815-5788.
Use of Proceeds ..................... There will be no cash proceeds payable to the Company from
the issuance of the New Notes pursuant to the Exchange Offer.
The net proceeds received by the Company from the sale of the
Old Notes were used to repay indebtedness under the Credit
Agreement and to fund the cash portion of the purchase price
of the HIMSCORP Acquisition. The remaining balance of
approximately $22 million, together with future borrowings
under the Credit Agreement will be used to fund the cash portion
of the purchase price of the Arcus Acquisition and to repay
assumed indebtedness related thereto. Any proceeds not so used
will be used for general corporate purposes. See "Use of
Proceeds."
</TABLE>
5
<PAGE>
Summary of the Terms of the New Notes
The Exchange Offer applies to an aggregate principal amount of
$250,000,000 of the Old Notes. The form and terms of the New Notes will be the
same as the form and terms of the Old Notes except that the New Notes will not
bear legends restricting the transfer thereof. The New Notes will be
obligations of the Company entitled to the benefits of the Indenture. See
"Description of the New Notes."
<TABLE>
<S> <C>
Issuer .................. Iron Mountain Incorporated.
Securities Offered ...... $250,000,000 principal amount of 8-3/4% Senior Subordinated
Notes due 2009.
Maturity Date ............ September 30, 2009.
Interest ............... The New Notes will bear interest at the rate of 8-3/4% per annum,
payable semi-annually in arrears on March 31 and September 30
of each year, commencing March 31, 1998.
Guarantees ............... The New Notes will be fully and unconditionally guaranteed on an
unsecured senior subordinated and joint and several basis (the
"Subsidiary Guarantees") by substantially all of the Company's
present and future Restricted Subsidiaries (as defined in
"Description of the New Notes--Certain Definitions") (the
"Guarantors"). Each of the Guarantors has also guaranteed
unconditionally the indebtedness outstanding under the Credit
Agreement and the Company's 10-1/8% Senior Subordinated Notes
due 2006 issued in October 1996 (the "1996 Notes"). See
"Description of the New Notes--Subsidiary Guarantees" and
"Description of Certain Existing Indebtedness."
Subordination ............ The New Notes will be general unsecured senior subordinated
obligations of the Company ranking junior to all existing and future
Senior Debt (as defined below under "Description of the New
Notes--Certain Definitions") of the Company, including any
indebtedness that may be incurred under the Credit Agreement, and
ranking pari passu with the 1996 Notes. The Subsidiary Guarantees
will rank junior to all existing and future Senior Debt of the
Guarantors. As of September 30, 1997, after giving effect to the
acquisitions consummated after September 30, 1997, the Arcus
Acquisition, and the offering of the Old Notes and the use of the net
proceeds thereof, the aggregate outstanding principal amount of
Senior Debt of the Company and the Guarantors was $78.9 million.
See "Description of the New Notes--Subordination."
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
Optional Redemption ...... Prior to September 30, 2002, the New Notes will be redeemable, at
the option of the Company, in whole or in part, at the Make-Whole
Price (as defined below under "Description of the New Notes--
Certain Definitions"), plus accrued and unpaid interest and
Liquidated Damages (as defined below under "The Exchange
Offer--Terms of the Exchange Offer"), if any, to but excluding the
redemption date. On and after September 30, 2002, the New Notes
will be redeemable, at the option of the Company, in whole or in part,
at the redemption prices set forth herein, plus accrued and unpaid
interest to but excluding the redemption date. In addition, during the
first 36 months after the date of issuance of the New Notes, the
Company, at its option, may redeem up to 35% of the initial principal
amount of the New Notes with the net proceeds of one or more
Qualified Equity Offerings (as defined below under "Description of
the New Notes--Certain Definitions") at a redemption price equal
to 108.75%, plus accrued and unpaid interest to but excluding the
redemption date; provided that at least 65% of the initial principal
amount of the New Notes remains outstanding after each such
redemption. See "Description of the New Notes--Optional
Redemption."
Mandatory Redemption ...... Except with respect to required repurchases upon the occurrence
of a Change of Control (as defined below under "Description of
the New Notes--Repurchase at the Option of Holders--Change
of Control") or in the event of certain Asset Sales (as defined
below under "Description of the New Notes--Repurchase at the
Option of Holders--Asset Sales"), the Company is not required
to make sinking fund or redemption payments with respect to the
New Notes at any time prior to maturity. See "Description of the
New Notes--Mandatory Redemption."
Change of Control ......... Upon the occurrence of a Change of Control, each holder of New
Notes may require the Company to repurchase such New Notes
at 101% of the principal amount thereof, plus accrued and unpaid
interest to but excluding the repurchase date. See "Description of
the New Notes--Repurchase at the Option of Holders--Change
of Control."
Certain Covenants ......... The Indenture contains covenants restricting or limiting the
ability of the Company and its Restricted Subsidiaries to, among
other things: (i) incur additional indebtedness, including
indebtedness ranking senior to the New Notes and junior to any
Senior Debt; (ii) pay dividends or make other restricted payments;
(iii) make asset dispositions; (iv) permit liens; (v) enter into sale
and leaseback transactions; (vi) enter into certain mergers; (vii)
make certain investments; and (viii) enter into transactions with
related persons. See "Description of the New Notes--Certain
Covenants."
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Registration Requirements and
Liquidated Damages ...... Pursuant to the Registration Rights Agreement, the Company and
the Guarantors have agreed to use their best efforts to cause the
Registration Statement to be declared effective by no later than
February 21, 1998 and to cause the Exchange Offer to be
consummated within 45 days of the effective date of the
Registration Statement. In certain circumstances, the Company
and the Guarantors have agreed to file a shelf registration
statement (the "Shelf Registration Statement") for resales of the
Old Notes by the holders thereof. If the Company and the
Guarantors do not comply with their obligations under the
Registration Rights Agreement, the Company will be required to
pay Liquidated Damages to the holders of the Old Notes. See
"The Exchange Offer--Terms of the Exchange Offer."
</TABLE>
Risk Factors
For a discussion of certain material factors that should be considered in
connection with an investment in the New Notes offered hereby, see "Risk
Factors" beginning on page 11.
8
<PAGE>
Summary Historical and Pro Forma Information (Dollars in thousands)
The following summary historical consolidated statements of operations and
balance sheet data of the Company as of and for each of the years ended
December 31, 1992, 1993, 1994, 1995 and 1996 have been derived from the
Company's audited consolidated financial statements. The summary historical
consolidated statements of operations and balance sheet data of the Company for
the nine months ended September 30, 1996 and 1997 have been derived from the
Company's unaudited condensed consolidated financial statements. The Company's
unaudited condensed consolidated financial statements include all adjustments,
consisting of normal recurring accruals, that the Company considers necessary
for a fair presentation of the financial position and the results of operations
for those periods. Operating results for the nine months ended September 30,
1997 are not necessarily indicative of the results for the entire year ending
December 31, 1997. The summary historical and pro forma financial data set
forth below should be read in conjunction with "Pro Forma Condensed
Consolidated Financial Information" and the Notes thereto and "Selected
Consolidated Financial and Operating Information" and the Notes thereto,
included elsewhere in this Prospectus and with the Company's Consolidated
Financial Statements and the Notes thereto incorporated by reference herein.
See "Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------------------------------
Pro
Historical Forma
---------------------------------------------------------------- -------------
1992 1993 1994 1995 1996 1996(1)
------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Consolidated Statements of
Operations Data:
Revenues:
Storage ..................... $ 44,077 $ 48,892 $ 54,098 $ 64,165 $ 85,826 $ 186,440
Service and Storage
Material Sales ............ 26,596 32,781 33,520 40,271 52,892 108,503
-------- -------- -------- ---------- ---------- ---------
Total Revenues ............ 70,673 81,673 87,618 104,436 138,718 294,943
Operating Expenses:
Cost of Sales (Excluding
Depreciation) ............ 35,169 43,054 45,880 52,277 70,747 142,760
Selling, General and
Administrative ............ 17,630 19,971 20,853 26,035 34,342 85,212
Depreciation and
Amortization ............... 5,780 6,789 8,690 12,341 16,936 38,468
-------- -------- -------- ---------- ---------- ---------
Total Operating
Expenses ............... 58,579 69,814 75,423 90,653 122,025 266,440
-------- -------- -------- ---------- ---------- ---------
Operating Income ............ $ 12,094 $ 11,859 $ 12,195 $ 13,783 $ 16,693 $ 28,503
======== ======== ======== ========== ========== =========
Other Data:
EBITDA(3) ..................... $ 17,874 $ 18,648 $ 20,885 $ 26,124 $ 33,629 $ 66,971
EBITDA as a Percentage of
Total Revenues ............... 25.3% 22.8% 23.8% 25.0% 24.2% 22.7%
Capital Expenditures:
Growth (4)(5) ............... $ 11,226 $ 13,605 $ 15,829 $ 14,395 $ 23,334
Maintenance ............... 818 1,846 1,151 858 1,112
-------- -------- -------- ---------- ----------
Total Capital Expenditures (5) $ 12,044 $ 15,451 $ 16,980 $ 15,253 $ 24,446
======== ======== ======== ========== ==========
<CAPTION>
Nine Months Ended September 30,
---------------------------------------------------
Pro
Forma
Pro As
Historical Forma Adjusted
------------------------- ------------- -----------
1996 1997 1997(1) 1997(1)(2)
------------ ------------ ------------- -----------
<S> <C> <C> <C> <C>
Consolidated Statements of
Operations Data:
Revenues:
Storage ..................... $ 61,419 $ 86,199 $ 159,775 $159,775
Service and Storage
Material Sales ............ 38,550 57,195 105,560 105,560
-------- ---------- --------- ---------
Total Revenues ............ 99,969 143,394 265,335 265,335
Operating Expenses:
Cost of Sales (Excluding
Depreciation) ............ 51,091 73,742 134,025 133,150
Selling, General and
Administrative ............ 24,762 35,682 72,391 66,758
Depreciation and
Amortization ............... 11,896 18,495 31,783 31,783
-------- ---------- --------- ---------
Total Operating
Expenses ............... 87,749 127,919 238,199 231,691
-------- ---------- --------- ---------
Operating Income ............ $ 12,220 $ 15,475 $ 27,136 $ 33,644
======== ========== ========= =========
Other Data:
EBITDA(3) ..................... $ 24,116 $ 33,970 $ 58,919 $ 65,427
EBITDA as a Percentage of
Total Revenues ............... 24.1% 23.7% 22.2% 24.7%
Capital Expenditures:
Growth (4)(5) ............... $ 16,610 $ 20,074
Maintenance ............... 803 544
-------- ----------
Total Capital Expenditures (5) $ 17,413 $ 20,618
======== ==========
</TABLE>
<TABLE>
<CAPTION>
As of or for
the Period Ended
September 30, 1997
-------------------
<S> <C>
Adjusted EBITDA and Credit Ratios:
Adjusted EBITDA (6) .................................... $ 87,728
Cash Interest Expense (7) .............................. 44,603
Ratio of Adjusted EBITDA to Cash Interest Expense ...... 2.0x
Ratio of Total Debt to Adjusted EBITDA (8) ............ 5.6x
</TABLE>
(continued on next page)
9
<PAGE>
<TABLE>
<CAPTION>
As of September 30,
1997
-----------------------
Pro
Historical Forma(9)
------------ ----------
<S> <C> <C>
Consolidated Balance Sheet Data:
Cash and Cash Equivalents ...... $ 2,242 $ 2,242
Total Assets .................. 451,099 801,468
Total Debt ..................... 274,368 494,476
Stockholders' Equity ............ 113,945 224,379
</TABLE>
- --------
(footnotes from the preceding page)
(1) Gives effect to the Recent Acquisitions and the Arcus Acquisition as if
each had occurred as of January 1, 1996. Certain transactions have been
excluded as the impact of such transactions is immaterial. See "Pro Forma
Condensed Consolidated Financial Information." Depreciation and
amortization are subject to revision based on appraisal of restricted
stock issued in connection with certain Recent Acquisitions and to be
issued in connection with the Arcus Acquisition.
(2) Gives effect to certain identified cost savings that the Company believes
would have been realized had the Recent Acquisitions and the Arcus
Acquisition occurred and been fully integrated as of January 1, 1996
relating to: (i) termination of specific employees and related net
reductions in compensation expense; (ii) closure of identified redundant
facilities and related net reductions in occupancy costs; and (iii) the
elimination of related party and management fees in excess of amounts that
would have been incurred by the Company. See "Pro Forma Condensed
Consolidated Financial Information."
(3) Based on its experience in the records management industry, the Company
believes that EBITDA is an important tool for measuring the performance of
records management companies (including potential acquisition targets) in
several areas, such as liquidity, operating performance and leverage. In
addition, lenders use EBITDA as a criterion in evaluating records
management companies, and substantially all of the Company's financing
agreements contain covenants in which EBITDA is used as a measure of
financial performance. However, EBITDA should not be considered an
alternative to operating or net income (as determined in accordance with
generally accepted accounting principles ("GAAP")) as an indicator of the
Company's performance or to cash flow from operations (as determined in
accordance with GAAP) as a measure of liquidity.
(4) Growth capital expenditures include investments in racking systems, new
buildings and leasehold improvements, equipment for new facilities,
management information systems and facilities restructuring.
(5) Includes $2,901 in 1994 related to the cost of constructing a records
management facility which was sold in a sale and leaseback transaction in
the fourth quarter of 1994.
(6) Represents Adjusted EBITDA, as calculated for purposes of the Indenture,
based on: (i) the Company's EBITDA for the most recent quarter multiplied
by four; (ii) the EBITDA of entities acquired or to be acquired by the
Company for their most recent fiscal quarter (appropriately reduced to the
extent that such entities' EBITDA are already included in the Company's
EBITDA) multiplied by four; and (iii) projected quantifiable improvements
in operating results (on an annualized basis) due to cost reductions
calculated in good faith by the Company, without giving any effect to any
operating losses of the business acquired or to be acquired. Such
projected quantifiable savings may differ from the cost savings used to
calculate the Pro Forma As Adjusted Condensed Consolidated Statement of
Operations of the Company. Adjusted EBITDA is a calculation utilized for
purposes of debt incurrence under the Indenture and should not be viewed
as indicative of actual or future results. See "Description of the New
Notes--Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock" and "Description of the New Notes--Certain Definitions."
(7) Cash interest expense represents total interest expense less amortization
of deferred financing costs and other non-cash interest charges for the
twelve months ended September 30, 1997 on a pro forma basis giving effect
to: (i) the Recent Acquisitions and the Arcus Acquisition; (ii) the Credit
Agreement; (iii) the 1996 Notes; (iv) the Credit Agreement Amendment; and
(v) the offering of the Old Notes as if each had occurred on October 1,
1996.
(8) Based on the pro forma total debt as of September 30, 1997.
(9) Gives effect to: (i) the acquisitions consummated after September 30, 1997;
(ii) the Arcus Acquisition; and (iii) the offering of Old Notes, as if
each had occurred as of September 30, 1997. Certain transactions have been
excluded as the impact of such transactions is immaterial. See "Pro Forma
Condensed Consolidated Financial Information." Total assets and
shareholders' equity are subject to revision based on appraisal of
restricted stock issued in connection with certain Recent Acquisitions and
to be issued in connection with the Arcus Acquisition.
10
<PAGE>
RISK FACTORS
Prospective investors should carefully consider the following risk
factors, in addition to the other information contained in this Prospectus, in
connection with an investment in the New Notes offered hereby.
Financial Leverage; Debt Service Requirements
The Company is highly leveraged due to the substantial indebtedness it has
incurred primarily to finance acquisitions and expand its operations. As of
September 30, 1997, after giving effect to the acquisitions consummated after
September 30, 1997, the Arcus Acquisition and the offering of the Old Notes and
the use of the net proceeds thereof, the Company had $494.5 million in total
indebtedness and $224.4 million in stockholders' equity. The Company expects to
continue to borrow under the Credit Agreement and possible future credit
arrangements in order to finance possible future acquisitions and for general
corporate purposes.
The ability of the Company to repay the New Notes and its other
indebtedness will depend upon future operating performance, which is subject to
the success of the Company's business strategy, prevailing economic conditions,
levels of interest rates and financial, business and other factors, many of
which are beyond the Company's control. The debt service obligations of the
Company could have important consequences, including the following: (i) the
ability of the Company to obtain additional financing for future working
capital needs or for possible future acquisitions or other purposes may be
limited; (ii) a substantial portion of the Company's cash flow from operations
will be dedicated to the payment of principal and interest on its indebtedness,
thereby reducing funds available for other purposes; (iii) the Company may be
more vulnerable to adverse economic conditions than some of its competitors and
thus may be limited in its ability to withstand competitive pressures; and (iv)
the Company may be more highly leveraged than certain of its competitors, which
may place it at a competitive disadvantage.
A substantial portion of the Company's cash flow from operations is
required for debt service. Management believes that cash flow from operations
in conjunction with borrowings from existing and possible future credit
facilities will be sufficient for the foreseeable future to meet debt service
requirements and to make possible future acquisitions and capital expenditures.
However, there can be no assurance in this regard, and the Company's leverage
could make it vulnerable to a downturn in the operating performance of its
subsidiaries, a downturn in economic conditions or, because borrowings under
the Credit Agreement bear interest at rates which fluctuate, increases in
interest rates on borrowings under the Credit Agreement. If such cash flow were
not sufficient to meet such debt service requirements or payments of principal,
the Company could be required to sell additional equity securities, refinance
its obligations or dispose of assets in order to make such scheduled payments.
There can be no assurance that the Company would be able to effect any of such
transactions or do so on favorable terms.
Subordination; Guarantees
The New Notes will be unsecured senior subordinated obligations of the
Company and will be subordinated in right of payment to the prior payment in
full of all existing and future Senior Debt of the Company. At September 30,
1997, the Company had $109.4 million of indebtedness outstanding that would
have constituted Senior Debt. After giving effect to the acquisitions
consummated after September 30, 1997, the Arcus Acquisition and the offering of
the Old Notes and the use of the net proceeds thereof, as of September 30,
1997, the Company and the Guarantors had outstanding $78.9 million aggregate
principal amount of Senior Debt and $165.0 million aggregate principal amount
of debt ranking pari passu with the Notes. The Company intends to actively
pursue additional acquisitions which would likely be financed in whole or in
part through the incurrence of additional indebtedness. Such additional
indebtedness may constitute Senior Debt. The Indenture allows the Company to
incur Senior Debt from time to time under the Credit Agreement, subject to
certain limitations. Upon any acceleration of the maturity of the New Notes or
upon any payment or distribution of assets of the Company to creditors upon any
liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors, marshaling of assets or any bankruptcy, insolvency or
similar proceedings of the Company, the holders of all Senior Debt will be
first entitled to receive payment in full of all amounts due or to become due
thereon before the holders of New Notes will be entitled to receive any payment
in respect of the principal of or premium, if any, or interest on the New
Notes. In addition, upon the occurrence of a payment default or certain other
defaults in respect of outstanding Senior Debt, holders of New Notes may be
prevented from receiving payments with respect to the New Notes for an extended
period. See "Description of the New Notes--Subordination."
11
<PAGE>
The Company's subsidiaries have guaranteed its obligations under the
Credit Agreement on a senior basis and its obligations under the 1996 Notes on
a senior subordinated basis. Iron Mountain's obligations under the Credit
Agreement are secured by a first priority security interest in the stock of its
subsidiaries. If Iron Mountain becomes insolvent or is liquidated or if the
indebtedness under the Credit Agreement is accelerated, the lenders under the
Credit Agreement would be entitled to exercise the remedies available to a
secured lender. Accordingly, such lenders will have a prior claim on the stock
of Iron Mountain's subsidiaries. In such event, it is possible that there would
be no assets remaining from which claims of the holders of New Notes could be
satisfied or, if any assets remained, such assets might be insufficient to
fully satisfy such claims. The Company may incur additional secured
indebtedness in the future. See "Description of the New Notes--Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock" and
"--Liens."
The Company is a holding company, substantially all of the assets of which
are the stock of its subsidiaries. Substantially all of the operations of the
Company are currently conducted by Iron Mountain's direct and indirect wholly
owned subsidiaries, all of which will be Guarantors, subject to the terms of
the Indenture. Management of the Company believes that separate financial
statements of such subsidiaries are not meaningful or material to investors and
therefore such statements have not been included in this Prospectus. The
Company does not currently expect that it will be required to prepare separate
financial statements for any of its subsidiaries in the foreseeable future and
does not expect to do so.
Unenforceability and Release of Guarantees
The Company's obligations under the New Notes will be guaranteed, jointly
and severally, on a senior subordinated basis by the Guarantors. To the extent
that a court were to find that (i) a Subsidiary Guarantee was incurred by a
Guarantor with intent to hinder, delay or defraud any present or future
creditor or the Guarantor contemplated insolvency with a design to prefer one
or more creditors to the exclusion in whole or in part of others, or (ii) such
Guarantor did not receive fair consideration or reasonably equivalent value for
issuing its Subsidiary Guarantee and such Guarantor (a) was insolvent; (b) was
rendered insolvent by reason of the issuance of such Subsidiary Guarantee; (c)
was engaged or about to engage in a business or transaction for which the
remaining assets of such Guarantor constituted unreasonably small capital to
carry on its business; (d) intended to incur, or believed that it would incur,
debts beyond its ability to pay such debts as they mature; or (e) was a
defendant in an action for money damages or had a judgment for money damages
docketed against it (if, in either case, after final judgment, the judgment is
unsatisfied), then in each such case, a court could avoid or subordinate such
Subsidiary Guarantee in favor of the Guarantor's other creditors. The measure
of insolvency for purposes of the foregoing will vary depending upon the law of
the jurisdiction which is being applied. Generally, however, a company will be
considered insolvent for purposes of the foregoing if, at the time it incurs
any given obligation, the sum of the company's debts (including unliquidated or
contingent debt) is greater than all the company's property at a fair
valuation, or if the present fair salable value of the company's assets is less
than the amount that will be required to pay its probable liability on its
existing debts (including unliquidated or contingent debt) as they become
absolute and matured.
To the extent any Subsidiary Guarantee were to be avoided as a fraudulent
conveyance or held unenforceable for any other reason, holders of New Notes
would cease to have any claim in respect of such Guarantor and would be
creditors solely of the Company and any Guarantor whose Subsidiary Guarantee
was not avoided or held unenforceable. In such event, the claims of the holders
of New Notes against the issuer of an invalid Subsidiary Guarantee would be
subject to the prior payment of all liabilities of such Guarantor, including
without limitation, to the extent valid and enforceable, such Guarantor's
guarantee of indebtedness of the Company under the Credit Agreement and any
other Senior Debt of the Company guaranteed by such Guarantor. There can be no
assurance that, after providing for all prior claims, there would be sufficient
assets to satisfy the claims of the holders of New Notes relating to any voided
Subsidiary Guarantee. See "Description of the New Notes--Subordination."
Based upon financial and other information currently available to it, the
Company believes that the New Notes and the Subsidiary Guarantees are being
incurred for proper purposes and in good faith, and that the Company and each
Guarantor are solvent and will continue to be solvent after issuing the New
Notes or the Subsidiary Guarantees, as the case may be, will have sufficient
capital for carrying on their businesses after such issuance and will be able
to pay their debts as they mature. There can be no assurance, however, that a
court would reach the same conclusion.
12
<PAGE>
Any Guarantor may be released from its Subsidiary Guarantee at any time
upon any sale, exchange or transfer in compliance with the provisions of the
Indenture by the Company of the capital stock of such Guarantor or
substantially all of the assets of such Guarantor and, in certain other
circumstances, a Guarantor may be released from its Subsidiary Guarantee in
connection with the Company's designation of such Guarantor as an Unrestricted
Subsidiary (as defined below under "Description of the New Notes--Certain
Definitions"). See "Description of the New Notes--Certain Covenants--Additional
Subsidiary Guarantees."
Restrictions Imposed by Terms of Indebtedness
The indenture under which the 1996 Notes are outstanding (the "1996
Indenture") and the Indenture (collectively, the "Indentures") contain
covenants restricting or limiting the ability of the Company and its Restricted
Subsidiaries to, among other things: (i) incur additional indebtedness,
including indebtedness ranking senior to the New Notes and junior to any Senior
Debt; (ii) pay dividends or make other restricted payments; (iii) make asset
dispositions; (iv) permit liens; (v) enter into sale and leaseback
transactions; (vi) enter into certain mergers; (vii) make certain investments;
and (viii) enter into transactions with related persons. In addition, the
Credit Agreement contains certain other and more restrictive covenants than
those contained in the Indenture. See "Description of Certain Existing
Indebtedness--Credit Agreement." This may adversely affect the Company's
ability to pursue its acquisition strategy. The Credit Agreement also requires
the Company to maintain specific financial ratios and to satisfy certain
financial condition tests. The Company's ability to meet those financial ratios
and financial condition tests can be affected by events beyond its control, and
there can be no assurance that the Company will meet those tests. The breach of
any of those covenants could result in a default under the Credit Agreement,
the Indentures or all of them. In the event of a default under the Credit
Agreement or the Indentures, the lenders could seek to declare all amounts
outstanding under the Credit Agreement, together with accrued and unpaid
interest, if any, to be immediately due and payable. If the Company were unable
to repay those amounts, the lenders under the Credit Agreement could proceed
against the collateral granted to them to secure that indebtedness. If the
indebtedness under the Credit Agreement or the Indentures were to be
accelerated, there can be no assurance that the assets of the Company would be
sufficient to repay in full that indebtedness and the other indebtedness of the
Company. The New Notes are subordinated to all existing and future Senior Debt
of the Company, including indebtedness under the Credit Agreement, and the
Guarantees are subordinated to all existing and future Senior Debt of the
Guarantors, including guarantees by the Guarantors of the indebtedness
outstanding under the Credit Agreement.
Holding Company Structure; Dependence Upon Operations of Subsidiaries
Substantially all of the tangible assets of the Company are held by, and
substantially all of the Company's operating revenues are derived from
operations of, the Company's subsidiaries. Therefore, the Company's ability to
pay interest and principal when due to holders of New Notes will be dependent
upon the receipt of sufficient funds from such subsidiaries. However, the
Company's obligations under the New Notes will be guaranteed, jointly and
severally, on a senior subordinated basis, by substantially all of the
Company's present and future Restricted Subsidiaries.
Risk of Inability to Finance Change of Control Offer
In the event of a Change of Control, the Company will be required to offer
to purchase all New Notes then outstanding at a purchase price, in cash, equal
to 101% of the principal amount thereof plus accrued and unpaid interest to but
excluding the date of purchase. There can be no assurance that the Company
would be able to obtain such funds through a refinancing of the New Notes to be
purchased or otherwise, or that the purchase would be permitted under the
Credit Agreement, or the terms of other financing instruments, as the case may
be. Also, the requirement that the Company offer to purchase all New Notes then
outstanding in the event of a Change of Control may have the effect of
deterring a third party from effecting a transaction that would constitute a
Change of Control. See "Description of the New Notes--Repurchase at the Option
of Holders--Change of Control."
Risks Associated with Acquisition Strategy
The Company has pursued and intends to continue to pursue acquisitions of
records management businesses as a key component of its growth strategy. Since
mid-1994, the Company has acquired or agreed to acquire 42 records management
businesses for aggregate consideration of approximately $577 million, including
approximately $173 million of Common Stock and options to purchase Common Stock
(but not contingent payments of up to $5.9 million based upon the achievement
of certain targets in 1997 and 1998). Certain risks are
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inherent in an acquisition strategy, such as increasing leverage and debt
service requirements and combining disparate company cultures and facilities,
which could adversely affect the Company's operating results. The success of
any completed acquisition will depend in part on the Company's ability to
integrate effectively the acquired records management business into the
Company. The process of integrating such acquired businesses may involve
unforeseen difficulties and may require a disproportionate amount of
management's attention and the Company's financial and other resources. No
assurance can be given that the Arcus Acquisition will be completed, that
additional suitable acquisition candidates will be identified, financed and
purchased on acceptable terms, or that Recent Acquisitions or future
acquisitions, if completed, will be successful.
Under the terms of the Credit Agreement Amendment, acquisitions by the
Company involving: (i) $350 million in the aggregate or $250 million in cash
for the fourth quarter of 1997 (provided that $175 million of such aggregate
amount and $125 million of such cash amount may be carried over to the first
quarter of 1998 if the Arcus Acquisition occurs in such quarter); (ii) in
excess of $65 million (other than the acquisitions of Arcus and HIMSCORP) for
any one acquisition; and (iii) $150 million in the aggregate or $100 million in
cash for 1998 or any subsequent year require the approval of lenders holding
51% or more of the commitments under the Credit Agreement. No assurance can be
given that the lenders will consent to any acquisitions that the Company
proposes to make in excess of such limits.
The size, timing and integration of possible future acquisitions may cause
substantial fluctuations in operating results from quarter to quarter. As a
result, operating results for any quarter may not be indicative of the results
that may be achieved for any subsequent fiscal quarter or for a full fiscal
year.
Competition; Alternative Technology
The Company has one or more competitors in all geographic areas where it
operates. The Company believes that competition for customers is based on
price, reputation for reliability, quality of service and scope and scale of
technology, and believes that it generally competes effectively based on these
factors. As a result of this competition, the records management industry has
for the past several years experienced downward pricing pressures. While Iron
Mountain believes that this pricing climate has stabilized, there can be no
assurance that prices will not decline further, as competitors seek to gain or
preserve market share. Should a further downward trend in pricing occur or
continue for an extended period of time, it could have a material adverse
effect on the Company's results of operations. The Company also competes for
acquisition candidates. Some of the Company's competitors may possess greater
financial and other resources than the Company. If any such competitor were to
devote additional resources to the records management business and such
acquisition candidates or to focus its strategy on the Company's markets, the
Company's results of operations could be adversely affected. In addition, the
Company faces competition from the internal document handling capability of its
current and potential customers. There can be no assurance that these
organizations will outsource more of their document management needs or that
they will not bring in-house some or all of the functions they currently
outsource.
The substantial majority of the Company's revenues have been derived from
the storage of paper documents and from related services. Such storage requires
significant physical space. Alternative technologies for generating, capturing,
managing, transmitting and storing information have been developed, many of
which require significantly less space than paper. Such technologies include
computer media, microforms, audio/video tape, film, CD-ROM and optical disk.
None of these technologies has replaced paper as the principal means for
storing information. However, there can be no assurance that one or more
non-paper-based technologies (whether existing or developed in the future) may
not in the future reduce or supplant the use of paper as a preferred medium,
which could in turn adversely affect the Company's business.
Reliance on Executive Officers
The Company's success is partially dependent upon the performance and
continued availability of its current executive officers. The Company does not
have employment contracts with any of its current executive officers. There can
be no assurance that the Company will be able to retain its executive officers,
the loss of any of whom could have a material adverse effect upon the Company.
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Casualty
The Company currently maintains and intends to continue to maintain, to
the extent such insurance is available on commercially reasonable terms,
comprehensive liability, fire, flood and earthquake (where appropriate) and
extended coverage insurance with respect to the properties that it now owns or
leases or that it may in the future own or lease, with customary limits and
deductibles. Certain types of loss, however, may not be fully insurable on a
cost-effective basis, such as losses from earthquakes, or may be altogether
uninsurable, such as losses from riots. In addition, as of September 30, 1997,
28 of the Company's 156 records management facilities were located in
California and the Company derived approximately 23% of its revenues for the
nine months ended September 30, 1997 from its operations in California. After
the Arcus Acquisition, as of September 30, 1997, 44 of the Company's 217
records management facilities would be located in California. The Company
derived approximately 24% of its revenues for the nine months ended September
30, 1997 on a pro forma basis from these 44 facilities. The Company has in the
past suffered damages and losses from an earthquake and a riot in California,
which damages and losses were substantially covered by insurance. In March
1997, the Company experienced three fires, two of which authorities have
determined were caused by arson and which resulted in extensive damage to two
of its records management facilities in South Brunswick, New Jersey. The
Company has filed several insurance claims related to the South Brunswick
fires, including a significant claim under its business interruption insurance
policy. In the future, should uninsured losses or damages occur, the Company
could lose both its investment in and anticipated profits and cash flow from
the affected property and may continue to be obligated on any leasehold
obligations, mortgage indebtedness or other obligations related to such
property. As a result, any such loss could materially adversely affect the
Company.
Lack of Public Market
There has previously been no public market for the Notes. The Company does
not intend to list the New Notes on any securities exchange or to seek approval
for quotation through any automated quotation system. Although the Notes have
been accepted for trading in the Private Offerings, Resales and Trading through
Automated Linkages ("PORTAL") Market there can be no assurance that an active
trading market will develop or be sustained in the New Notes. If a market were
to develop, the New Notes could trade at prices that may be lower than the
initial offering price thereof depending on many factors, including prevailing
interest rates and the markets for similar securities, general economic
conditions and the financial condition and performance of, and prospects for,
the Company.
Consequences of Failure to Exchange
Untendered Old Notes that are not exchanged for New Notes pursuant to the
Exchange Offer will remain subject to the existing restrictions on transfer of
such Old Notes. Additionally, holders of any Old Notes not tendered in the
Exchange Offer will not have any rights under the Registration Rights Agreement
to cause the Company to register the Old Notes, and the interest rate on the
Old Notes will remain at its initial rate of 8-3/4% per annum.
