As filed with the Securities and Exchange Commission on November 23, 1998
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
IRON MOUNTAIN INCORPORATED
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
DELAWARE 4226 04-3107342
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
</TABLE>
745 ATLANTIC AVENUE, BOSTON, MA 02111
(617) 535-4766
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
--------------------
C. Richard Reese
Chairman of The Board of
Directors and Chief Executive Officer
Iron Mountain Incorporated
745 Atlantic Avenue
Boston, MA 02111
(617) 535-4766
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
--------------------
Copy to:
Susan Forest Barrett, Esq.
Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02109
(617) 338-2800
Approximate date of commencement of proposed sale to the public: From
time to time as soon as practicable after this Registration Statement becomes
effective.
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, 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, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to Amount to be Proposed Maximum Offering Proposed Maximum Amount of
be Registered Registered Price Per Share (1) Aggregate Offering Price (1) Registration Fee
------------- ---------- ------------------- ---------------------------- ----------------
<S> <C> <C> <C> <C>
Common Stock,
Par Value $.01 per share 1,488,508 $28.8125 $42,887,636 $11,922.77(2)
</TABLE>
(Footnotes provided on following page)
----------------------
If, as a result of stock splits, stock dividends or similar transactions,
the number of securities purported to be registered on this Registration
Statement changes, the provisions of Rule 416 shall apply to this Registration
Statement.
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.
<PAGE>
(1) The shares are to be offered at prices not presently determinable. The
offering price is estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457(c) under the Securities Act of
1933, as amended, using the average high and low prices reported on the
Nasdaq National Market on November 16, 1998.
(2) Pursuant to Rule 429(a) of the rules and regulations under the
Securities Act of 1933, as amended, the Prospectus filed herein relates
to the shares of Common Stock registered hereby and to the remaining
1,011,492 shares of Common Stock included in Iron Mountain
Incorporated's Registration Statement on Form S-4 (File No. 333-44187).
The amount of the filing fee associated with such securities that was
previously paid with such registration statement was $10,472.50.
The Prospectus contained herein is a combined Prospectus pursuant to Rule 429(a)
of the rules and regulations under the Securities Act of 1933, as amended, which
also relates to 1,011,492 shares of Common Stock included in Iron Mountain
Incorporated's Registration Statement on Form S-4 (File No. 333-44187).
<PAGE>
Subject to Completion
Preliminary Prospectus Dated November 23, 1998
PROSPECTUS
2,500,000 Shares
Iron Mountain Incorporated
Common Stock
----------------------
This Prospectus relates to the issuance from time to time of shares of
common stock of Iron Mountain Incorporated in an aggregate amount of up to
2,500,000 shares. The terms of each issuance are to be determined at the time of
each offering.
We will offer the common stock directly in connection with the
acquisition of the assets of, or ownership interests in, certain entities
involved in the same or similar lines of business as ours or any of our
subsidiaries. We will negotiate the terms of an acquisition with the owners or
controlling persons of the assets or ownership interests we seek to acquire.
We expect that the common stock issued in any such acquisition will be
valued at a price reasonably related to the market value of our common stock,
either at the time the terms of the acquisitions are tentatively agreed upon, at
or about the time of the closing of the acquisitions, or during a set period or
periods prior to the closing of the acquisitions.
Our common stock is traded on the Nasdaq National Market System under
the symbol "IMTN." Our principal executive offices are located at 745 Atlantic
Avenue, Boston, Massachusetts 02111. Our telephone number is (617) 535-4766.
We do not expect to pay underwriting discounts or commissions in
connection with each offering.
----------------------
See "RISK FACTORS" at page 5 for certain information that should be
considered by prospective investors.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus. Any representation to the contrary is a
criminal offense.
----------------------
The date of this Prospectus is ______________,1998.
The information in this Prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This Prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
<PAGE>
You should rely only on the information incorporated by reference or
provided in this Prospectus. We have not authorized anyone else to provide you
with different information. We are not making an offer of these securities in
any jurisdiction where it is unlawful. You should not assume that the
information in this Prospectus is accurate as of any date other than the date on
the front of this document.
-----------------------
TABLE OF CONTENTS
Page
About This Prospectus 3
Where You Can Find Additional Information 3
Incorporation of Certain Documents by Reference 3
The Company 4
The Acquisitions 4
Risk Factors 5
Selected Consolidated Financial and Operating Information 11
Description of Capital Stock 13
Delaware General Corporation Law and Certain Provisions
of the Restated Certificate of Incorporation and the By-laws 15
Legal Matters 17
Experts 17
-----------------------
This Prospectus incorporates important business and financial
information about Iron Mountain that is not included in or delivered with this
document. You may obtain this information at no cost by writing or telephoning
us at the following address:
John F. Kenny, Jr.
Executive Vice President and
Chief Financial Officer
Iron Mountain Incorporated
745 Atlantic Avenue
Boston, Massachusetts 02111
(617) 535-4766
To obtain timely delivery, you must request the information by no later
than five business days before you must make your investment decision.
2
<PAGE>
ABOUT THIS PROSPECTUS
This Prospectus is part of a registration statement that we filed with the
SEC using a "shelf" registration process with respect to the common stock. Under
this shelf process we may sell, in one or more offerings, shares of our common
stock up to a total of 2,500,000 shares. This Prospectus does not contain all of
the information contained in the Registration Statement. Accordingly, for
further information concerning Iron Mountain and the common stock, reference is
also made to the Registration Statement. Statements in this Prospectus regarding
the contents of any contract or other document are not necessarily complete, and
in each instance reference is made to the copy of the contract or other document
filed as an exhibit to the Registration Statement.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and, accordingly, file annual, quarterly, and current
reports, proxy statements and other information with the SEC. You can inspect
and obtain copies of the Registration Statement, the exhibits and schedules
which form a part of the Registration Statement, and the reports, proxy
statements and other information filed by us with the SEC, at prescribed rates,
at the public reference facilities maintained by the SEC at Judiciary Plaza,
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference room. The SEC
maintains a World Wide Web site that contains reports, proxy and information
statements and other information regarding registrants, including Iron Mountain,
that file electronically with the SEC. The address of the site is
http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this Prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC (File No.
0-27584) under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934
until our offering is completed.
o Annual Report on Form 10-K for the fiscal year ended December 31,
1997;
o Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998;
o Current Reports on Form 8-K dated January 6, 1998, February 18, 1998
(amended April 7, 1998), March 9, 1998, March 30, 1998, April 21,
1998, July 10, 1998 (amended August 7, 1998), September 18, 1998 and
November 23, 1998;
o The description of the common stock contained in our Registration
Statement on Form 8-A dated January 18, 1996;
o The financial statements for Safesite Records Management Corporation
included in 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 SEC on May 14, 1997, and the unaudited financial statements of
Safesite Records Management Corporation as of March 31, 1997 and for
the three months ended
3
<PAGE>
March 31, 1996 and 1997 contained in the Current Report on Form 8- K/A
dated August 26, 1997;
o The financial information for Security Archives of Minnesota,
Wellington Financial Services, Inc., Concorde Group, Inc. and Neil
Tucker Trust, and Data Securities International, Inc. contained in the
Current Report on Form 8-K dated October 30, 1997; and
o The financial information for Records Retention/FileSafe, LP,
Allegiance Business Archives, Ltd., and HIMSCORP, Inc. and
Subsidiaries contained in the Current Report on Form 8-K dated
November 25, 1997.
THE COMPANY
Iron Mountain is America's largest records management company, as measured
by its revenues. We are a national, full-service provider of records management
and related services, enabling customers to outsource records management
functions. We have 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. We provide storage and
related services for all major media, including paper (the dominant form of
record storage), computer disk and tapes, microfilm and microfiche, master audio
and video tapes, film and optical disks, X-rays and blueprints. The principal
services provided to our storage customers include courier pick-up and delivery,
filing, retrieval and destruction of records, database management, customized
reporting and disaster recovery support. We also sell storage materials and
provide consulting, facilities management, information technology staffing and
other outsourcing services.
Iron Mountain was incorporated in Delaware in 1990 but its predecessor
operations date from 1951. Our principal executive offices are located at 745
Atlantic Avenue, Boston, Massachusetts 02111. Our telephone number is (617)
535-4766.
THE ACQUISITIONS
We will offer the common stock registered hereby in connection with our
acquisitions of records management companies and companies that offer related
services. The consideration for acquisitions will consist of shares of common
stock, cash, notes or other evidences of indebtedness, guarantees, assumption of
liabilities, tangible or intangible property, or a combination thereof, as
determined from time to time by negotiations between us and the owners or
controlling persons of the assets or ownership interests to be acquired. In
addition, we may lease property from and enter into management or consulting
agreements and non-competition agreements with the former owners and key
executive personnel of the businesses to be acquired.
We will consider the following factors, among others, when we decide
whether to acquire a business: (1) the quality and reputation of the business,
(2) the assets, liabilities, results of operations and cash flows for the
business, (3) the quality of its management and employees, (4) its earnings
potential, (5) the geographic locations of the business and (6) the market value
of our common stock when pertinent.
4
<PAGE>
RISK FACTORS
Before you invest in our common stock, you should be aware that there are
various risks, including those described below. You should consider carefully
these risk factors together with all of the other information included in or
incorporated into this Prospectus before you decide to purchase shares of our
common stock.
Some of the information contained in or incorporated into this Prospectus
may include forward-looking statements. Such statements can be identified by the
use of forward-looking terminology such as "may," "will," "expect,"
"anticipate," "believe" or other similar words. These statements discuss our
current expectations, goals, beliefs and plans regarding the financial condition
or results of operations of Iron Mountain or other non-historical facts.
By their nature, such forward-looking statements include risks and
uncertainties. When considering such forward-looking statements, you should keep
in mind the risk factors set forth below and the cautionary statements included
elsewhere in this Prospectus or in documents that are incorporated into this
Prospectus. Such risk factors and other factors identified in this Prospectus or
in the documents that are incorporated into this Prospectus could cause our
actual results to differ materially from those expressed in or implied by such
forward-looking statements. If we revise any of our forward-looking statements
to reflect future events or circumstances, we will not always publicly release
our revised statements.
Risks Associated with Acquisition Strategy
As part of our growth strategy, we have acquired, and expect to acquire in
the future, records management businesses and businesses that provide services
related to records management. This growth strategy involves certain risks, and
we may be unable to pursue such a strategy in the future. For example, we may be
unable to:
o identify suitable companies to acquire;
o arrange suitable financing to provide us with the funds to acquire
such companies; or
o incur additional debt necessary to acquire such companies, if we are
unable to pay the purchase price out of working capital or to pay all
or part of the purchase price with our common stock or other equity
securities.
The success of any completed acquisition depends in part on our ability to
integrate effectively the acquired company into Iron Mountain. The process of
integrating such acquired businesses may involve unforeseen difficulties and may
require a disproportionate amount of our management's attention and our
financial and other resources. We may be unable to successfully integrate our
recent acquisitions or possible future acquisitions.
The lenders under our credit agreement must pre-approve certain
acquisitions. If we propose to acquire one company for a purchase price over $65
million or if we propose to acquire multiple companies in a given year and the
aggregate purchase price exceeds $150 million in cash and other consideration or
$100 million in cash, then lenders holding 51% or more of the commitments under
our credit agreement must approve such acquisition or acquisitions. The lenders
could withhold their consent on acquisitions that Iron Mountain proposes to make
in excess of such limits.
Our operating results may fluctuate substantially from quarter to quarter
due to the size, timing and integration of possible future
5
<PAGE>
acquisitions. As a result, operating results for any quarter may not indicate
the results that may be achieved for any subsequent fiscal quarter or for a full
fiscal year.
Competition
We compete with one or more records management service providers in all
geographic areas where we operate. We believe that competition for customers is
based on price, reputation for reliability, quality of service and scope and
scale of technology and that we generally compete 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 we
believe that this pricing climate is stabilizing, prices could decline further,
as competitors seek to gain or preserve market share. A further downward trend
in pricing, if it continues for an extended period of time, could materially and
adversely affect our results of operations.
Iron Mountain also competes for companies to acquire. Some of our
competitors may possess greater financial and other resources than us. If any
such competitor were to devote additional resources to the records management
business and such acquisition candidates or focused its strategy on Iron
Mountain's markets, our results of operations could be adversely affected.
In addition, we compete with the internal records management capability of
our current and potential customers. We can provide no assurances that these
organizations will use an outside company such as Iron Mountain for their future
records management. In addition, such organizations could bring in-house some or
all of the functions they currently outsource to Iron Mountain.
Alternative Technologies
We derive most of our revenues from the storage of paper documents and
related services. Such storage requires significant physical space. Alternative
technologies for generating, capturing, managing, transmitting and storing
information exist, many of which require significantly less space than paper.
Such technologies include computer media, microforms, CD-ROM and optical disk.
To date, none of these technologies has replaced paper as the principal means
for storing information. However, we can provide no assurances that our
customers will continue to store most of their records in paper format. A
significant shift by our customers to storage of data through non-paper based
technologies (whether now existing or developed in the future) could adversely
affect our business.
Financial Leverage; Debt Service Requirements
We have a significant level of debt due to the substantial indebtedness we
have incurred primarily to finance acquisitions and expand our operations. We
expect to continue to borrow under our credit agreement and possible future
credit arrangements in order to finance possible future acquisitions and for
general corporate purposes.
Our ability to make principal and interest payments on our indebtedness
depends upon our future operating results, which we cannot entirely control
because they are tied to both internal and external forces. Our high debt level
could have important consequences, including the following:
o we may not be able to obtain additional financing for future working
capital needs or for possible future acquisitions or other purposes;
6
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o the required payments of principal and interest on our indebtedness
may reduce funds available for other purposes;
o we may be vulnerable to a downturn in our operating performance;
o we may be more sensitive to adverse economic conditions than some of
our competitors; and
o we may be limited in our ability to withstand competitive pressures.
Our debt service absorbs a substantial portion of our cash flow from
operations. We believe, but can provide no assurances, 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. Moreover, borrowings under the credit agreement bear interest at
rates that fluctuate. Any increases in interest rates on borrowings under the
credit agreement increases our debt service payments. If our cash flow were not
sufficient to meet our debt service requirements or payments of principal, we
could be required to sell additional equity securities, refinance our
obligations or dispose of assets in order to make scheduled payments. Iron
Mountain may not be able to effect any of such transactions or do so on
favorable terms.
Casualty
We maintain comprehensive liability, fire, flood, earthquake (where
appropriate) and extended coverage insurance with respect to the properties that
we own or lease, to the extent such insurance is available on commercially
reasonable terms, with customary limits and deductibles. We will continue to
maintain such insurance. We may be unable to obtain full coverage on a
cost-effective basis for some casualties, such as earthquakes, or we may be
unable to obtain any insurance for certain losses, such as losses from riots. In
the past we have suffered damages and losses from an earthquake and a riot in
California, which were substantially covered by insurance.
In March 1997, three fires extensively damaged one and destroyed another of
our records management facilities in South Brunswick Township, New Jersey. Some
of our customers or their insurance carriers have asserted claims or filed
lawsuits against us as a consequence of the destruction of or damage to their
records due to the fires. We cannot predict the outcome of these claims and
proceedings. Based on our present assessment of the situation, after
consultation with legal counsel, we do not believe that the outcome of these
claims and lawsuits will have a material adverse effect on Iron Mountain's
financial condition or results of operations, although we can provide no
assurances in this regard.
In the future, should uninsured losses or damages occur, we could lose both
our 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. Any such loss could
materially adversely affect our financial condition or results of operations.
History of Losses; EBITDA Objective
In the past, our results of operations have resulted in net losses
applicable to common stockholders. We attribute such losses in part to
significant non-cash charges against income for depreciation and amortization
expenses associated with expansion of our storage capacity and goodwill
amortization associated with acquisitions accounted for under the purchase
method. We incur these non-cash charges because of our growth strategy. In
addition, in the past, two extraordinary
7
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expenses negatively impacted net income applicable to common stockholders: a
charge for accretion of a redeemable put warrant and a charge related to the
early retirement of debt in 1996. We redeemed the put warrant in February 1996,
upon completion of our initial public offering. In the future, our growth
strategy could result in further net losses due to increased interest expense
associated with borrowings under our credit agreement and possible future credit
arrangements and increased depreciation and amortization expenses.
Iron Mountain's primary financial objective is to increase its earnings
before interest, taxes, depreciation, amortization and extraordinary items
("EBITDA"), which is a source of funds to service indebtedness and for
investment in continued internal growth and growth through acquisitions.
Increasing net income and net income applicable to common stockholders is not
our focus. In the past, we have experienced a growth in EBITDA, while net losses
applicable to common stockholders have increased. Based on our experience in the
records management industry, we believe 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. Our financing agreements contain covenants in which EBITDA
is the measure of financial performance. Other measures of financial
performance, such as net income and net income applicable to common
stockholders, have been negatively affected by our pursuit of increased EBITDA
and may be negatively affected in the future.
Anti-Takeover Effect of Certain Provisions of Iron Mountain's Restated
Certificate of Incorporation, By-Laws and the Notes Indentures
Certain provisions of our Restated Certificate of Incorporation and By-Laws
could have the effect of discouraging or precluding acquisition of control of us
by a third party and could render the consummation of certain types of
transactions involving an actual or potential change in control of Iron
Mountain, such as a merger, tender offer or proxy contest, more difficult.
Staggered Board. The Board of Directors is divided into three classes of
Directors, elected on a staggered basis (one class per year). A third party
would have to successfully elect its directors at two consecutive stockholders
meetings at which directors were elected in order to replace a majority of the
members of the Board. This means that existing management would control Iron
Mountain during such period.
Preferred Stock. The Board may issue up to 2,000,000 shares of preferred
stock without stockholder approval. The Board may determine the terms and
conditions of any issuance of preferred stock and the rights, privileges and
preferences (including the right to vote and the right to convert into common
stock) of the preferred stock.
Restrictions on Transfer. The By-Laws prohibit the transfer by the holders
of approximately 2,200,000 shares of common stock that were issued by Iron
Mountain in one acquisition. The restrictions on transfer expire in January
1999. A significant portion of such shares are held by an affiliate.
Mandatory Redemption of Notes. Iron Mountain currently has outstanding
$165,000,000 in aggregate principal amount of 10 1/8% Senior Subordinated Notes
due 2006 issued in October 1996 and $250,000,000 in
8
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aggregate principal amount of 8 3/4% Senior Subordinated Notes due 2009 issued
in October 1997. If a change of control of Iron Mountain (as defined in the
indentures for the Notes) occurs, we must offer to purchase all of the
outstanding Notes at a purchase price, in cash, equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
purchase. We can provide no assurances that we would be able to obtain the funds
for such a redemption through a refinancing of the Notes to be purchased or
otherwise, or that the purchase would be permitted under our credit agreement.