Environmental Matters
As of September 30, 1997, the Company owned or leased approximately 8.9
million square feet of record management facilities. Under various federal,
state and local environmental laws, ordinances and regulations ("environmental
laws"), an owner of real estate or a lessee conducting operations thereon may
become liable for the costs of investigation, removal or remediation of soil
and groundwater contaminated by certain hazardous substances or wastes or
petroleum products. Certain such laws impose cleanup responsibility and
liability without regard to whether the owner or operator of the real estate or
operations thereon knew of or was responsible for the contamination, and
whether or not operations at the property have been discontinued or title to
the property has been transferred. In addition, the presence of such
substances, or the failure to properly remediate such property, may adversely
affect the current property owner's or operator's ability to sell or rent such
property or to borrow using such property as collateral. The owner or operator
of contaminated real estate also may be subject to common law claims by third
parties based on damages and costs resulting from off-site migration of the
contamination.
Certain environmental laws govern the removal, encapsulation or
disturbance of asbestos-containing materials ("ACMs"). Such laws may impose
liability for release of ACMs and may enable third parties to seek recovery
from owners or operators of real estate for personal injury associated with
exposure to such substances.
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Certain facilities operated by the Company contain or may contain ACMs. In
addition, certain of the properties formerly or currently owned or operated by
the Company were previously used for industrial or other purposes that involved
the use or storage of hazardous substances or petroleum products or the
generation and disposal of hazardous wastes, and in some instances, included
the operation of underground storage tanks. In connection with its former and
current ownership or operation of certain properties, the Company may be
potentially liable for environmental costs such as those discussed above. The
Company has from time to time conducted certain environmental investigations
and remedial activities at certain of its former and current facilities, but an
in-depth environmental review of all properties has not been conducted by or on
behalf of the Company.
The Company believes that it is in substantial compliance with all
applicable material environmental laws. The Company has not received any
written notice from any governmental authority or third party asserting, and is
not otherwise aware of, any material environmental noncompliance, liability or
claim relating to hazardous substances or wastes, petroleum products or
material environmental laws applicable to Company operations in connection with
any of its present or former properties. However, no assurance can be given
that there are, or as a result of possible future acquisitions there will be,
no environmental conditions for which the Company might be liable in the future
or that future regulatory action, as well as compliance with future
environmental laws, will not require the Company to incur costs for or at its
properties that could have a material adverse effect on the Company's financial
condition and results of operations.
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the
New Notes offered hereby. In consideration for issuing the New Notes as
contemplated in this Prospectus, the Company will receive in exchange Old Notes
in like principal amount, the terms of which are identical to the New Notes.
The Old Notes surrendered in exchange for New Notes will be retired and
canceled and cannot be reissued. Accordingly, issuance of the New Notes will
not result in any increase in the indebtedness of the Company.
The net proceeds to the Company from the sale of the Old Notes were
approximately $242 million, after deducting the discounts to the initial
purchasers and estimated offering expenses, and were used to repay indebtedness
under the Credit Agreement in the amount of approximately $168 million and to
fund the cash portion of the purchase price of the HIMSCORP Acquisition in the
amount of approximately $52 million. The remaining net proceeds of
approximately $22 million, together with future borrowings under the Credit
Agreement, will be used to fund the cash portion of the purchase price of the
Arcus Acquisition and to repay assumed indebtedness related thereto. Any
proceeds not so used will be used for general corporate purposes. Prior to
funding the Arcus Acquisition or their application for general corporate
purposes, the net proceeds from the offering will be invested in short-term,
dividend-paying or interest-bearing investment grade securities. Borrowings by
the Company under the Credit Agreement during the most recent twelve months
were used to finance acquisitions and for working capital. The Credit Agreement
has a final maturity date of September 30, 2002. As of December 1, 1997, there
was no indebtedness outstanding under the Credit Agreement.
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THE EXCHANGE OFFER
General
In connection with the sale of the Old Notes, the Company and the
Guarantors entered into the Registration Rights Agreement, which requires the
Company and the Guarantors to file with the Commission a registration statement
under the Securities Act with respect to an issue of senior notes of the
Company with terms identical to the Old Notes (except with respect to
restrictions on transfer) and to use their best efforts to cause such
registration statement to become effective under the Securities Act by no later
than February 21, 1998 and, upon the effectiveness of such registration
statement, to offer to the holders of the Old Notes the opportunity, for a
period of 20 business days (or longer if required by applicable law) from the
date the notice of the Exchange Offer is mailed to holders of the Old Notes, to
exchange their Old Notes for a like principal amount of New Notes. The Exchange
Offer is being made pursuant to the Registration Rights Agreement to satisfy
the Company's and the Guarantors' obligations thereunder.
Under existing interpretations of the staff of the Commission enunciated
in no-action letters issued to third parties, the New Notes would, in general,
be freely transferable after the Exchange Offer without further registration
under the Securities Act by holders thereof (other than (i) a broker-dealer who
acquires such New Notes directly from the Company to resell pursuant to Rule
144A or any other available exemption under the Securities Act or (ii) a person
that is an affiliate of the Company within the meaning of Rule 405 under the
Securities Act), without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Notes are
acquired in the ordinary course of such holders' business and such holders have
no arrangements with any person to participate in the distribution of such New
Notes. Eligible holders wishing to accept the Exchange Offer must represent to
the Company that such conditions have been met. Each broker-dealer that
receives New Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes.
In the event that (i) applicable interpretations of the staff of the
Commission do not permit the Company and the Guarantors to effect such an
Exchange Offer; (ii) for any other reason the Exchange Offer is not consummated
within the earlier of 45 days of the effective date of the Registration
Statement or 210 days after the issue date of the Old Notes (the "Issue Date");
or (iii) upon the request of an initial purchaser under certain circumstances,
the Company and the Guarantors will, at their own expense, (a) as promptly as
practicable, file a Shelf Registration Statement, (b) use their best efforts to
cause such Shelf Registration Statement to be declared effective under the
Securities Act as promptly as practicable after the filing of such Shelf
Registration Statement but in no event later than 60 days after the occurrence
of one of the events described in clauses (i), (ii) or (iii) above and (c) use
their best efforts to keep effective such Shelf Registration Statement until
the earlier of (i) all of the Old Notes have been sold thereunder or (ii) the
date on which all persons that are not affiliates may resell the Old Notes
pursuant to Rule 144(k) under the Securities Act, or the date on which the Old
Notes otherwise cease to be Transfer Restricted Securities (as defined in the
Registration Rights Agreement).
Terms of the Exchange Offer
Each holder of Old Notes who wishes to exchange Old Notes for New Notes in
the Exchange Offer will be required to make certain representations, including
that (i) it is neither an affiliate of the Company nor a broker-dealer
tendering Old Notes acquired directly from the Company for its own account,
(ii) any New Notes to be received by it were acquired in the ordinary course of
its business and (iii) at the time of commencement of the Exchange Offer, it
has no arrangement with any person to participate in the distribution (within
the meaning of the Securities Act) of the New Notes. In addition, in connection
with any resales of New Notes, any broker-dealer (a "Participating
Broker-Dealer") who acquired Old Notes for its own account as a result of
market-making activities or other trading activities must deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
the New Notes. The Commission has taken the position, in no-action letters
issued to third parties, that Participating Broker-Dealers may fulfill their
prospectus delivery requirements with respect to the New Notes (other than a
resale of an unsold allotment from the original sales of Old Notes) with the
prospectus contained in the Registration Statement. Under the Registration
Rights Agreement, the Company and the Guarantors are required to allow
Participating Broker-Dealers (and other persons, if any, subject to similar
prospectus delivery requirements)
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to use the prospectus contained in the Registration Statement in connection
with the resale of such New Notes, provided, however, they shall not be
required to amend or supplement such prospectus for a period exceeding 180 days
after the consummation of the Exchange Offer.
If (a) the Registration Statement is not declared effective by the
Commission on or before the 120th day after the Issue Date, (b) the Company and
the Guarantors fail to consummate the Exchange Offer on or before the 45th day
after the effective date of the Registration Statement or (c) either the
Registration Statement or the Shelf Registration Statement is declared
effective but thereafter ceases to be effective in connection with resales of
Notes during the period specified in the Registration Rights Agreement (each
such event referred to in clauses (a) through (c) above a "Registration
Default"), then the Company will pay to each holder of the Notes, accruing from
the date of the first such Registration Default (or if such Registration
Default has been cured, from the date of the next Registration Default),
liquidated damages ("Liquidated Damages") in an amount equal to 0.25% per annum
of the principal amount of the Notes held by such holder during the first
90-day period after such Registration Default. The amount of the Liquidated
Damages will increase, up to a maximum rate of 2.0% per annum, by an additional
0.25% per annum with respect to each subsequent 90-day period. Liquidated
Damages accrued as of any interest payment date will be payable on such date.
Following the cure of all Registration Defaults, the accrual of Liquidated
Damages will cease.
If the Exchange Offer is consummated in accordance with the provisions of
the Registration Rights Agreement described above, the Company will not be
required to file a Shelf Registration Statement to register any outstanding Old
Notes, and the interest rate on such Old Notes will remain at its initial level
of 8-3/4% per annum. The Exchange Offer shall be deemed to have been consummated
upon the Company's having exchanged, pursuant to the Exchange Offer, New Notes
for all Old Notes that have been properly tendered and not withdrawn by the
Expiration Date. In such event, holders of Old Notes not participating in the
Exchange Offer who are seeking liquidity in their investment would have to rely
on exemptions to registration requirements under the securities laws, including
the Securities Act.
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal, the Company will accept all Old
Notes validly tendered prior to 5:00 p.m., New York City time, on the
Expiration Date. The Company will issue $1,000 in principal amount of New Notes
(and integral multiples in excess thereof) in exchange for an equal principal
amount of outstanding Old Notes tendered and accepted in the Exchange Offer.
Holders may tender some or all of their Old Notes pursuant to the Exchange
Offer in any denomination of $1,000 or in integral multiples in excess thereof.
Based on no-action letters issued by the staff of the Commission to third
parties, the Company believes that the New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by holders thereof (other than any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Notes are acquired
in the ordinary course of such holders' business and such holders have no
arrangement with any person to participate in the distribution of such New
Notes. Any holder of Old Notes who tenders in the Exchange Offer for the
purpose of participating in a distribution of the New Notes cannot rely on such
interpretation by the staff of the Commission and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives New
Notes for its own account in exchange for Old Notes, where such Old Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes.
The form and terms of the New Notes will be the same as the form and terms
of the Old Notes except that the New Notes will not bear legends restricting
the transfer thereof. The New Notes will evidence the same debt as the Old
Notes. The New Notes will be issued under and entitled to the benefits of the
Indenture.
As of the date of this Prospectus, $250,000,000 million aggregate
principal amount of the Old Notes are outstanding and CEDE & Co., the nominee
of DTC, is the only registered holder thereof. In connection with the issuance
of the Old Notes, the Company arranged for the Old Notes to be eligible for
trading in the PORTAL Market, the National Association of Securities Dealers'
screen based, automated market trading of securities eligible for resale under
Rule 144A, and to be issued and transferable in book-entry form through the
facilities of DTC. The New Notes will also be issuable and transferable in
book-entry form through DTC.
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This Prospectus, together with the accompanying Letter of Transmittal, is
being sent to all registered holders as of (the "Record Date").
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. See "Exchange Agent." The Exchange Agent will act as agent for
the tendering holders of Old Notes for the purpose of receiving New Notes from
the Company and delivering New Notes to such holders.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender or the occurrence of certain other events set forth herein,
certificates for any such unaccepted Old Notes will be returned, without
expense, to the tendering holder thereof as promptly as practicable after the
Expiration Date.
Holders of Old Notes who tender in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"Fees and Expenses."
Holders of Old Notes do not have any appraisal or dissenters' rights under
the Delaware General Corporation Law or the Indenture in connection with the
Exchange Offer. The Company intends to conduct the Exchange Offer in accordance
with the provisions of the Registration Rights Agreement and the applicable
requirements of the Exchange Act and the rules and regulations of the
Commission thereunder. Old Notes that are not tendered for exchange in the
Exchange Offer will remain outstanding and continue to accrue interest, but
will not be entitled to any rights or benefits under the Registration Rights
Agreement.
Expiration Date; Extensions; Amendments
The term "Expiration Date" shall mean 5:00 p.m. New York City time, on
, 1998, unless the Company, in its sole discretion, extends the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date to
which the Exchange Offer is extended.
In order to extend the Expiration Date, the Company will notify the
Exchange Agent of any extension by oral or written notice and will mail to the
record holders of Old Notes an announcement thereof, each prior to 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date. Such announcement may state that the Company is extending the
Exchange Offer for a specified period of time.
The Company reserves the right (i) to delay acceptance of any Old Notes,
to extend the Exchange Offer or to terminate the Exchange Offer and to refuse
to accept Old Notes not previously accepted, if any of the conditions set forth
herein under "Termination" shall have occurred and shall not have been waived
by the Company (if permitted to be waived by the Company), by giving oral or
written notice of such delay, extension or termination to the Exchange Agent,
and (ii) to amend the terms of the Exchange Offer in any manner deemed by it to
be advantageous to the holders of the Old Notes. Any such delay in acceptance,
extension, termination or amendment will be followed as promptly as practicable
by oral or written notice thereof. If the Exchange Offer is amended in a manner
determined by the Company to constitute a material change, the Company will
promptly disclose such amendment in a manner reasonably calculated to inform
the holders of the Old Notes of such amendment.
Without limiting the manner in which the Company may choose to make public
announcements of any delay in acceptance, extension, termination or amendment
of the Exchange Offer, the Company shall have no obligation to publish,
advertise, or otherwise communicate any such public announcement, other than by
making a timely release to the Dow Jones News Service.
Interest on the New Notes
The New Notes will bear interest from the last Interest Payment Date on
which interest was paid on the Old Notes, or if interest has not yet been paid
on the Old Notes, from October 24, 1997. Such interest will be paid with the
first interest payment on the New Notes. Interest on the Old Notes accepted for
exchange will cease to accrue upon issuance of the New Notes.
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The New Notes will bear interest at a rate of 8-3/4% per annum. Interest on
the New Notes will be payable semi-annually, in arrears on each Interest
Payment Date following the consummation of the Exchange Offer. Untendered Old
Notes that are not exchanged for New Notes pursuant to the Exchange Offer will
bear interest at a rate of 8-3/4% per annum after the Expiration Date.
Procedures for Tendering
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the Old
Notes (unless the book-entry transfer procedures described below are used) and
any other required documents, to the Exchange Agent for receipt prior to 5:00
p.m., New York City time, on the Expiration Date.
Any financial institution that is a participant in DTC's Book-Entry
Transfer Facility system may make book-entry delivery of the Old Notes by
causing DTC to transfer such Old Notes into the Exchange Agent's account in
accordance with DTC's procedure for such transfer. Although delivery of Old
Notes may be effected through book-entry transfer into the Exchange Agent's
account at DTC, the Letter of Transmittal (or facsimile thereof), with any
required signature guarantees and any other required documents, must, in any
case, be transmitted to and received or confirmed by the Exchange Agent at its
addresses set forth in this Prospectus prior to 5:00 p.m., New York City time,
on the Expiration Date. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The tender by a holder of Old Notes will constitute an agreement between
such holder and the Company in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal.
Delivery of all documents must be made to the Exchange Agent at its
address set forth herein. Holders may also request that their respective
brokers, dealers, commercial banks, trust companies or nominees effect such
tender for such holders.
The method of delivery of Old Notes and the Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the holders. Instead of delivery by mail, it is recommended that holders use an
overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure timely delivery. No Letter of Transmittal or Old Notes should
be sent to the Company.
Only a holder of Old Notes may tender such Old Notes in the Exchange
Offer. The term "holder" with respect to the Exchange Offer means any person in
whose name Old Notes are registered on the books of the Company or any other
person who has obtained a properly completed bond power from the registered
holder or any person whose Old Notes are held of record by DTC who desires to
deliver such Old Notes by book-entry transfer at DTC.
Any beneficial holder whose Old Notes are registered in the name of his
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on his behalf. If such beneficial holder wishes to
tender on his own behalf, such beneficial holder must, prior to completing and
executing the Letter of Transmittal and delivering his Old Notes, either make
appropriate arrangements to register ownership of the Old Notes in such
holder's name or obtain a properly completed bond power from the registered
holder. The transfer of record ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (an "Eligible Institution") that is a
participant in a recognized medallion signature guarantee program unless the
Old Notes tendered pursuant thereto are tendered (i) by a registered holder who
has not completed the box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution.
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by appropriate bond powers which authorize such person
to tender the Old Notes on behalf of the registered holder, in either case
signed as the name of the registered holder or holders appears on the Old
Notes.
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If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
submit evidence satisfactory to the Company of their authority to so act with
the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of the tendered Old Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and
all Old Notes not properly tendered or any Old Notes the Company's acceptance
of which would, in the opinion of counsel for the Company, be unlawful. The
Company also reserves the absolute right to waive any irregularities or
conditions of tender as to particular Old Notes. The Company's interpretation
of the terms and conditions of the Exchange Offer (including the instructions
in the Letter of Transmittal) will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Old Notes
must be cured within such time as the Company shall determine. Neither the
Company, the Exchange Agent nor any other person shall be under any duty to
give notification of defects or irregularities with respect to tenders of Old
Notes nor shall any of them incur any liability for failure to give such
notification. Tenders of Old Notes will not be deemed to have been made until
such irregularities have been cured or waived. Any Old Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned without cost by
the Exchange Agent to the tendering holder of such Old Notes unless otherwise
provided in the Letter of Transmittal as soon as practicable following the
Expiration Date.
In addition, the Company reserves the right in its sole discretion to (a)
purchase or make offers for any Old Notes that remain outstanding subsequent to
the Expiration Date, or, as set forth under "Termination," to terminate the
Exchange Offer and (b) to the extent permitted by applicable law, purchase Old
Notes in the open market, in privately negotiated transactions or otherwise.
The terms of any such purchases or offers may differ from the terms of the
Exchange Offer.
Guaranteed Delivery Procedures
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, or (ii) who cannot deliver their Old Notes, the Letter
of Transmittal or any other required documents to the Exchange Agent prior to
the Expiration Date, or if such holder cannot complete the procedure for
book-entry transfer on a timely basis, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting
forth the name and address of the holder of the Old Notes, the certificate
number or numbers of such Old Notes and the principal amount of Old Notes
tendered, stating that the tender is being made thereby, and guaranteeing that,
within three business days after the Expiration Date, the Letter of Transmittal
(or facsimile thereof), together with the certificate(s) representing the Old
Notes (unless the book-entry transfer procedures are to be used) to be tendered
in proper form for transfer and any other documents required by the Letter of
Transmittal, will be deposited by the Eligible Institution with the Exchange
Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), together with the certificate(s) representing all tendered
Old Notes in proper form for transfer (or confirmation of a book-entry transfer
into the Exchange Agent's account at DTC of Old Notes delivered electronically)
and all other documents required by the Letter of Transmittal are received by
the Exchange Agent within three business days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will
be sent to holders who wish to tender their Old Notes according to the
guaranteed delivery procedures set forth above.
Withdrawal of Tenders
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
21
<PAGE>
To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time,
on the Expiration Date. Any such notice of withdrawal must (i) specify the name
of the person having deposited the Old Notes to be withdrawn (the "Depositor"),
(ii) identify the Old Notes to be withdrawn (including the certificate number
or numbers and principal amount of such Old Notes), (iii) be signed by the
Depositor in the same manner as the original signature on the Letter of
Transmittal by which such Old Notes were tendered (including any required
signature guarantees) or be accompanied by documents of transfer sufficient to
permit the Trustee with respect to the Old Notes to register the transfer of
such Old Notes into the name of the Depositor withdrawing the tender and (iv)
specify the name in which any such Old Notes are to be registered, if different
from that of the Depositor. All questions as to the validity, form and
eligibility (including time of receipt) of such withdrawal notices will be
determined by the Company, whose determination shall be final and binding on
all parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer, and no New Notes will be issued
with respect thereto unless the Old Notes so withdrawn are validly retendered.
Any Old Notes that have been tendered but which are not accepted for exchange
will be returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Notes may be retendered by following one
of the procedures described above under "Procedures for Tendering" at any time
prior to the Expiration Date.
Termination
Notwithstanding any other term of the Exchange Offer, the Company will not
be required to accept for exchange, or exchange New Notes for any Old Notes not
theretofore accepted for exchange, and may terminate or amend the Exchange
Offer as provided herein before the acceptance of such Old Notes if: (i) any
action or proceeding is instituted or threatened in any court or by or before
any governmental agency with respect to the Exchange Offer, which, in the
Company's judgment, might materially impair the Company's ability to proceed
with the Exchange Offer or (ii) any law, statute, rule or regulation is
proposed, adopted or enacted, or any existing law, statute, rule or regulation
is interpreted by the staff of the Commission in a manner, which, in the
Company's judgment, might materially impair the Company's ability to proceed
with the Exchange Offer.
If the Company determines that it may terminate the Exchange Offer, as set
forth above, the Company may (i) refuse to accept any Old Notes and return any
Old Notes that have been tendered to the holders thereof, (ii) extend the
Exchange Offer and retain all Old Notes tendered prior to the expiration of the
Exchange Offer, subject to the rights of such holders of tendered Old Notes to
withdraw their tendered Old Notes, or (iii) waive such termination event with
respect to the Exchange Offer and accept all properly tendered Old Notes that
have not been withdrawn. If such waiver constitutes a material change in the
Exchange Offer, the Company will disclose such change by means of a supplement
to this Prospectus that will be distributed to each registered holder of Old
Notes, and the Company will extend the Exchange Offer for a period of five to
ten business days, depending upon the significance of the waiver and the manner
of disclosure to the registered holders of the Old Notes, if the Exchange Offer
would otherwise expire during such period.
Exchange Agent
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance and requests for additional copies
of this Prospectus or of the Letter of Transmittal should be directed to the
Exchange Agent addressed as follows:
By Registered or Certified Mail:
The Bank of New York
101 Barclay Street-7E
New York, New York 10286
Attention: Natalie Simon
Reorganization Section
By Hand or Overnight Delivery:
The Bank of New York
101 Barclay Street
Corporate Trust Services Window
Ground Level
New York, New York 10286
Attention: Natalie Simon
Reorganization Section
By Facsimile for Eligible Institutions:
(212) 815-6339.
22
<PAGE>
Fees and Expenses
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail. Additional solicitations may be made by
officers and regular employees of the Company and its affiliates in person, by
telegraph or by telephone.
The Company will not make any payments to brokers, dealers or other
persons soliciting acceptances of the Exchange Offer. The Company, however,
will pay the Exchange Agent reasonable and customary fees for its services and
will reimburse the Exchange Agent for its reasonable out-of-pocket expenses in
connection therewith. The Company may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus, Letters of
Transmittal and related documents to the beneficial owners of the Old Notes and
in handling or forwarding tenders for exchange.
The expenses to be incurred in connection with the Exchange Offer,
including fees and expenses of the Exchange Agent and Trustee and accounting
and legal fees, will be paid by the Company.
The Company will pay all transfer taxes, if any, applicable to the
exchange of Old Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes or Old Notes not tendered or accepted for exchange are
to be delivered to, or are to be registered or issued in the name of, any
person other than the registered holder of the Old Notes tendered, or if
tendered Old Notes are registered in the name of any person other than the
person signing the Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the exchange of Old Notes pursuant to the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes
will be billed directly to such tendering holder.
Accounting Treatment
The New Notes will be recorded at the same carrying value as the Old
Notes, which is face value, as reflected in the Company's accounting records on
the date of the exchange. Accordingly, no gain or loss for accounting purposes
will be recognized by the Company upon the consummation of the Exchange Offer.
The expenses of the Exchange Offer will be amortized by the Company over the
term of the New Notes under generally accepted accounting principles.
23
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited Pro Forma Condensed Consolidated Balance Sheet has
been prepared based upon the unaudited historical condensed consolidated
balance sheet of Iron Mountain as of September 30, 1997 and the balance sheets
as of September 30, 1997 of the acquisitions consummated after September 30,
1997 and the Arcus Acquisition, and gives effect to: (i) the acquisitions
consummated after September 30, 1997; (ii) the Arcus Acquisition; and (iii) the
offering of the Old Notes, as if each had occurred as of September 30, 1997.
The following unaudited Pro Forma Condensed Consolidated Statements of
Operations for the nine months ended September 30, 1997 and for the year ended
December 31, 1996 give effect to each of the above transactions and to: (iv)
the Credit Agreement Amendment; (v) the Recent Acquisitions consummated prior
to September 30, 1997; (vi) the Company's initial public offering of Common
Stock, consummated on February 6, 1996 (the "Initial Public Offering"), and the
application of the net proceeds therefrom; (vii) the Credit Agreement; and
(viii) the 1996 Notes, as if each had occurred as of January 1, 1996. The
transactions described in clauses (i) through (viii) above are collectively
referred to herein as the "Transactions." Pro forma adjustments are described
in the accompanying notes.
The Pro Forma As Adjusted results of operations for the nine months ended
September 30, 1997 give effect to the Transactions and to integration
adjustments related to certain identified cost savings that management believes
would have been realized had the acquisitions completed in 1997 and the Arcus
Acquisition been fully integrated as of January 1, 1996.
The pro forma statements of operations do not include results of
operations prior to the date of acquisition, or pro forma adjustments, for
seven of the Company's acquisitions because the impact of the Excluded
Acquisitions (as defined below) is, in the aggregate, immaterial to such
statements. The pro forma statements of operations also do not include results
of operations prior to the date of acquisition, or pro forma adjustments, for
acquisitions completed by Arcus and HIMSCORP in 1996 and 1997, which
represented aggregate revenues of $31.4 million for the year ended December 31,
1996 and $6.6 million for the nine months ended September 30, 1997. In
addition, the pro forma statements of operations do not reflect one disposition
by Arcus in June 1997, which is immaterial to such statements. See "Notes to
Unaudited Condensed Pro Forma Financial Statements--Overview."
The following unaudited Pro Forma Condensed Consolidated Statements of
Operations are not necessarily indicative of the actual results of operations
that would have been reported if the events described above had occurred as of
January 1, 1996, nor do they purport to indicate the results of the Company's
future operations. Furthermore, the pro forma results do not give effect to all
cost savings or incremental costs that may occur as a result of the integration
and consolidation of the Recent Acquisitions. In the opinion of management, all
adjustments necessary to present fairly such pro forma financial statements
have been made.
24
<PAGE>
IRON MOUNTAIN INCORPORATED UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1997
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Historical Recent and Pro Forma
Iron Pending Pro Forma Iron
Mountain Acquisitions(1) Adjustments Mountain
------------ ----------------- -------------------- ----------
<S> <C> <C> <C> <C>
Assets
Current Assets .............................. $ 50,836 $ 29,374 $ (1,742)(A) $ 78,468
Property, Plant and Equipment, net ......... 150,621 25,868 12,632 (A) 189,121
Goodwill, net .............................. 226,779 84,803 186,712 (A) 498,294
Other Long-term Assets ..................... 22,863 5,122 7,600 (A) 35,585
-------- -------- --------- --------
Total Assets .............................. $451,099 $145,167 $ 205,202 $801,468
======== ======== ========= ========
Liabilities and Stockholders' Equity
Current Liabilities ........................ $ 44,175 $ 25,629 $ (7,624)(B) $ 62,180
Long-term Debt, net of Current Portion ...... 273,965 70,671 149,437 (B) 494,073
Deferred Rent .............................. 8,209 107 (107)(B) 8,209
Deferred Income Taxes ........................ 4,237 1,202 (676)(B) 4,763
Other Long-term Liabilities .................. 6,568 296 1,000 (B) 7,864
Stockholders' Equity ........................ 113,945 47,262 63,172 (B) 224,379
-------- -------- --------- --------
Total Liabilities and Stockholders' Equity $451,099 $145,167 $ 205,202 $801,468
======== ======== ========= ========
</TABLE>
- --------
(1) See Schedule A for detail of the Recent Acquisitions and the Arcus
Acquisition.
The accompanying Notes are an integral part of these
pro forma financial statements.
25
<PAGE>
IRON MOUNTAIN INCORPORATED UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE-MONTHS ENDED SEPTEMBER 30, 1997
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Historical Recent and Pro Forma As Adjusted
Iron Pending Pro Forma Iron Integration Iron
Mountain Acquisitions(1) Adjustments Mountain(2) Adjustments(3) Mountain(2)(3)
---------- --------------- ----------- ----------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Storage ..................... $ 86,199 $ 73,576 $ -- $159,775 $ -- $159,775
Service and Storage Material
Sales ........................ 57,195 48,365 -- 105,560 -- 105,560
-------- --------- --------- -------- -------- --------
Total Revenues ............ 143,394 121,941 -- 265,335 -- 265,335
Operating Expenses:
Cost of Sales (Excluding
Depreciation) ............... 73,742 60,782 (499)(C) 134,025 (875)(I) 133,150
Selling, General and
Administrative ............... 35,682 37,309 (600)(D) 72,391 (5,633)(J) 66,758
Depreciation and
Amortization ............... 18,495 7,994 5,294 (E) 31,783 -- 31,783
-------- --------- --------- -------- -------- --------
Total Operating
Expenses .................. 127,919 106,085 4,195 238,199 (6,508) 231,691
-------- --------- --------- -------- -------- --------
Operating Income ............... 15,475 15,856 (4,195) 27,136 6,508 33,644
Interest Expense, Net ............ 17,631 4,990 12,116 (F) 34,737 -- 34,737
-------- --------- --------- -------- -------- --------
Income (Loss) Before Provision
(Credit) for Income Taxes ...... (2,156) 10,866 (16,311) (7,601) 6,508 (1,093)
Provision (Credit) for Income
Taxes ........................... (346) 2,887 (2,417)(G) 124 1,892(K) 2,016
-------- --------- --------- -------- -------- --------
Net Income (Loss) ............... $ (1,810) $ 7,979 $ (13,894) $ (7,725) $ 4,616 $ (3,109)
======== ========= ========= ======== ======== ========
Net Loss per Common and
Common Equivalent Share ......... $ (0.17) $ (0.52) $ (0.21)
======== ======== ========
Weighted Average Common and
Common Equivalent Shares
Outstanding ..................... 10,906 3,861 (H) 14,767 14,767
======== ========= ======== ========
EBITDA ........................... $ 33,970 $ 23,850 $ 1,099 $ 58,919 $ 6,508 $ 65,427
</TABLE>
- --------
(1) See Schedule B for detail of the Recent Acquisitions and the Arcus
Acquisition.
(2) Does not include results of operations prior to the date of acquisition, or
pro forma adjustments, for acquisitions completed by Arcus and HIMSCORP
during 1997. Giving effect to such acquisitions, revenues would increase
$6.6 million to $271.9 million.
(3) Gives effect to certain identified cost savings that the Company believes
would have been realized had the Recent Acquisitions and the Arcus
Acquisition occurred and been fully integrated as of January 1, 1996
relating primarily to: (i) termination of specific employees and related
net reductions in compensation expense; (ii) closure of identified
redundant facilities and related net reductions in occupancy costs; and
(iii) the elimination of related party and management fees in excess of
amounts that would have been incurred by the Company.
The accompanying Notes are an integral part of these
pro forma financial statements.
26
<PAGE>
IRON MOUNTAIN INCORPORATED UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Historical Recent and Pro Forma
Iron Pending Pro Forma Iron
Mountain Acquisitions(1) Adjustments Mountain(2)
---------- --------------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues:
Storage .................................... $ 85,826 $100,614 $ -- $ 186,440
Service and Storage Material Sales ......... 52,892 55,611 -- 108,503
--------- --------- -------- ---------
Total Revenues ........................... 138,718 156,225 -- 294,943
Operating Expenses:
Cost of Sales (Excluding Depreciation) ...... 70,747 72,972 (959)(C) 142,760
Selling, General and Administrative ......... 34,342 51,370 (500)(D) 85,212
Depreciation and Amortization ............... 16,936 10,898 10,634 (E) 38,468
--------- --------- -------- ---------
Total Operating Expenses .................. 122,025 135,240 9,175 266,440
--------- --------- -------- ---------
Operating Income .............................. 16,693 20,985 (9,175) 28,503
Interest Expense, net ........................... 14,901 6,038 25,343 (F) 46,282
--------- --------- -------- ---------
Income (Loss) Before Provision (Credit) for
Income Taxes ................................. 1,792 14,947 (34,518) (17,779)
Provision (Credit) for Income Taxes ............ 1,435 3,652 (7,814)(G) (2,727)
--------- --------- -------- ---------
Income (Loss) Before Extraordinary Charge ...... $ 357 $ 11,295 $(26,704) $ (15,052)
========= ========= ======== =========
Income (Loss) Before Extraordinary Charge
per Common and Common Equivalent
Share .......................................... $ 0.01(3) $ (1.02)
========= =========
Weighted Average Common and Common
Equivalent Shares Outstanding .................. 10,137 4,608 (H) 14,745
========= ======== =========
EBITDA .......................................... $ 33,629 $ 31,883 $ 1,459 $ 66,971
</TABLE>
- --------
(1) See Schedule C for detail of the Recent Acquisitions and the Arcus
Acquisition.
(2) Does not include results of operations prior to the date of acquisition, or
pro forma adjustments, for acquisitions completed by Arcus and HIMSCORP in
1996 and 1997. Giving effect to such acquisitions, revenues would increase
$31.4 million to $326.3 million.
(3) After accretion of $0.03 per Common and Common Equivalent Share related to
a warrant.
The accompanying Notes are an integral part of these
pro forma financial statements.