Also, the requirement that we make an offer to purchase all of the Notes then
outstanding in the event of a change of control may deter a third party from
effecting a transaction that would constitute a change of control.
Control by Principal Stockholders
The voting power held by certain of our large stockholders may discourage
certain types of transactions involving an actual or potential change of control
of Iron Mountain, including transactions in which the holders of common stock
might otherwise receive a premium for their shares over then-current market
prices. In addition, such stockholders' voting power gives them the ability to
significantly affect the election of Directors of Iron Mountain who, in turn,
control the management and affairs of Iron Mountain.
Environmental Matters
Various federal, state and local environmental laws impose liability on an
owner of real estate for the costs of investigation and cleanup of soil and
groundwater contaminated by certain hazardous substances or wastes or petroleum
products. These laws also impose liability on lessees conducting operations on
contaminated real estate. Some of these environmental laws impose cleanup
liability without regard to whether the owner or operator of the real estate or
operations knew of or was responsible for the contamination. Moreover, some of
these laws impose liability whether or not operations at the property have been
discontinued or title to the property has been transferred. In addition, the
presence of contamination, or the failure to properly cleanup 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. Third parties
may make claims against the owner or operator of contaminated real estate 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. Such laws may impose liability for release of
asbestos-containing materials and may enable third parties to sue owners or
operators of real estate for personal injury associated with exposure to such
substances. Certain of our facilities contain or may contain asbestos-containing
materials, but we believe that such materials are in acceptable condition at
this time. We believe that future costs related to any removal or encapsulation
of asbestos-containing materials at our facilities will not be material.
In addition, certain of our current and former properties that we now or
formerly owned or operated 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. In some instances these
properties included the operation of underground storage tanks. Iron Mountain
may be potentially liable for environmental costs such as those discussed above.
We have from time to time conducted limited environmental investigations
and remedial activities at certain of our former and
9
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current facilities, but we have not undertaken an in-depth environmental review
of all of our properties.
We believe that we are in substantial compliance with all applicable
material environmental laws. Moreover, we are not aware of any material
liability relating to contamination at any of our current or former properties.
We cannot, however, rule out the possibility that environmental conditions for
which Iron Mountain might be liable exist at such properties or at properties
which we may acquire in future acquisitions. In addition, future regulatory
action and environmental laws may impose costs for environmental compliance that
do not exist today. These future events could have a material adverse effect on
our financial condition and results of operations.
No Intention to Pay Dividends
We have never declared or paid cash dividends on our capital stock. We
intend to retain future earnings for use in our business and do not anticipate
declaring or paying any cash dividends on shares of common stock in the
foreseeable future. In addition, we are currently restricted under the terms of
our credit agreement and the indentures for the Notes from declaring or paying
cash dividends on our common stock.
10
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SELECTED CONSOLIDATED FINANCIAL AND OPERATING INFORMATION
(In thousands, except per share amounts)
We derived the following selected consolidated statements of operations
and balance sheet data of Iron Mountain as of and for each of the years ended
December 31, 1993, 1994, 1995, 1996 and 1997 from our audited consolidated
financial statements. We have restated this selected consolidated financial and
operating information to reflect a three-for-two stock split effected in the
form of a stock dividend on our common stock, which was approved by the Board on
June 30, 1998. Shares of common stock were issued on July 31, 1998 to all
stockholders of record as of the close of business on July 17, 1998. We derived
the selected consolidated statements of operations and balance sheet data of
Iron Mountain as of and for the nine months ended September 30, 1997 and 1998
from our unaudited condensed consolidated financial statements. Our unaudited
condensed consolidated financial statements include all adjustments, consisting
of normal recurring accruals, that we consider 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, 1998 are not
necessarily indicative of the results for the entire year ending December 31,
1998. You should read the selected consolidated financial and operating
information set forth below in conjunction with our 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,
---------------------------------------------------- ----------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statements of Operations Data:
Revenues:
Storage ...................................... $48,892 $54,098 $ 64,165 $ 85,826 $125,968 $ 86,199 $168,046
Service and Storage Material Sales ........... 32,781 33,520 40,271 52,892 82,797 57,195 142,461
------- ------- -------- -------- -------- -------- --------
Total Revenues ............................. 81,673 87,618 104,436 138,718 208,765 143,394 310,507
Operating Expenses:
Cost of Sales (Excluding Depreciation) ....... 43,054 45,880 52,277 70,747 106,879 73,742 162,609
Selling, General and Administrative .......... 19,971 20,853 26,035 34,342 51,668 35,682 76,666
Depreciation and Amortization ................ 6,789 8,690 12,341 16,936 27,107 18,495 36,225
------- ------- -------- -------- -------- -------- --------
Total Operating Expenses ................... 69,814 75,423 90,653 122,025 185,654 127,919 275,500
------- ------- -------- -------- -------- -------- --------
Operating Income ................................ 11,859 12,195 13,783 16,693 23,111 15,475 35,007
Interest Expense ................................ 8,203 8,954 11,838 14,901 27,712 17,631 34,228
Other Income(5) ................................. -- -- -- -- -- -- 1,700
------- ------- -------- -------- -------- -------- --------
Income (Loss) Before Provision (Credit)
for Income Taxes ............................. 3,656 3,241 1,945 1,792 (4,601) (2,156) 2,479
Provision (Credit) for Income Taxes ............. 2,088 1,957 1,697 1,435 (80) (346) 4,123
------- ------- -------- -------- -------- -------- --------
Income (Loss) Before Extraordinary Charge ....... 1,568 1,284 248 357 (4,521) (1,810) (1,644)
Extraordinary Charge, Net of Tax Benefit(1)...... -- -- -- 2,126 -- -- --
------- ------- -------- -------- -------- -------- --------
Net Income (Loss) ............................... 1,568 1,284 248 (1,769) (4,521) (1,810) (1,644)
Accretion of Redeemable Put Warrant ............. 940 1,412 2,107 280 -- -- --
------- ------- -------- -------- -------- -------- --------
Net Income (Loss) Applicable to Common
Stockholders ................................. $ 628 $ (128) $ (1,859) $ (2,049) $ (4,521) $ (1,810) $ (1,644)
======= ======= ======== ======== ======== ======== ========
Income (Loss) per Common Share:
Basic:
Income (Loss) Before Extraordinary Charge...... $ 9.10 $ (0.40) $ (32.61) $ 0.00 $ (0.26) $ (0.11) $ (0.06)
Extraordinary Charge, Net of Tax Benefit (1)... -- -- -- (0.15) -- -- --
------- ------- -------- -------- -------- -------- --------
Net Income (Loss) Applicable to Common
Stockholders ............................... $ 9.10 $ (0.40) $ (32.61) $ (0.15) $ (0.26) $ (0.11) $ (0.06)
======= ======= ======== ======== ======== ======== ========
Weighted Average Common Shares Outstanding .... 69 321 57 13,911 17,172 16,359 26,848
======= ======= ======== ======== ======== ======== ========
Diluted:
Income (Loss) Before Extraordinary Charge...... $ 0.05 $ (0.40) $ (32.61) $ 0.00 $ (0.26) $ (0.11) $ (0.06)
Extraordinary Charge, Net of Tax Benefit(1).... -- -- -- (0.15) -- -- --
------- ------- -------- -------- -------- -------- --------
Net Income (Loss) Applicable to Common
Stockholders ............................... $ 0.05 $ (0.40) $ (32.61) $ (0.15) $ (0.26) $ (0.11) $ (0.06)
======= ======= ======== ======== ======== ======== ========
Weighted Average Common Shares Outstanding..... 12,101 321 57 13,911 17,172 16,359 26,848
======= ======= ======== ======== ======== ======== ========
11
<PAGE>
<CAPTION>
Nine Months
Year Ended December 31, Ended September 30,
----------------------------------------------------- ----------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Pro Forma(6):
Net Income (Loss) Applicable to Common
Stockholders................................ $ 0.08 $ (0.01) $ (0.16) $ (0.13) $ (0.26) $ (0.11) $ (0.06)
======= ======= ======== ======== ======== ======== ========
Weighted Average Common Shares Outstanding..... 12,101 11,976 11,676 15,206 17,172 16,359 26,848
======= ======= ======== ======== ======== ======== ========
Other Data:
EBITDA(2) ....................................... $18,648 $20,885 $ 26,124 $ 33,629 $ 50,218 $ 33,970 $ 71,232
EBITDA as a Percentage of Total Revenues ........ 22.8% 23.8% 25.0% 24.2% 24.1% 23.7% 22.9%
Capital Expenditures:
Growth (3)(4) ................................ $13,605 $15,829 $ 14,395 $ 23,334 $ 37,082 $ 20,074 $ 36,259
Maintenance .................................. 1,846 1,151 858 1,112 1,238 544 960
------- ------- -------- -------- -------- -------- --------
Total Capital Expenditures(4) ................... $15,451 $16,980 $ 15,253 $ 24,446 $ 38,320 $ 20,618 $ 37,219
======= ======= ======== ======== ======== ======== ========
Additions to Customer Acquisition Costs.......... $ 922 $ 1,366 $ 1,379 $ 1,642 $ 1,635 $ 688 $ 2,326
<CAPTION>
As of December 31, As of
---------------------------------------------------- September 30,
1993 1994 1995 1996 1997 1998
--------- -------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Consolidated Balance Sheet Data:
Cash and Cash Equivalents ...... $ 591 $ 1,303 $ 1,585 $ 3,453 $ 24,510 $ 522
Total Assets ................... 125,288 136,859 186,881 281,799 636,786 894,706
Total Debt ..................... 78,460 86,258 121,874 184,733 428,018 443,189
Stockholders' Equity ........... 24,047 22,869 21,011 52,384 137,733 340,460
<FN>
(first and fifth footnotes from the preceding page)
(1) The extraordinary charge for 1996 relates to the early retirement of certain debt and 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 our experience in the records management industry, we believe 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 our 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 of our performance or to cash flow from operations (as determined in accordance with GAAP) as a
measure of liquidity.