27
<PAGE>
Schedule A
IRON MOUNTAIN INCORPORATED
SCHEDULE OF RECENT AND PENDING ACQUISITIONS
AS OF SEPTEMBER 30, 1997
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Pending
Recent Acquisitions Acquisition Total
------------------------------------------------ ----------- Recent and
Pending
FileSafe Allegiance HIMSCORP Other Arcus (1) Acquisitions
-------- ---------- -------- ----- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Current Assets .................. $2,939 $1,621 $ 5,267 $290 $19,257 $ 29,374
Property, Plant and Equipment, net 5,434 425 3,977 300 15,732 25,868
Goodwill, net ..................... -- -- 27,352 -- 57,451 84,803
Other Long-term Assets ............ 75 60 4,463 -- 524 5,122
------ ------ ------- ---- ------- --------
Total Assets .................. $8,448 $2,106 $41,059 $590 $92,964 $145,167
====== ====== ======= ==== ======= ========
Liabilities and Stockholders'
Equity
Current Liabilities ............... $1,504 $ 399 $ 5,812 $ 46 $17,868 $ 25,629
Long-term Debt, net of Current
Portion ........................ 3,100 -- 27,410 -- 40,161 70,671
Deferred Rent ..................... -- 107 -- -- -- 107
Deferred Income Taxes ............ -- 3 523 -- 676 1,202
Other Long-term Liabilities ...... -- -- -- -- 296 296
Stockholders' Equity ............ 3,844 1,597 7,314 544 33,963 47,262
------ ------ ------- ---- ------- --------
Total Liabilities and
Stockholders' Equity ......... $8,448 $2,106 $41,059 $590 $92,964 $145,167
====== ====== ======= ==== ======= ========
</TABLE>
- --------
(1) Represents the historical balance sheet of Arcus as of September 30, 1997.
See "Overview--Arcus Acquisition" in Notes to Unaudited Condensed
Consolidated Pro Forma Financial Statements. See Schedule D for a
reconciliation of AGI to Arcus.
The accompanying Notes are an integral part of these
pro forma financial statements.
28
<PAGE>
Schedule B
IRON MOUNTAIN INCORPORATED
SCHEDULE OF RECENT AND PENDING ACQUISITIONS
FOR THE NINE-MONTHS ENDED SEPTEMBER 30, 1997
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Pending
Recent Acquisitions (1) Acquisition Total
----------------------------------------------------------------- ----------- Recent and
Pending
Safesite DSI FileSafe Allegiance HIMSCORP (3) Other Arcus (2) Acquisitions
-------- ------ -------- ---------- ------------ ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Storage .................. $ 4,198 $2,862 $5,254 $1,625 $16,913 $4,550 $38,174 $ 73,576
Service and Storage
Material Sales ............ 6,034 595 3,419 1,132 3,559 2,831 30,795 48,365
------- ------ ------ ------ ------- ------ ------- --------
Total Revenues ......... 10,232 3,457 8,673 2,757 20,472 7,381 68,969 121,941
Operating Expenses:
Cost of Sales (Excluding
Depreciation) ............ 5,111 -- 3,019 1,378 10,424 3,124 37,726 60,782
Selling, General and
Administrative ............ 4,460 2,840 1,497 580 5,074 2,579 20,279 37,309
Depreciation and
Amortization ............ 397 368 289 149 1,798 454 4,539 7,994
------- ------ ------ ------ ------- ------ ------- --------
Total Operating
Expenses ............... 9,968 3,208 4,805 2,107 17,296 6,157 62,544 106,085
------- ------ ------ ------ ------- ------ ------- --------
Operating Income ............ 264 249 3,868 650 3,176 1,224 6,425 15,856
Interest (Income) Expense ... 26 327 142 (31) 1,791 281 2,454 4,990
------- ------ ------ ------ ------- ------ ------- --------
Income (Loss) Before Provision
for Income Taxes ............ 238 (78) 3,726 681 1,385 943 3,971 10,866
Provision for Income Taxes ... 77 -- -- 28 989 6 1,787 2,887
------- ------ ------ ------ ------- ------ ------- --------
Net Income (Loss) ............ $ 161 $ (78) $3,726 $ 653 $ 396 $ 937 $ 2,184 $ 7,979
======= ====== ====== ====== ======= ====== ======= ========
EBITDA ..................... $ 661 $ 617 $4,157 $ 799 $ 4,974 $1,678 $10,964 $ 23,850
</TABLE>
- --------
(1) Represents historical results of operations for each Recent Acquisition for
the period in 1997 prior to acquisition by the Company. See "Overview" in
Notes to Condensed Consolidated Pro Forma Financial Statements.
(2) Does not include results of operations prior to the date of acquisition, or
pro forma adjustments, for the acquisition completed by Arcus during 1997.
Giving effect to such acquisition, revenues would have increased $5.6
million to $74.6 million. See "Overview--Arcus Acquisition" in Notes to
Unaudited Condensed Consolidated Pro Forma Financial Statements. See
Schedule E for a reconciliation of AGI to Arcus.
(3) Does not include results of operations prior to the date of acquisition, or
pro forma adjustments, for the acquisitions completed by HIMSCORP during
1997. Giving effect to such acquisitions, revenues would have increased
$0.9 million to $21.4 million.
The accompanying Notes are an integral part of these
pro forma financial statements.
29
<PAGE>
Schedule C
IRON MOUNTAIN INCORPORATED
SCHEDULE OF RECENT AND PENDING ACQUISITIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Pending Total
Recent Acquisitions(1) Acquisition Recent and
----------------------------------------------------------------------------- ------------ Pending
Mohawk Safesite DSI FileSafe Allegiance HIMSCORP (3) Other Arcus(2) Acquisitions
------ -------- ------- -------- ---------- ------------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Storage ............ $4,429 $ 8,300 $ 3,367 $ 6,662 $ 2,008 $14,067 $18,110 $ 43,671 $100,614
Service and Storage
Material Sales ... 3,436 10,709 851 4,147 1,395 1,585 11,178 22,310 55,611
------ -------- ------- -------- ------- ------- ------- -------- --------
Total Revenues 7,865 19,009 4,218 10,809 3,403 15,652 29,288 65,981 156,225
Operating Expenses:
Cost of Sales
(Excluding
Depreciation) ...... 3,945 9,464 -- 4,207 1,610 7,860 13,148 32,738 72,972
Selling, General and
Administrative ... 2,647 7,587 2,997 2,269 749 3,207 10,322 21,592 51,370
Depreciation and
Amortization ...... 608 799 608 565 202 1,475 2,205 4,436 10,898
------ -------- ------- -------- ------- ------- ------- -------- --------
Total Operating
Expenses ......... 7,200 17,850 3,605 7,041 2,561 12,542 25,675 58,766 135,240
------ -------- ------- -------- ------- ------- ------- -------- --------
Operating Income ...... 665 1,159 613 3,768 842 3,110 3,613 7,215 20,985
Interest (Income)
Expense ............ 201 34 548 249 (6) 1,278 1,065 2,669 6,038
------ -------- ------- -------- ------- ------- ------- -------- --------
Income Before Provision
for Income Taxes ... 464 1,125 65 3,519 848 1,832 2,548 4,546 14,947
Provision for Income
Taxes ............... -- 125 460 -- 6 866 211 1,984 3,652
------ -------- ------- -------- ------- ------- ------- -------- --------
Net Income (Loss) ... $ 464 $ 1,000 $ (395) $ 3,519 $ 842 $ 966 $ 2,337 $ 2,562 $ 11,295
====== ======== ======= ======== ======= ======= ======= ======== ========
EBITDA ............... $1,273 $ 1,958 $ 1,221 $ 4,333 $ 1,044 $ 4,585 $ 5,818 $ 11,651 $ 31,883
</TABLE>
- --------
(1) Represents historical results of operations for each Recent Acquisition for
the period in 1996 prior to acquisition by the Company. See "Overview" in
the accompanying Notes.
(2) Does not include results of operations prior to the date of acquisition, or
pro forma adjustments, for the acquisitions completed by Arcus in 1996 and
1997. Giving effect to such acquisitions, revenues would have increased
$23.2 million to $89.2 million. Represents the condensed consolidated
statement of operations of Arcus for the year ended December 31, 1996. See
Schedule E for a reconciliation of AGI to Arcus.
(3) Does not include results of operations prior to the date of acquisition, or
pro forma adjustments, for the acquisitions completed by HIMSCORP in 1996
and 1997. Giving effect to such acquisitions, revenues would have increased
$8.1 million to $23.8 million.
The accompanying Notes are an integral part of these
pro forma financial statements.
30
<PAGE>
Schedule D
IRON MOUNTAIN INCORPORATED
RECONCILIATION OF THE BALANCE SHEET OF
ARCUS GROUP, INC. TO ARCUS TECHNOLOGY SERVICES, INC.
AS OF SEPTEMBER 30, 1997
(Note 1)
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
AGI Adjustments (2) Arcus
-------- --------------- -----
<S> <C> <C> <C>
Assets
Current Assets .................................... $ 31,369 $ (12,112)(a) $19,257
Property, Plant and Equipment, net ............... 15,752 (20)(a) 15,732
Goodwill, net .................................... 57,320 131 (b) 57,451
Investments ....................................... 867 (867)(c) --
Other Long-term Assets ........................... 513 11 (b) 524
-------- --------- -------
Total Assets .................................... $105,821 $ (12,857) $92,964
======== ========= =======
Liabilities and Stockholders' Equity
Current Liabilities .............................. $ 15,523 $ 2,345(b) $17,868
Long-term Debt, net of Current Portion ............ 38,661 1,500 (b) 40,161
Deferred Income Taxes .............................. -- 676 (b) 676
Other Long-term Liabilities ........................ 296 -- 296
Minority Interest in Subsidiaries .................. 8,473 (8,473)(d) --
Preferred Stock of Subsidiary, Redeemable ......... 27,089 (27,089)(d) --
Warrants Outstanding to Purchase Common Stock of
Subsidiary .................................... 15 (15)(e) --
Stockholders' Equity .............................. 15,764 18,199 (b) 33,963
-------- --------- -------
Total Liabilities and Stockholders' Equity ...... $105,821 $ (12,857) $92,964
======== ========= =======
</TABLE>
- --------
(1) The AGI balance sheet includes holding company assets and liabilities
unrelated to the business or operations of Arcus. This schedule shows the
assets and liabilities that do not relate to the business of Arcus and
reconciles AGI's balance sheet to Arcus's balance sheet.
(2) The accompanying balance sheets reflect the following adjustments:
(a) Reverse AGI's assets not acquired by the Company including approximately
$11 million in cash.
(b) Record assets and liabilities of Arcus to be acquired by the Company
that are eliminated in the consolidation of AGI and its subsidiaries.
(c) Reverse AGI's investment in limited partnership, which will be disposed
of or distributed to stockholders of AGI prior to the Arcus Acquisition.
(d) Reverse AGI's liabilities that are eliminated as a result of the
reorganization of AGI and certain of its subsidiaries prior to the
consummation of the Arcus Acquisition.
(e) Reverse warrants that will be cancelled as part of the Arcus
Acquisition.
The accompanying Notes are an integral part of these
pro forma financial statements.
31
<PAGE>
Schedule E
IRON MOUNTAIN INCORPORATED
RECONCILIATION OF STATEMENTS OF OPERATIONS OF
ARCUS GROUP, INC. TO ARCUS TECHNOLOGY SERVICES, INC.
FOR THE NINE-MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(Note 1)
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine-Months Ended September 30, 1997 Year Ended December 31, 1996
------------------------------------ ------------------------------------
AGI Adjustments (2) Arcus AGI Adjustments (2) Arcus
--------- ----------------- -------- --------- ----------------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Storage and Transport ..................... $38,174 $ -- $38,174 $43,671 $ -- $43,671
Other .................................... 30,795 -- 30,795 22,310 -- 22,310
------- -------- ------- ------- -------- -------
Total Revenues ........................... 68,969 -- 68,969 65,981 -- 65,981
Operating Expenses:
Cost of Sales (Excluding
Depreciation) ........................... 37,726 -- 37,726 32,738 -- 32,738
Selling, General and Administrative ...... 20,279 -- 20,279 21,592 -- 21,592
Holding Company Expenses .................. 1,024 (1,024)(a) -- 1,990 (1,990)(a) --
Depreciation and Amortization ............ 4,550 (11)(a) 4,539 4,449 (13)(a) 4,436
------- -------- ------- ------- -------- -------
Total Operating Expenses ............... 63,579 (1,035) 62,544 60,769 (2,003) 58,766
------- -------- ------- ------- -------- -------
Operating Income ........................... 5,390 1,035 6,425 5,212 2,003 7,215
Interest Expense, net ..................... 1,954 500 (b) 2,454 1,668 1,001 (b) 2,669
Equity in Income of/Writedown of
Investment in Limited Partnership ......... 572 (572)(a) -- (34) 34 (a) --
Minority Interest ........................ 428 (428)(a) -- 321 (321)(a) --
Preferred Stock Dividends of
Subsidiary .............................. 1,533 (1,533)(a) -- 1,895 (1,895)(a) --
------- -------- ------- ------- -------- -------
Income Before Provision for Income
Taxes .................................... 903 3,068 3,971 1,362 3,184 4,546
Provision for Income Taxes ............... 427 1,360 (c) 1,787 475 1,509 (c) 1,984
------- -------- ------- ------- -------- -------
Net Income ................................. $ 476 $ 1,708 $ 2,184 $ 887 $ 1,675 $ 2,562
======= ======== ======= ======= ======== =======
EBITDA .................................... $ 7,979 $ 2,985 $10,964 $ 7,479 $ 4,172 $11,651
</TABLE>
- --------
(1) The AGI statements of operations include holding company income from and
expenses for activities unrelated to the business or operations of Arcus.
This schedule shows the expenses that do not relate to the business of
Arcus and reconciles AGI's statements of operations to Arcus's statements
of operations.
(2) The accompanying statements of operations reflect the following
adjustments:
(a) Reverse AGI income from and expenses for holding company activities
unrelated to the business or operations of Arcus. Such holding company
expenses consist primarily of compensation, equity in income
of/writedown of investment in limited partnership, minority interest and
preferred stock dividends.
(b) Reverse interest income on AGI cash not acquired.
(c) Adjust income taxes to reflect Arcus as a stand alone entity.
The accompanying Notes are an integral part of these
pro forma financial statements.
32
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Overview
Recent Acquisitions
In January 1996, Iron Mountain acquired Nashville Vault Company, Ltd. and
Florida Data Bank, Inc. ("FDB"). In February 1996, Iron Mountain acquired
DataVault Corporation. In March 1996, Iron Mountain acquired Data Storage
Systems, Inc. In April 1996, Iron Mountain acquired Brambles CRC, Inc. ("CRC").
In May 1996, Iron Mountain acquired the records management business of Output
Technologies Central Region, Inc. In July 1996, Iron Mountain acquired the
records management business of The Fortress Corporation. In August 1996, Iron
Mountain acquired Data Archive Services, Inc. and Data Archive Services of
Miami, Inc. (collectively, "DAS") and DKA Industries, Inc. (d/b/a Systems
Record Storage). In September 1996, Iron Mountain acquired International Record
Storage and Retrieval Service, Inc. and Security Archives Corporation. In
October 1996, Iron Mountain acquired Data Storage Company, Inc. and Dial-A-File
Storage, Inc. In November 1996, Iron Mountain acquired Mohawk Business Record
Storage, Inc. ("Mohawk"), Magnetic Archives, Inc. and Deliverex of Broward. The
aggregate purchase price of the acquisitions completed in 1996 was $68.6
million (not including contingent payments of up to $4.0 million based upon the
achievement of certain targets during 1997 and 1998).
In January 1997, Iron Mountain acquired Security Archives II, Inc. and
Security Archives of MSP, Inc. In February 1997, Iron Mountain acquired the
records management business of Wellington Financial Services, Inc. (d/b/a
Michigan Data Storage) and Data Recovery Services, Inc. In March 1997, Iron
Mountain acquired CBD Security Archives, Inc. ("CBD"). In April 1997, Iron
Mountain acquired Chicago Data Destruction Corporation and Critical Files
Security, Inc. In May 1997, Iron Mountain acquired Business Records Center,
Inc. and Willamette Archives, Inc. In June 1997, Iron Mountain acquired
Safesite and certain related real estate for $70.9 million, including $53.6
million in value of Common Stock and options to acquire Common Stock and the
balance in cash. In July 1997, Iron Mountain acquired Data Archives, Ltd
("DAL"), Archives Express, Inc. ("AEI") and File Pro L.C. In August, 1997, Iron
Mountain acquired Concorde Group, Inc. In September 1997, Iron Mountain
acquired Data Securities International, Inc. ("DSI"). In October 1997, Iron
Mountain acquired Records Retention/FileSafe LP ("FileSafe") for $45.1 million
in cash and assumed debt, Allegiance Business Archives, Ltd. ("Allegiance") for
$8.7 million in cash, and Records Management Services, Inc. In November 1997,
Iron Mountain acquired HIMSCORP for $98.8 million, including $46.2 million in
value of Common Stock and the balance in cash and assumed indebtedness. The
aggregate purchase price of the businesses and certain related real estate
acquired in 1997 excluding Safesite, FileSafe, Allegiance and HIMSCORP was
$83.6 million including shares of Common Stock and options to purchase Common
Stock valued at $8.9 million.
The pro forma statements of operations do not include results of
operations prior to the date of acquisition, or pro forma adjustments, for
acquisitions of Data Storage Company, Inc., Dial-A-File Storage, Inc., Magnetic
Archives, Inc., Deliverex of Broward, Data Recovery Services Inc., Critical
Files Security, Inc. and Willamette Archives, Inc. (the "Excluded
Acquisitions") as the impact of such acquisitions is immaterial to the
accompanying pro forma financial statements. The Excluded Acquisitions, in the
aggregate, represent less than 2% of pro forma revenues. The pro forma
statements of operations also do not include results of operations prior to the
date of acquisition, or pro forma adjustments, for acquisitions completed by
Arcus and HIMSCORP in 1996 and 1997, which represented aggregate revenues of
$31.4 million for the year ended December 31, 1996 and $6.6 million for the
nine months ended September 30, 1997. In addition, the pro forma statements of
operations do not reflect one disposition by Arcus in June 1997, which is
immaterial to such statements.
33
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
Arcus Acquisition
On September 26, 1997, the Company entered into an agreement to acquire
all of the outstanding capital stock of AGI and its subsidiaries for
approximately $160 million. The principal operating subsidiary of AGI is Arcus.
The purchase price consists of Common Stock and options to acquire Common Stock
valued at approximately $62 million (assuming that vested options are not
exercised prior to closing), the assumption of debt (net of approximately $12
million of acquired cash) of approximately $34 million and approximately $64
million in cash. The number of shares of Common Stock and options will be based
on the average market price for the 20 trading days ending three trading days
before the closing, subject to a floor of $29.00 and a ceiling of $36.00. If
such average price is less than $29.00 or greater than $36.00, as the case may
be, the number of shares of Common Stock issued as a result of this transaction
would be based on $29.00 or $36.00, respectively (or 1.7 million or 1.4 million
shares, respectively). A $0.25 change above or below the collar would result in
a $0.3 million increase and a $0.4 million decrease, respectively, in the
purchase price. In addition to the stated purchase price of $160 million, the
Company will record approximately $3 million in capitalized transaction costs
and approximately $2 million in additional equity resulting from a higher
financial valuation of the options to acquire shares of the Common Stock for
accounting purposes. The amortization of approximately $96 million of the
approximately $141 million of goodwill associated with AGI will be
nondeductible for income tax purposes.
The AGI financial statements include certain assets, liabilities and
holding company expenses for activities unrelated to the business or operations
of Arcus, which will not be purchased or assumed by the Company. For
informational purposes, the schedules to the pro forma financial statements
include a reconciliation between AGI and Arcus. The Company is evaluating its
ability to utilize AGI's net operating loss carryforwards ("NOL") for federal
income tax purposes. Accordingly, for pro forma purposes, the Company has
provided a full valuation allowance for the deferred tax asset generated by
such NOL. See Notes 9 and 15 of Notes to AGI's Consolidated Financial
Statements.
In August 1997, Arcus completed the acquisition of an IT staffing and
computer consulting business. The results of operations for such IT staffing
business are not reflected in the pro forma financial statements. For the year
ended December 31, 1996 and the period from January 1, 1997 to August 20, 1997
(the date of the acquisition), such IT staffing business had unaudited revenues
of $8.4 million and $5.6 million, respectively.
The consummation of the Arcus Acquisition is subject to customary
conditions, and no assurance can be given that it will be completed. All of the
Recent Acquisitions have been, and the Arcus Acquisition, if consummated, will
be, accounted for as purchases.
Appraisal of Restricted Stock
The Company has issued shares of Common Stock in connection with certain
of the Recent Acquisitions and will record such shares for financial reporting
purposes at fair value. Because under the terms of the relevant acquisition
agreements a portion of such shares are subject to resale restrictions, the
Company is in the process of obtaining appraisals to determine the fair value
of such shares. Pending the appraisals, the Company initially recorded the
value of such shares based upon their market price at the time of closing. The
Company anticipates that the appraised value of the restricted shares will be
less than the initially recorded value for accounting purposes and expects to
record corresponding decreases in equity, goodwill and goodwill amortization.
The Company intends to follow the same process with respect to those shares of
Common Stock to be issued in the Arcus Acquisition that will be subject to
resale restrictions.
34
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
Balance Sheet
The aggregate consideration paid or to be paid for the Recent Acquisitions
and the Arcus Acquisition is approximately $540 million including approximately
$173 million in Common Stock and options to purchase Common Stock and
approximately $367 million in cash and assumed debt (not including up to $5.9
million of contingent payments based upon the achievement of certain targets
during 1997 and 1998). The excess of the purchase price over the book value of
the net assets acquired for each of the acquisitions has been allocated to
tangible and intangible assets, based on Iron Mountain's estimate of the fair
value of the net assets acquired and the Common Stock issued. The allocations
of the purchase price as illustrated below may change upon final appraisal of
the fair value of the net assets acquired and the Common Stock issued (in
millions):
<TABLE>
<CAPTION>
<S> <C> <C>
Recent Acquisitions Completed Prior to September 30, 1997:
Allocation of Purchase Price:
Current Assets ...................................................... $ 10.4
Property, Plant and Equipment ....................................... 42.1
Other Long-term Assets ................................................ 7.0
Current Liabilities ................................................... (16.4)
Deferred Income Taxes ................................................ ( 1.4)
Other Long-term Liabilities .......................................... ( 0.8)
Goodwill ............................................................ 172.4
Purchase Price of Excluded Acquisitions .............................. 4.6
-------
Purchase Price of Recent Acquisitions Completed Prior to
September 30, 1997 ................................................ $ 217.9
Acquisitions Completed After September 30, 1997 and the Arcus Acquisition:
Allocation of Purchase Price:
Current Assets ...................................................... $ 27.6
Property, Plant and Equipment ....................................... 38.5
Other Long-term Assets ................................................ 4.6
Current Liabilities ................................................... (18.0)
Deferred Income Taxes ................................................ ( 0.5)
Other Long-term Liabilities and Deferred Rent ........................ ( 1.3)
Goodwill ............................................................ 271.5
-------
Purchase Price of Acquisitions Completed After September 30, 1997
and the Arcus Acquisition .......................................... 322.4
-------
Total Purchase Price of the Recent Acquisitions and the Arcus Acquisition $ 540.3
=======
</TABLE>
The Recent Acquisitions consummated prior to September 30, 1997 were financed
with Common Stock and options to purchase Common Stock, the Credit Agreement,
the Initial Public Offering and the 1996 Notes. The Recent Acquisitions and the
Arcus Acquisition are assumed to be financed as follows (in millions):
<TABLE>
<S> <C> <C>
Recent Acquisitions Completed Prior to September 30, 1997:
Value of Common Stock Issued .......................................... $ 59.4
Value of Options Granted ............................................. 3.1
Cash Consideration ................................................... 155.4
------
Purchase Price of Recent Acquisitions Completed Prior to September 30,
1997 ............................................................... $ 217.9
Acquisitions Completed After September 30, 1997 and the Arcus Acquisition:
Value of Common Stock Issued .......................................... $ 96.0
Value of Options Granted ............................................. 14.5
Net Proceeds from the offering of the Old Notes ..................... 211.9
------
Purchase Price of Acquisitions Completed After September 30, 1997
and the Arcus Acquisition .......................................... 322.4
-------
Total Purchase Price of the Recent Acquisitions and the Arcus Acquisition. $ 540.3
=======
</TABLE>
35
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
The accompanying pro forma balance sheet as of September 30, 1997 has been
prepared as if the Transactions had been completed as of September 30, 1997 and
reflects the following pro forma adjustments:
(A) Pro forma adjustments to Assets consist of the following (in millions):
<TABLE>
<CAPTION>
Property Other
Current Plant and Long-term
Assets Equipment Goodwill Assets
--------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Acquisition Adjustments:
Reverse assets of acquired companies not purchased ...... $ (3.2) $ -- $ -- $ (1.0)
Record estimated fair value of assets of acquired
companies ............................................. 1.5 12.6 -- 0.5
Record increase in goodwill equal to the excess of
purchase price over fair value of net assets
acquired ................................................ -- -- 186.7 --
------- ------ ------- -------
Total Acquisition Adjustments ........................ ( 1.7) 12.6 186.7 ( 0.5)
------- ------ ------- -------
Use of Proceeds Adjustments:
Record deferred financing fees associated with the
Offering and the Credit Agreement Amendment ............ -- -- -- 8.1
------- ------ ------- -------
Total Use of Proceeds Adjustments ..................... -- -- -- 8.1
------- ------ ------- -------
Total Pro Forma Adjustments ........................... $ (1.7) $12.6 $186.7 $ 7.6
======= ====== ======= =======
</TABLE>
(B) Pro Forma adjustments to Liabilities and Stockholders' Equity consist
of the following (in millions):
<TABLE>
<CAPTION>
Deferred Rent
Long- Deferred and Other Stock-
Current term Income Long-term holders'
Liabilities Debt Taxes Liabilities Equity
------------- ----------- ---------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Acquisition Adjustments:
Reverse liabilities and equity not assumed in
connection with acquisitions consummated
after September 30, 1997 and the Arcus
Acquisition .................................... $ (9.4) $ (70.7) $ (0.7) $ (0.1) $(47.2)
Record purchase reserves and estimated fair
value of liabilities of acquired companies ...... 1.8 -- -- 1.0 --
Record additional debt to finance acquisitions
consummated after September 30, 1997 and
the Arcus Acquisition ........................... -- 212.0 -- -- --
Record equity used to finance acquisitions
consummated after September 30, 1997 and
the Arcus Acquisition ........................... -- -- -- -- 110.4
------- -------- ------- ------ -------
Total Acquisition Adjustments .................. ( 7.6) 141.3 ( 0.7) 0.9 63.2
------- -------- ------- ------ -------
Use of Proceeds Adjustments:
Proceeds from the Offering ........................ -- 249.5 -- -- --
Repayment of the Credit Agreement ............... -- ( 98.5) -- -- --
Use of proceeds to repay debt used to finance
acquisitions consummated after September
30, 1997 and the Arcus Acquisition ............... -- (142.9) -- -- --
------- -------- ------- ------ -------
Total Use of Proceeds Adjustments ............... -- 8.1 -- -- --
------- -------- ------- ------ -------
Total Pro Forma Adjustments ..................... $ (7.6) $ 149.4 $ (0.7) $ 0.9 $ 63.2
======= ======== ======= ====== =======
</TABLE>
36
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
Statements of Operations
Storage revenues consist of periodic charges related to the storage of
materials. Service and storage material sales revenues consist of charges for
related service activities and the sale of storage materials. In certain
circumstances, based upon customer requirements, storage revenues include
periodic charges associated with normal, recurring service activities.
All of the Recent Acquisitions and the Arcus Acquisition, except FDB, CRC,
DAS, CBD, DAL, AEI and Allegiance, have a December 31 fiscal year end. DAL's
fiscal year end is February 28, CRC's and CBD's fiscal year end is June 30,
DAS's fiscal year end is May 31, FDB's fiscal year end is August 31 and AEI's
fiscal year end is September 30. During 1996, Allegiance changed its fiscal
year end from March 31 to December 31. Accordingly, FDB's, CRC's, DAS's, CBD's,
DAL's and AEI's results of operations were calendarized to the twelve months
ended December 31, 1996.
Pro Forma Adjustments
The accompanying pro forma statements of operations for the year ended
December 31, 1996 and the nine months ended September 30, 1997, have been
prepared as if the Transactions had occurred on January 1, 1996 and reflect the
following pro forma adjustments:
(C) To reduce cost of sales to eliminate rent expense for facilities
purchased by the Company as part of certain acquisitions that would not have
been incurred had such acquisitions occurred as of January 1, 1996. All such
facilities had been previously owned by affiliates of the acquired companies.
(D) To conform the accounting policies of certain acquired companies to
those of the Company with respect to the capitalization of costs for software
developed for internal use.
(E) To reflect additional depreciation and amortization expense based on
the fair value of the assets acquired and the remaining estimated useful lives
and the amortization of goodwill. Property and equipment and capitalized
software development costs are depreciated or amortized on a straight-line
basis over their estimated useful lives ranging from three to 50 years,
goodwill is amortized over 25 to 30 years and covenants not-to-compete are
amortized over two to five years on a straight-line basis. Such depreciation
and amortization may change upon final appraisal of the fair value of the net
assets acquired and Common Stock issued.
(F) Pro forma adjustments to Interest Expense consist of the following (in
millions):
<TABLE>
<CAPTION>
Nine-Months Year
Ended Ended
September 30, December 31,
1997 1996
--------------- -------------
<S> <C> <C>
Acquisition Adjustments:
Reverse interest expense on debt retired or not assumed ............... $ (5.1) $ (6.1)
Use of Proceeds Adjustments:
Reverse interest expense on debt of the Company retired with
proceeds of the Initial Public Offering, the 1996 Notes, the Credit
Agreement and the offering of the Old Notes ........................ (16.8) (13.8)
Record interest expense relating to the 1996 Notes including
amortization of deferred financing costs ........................... 13.0 17.3
Record interest expense relating to the offering of the Old Notes, at an
effective interest rate of 8.78% and the amortization of deferred
financing costs ...................................................... 16.9 22.5
Record interest expense related to borrowings under the Credit
Agreement at an assumed interest rate of 7.28% and the
amortization of deferred financing costs ........................... 4.1 5.4
------- -------
Total Acquisition and Use of Proceeds Adjustments .................. $ 12.1 $ 25.3
======= =======
</TABLE>
37
<PAGE>
IRON MOUNTAIN INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
The impact of a one-quarter of one percentage point change in the interest
rate on pro forma borrowings under the Credit Agreement for each of the year
ended December 31, 1996 and the nine months ended September 30, 1997 is $0.2
million and $0.1 million, respectively.
(G) To adjust the provision for income taxes to a 40% rate on pro forma
income before nondeductible goodwill amortization and other nondeductible
expenses.
(H) To adjust the pro forma weighted average common and common equivalent
shares outstanding as if the Transactions had occurred on January 1, 1996. The
number of shares of Common Stock issued, or assumed to be issued, and the
adjustment for each period presented, is as follows (in thousands):
<TABLE>
<CAPTION>
Adjustment to
Weighted Average Shares
------------------------------------
Total Nine-Months Year Ended
Number Ended December 31,
Transactions of Shares September 30, 1997 1996
- ------------ --------- ------------------ ------------
<S> <C> <C> <C>
Initial Public Offering .............................. 2,350 -- 200
Safesite ............................................. 1,770 1,050 1,770
DSI ................................................ 227 204 227
HIMSCORP ............................................. 1,202 1,202 1,202
Arcus ................................................ 1,382 1,382 1,382
Other ................................................ 35 23 35
Reversal of Common Equivalent Shares Due to
Pro Forma Loss .................................... -- -- (208)
------ ------ -----
Total Shares Issued, or Assumed to be Issued ...... 6,966 3,861 4,608
====== ====== =====
</TABLE>
Integration Adjustments
The integration adjustments relate to certain cost savings that management
believes would have been realized had the Recent Acquisitions consummated in
1997 and the Arcus Acquisition been fully integrated on January 1, 1996. The
accompanying pro forma as adjusted statement of operations for the nine months
ended September 30, 1997 has been prepared as if the Transactions had occurred
as of January 1, 1996 and reflect the following adjustments:
(I) To reduce cost of sales to eliminate specific expenses that would not
have been incurred had such acquisitions occurred as of January 1, 1996. Such
cost savings relate to: (i) the termination of certain employees due to the
integration and consolidation of certain acquisitions; (ii) a reduction in
certain occupancy costs for facilities the Company will vacate upon completion
of certain acquisitions; and (iii) a reduction in rent expense to reflect new
or amended leases for certain facilities of acquisitions. Additional cost
savings that the Company expects to realize through integration of the Recent
Acquisitions and the Arcus Acquisition into the Company's operations have not
been reflected herein.
(J) To adjust specific selling, general and administrative expenses had
such acquisitions occurred as of January 1, 1996. Such adjustments relate to:
(i) cost savings from the termination of certain employees due to the
integration and consolidation of certain acquisitions; (ii) cost savings from
the elimination of related party expenses, management fees and compensation
expenses in excess of amounts that would have been incurred by the Company; and
(iii) additional compensation and benefit expenses that would have been
incurred by the Company.
(K) To adjust the provision for income taxes to a 40% rate on pro forma
income before nondeductible goodwill amortization and other nondeductible
expenses.
38
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING INFORMATION
(In thousands, except per share amounts)
The following selected consolidated statements of operations and balance
sheet data of the Company as of and for each of the years ended December 31,
1992, 1993, 1994, 1995 and 1996 have been derived from the Company's audited
consolidated financial statements. The selected consolidated statements of
operations and balance sheet data of the Company for the nine months ended
September 30, 1996 and 1997 have been derived from the Company's unaudited
condensed consolidated financial statements. The Company's unaudited condensed
consolidated financial statements include all adjustments, consisting of normal
recurring accruals, that the Company considers necessary for a fair
presentation of the financial position and the results of operations for those
periods. Operating results for the nine months ended September 30, 1997 are not
necessarily indicative of the results for the entire year ending December 31,
1997. The selected consolidated financial and operating information set forth
below should be read in conjunction with Iron Mountain's Consolidated Financial
Statements and the Notes thereto incorporated by reference herein. See
"Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
Nine Months
Year Ended December 31, Ended September 30,
------------------------------------------------------ -------------------
1992 1993 1994 1995 1996 1996 1997
--------- -------- ------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statements of Operations Data:
Revenues:
Storage ....................................... $ 44,077 $ 48,892 $54,098 $ 64,165 $ 85,826 $ 61,419 $ 86,199
Service and Storage Material Sales ............ 26,596 32,781 33,520 40,271 52,892 38,550 57,195
-------- -------- ------- -------- -------- -------- --------
Total Revenues .............................. 70,673 81,673 87,618 104,436 138,718 99,969 143,394
Operating Expenses:
Cost of Sales (Excluding Depreciation) ...... 35,169 43,054 45,880 52,277 70,747 51,091 73,742
Selling, General and Administrative ......... 17,630 19,971 20,853 26,035 34,342 24,762 35,682
Depreciation and Amortization ............... 5,780 6,789 8,690 12,341 16,936 11,896 18,495
-------- -------- ------- -------- -------- -------- --------
Total Operating Expenses .................. 58,579 69,814 75,423 90,653 122,025 87,749 127,919
-------- -------- ------- -------- -------- -------- --------
Operating Income ................................. 12,094 11,859 12,195 13,783 16,693 12,220 15,475
Interest Expense ................................. 8,412 8,203 8,954 11,838 14,901 9,981 17,631
-------- -------- ------- -------- -------- -------- --------
Income (Loss) Before Provision (Credit) for
Income Taxes ................................. 3,682 3,656 3,241 1,945 1,792 2,239 (2,156)
Provision (Credit) for Income Taxes ............ 2,095 2,088 1,957 1,697 1,435 1,542 (346)
-------- -------- ------- -------- -------- -------- --------
Income (Loss) Before Extraordinary Charge ...... 1,587 1,568 1,284 248 357 697 (1,810)
Extraordinary Charge, Net of Tax Benefit (1) . -- -- -- -- 2,126 -- --
-------- -------- ------- -------- -------- -------- --------
Net Income (Loss) .............................. 1,587 1,568 1,284 248 (1,769) 697 (1,810)
Accretion of Redeemable Put Warrant ............ 626 940 1,412 2,107 280 280 --
-------- -------- ------- -------- -------- -------- --------
Net Income (Loss) Applicable to Common
Stockholders ................................. $ 961 $ 628 $ (128) $ (1,859) $(2,049) $ 417 $ (1,810)
======== ======== ======= ======== ======== ======== ========
Income (Loss) Before Extraordinary Item per
Common and Common Equivalent Share ............ $ 0.12 $ 0.08 $ (0.02) $ (0.24) $ 0.01 $ 0.04 $ (0.17)
Net Income (Loss) per Common and Common
Equivalent Share .............................. $ 0.12 $ 0.08 $ (0.02) $ (0.24) $ (0.20) $ 0.04 $ (0.17)
Weighted Average Common and Common
Equivalent Shares Outstanding .................. 8,052 8,067 7,984 7,784 10,137 10,101 10,906
Other Data:
EBITDA (2) .................................... $ 17,874 $ 18,648 $20,885 $ 26,124 $33,629 $ 24,116 $ 33,970
EBITDA as a Percentage of Total Revenues ...... 25.3% 22.8% 23.8% 25.0% 24.2% 24.1% 23.7%
Capital Expenditures:
Growth (3)(4) ................................. $ 11,226 $ 13,605 $15,829 $ 14,395 $23,334 $ 16,610 $ 20,074
Maintenance ................................. 818 1,846 1,151 858 1,112 803 544
-------- -------- ------- -------- -------- -------- --------
Total Capital Expenditures (4) .................. $ 12,044 $ 15,451 $16,980 $ 15,253 $24,446 $ 17,413 $ 20,618
======== ======== ======= ======== ======== ======== ========
Additions to Customer Acquisition Costs ......... $ 1,268 $ 922 $ 1,366 $ 1,379 $ 1,642 $ 1,265 $ 688
Ratio of Earnings to Fixed Charges (5) ......... 1.3x 1.3x 1.2x 1.1x 1.1x 1.1x 0.9x
(continued on next page)
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
As of December 31, As of
-------------------------------------------------------------- September 30,
1992 1993 1994 1995 1996 1997
---------- ---------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Consolidated Balance Sheet Data:
Cash and Cash Equivalents ...... $ 498 $ 591 $ 1,303 $ 1,585 $ 3,453 $ 2,242
Total Assets .................. 115,429 125,288 136,859 186,881 281,799 801,468
Total Debt ..................... 73,304 78,460 86,258 121,874 184,733 494,476
Stockholders' Equity ............ 23,419 24,047 22,869 21,011 52,384 224,379
</TABLE>
- --------
(footnotes from the preceding page)
(1) The extraordinary charge for 1996 consists of a prepayment penalty, the
write-off of deferred financing costs, original issue discount and loss on
termination of interest rate protection agreements.
(2) Based on its experience in the records management industry, the Company
believes that EBITDA is an important tool for measuring the performance of
records management companies (including potential acquisition targets) in
several areas, such as liquidity, operating performance and leverage. In
addition, lenders use EBITDA as a criterion in evaluating records
management companies, and substantially all of the Company's financing
agreements contain covenants in which EBITDA is used as a measure of
financial performance. However, EBITDA should not be considered an
alternative to operating or net income (as determined in accordance with
GAAP) as an indicator the Company's performance or to cash flow from
operations (as determined in accordance with GAAP) as a measure of
liquidity.
(3) Growth capital expenditures include investments in racking systems, new
buildings and leasehold improvements, equipment for new facilities,
management information systems and facilities restructuring.
(4) Includes $2,901 in 1994 related to the cost of constructing a records
management facility which was sold in a sale-leaseback transaction in the
fourth quarter of 1994.
(5) The ratio of earnings to fixed charges was 0.9x for the nine months ended
September 30, 1997. For such period, the Company would have needed to
generate additional income from continuing operations, before provision
for income taxes, of $2,156 to cover its fixed charges of $24,425.The pro
forma ratio of earnings to fixed charges, giving effect to the
Transactions as if each had occurred as of January 1, 1996, would have
been 0.7x for the year ended December 31, 1996 and 0.8x for the nine
months ended September 30, 1997. For such periods, the Company would have
needed to generate additional pro forma income from continuing operations,
before provisions for income taxes, of $17,779 and $7,601 to cover its
fixed charges of $56,433 and $44,366, respectively.
40
<PAGE>
DESCRIPTION OF CERTAIN EXISTING INDEBTEDNESS
The 1996 Notes
In October 1996, the Company issued $165.0 million principal amount of the
1996 Notes. The 1996 Notes mature on October 1, 2006, and bear interest at
10-1/8% per annum, payable semi-annually in arrears on April 1 and October 1.
The Company may redeem up to 35% of the initial principal amount of the 1996
Notes with the net proceeds of one or more Qualified Equity Offerings (as
defined in the 1996 Indenture in the same manner as defined in the Indenture)
at a redemption price of 109.125% of the aggregate principal amount plus
accrued and unpaid interest. Like the Notes, the 1996 Notes are general
unsecured obligations of the Company, subordinated in right of payment to senior
indebtedness of the Company. The 1996 Notes are guaranteed, pari passu with the
Notes, on an unsecured senior subordinated and joint and several basis, by
substantially all of the Company's present and future Restricted Subsidiaries
(defined in the 1996 Indenture in the same manner as defined in the Indenture).
Credit Agreement
The Credit Agreement, as currently in effect, is a $250.0 million
revolving credit facility that matures on September 30, 2002. Upon maturity,
all outstanding revolving credit loans and other amounts payable thereunder
will become due.
Borrowings under the Credit Agreement may be used to finance possible
future acquisitions, as well as for working capital and general corporate
purposes. The Company's obligations under the Credit Agreement are guaranteed
by substantially all of Iron Mountain's subsidiaries and are secured by the
pledge of the stock of such subsidiaries. Prepayments of outstanding borrowings
under the Credit Agreement are required in certain circumstances out of the
proceeds of certain insurance payments, condemnations, issuances of
indebtedness and asset dispositions.
The Credit Agreement permits the Company to elect interest rates from time
to time, as to all or a portion of the borrowings made thereunder, at interest
rates based upon the applicable reference rate and a margin or spread over such
reference rate (which spread varies based upon the ratio of the Company's
indebtedness to EBITDA). The reference rate, at the Company's option, may be
based upon (i) a fluctuating rate of interest equal to the higher of the prime
rate of The Chase Manhattan Bank, or rates based upon certificate of deposit or
overnight federal funds rates, or (ii) for interest periods of 1, 2, 3, 6 or
(if available) 12 months, the interest rates prevailing on the date of
determination for the selected interest period in the London interbank market.
The Credit Agreement contains covenants restricting the ability of Iron
Mountain and its subsidiaries to, among other things: (i) declare dividends or
redeem or repurchase capital stock; (ii) make optional payments and
modifications of subordinated and other debt instruments; (iii) incur liens and
engage in sale and leaseback transactions; (iv) make loans and investments; (v)
incur indebtedness and contingent obligations; (vi) make capital expenditures;
(vii) engage in mergers, acquisitions and asset sales; (viii) enter into
transactions with affiliates; and (ix) make changes in their lines of business.
Iron Mountain is also required to comply with financial covenants with respect
to: (i) a maximum leverage ratio; (ii) a minimum interest coverage ratio; and
(iii) a minimum fixed charge coverage ratio. The Credit Agreement also contains
customary affirmative covenants and events of default.
41
<PAGE>
DESCRIPTION OF THE NEW NOTES
General
The New Notes will be issued pursuant to the Indenture among the Company,
the Guarantors and the Trustee. The terms of the New Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (the "Trust Indenture Act"). The New Notes are subject to
all such terms, and holders of Notes are referred to the Indenture and the
Trust Indenture Act for a statement thereof. The following summary of certain
provisions of the Indenture does not purport to be complete and is qualified in
its entirety by reference to the Indenture, including the definitions therein
of certain terms used below. The definitions of certain terms used in the
following summary are set forth below under "--Certain Definitions."
Principal, Maturity and Interest
The Notes are general unsecured obligations of the Company, are limited in
aggregate principal amount to $250.0 million and will mature on September 30,
2009. Interest on the Notes will accrue at the rate of 83/4% per annum and will
be payable semi-annually in arrears on March 31 and September 30, commencing on
March 31, 1998, to holders of record on the immediately preceding March 15 and
September 15. Interest on the New Notes will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from October
24, 1997. Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months. The Notes are payable both as to principal and interest
at the office or agency of the Company maintained for such purpose within the
City and State of New York or, at the option of the Company, payment of
interest may be made by check mailed to the holders of Notes at their addresses
set forth in the register of holders of Notes. Until otherwise designated by
the Company, the Company's office or agency in New York is the office of the
Trustee maintained for such purpose. The Old Notes were and the New Notes will
be issued in registered form, without coupons, and in denominations of $1,000
and integral multiples thereof.
Subsidiary Guarantees
The Company's payment obligations under the Notes are jointly and
severally guaranteed pursuant to the Subsidiary Guarantees on an unsecured
senior subordinated basis by all of the Company's Restricted Subsidiaries other
than the Excluded Restricted Subsidiaries (as defined below). See "--Certain
Covenants--Additional Subsidiary Guarantees." Each Subsidiary Guarantee is
subordinated to the prior payment in full of all Senior Debt of each such
Guarantor, which was $109.4 million at September 30, 1997 for all Guarantors.
Notwithstanding the subordination provisions contained in the Indenture, the
obligations of a Guarantor under its Subsidiary Guarantee are unconditional.
See "Risk Factors--Unenforceability and Release of Guarantees."
Subordination
The payment of principal, premium, if any, and interest on the Notes is
subordinated in right of payment, as set forth in the Indenture, to the prior
payment in full in cash of all Obligations with respect to Senior Debt, whether
outstanding on the date of the Indenture or thereafter incurred.
Upon any payment or distribution to creditors of the Company or any
Guarantor in a liquidation or dissolution of the Company or such Guarantor or
in a bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or any Guarantor or its property, an assignment for the
benefit of creditors or any marshaling of the assets and liabilities of the
Company or any Guarantor, (a) the holders of Senior Debt will be entitled to
receive payment in full in cash of all Obligations due in respect of such
Senior Debt (including interest after the commencement of any such proceeding
at the rate specified in the applicable Senior Debt, whether or not allowed as
a claim in such proceeding) before the holders of Notes will be entitled to
receive any payment or distribution with respect to the Notes, and (b) until
all Obligations with respect to Senior Debt are paid in full in cash, any
payment or distribution to which the holders of Notes would be entitled shall
be made to the holders of Senior Debt.
Neither the Company nor any Guarantor may make any payment or distribution
upon or in respect of the Notes, including, without limitation, by way of
set-off or otherwise, or redeem (or make a deposit in redemption of), defease
or acquire any of the Notes for cash, properties or securities if (a) a default
in the payment of any Obligation in respect
42
<PAGE>
of any Senior Debt occurs and is continuing or (b) any other default (or any
event that, after notice or passage of time would become a default) (a
"Non-Monetary Default") occurs and is continuing with respect to Senior Debt
and, in the case of clause (b), the Trustee receives a notice of such default
(a "Payment Blockage Notice") from the holders (or the agent or representative
of such holders) of any Designated Senior Debt. Payments on the Notes may and
shall be resumed (i) in the case of a payment default, on the date on which
such default is cured or waived and (ii) in the case of a Non-Monetary Default,
on the earlier of the date on which such Non-Monetary Default is cured or
waived or 179 days after the date on which the applicable Payment Blockage
Notice is received, unless the maturity of any Senior Debt has been
accelerated. Any number of Payment Blockage Notices may be given, provided,
however, that (A) not more than one Payment Blockage Notice may be commenced
during any period of 360 consecutive days and (B) any Non-Monetary Default that
existed or was continuing on the date of delivery of any Payment Blockage
Notice to the Trustee (to the extent the holder of Designated Senior Debt, or
such trustee or agent, giving such Payment Blockage Notice had knowledge of the
same) shall not be the basis for a subsequent Payment Blockage Notice, unless
such default has been cured or waived for a period of not less than 90
consecutive days.
The Indenture requires that the Company promptly notify holders of Senior
Debt if payment of the Notes is accelerated because of an Event of Default (as
described below).
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency, holders of Notes may recover less ratably than
creditors of the Company who are holders of Senior Debt. After giving effect to
the acquisitions consummated after September 30, 1997, the Arcus Acquisition,
and the use of the net proceeds of the offering of the Old Notes, the principal
amount of Senior Debt of the Company and the Restricted Subsidiaries
outstanding at September 30, 1997 was $78.9 million. The Indenture does not
limit the amount of additional Indebtedness, including Senior Debt, that the
Company and its Subsidiaries can incur if certain financial tests are met. See
"--Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred
Stock."
Optional Redemption
Prior to September 30, 2002, the Notes are subject to redemption at any
time at the option of the Company, in whole or in part, upon not less than 30
nor more than 60 days' notice, at the Make-Whole Price, plus accrued and unpaid
interest (and Liquidated Damages, if any, on the Old Notes prior to the
Exchange Offer) to but excluding the applicable redemption date. On and after
September 30, 2002, the Notes will be subject to redemption at any time at the
option of the Company, in whole or in part, upon not less than 30 nor more than
60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below, plus accrued and unpaid interest (and
Liquidated Damages, if any, on the Old Notes prior to the Exchange Offer) to
but excluding the applicable redemption date, if redeemed during the
twelve-month period beginning on September 30 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
- ------------------------------- - ----------
<S> <C>
2002 ..................... 104.375%
2003 ..................... 102.916
2004 ..................... 101.458
2005 and thereafter ...... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time during the first 36 months
after the date of issuance of the Notes, the Company may redeem up to 35% of
the initial principal amount of the Notes originally issued with the net
proceeds of one or more Qualified Equity Offerings at a redemption price equal
to 108.75% of the principal amount of such Notes, plus accrued and unpaid
interest (and Liquidated Damages, if any, on the Old Notes prior to the
Exchange Offer) to but excluding the redemption date; provided, that at least
65% of the principal amount of Notes originally issued remains outstanding
immediately after the occurrence of any such redemption and that such
redemption occurs within 60 days following the closing of any such Qualified
Equity Offering.
Mandatory Redemption
Except with respect to required repurchases upon the occurrence of a
Change of Control or in the event of certain Asset Sales, each as described
below under "--Repurchase at the Option of Holders," the Company is not
required to make sinking fund or redemption payments with respect to the Notes.
43
<PAGE>
Repurchase at the Option of Holders
Change of Control
Upon the occurrence of a Change of Control, each holder of Notes will have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest (and Liquidated Damages, if any, on the Old Notes prior to the
Exchange Offer) to but excluding the date of repurchase (the "Change of Control
Payment"). Within 30 calendar days following any Change of Control, the Company
will mail a notice to each holder stating: (a) that the Change of Control Offer
is being made pursuant to the covenant entitled "Change of Control" and that
all Notes tendered will be accepted for payment; (b) the purchase price and the
purchase date, which will be no earlier than 30 calendar days nor later than 60
calendar days from the date such notice is mailed (the "Change of Control
Payment Date"); (c) that any Note not tendered will continue to accrue
interest; (d) that, unless the Company defaults in the payment of the Change of
Control Payment, all Notes accepted for payment pursuant to the Change of
Control Offer will cease to accrue interest (and Liquidated Damages, if any, on
the Old Notes prior to the Exchange Offer) on and after the Change of Control
Payment Date; (e) that holders electing to have any Notes purchased pursuant to
a Change of Control Offer will be required to surrender the Notes, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes
completed, to the paying agent at the address specified in such notice prior to
the close of business on the fifth Business Day preceding the Change of Control
Payment Date; (f) that holders will be entitled to withdraw their election if
the paying agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, facsimile
transmission or letter setting forth the name of the holder, the principal
amount of Notes delivered for purchase, and a statement that such holder is
withdrawing his election to have such Notes purchased; and (g) that holders
whose Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered, which
unpurchased portion must be equal to $1,000 in principal amount or an integral
multiple thereof. The Company will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable to the repurchase of the
Notes in connection with a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (a) accept for payment Notes or portions thereof tendered pursuant to
the Change of Control Offer, (b) deposit with the paying agent an amount equal
to the Change of Control Payment in respect of all Notes or portions thereof so
tendered and (c) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate stating the Notes or portions
thereof tendered to the Company. The paying agent will promptly mail to each
holder of Notes so accepted the Change of Control Payment for such Notes, and
the Trustee will promptly authenticate and mail to each holder a new Note equal
in principal amount to any unpurchased portion of the Notes surrendered, if
any; provided that each such new Note will be in a principal amount of $1,000
or an integral multiple thereof.
Except as described above with respect to a Change of Control, the
Indenture does not contain provisions that permit the holders of the Notes to
require that the Company repurchase or redeem the Notes in the event of a
takeover, recapitalization or similar restructuring, nor does it contain any
other "event risk" protections for holders of the Notes.
Although the Change of Control provision may not be waived by the Company,
and may be waived by the Trustee only in accordance with the provisions of the
Indenture, there can be no assurance that any particular transaction (including
a highly leveraged transaction) cannot be structured or effected in a manner
not constituting a Change of Control.
The Credit Agreement currently prohibits the Company from purchasing any
Notes prior to the expiration of the Credit Agreement and also provides that
certain change of control events with respect to the Company would constitute a
default thereunder. Any future credit agreements or other agreements relating
to Senior Debt to which the Company becomes a party may contain similar
restrictions and provisions. In the event a Change of Control occurs at a time
when the Company is prohibited from purchasing Notes, the Company could seek
the consent of its lenders to the purchase of Notes or could attempt to
refinance the borrowings that contain such prohibition. If the Company does not
obtain such a consent or repay such borrowings, the Company will remain
prohibited from purchasing Notes. In such case, the Company's failure to
purchase tendered Notes would constitute an Event of
44
<PAGE>
Default under the Indenture which would, in turn, constitute a default under
the Credit Agreement. In such circumstances, the subordination provisions in
the Indenture would likely restrict payments to the holders of Notes.
"Change of Control" means the occurrence of any of the following events:
(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 a majority
of the voting power of all classes of Voting Stock of the Company;
(b) the Company consolidates with, or merges with or into, another Person
(as defined below) or conveys, transfers, leases or otherwise disposes of all
or substantially all of its assets to any Person, or any Person consolidates
with, or merges with or into, the Company, in any such event pursuant to a
transaction in which the outstanding Voting Stock of the Company is converted
into or exchanged for cash, securities or other property, other than any such
transaction where (i) the outstanding Voting Stock of the Company is not
converted or exchanged at all (except to the extent necessary to reflect a
change in the jurisdiction of incorporation) or is converted into or exchanged
for (A) Voting Stock (other than Disqualified Stock) of the surviving or
transferee Person or (B) cash, securities and other property (other than
Capital Stock described in the foregoing clause (A)) of the surviving or
transferee Person in an amount that could be paid as a Restricted Payment as
described under the "Restricted Payments" covenant and (ii) immediately after
such transaction, no "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 the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act), directly or indirectly, of more than a majority of the
total outstanding Voting Stock of the surviving or transferee Person;
(c) during any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors (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
662/3% of the directors then 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
(d) the Company is liquidated or dissolved or adopts a plan of liquidation
or dissolution other than in a transaction which complies with the provisions
described under "Merger, Consolidation or Sale of Assets."
Asset Sales
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, (a) sell, lease, convey or otherwise dispose
of any assets (including by way of a Sale and Leaseback Transaction, but
excluding a Qualifying Sale and Leaseback Transaction) other than sales of
inventory in the ordinary course of business (provided that the sale, lease,
conveyance or other disposition of all or substantially all of the assets of
the Company will be governed by the provisions of the Indenture described above
under the caption "Change of Control" and/or the provisions described below
under the caption "Merger, Consolidation or Sale of Assets" and not by the
provisions of this covenant), or (b) issue or sell Equity Interests of any of
its Restricted Subsidiaries, that, in the case of either clause (a) or (b)
above, whether in a single transaction or a series of related transactions, (i)
have a fair market value in excess of $1.0 million, or (ii) result in Net
Proceeds in excess of $1.0 million (each of the foregoing, an "Asset Sale"),
unless (x) the Company (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the
fair market value (evidenced by an Officers' Certificate delivered to the
Trustee, and for Asset Sales having a fair market value or resulting in net
proceeds in excess of $5.0 million, evidenced by a resolution of the Board of
Directors set forth in an Officers' Certificate delivered to the Trustee) of
the assets sold or otherwise disposed of and (y) at least 75% of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of cash or like-kind assets (in each case as determined in good
faith by the Company, evidenced by a resolution of the Board of Directors and
certified by an Officers' Certificate delivered to the Trustee); provided,
however, that the amount of (A) any liabilities (as shown on the Company's or
such Restricted Subsidiary's most recent balance sheet or in the notes thereto)
of the Company or such Restricted Subsidiary (other than liabilities that are
by their terms subordinated to the Notes or any Subsidiary Guarantee) that are
assumed by the transferee of any such assets and (B) any notes or other
obligations received by the Company or such Restricted Subsidiary from such
transferee that are immediately converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received) or Cash Equivalents,
shall
45
<PAGE>
be deemed to be cash for purposes of this provision; and provided, further,
that the 75% limitation referred to in the foregoing clause (y) shall not apply
to any Asset Sale in which the cash portion of the consideration received
therefrom is equal to or greater than what the after-tax proceeds would have
been had such Asset Sale complied with the aforementioned 75% limitation. A
transfer of assets or issuance of Equity Interests by the Company to a Wholly
Owned Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary to the
Company or to another Wholly Owned Restricted Subsidiary will not be deemed to
be an Asset Sale.
Within 360 days of any Asset Sale, the Company may, at its option, apply
an amount equal to the Net Proceeds from such Asset Sale either (a) to
permanently reduce Senior Debt, or (b) to an investment in a Restricted
Subsidiary or in another business or capital expenditure or other
long-term/tangible assets, in each case, in the same line of business as the
Company or any of its Restricted Subsidiaries was engaged in on the date of the
Indenture or in businesses similar or reasonably related thereto. Pending the
final application of any such Net Proceeds, the Company may temporarily reduce
Senior Bank Debt or otherwise invest such Net Proceeds in any manner that is
not prohibited by the Indenture. Any Net Proceeds from such Asset Sale that are
not applied or invested as provided in the first sentence of this paragraph
will be deemed to constitute "Excess Proceeds." When the aggregate amount of
Excess Proceeds exceeds $5.0 million, the Company shall make an offer to all
holders of Notes and the holders of any future Indebtedness ranking pari passu
with the Notes, which Indebtedness contains similar provisions requiring the
Company to repurchase such Indebtedness (an "Asset Sale Offer"), to purchase
the maximum principal amount of Notes and such other Indebtedness that may be
purchased out of the Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest,
if any, to the date of purchase, in accordance with the procedures set forth in
the Indenture; provided, however, that prior to making any such Asset Sale
Offer, the Company may, to the extent required by the 1996 Indenture, use such
Excess Proceeds to repurchase the 1996 Notes. To the extent that the aggregate
amount of Notes and other pari passu Indebtedness tendered pursuant to an Asset
Sale Offer is less than the Excess Proceeds, the Company may use any remaining
Excess Proceeds for general corporate purposes. If the aggregate principal
amount of Notes surrendered by holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased on a pro rata
basis. Upon completion of such offer to purchase, the amount of Excess Proceeds
shall be reset at zero.
Selection and Notice
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which
the Notes are listed, or, if the Notes are not so listed, on a pro rata basis,
by lot or by such method as the Trustee shall deem fair and appropriate,
provided that no Notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each holder of Notes to be redeemed at its
registered address. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the holder thereof
upon cancellation of the original Note. On and after the redemption date,
interest and Liquidated Damages, if any, will cease to accrue on Notes or
portions thereof called for redemption.
Certain Covenants
Restricted Payments
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly: (a) declare or pay
any dividend or make any distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of
the Company or such Restricted Subsidiary or dividends or distributions payable
to the Company or any Restricted Subsidiary); (b) purchase, redeem or otherwise
acquire or retire for value any Equity Interests of the Company or any
Restricted Subsidiary or other Affiliate of the Company (other than any such
Equity Interests owned by the Company or any Restricted Subsidiary); (c)
purchase, redeem or otherwise acquire or retire prior to scheduled maturity for
value any Indebtedness that is subordinated in right of payment
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to the Notes or (d) make any Investment other than a Permitted Investment (all
such payments and other actions set forth in clauses (a) through (d) above
being collectively referred to as "Restricted Payments"), unless, at the time
of such Restricted Payment:
(i) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
(ii) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto, have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the test set forth in the first paragraph
of the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred
Stock;" and
(iii) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Restricted Subsidiaries after
the date of the 1996 Indenture is less than (x) the cumulative EBITDA of the
Company, minus 1.75 times the cumulative Consolidated Interest Expense of the
Company, in each case for the period (taken as one accounting period) from June
30, 1996, to the end of the Company's most recently ended fiscal quarter for
which internal financial statements are available at the time of such
Restricted Payment, plus (y) the aggregate net Equity Proceeds received by the
Company from the issuance or sale since the date of the 1996 Indenture of
Equity Interests of the Company or of debt securities of the Company that have
been converted into such Equity Interests (other than Equity Interests or
convertible debt securities sold to a Restricted Subsidiary of the Company and
other than Disqualified Stock or debt securities that have been converted into
Disqualified Stock), plus (z) $2.0 million.
The foregoing provisions will not prohibit (A) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the
Indenture; (B) the redemption, repurchase, retirement or other acquisition or
retirement for value of any Equity Interests of the Company in exchange for, or
with the net cash proceeds of, the substantially concurrent sale (other than to
a Restricted Subsidiary of the Company) of other Equity Interests of the
Company (other than any Disqualified Stock); (C) the defeasance, redemption,
repurchase, retirement or other acquisition or retirement for value of
Indebtedness that is subordinated or pari passu in right of payment to the
Notes in exchange for, or with the net cash proceeds of, a substantially
concurrent issuance and sale (other than to a Restricted Subsidiary of the
Company) of Equity Interests of the Company (other than Disqualified Stock);
(D) the defeasance, redemption, repurchase, retirement or other acquisition or
retirement for value of Indebtedness that is subordinated or pari passu in
right of payment to the Notes in exchange for, or with the net cash proceeds
of, a substantially concurrent issue and sale (other than to the Company or any
of its Restricted Subsidiaries) of Refinancing Indebtedness; (E) the repurchase
of any Indebtedness subordinated or pari passu in right of payment to the Notes
at a purchase price not greater than 101% of the principal amount of such
Indebtedness in the event of a Change of Control in accordance with provisions
similar to the "Change of Control" covenant, provided that prior to or
contemporaneously with such repurchase the Company has made the Change of
Control Offer as provided in such covenant with respect to the Notes and has
repurchased all Notes validly tendered for payment in connection with such
Change of Control Offer; and (F) additional payments to current or former
employees or directors of the Company for repurchases of stock, stock options
or other equity interests, provided that the aggregate amount of all such
payments under this clause (F) does not exceed $0.5 million in any year and
$2.0 million in the aggregate.
The Restricted Payments described in clauses (B), (C), (E) and (F) of the
immediately preceding paragraph will be Restricted Payments that will be
permitted to be taken in accordance with such paragraph but will reduce the
amount that would otherwise be available for Restricted Payments under clause
(iii) of the first paragraph of this section, and the Restricted Payments
described in clauses (A) and (D) of the immediately preceding paragraph will be
Restricted Payments that will be permitted to be taken in accordance with such
paragraph and will not reduce the amount that would otherwise be available for
Restricted Payments under clause (iii) of the first paragraph of this section.
If an Investment results in the making of a Restricted Payment, the
aggregate amount of all Restricted Payments deemed to have been made as
calculated under the foregoing provision will be reduced by the amount of any
net reduction in such Investment (resulting from the payment of interest or
dividends, loan repayment, transfer of assets or otherwise) to the extent such
net reduction is not included in the Company's EBITDA; provided, however, that
the total amount by which the aggregate amount of all Restricted Payments may
be reduced may not exceed the
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lesser of (a) the cash proceeds received by the Company and its Restricted
Subsidiaries in connection with such net reduction and (b) the initial amount
of such Investment.
If the aggregate amount of all Restricted Payments calculated under the
foregoing provision includes an Investment in an Unrestricted Subsidiary or
other Person that thereafter becomes a Restricted Subsidiary, such Investment
will no longer be counted as a Restricted Payment for purposes of calculating
the aggregate amount of Restricted Payments. For the purpose of making any
calculations under the Indenture, (a) an Investment will include the fair
market value of the net assets of any Restricted Subsidiary at the time that
such Restricted Subsidiary is designated an Unrestricted Subsidiary and will
exclude the fair market value of the net assets of any Unrestricted Subsidiary
that is designated as a Restricted Subsidiary, (b) any property transferred to
or from an Unrestricted Subsidiary will be valued at fair market value at the
time of such transfer, provided that, in each case, the fair market value of an
asset or property is as determined by the Board of Directors in good faith, and
(c) subject to the foregoing, the amount of any Restricted Payment, if other
than cash, will be determined by the Board of Directors, whose good faith
determination will be conclusive.
The Board of Directors may designate a Restricted Subsidiary to be an
Unrestricted Subsidiary in compliance with the covenant entitled "Unrestricted
Subsidiaries." Upon such designation, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash)
in the Subsidiary so designated will be deemed to be Restricted Payments made
at the time of such designation and will reduce the amount available for
Restricted Payments under the first paragraph of this covenant. Such
designation will only be permitted if such Restricted Payment would be
permitted at such time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur,
issue, assume, guaranty or otherwise become directly or indirectly liable with
respect to (collectively, "incur") any Indebtedness (including Acquired Debt)
and that the Company will not permit any of its Restricted Subsidiaries to
issue any shares of preferred stock; provided, however, that the Company may
incur Indebtedness and may permit a Restricted Subsidiary to incur Indebtedness
if at the time of such incurrence and after giving effect thereto the Leverage
Ratio would be less than 6.5 to 1.0.
The foregoing limitations do not apply to (a) the incurrence by the
Company or any Restricted Subsidiary of Senior Bank Debt in an aggregate amount
not to exceed $100.0 million at any one time outstanding, (b) the issuance by
the Restricted Subsidiaries of Subsidiary Guarantees, (c) the incurrence by the
Company and its Restricted Subsidiaries of the Existing Indebtedness, (d) the
issuance by the Company of the Notes, (e) the incurrence by the Company and its
Restricted Subsidiaries of Capital Lease Obligations and/or additional
Indebtedness constituting purchase money obligations up to an aggregate of $2.5
million at any one time outstanding, provided that the Liens securing such
Indebtedness constitute Permitted Liens, (f) the incurrence of Indebtedness
between (i) the Company and its Restricted Subsidiaries and (ii) the Restricted
Subsidiaries, (g) Hedging Obligations that are incurred for the purpose of
fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of the Indenture to be outstanding,
(h) the incurrence by the Company and its Restricted Subsidiaries of
Indebtedness arising out of letters of credit, performance bonds, surety bonds
and bankers' acceptances incurred in the ordinary course of business up to an
aggregate of $2.0 million at any one time outstanding, (i) the incurrence by
the Company and its Restricted Subsidiaries of Indebtedness consisting of
guarantees, indemnities or obligations in respect of purchase price adjustments
in connection with the acquisition or disposition of assets, including, without
limitation, shares of Capital Stock, and (j) the incurrence by the Company and
its Restricted Subsidiaries of Refinancing Indebtedness issued in exchange for,
or the proceeds of which are used to repay, redeem, defease, extend, refinance,
renew, replace or refund, Indebtedness referred to in clauses (b) through (e)
above, and this clause (j).