(3) Growth capital expenditures consist primarily of investments in racking systems, management information systems, new buildings
and improvements to existing facilities.
(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) Other income for the nine month period ended September 30, 1998 is comprised of a $1.7 million gain resulting from the
settlement of several insurance claims related to the March 1997 fires at our South Brunswick Township, New Jersey
facilities.
(6) Represents pro forma earnings per share as if the preferred stock that was converted into common stock in connection with our
initial public offering had been converted for all periods presented.
</FN>
</TABLE>
12
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock and certain provisions of
our Restated Certificate of Incorporation and our By-Laws is only a summary and
is qualified in its entirety by reference to the Restated Certificate of
Incorporation and the By-Laws.
Our authorized capital stock consists of 100,000,000 shares of common
stock, 1,000,000 shares of nonvoting common stock, par value $.01 per share, and
2,000,000 shares of preferred stock, $.01 par value per share. No shares of
preferred stock have been issued. There were 29,291,033 shares of common stock
held by 343 holders of record and no shares of nonvoting common stock issued and
outstanding as of November 20, 1998.
Common Stock
The rights of holders of the common stock and the nonvoting common stock
are identical in all respects except voting and convertibility.
Dividends. Holders of record of shares of common stock and nonvoting common
stock on the record date fixed by the Board of Directors are entitled to receive
such dividends as may be declared by the Board out of funds legally available
for such purpose. No dividends may be declared or paid in cash or property on
any share of either class, however, unless simultaneously the same dividend is
declared or paid on each share of the other class. In the case of any stock
dividend, holders of each class are entitled to receive the same percentage
dividend (payable in shares of that class).
We are currently restricted under the terms of our credit agreement and the
indenture for our outstanding senior subordinated notes from paying cash
dividends on the common stock and nonvoting common stock. Even if funds were to
be available, we do not intend to pay dividends in the foreseeable future.
Voting Rights. Except as otherwise required by law, on each matter
submitted for a vote of stockholders, holders of shares of common stock are
entitled to one vote per share and holders of nonvoting common stock are not
entitled to vote.
Under the Restated Certificate of Incorporation, the vote of holders of at
least 662/3% of the voting power of all outstanding shares of capital stock
entitled to vote generally in the election of Directors, voting together as a
single class, is required to amend or repeal the provisions of the Restated
Certificate of Incorporation authorizing the preferred stock, common stock and
nonvoting common stock or specifying the terms of the common stock and the
nonvoting common stock (including any amendment to increase any shares of
authorized capital stock). Certain other provisions also require such a 662/3%
vote. See "Delaware General Corporation Law and Certain Provisions of the
Restated Certificate of Incorporation and the By-Laws." There are no cumulative
voting rights in the election of the Board of Directors.
Conversion Provisions. Shares of nonvoting common stock may be converted
into shares of common stock at any time at the option of the holder on a
share-for-share basis without the payment of any additional consideration.
However, the conversion of any shares of nonvoting common stock by a "bank
holding company" under the Bank Holding Company Act of 1956, as amended, or an
affiliate of a "bank holding company" is prohibited if the conversion of the
total number of shares of nonvoting common stock held by such holder would cause
it to be in violation of the Bank Holding Company Act.
Liquidation Rights. Upon liquidation, dissolution or winding-up of Iron
Mountain,
13
<PAGE>
the holders of common stock and nonvoting common stock are entitled to share
ratably (based on the number of shares held) in all assets available for
distribution after payment in full of creditors and payment in full to any
holders of preferred stock then outstanding of any amount required to be paid
under the terms of the preferred stock.
Other Provisions. The outstanding shares of common stock and nonvoting
common stock are validly issued, fully paid and nonassessable. In any merger,
consolidation or business combination, holders of each class will receive
identical consideration, except that in any such transaction in which shares of
stock are distributed, such shares may differ as to voting rights to the extent
that voting rights now differ between the two classes. Neither class may be
subdivided, consolidated, reclassified or otherwise changed unless,
concurrently, the other class is subdivided, consolidated, reclassified or
otherwise changed in the same proportion and in the same manner.
The Transfer Agent and Registrar for the common stock is Boston Equiserve
Limited Partnership, 150 Royall Street, Canton, Massachusetts 02021 (telephone
number (781) 575-2000).
The Board of Directors has the power to issue shares of authorized but
unissued common stock and nonvoting common stock without further stockholder
action. The holders of common stock and nonvoting common stock are not entitled
to preemptive or subscription rights. The issuance of any currently unissued
shares could have the effect of diluting the earnings per share and book value
per share of currently outstanding shares of common stock.
Preferred Stock
The authorized and unissued shares of preferred stock may be issued with
such designations, preferences, limitations and relative rights as the Board of
Directors may authorize including, but not limited to:
o the distinctive designation of each series and the number of shares
that will constitute such series;
o the voting rights, if any, of shares of such series;
o the dividend rate on the shares of such series, any restriction,
limitation or condition upon the payment of such dividends, whether
dividends shall be cumulative, and the dates on which dividends are
payable;
o the prices at which, and the terms and conditions on which, the shares
of such series may be redeemed, if such shares are redeemable;
o the purchase or sinking fund provisions, if any, for the purchase or
redemption of shares of such series;
o any preferential amount payable upon shares of such series in the
event of the liquidation, dissolution or winding-up of Iron Mountain
or the distribution of its assets; and
o the price or rates of conversion at which, and the terms and
conditions on which the shares of such series may be converted into
other securities, if such shares are convertible.
We currently have no intention to issue shares of preferred stock. However,
the issuance of preferred stock, or the issuance of rights to purchase preferred
stock, could discourage an unsolicited acquisition proposal. If we issue shares
of preferred stock in the future, the rights of holders of common stock
14
<PAGE>
will be subject to, and may be adversely affected by, the rights of holders of
any preferred stock.
DELAWARE GENERAL CORPORATION LAW AND CERTAIN PROVISIONS OF THE RESTATED
CERTIFICATE OF INCORPORATION AND THE BY-LAWS
The Restated Certificate of Incorporation and the By-Laws contain certain
provisions that could delay or make more difficult the acquisition of Iron
Mountain by means of a tender offer, a proxy contest or otherwise. These
provisions, as described below, are expected to discourage certain types of
coercive takeover practices and inadequate takeover bids and to encourage
persons seeking to acquire control of Iron Mountain first to negotiate with Iron
Mountain. We believe that the benefits of increased protection of our ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to acquire
or restructure Iron Mountain outweigh the disadvantages of discouraging such
proposals because, among other things, negotiations with respect to such
proposals could result in an improvement of their terms.
Classified Board of Directors
The Restated Certificate of Incorporation and the By-Laws provide for a
Board of Directors that is divided into three classes of Directors, as nearly
equal in number as possible, with the term of each class expiring in a different
year. The By-Laws provide that the number of Directors will be fixed from time
to time exclusively by the Board of Directors, but shall consist of not more
than fifteen nor less than three Directors. The classified Board of Directors is
intended to promote continuity and stability of our management and policies
since a majority of the Directors at any given time will have prior experience
as Directors of Iron Mountain. Such continuity and stability facilitates
long-range planning of our business and ensures the quality of our business
operations. The classification of Directors has the effect of making it more
difficult to change the composition of the Board of Directors. At least two
annual stockholder meetings, instead of one, would be required to effect a
change in the majority control of the Board of Directors, except in the event of
vacancies resulting from removal (in which case the remaining Directors will
fill the vacancies created by the removal). See "--Removal of Directors; Filling
Vacancies on the Iron Mountain Board."
Removal of Directors; Filling Vacancies on the Iron Mountain Board
Our Restated Certificate of Incorporation and By-Laws provide that a
Director may be removed by the stockholders only for cause at any time during
such Director's term of office by affirmative vote of the holders of at least
80% of the voting power.