Liens
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries may directly or indirectly create, incur, assume or suffer to
exist any Lien (other than a Permitted Lien) upon any property or assets now
owned or hereafter acquired, or any income, profits or proceeds therefrom, or
assign or otherwise convey any right to receive income therefrom, unless (a) in
the case of any Lien securing any Indebtedness that is subordinate
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to the Notes, the Notes are secured by a Lien on such property, assets or
proceeds that is senior in priority to such Lien and (b) in the case of any
other Lien, the Notes are equally and ratably secured with the obligation or
liability secured by such Lien.
Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to (a) (i) pay dividends or make any
other distributions to the Company or any of its Restricted Subsidiaries (A) on
its Capital Stock or (B) with respect to any other interest or participation
in, or measured by, its profits, or (ii) pay any Indebtedness owed to the
Company or any of its Restricted Subsidiaries, (b) make loans or advances to
the Company or any of its Restricted Subsidiaries or (c) transfer any of its
properties or assets to the Company or any of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of (1)
Existing Indebtedness, (2) the Credit Agreement as in effect as of the date of
the Indenture, and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancing thereof,
provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings are no more
restrictive in the aggregate with respect to such dividend and other payment
restrictions than those contained in the Credit Agreement as in effect on the
date of the Indenture, (3) the Indenture and the Notes, (4) applicable law, (5)
any instrument governing Indebtedness or Capital Stock of a Person acquired by
the Company or any of its Restricted Subsidiaries as in effect at the time of
such acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired, provided that the EBITDA of such Person is not taken into account in
determining whether such acquisition was permitted by the terms of the
Indenture, (6) customary non-assignment provisions in leases entered into in
the ordinary course of business and consistent with past practices, (7)
restrictions on the transfer of property subject to purchase money obligations
or Capital Lease Obligations otherwise permitted by clause (e) of the covenant
entitled "Incurrence of Indebtedness and Issuance of Preferred Stock," or (8)
permitted Refinancing Indebtedness, provided that the restrictions contained in
the agreements governing such Refinancing Indebtedness are no more restrictive
in the aggregate than those contained in the agreements governing the
Indebtedness being refinanced.
Merger, Consolidation, or Sale of Assets
The Indenture provides that the Company may not consolidate or merge with
or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially
all of its properties or assets in one or more related transactions, to another
Person unless: (a) the Company is the surviving corporation or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (b) the Person formed by or surviving any such consolidation or
merger (if other than the Company) or the Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made assumes all the obligations of the Company under the Notes, the Indenture
(pursuant to a supplemental indenture in a form reasonably satisfactory to the
Trustee) and the Registration Rights Agreement; (c) immediately after such
transaction no Default or Event of Default exists; and (d) the Company or any
Person formed by or surviving any such consolidation or merger, or to which
such sale, assignment, transfer, lease, conveyance or other disposition shall
have been made, will, at the time of such transaction and after giving pro
forma effect thereto, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the test set forth in the first paragraph of the
covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock."
Transactions with Affiliates
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, sell, lease, transfer or otherwise dispose
of any of its properties or assets to, or purchase any property or assets from,
or enter into any contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an
"Affiliate Transaction"), unless (a) such Affiliate Transaction is on terms
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that are no less favorable to the Company or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable transaction by the
Company or such Restricted Subsidiary with a non-Affiliated Person and (b) the
Company delivers to the Trustee (i) with respect to any Affiliate Transaction
involving aggregate payments in excess of $1.0 million, a resolution of the
Board of Directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (a) above and such Affiliate
Transaction is approved by a majority of the disinterested members of the Board
of Directors and (ii) with respect to any Affiliate Transaction involving
aggregate payments in excess of $5.0 million, an opinion as to the fairness to
the Company or such Restricted Subsidiary from a financial point of view issued
by an investment banking firm of national standing; provided, however, that (A)
any employment agreement entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with the past
practice of the Company or such Restricted Subsidiary, (B) transactions between
or among the Company and/or its Restricted Subsidiaries, (C) transactions
permitted by the provisions of the Indenture described above under the covenant
entitled "Restricted Payments" and (D) the grant of stock, stock options or
other equity interests to employees and directors of the Company in accordance
with duly adopted Company stock grant, stock option and similar plans, in each
case, shall not be deemed Affiliate Transactions; and further provided that (1)
the provisions of clause (b) shall not apply to sales of inventory by the
Company or any Restricted Subsidiary to any Affiliate in the ordinary course of
business and (2) the provisions of clause (b) (ii) shall not apply to loans or
advances to the Company or any Restricted Subsidiary from, or equity
investments in the Company or any Restricted Subsidiary by, any Affiliate to
the extent permitted by the provisions of the Indenture described above under
the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred
Stock."
Certain Senior Subordinated Debt
The Indenture provides that (a) the Company will not incur any
Indebtedness that is subordinated or junior in right of payment to any Senior
Debt of the Company and senior in any respect in right of payment to the Notes,
and (b) the Company will not permit any Restricted Subsidiary to incur any
Indebtedness that is subordinated or junior in right of payment to its Senior
Debt and senior in any respect in right of payment to its Subsidiary Guarantee.
Additional Subsidiary Guarantees
The Indenture provides that if any entity (other than an Excluded
Restricted Subsidiary) becomes a Restricted Subsidiary after the date of the
Indenture, then such Restricted Subsidiary shall execute a Subsidiary Guarantee
and deliver an opinion of counsel with respect thereto, in accordance with the
terms of the Indenture.
The Indenture provides that no Restricted Subsidiary may consolidate with
or merge with or into (whether or not such Restricted Subsidiary is the
surviving Person), another Person (other than the Company) whether or not
affiliated with such Restricted Subsidiary unless (a) subject to the provisions
of the following paragraph, the Person formed by or surviving any such
consolidation or merger (if other than such Restricted Subsidiary) assumes all
the obligations of such Restricted Subsidiary under its Subsidiary Guaranty, if
any, pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee; (b) immediately after giving effect to such
transaction, no Default or Event of Default exists; and (c) such Restricted
Subsidiary, or any Person formed by or surviving any such consolidation or
merger, would be permitted to incur, immediately after giving effect to such
transaction, at least $1.00 of additional Indebtedness pursuant to the test set
forth in the first paragraph of the covenant entitled "Incurrence of
Indebtedness and Issuance of Preferred Stock."
The Indenture provides that in the event of (a) a sale or other
disposition of all of the assets of any Restricted Subsidiary, by way of
merger, consolidation or otherwise, (b) a sale or other disposition of all of
the capital stock of any Restricted Subsidiary, or (c) the designation of a
Restricted Subsidiary as an Unrestricted Subsidiary in accordance with the
terms of the covenant entitled "Unrestricted Subsidiaries," then such
Subsidiary (in the event of a sale or other disposition, by way of such a
merger, consolidation or otherwise, of all of the capital stock of such
Restricted Subsidiary or in the event of the designation of such Restricted
Subsidiary as an Unrestricted Subsidiary) or the corporation acquiring the
property (in the event of a sale or other disposition of all of the assets of
such Restricted Subsidiary) will be released and relieved of any obligations
under its Subsidiary Guarantee, provided that the Net Proceeds of such sale or
other disposition are applied in accordance with the applicable provisions of
the Indenture. See "Repurchase at the Option of Holders--Asset Sales."
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Unrestricted Subsidiaries
The Board of Directors may designate any Subsidiary (including any
Restricted Subsidiary or any newly acquired or newly formed Subsidiary) to be
an Unrestricted Subsidiary so long as: (i) neither the Company nor any
Restricted Subsidiary is directly or indirectly liable for any Indebtedness of
such Subsidiary; (ii) no default with respect to any Indebtedness of such
Subsidiary would permit (upon notice, lapse of time or otherwise) any holder of
any other Indebtedness of the Company or any Restricted Subsidiary to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; (iii) any Investment in
such Subsidiary deemed to be made as a result of designating such Subsidiary an
Unrestricted Subsidiary will not violate the provisions of the covenant
entitled "Restricted Payments;" (iv) neither the Company nor any Restricted
Subsidiary has a contract, agreement, arrangement, understanding or obligation
of any kind, whether written or oral, with such Subsidiary other than (A) those
that might be obtained at the time from Persons who are not Affiliates of the
Company or (B) administrative, tax sharing and other ordinary course contracts,
agreements, arrangements and understandings or obligations entered into in the
ordinary course of business; and (v) neither the Company nor any Restricted
Subsidiary has any obligation to subscribe for additional shares of Capital
Stock or other Equity Interests in such Subsidiary, or to maintain or preserve
such Subsidiary's financial condition or to cause such Subsidiary to achieve
certain levels of operating results other than as permitted under the covenant
entitled "Restricted Payments." Notwithstanding the foregoing, the Company may
not designate as an Unrestricted Subsidiary any Subsidiary which, on the date
of the Indenture, is a Significant Subsidiary, and may not sell, transfer or
otherwise dispose of any properties or assets of any such Significant
Subsidiary to an Unrestricted Subsidiary, other than in the ordinary course of
business.
The Board of Directors may designate any Unrestricted Subsidiary as a
Restricted Subsidiary; provided that such designation will be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation will only be
permitted if (i) such Indebtedness is permitted under the "Incurrence of
Indebtedness and Issuance of Preferred Stock" covenant and (ii) no Default or
Event of Default would occur as a result of such designation.
Limitation on Sale and Leaseback Transactions
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any Sale and Leaseback Transaction unless (a) the consideration
received in such Sale and Leaseback Transaction is at least equal to the fair
market value of the property sold, as determined by a resolution of the Board
of Directors of the Company, and (b) the Company or such Restricted Subsidiary
could incur the Attributable Indebtedness in respect of such Sale and Leaseback
Transaction in compliance with the covenant entitled "Incurrence of
Indebtedness and Issuance of Preferred Stock."
Reports
Whether or not required by the rules and regulations of the Commission, so
long as any Notes are outstanding, the Company will furnish to the holders of
Notes (a) all quarterly and annual financial information that would be required
to be contained in a filing with the Commission on Forms 10-Q and 10-K if the
Company were required to file such Forms, including a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and, with
respect to the annual information only, a report thereon by the Company's
certified independent accountants and (b) all financial information that would
be required to be included in a Form 8-K filed with the Commission if the
Company were required to file such reports. In addition, whether or not
required by the rules and regulations of the Commission, the Company will file
a copy of all such information and reports with the Commission for public
availability (unless the Commission will not accept such a filing) and make
such information available to investors who request it in writing.
Events of Default and Remedies
The Indenture provides that each of the following constitutes an "Event of
Default": (a) default for 30 days in the payment when due of interest on the
Notes or Liquidated Damages, if any, on the Old Notes prior to the Exchange
Offer (whether or not prohibited by the subordination provisions of the
Indenture); (b) default in payment when due of the principal of or premium, if
any, on the Notes (whether or not prohibited by the subordination provisions of
the Indenture); (c) failure by the Company to comply with the provisions
described under "Change
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of Control;" (d) failure by the Company or any Guarantor for 60 days after
written notice from the Trustee or holders of not less than 25% of the
aggregate principal amount of the Notes outstanding to comply with any of its
other agreements in the Indenture, Notes or the Subsidiary Guarantees; (e)
default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for money
borrowed by the Company or any of its Restricted Subsidiaries (or the payment
of which is guaranteed by the Company or any of its Restricted Subsidiaries)
whether such Indebtedness or guarantee exists on the date of the Indenture or
is created thereafter, if (i) such default results in the acceleration of such
Indebtedness prior to its express maturity or shall constitute a default in the
payment of such Indebtedness at final maturity of such Indebtedness, and (ii)
the principal amount of any such Indebtedness that has been accelerated or not
paid at maturity, when added to the aggregate principal amount of all other
such Indebtedness that has been accelerated or not paid at maturity, exceeds
$5.0 million; (f) failure by the Company or any of its Restricted Subsidiaries
to pay final judgments aggregating in excess of $5.0 million, which judgments
remain unpaid, undischarged or unstayed for a period of 60 days; (g) certain
events of bankruptcy or insolvency with respect to the Company or any of its
Restricted Subsidiaries that are Significant Subsidiaries; and (h) except as
permitted by the Indenture or the Subsidiary Guarantees, any Subsidiary
Guarantee issued by a Restricted Subsidiary shall be held in any judicial
proceeding to be unenforceable or invalid or shall cease for any reason to be
in full force and effect, or any Restricted Subsidiary or any Person acting on
behalf of any Restricted Subsidiary shall deny or disaffirm in writing its
obligations under its Subsidiary Guarantee.
If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately; provided, however,
that if any Obligation with respect to Senior Bank Debt is outstanding pursuant
to the Credit Agreement upon a declaration of acceleration of the Notes, the
principal, premium, if any, and interest on the Notes will not be payable until
the earlier of (i) the day which is five business days after written notice of
acceleration is received by the Company and the Credit Agent, or (ii) the date
of acceleration of the Indebtedness under the Credit Agreement. Notwithstanding
the foregoing, in the case of an Event of Default arising from certain events
of bankruptcy or insolvency with respect to the Company or any Restricted
Subsidiary that is a Significant Subsidiary, the principal of, and premium, if
any, and any accrued and unpaid interest on all outstanding Notes will become
due and payable without further action or notice. Holders of the Notes may not
enforce the Indenture or the Notes except as provided in the Indenture. In the
event of a declaration of acceleration of the Notes because an Event of Default
has occurred and is continuing as a result of the acceleration of any
Indebtedness described in clause (e) of the preceding paragraph, the
declaration of acceleration of the Notes shall be automatically annulled if the
holders of any Indebtedness described in clause (e) have rescinded the
declaration of acceleration in respect of such Indebtedness within 30 days from
the date of such declaration and if (i) the annulment of the acceleration of
the Notes would not conflict with any judgment or decree of a competent
jurisdiction, and (ii) all existing Events of Default, except non-payment of
principal or interest on the Notes that became due solely because of the
acceleration of the Notes, have been cured or waived.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the Make Whole Price or premium, as
applicable, that the Company would have had to pay if the Company then had
elected to redeem the Notes pursuant to the optional redemption provisions of
the Indenture, the applicable Make Whole Price, or an equivalent premium, as
the case may be, shall become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Notes.
The holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest (and Liquidated Damages, if any, on the Old Notes prior to the
Exchange Offer) on, or the principal of, the Notes. Subject to certain
limitations, holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from holders of the Notes notice of any continuing Default or
Event of Default (except a Default or Event of Default relating to the payment
of principal or interest) if it determines that withholding notice is in their
interest.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
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No Personal Liability of Directors, Officers, Employees and Stockholders
No director, officer, employee, incorporator or stockholder of the Company
or any Restricted Subsidiary, as such, shall have any liability for any
obligations of the Company or any Restricted Subsidiary under the Notes, the
Subsidiary Guarantees, the Indenture or the Registration Rights Agreement or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each holder of Notes by accepting a Note and the Subsidiary
Guarantees waives and releases all such liability. The waiver and release are
part of the consideration for issuance of the Notes and the Subsidiary
Guarantees. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Commission that such a waiver
is against public policy.
Legal Defeasance and Covenant Defeasance
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance") except for (a) the rights of holders of outstanding Notes to
receive payments in respect of the principal of, premium, if any, and interest
on such Notes when such payments are due, (b) the Company's obligations with
respect to the Notes concerning issuing temporary Notes, registration of Notes,
mutilated, destroyed, lost or stolen Notes and the maintenance of an office or
agency for payment and money for security payments held in trust, (c) the
rights, powers, trusts, duties and immunities of the Trustee, and the Company's
obligations in connection therewith and (d) the Legal Defeasance provisions of
the Indenture. In addition, the Company may, at its option and at any time,
elect to have the obligations of the Company released with respect to certain
covenants that are described in the Indenture ("Covenant Defeasance"), and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership and insolvency events) described under "Events of Default" will no
longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (a)
the Company must irrevocably deposit with the Trustee, in trust, for the
benefit of the holders of the Notes, cash in Dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest on the outstanding Notes
on the stated maturity or on the applicable redemption date, as the case may
be, of such principal or installment of principal of, premium, if any, or
interest on the outstanding Notes; (b) in the case of Legal Defeasance, the
Company shall have delivered to the Trustee an opinion of counsel in the United
States reasonably acceptable to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue Service
(the "IRS") a ruling or (ii) since the date of the Indenture, there has been a
change in the applicable federal income tax law, in either case to the effect
that, and based thereon such opinion of counsel shall confirm that, the holders
of the outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Legal Defeasance had not occurred;
(c) in the case of Covenant Defeasance, the Company shall have delivered to the
Trustee an opinion of counsel in the United States reasonably acceptable to the
Trustee confirming that the holders of the outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Covenant Defeasance had not occurred; (d) no Default or Event of
Default shall have occurred and be continuing on the date of such deposit or
insofar as Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the date of
deposit; (e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement
or instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound; (f) the Company shall
have delivered to the Trustee an opinion of counsel to the effect that after
the 91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally; (g) the Company shall have delivered to
the Trustee an Officers' Certificate stating that the deposit was not made by
the Company with the intent of preferring the holders of Notes over the other
creditors of the Company with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others; and (h) the Company shall have
delivered to the Trustee an Officers' Certificate and an opinion of counsel,
each stating that all conditions precedent provided for relating to the Legal
Defeasance or the Covenant Defeasance have been complied with.
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Transfer and Exchange
A holder may transfer or exchange Notes in accordance with the Indenture.
The registrar and the Trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note
selected for redemption. Also, the Company is not required to transfer or
exchange any Note for a period of 15 days before the mailing of a notice of
redemption of Notes to be redeemed.
The registered holder of a Note will be treated as the owner of it for all
purposes.
Book-Entry, Delivery and Form
The Old Notes, whether sold in the United States in reliance on Rule 144A
or in offshore transactions in reliance on Regulation S under the Securities
Act, are represented by a single, permanent Global Note (which has been
subdivided) in definitive, fully-registered form without interest coupons in
minimum denominations of $1,000 and integral multiples in excess thereof (the
"Restricted Global Note"). The Restricted Global Note was deposited with the
Trustee as custodian for DTC and registered in the name of a nominee of DTC for
credit to the respective accounts of the purchasers at DTC, Morgan Guaranty
Trust Company of New York, Brussels Office, as operators of Euroclear or Cedel
Bank.
The Restricted Global Note, to the extent directed by the holders thereof
in their Letters of Transmittal, will be exchanged through book-entry
electronic transfer for a new Global Note in definitive fully-registered form
without interest coupons registered in the name of a nominee of DTC and held by
the Trustee as custodian. Except in the limited circumstances described below,
owners of beneficial interests in the Global Note will not be entitled to
receive physical delivery of Notes.
Any Old Notes that, subsequent to the consummation of the offering of Old
Notes, were or, prior to the consummation of the Exchange Offer, will be (i)
transferred to institutional "accredited investors" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) who are
not "qualified institutional buyers" ("QIBs") (as defined in Rule 144A)
("IAIs"); (ii) issued in the limited circumstances described below; or (iii)
issued as provided in the Indenture in reliance upon Rule 144 under the
Securities Act, have been or will be issued in definitive, fully registered
form without interest coupons in minimum denominations of $1,000 and integral
multiples in excess thereof (the "Definitive Notes"). Upon the purchase of a
Note, each IAI has been or will be required to execute and deliver to the
Company and the Trustee a letter containing certain representations and
agreements relating to the transfer of the Notes (the form of which letter can
be obtained from the Trustee) and an opinion of counsel, if the Company or the
Trustee so requests. If Definitive Notes initially issued to an IAI are
transferred to a QIB in reliance on Rule 144A or to non-U.S. persons in
compliance with Regulation S, such Definitive Notes will, unless the Restricted
Global Note has previously been exchanged in whole for Definitive Notes, be
exchanged for an interest in the Restricted Global Note. The Definitive Notes,
to the extent directed by the holder thereof, will be exchanged for New Notes
in definitive fully registered form without interest coupons.
The Notes are not issuable in bearer form. The Global Note may be
transferred, in whole or in part, only to another nominee of DTC.
The Global Note
Upon the issuance of the Global Note, DTC or its custodian will credit, on
its internal system, the respective principal amount of the individual
beneficial interests represented by the Global Note to the accounts of persons
who have accounts with DTC. Ownership of beneficial interests in the Global
Note will be limited to persons who have accounts with DTC ("participants") or
persons who hold interests through participants. Ownership of beneficial
interests in the Global Note will be shown on, and the transfer of that
ownership will be effected only through, records maintained by DTC or its
nominee (with respect to interests of participants) and the records of
participants (with respect to interests of persons other than participants).
So long as DTC, or its nominee, is the registered owner or holder of the
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Notes represented by the Global Note for all
purposes under the Indenture and the Notes. Owners of beneficial interests in
the Global Note will not be considered to be the owners or holders of any Notes
under the Indenture. In addition, no beneficial owner of an
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interest in the Global Note will be able to transfer that interest except in
accordance with DTC's applicable procedures (in addition to those under the
Indenture referred to herein and, if applicable, those of Euroclear and Cedel
Bank).
Investors may hold their interests in the Global Note directly through DTC
if they are participants in DTC, or indirectly through organizations which are
participants in DTC, including Cedel Bank and Euroclear. Cedel Bank and
Euroclear will hold interests in the Global Note on behalf of their
participants through their respective depositaries, which in turn will hold
such interests in the Global Note in customers' securities accounts in the
depositaries' names on the books of DTC. Citibank, New York will initially act
as depositary for Cedel Bank and The Chase Manhattan Bank, New York will
initially act as depositary for Euroclear.
Payments of the principal, interest, premium (and Liquidated Damages, if
any, on the Global Note for the Old Notes) on the Global Note will be made to
DTC or its nominee, as the registered owner thereof. Neither the Company, the
Trustee nor any Paying Agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Note or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
The Company expects that DTC or its nominee, upon receipt of any payment
of principal, interest, premium (or Liquidated Damages, if any, on the Global
Note for the Old Notes) in respect of the Global Note, will immediately credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Note as
shown on the records of DTC or its nominee. The Company also expects that
payments by participants to owners of beneficial interests in the Global Note
held through such participants, including Cedel Bank and Euroclear, will be
governed by standing instructions and customary practices and, in the case of
Cedel Bank and Euroclear, in accordance with the relevant system's rules and
procedures. Such payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds. The laws of
some states require that certain persons take physical delivery of securities
in definitive form. Consequently, the ability to transfer beneficial interests
in Global Note to such persons may be limited. Because DTC can only act on
behalf of participants, who in turn act on behalf of indirect participants and
certain banks, the ability of a person having a beneficial interest in the
Global Note to pledge such interest to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
interest, may be affected by the lack of a physical certificate evidencing such
interest. Transfers between participants in Euroclear and Cedel Bank will be
effected in the ordinary way in accordance with their respective rules and
operating procedures.
Cross-market transfers between DTC participants, on the one hand, and
directly or indirectly through Euroclear or Cedel Bank participants, on the
other, will be effected in DTC in accordance with DTC rules on behalf of
Euroclear or Cedel Bank, as the case may be, by its respective depositary;
however, such cross-market transactions will require delivery of instructions
to Euroclear or Cedel Bank, as the case may be, by the counterparty in such
system in accordance with its rules and procedures and within its established
deadlines (Brussels time). Euroclear or Cedel Bank, as the case may be, will,
if the transaction meets its settlement requirements, deliver instructions to
its respective depositary to take action to effect final settlement on its
behalf by delivering or receiving interests in the Global Note in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Cedel Bank participants and Euroclear
participants may not deliver instructions directly to the depositaries for
Cedel Bank or Euroclear.
Because of time zone differences, the securities account of a Euroclear or
Cedel Bank participant purchasing an interest in the Global Note from a DTC
participant will be credited during the securities settlement processing day
(which must be a business day for Euroclear and Cedel Bank) immediately
following the DTC settlement date, and such credit will be reported to the
relevant Euroclear or Cedel Bank participant on such processing day. Cash
received in Euroclear or Cedel Bank as a result of sales of interests in the
Global Note by or through a Euroclear or Cedel Bank participant to a DTC
participant will be received with value on the DTC settlement date but will be
available in the relevant Euroclear or Cedel Bank cash accounts only as of the
business day following settlement in DTC.
The Company expects that DTC will take any action permitted to be taken by
a holder of Notes (including the presentation of Old Notes in exchange for New
Notes as described below) only at the direction of one or more participants to
whose account with DTC interests in the Restricted Global Note or the Global
Note, as the case
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may be, are credited and only in respect of such portion of the aggregate
principal amount of the Notes as to which such participant or participants has
or have given such direction. However, if an Event of Default has occurred and
is continuing or in the limited circumstances described below, DTC will
surrender the Global Note and certificated notes in definitive form will be
distributed to its participants. The giving of notices and other communications
by DTC to participants in DTC, by participants in DTC to persons who hold
accounts with them and by such persons to holders of beneficial interests in
the Global Note will be governed by arrangements between them, subject to any
statutory or regulatory requirements as may exist from time to time.
The Company understands that DTC is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities for its participants and
facilitates the clearance and settlement of securities transactions, such as
transfers and pledges, in deposited securities through electronic computerized
book-entry changes in participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Participants include securities
brokers and dealers, banks, trust companies, clearing corporations, and certain
other organizations. DTC is owned by a number of its participants and by the
New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. The rules applicable to DTC and its
participants are on file with the Commission.
Although DTC, Cedel Bank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of interests in the Global Note
among participants of DTC, Cedel Bank and Euroclear, they are under no
obligation to perform or continue to perform such procedures, and such
procedures may be changed or discontinued at any time. Neither the Company nor
the Trustee will have any responsibility for the performance by DTC, Cedel Bank
or Euroclear or their respective participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
The Global Note is exchangeable for definitive Notes (i) if the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
of the Global Note and the Company thereupon fails to appoint a successor
Depositary; (ii) if the Company, at its option, notifies the Trustee in writing
that it elects to cause the issuance of the Notes in definitive registered
form; or (iii) if there shall have occurred and be continuing an Event of
Default or any event which after notice or lapse of time or both would be an
Event of Default with respect to the Notes. Such definitive Notes shall be
registered in the names of the owners of the beneficial interests in the Global
Note as provided by the participants. Upon issuance of the Notes in definitive
form, the Trustee is required to register the Notes in the name of, and cause
the Notes to be delivered to, the person or persons (or the nominee thereof)
identified as the beneficial owners, as the Depositary shall direct.
Settlement
Payments in respect of the Notes represented by the Global Note (including
principal, interest, premium (and Liquidated Damages, if any, on the Old Notes
prior to the Exchange Offer)) will be made by wire transfer in immediately
available funds to the accounts specified by the registered owner of the Global
Note. With respect to any certificated Notes, the Company will make all
payments of principal, interest, premium (and Liquidated Damages, if any, on
the Old Notes prior to the Exchange Offer), by wire transfer in immediately
available funds to the accounts specified by the holders thereof or, if no such
account is specified, by mailing a check to such holder's registered address.
Secondary trading in long-term notes of corporate issuers is generally settled
in clearing-house or next-day funds. In contrast, the beneficial interests in
the Global Note trade in DTC's Same-Day Funds Settlement System, in which
secondary market trading activity in those beneficial interests is required by
DTC to settle in immediately available funds. There is no assurance as to the
effect, if any, that settlement in immediately available funds would have on
trading activity in such beneficial interests.
Amendment, Supplement and Waiver
Except as provided in the next two succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the holders of at
least a majority in principal amount of the Notes then outstanding (including
consents obtained in connection with a tender offer or exchange offer for
Notes), and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the holders
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of a majority in principal amount of the then outstanding Notes (including
consents obtained in connection with a tender offer or exchange offer for
Notes).
Without the consent of each holder affected, an amendment or waiver may
not (with respect to any Notes held by a non-consenting holder of Notes): (a)
reduce the principal amount of Notes whose holders must consent to an
amendment, supplement or waiver; (b) reduce the principal of or change the
fixed maturity of any Note or alter the provisions with respect to the
redemption of the Notes in a manner adverse to the holders of the Notes; (c)
reduce the rate of or change the time for payment of interest on any Note; (d)
waive a Default or Event of Default in the payment of principal of or premium,
if any, or interest on the Notes (except a rescission of acceleration of the
Notes by the holders of at least a majority in aggregate principal amount of
the then outstanding Notes and a waiver of the payment default that resulted
from such acceleration); (e) make any Note payable in money other than that
stated in the Notes; (f) make any change in the provisions of the Indenture
relating to waivers of past Defaults or the rights of holders of Notes to
receive payments of principal of or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note (other than a payment
required by one of the covenants described above under the caption "Repurchase
at the Option of Holders"); (h) except pursuant to the Indenture, release any
Restricted Subsidiary from its obligations under its Subsidiary Guarantee, or
change any Subsidiary Guarantee in any manner that would materially adversely
affect the holders; or (i) make any change in the foregoing amendment and
waiver provisions.
Notwithstanding the foregoing, without the consent of any holder of Notes,
the Company and the Trustee may amend or supplement the Indenture or the Notes
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Company's obligations to holders of the Notes in the case of
a merger or consolidation, to make any change that would provide any additional
rights or benefits to the holders of the Notes or that does not adversely
affect the legal rights under the Indenture of any such holder, or to comply
with requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
Concerning the Trustee
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in
other transactions. However, if it acquires any conflicting interest it must
eliminate such conflict within 90 days, resign or apply to the Commission for
permission to continue.
The holders of a majority in principal amount of the then outstanding
Notes will have the right to direct the time, method and place of conducting
any proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any holder of Notes, unless such holder shall have offered to
the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
Additional Information
Anyone who receives this Prospectus may obtain a copy of the Indenture
without charge by writing to Iron Mountain Incorporated, 745 Atlantic Avenue,
Boston, MA 02111, Attention: Executive Vice President/Chief Financial Officer.
Certain Definitions
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person, (a)
Indebtedness of any other Person, existing at the time such other Person merged
with or into or became a Subsidiary of such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person
and (b) Indebtedness encumbering any asset acquired by such specified Person.
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"Acquisition EBITDA" means, as of any date of determination, with respect
to an Acquisition EBITDA Entity, the sum of (a) EBITDA of such Acquisition
EBITDA Entity for its last fiscal quarter for which financial statements are
available at such date of determination (adjusted to give pro forma effect to
any acquisition or disposition of a business or Person by such Acquisition
EDITDA Entity consummated during the period covered by, or after the date of,
such quarterly financial statements), multiplied by four (or if such quarterly
statements are not available, EBITDA for the most recent fiscal year for which
financial statements are available), plus (b) projected quantifiable
improvements in operating results (on an annualized basis) due to cost
reductions calculated in good faith by the Company or one of its Restricted
Subsidiaries, as certified by an Officers' Certificate filed with the Trustee,
without giving effect to any operating losses of the acquired Person.
"Acquisition EBITDA Entity" means, as of any date of determination, a
business or Person (a) which has been acquired by the Company or one of its
Restricted Subsidiaries and with respect to which financial results on a
consolidated basis with the Company have not been made available for an entire
fiscal quarter or (b) which is to be acquired in whole or in part with
Indebtedness, the incurrence of which will require the calculation on such date
of the Acquisition EBITDA of such Acquisition EBITDA Entity for purposes of the
covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock."
"Adjusted EBITDA" means, as of any date of determination and without
duplication, the sum of (a) EBITDA of the Company and its Restricted
Subsidiaries for the most recent fiscal quarter for which internal financial
statements are available at such date of determination, multiplied by four, and
(b) Acquisition EBITDA of each business or Person that is an Acquisition EBITDA
Entity as of such date of determination, multiplied by a fraction, (i) the
numerator of which is three minus the number of months (and/or any portion
thereof) in such most recent fiscal quarter for which the financial results of
such Acquisition EBITDA Entity are included in the EBITDA of the Company and
its Restricted Subsidiaries under clause (a) above, and (ii) the denominator of
which is three. The effects of unusual or non-recurring items in respect of the
Company, a Restricted Subsidiary or an Acquisition EBITDA Entity occurring in
any period shall be excluded in the calculation of Adjusted EBITDA.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control.
"Attributable Indebtedness" in respect of a Sale and Leaseback Transaction
means, as of the time of determination, the greater of (a) the fair market
value of the property subject to such arrangement (as determined by the Board
of Directors of the Company) and (b) the present value (discounted at the rate
of interest implicit in such transaction) of the total obligations of the
lessee for rental payments during the remaining terms of the lease included in
such Sale and Leaseback Transaction (including any period for which such lease
has been extended).
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be so required to be capitalized on the balance sheet in
accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock, including,
without limitation, with respect to partnerships, partnership interests
(whether general or limited) and any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, such partnership.
"Cash Equivalents" means (a) securities with maturities of one year or
less from the date of acquisition, issued, fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit,
time deposits, overnight bank deposits, bankers acceptances and repurchase
agreements issued by a Qualified Issuer having maturities of 270 days or less
from the date of acquisition, (c) commercial paper of an issuer rated at least
A-2 by Standard & Poor's Rating Group, a division of McGraw Hill, Inc., or P-2
by Moody's Investors Service, or carrying an equivalent rating by a nationally
recognized rating agency if both of the two named rating agencies cease
publishing ratings of investments and having maturities of 270 days or less
from the date of acquisition, (d) money market accounts or funds with or issued
by Qualified Issuers and (e) Investments in money market funds
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substantially all of the assets of which are comprised of securities and other
obligations of the types described in clauses (a) through (c) above.