The By-Laws and the Restated Certificate of Incorporation both provide that
a vacancy on the Board of Directors, including a vacancy created by an increase
in the size of the Board of Directors by the Directors, may be filled by a
majority of the remaining Directors or by a sole remaining Director, or if no
Directors remain, then by the stockholders. The Restated Certificate of
Incorporation also provides that any Director elected by the Board of Directors
to replace another Director of a given class of Directors will hold office until
the next election of that Director's class. These provisions are to ensure that
a third party would be precluded from removing incumbent Directors and
simultaneously gaining control of the Board of Directors by filling the
vacancies created by such removal with its own nominees. Moreover, even if the
holders of the outstanding common stock were to vote to remove Directors for
cause, only the remaining Directors would have the power to fill the vacancies
created by such removal, unless such vote provided for the removal of the entire
Board of Directors for cause.
15
<PAGE>
Amendment of Certain Provisions of the Restated Certificate of Incorporation and
the By-Laws
The Restated Certificate of Incorporation and the By-Laws contain
provisions requiring the affirmative vote of the holders of at least 662/3% of
the voting power to amend certain provisions of the Restated Certificate of
Incorporation and the By-Laws. This supermajority voting provision applies to
(1) the provisions of the Restated Certificate of Incorporation setting forth
the capitalization of Iron Mountain, (2) the provisions authorizing Iron
Mountain to release its Directors from any liability for monetary damages as a
result of any breach of their fiduciary duties, with certain exceptions mandated
by the Delaware General Corporation Law (the "DGCL"), (3) the provisions
allowing for the indemnification of officers and Directors of Iron Mountain and
(4) the supermajority voting provision.
In addition, the Restated Certificate of Incorporation provides that the
By-Laws may be amended only by a majority of the full Board of Directors or by
the stockholders holding at least 662/3% of the voting power. The DGCL provides
that by-laws may not be amended by a corporation's board of directors unless the
corporation's certificate of incorporation expressly authorizes such amendments
by the board of directors. Our Restated Certificate of Incorporation includes
such a provision. Under the Restated Certificate of Incorporation, at least 80%
of the voting power is required to approve amendments to those provisions of the
ByLaws (1) establishing a classified Board, (2) specifying notice requirements
for stockholder nominations of Directors, (3) limiting the rights of
stockholders to remove or nominate Directors or to bring business before annual
meetings of stockholders, (4) filling vacancies on the Board of Directors and
(5) providing for limitations on calling special meetings of the stockholders.
Stockholder Actions and Meetings
Our Restated Certificate of Incorporation provides that stockholder action
may be taken only at an annual or special meeting of stockholders and prohibits
stockholder action by written consent in lieu of a meeting. The Restated
Certificate of Incorporation and ByLaws provide that special meetings of
stockholders can be called by the Chairman of the Board of Directors, if any, or
the Board of Directors pursuant to a resolution approved by a majority of the
members of the Board of Directors. The business permitted to be conducted at any
special meeting of stockholders is limited to the business brought before the
meeting by the Board of Directors. The By-Laws set forth an advance notice
procedure with regard to the nomination, other than by or at the direction of
the Board of Directors, of candidates for election as Directors and with regard
to business brought before an annual meeting of our stockholders.
Delaware Anti-Takeover Statute
Subject to certain exceptions set forth therein, Section 203 of the DGCL
provides that a corporation shall not engage in any business combination with
any "interested stockholder" for a three-year period following the date that
such stockholder becomes an interested stockholder unless (1) prior to such
date, the board of directors of the corporation approved either the business
combination or the transaction that resulted in the stockholder becoming an
interested stockholder, (2) upon consummation of the transaction that resulted
in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding certain shares) or
(3) on or subsequent to such date, the business combination is approved by the
board of directors of the corporation and by the affirmative vote of at least
662/3% of the outstanding voting stock which is not owned by the interested
stockholder.
16
<PAGE>
Except as specified therein, an interested stockholder is defined to mean
any person that (a) is the owner of 15% or more of the outstanding voting stock
of the corporation or (b) is an affiliate or associate of the corporation and
was the owner of 15% or more of the outstanding voting stock of the corporation
at any time within three years immediately prior to the relevant date, or any
affiliate or associate of such person referred to in (a) or (b) of this
sentence.
Under certain circumstances, Section 203 of the DGCL makes it more
difficult for an interested stockholder to effect various business combinations
with a corporation for a three-year period. However, stockholders may, by
adopting an amendment to the corporation's certificate of incorporation or
by-laws, elect not to be governed by this section, effective twelve months after
adoption. The Restated Certificate of Incorporation and the By-Laws do not
exclude us from the restrictions imposed under Section 203 of the DGCL. It is
anticipated that the provisions of Section 203 of the DGCL may encourage
companies interested in acquiring Iron Mountain to negotiate in advance with the
Board of Directors.
LEGAL MATTERS
The validity of the shares of common stock offered by this Prospectus have
been passed upon for us by Sullivan & Worcester LLP, Boston, Massachusetts. Jas.
Murray Howe, Secretary of Iron Mountain, is of counsel to Sullivan & Worcester
LLP and beneficially owns 15,000 shares of common stock.
EXPERTS
The consolidated financial statements and schedule of Iron Mountain
Incorporated and its subsidiaries for the three years ended December 31, 1997,
included in Iron Mountain's Annual Report on Form 10-K, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated 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 Security Archives of Minnesota for the year
ended December 31, 1996, included in Iron Mountain's Current Report on Form 8-K
dated October 30, 1997, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated 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, included in Iron Mountain's Current Report on Form
8-K dated October 30, 1997, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated 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, included in Iron
Mountain's Registration Statement on Form S-4 (file no. 333-24635, effective
date May 14, 1997), have been audited by Arthur Andersen LLP, independent public
accountants, as indicated 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.
17
<PAGE>
The financial statements of Concorde Group, Inc. and Neil Tucker Trust for
the year ended December 31, 1996, included in Iron Mountain's Current Report on
Form 8-K dated October 30, 1997, have been audited by Fisher, Schacht & Oliver
LLP, independent public accountants, as indicated 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, included in Iron Mountain's Current Report on Form
8-K dated October 30, 1997, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated 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, included in Iron Mountain's Current Report on
Form 8-K dated November 25, 1997, have been audited by Abbott Stringham & Lynch,
independent public accountants, as indicated 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, included in Iron Mountain's Current Report on Form 8-K
dated November 25, 1997, have been audited by Stout, Causey & Horning, P.A.,
independent public accountants, as indicated 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's Current Report on Form 8-K dated
November 25, 1997, have been audited by Ernst & Young LLP, independent public
accountants, as indicated 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 Arcus Technology Services, Inc.
for the years ended December 31, 1997 and 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, appearing in
Iron Mountain's Current Report on Form 8-K dated March 9, 1998, have been
audited by Ernst & Young LLP, independent public accountants, as indicated in
their report with respect thereto, and incorporated by reference herein in
reliance upon the authority of such firm as experts in giving said report.
The financial statements of National Underground Storage, Inc. for the two
years ended December 31, 1997, included in Iron Mountain's Current Report on
Form 8-K dated July 10, 1998 (as amended August 7, 1998), have been audited by
Carbis Walker & Associates, LLP, independent public accountants, as indicated 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 Midwest Records Management for the year ended
December 31, 1997, included in Iron Mountain's Current Report on Form 8-K dated
September 18, 1998, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated 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.
18
<PAGE>
The financial statements of Sloan Vaults, Inc. and Affiliate for the year
ended December 31, 1997, included in Iron Mountain's Current Report on Form 8-K
dated September 18, 1998, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated 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 InterMation, Inc. for the year ended December
31, 1997, included in Iron Mountain's Current Report on Form 8-K dated September
18, 1998, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated 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.
19
<PAGE>
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 (2.2)7
September 26, 1997, by and among Iron
Mountain, Arcus Group, United Acquisition
Company and Arcus (collectively, the "Arcus
Parties")
2.1A Amendment No. 1 to Agreement and Plan of (2.1A)9
Merger, dated as of November 25, 1997, by and
among Iron Mountain and each of the Arcus
Parties
II-1
<PAGE>
2.2 Agreement and Plan of Merger, dated as of (2)4
February 19, 1997, by and among Iron Mountain,
IM-1 Acquisition Corp. and Safesite Records
Management Corporation
2.3 Amendment No. 1 to Agreement and Plan of (2A)5
Merger, dated as of April 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 (2B)5
Merger, dated as of May 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 (2.3)7
August 25, 1997, by and among Iron Mountain,
DSI Acquisition Corporation and Data Securities
International, Inc.
2.6 Agreement and Plan of Merger, dated as of (2.2)8
September 17, 1997, by and among Iron
Mountain, IM-3 Acquisition Corp. and
HIMSCORP, Inc.
2.7 Agreement and Plan of Merger, dated as of (2.7)13
February 24, 1998, by and among Iron Mountain,
IM-3 Acquisition Corp. and InterMation, Inc.
(confidential treatment granted as to certain
portions)
2.8 The Agreement and Plan of Merger by and among (2.1)14
Iron Mountain Records Management, Inc.