"Consolidated Adjusted Net Income" means, for any period, the net income
(or net loss) of the Company and its Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP, adjusted to the
extent included in calculating such net income or loss by excluding (a) any net
after-tax extraordinary gains or losses (less all fees and expenses relating
thereto), (b) any net after-tax gains or losses (less all fees and expenses
relating thereto) attributable to Asset Sales, (c) the portion of net income
(or loss) of any Person (other than the Company or a Restricted Subsidiary),
including Unrestricted Subsidiaries, in which the Company or any Restricted
Subsidiary has an ownership interest, except to the extent of the amount of
dividends or other distributions actually paid to the Company or any Restricted
Subsidiary in cash dividends or distributions by such Person during such
period, and (d) the net income (or loss) of any Person combined with the
Company or any Restricted Subsidiary on a "pooling of interests" basis
attributable to any period prior to the date of combination.
"Consolidated Income Tax Expense" means, for any period, the provision for
federal, state, local and foreign income taxes of the Company and its
Restricted Subsidiaries for such period as determined on a consolidated basis
in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, without
duplication, the sum of (a) the amount which, in conformity with GAAP, would be
set forth opposite the caption "interest expense" (or any like caption) on a
consolidated statement of operations of the Company and its Restricted
Subsidiaries for such period, including, without limitation, (i) amortization
of debt discount, (ii) the net cost of interest rate contracts (including
amortization of discounts), (iii) the interest portion of any deferred payment
obligation, (iv) amortization of debt issuance costs, and (v) the interest
component of Capital Lease Obligations of the Company and its Restricted
Subsidiaries, plus (b) all interest on any Indebtedness of any other Person
guaranteed and paid by the Company or any of its Restricted Subsidiaries;
provided, however, that Consolidated Interest Expense will not include any gain
or loss from extinguishment of debt, including write-off of debt issuance
costs.
"Consolidated Non-Cash Charges" means, for any period, the aggregate
depreciation, amortization and other non-cash expenses of the Company and its
Restricted Subsidiaries reducing Consolidated Adjusted Net Income for such
period, determined on a consolidated basis in accordance with GAAP (excluding
any such non-cash charge that requires an accrual of or reserve for cash
charges for any future period).
"Credit Agent" means The Chase Manhattan Bank, in its capacity as
administrative agent for the lenders party to the Credit Agreement, or any
successor or successors party thereto.
"Credit Agreement" means that certain Second Amended and Restated Credit
Agreement, dated as of September 26, 1997, as amended, among the Company, the
lenders party thereto and the Credit Agent, as amended, restated, supplemented,
modified, renewed, refunded, increased, extended, replaced or refinanced from
time to time.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Designated Senior Debt" means (a) Senior Bank Debt and (b) other Senior
Debt the principal amount of which is $50.0 million or more at the date of
designation by the Company in a written instrument delivered to the Trustee;
provided that Senior Debt designated as Designated Senior Debt pursuant to
clause (b) shall cease to be Designated Senior Debt at any time that the
aggregate principal amount thereof outstanding is $10.0 million or less.
"Disqualified Stock" means any Capital Stock which, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, for cash or other property (other than Capital Stock that is not
Disqualified Stock) pursuant to a sinking fund obligation or otherwise, or is
redeemable at the option of the holder thereof, in whole or in part, in each
case on or prior to the stated maturity of the Notes.
"Dollars" and "$" mean lawful money of the United States of America.
"EBITDA" means for any period Consolidated Adjusted Net Income for such
period increased by (a) Consolidated Interest Expense for such period, plus (b)
Consolidated Income Tax Expense for such period, plus (c) Consolidated Non-Cash
Charges for such period.
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"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Proceeds" means (a) with respect to Equity Interests (or debt
securities converted into Equity Interests) issued or sold for cash Dollars,
the aggregate amount of such cash Dollars and (b) with respect to Equity
Interests (or debt securities converted into Equity Interests) issued or sold
for any consideration other than cash Dollars, the aggregate Market Price
thereof computed on the date of the issuance or sale thereof.
"Excluded Restricted Subsidiary" means any Wholly Owned Restricted
Subsidiary principally engaged in the records management business (including,
without limitation, the Company's outsourcing and staffing businesses)
domiciled outside the United States of America if the issuance of a Subsidiary
Guarantee by such Subsidiary would, as determined in a resolution of the Board
of Directors set forth in an Officers' Certificate delivered to the Trustee,
create a tax disadvantage that is material in relation to the aggregate amount
of the Company's and any Restricted Subsidiary's Investment or proposed
Investment therein.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than under the Credit Agreement) in existence on the date
of the Indenture, until such amounts are repaid.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States of America is
pledged.
"Guarantee" means, as applied to any obligation, (a) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (b) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
obligation to reimburse amounts drawn down under letters of credit securing
such obligations.
"Hedging Obligations" means, with respect to any Person, the obligations
of such Person under (a) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (b) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Indebtedness" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person, and
whether or not contingent, (a) every obligation of such Person for money
borrowed, (b) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) every reimbursement obligation of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (d) every obligation of such
Person issued or assumed as the deferred purchase price of property or
services, (e) every Capital Lease Obligation and every obligation of such
Person in respect of Sale and Leaseback Transactions that would be required to
be capitalized on the balance sheet in accordance with GAAP, (f) all
Disqualified Stock of such Person valued at the greater of its voluntary or
involuntary maximum fixed repurchase price, plus accrued and unpaid dividends
(unless included in such maximum repurchase price), (g) all obligations of such
Person under or with respect to Hedging Obligations which would be required to
be reflected on the balance sheet as a liability of such Person in accordance
with GAAP and (h) every obligation of the type referred to in clauses (a)
through (g) of another Person and dividends of another Person the payment of
which, in either case, such Person has guaranteed. For purposes of this
definition, the "maximum fixed repurchase price" of any Disqualified Stock that
does not have a fixed repurchase price will be calculated in accordance with
the terms of such Disqualified Stock as if such Disqualified Stock were
repurchased on any date on which Indebtedness is required to be determined
pursuant to the Indenture, and if such price is based upon, or measured by, the
fair market value of such Disqualified Stock, such fair market value will be
determined in good faith by the board of directors of the issuer of such
Disqualified Stock. Notwithstanding the foregoing, trade accounts payable and
accrued liabilities arising in the ordinary course of business and any
liability for federal, state or local taxes or other taxes owed by such Person
shall not be considered Indebtedness for purposes of this definition. The
amount outstanding at any time of any Indebtedness issued with original issue
discount is the aggregate principal amount at maturity of such Indebtedness,
less the remaining unamortized portion of the original issue discount of such
Indebtedness at such time, as determined in accordance with GAAP.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of loans (including
Guarantees), advances or capital contributions (excluding commission,
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travel and similar advances to officers and employees made in the ordinary
course of business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities and all other items that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP.
"Leverage Ratio" means, at any date, the ratio of (a) the aggregate
principal amount of Indebtedness of the Company and its Restricted Subsidiaries
outstanding as of the most recent available quarterly or annual balance sheet
to (b) Adjusted EBITDA, after giving pro forma effect, without duplication, to
(i) the incurrence, repayment or retirement of any Indebtedness by the Company
or its Restricted Subsidiaries since the last day of the most recent full
fiscal quarter of the Company, (ii) if the Leverage Ratio is being determined
in connection with the incurrence of Indebtedness by the Company or a
Restricted Subsidiary, such Indebtedness, and (iii) the Indebtedness to be
incurred in connection with the acquisition of any Acquisition EBITDA Entity.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code, or equivalent statutes, of any
jurisdiction).
"Make-Whole Amount" means, with respect to any Note, an amount equal to
the excess, if any, of (a) the present value of the remaining principal,
premium and interest payments that would be payable with respect to such Note
if such Note were redeemed on September 30, 2002, computed using a discount
rate equal to the Treasury Rate plus 75 basis points, over (b) the outstanding
principal amount of such Note.
"Make-Whole Average Life" means, with respect to any date of redemption of
Notes, the number of years (calculated to the nearest one-twelfth) from such
redemption date to September 30, 2002.
"Make-Whole Price" means, with respect to any Note, the greater of (a) the
sum of the principal amount of and Make-Whole Amount with respect to such
Notes, and (b) the redemption price of such Notes on September 30, 2002.
"Market Price" means, (a) with respect to the calculation of Equity
Proceeds from the issuance or sale of debt securities which have been converted
into Equity Interests, the value received upon the original issuance or sale of
such converted debt securities, as determined reasonably and in good faith by
the Board of Directors, and (b) with respect to the calculation of Equity
Proceeds from the issuance or sale of Equity Interests, the average of the
daily closing prices for such Equity Interests for the 20 consecutive trading
days preceding the date of such computation. The closing price for each day
shall be (a) if such Equity Interests are then listed or admitted to trading on
the New York Stock Exchange, the closing price on the NYSE Consolidated Tape
(or any successor consolidated tape reporting transactions on the New York
Stock Exchange) or, if such composite tape shall not be in use or shall not
report transactions in such Equity Interests, or if such Equity Interests shall
be listed on a stock exchange other than the New York Stock Exchange (including
for this purpose the Nasdaq National Market), the last reported sale price
regular way for such day, or in case no such reported sale takes place on such
day, the average of the closing bid and asked prices regular way for such day,
in each case on the principal national securities exchange on which such Equity
Interests are listed or admitted to trading (which shall be the national
securities exchange on which the greatest number of such Equity Interests have
been traded during such 20 consecutive trading days), or (b) if such Equity
Interests are not listed or admitted to trading on any such exchange, the
average of the closing bid and asked prices thereof in the over-the-counter
market as reported by the National Association of Securities Dealers Automated
Quotation System or any successor system, or if not included therein, the
average of the closing bid and asked prices thereof furnished by two members of
the National Association of Securities Dealers selected reasonably and in good
faith by the Board of Directors for that purpose. In the absence of one or more
such quotations, the Market Price for such Equity Interests shall be determined
reasonably and in good faith by the Board of Directors.
"Net Proceeds" means the aggregate cash proceeds received by the Company
or any of its Restricted Subsidiaries in respect of any Asset Sale, which
amount is equal to the excess, if any, of (a) the cash received by the Company
or such Restricted Subsidiary (including any cash payments received by way of
deferred payment pursuant to, or monetization of, a note or installment
receivable or otherwise, but only as and when received) in connection with such
disposition over (b) the sum of (i) the amount of any Indebtedness which is
secured by such asset and which is required to be repaid in connection with the
disposition thereof, plus (ii) the reasonable out-
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of-pocket expenses incurred by the Company or such Restricted Subsidiary, as
the case may be, in connection with such disposition or in connection with the
transfer of such amount from such Restricted Subsidiary to the Company, plus
(iii) provisions for taxes, including income taxes, attributable to the
disposition of such asset or attributable to required prepayments or repayments
of Indebtedness with the proceeds thereof, plus (iv) if the Company does not
first receive a transfer of such amount from the relevant Restricted Subsidiary
with respect to the disposition of an asset by such Restricted Subsidiary and
such Restricted Subsidiary intends to make such transfer as soon as
practicable, the out-of-pocket expenses and taxes that the Company reasonably
estimates will be incurred by the Company or such Restricted Subsidiary in
connection with such transfer at the time such transfer is expected to be
received by the Company (including, without limitation, withholding taxes on
the remittance of such amount).
"Obligations" means any principal, interest (including post-petition
interest, whether or not allowed as a claim in any proceeding), penalties,
fees, costs, expenses, indemnifications, reimbursements, damages and other
liabilities payable under or in connection with any Indebtedness.
"Officers' Certificate" means a certificate signed, unless otherwise
specified, by any two of the Chairman of the Board, a Vice Chairman of the
Board, the President, the Chief Financial Officer, the Controller, or an
Executive Vice President of the Company, and delivered to the Trustee.
"Permitted Investments" means (a) any Investments in the Company or in a
Restricted Subsidiary (other than an Excluded Restricted Subsidiary) of the
Company, including without limitation the Guarantee of Indebtedness permitted
under the covenant entitled "Incurrence of Indebtedness and Issuance of
Preferred Stock;" (b) any Investments in Cash Equivalents; (c) Investments by
the Company or any Restricted Subsidiary of the Company in a Person, if as a
result of such Investment (i) such Person becomes a Restricted Subsidiary
(other than an Excluded Restricted Subsidiary) of the Company or (ii) such
Person is merged, consolidated or amalgamated with or into, or transfers or
conveys substantially all of its assets to, or is liquidated into, the Company
or a Restricted Subsidiary (other than an Excluded Restricted Subsidiary) of
the Company; (d) Investments in assets (including accounts and notes
receivable) owned or used in the ordinary course of business; (e) Investments
for any purpose related to the Company's records management business
(including, without limitation, the Company's outsourcing and staffing
businesses) in an aggregate outstanding amount not to exceed $10.0 million; and
(f) Investments by the Company or a Restricted Subsidiary (other than an
Excluded Restricted Subsidiary) in one or more Excluded Restricted
Subsidiaries, the aggregate outstanding amount of which does not exceed 10% of
the consolidated assets of the Company and its Restricted Subsidiaries.
"Permitted Liens" means:
(a) Liens existing as of the date of issuance of the Notes;
(b) Liens on property or assets of the Company or any Restricted Subsidiary
securing Senior Debt;
(c) Liens on any property or assets of a Restricted Subsidiary granted in
favor of the Company or any Wholly Owned Restricted Subsidiary;
(d) Liens securing the Notes or the Guarantees;
(e) any interest or title of a lessor under any Capital Lease Obligation
or Sale and Leaseback Transaction so long as the Indebtedness, if any, secured
by such Lien does not exceed the principal amount of Indebtedness permitted
under the covenant entitled "Incurrence of Indebtedness and Issuance of
Preferred Stock;"
(f) Liens securing Acquired Debt created prior to (and not in connection
with or in contemplation of) the incurrence of such Indebtedness by the Company
or any Restricted Subsidiary; provided that such Lien does not extend to any
property or assets of the Company or any Restricted Subsidiary other than the
assets acquired in connection with the incurrence of such Acquired Debt;
(g) Liens securing Hedging Obligations permitted to be incurred pursuant
to clause (g) of the covenant entitled "Incurrence of Indebtedness and Issuance
of Preferred Stock;"
(h) Liens arising from purchase money mortgages and purchase money security
interests, or in respect of the construction of property or assets, incurred in
the ordinary course of the business of the Company or a Restricted Subsidiary;
provided that (i) the related Indebtedness is not secured by any property or
assets of the Company or
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any Restricted Subsidiary other than the property and assets so acquired or
constructed and (ii) the Lien securing such Indebtedness is created within 60
days of such acquisition or construction;
(i) statutory Liens or landlords' and carriers', warehousemen's, mechanics',
suppliers', materialmen's, repairmen's or other like Liens arising in the
ordinary course of business and with respect to amounts not yet delinquent or
being contested in good faith by appropriate proceedings, if a reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor;
(j) Liens for taxes, assessments, government charges or claims with respect
to amounts not yet delinquent or that are being contested in good faith by
appropriate proceedings diligently conducted, if a reserve or other appropriate
provision, if any, as is required in conformity with GAAP has been made
therefor;
(k) Liens incurred or deposits made to secure the performance of tenders,
bids, leases, statutory obligations, surety and appeal bonds, government
contracts, performance bonds and other obligations of a like nature incurred in
the ordinary course of business (other than contracts for the payment of money);
(l) easements, rights-of-way, restrictions and other similar charges or
encumbrances not interfering in any material respect with the business of the
Company or any Restricted Subsidiary incurred in the ordinary course of
business;
(m) Liens arising by reason of any judgment, decree or order of any court so
long as such Lien is adequately bonded and any appropriate legal proceedings
that may have been duly initiated for the review of such judgment, decree or
order shall not have been finally terminated or the period within which such
proceedings may be initiated shall not have expired;
(n) Liens arising under options or agreements to sell assets;
(o) other Liens securing obligations incurred in the ordinary course of
business, which obligations do not exceed $1.0 million in the aggregate at any
one time outstanding; and
(p) any extension, renewal or replacement, in whole or in part, of any Lien
described in the foregoing clauses (a) through (o); provided that any such
extension, renewal or replacement shall not extend to any additional property or
assets.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Principal Stockholders" means each of Vincent J. Ryan, Schooner Capital
Corporation, C. Richard Reese, Eugene B. Doggett, and their respective
Affiliates.
"Qualified Equity Offering" means an offering of Capital Stock, other than
Disqualified Stock, of the Company for Dollars, whether registered or exempt
from registration under the Securities Act.
"Qualified Issuer" means (a) any lender party to the Credit Agreement or
(b) any commercial bank (i) which has capital and surplus in excess of
$500,000,000 and (ii) the outstanding short-term debt securities of which are
rated at least A-2 by Standard & Poor's Rating Group, a division of
McGraw-Hill, Inc. or at least P-2 by Moody's Investors Service, or carry an
equivalent rating by a nationally recognized rating agency if both of the two
named rating agencies cease publishing ratings of investments.
"Qualifying Sale and Leaseback Transaction" means any Sale and Leaseback
Transaction between the Company or any of its Restricted Subsidiaries and any
bank, insurance company or other lender or investor providing for the leasing
to the Company or such Restricted Subsidiary of any property (real or personal)
which has been or is to be sold or transferred by the Company or such
Restricted 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
property in question has been constructed or acquired after the date of the
Indenture.
"Refinancing Indebtedness" means new Indebtedness incurred or given in
exchange for, or the proceeds of which are used to repay, redeem, defease,
extend, refinance, renew, replace or refund, other Indebtedness; provided,
however, that (a) the principal amount of such new Indebtedness shall not
exceed the principal amount of Indebtedness so repaid, redeemed, defeased,
extended, refinanced, renewed, replaced or refunded (plus the amount
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of fees, premiums, consent fees, prepayment penalties and expenses incurred in
connection therewith); (b) such Refinancing Indebtedness shall have a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of the Indebtedness so repaid, redeemed, defeased, extended,
refinanced, renewed, replaced or refunded or shall mature after the maturity
date of the Notes; (c) to the extent such Refinancing Indebtedness refinances
Indebtedness that has a final maturity date occurring after the initial
scheduled maturity date of the Notes, such new Indebtedness shall have a final
scheduled maturity not earlier than the final scheduled maturity of the
Indebtedness so repaid, redeemed, defeased, extended, refinanced, renewed,
replaced or refunded and shall not permit redemption at the option of the
holder earlier than the earliest date of redemption at the option of the holder
of the Indebtedness so repaid, redeemed, defeased, extended, refinanced,
renewed, replaced or refunded; (d) to the extent such Refinancing Indebtedness
refinances Indebtedness subordinate to the Notes, such Refinancing Indebtedness
shall be subordinated in right of payment to the Notes and to the extent such
Refinancing Indebtedness refinances Notes or Indebtedness pari passu with the
Notes, such Refinancing Indebtedness shall be pari passu with or subordinated
in right of payment to the Notes, in each case on terms at least as favorable
to the holders of Notes as those contained in the documentation governing the
Indebtedness so repaid, redeemed, defeased, extended, refinanced, renewed,
replaced or refunded; and (e) with respect to Refinancing Indebtedness incurred
by a Restricted Subsidiary, such Refinancing Indebtedness shall rank no more
senior, and shall be at least as subordinated, in right of payment to the
Subsidiary Guarantee of such Restricted Subsidiary as the Indebtedness being
extended, refinanced, renewed, replaced or refunded.
"Restricted Subsidiary" means (a) each direct or indirect Subsidiary of
the Company existing on the date of the Indenture and (b) any other direct or
indirect Subsidiary of the Company formed, acquired or existing after the date
of the Indenture, in each case which is not designated by the Board of
Directors as a "Unrestricted Subsidiary."
"Sale and Leaseback Transaction" means any transaction or series of
related transactions pursuant to which a Person sells or transfers any property
or asset in connection with the leasing, or the resale against installment
payments, of such property or asset to the seller or transferor.
"Senior Bank Debt" means all Obligations outstanding under or in
connection with the Credit Agreement (including Guarantees of such Obligations
by Subsidiaries of the Company).
"Senior Debt" means (a) the Senior Bank Debt and (b) any other
Indebtedness permitted to be incurred by the Company or any Restricted
Subsidiary, as the case may be, under the terms of the Indenture, unless the
instrument under which such Indebtedness is incurred expressly provides that it
is (i) on a parity with or subordinated in right of payment to the Notes or
(ii) subordinated to Senior Debt on terms substantially similar to those of the
Notes. Notwithstanding anything to the contrary in the foregoing, Senior Debt
shall not include (i) any liability for federal, state, local or other taxes
owed or owing by the Company, (ii) any Indebtedness of the Company to any of
its Subsidiaries or other Affiliates, (iii) any trade payables or (iv) any
Indebtedness that is incurred in violation of the Indenture, provided that such
Indebtedness shall be deemed not to have been incurred in violation of the
Indenture for purposes of this clause (iv) if, in the case of any obligations
under the Credit Agreement, the holders of such obligations or their agent or
representative shall have received a representation from the Company to the
effect that the incurrence of such Indebtedness does not violate the provisions
of the Indenture.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of such Person or a combination
thereof.
"Treasury Rate" means, at any time of computation, the yield to maturity
at such time (as compiled by and published in the most recent Federal Reserve
Statistical Release H.15(519), which has become publicly available at least two
business days prior to the date of the redemption notice or, if such
Statistical Release is no longer published, any publicly available source of
similar market data) of United States Treasury securities with a constant
maturity most nearly equal to the Make-Whole Average Life; provided, however,
that if the Make-Whole Average Life is not equal to the constant maturity of
the United States Treasury security for which a weekly average yield
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is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average
yields of United States Treasury securities for which such yields are given,
except that if the Make-Whole Average Life is less than one year, the weekly
average yield on actually traded United States Treasury securities adjusted to
a constant maturity of one year shall be used.
"Unrestricted Subsidiary" means (a) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary in accordance with the
"Unrestricted Subsidiaries" covenant and (b) any Subsidiary of an Unrestricted
Subsidiary.
"Voting Stock" means 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 any 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).
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (b) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary of
the Company all of the outstanding Capital Stock or other ownership interests
of which (other than directors' qualifying shares) shall at the time be owned
by the Company or by one or more Wholly Owned Restricted Subsidiaries of the
Company.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following summary, which describes the principal U.S. federal income
tax consequences resulting from the exchange of Old Notes for New Notes and the
ownership and disposition of New Notes, is based upon laws, regulations,
rulings and decisions currently in effect, and as currently interpreted, all of
which are subject to change. There can be no assurance that future changes in
the law will not significantly affect the tax treatment of holders as described
herein, any of which changes may be applied retroactively. The discussion does
not purport to deal with all aspects of United Stated federal taxation that may
be relevant to particular investors in light of their specific investment
circumstances, nor does it discuss United States federal tax laws applicable to
holders that may be subject to special tax rules such as life insurance
companies; broker-dealers; tax-exempt organizations; financial institutions;
custodians, nominees or similar financial intermediaries holding Notes for
others; holders that will hold a Note as a position in a "straddle," or as part
of a "hedging," "conversion" or "integrated" transaction for U.S. federal
income tax purposes; holders subject to the alternative minimum tax; holders
having a "functional currency" for U.S. federal income tax purposes other than
the U.S. dollar; and Non-U.S. holders (as defined below) that are entitled to
claim the benefits of tax treaties to which the United States is a party. In
addition, the discussion does not consider the effect of any foreign, state,
local or other tax laws that may be applicable to a particular holder. This
discussion assumes that holders will hold the Notes as capital assets within
the meaning of Section 1221 of the Code.
EACH HOLDER IS STRONGLY URGED TO CONSULT ITS OWN TAX ADVISERS REGARDING
THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF EXCHANGING OLD NOTES
FOR NEW NOTES AND HOLDING AND DISPOSING OF THE NEW NOTES.
Exchange Offer
An exchange of Old Notes for New Notes pursuant to the Exchange Offer
should be regarded for federal income tax purposes as a continuation of the Old
Notes, and a holder should have the same adjusted basis and holding period in
the New Notes upon receipt as it had in the Old Notes immediately before the
exchange.
The Notes
For U.S. federal income tax purposes, each Note will be treated as
indebtedness issued by the Company.
U. S. Holders
For purposes of this summary, a "U.S. holder" is a holder of Notes that is
an individual who is a citizen or resident of the United States; a corporation,
partnership or other business entity created or organized under the laws of the
United States or any state or political subdivision thereof; an estate whose
income is includible in gross income for U.S. federal income tax purposes
regardless of its source; or a trust whose administration is subject to the
primary supervision of a U.S. court and which has one or more U.S. fiduciaries
who have the authority to control all substantial decisions of the trust.
Interest
Interest on a Note will be includible in the gross income of a U.S. holder
as ordinary interest income at the time the interest is received or when it
accrues in accordance with the U.S. holder's regular method of tax accounting.
Such interest will be treated as U.S. source income for U.S. federal income tax
purposes.
Disposition
A U.S. holder will recognize taxable gain or loss on the sale, exchange,
redemption, retirement or other disposition of a Note in an amount equal to the
difference between the amount realized from such disposition (other than
amounts attributable to accrued interest which would otherwise be taxable as
ordinary interest income) and the holder's adjusted tax basis in the Note. Such
gain or loss generally will be capital gain or loss, and will be long-term
capital gain or loss if the U.S. holder has held the Note for more than one
year at the time of disposition; preferential rates of tax may apply to gains
recognized upon the disposition of Notes held for more than eighteen months.
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Non-U. S. Holders
Payments of interest on the Notes to any holder other than a U.S. holder
(a "Non-U.S. holder") will generally not be subject to U.S. federal income or
withholding tax, provided that (1) the Non-U.S. holder is not (i) a direct or
indirect owner of 10 percent or more of the total voting power of all voting
stock of Iron Mountain or (ii) a controlled foreign corporation related to Iron
Mountain within the meaning of Section 864(d)(4) of the Code, (2) such interest
is not effectively connected with the conduct by the Non-U.S. holder of a trade
or business within the United States, and (3) Iron Mountain or its paying agent
receives (i) from the Non-U.S. holder, a properly completed Form W-8 (or
substitute Form W-8), signed under the penalties of perjury, which provides the
Non-U.S. holder's name and address and certifies that the Non-U.S. holder of
the Note is a Non-U.S. holder or (ii) from a security clearing organization,
bank or other financial institution that holds the Notes in the ordinary course
of its trade or business (a "financial institution") on behalf of the Non-U.S.
holder, a statement certifying under penalties of perjury that it has received
such a Form W-8 (or substitute Form W-8) from the Non-U.S. holder, or that it
has received from another financial institution a statement that it has
received a Form W-8 (or substitute Form W-8) from the Non-U.S. holder, and a
copy of such Form W-8 of the Non-U.S. holder is furnished to the payor.
If the payments of interest by Iron Mountain on a Note are effectively
connected with the conduct by a Non-U.S. holder of a trade or business in the
United States, such payments will be subject to U.S. federal income tax on a
net basis at the rates applicable to U. S. holders generally (and, with respect
to corporate Non-U.S. holders, may also be subject to a 30 percent branch
profits tax). Payments that are subject to U.S. federal income tax on a net
basis will not be subject to U. S. withholding tax so long as the Non-U.S.
holder provides Iron Mountain or its paying agent with a properly executed Form
4224.
A Non-U.S. holder will not be subject to U.S. federal income or
withholding tax with respect to gain recognized on a disposition of the Notes
unless (i) the gain is effectively connected with the conduct by the Non-U.S.
holder of a trade or business in the United States or (ii) in the case of a
Non-U.S. holder that is an individual, such holder is present in the United
States for 183 or more days in the taxable year of the disposition and certain
other requirements are met.
Information Reporting and Backup Withholding
For each calendar year in which the Notes are outstanding, Iron Mountain
will be required to provide the IRS with certain information with respect to
the holders of the Notes, including each holder's name, address and taxpayer
identification number, the aggregate amount of principal and interest paid to
that holder during the calendar year and the amount of tax withheld, if any.
This reporting obligation does not apply with respect to certain holders,
including corporations, tax-exempt organizations, qualified pension and profit
sharing trusts and individual retirement accounts.
A holder may, under certain circumstances, be subject to "backup
withholding" unless such holder (i) is not subject to the reporting
requirements described above and, when required, demonstrates this fact, or
(ii) provides to Iron Mountain a correct taxpayer identification number,
certifies that the holder is not subject to backup withholding due to "notified
payee underreporting" and otherwise complies with applicable requirements of
the backup withholding rules. In addition, a holder will be subject to backup
withholding if Iron Mountain has been notified by the IRS that backup
withholding is required for such holder due to payee underreporting. The backup
withholding rate is 31% of "reportable payments," which include interest and,
under certain circumstances, principal payments. If a holder is subject to
backup withholding due to such holder's failure to furnish a correct taxpayer
identification number, the backup withholding will continue until the holder
furnishes Iron Mountain with a correct taxpayer identification number. In
addition to backup withholding, a holder who does not provide Iron Mountain
with the correct taxpayer identification number may be subject to penalties
imposed by the IRS. Backup withholding is not an additional tax. The amount of
any backup withholding will be allowed as a credit against the holder's federal
income tax liability and may entitle such holder to a refund, provided that the
required information has been furnished to the IRS.
Information reporting and backup withholding will not apply to payments to
Non-U.S. holders outside the United States of principal and interest on a Note.
In order to avoid backup withholding on payments of interest and principal made
in the United States, a Non-U.S. holder of the Notes must generally complete
and provide the payor with a Form W-8 or other documentary evidence certifying
that such Non-U.S. holder is an exempt foreign person. Payments of the proceeds
from the sale by a Non-U.S. holder of a Note made to or through a foreign
office
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of a broker will not be subject to information reporting or backup withholding,
except that if the broker is a U.S. person, a controlled foreign corporation,
or a foreign person 50% or more of whose gross income is effectively connected
with a U. S. trade or business for a specified three-year period, information
reporting requirements may apply to such payments. Payments of the proceeds
from the sale by a Non-U.S. holder of a Note made to or through the United
States office of a broker will be subject to information reporting and backup
withholding unless the Non-U.S. holder or beneficial owner certifies its status
as such or otherwise establishes an exemption from information reporting and
backup withholding.
The foregoing information reporting and backup withholding rules are
currently under review by the IRS and proposed regulations would modify certain
of those rules if enacted in their current form. Accordingly, the application
of such rules to the Notes could be changed.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company and the Guarantors have agreed to make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale for a period of 180 days from the date of
the consummation of the Exchange Offer, or such shorter period as will
terminate when all Old Notes acquired by broker-dealers for their own accounts
as a result of market-making activities or other trading activities have been
exchanged for New Notes and resold by such broker-dealers.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own accounts
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market or, in negotiated transactions or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such New
Notes. Any broker-dealer that resells New Notes that were received by it for
its own account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Notes may be deemed to be an
"Underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days from the date of this Prospectus, or such shorter
period as will terminate when all Old Notes acquired by broker-dealers for
their own accounts as a result of market-making activities or other trading
activities have been exchanged for New Notes and resold by such broker-dealer,
the Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter to Transmittal. The Company has agreed to
indemnify such broker-dealers against certain liabilities, including
liabilities under the Securities Act.
TRANSFER RESTRICTIONS
Unless and until an Old Note is exchanged for a New Note pursuant to the
Exchange Offer, it will bear the following legend on the face thereof:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THESE
SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
JURISDICTION.
EACH HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO (A) OFFER,
SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY ONLY (1) TO THE COMPANY,
(2) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (3) TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (4) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE SECURITIES
ACT, (5) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT (AN
"IAI") THAT, PRIOR TO SUCH TRANSFER, EXECUTES AND DELIVERS TO THE COMPANY
AND THE TRUSTEE A LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS
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SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND AN
OPINION OF COUNSEL, IF THE COMPANY OR THE TRUSTEE SO REQUESTS OR (6)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT (AND BASED ON AN OPINION OF COUNSEL
IF THE COMPANY SO REQUESTS), SUBJECT IN EACH OF THE FOREGOING CASES TO
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THAT IT WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.
The New Notes will not contain such restrictive legend or be otherwise
subject to restrictions on their transfer, except each Global Note shall bear
the following legend on the face thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TRUST COMPANY (THE "DEPOSITORY") TO A NOMINEE OF THE DEPOSITORY
OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR SUCH OTHER
ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DEPOSITARY),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
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LEGAL MATTERS
Certain legal matters with respect to the validity of the New Notes and
the Guarantees will be passed upon for Iron Mountain by Sullivan & Worcester
LLP, Boston, Massachusetts Jas. Murray Howe, Secretary of Iron Mountain, is of
counsel to Sullivan & Worcester LLP and beneficially owns 3,855 shares of
Common Stock.
EXPERTS
The financial statements and schedule of Iron Mountain Incorporated and
its subsidiaries for the three years ended December 31, 1996, incorporated by
reference in the Registration Statement, have been audited by Arthur Andersen
LLP, independent public accountants, as stated in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said reports.
The financial statements of Nashville Vault Company, Ltd. for the year
ended December 31, 1995, incorporated by reference in the Registration
Statement, have been audited by Geo. S. Olive & Co. LLC, independent public
accountants, as stated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said report.
The financial statements of International Record Storage and Retrieval
Services, Inc. for the year ended December 31, 1995, incorporated by reference
in the Registration Statement, have been audited by Rothstein, Kass & Company,
P.C., independent public accountants, as stated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said report.
The financial statements of Mohawk Business Record Storage, Inc. for the
year ended December 31, 1995, incorporated by reference in the Registration
Statement, have been audited by Arthur Andersen LLP, independent public
accountants, as stated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said report.
The financial statements of Security Archives of Minnesota for the year
ended December 31, 1996, incorporated by reference in the Registration
Statement, have been audited by Arthur Andersen LLP, independent public
accountants, as stated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said report.
The financial statements of Wellington Financial Services, Inc. for the
year ended December 31, 1996, incorporated by reference in the Registration
Statement, have been audited by Arthur Andersen LLP, independent public
accountants, as stated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said report.