("IMRM"), Iron Mountain/NUS, Inc. and
National Underground Storage, Inc. dated as of
June 5, 1998 (confidential treatment granted as to
certain portions)
3.1 Amended and Restated Certificate of Incorporation (3.1)10
of Iron Mountain, as amended
3.2 Amended and Restated By-Laws of Iron (3.2)10
Mountain, as amended
5 Opinion of Sullivan & Worcester LLP Filed herewith
as Exhibit 5
10.1 Second Amended and Restated Credit Agreement, (10.1)7
dated as of September 26, 1997, among Iron
Mountain, the lenders party thereto and The Chase
Manhattan Bank, as Administrative Agent
II-2
<PAGE>
10.2 Amendment No. 1 to the Second Amended and (10.1)15
Restated Credit Agreement, dated December 31,
1997, among Iron Mountain, the lenders party
thereto and The Chase Manhattan Bank, as
Administrative Agent
10.3 Indenture for 101/8 % Senior Subordinated Notes (10.3)4
due 2006 by and among Iron Mountain, certain of
its subsidiaries and First National Association, as
trustee, dated October 1, 1996
10.4 Indenture of 8 3/4% Senior Subordinated Notes due (4.1)6
2009 by and among Iron Mountain, certain of its
subsidiaries and The Bank of New York, as
trustee, dated October 24, 1997
10.5 Iron Mountain Incorporated 1995 Stock Incentive (10.1)3
Plan, as amended
10.6 Iron Mountain/UAC 1995 Stock Option Plan (10.1)12
10.7 Iron Mountain/ATSI 1995 Stock Option Plan (10.2)12
10.8 Iron Mountain Incorporated 1998 Employee Stock (10.8)15
Purchase Plan
10.9 Record Center Storage Services Agreement (10.18)1
between IMRM and 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
10.10 Lease between IMRM and IM Houston (CR) (10.19)1
Limited Partnership, dated January 1, 1991
10.11 Asset Purchase and Sale Agreement, dated July (10.20)2
11, 1996, among IMRM, The Fortress
Corporation and certain subsidiaries
10.12 Asset Purchase Agreement, dated as of (10.23)2
September 6, 1996, among IMRM, Mohawk
Business Record Storage, Inc., Michael M. Rabin,
Richard K. Rabin, Herman Ladin and Sidney
Ladin
10.13 Amended and Restated Registration Rights (10.2)3
Agreement between Iron Mountain and certain
Stockholders, dated as of June 12, 1997
10.14 Joinder to Registration Rights Agreement, dated as (10.12)9
of October 31, 1997, by and between Iron
Mountain and Kent P. Dauten
II-3
<PAGE>
10.15 Stockholders' Agreement, dated September 17, (10.13)10
1997, by and between Iron Mountain and Kent P.
Dauten
10.16 Stockholders' Agreement, dated as of February (10.20)4
19, 1997, by and between Iron Mountain and
certain stockholders of Safesite Records
Management Corporation
10.17 Asset Purchase and Sale Agreement, dated (10.22)5
March 12, 1997, by and among IMRM, Chicago
Data Destruction Corporation, and John Mengel
and John S. Mengel
10.18 Asset Purchase and Sale Agreement, dated as of (10.2)7
August 20, 1997, by and between IMRM and
Records Retention/FileSafe, L.P.
10.19 Stockholders' Agreement, dated as of (10.16)9
September 26, 1997, by and among Iron Mountain
and certain stockholders of the Arcus Parties
10.20 Lease Agreement, dated as of October 1, 1998, Filed herewith as
between Iron Mountain Statutory Trust - 1998 and Exhibit 10.20
IMRM
10.21 Unconditional Guaranty, dated as of October 1, Filed herewith as
1998, from Iron Mountain to Iron Mountain Exhibit 10.21
Statutory Trust - 1998.
10.22 Amended and Restated Agency Agreement, dated Filed herewith as
October 1, 1998, by and between Iron Mountain Exhibit 10.22
Statutory Trust - 1998 and IMRM
11 Statement re: computation of per share earnings (11)7
21 Subsidiaries of Iron Mountain Filed herewith
as Exhibit 21
23.1 Consent of Arthur Andersen LLP (Midwest Filed herewith
Records Management, Sloan Vaults, Inc. and as Exhibit 23.1
Affiliate and InterMation, Inc.)
23.2 Consent of Carbis Walker & Associates, LLP Filed herewith
(National Underground Storage, Inc.) as Exhibit 23.2
23.3 Consent of Ernst & Young LLP (Arcus Filed herewith
Technology Services, Inc.) as Exhibit 23.3
23.4 Consent of Ernst & Young LLP (HIMSCORP, Filed herewith
Inc. and Subsidiaries) as Exhibit 23.4
23.5 Consent of Stout, Causey & Horning, P.A. Filed herewith
(Allegiance Business Archives, Ltd.) as Exhibit 23.5
II-4
<PAGE>
23.6 Consent of Abbott, Stringham & Lynch (Records Filed herewith
Retention/FileSafe, LP) as Exhibit 23.6
23.7 Consent of Arthur Andersen LLP (Security Filed herewith
Archives of Minnesota, Wellington Financial as Exhibit 23.7
Services, Inc. and Data Securities International,
Inc.)
23.8 Consent of Fisher, Schacht & Oliver, LLP Filed herewith
(Concorde Group, Inc. and Neil Tucker Trust) as Exhibit 23.8
23.9 Consent of Arthur Andersen LLP (Safesite Filed herewith
Records Management Corporation) as Exhibit 23.9
23.10 Consent of Arthur Andersen LLP (Iron Mountain Filed herewith
Incorporated) as Exhibit 23.10
23.11 Consent of Sullivan & Worcester LLP Contained in Exhibit 5
filed herewith
24 Powers of Attorney Contained on Page II-8 of
the Registration Statement
27.1 Financial Data Schedule--December 31, 1997 (27.1)12
27.2 Financial Data Schedule--Restated March 31, (27.2)13
1997, June 30, 1997 and September 30, 1997.
27.3 Financial Data Schedule--Restated June 30, 1996, (27.3)13
September 30, 1996 and December 31, 1996.
- ----------------
<FN>
1 Filed as an Exhibit to Iron Mountain's Registration Statement No. 33-99950 filed with the
Commission on December 1, 1995.
2 Filed as an Exhibit to Iron Mountain's Registration Statement No. 333-10359 filed with the
Commission on August 16, 1996.
3 Filed as an Exhibit to Iron Mountain's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996, filed with the Commission, File No. 0-27584.
4 Filed as an Exhibit to Iron Mountain's Annual Report on Form 10-K for the year ended December
31, 1996, filed with the Commission, File No. 0-27584.
5 Filed as an Exhibit to Iron Mountain's Registration Statement No. 333-24635 filed with the
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 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 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 Commission, File No. 0-27584.
9 Filed as an Exhibit to Iron Mountain's Registration Statement No. 333-41045 filed with the
Commission on November 26, 1997.
10 Filed as an Exhibit to Iron Mountain's Registration Statement No. 333-44185 filed with the
Commission on January 13, 1998.
II-5
<PAGE>
11 Filed as an Exhibit to Iron Mountain's Registration Statement No. 333-44187 filed with the
Commission on January 13, 1998.
12 Filed as an Exhibit to Iron Mountain's Current Report on Form 8-K dated March 9, 1998, filed
with the Commission, File No. 0-27584.
13 Filed as an Exhibit to Iron Mountain's Annual Report on Form 10-K for the year ended December
31, 1997, filed with the Commission, File No. 0-27584.
14 Filed as an Exhibit to Iron Mountain's Current Report on Form 8-K dated July 10, 1998, filed
with the Commission, File No. 0-27584.
15 Filed as an Exhibit to Amendment No. 1 to Iron Mountain's Registration Statement No. 333- 44187
filed with the Commission on August 3, 1998.
</FN>
</TABLE>
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 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;
II-6
<PAGE>
(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; and
(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-7
<PAGE>
SIGNATURES
Pursuant to the requirements of 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 November 23, 1998.
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 has been signed 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.
Signature Title Date
- --------- ----- ----
/s/ C. Richard Reese Chairman of the Board of November 23, 1998
C. Richard Reese Directors
and Chief Executive Officer
/s/ David S. Wendell President, Chief Operating November 23, 1998
David S. Wendell Officer and Director
/s/ John F. Kenny, Jr. Executive Vice President and November 23, 1998
John F. Kenny, Jr. Chief Financial Officer
/s/ Eugene B. Doggett Director November 23, 1998
Eugene B. Doggett
/s/ Constantin R. Boden Director November 23, 1998
Constantin R. Boden
II-8
<PAGE>
/s/ Arthur D. Little Director November 23, 1998
Arthur D. Little
/s/ Vincent J. Ryan Director November 23, 1998
Vincent J. Ryan
/s/ B. Thomas Golisano Director November 23, 1998
B. Thomas Golisano
/s/ Kent P. Dauten Director November 23, 1998
Kent P. Dauten
/s/ Clarke H. Bailey Director November 23, 1998
Clarke H. Bailey
/s/ Jean A. Bua Vice President and Corporate November 23, 1998
Jean A. Bua Controller
II-9
EXHIBIT 5
SULLIVAN & WORCESTER LLP
ONE POST OFFICE SQUARE
BOSTON, MASSACHUSETTS 02109
(617) 338-2800
FAX NO. 617-338-2880
IN WASHINGTON, D.C. IN NEW YORK CITY
1025 CONNECTICUT AVENUE, N.W. 767 THIRD AVENUE
WASHINGTON, D.C. 20036 NEW YORK, NEW YORK 10017
(202) 775-8190 (212) 486-8200
FAX NO. 202-293-2275 FAX NO. 212-758-2151
November 23, 1998
Iron Mountain Incorporated
745 Atlantic Avenue
Boston, MA 02111
Re: Registration Statement on Form S-4;
1,488,508 shares of Iron Mountain
Incorporated Common Stock, par value $.01 per share
Ladies and Gentlemen:
In connection with the registration under the Securities Act of 1933,
as amended (the "Securities Act"), by Iron Mountain Incorporated, a Delaware
corporation (the "Company"), of 1,488,508 shares (the "Registered Shares") of
its Common Stock, par value $.01 per share ("Common Stock"), all of which
Registered Shares are to be offered by the Company, the following opinion is
furnished to you to be filed with the Securities and Exchange Commission (the
"Commission") as Exhibit 5 to the Company's registration statement on Form S-4
(the "Registration Statement") under the Securities Act. The Registered Shares
are to be offered on a delayed or continuous basis in connection with business
combination transactions pursuant to Rule 415 under the Securities Act.