The financial statements of Allegiance Business Archives, Ltd. for the
year ended December 31, 1996, incorporated by reference in the Registration
Statement, have been audited by Stout, Causey & Horning, P.A., independent
public accountants, as stated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said report.
The financial statements and schedule of Safesite Records Management
Corporation for the three years ended December 31, 1996, incorporated by
reference in the Registration Statement, have been audited by Arthur Andersen
LLP, independent public accountants, as stated in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said reports.
The financial statements of Concorde Group, Inc. and Neil Tucker Trust for
the year ended December 31, 1996, incorporated by reference in the Registration
Statement, have been audited by Fisher, Schacht & Oliver LLP, independent
public accountants, as stated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said report.
The financial statements of Data Securities International, Inc. for the
year ended December 31, 1996, incorporated by reference in the Registration
Statement, have been audited by Arthur Andersen LLP, independent public
accountants, as stated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said report.
The financial statements of Records Retention/FileSafe, LP for the two
years ended December 31, 1996, incorporated by reference in the Registration
Statement, have been audited by Abbott, Stringham & Lynch,
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independent public accountants, as stated in their report with respect thereto,
and are incorporated by reference herein in reliance upon the authority of said
firm as experts in giving said report.
The consolidated financial statements of HIMSCORP, Inc. and Subsidiaries
for the period February 1, 1995 to December 31, 1995 and for the year ended
December 31, 1996 appearing in Iron Mountain Incorporated's Current Report on
Form 8-K dated November 25, 1997, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report included therein and
incorporated herein by reference. Such financial statements referred to above
are incorporated herein by reference in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Arcus Technology Services, Inc.
(Successor Company) for the year ended December 31, 1996 and the five months
ended December 31, 1995 and the consolidated financial statements of Arcus,
Inc. (Predecessor Company) for the seven months ended July 31, 1995 and the
year ended December 31, 1994, included in the Current Report on Form 8-K dated
November 25, 1997, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report and are incorporated herein by reference
in reliance upon such report given upon the authority of such firm as experts
in accounting and auditing.
The consolidated financial statements of Arcus Group, Inc. for the two
years in the period ended December 31, 1996, included in the Current Report on
Form 8-K dated November 25, 1997, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report and are incorporated herein
by reference in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
The consolidated financial statements of Arcus Group, Inc. for the year
ended December 31, 1994, incorporated by reference in the Registration
Statement, have been audited by Arthur Andersen LLP, independent public
accountants, as stated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said report.
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Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides,
in effect, that any person made a party to any action by reason of the fact
that he is or was a Director, officer, employee or agent of Iron Mountain may
and, in certain cases, must be indemnified by Iron Mountain against, in the
case of a non-derivative action, judgments, fines, amounts paid in settlement
and reasonable expenses (including attorney's fees) incurred by him as a result
of such action, and in the case of a derivative action, against expenses
(including attorney's fees), if in either type of action he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of Iron Mountain. This indemnification does not apply, in a
derivative action, to matters as to which it is adjudged that the Director,
officer, employee or agent is liable to Iron Mountain, unless upon court order
it is determined that, despite such adjudication of liability, but in view of
all the circumstances of the case, he is fairly and reasonably entitled to
indemnity for expenses, and, in a non-derivative action, to any criminal
proceeding in which such person had reasonable cause to believe his conduct was
unlawful.
Article Sixth of Iron Mountain's Restated Certificate of Incorporation
provides that Iron Mountain shall indemnify each person who is or was an
officer or Director of Iron Mountain to the fullest extent permitted by Section
145 of the DGCL.
Article Seventh of Iron Mountain's Restated Certificate of Incorporation
states that no Director of Iron Mountain shall be liable to Iron Mountain or
its stockholders for monetary damages for breach of fiduciary duty as a
Director, except to the extent that exculpation from liability is not permitted
under the DGCL as in effect when such breach occurred.
Item 21. Exhibits
Exhibits indicated below are incorporated by reference to documents of
Iron Mountain on file with the Securities and Exchange Commission. Exhibit
numbers in parentheses refer to the exhibit numbers in the applicable filing.
All other exhibits are filed herewith.
<TABLE>
<CAPTION>
Exhibit No. Item Exhibit
- ------------- ---------------------------------------------------------------------- --------
<S> <C> <C>
2.1 Agreement and Plan of Merger, dated as of September 26, 1997, by and (2.2)7
among Iron Mountain, Arcus Group, Inc., United Acquisition
Company and Arcus Technology Services, Inc. (collectively, the
"Arcus Parties")
2.1A Amendment No. 1 to Agreement and Plan of Merger, dated as of (2.1A)9
November 25, 1997, by and among Iron Mountain and each of the
Arcus Parties
2.2 Agreement and Plan of Merger, dated as of February 19, 1997, by and (2)3
among Iron Mountain, IM-1 Acquisition Corp. and Safesite Records
Management Corporation
2.3 Amendment No. 1 to Agreement and Plan of Merger, dated as of April (2A)5
1, 1997, by and among Iron Mountain, IM-1 Acquisition Corp. and
Safesite Records Management Corporation
2.4 Amendment No. 2 to Agreement and Plan of Merger, dated as of May (2B)5
7, 1997, by and among Iron Mountain, IM-1 Acquisition Corp. and
Safesite Records Management Corporation
2.5 Agreement and Plan of Merger, dated as of August 25, 1997, by and (2.3)7
among Iron Mountain, DSI Acquisition Corporation and Data
Securities International, Inc.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Item Exhibit
- ------------- ------------------------------------------------------------------------- ------------------
<S> <C> <C>
2.6 Agreement and Plan of Merger, dated as of September 17, 1997, by and (2.2)8
among Iron Mountain, IM-3 Acquisition Corp. and HIMSCORP, Inc.
3.1 Amended and Restated Certificate of Incorporation of Iron Mountain, as (3.1)4
amended
3.2 By-Laws of Iron Mountain, as amended (3.2)4
4.1 Indenture for 8-3/4% Senior Subordinated Notes due 2009 by and among (4.1)6
Iron Mountain, certain of its subsidiaries and The Bank of New York,
as trustee, dated October 24, 1997
5 Opinion of Sullivan & Worcester LLP Filed herewith as
Exhibit 5
10.1 Second Amended and Restated Credit Agreement, dated as of September (10.1)7
26, 1997, among Iron Mountain, the lenders party thereto and The
Chase Manhattan Bank, as Administrative Agent
10.2 Indenture for 10-1/8% Senior Subordinated Notes due 2006 by and among (10.3)3
Iron Mountain, certain of its subsidiaries and First National
Association, as trustee, dated October 1, 1996
10.3 Iron Mountain Incorporated 1995 Stock Incentive Plan, as amended (10.1)4
10.4 Asset Purchase and Sale Agreement, dated November 22, 995 among (10.17)1
Iron Mountain Records Management, Inc. ("IMRM"), Data
Management Business Records Storage, Inc. and Outdoor West, Inc.
10.5 Record Center Storage Services Agreement between IMRM and (10.18)1
Resolution Trust Corporation, dated July 31, 1992, as renewed by
letter agreement effective July 26, 1996 between Iron Mountain and
the Federal Deposit Insurance Corporation
10.6 Lease between IMRM and IM Houston (CR) Limited Partnership, dated (10.19)1
January 1, 1991
10.7 Asset Purchase and Sale Agreement, dated July 11, 1996, among (10.20)2
IMRM, The Fortress Corporation and certain subsidiaries
10.8 Stock Purchase and Sale Agreement, dated as of August 9, 1996, among (10.21)2
IMRM and the shareholders of Data Archive Services of Miami, Inc.
and Data Archives Services, Inc.
10.9 Asset Purchase Agreement, dated as of September 6, 1996, among (10.23)2
IMRM, Mohawk Business Record Storage, Inc., Michael M. Rabin,
Richard K. Rabin, Herman Ladin and Sidney Ladin
10.10 Amended and Restated Registration Rights Agreement between Iron (10.2)4
Mountain and certain Stockholders, dated as of June 12, 1997
10.11 Joinder to Registration Rights Agreement, dated as of October 31, 1997, (10.12)9
by and between Iron Mountain and Kent P. Dauten
10.12 Stockholders' Agreement, dated as of February 19, 1997 by and among (10.20)3
Iron Mountain and certain stockholders of Safesite Records
Management Corporation
10.13 Asset Purchase and Sale Agreement, dated March 12, 1997, by and (10.22)5
among IMRM, Chicago Data Destruction Corporation, and John
Mengel and John S. Mengel
10.14 Asset Purchase and Sale Agreement, dated as of August 20, 1997, by (10.2)7
and between IMRM and Records Retention/FileSafe, L.P.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Item Exhibit
- ------------- ------------------------------------------------------------------------ ------------------------
<S> <C> <C>
10.15 Stockholders' Agreement, dated as of September 26, 1997, by and (10.16)9
among Iron Mountain and certain stockholders of the Arcus Parties
10.16 Acquiror Voting Agreement, dated as of September 26, 1997, by and (10.17)9
among Iron Mountain, the Arcus Parties and certain stockholders of
Iron Mountain
10.17 Exchange and Registration Rights Agreement, dated as of October 21, (10.18)9
1997, among Iron Mountain, certain subsidiaries of Iron Mountain
and Bear, Stearns & Co., Inc. on behalf of itself and the other Initial
Purchasers of Iron Mountain 83/4% Senior Subordinated Notes due
2009
11 Statement re: computation of per share earnings (11)7
12 Statement re: computation of ratios Filed herewith as
Exhibit 12
21 Subsidiaries of Iron Mountain (21)9
23.1 Consent of Ernst & Young LLP (Arcus Group, Inc. and Arcus Filed herewith as
Technology Services, Inc.) Exhibit 23.1
23.2 Consent of Arthur Andersen LLP (Arcus Group, Inc.) Filed herewith as
Exhibit 23.2
23.3 Consent of Ernst & Young LLP (HIMSCORP, Inc. and Subsidiaries) Filed herewith as
Exhibit 23.3
23.4 Consent of Stout, Causey & Horning, P.A. (Allegiance Business Filed herewith as
Archives, Ltd.) Exhibit 23.4
23.5 Consent of Abbott, Stringham & Lynch (Records Retention/FileSafe, LP) Filed herewith as
Exhibit 23.5
23.6 Consent of Arthur Andersen LLP (Security Archives of Minnesota, Filed herewith as
Wellington Financial Services, Inc. and Data Securities International, Exhibit 23.6
Inc.)
23.7 Consent of Fisher, Schacht & Oliver, LLP (Concorde Group, Inc. and Filed herewith as
Neil Tucker Trust) Exhibit 23.7
23.8 Consent of Arthur Andersen LLP (Safesite Records Management Filed herewith as
Corporation and Mohawk Business Record Storage, Inc.) Exhibit 23.8
23.9 Consent of Geo. S. Olive & Co. LLC (Nashville Vault Company, Ltd.) Filed herewith as
Exhibit 23.9
23.10 Consent of Rothstein, Kass & Company, P.C. (International Record Filed herewith as
Storage and Retrieval Service, Inc.) Exhibit 23.10
23.11 Consent of Arthur Andersen LLP (Iron Mountain Incorporated) Filed herewith as
Exhibit 23.11
23.12 Consent of Sullivan & Worcester LLP Contained in Exhibit 5
filed herewith
24 Powers of Attorney Contained on Pages
II-6 and Pages II-10 of
the Registration
Statement
25 Form T-1 Statement of Eligibility of The Bank of New York Filed herewith as
Exhibit 25
27 Financial Data Schedule (27)7
</TABLE>
II-3
<PAGE>
Exhibit No. Item Exhibit
- ------------- --------------------------------------- ------------------
99.1 Form of Letter of Transmittal Filed herewith as
Exhibit 99.1
99.2 Form of Notice of Guaranteed Delivery Filed herewith as
Exhibit 99.2
- ------------
1 Filed as an Exhibit to Iron Mountain's Registration Statement No. 33-99950
filed with the Securities and Exchange Commission on December 1, 1995.
2 Filed as an Exhibit to Iron Mountain's Registration Statement No. 333-10359
filed with the Securities and Exchange Commission on August 16, 1996.
3 Filed as an Exhibit to Iron Mountain's Annual Report on Form 10-K for the
year ended December 31, 1996, filed with the Securities and Exchange
Commission, File No. 0-27584.
4 Filed as an Exhibit to Iron Mountain's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997, filed with the Securities and Exchange
Commission, File No. 0-27584.
5 Filed as an Exhibit to Iron Mountain's Registration Statement No. 333-24635
filed with the Securities and Exchange Commission on April 4, 1997, as
amended on May 7, 1997 and May 13, 1997.
6 Filed as an Exhibit to Iron Mountain's Current Report on Form 8-K dated
October 30, 1997, filed with the Securities and Exchange Commission, File No.
0-27584.
7 Filed as an Exhibit to Iron Mountain's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997, filed with the Securities and Exchange
Commission, File No. 0-27584.
8 Filed as an Exhibit to Iron Mountain's Current Report on Form 8-K/A dated
November 10, 1997, filed with the Securities and Exchange Commission, File
No. 0-27584.
9 Filed as an Exhibit to Iron Mountain's Registration Statement No. 333-41045
filed with the Securities and Exchange Commission on November 26, 1997.
Item 22. Undertakings
Iron Mountain hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that the undertakings set forth in paragraphs (1)(i) and
(1)(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
II-4
<PAGE>
reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Act of 1934, as amended (the "Exchange Act") that are incorporated
by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering;
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's Annual Report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act (and where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof;
(5) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the Registrant undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form;
(6) That every prospectus: (i) that is filed pursuant to paragraph (4)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof;
(7) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form,
within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the effective
date of this Registration Statement through the date of responding to the
request;
(8) To supply by means of a post-effective amendment, all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the Registration Statement when it
became effective.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to Directors, officers and controlling persons of Iron
Mountain, Iron Mountain has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by Iron Mountain in the successful defense of any action, suit or
proceeding) is asserted by such Director, officer or controlling person in
connection with the securities being registered, Iron Mountain will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended
(the "Securities Act"), Iron Mountain Incorporated has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Boston, Commonwealth of Massachusetts, on
December 8, 1997.
IRON MOUNTAIN INCORPORATED
By: /s/ C. Richard Reese
----------------------------
Name: C. Richard Reese
Title: Chairman of the Board
of Directors and Chief
Executive Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement on Form S-4 relating to the New Notes has been signed below by the
following persons in the capacities and on the dates indicated; and each of the
undersigned officers and Directors of Iron Mountain Incorporated hereby
severally constitutes and appoints C. Richard Reese, David S. Wendell and John
F. Kenny, Jr., and each of them, to sign for him, and in his name in the
capacity indicated below, such Registration Statement for the purpose of
registering such securities under the Securities Act, and any and all
amendments thereto, including without limitation any registration statement or
post-effective amendment thereof filed under and meeting the requirements of
Rule 462(b) under the Securities Act, hereby ratifying and confirming our
signatures as they may be signed by our attorneys to such Registration
Statement and any and all amendments thereto.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ C. Richard Reese Chairman of the Board of Directors December 8, 1997
- ------------------------- and Chief Executive Officer
C. Richard Reese
/s/ David S. Wendell President, Chief Operating Officer December 8, 1997
- ------------------------- and Director
David S. Wendell
/s/ John F. Kenny, Jr. Executive Vice President and Chief December 8, 1997
- ------------------------- Financial Officer
John F. Kenny, Jr.
/s/ Eugene B. Doggett Executive Vice President and December 8, 1997
- ------------------------- Director
Eugene B. Doggett
/s/ Constantin R. Boden Director December 8, 1997
- -------------------------
Constantin R. Boden
/s/ Arthur D. Little Director December 8, 1997
- -------------------------
Arthur D. Little
</TABLE>
II-6
<PAGE>
Signature Title Date
--------- ----- ----
/s/ Vincent J. Ryan Director December 8, 1997
- -------------------------
Vincent J. Ryan
/s/ B. Thomas Golisano Director December 8, 1997
- -------------------------
B. Thomas Golisano
/s/ Kent P. Dauten Director December 8, 1997
- -------------------------
Kent P. Dauten
/s/ Jean A. Bua Vice President and Corporate December 8, 1997
- ------------------------- Controller
Jean A. Bua
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, Iron Mountain Records
Management, Inc., Iron Mountain/ Safesite, Inc., Data Securities International,
Inc., IM-3 Acquisition Corp., Metro Business Archives, Inc., Criterion Atlantic
Property, Inc., Criterion Property, Inc., Iron Mountain/Critical Files, Inc.,
Hollywood Property, Inc., IM San Diego, Inc., Iron Mountain Consulting Services,
Inc., Iron Mountain Data Protection Services, Inc., Iron Mountain Records
Management of Maryland, Inc., Iron Mountain Records Management of Ohio, Inc.,
Iron Mountain Wilmington, Inc., Iron Mountain Records Management of Missouri,
LLC, Iron Mountain Records Management of Boston, Inc., Iron Mountain Records
Management of Florida, Inc., Iron Mountain Records Management of Minnesota,
Inc., Iron Mountain Records Management of Michigan, Inc., Iron Mountain Records
Management of Wisconsin, Inc., Iron Mountain Records Management of the
Northwest, Inc., IM Earhart, Inc., IM Billerica, Inc., Iron Mountain Records
Management of San Antonio, Inc., Iron Mountain Records Management of San
Antonio--FP, Inc., IM-AEI Acquisition Corp., Allegiance Business Archives, Ltd.,
Archives Express, Incorporated, HIMSCORP of Philadelphia, Inc., RecordKeepers,
Inc., HIMSCORP of Pittsburgh, Inc., HIMSCORP of Cleveland, Inc., HIMSCORP of New
Orleans, Inc., HIMSCORP of Portland, Inc., HIMSCORP of San Diego, Inc., HIMSCORP
of Detroit, Inc., HIMSCORP of Los Angeles, Inc., HIMSCORP of Houston, Inc.,
HIMSCORP of St. Louis, Inc., Copyright, Inc., HIMSCORP of Milwaukee, Inc., and
Record Masters Network Corp., have each duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Boston, Commonwealth of Massachusetts, on December 8, 1997.
IRON MOUNTAIN RECORDS MANAGEMENT, IRON MOUNTAIN RECORDS MANAGEMENT OF
INC. WISCONSIN, INC.
IRON MOUNTAIN/SAFESITE, INC. IRON MOUNTAIN RECORDS MANAGEMENT OF
DATA SECURITIES INTERNATIONAL, INC. THE NORTHWEST, INC.
IM-3 ACQUISITION CORP. IM EARHART, INC.
METRO BUSINESS ARCHIVES, INC. IM BILLERICA, INC.
CRITERION ATLANTIC PROPERTY, INC. IRON MOUNTAIN RECORDS MANAGEMENT OF
CRITERION PROPERTY, INC. SAN ANTONIO, INC.
IRON MOUNTAIN/CRITICAL FILES, INC. IRON MOUNTAIN RECORDS MANAGEMENT OF
HOLLYWOOD PROPERTY, INC. SAN ANTONIO--FP, INC.
IM SAN DIEGO, INC. IM-AEI ACQUISITION CORP.
IRON MOUNTAIN CONSULTING SERVICES, ALLEGIANCE BUSINESS ARCHIVES, LTD.
INC. ARCHIVES EXPRESS, INCORPORATED
IRON MOUNTAIN DATA PROTECTION HIMSCORP OF PHILADELPHIA, INC.
SERVICES, INC. RECORDKEEPERS, INC.
IRON MOUNTAIN RECORDS MANAGEMENT OF HIMSCORP OF PITTSBURGH, INC.
MARYLAND, INC. HIMSCORP OF CLEVELAND, INC.
IRON MOUNTAIN RECORDS MANAGEMENT OF HIMSCORP OF NEW ORLEANS, INC.
OHIO, INC. HIMSCORP OF PORTLAND, INC.
IRON MOUNTAIN WILMINGTON, INC. HIMSCORP OF SAN DIEGO, INC.
IRON MOUNTAIN RECORDS MANAGEMENT OF HIMSCORP OF DETROIT, INC.
BOSTON, INC. HIMSCORP OF LOS ANGELES, INC.
IRON MOUNTAIN RECORDS MANAGEMENT OF HIMSCORP OF HOUSTON, INC.
FLORIDA, INC. HIMSCORP OF ST. LOUIS, INC.
IRON MOUNTAIN RECORDS MANAGEMENT OF COPYRIGHT, INC.
MINNESOTA, INC. HIMSCORP OF MILWAUKEE, INC.
IRON MOUNTAIN RECORDS MANAGEMENT OF RECORD MASTERS NETWORK CORP.
MICHIGAN, INC.
II-8
<PAGE>
By: /s/ C. Richard Reese
------------------------------
Name: C. Richard Reese
Title: Chairman of the Board
of Directors and Chief
Executive Officer
IRON MOUNTAIN RECORDS
MANAGEMENT OF MISSOURI, LLC
By: Iron Mountain Records
Management, Inc. Its Manager
By: /s/ C. Richard Reese
------------------------------
Name: C. Richard Reese
Title: Chairman of the Board
of Directors and Chief
Executive Officer
II-9
<PAGE>
Pursuant to the requirements of the Securities Act, this Registration
Statement on Form S-4 relating to the New Notes has been signed below on
December 8, 1997 by the following persons in the capacities and on the dates
indicated; and each of the undersigned officers or Directors or Managers of
Iron Mountain Records Management, Inc., Iron Mountain/Safesite, Inc., Data
Securities International, Inc., IM-3 Acquisition Corp., Metro Business
Archives, Inc., Criterion Atlantic Property, Inc., Criterion Property, Inc.,
Iron Mountain/Critical Files, Inc., Hollywood Property, Inc., IM San Diego,
Inc., Iron Mountain Consulting Services, Inc., Iron Mountain Data Protection
Services, Inc., Iron Mountain Records Management of Maryland, Inc., Iron
Mountain Records Management of Ohio, Inc., Iron Mountain Wilmington, Inc., Iron
Mountain Records Management of Missouri, LLC, Iron Mountain Records Management
of Boston, Inc., Iron Mountain Records Management of Florida, Inc., Iron
Mountain Records Management of Minnesota, Inc., Iron Mountain Records
Management of Michigan, Inc., Iron Mountain Records Management of Wisconsin,
Inc., Iron Mountain Records Management of the Northwest, Inc., IM Earhart,
Inc., IM Billerica, Inc., Iron Mountain Records Management of San Antonio,
Inc., Iron Mountain Records Management of San Antonio--FP, Inc., IM-AEI
Acquisition Corp., Allegiance Business Archives, Ltd., Archives Express,
Incorporated, HIMSCORP of Philadelphia, Inc., RecordKeepers, Inc., HIMSCORP of
Pittsburgh, Inc., HIMSCORP of Cleveland, Inc., HIMSCORP of New Orleans, Inc.,
HIMSCORP of Portland, Inc., HIMSCORP of San Diego, Inc., HIMSCORP of Detroit,
Inc., HIMSCORP of Los Angeles, Inc., HIMSCORP of Houston, Inc., HIMSCORP of St.
Louis, Inc., Copyright, Inc., HIMSCORP of Milwaukee, Inc., and Record Masters
Network Corp., hereby severally constitutes and appoints C. Richard Reese,
David S. Wendell and John F. Kenny, Jr., and each of them, to sign for him, and
in his name in the capacity indicated below, such Registration Statement for
the purpose of registering such securities under the Securities Act, and any
and all amendments thereto, including without limitation any registration
statement or post-effective amendment thereof filed under and meeting the
requirements of Rule 462(b) under the Securities Act, hereby ratifying and
confirming our signatures as they may be signed by our attorneys to such
Registration Statement and any and all amendments thereto.
<TABLE>
<CAPTION>
Signature Title Date
- -------------------------------- ------------------------------------ -----------------
<S> <C> <C>
/s/ C. Richard Reese Chairman of the Board of Directors December 8, 1997
- ------------------------- and Chief Executive Officer
C. Richard Reese
/s/ John F. Kenny, Jr. Executive Vice President and Chief December 8, 1997
- ------------------------- Financial Officer
John F. Kenny, Jr.
/s/ Jean A. Bua Vice President and Corporate December 8, 1997
- ------------------------- Controller
Jean Bua
Iron Mountain Records Manager of Iron Mountain Records December 8, 1997
Management, Inc. Management of Missouri, LLC
By: /s/ C. Richard Reese
- ------------------------
Name: C. Richard Reese
Title: Chairman of the Board
of Directors and Chief
Executive Officer
</TABLE>
II-10
EXHIBIT 5
---------
CONFORMED COPY
--------------
[Sullivan & Worcester LLP Letterhead]
December 8, 1997
Iron Mountain Incorporated
745 Atlantic Avenue
Boston, Massachusetts 02111
Re: Registration Statement on Form S-4
$250,000,000 of Senior Subordinated Notes due 2009
Ladies and Gentlemen:
The following opinion is furnished to you in connection with the
registration pursuant to a registration statement on Form S-4 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
by Iron Mountain Incorporated, a Delaware corporation (the "Company"), of
$250,000,000 of Senior Subordinated Notes due 2009 (the "Notes"), which Notes
will initially be guaranteed (the "Guarantees") by each of the Company's direct
and indirect wholly owned subsidiaries (collectively, the "Subsidiary
Guarantors") and issued under an indenture relating to the Notes (the
"Indenture") by and among the Company, the Subsidiary Guarantors and The Bank of
New York, as Trustee (the "Trustee").
We have acted as counsel to the Company in connection with the
preparation of the Registration Statement, and we have examined originals or
copies, certified or otherwise identified to our satisfaction, of corporate
records, certificates and statements of officers and accountants of the Company,
of public officials, and such other documents as we have considered necessary in
order to furnish the opinion hereinafter set forth. We express no opinion herein
as to any laws other than the State of New York.
Based upon and subject to the foregoing, we are of the opinion that the
Company and the Subsidiary Guarantors have taken all necessary action to approve
the Indenture and the terms of the Notes and Guarantees, and when (i) the
Registration Statement has become effective under the Securities Act, (ii) the
Indenture has been duly executed and delivered by the Company, the Subsidiary
Guarantors and the Trustee, and the Notes have been duly executed by the Company
and authenticated by the Trustee, (iii) the Indenture has been qualified under
the Trust Indenture Act of 1939, as amended, and (iv) the Notes have been
delivered to the purchasers thereof against payment of the purchase price
therefore as described in the Registration Statement, the Notes and the
Guarantees will be legal, valid and binding obligations of the Company and the
Subsidiary Guarantors respectively, subject in each case to the effect of (a)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors and the
obligations of debtors generally and (b) the application of general principles
of equity (regardless of whether enforcement is considered in proceedings at law
or in equity).
We express no opinion as to the applicability (and, if applicable, the
effect) of Section 548 of the United States Bankruptcy Code or any comparable
provision of state law to the conclusions expressed above.
<PAGE>
Iron Mountain Incorporated
December 8, 1997
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm made therein under the
caption "Legal Matters." In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act or the Rules and Regulations of the Securities and Exchange
Commission promulgated thereunder.
Very truly yours,
/s/ Sullivan & Worcester LLP
----------------------------
SULLIVAN & WORCESTER LLP
Exhibit 12
IRON MOUNTAIN INCORPORATED
STATEMENT OF THE CALCULATION OF RATIO OF EARNINGS OF FIXED CHARGES
(Dollars in thousands)
<TABLE>
<CAPTION>
Pro Forma(1)
------------------------
For the
Nine Months Year For the
Ended Ended Nine Months
Year Ended December 31, September 30, December Ended
-------------------------------------------- --------------- 31, September 30,
1992 1993 1994 1995 1996 1996 1997 1996 1997
------ ------ ------ ------ ----- ----- ------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Income (Loss)
from Operations
before Provision
for Income Taxes $ 3,682 $ 3,656 $ 3,241 $ 1,945 $ 1,792 $ 2,239 $ (2,156) $(17,779) $(7,601)
Add: Fixed
Charges 12,079 12,430 13,472 17,058 21,939 15,103 24,425 56,433 44,366
------- ------- ------- ------- ------ ------- ------- ------- -------
$15,761 $16,086 $16,713 $19,003 $23,731 $17,342 $22,269 $38,654 $36,765
======= ======= ======= ======== ====== ======= ======= ======= =======
Fixed
Charges:
Interest Expense $ 8,412 $ 8,203 $ 8,954 $11,838 $14,901 $ 9,981 $17,631 $46,282 $34,737
Interest Portion
of Rent Expense 3,667 4,227 4,518 5,220 7,038 5,122 6,794 10,151 9,629
------- ------- ------- ------- ------ ------- ------- ------- -------
$12,079 $12,430 $13,472 $17,058 $21,939 $15,103 $24,425 $56,433 $44,366
======= ======= ======= ======== ====== ======= ======= ======= =======
Ratio of
Earnings
to Fixed
Charges 1.3x 1.3x 1.2x 1.1x 1.1x 1.1x 0.9x(2) 0.7x(3) 0.8x(4)
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
(1) Does not include results of operations prior to the date of acquisition, or
pro forma adjustments, for acquisitions completed by HIMSCORP or Arcus in
1996 and 1997. Does not include adjustments for certain anticipated cost
reductions from the integration of the Recent Acquisitions and the Arcus
Acquisition.
(2) The Company reported a pretax loss for the nine months ended September 30,
1997. For such period the Company would have needed to generate
additional income from continuing operations, before provision for income
taxes, of $2,156 to cover its fixed charges of $24,425.
(3) On a pro forma basis, the Company would have needed to generate
additional income from continuing operations, before provision for income
taxes, of $17,779 to cover its fixed charges of $56,433.
(4) On a pro forma basis, the Company would have needed to generate
additional income from continuing operations, before provision for income
taxes, of $7,601 to cover its fixed charges of $44,366.
EXHIBIT 23.1
Consent of Independent Public Accountants
We consent to the reference to our firm under the caption "Experts", in the
Registration Statement (Form S-4 No. 333-00000) and related Prospectus of Iron
Mountain Incorporated and to the incorporation by reference therein of our
reports dated February 28, 1997 (except for Note 12, as to which the date is
September 26, 1997), and April 30, 1997 (except for Note 15, as to which the
date is September 26, 1997) with respect to the financial statements of Arcus
Technology Services, Inc. and Arcus Group, Inc., respectively, included in Iron
Mountain Incorporated's Current Report on Form 8-K dated November 25, 1997,
filed with the Securities and Exchange Commission.
Ernst & Young LLP
Dallas, Texas
December 2, 1997
EXHIBIT 23.2
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation of
our report dated April 4, 1995 for Arcus Group, Inc. included in the Current
Report on Form 8-K filed with the Securities and Exchange Commission on
November 25, 1997, and to all references to our Firm incorporated by reference
in this Form S-4 and into Iron Mountain Inc.'s previously filed Registration
Statements on Form S-8 File No. 333-24803 and No. 333-33191.
Arthur Andersen LLP
Houston, Texas
December 2, 1997
EXHIBIT 23.3
Consent of Independent Public Accountants
We consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 333-24803 and No. 333-33191) of Iron Mountain Incorporated of our
report dated February 21, 1997, with respect to the consolidated financial
statements of HIMSCORP, Inc. and Subsidiaries included in the Current Report on
Form 8-K filed with the Securities and Exchange Commission on November 25, 1997
and incorporated by reference in the Registration Statement on Form S-4 filed
on or around December 2, 1997 by Iron Mountain Incorporated with the Securities
and Exchange Commission.
Ernst & Young LLP
Chicago, Illinois
December 2, 1997
EXHIBIT 23.4
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation of
our report dated March 4, 1997 (except for Note 11, as to which the date is
October 1, 1997) for Allegiance Business Archives, Ltd. included in the Current
Report on Form 8-K filed with the Securities and Exchange Commission on
November 25, 1997, and to all references to our Firm incorporated by reference
in this Form S-4 and into Iron Mountain Inc.'s previously filed Registration
Statements on Form S-8 File No. 333-24803 and No. 333-33191.
Stout, Causey & Horning, P.A.
Cockeysville, Maryland
December 2, 1997
EXHIBIT 23.5
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation of
our reports dated August 7, 1997 for Records Retention/FileSafe included in the
Current Report on Form 8-K filed with the Securities and Exchange Commission on
November 25, 1997, and to all references to our Firm incorporated by reference
in this Form S-4 and into Iron Mountain Inc.'s previously filed Registration
Statements on Form S-8 File No. 333-24803 and No. 333-33191.
Abbott, Stringham & Lynch
Campbell, California
December 2, 1997
EXHIBIT 23.6
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation of
our reports dated August 15, 1997, April 25, 1997 and September 12, 1997 for
Security Archives of Minnesota, Wellington Financial Services, Inc. and Data
Securities International, Inc., respectively, included in the Current Report on
Form 8-K filed with the Securities and Exchange Commission on October 30, 1997,
and to all references to our Firm incorporated by reference in this Form S-4
and into Iron Mountain Inc.'s previously filed Registration Statements on Form
S-8 File No. 333-24803 and No. 333-33191.
Arthur Andersen LLP
Minneapolis, Minnesota
Detroit, Michigan
San Jose, California
December 2, 1997
EXHIBIT 23.7
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation of
our reports dated August 8, 1997 for Concorde Group, Inc. and Neil Tucker Trust
included in the Current Report on Form 8-K filed with the Securities and
Exchange Commission on October 30, 1997, and to all references to our Firm
incorporated by reference in this Form S-4 and into Iron Mountain Inc.'s
previously filed Registration Statements on Form S-8 File No. 333-24803 and No.
333-33191.
Fisher, Schacht & Oliver, LLP
Rochester, New York
December 2, 1997
EXHIBIT 23.8
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation of
our reports dated March 14, 1997 and September 6, 1996 for Safesite Records
Management Corporation and Mohawk Business Record Storage, Inc. included in the
Registration Statement on Form S-4/A filed with the Securities and Exchange
Commission on May 13, 1997, and to all references to our Firm incorporated by
reference in this Form S-4 and into the Company's previously filed Registration
Statements on Form S-8 File No. 333-24803 and No. 333-33191.
Arthur Andersen LLP
Boston, Massachusetts
Minneapolis, Minnesota
December 2, 1997
EXHIBIT 23.9
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation of
our reports dated January 16, 1996 for Nashville Vault Company, Ltd. included
in the Registration Statement on Form S-4/A filed with the Securities and
Exchange Commission on May 13, 1997, and to all references to our Firm
incorporated by reference in this Form S-4 and into Iron Mountain Inc.'s
previously filed Registration Statements on Form S-8 File No. 333-24803 and No.
333-33191.
Geo. S. Olive & Co. LLC
Indianapolis, Indiana
December 2, 1997
EXHIBIT 23.10
Consent of Independent Public Accountants
We consent to the incorporation by reference in this Registration Statement on
Form S-4 of our report dated July 19, 1996 except as to Note 11 which is as of
September 1, 1996, on our audit of the financial statements of International
Record Storage and Retrieval Service, Inc. as of and for the year ended
December 31, 1995 included in the Registration Statement on Form S-4/A filed
with the Securities and Exchange Commission on May 13, 1997. We also consent to
the reference to our firm under the caption "Experts".
Rothstein, Kass & Company, P.C.
Roseland, New Jersey
December 2, 1997
EXHIBIT 23.11
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation of
our reports dated March 4, 1997 (except for Note 11.a. and e. for which the
date is March 19, 1997) for Iron Mountain Incorporated included in the Annual
Report on Form 10-K filed with the Securities and Exchange Commission on March
28, 1997, and to all references to our Firm incorporated by reference in this
Form S-4 and into the Company's previously filed Registration Statements on
Form S-8 File No. 333-24803 and No. 333-33191.
Arthur Andersen LLP
Boston, Massachusetts
December 2, 1997
================================================================================
EXHIBIT 25
----------
CONFORMED COPY
--------------
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [ ]
- --------------------------------------------------------------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
- --------------------------------------------------------------------------------
IRON MOUNTAIN INCORPORATED
(Exact name of obligor as specified in its charter)
Delaware 04-3107342
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
745 Atlantic Avenue
Boston, MA 02111
(Address of principal executive offices) (Zip code)
----------------------
8 3/4% Senior Notes Due 2009
(Title of the indenture securities)
===============================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street,
New York New York, N.Y. 10006, and
Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza,
New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-2-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 25th day of November, 1997.
THE BANK OF NEW YORK
By: /s/ THOMAS E. TABOR
--------------------------
Name: THOMAS E. TABOR
Title: ASSISTANT TREASURER
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 1997,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 7,769,502
Interest-bearing balances .......... 1,472,524
Securities:
Held-to-maturity securities ........ 1,080,234
Available-for-sale securities ...... 3,046,199
Federal funds sold and Securities pur-
chased under agreements to resell...... 3,193,800
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ........................... 35,352,045
LESS: Allowance for loan and
lease losses .................... 625,042
LESS: Allocated transfer risk
reserve.......................... 429
Loans and leases, net of unearned
income, allowance, and reserve 34,726,574
Assets held in trading accounts ...... 1,611,096
Premises and fixed assets (including
capitalized leases) ................ 676,729
Other real estate owned .............. 22,460
Investments in unconsolidated
subsidiaries and associated
companies .......................... 209,959
Customers' liability to this bank on
acceptances outstanding ............ 1,357,731
Intangible assets .................... 720,883
Other assets ......................... 1,627,267
-----------
Total assets ......................... $57,514,958
===========
LIABILITIES
Deposits:
In domestic offices ................ $26,875,596
<PAGE>
Noninterest-bearing ................ 11,213,657
Interest-bearing ................... 15,661,939
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 16,334,270
Noninterest-bearing ................ 596,369
Interest-bearing ................... 15,737,901
Federal funds purchased and Securities
sold under agreements to repurchase. 1,583,157
Demand notes issued to the U.S.
Treasury ........................... 303,000
Trading liabilities .................. 1,308,173
Other borrowed money:
With remaining maturity of one year
or less .......................... 2,383,570
With remaining maturity of more than
one year through three years.......... 0
With remaining maturity of more than
three years ......................... 20,679
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,377,244
Subordinated notes and debentures .... 1,018,940
Other liabilities .................... 1,732,792
-----------
Total liabilities .................... 52,937,421
-----------
EQUITY CAPITAL
Common stock ........................ 1,135,284
Surplus ............................. 731,319
Undivided profits and capital
reserves .......................... 2,721,258
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ 1,948
Cumulative foreign currency transla-
tion adjustments .................. ( 12,272)
------------
Total equity capital ................ 4,577,537
-----------
Total liabilities and equity
capital ........................... $57,514,958
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
-
Alan R. Griffith |
J. Carter Bacot |
Thomas A. Renyi | Directors
-
Exhibit 99.1
IRON MOUNTAIN INCORPORATED
FORM OF LETTER OF TRANSMITTAL
8 3/4% SENIOR NOTES DUE 2009
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
UNLESS EXTENDED (THE "EXPIRATION DATE").
The Exchange Agent is:
THE BANK OF NEW YORK
By Registered or Certified Mail: By Hand or Overnight Delivery:
The Bank of New York The Bank of New York
101 Barclay Street - 7E 101 Barclay Street
New York, New York 10286 Corporate Trust Services Window
Attention: Natalie Simon Ground Level
Reorganization Section New York, New York 10286
Attention: Natalie Simon
Reorganization Section
By Facsimile for Eligible
Institutions:
(212) 815-6339
For confirmation and/or
information call:
(212) 815-5788
Delivery of this instrument to an address other than as set forth above
or transmission of instructions via a facsimile number other than the one listed
above will not constitute a valid delivery. The instructions accompanying this
Letter of Transmittal should be read carefully before this Letter of Transmittal
is completed.
The undersigned acknowledges that he or she has received the Prospectus
dated December , 1997 (the "Prospectus") of Iron Mountain Incorporated (the
"Company") and this Letter of Transmittal (the "Letter of Transmittal"), which
together constitute the Company's offer (the "Exchange Offer") to exchange
$1,000 principal amount (or integral multiples in excess thereof) of its 8 3/4%
Senior Notes due 2009, (the "New Notes"), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement of which the Prospectus is a part, for each $1,000
principal amount (or integral multiples in excess thereof) of its outstanding
8-3/4% Senior Notes due 2009 (the "Old Notes"), of which $250,000,000 aggregate
principal amount is outstanding. Other capitalized terms used but not defined
herein have the meaning given to them in the Prospectus.
<PAGE>
2
The Letter of Transmittal is to be used by Holders of Old Notes (i) if
the Old Notes are to be physically delivered herewith; (ii) if delivery of the
Old Notes is made by book-entry transfer to the Exchange Agent's account at the
Depositary Trust Company ("DTC") pursuant to the procedures set forth in the
Prospectus under "The Exchange Offer--Procedures for Tendering" by any financial
institution that is a participant in DTC and whose name appears on a security
position listing as the owner of the Old Notes or (iii) if the guaranteed
delivery procedures described in the Prospectus are to be utilized. DELIVERY OF
DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The term "Holder" with respect to the Exchange Offer means any person
(i) in whose name Old Notes are registered on the books of the Company or any
other person who has obtained a properly completed bond power from the
registered holder or (ii) in whose name the Old Notes are held of record by DTC
who desires to deliver such Old Notes by book-entry transfer at DTC. The
undersigned has completed, executed and delivered this Letter of Transmittal to
indicate the action the undersigned desires to take with respect to the Exchange
Offer. Holders who wish to tender their Old Notes must complete this letter in
its entirety.
Holders who desire to tender their Old Notes and whose Old Notes are
not lost but are not immediately available or who cannot deliver their Old Notes
and all other documents required hereby to the Exchange Agent by the Expiration
Date or who are unable to complete the procedure for book-entry transfer on a
timely basis must tender their Old Notes pursuant to the guaranteed delivery
procedure set forth in "The Exchange Offer--Procedures for Tendering."
<PAGE>
3
PLEASE READ THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL
CAREFULLY BEFORE CHECKING ANY BOX BELOW.
DESCRIPTION OF 8 3/4% SENIOR NOTES DUE 2009 (OLD NOTES)
<TABLE>
<CAPTION>
Principal Amount
Tendered (must be in
Name(s) and denominations of
Address(es) of Aggregate Principal $1,000 or any integral
Registered Holder(s) Certificate Amount Represented multiples in excess
(Please fill in, if blank) Number(s)* by Certificate(s) thereof )**
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Total
- --------------------------------------------------------------------------------------------------------------------------
* Need not be completed by holders of Old Notes who tender by book-entry transfer.
** Need not be completed by holders who wish to tender with respect to all Old Notes listed.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY.
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:__________________________________________________
DTC Book-Entry Account Number:__________________________________________________
Transaction Code No:____________________________________________________________
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO
A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE
AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):_______________________________________________
Date of Execution of Notice of Guaranteed Delivery:_____________________________
Name of Institution which Guaranteed Delivery:________________________________
DTC Account Number:___________________________________________________________
If Delivered by Book-Entry Transfer:__________________________________________
Name of Tendering Institution:________________________________________________
DTC Book-Entry Account No.:___________________________________________________
Transaction Code No.:_________________________________________________________
<PAGE>
4
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER TENDERING OLD NOTES ACQUIRED AS A
RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES AND WISH TO RECEIVE
10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS
OR SUPPLEMENTS THERETO.
Name:____________________
Address:_________________
_________________
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
<PAGE>
5
To: The Bank of New York
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of Old Notes
indicated above. Subject to and effective upon the acceptance for exchange of
the principal amount of Old Notes tendered in accordance with this Letter of
Transmittal, the undersigned sells, assigns and transfers to, or upon the order
of, the Company all right, title and interest in and to the Old Notes tendered
hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent its agent and attorney-in-fact (with full knowledge that the Exchange
Agent also acts as the agent of the Company) with respect to the tendered Old
Notes with full power of substitution to (i) deliver such Old Notes to the
Company or transfer ownership of such Old Notes on the account books maintained
by DTC, in each case, together with all accompanying evidences of transfer and
authenticity to, or upon the order of, the Company, (ii) present such Old Notes
or transfer ownership of such Old Notes on the account books maintained by DTC,
for transfer on the books of the Company and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Old Notes, all in
accordance with the terms of the Exchange Offer. The power of attorney granted
in this paragraph shall be deemed irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that he or she has full
power and authority to tender, sell, assign and transfer the Old Notes tendered
hereby and that the Company will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges and encumbrances and not
subject to any adverse claim, when the same are acquired by the Company. The
undersigned hereby acknowledges that this Exchange Offer is being made in
reliance upon an interpretation by the staff of the Securities and Exchange
Commission that any New Notes acquired in exchange for Old Notes tendered hereby
may be offered for sale, resold and otherwise transferred by holders thereof
(other than any such Holder that is an "affiliate" of the Company or any of its
subsidiaries within the meaning of Rule 405 under the Securities Act of 1933
(the "Securities Act")), without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Notes are
acquired in the ordinary course of business of the Holder receiving such New
Notes and that neither the Holder nor any such other person has an arrangement
with any person to participate in the distribution of such New Notes. The
undersigned hereby further represents that (i) the New Notes acquired pursuant
to the Exchange Offer are being obtained in the ordinary course of such Holder's
business, (ii) such Holder has no arrangements with any person to participate in
the distribution (within the meaning of the Securities Act) of such New Notes
and (iii) such Holder is not an "affiliate", as defined under Rule 405 of the
Securities Act of the Company or any of its subsidiaries or, if such Holder is
an affiliate, that such Holder will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable. If the
undersigned is not a broker-dealer, the undersigned represents that it is not
engaged in, and does not intend to engage in, a distribution of New Notes. If
the undersigned is a broker-dealer that will receive New Notes for its own
account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such New Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Exchange Agent or the Company to be necessary
or desirable to complete the assignment, transfer and purchase of the Old Notes
tendered hereby.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Old Notes, when, as and if the Company has given oral
or written notice of acceptance thereof to the Exchange Agent.
<PAGE>
6
If any tendered Old Notes are not accepted for exchange pursuant to the
Exchange Offer for any reason, any such unaccepted Old Notes will be returned
(except as noted below with respect to tenders through DTC), without expense, to
the undersigned at the address shown below or at a different address as may be
indicated herein under "Special Payment Instructions" as promptly as practicable
after the Expiration Date.
All authority herein conferred or agreed to be conferred in this Letter
of Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and any obligation of the undersigned hereunder shall be binding
upon the administrators, legal representatives, heirs, personal representatives,
successors and assigns of the undersigned.
The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the caption "The Exchange Offer--Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer.
Unless otherwise indicated under "Special Payment Instructions," please
issue the New Notes issued in exchange for the Old Notes accepted for exchange
and return any Old Notes not tendered or not exchanged in the name(s) of the
undersigned (or, in either such event, in the case of Old Notes tendered by DTC,
by credit to the account at DTC). Similarly, unless otherwise indicated under
"Special Delivery Instructions," please send the New Notes issued in exchange
for the Old Notes accepted for exchange and any Old Notes not tendered or not
exchanged (and accompanying documents, as appropriate) to the undersigned at the
address shown below the undersigned's signature(s), unless, in either event,
tender is being made through DTC. In the event that both "Special Payment
Instructions" and "Special Delivery Instructions" are completed, please issue
the New Notes issued in exchange for the Old Notes accepted for exchange and
return any Old Notes not tendered or not exchanged in the name(s) of, and send
said New Notes to, the person(s) so indicated. The undersigned recognizes that
the Company has no obligation pursuant to the "Special Payment Instructions" and
"Special Delivery Instructions" to transfer any Old Notes from the name of the
registered holder(s) thereof if the Company does not accept for exchange any of
the Old Notes so tendered.
Holders of the Old Notes who wish to tender their Old Notes and (i)
whose Old Notes are not immediately available or (ii) who cannot deliver their
Old Notes, this Letter of Transmittal or any other documents required hereby to
the Exchange Agent prior to the Expiration Date, may tender their Old Notes
according to the guaranteed delivery procedures set forth in the Prospectus
under the caption "The Exchange Offer--Guaranteed Delivery Procedures." See
Instruction 1 regarding the completion of the Letter of Transmittal printed
below.
<PAGE>
7
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3, 4 and 5)
To be completed ONLY if certificates for Old Notes in a principal amount not
tendered or not purchased, or New Notes issued in exchange for Old Notes
accepted for exchange are to be sent to someone other than the undersigned, or
the undersigned at an address other than that shown above.
Mail to:
Name:______________________________________
(Please Print)
Address:___________________________________
___________________________________________
___________________________________________
___________________________________________
(Include Zip Code)
___________________________________________
(Tax Identification or Social Security No.)
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 3, 4 and 5)
To be completed ONLY if certificates for Old Notes in a principal amount not
tendered or not purchased, or New Notes issued in exchange for Old Notes
accepted for exchange, are to be issued in the name of someone other than the
undersigned.
Issue New Notes to:
Name:______________________________________
(Please Print)
Address:___________________________________
___________________________________________
___________________________________________
___________________________________________
(Include Zip Code)
___________________________________________
(Tax Identification or Social Security No.)
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES FOR
OLD NOTES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE
NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO
5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
<PAGE>
8
PLEASE SIGN HERE WHETHER OR NOT OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY
______________________________________________ Dated: __________________________
______________________________________________ Dated: __________________________
Signature(s) of Registered Holder(s) or Authorized Signatory
Area Code and Telephone Number: ________________________________________________
The above lines must be signed by the registered holder(s) of Old Notes
as their name(s) appear(s) on the Old Notes or, if tendered by a participant in
DTC, exactly as such participant's name appears on a security position listing
as the owner of the Old Notes or by person(s) authorized to become registered
holder(s) by properly executed bond power and other documents transmitted with
this Letter of Transmittal. If Old Notes to which this Letter of Transmittal
relates are held of record by two or more joint holders, then all such holders
must sign this Letter of Transmittal. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such person must (i)
set forth his or her full title below and (ii) unless waived by the Company,
submit evidence satisfactory to the Company of such person's authority so to
act. See Instruction 3 regarding the completion of this Letter of Transmittal
printed below.
If the signature appearing above is not the registered Holder(s) of the
Old Notes, then the registered Holder must sign a valid proxy.
Name(s):________________________________________________________________________
________________________________________________________________________________
(Please Print)
Capacity (full title):__________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
GUARANTEE OF SIGNATURE(S)
(If required - See Instruction 3)
Authorized Signature:___________________________________________________________
Name:___________________________________________________________________________
(Please Print)
Name of Firm:___________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
Title:__________________________________________________________________________
Area Code and Telephone No.:____________________________________________________
Dated:__________________________________________________________________________
<PAGE>
9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Old Notes. The tendered
Old Notes (or a confirmation of a book-entry transfer into the Exchange Agent's
account at DTC of all Old Notes delivered electronically), as well as a properly
completed and duly executed copy of this Letter of Transmittal or facsimile
hereof and any other documents required by this Letter of Transmittal, must be
received by the Exchange Agent at its address set forth herein prior to 5:00
p.m., New York City time, on the Expiration Date. The method of delivery of the
tendered Old Notes, this Letter of Transmittal and all other required documents
to the Exchange Agent is at the election and risk of the Holder and, except as
otherwise provided below, the delivery will be deemed made only when actually
received by the Exchange Agent. Instead of delivery by mail, it is recommended
that the Holder use an overnight or hand delivery service. In all cases,
sufficient time should be allowed to assure timely delivery. No Letter of
Transmittal or Old Notes should be sent to the Company.
Holders who wish to tender their Old Notes and (i) whose Old Notes are
not immediately available, or (ii) who cannot deliver their Old Notes, this
Letter of Transmittal or any other documents required hereby to the Exchange
Agent prior to 5:00 p.m., New York City time, on the Expiration Date, must
tender their Old Notes according to the guaranteed delivery procedures set forth
in the Prospectus. Pursuant to such procedures: (i) such tender must be made by
or through a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., or a commercial bank or trust
company having an office or correspondent in the United States or an "eligible
guarantor institution" (an "Eligible Institution") within the meaning of Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended; (ii) prior to the
Expiration Date, the Exchange Agent must have received from the Eligible
Institution a properly completed and duly executed Notice of Guaranteed Delivery
(by facsimile transmission, mail or hand delivery) setting forth the name and
address of the Holder of the Old Notes, the certificate number or numbers of
such Old Notes and the principal amount of Old Notes tendered, stating that the
tender is being made thereby and guaranteeing that, within three business days
after the Expiration Date, this Letter of Transmittal (or facsimile hereof)
together with the Old Notes (or a confirmation of electronic delivery of
book-entry delivery into the Exchange Agent's account at DTC) and any other
required documents will be deposited by the Eligible Institution with the
Exchange Agent; and (iii) such properly completed and executed Letter of
Transmittal (or facsimile hereof), as well as all other documents required by
this Letter of Transmittal and all tendered Old Notes in proper form for
transfer (or a confirmation of electronic delivery of book-entry delivery into
the Exchange Agent's account at DTC), must be received by the Exchange Agent
within three business days after the Expiration Date, all as provided in the
Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures." Any Holder of Old Notes who wishes to tender his or her Old Notes
pursuant to the guaranteed delivery procedures described above must ensure that
the Exchange Agent receives the Notice of Guaranteed Delivery prior to 5:00
p.m., New York City time, on the Expiration Date. Upon request of the Exchange
Agent, a Notice of Guaranteed Delivery will be sent to Holders who wish to
tender their Old Notes according to the guaranteed delivery procedures set forth
above.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Old Notes and withdrawal of tendered Old
Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute right
to reject any and all Old Notes not properly tendered or any Old Notes the
Company's acceptance of which would, in the opinion of counsel for the Company,
be unlawful. The Company also reserves the right to waive any defects or
irregularities or conditions of tender as to the Exchange Offer and/or
particular Old Notes. The Company's interpretation of the terms and conditions
of the Exchange Offer (including the instructions in this Letter of Transmittal)
shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes must be cured within such
time as the
<PAGE>
10
Company shall determine. Neither the Company, the Exchange Agent nor any other
person shall be under any duty to give notification of defects or irregularities
with respect to tenders of Old Notes, nor shall any of them incur any liability
for failure to give such notification. Tenders of Old Notes will not be deemed
to have been made until such defects or irregularities have been cured or
waived. Any Old Notes received by the Exchange Agent that are not validly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering Holders of Old
Notes, unless otherwise provided in this Letter of Transmittal, as soon as
practicable following the Expiration Date.
2. Partial Tenders. Tenders of Old Notes will be accepted only in
denominations of $1,000 and any integral multiples in excess thereof. If less
than the entire principal amount of any Old Notes is tendered, the tendering
Holder should fill in the principal amount tendered in the fourth column of the
box entitled "Description of 8 3/4% Senior Notes Due 2009 (Old Notes)" above.
The entire principal amount of Old Notes delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise indicated. If the entire principal
amount of all Old Notes is not tendered, then Old Notes for the principal amount
of Old Notes not tendered and the New Notes issued in exchange for any Old Notes
accepted will be sent to the Holder at his or her registered address, unless a
different address is provided in the appropriate box on this Letter of
Transmittal, promptly after the Old Notes are accepted for exchange.
3. Signatures on the Letter of Transmittal; Bond Powers and
Endorsements; Guarantee of Signatures. If this Letter of Transmittal (or
facsimile hereof) is signed by the record Holder(s) of the Old Notes tendered
hereby, the signature must correspond with the name(s) as written on the face of
the Old Notes without alteration, enlargement or any change whatsoever.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder or Holders of Old Notes tendered and the New Notes issued in
exchange therefor are to be issued (or any untendered principal amount of Old
Notes is to be reissued) to the registered Holder, the said Holder need not and
should not endorse any tendered Old Notes, nor provide a separate bond power.
If this Letter of Transmittal (or facsimile hereof) is signed by a
person other than the registered Holder or Holders of any Old Notes listed, such
Old Notes must be endorsed or accompanied by appropriate bond powers signed as
the name of the registered Holder or Holders appears on the Old Notes.
If this Letter of Transmittal (or facsimile hereof) or any Old Notes or
bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact or officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, evidence satisfactory to the Company of their
authority so to act must be submitted with this Letter of Transmittal.
Endorsements on Old Notes or signatures on bond powers required by this
Instruction 3 must be guaranteed by an Eligible Institution participating in a
recognized medallion signature guarantee program.
Except as otherwise provided below, all signatures on this Letter of
Transmittal (or facsimile hereof) must be guaranteed by an Eligible Institution
participating in a recognized medallion signature guarantee program. Signatures
on this Letter of Transmittal need not be guaranteed if (i) this Letter of
Transmittal is signed by the registered Holder(s) of the Old Notes tendered
herewith (including any participant in DTC whose name appears on a security
position listing as the owner of Old Notes) and such Holder(s) have not
completed the box set forth herein entitled "Special Payments Instructions" or
the box entitled "Special Delivery Instructions" or (ii) such Old Notes are
tendered for the account of an Eligible Institution.
<PAGE>
11
4. Special Issuance and Delivery Instructions. Tendering Holders should
indicate, in the applicable box or boxes, the name and address to which New
Notes or substitute Old Notes for principal amounts not tendered or not accepted
for exchange are to be issued or sent, if different from the name and address of
the person signing this Letter of Transmittal (or in the case of tender of the
Old Notes through DTC, if different from DTC). In the case of issuance in a
different name, the taxpayer identification or social security number of the
person named must also be indicated.
5. Tax Identification Number. Federal income tax law requires that a
Holder whose offered Old Notes are accepted for exchange must provide the
Company (as payor) with his, her or its correct Taxpayer Identification Number
("TIN"), which, in the case of an exchanging Holder who is an individual, is his
or her social security number. If the Company is not provided with the correct
TIN or an adequate basis for exemption, such Holder may be subject to a $50
penalty imposed by the Internal Revenue Service (the "IRS"). In addition,
delivery to such Holder of New Notes may be subject to backup withholding in an
amount equal to 31% of the gross proceeds resulting from the Exchange Offer. If
withholding results in an overpayment of taxes, a refund may be obtained. Exempt
Holders (including, among others, all corporations and certain foreign
individuals) are not subject to these backup withholding and reporting
requirements.
To prevent backup withholding, each exchanging Holder must provide his,
her or its correct TIN by completing the Substitute Form W-9 enclosed herewith,
certifying that the TIN provided is correct (or that such Holder is awaiting a
TIN) and that either (i) the Holder is exempt from backup withholding, (ii) the
Holder has not been notified by the IRS that he, she or it is subject to backup
withholding as a result of a failure to report all interest or dividends, or
(iii) the IRS has notified the Holder that he, she or it is no longer subject to
backup withholding. In order to satisfy the Exchange Agent that a foreign
individual qualifies as an exempt recipient, such Holder must submit a statement
signed under penalty of perjury attesting to such exempt status. Such statements
may be obtained from the Exchange Agent. If the Old Notes are in more than one
name or are not in the name of the actual owner, consult the Substitute Form W-9
for information on which TIN to report. If you do not provide your TIN to the
Company within 60 days, backup withholding will begin and continue until you
furnish your TIN to the Company.
6. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, New Notes or Old Notes for principal amounts not tendered or accepted
for exchange are to be delivered to, or are to be registered or issued in the
name of, any person other than the registered Holder of the Old Notes tendered
hereby, or if tendered Old Notes are registered in the name of any person other
than the person signing this Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the exchange of Old Notes pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered Holder or on any other person) will be payable by the tendering
Holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
7. Waiver of Conditions. The Company reserves the absolute right to
amend, waive or modify specified conditions in the Exchange Offer in the case of
any Old Notes tendered.
8. Mutilated, Lost Stolen or Destroyed Old Notes. Any tendering Holder
whose Old Notes have been mutilated, lost, stolen or destroyed should contact
the Exchange Agent at the address indicated herein for further instructions.
9. Requests for Assistance or Additional Copies. Questions and requests
for assistance and requests for additional copies of the Prospectus or this
Letter of Transmittal may be directed to the Exchange Agent at the address
specified above. The telephone number for the Exchange Agent is (212) 815-5788.
Holders may also contact their broker, dealer, commercial bank, trust company or
other nominee for assistance concerning the Exchange Offer.
<PAGE>
12
(DO NOT WRITE IN SPACE BELOW)
- --------------------------------------------------------------------------------
Certificate Old Notes Old Notes
Surrendered Tendered Accepted
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Delivery Prepared By: _________________ Checked By: _____________ Dated:________
<PAGE>
14
PAYOR'S NAME: Iron Mountain Incorporated
<TABLE>
<S> <C> <C>
PART I -- PLEASE PROVIDE YOUR TIN IN
SUBSTITUTE THE BOX AT RIGHT AND CERTIFY BY ____________________________
Form W-9 SIGNING AND DATING BELOW Social Security Number
OR
----------------------------
Employer Identification Number
PART II -- Certification--Under penalties of perjury,
I certify that:
Department of
the Treasury (1) The number shown on this form is my correct
Internal Revenue Taxpayer Identification Number (or I am
Service waiting for a number to be issued to me), and
(2) I am not subject to backup withholding because
(i) I am exempt from backup withholding, (ii)
I have not been notified by the Internal
Revenue Service ("IRS") that I am subject to
backup withholding as a result of a failure to
report all interest or dividends, or (iii) the
IRS has notified me that I am no longer
subject to backup withholding.
- --------------------------------------------------------------------------------
Certification Instructions--You must cross out item (2) in Part II above
Payer's Request if you have been notified by the IRS that you are subject to backup
for Taxpayer withholding because of underreporting interest or dividends on your tax
Identification return. However, if after being notified by the IRS that you were subject
Number (TIN) to backup withholding you received another notification from the IRS PART III
that you are no longer subject to backup withholding, do not cross out
item (2). Awaiting TIN [ ]
Signature:___________________________ Date:_________
Name (Please Print):_________________________________
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THE SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE
IF YOU CHECKED THE BOX IN PART III OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (i) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (ii)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within 60 days, 31% of all
reportable payments made to me thereafter will be withheld until I provide a
number.
---------------------------------------- ----------------------------------
Signature Date
----------------------------------------
Name (Please Print)
Exhibit 99.2
FORM OF NOTICE OF GUARANTEED DELIVERY
FOR
8 3/4% SENIOR NOTES DUE 2009
OF
IRON MOUNTAIN INCORPORATED
As set forth in the Prospectus, dated December , 1997 (the "Prospectus")
of Iron Mountain Incorporated (the "Company") and the accompanying Letter of
Transmittal and instructions thereto (the "Letter of Transmittal"), this form or
one substantially equivalent hereto must be used to accept the Company's
exchange offer (the "Exchange Offer") to purchase all of its outstanding 8 3/4%
Senior Notes Due 2009 (the "Old Notes") if (i) certificates representing the Old
Notes to be tendered for purchase and payment are not lost but are not
immediately available, (ii) time will not permit the Letter of Transmittal,
certificates representing such Old Notes or other required documents to reach
the Exchange Agent prior to the Expiration Date or (iii) the procedures for
book-entry transfer cannot be completed prior to the Expiration Date. This form
may be delivered by an Eligible Institution by mail or hand delivery or
transmitted, via telegram, telex or facsimile, to the Exchange Agent as set
forth below. All capitalized terms used herein but not defined herein shall have
the meanings ascribed to them in the Prospectus.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION
DATE"). TENDERS OF OLD NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR
TO 5:00 P.M. ON THE EXPIRATION DATE.
The Exchange Agent:
The Bank of New York
By Registered or By Hand or Overnight Delivery:
Certified Mail: 101 Barclay Street
The Bank of New York Corporate Trust Services Window
101 Barclay Street - 7E Ground Level
New York, New York 10286 New York, New York 10286
Attention: Natalie Simon Attention: Natalie Simon
Reorganization Section Reorganization Section
By Facsimile for
Eligible Institutions:
(212) 815-6399
For confirmation
and/or information
call:
(212) 815-5788
<PAGE>
-2-
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION
VIA TELEGRAM, TELEX OR FACSIMILE, OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on
the Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" participating in a recognized medallion signature guarantee program
under the instruction thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
-3-
To: The Bank of New York
Ladies and Gentlemen:
The undersigned hereby tender(s) to the Company, upon the terms and
subject to the conditions set forth in the Exchange Offer and the Letter of
Transmittal, receipt of which is hereby acknowledged, the aggregate principal
amount of Old Notes set forth below pursuant to the guaranteed delivery
procedures set forth in the Prospectus.
The undersigned understands that tenders of Old Notes pursuant to the
Exchange Offer may not be withdrawn after 5:00 p.m., New York City time on the
Expiration Date. Tenders of Old Notes may also be withdrawn if the Exchange
Offer is terminated without any such Old Notes being purchased thereunder or as
otherwise provided in the Prospectus.
All authority herein conferred or agreed to be conferred by this Notice
of Guaranteed Delivery shall survive the death or incapacity of the undersigned
and every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
PLEASE SIGN AND COMPLETE
Signature(s) of Registered Owner(s) or Names(s) of Registered Holder(s):
Authorized Signatory:
_________________________________ _________________________________
_________________________________ _________________________________
_________________________________ _________________________________
Aggregate Principal Amount of Old Address:
Notes Tendered:
_________________________________ _________________________________
_________________________________ _________________________________
_________________________________ _________________________________
Area Code and
Certificate No(s) of Old Notes Telephone No.:___________________
(if available):
If Old Notes will be delivered by
_________________________________ book-entry transfer at
_________________________________ The Depository Trust Company,
_________________________________ Insert DTC Book-entry Account
Date:_____________________________ No.:_____________________________
This Notice of Guaranteed Delivery must be signed by the registered holder(s) of
Old Notes exactly as its (their) name(s) appear on certificates for Old Notes,
or by person(s) authorized to become registered holder(s) by endorsements and
documents transmitted with this Notice
<PAGE>
-4-
of Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
Please print name(s) and address(es)
Name(s):___________________________________
Capacity: __________________________________
Address(es):________________________________
DO NOT SEND OLD NOTES WITH THIS FORM. NOTES SHOULD BE SENT TO THE
EXCHANGE AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY
EXECUTED LETTER OF TRANSMITTAL.
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or a correspondent in the
United States, hereby (a) represents that each holder of Old Notes on whose
behalf this tender is being made "own(s)" the Old Notes covered hereby within
the meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended,
(b) represents that such tender of Notes complies with such Rule 14e-4, and (c)
guarantees that, within three New York Stock Exchange trading days from the date
of this Notice of Guaranteed Delivery, a properly completed and duly executed
Letter of Transmittal (or a facsimile thereof), together with certificates
representing the Old Notes covered hereby in proper form for transfer (or
confirmation of the book-entry transfer of such Old Notes into the Exchange
Agent's account at The Depository Trust Company, pursuant to the procedure for
book-entry transfer set forth in the Prospectus) and required documents will be
deposited by the undersigned with the Exchange Agent.
THE UNDERSIGNED ACKNOWLEDGES THAT IT MUST DELIVER THE LETTER OF
TRANSMITTAL AND OLD NOTES TENDERED HEREBY TO THE EXCHANGE AGENT WITHIN THE TIME
PERIOD SET FORTH ABOVE AND THAT FAILURE TO DO SO COULD RESULT IN FINANCIAL LOSS
TO THE UNDERSIGNED.
Name of Firm:_________________________ _________________________________
Authorized Signature
Address:______________________________ Name:____________________________
Title:___________________________
Area Code and Telephone No.: Date:____________________________