We assume that the number, issuance and sale of the Registered Shares
to be offered from time to time will be determined and authorized by proper
action of the Board of Directors of the Company in accordance with the
parameters described in the Registration Statement (each a "Board Action") and
in accordance with the Company's Amended and Restated Certificate of
Incorporation and applicable Delaware law. We further assume that prior to the
issuance of any Registered Shares, there will exist, under the Company's Amended
and Restated Certificate of Incorporation, the requisite number of authorized
shares of Common Stock for such issuance which are unissued and are not
otherwise reserved for issuance.
We have acted as counsel to the Company in connection with the
Registration Statement, and we have examined originals or copies, certified or
otherwise identified to our satisfaction, of the Registration Statement, the
Amended and Restated Certificate of Incorporation of the Company as presently in
effect, corporate records, certificates and
<PAGE>
Iron Mountain Incorporated
November 23, 1998
Page 2
statements of officers and accountants of the Company and of public officials,
and such other documents as we have considered necessary in order to furnish the
opinion hereinafter set forth.
This opinion is limited to the laws of The Commonwealth of
Massachusetts, the Delaware General Corporation Law and the federal laws of the
United States of America, and we express no opinion with respect to the law of
any other jurisdiction.
Based on and subject to the foregoing, we are of the opinion that, when
the Registration Statement has become effective under the Securities Act, upon
due authorization by Board Action of an issuance of Registered Shares, and upon
delivery of certificates representing the Registered Shares against payment
therefor in the manner contemplated by such Board Action and in accordance with
the terms of such agreements (if any) relating to one or more business
combination transactions as the Company may enter into from time to time, the
Registration Statement and any applicable Prospectus Supplement, the Registered
Shares represented by such certificates will be duly authorized, validly issued,
fully paid and nonassessable by the Company.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm in the Prospectus
forming a part of the Registration Statement. 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 Commission promulgated thereunder.
Very truly yours,
/s/ Sullivan & Worcester LLP
SULLIVAN & WORCESTER LLP
Exhibit 10.20
LEASE AGREEMENT
between
IRON MOUNTAIN STATUTORY TRUST - 1998,
as Lessor
and
IRON MOUNTAIN RECORDS MANAGEMENT, INC.,
as Lessee
Dated as of October 1, 1998
<PAGE>
-i-
TABLE OF CONTENTS
PAGE
1. Demise; Title; Condition.............................................1
2. Term.................................................................2
3. Rent.................................................................2
4. Use..................................................................4
5. Net Lease; Nonterminability..........................................4
6. Taxes and Other Charges; Law and Agreements..........................5
7. Title; Liens.........................................................9
8. Indemnification; Fees and Expenses...................................9
9. Environmental Matters...............................................12
10. Maintenance and Repair; Additions; Completion Improvements..........16
11. Trade Fixtures; Inspection..........................................20
12. Condemnation and Casualty...........................................21
13. Insurance...........................................................27
14. Financial Statements; Other Information.............................31
15. Mergers; Acquisitions; Asset Sales..................................31
16. Purchase Procedure..................................................32
17. Reserved............................................................33
18. Quiet Enjoyment.....................................................33
<PAGE>
-ii-
19. Survival............................................................33
20. Subletting; Assignment..............................................33
21. Advances by Lessor..................................................35
22. Conditional Limitations -- Events of Default and Remedies...........35
23. Notices.............................................................41
24. Estoppel Certificates...............................................41
25. No Merger...........................................................42
26. Surrender and Return................................................42
27. Separability........................................................44
28. Lessee's End of Term Purchase Options...............................44
29. Signs; Showing......................................................46
30. End of Term Adjustment..............................................46
31. Reserved............................................................48
32. Nature of Lessor's Obligations; Limitations on Liability............48
33. Lessee's Representations and Warranties.............................49
34. Granting of Easements, Etc..........................................50
35. Lessee's Right to Terminate; Exchange of Leased Properties..........51
36. Recording...........................................................54
37. Miscellaneous.......................................................55
38. Ownership of the Leased Properties..................................56
39. Louisiana Provisions................................................58
<PAGE>
-iii-
Appendix I Definitions
SCHEDULE A Land Parcel
SCHEDULE B Basic Rent
SCHEDULE C Termination Values
SCHEDULE D Standard Mortgagee Endorsement
SCHEDULE E Environmental Matters
SCHEDULE F Purchase Prices
SCHEDULE G Maximum Lessor and Lessee Risk Amounts
SCHEDULE H Permitted Encumbrances
SCHEDULE I Form of Supplement to Lease
SCHEDULE J Form of Certificate As to Insurance
SCHEDULE K [intentionally omitted]
SCHEDULE L Form of Lessee Estoppel Certificate
<PAGE>
THIS LEASE AGREEMENT, dated as of October 1, 1998 (this Lease), between
IRON MOUNTAIN STATUTORY TRUST - 1998 (together with its successors and assigns,
Lessor), having an address at 10 State House Square, Hartford, Connecticut
06103, Attention: Corporate Trust Administration, as lessor, and IRON MOUNTAIN
RECORDS MANAGEMENT, INC., a Delaware corporation (together with any corporation
succeeding thereto by consolidation, merger or acquisition of its assets
substantially as an entirety, Lessee), having an address at 745 Atlantic Avenue,
Boston, Massachusetts 02111, Attention: Treasurer, as lessee.
Lessor and Lessee hereby agree for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, one to the other, as
follows (capitalized terms not otherwise defined when they first appear are
defined in Appendix I hereto):
1. Demise; Title; Condition. In consideration of the agreements and
provisions of this Lease hereinafter stipulated to be observed and performed by
Lessee, Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,
subject to the terms and conditions hereinafter set forth, for the terms
described in Article 2 hereof, all of Lessor's right, title and interest in (i)
each parcel of land (individually, a Land Parcel and collectively, the Land
Parcels) described in Schedule A annexed hereto, as Schedule A may be
supplemented from time to time by Lease Supplement in the form attached hereto
as Schedule I; (ii) all Existing Improvements and all additional buildings,
structures, improvements, fixtures and other real and personal property
described in or contemplated by the Approved Plans and all other real and
personal property now or hereafter placed on, affixed or appurtenant to, each
Land Parcel by Lessee, as agent for Lessor pursuant to the Agency Agreement,
including, without limitation, the equipment and other personal property
identified on Schedule A, together with any and all accessions, additions,
improvements (including Completion Improvements), substitutions and replacements
thereto or therefor (all of the foregoing described in this clause (ii), the
Improvements); and (iii) all easements, rights and appurtenances thereto (each
Land Parcel together with the related Improvements and all such easements,
rights and appurtenances with respect thereto called a Leased Property and
collectively, the Leased Properties). Each of the Leased Properties shall be
either an Existing Facility or a New Facility. The Improvements do not include
personal property which constitutes Trade Fixtures or Lessee's property pursuant
to paragraph (c) of Article 10 and which is placed on any Land Parcel by Lessee
for Lessee's own account and not as agent for Lessor under the Agency Agreement.
Each Leased Property is demised and let in its present condition
without representation or warranty by Lessor, subject in each case to (a) the
rights of any parties in possession thereof, (b) the state of the title thereto
existing at the time Lessor acquired its interest in such Leased Property, (c)
any state of facts which an accurate survey or physical inspection might show,
(d) all applicable laws, rules, regulations, ordinances and restrictions now in
effect or hereafter adopted by any governmental authority having jurisdiction,
(e) any environmental conditions now or hereafter existing at, on or under such
Leased Property and (f) any violations of such laws, rules, regulations,
ordinances and restrictions which may exist at the commencement of the
<PAGE>
-2-
Term of this Lease. Lessee has examined each Leased Property, and has, as
between Lessor and Lessee, found the same to be satisfactory for all purposes.
LESSOR HAS NOT MADE AN INSPECTION OF ANY LEASED PROPERTY AND MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO ANY LEASED
PROPERTY WHETHER NOW OR HEREAFTER EXISTING OR THE LOCATION, USE, DESCRIPTION,
DESIGN, MERCHANTABILITY, FITNESS FOR USE FOR A PARTICULAR PURPOSE, CONDITION OR
DURABILITY THEREOF, OR AS TO QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN; AND
ALL RISKS INCIDENTAL TO THE LEASED PROPERTIES SHALL BE BORNE BY LESSEE. IN THE
EVENT OF ANY DEFECT OR DEFICIENCY OF ANY NATURE IN ANY LEASED PROPERTY OR ANY
FIXTURE OR OTHER ITEM CONSTITUTING A PORTION THEREOF, WHETHER PATENT OR LATENT,
LESSOR SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO. THE
PROVISIONS OF THIS PARAGRAPH HAVE BEEN NEGOTIATED AND ARE INTENDED TO BE A
COMPLETE EXCLUSION AND NEGATION BY LESSOR OF, AND LESSOR DOES HEREBY DISCLAIM
ANY AND ALL WARRANTIES BY LESSOR, EXPRESS OR IMPLIED, WITH RESPECT TO THE LEASED
PROPERTIES WHETHER NOW OR HEREAFTER EXISTING OR ANY FIXTURE OR OTHER ITEM
CONSTITUTING A PORTION THEREOF, WHETHER ARISING PURSUANT TO THE UNIFORM
COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR OTHERWISE.
2. Term. Subject to the provisions hereof, Lessee shall have and hold
the Leased Properties for (i) a term which shall begin on the Interim Term
Commencement Date, and end at midnight on the day immediately prior to the Basic
Term Commencement Date (the Interim Term), and (ii) a term which shall begin
immediately after the end of the Interim Term and end (as to each Leased
Property) at midnight on the day immediately prior to the fifth anniversary of
the Basic Term Commencement Date applicable to such Leased Property (the Basic
Term), unless sooner terminated as hereinafter provided; provided, however, that
in any and all events, the Term of this Lease shall expire as to all Leased
Properties by not later than March 31, 2005.
3. Rent.
(a) During the Term of this Lease, Lessee shall pay the basic rent
provided for in Schedule B annexed hereto (Basic Rent) to Lessor (or to any
other party as Lessor may from time to time specify in writing), by bank wire
transfer or electronic funds transfer (including automated clearinghouse
transfers) of immediately available federal funds initiated before 10:30 A.M.,
Eastern Time, at Lessor's address set forth above, or at such other place within
the continental United States to which bank wire or electronic funds transfers
can be made, as Lessor may from time to time designate to Lessee in writing.
Basic Rent during the Interim Term and
<PAGE>
-3-
the Basic Term shall be due and payable by Lessee in installments in the amounts
set forth in Schedule B on the first day of each month during the Term of the
Lease (Payment Dates). If any Payment Date falls on a day that is not a Business
Day, Basic Rent shall be due and payable on the next succeeding Business Day
without interest or penalty if paid on such Business Day.
(b) All amounts that Lessee is required to pay or discharge pursuant to
(i) this Lease in addition to Basic Rent (including, without limitation, amounts
payable as the Purchase Price, Termination Value or other amounts for any Leased
Property pursuant to any provision hereof, any Adjustment Price or Maximum
Lessee Risk Amount payable pursuant to Article 30, any amounts payable by Lessee
on behalf of Lessor pursuant to Sections 2.5.2, 2.5.3, 2.5.4, 2.5.6(b), 2.6,
2.7, 3.5, 5.9 and Article 4 of the Loan Agreement, any amounts payable pursuant
to Article 21 hereof or as liquidated damages pursuant to paragraph (c) of
Article 22 hereof and any indemnity payments payable pursuant to Articles 8 and
9 hereof), and (ii) the Assignment, together with every fine, penalty, overdue
interest and cost which may be added for nonpayment or late payment thereof,
shall constitute additional obligations hereunder (all of the foregoing,
Additional Obligations). In the event of any failure by Lessee to pay or
discharge any such Additional Obligations when due, Lessor, except as may be
otherwise provided herein, shall have all rights, powers and remedies provided
for herein or by law or otherwise in the case of nonpayment of Basic Rent.
Lessee may pay Additional Obligations directly to the Persons entitled thereto.
Lessee also covenants to pay to Lessor on demand as Additional Obligations,
interest at the Overdue Rate, but in no event greater than the maximum rate
permitted by applicable law, on (i) all overdue installments of Basic Rent from
the due date thereof until paid in full, (ii) all overdue amounts of Additional
Obligations arising out of obligations which Lessor shall have paid on behalf of
Lessee pursuant to Article 21 hereof or otherwise from the date of such payment
by Lessor until paid in full and (iii) each other sum required to be paid by
Lessee hereunder or under the Assignment which is overdue, including without
limitation, any Maximum Lessee Risk Amount or portion thereof, Purchase Price,
Termination Value or other amounts for any Leased Property, Adjustment Price,
any amounts payable by Lessor pursuant to Sections 2.5.2, 2.5.3, 2.5.4,
2.5.6(b), 2.6, 2.7, 3.5, 5.9 and Article 4 of the Loan Agreement, and any
amounts payable pursuant to Article 21 hereof or as liquidated damages pursuant
to paragraph (c) of Article 22 hereof, from the date such sum was due until the
date received by the Person entitled thereto.
(c) With respect to each Leased Property, each of (i) the Termination
Value, (ii) the Purchase Price, and (iii) the sum of (x) the Adjustment Price,
plus (y) the Maximum Lessor Risk Amount and (z) the Maximum Lessee Risk Amount
shall be at least sufficient at all times during the Maximum Lease Term to pay
all outstanding principal under the indebtedness evidenced by the Debt Notes
related to such Leased Property and, to pay to Lessor the amount of the
outstanding Equity Investment, in accordance with the Operative Documents; and,
in each case together with other amounts required to be paid by Lessee under the
Operative Documents, such
<PAGE>
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amount shall be also sufficient to pay accrued interest under the Debt Notes and
the Equity Return.
4. Use. Lessee may use each Leased Property as a warehouse storage
facility and for accessory office, parking and other ancillary uses. With the
prior written consent of Lessor, Agent Bank and LC Issuer of such other use,
which consent will not be unreasonably withheld, Lessee may use a Leased
Property for any other lawful use which Lessee certifies (i) is not generally
hazardous, (ii) does not, in Lessee's good faith determination, adversely affect
the fair market value, utility or useful life of such Leased Property and (iii)
does not violate any applicable law, rule, regulation or restriction.
5. Net Lease; Nonterminability
(a) This Lease is a "triple net lease" and Lessee shall pay all Basic
Rent and Additional Obligations without notice, demand, counterclaim, set-off,
deduction, or defense, and without abatement, suspension, deferment, recoupment,
diminution or reduction, free from any charges, assessments, impositions,
expenses or deductions of any and every kind or nature whatsoever including,
without limitation (1) any right Lessee may have against Lessor, any contractor
or any other Person for any reason (whether in connection with this transaction
or any other transaction), (2) any breach, default or misrepresentation by
Lessor or any other Person under this Lease, the Loan Agreement, Guaranty,
Assignment of Guaranty or Assignment, or (3) any invalidity or unenforceability
in whole or in part of this Lease, the Loan Agreement, Guaranty, Assignment of
Guaranty or Assignment, or any other infirmity herein or therein, or any lack of
power or authority of any party to this Lease, the Loan Agreement, any Guaranty,
any Assignment of Guaranty or any Assignment. All costs, expenses and
obligations of every kind and nature whatsoever relating to each Leased Property
and the appurtenances thereto and the use and occupancy thereof by Lessee or
anyone claiming by, through or under Lessee as Lessee hereunder which may arise
or become due during or with respect to the period constituting the Term hereof
shall be paid by Lessee, and Lessee shall indemnify Lessor against any of the
foregoing as provided in Article 8. Lessee assumes, during the Term of this
Lease, the sole responsibility for the condition (physical or environmental),
use, operation, maintenance, subletting and management of each Leased Property,
and Lessee shall indemnify Lessor with respect to the foregoing as provided in
Article 8, and Lessor shall have no responsibility in respect thereof and shall
have no liability for damage to the property of Lessee or any sublessee of
Lessee on any account or for any reason whatsoever. Without limiting the
generality of the foregoing, during the Term of this Lease, Lessee shall perform
all of the obligations of the sublessor under any subleases affecting all or any
part of any Leased Property which Lessee may hereafter enter into as sublessor
to the extent that sublessee's failure to perform such obligations would result
in the occurrence of a Default or Event of Default under this Lease.
<PAGE>
-5-
(b) Except as otherwise expressly provided in Article 9, paragraph (c)
of Article 12, clause (ii) of paragraph (b) of Article 22, and paragraph (a) of
Article 35 hereof, this Lease shall not terminate as to any Leased Property, nor
shall Lessee have any right to terminate this Lease as to any Leased Property,
nor shall Lessee be entitled to any abatement or reduction of rent hereunder,
nor shall Lessee have the right to be released or discharged from any
obligations or liabilities hereunder for any reason, including without
limitation, any damage to or destruction of all or part of any Leased Property;
any restriction, deprivation (including eviction) or prevention of, or any
interference with, any use or the occupancy of any Leased Property (whether due
to any defect in or failure of Lessor's title to such Leased Property, any
Lessor Lien or otherwise); any condemnation, requisition or other taking or sale
of the use, occupancy or title to any Leased Property; any action, omission or
breach on the part of Lessor under this Lease or under any other agreement
between Lessor and Lessee; the inadequacy or failure of the description of any
Leased Property to demise and let to Lessee any property intended to be leased
hereby; Lessee's acquisition of ownership of any Leased Property or any sale or
other disposition of any Leased Property; the impossibility or illegality of
performance by Lessor or Lessee or both; the failure of Lessor to deliver
possession of any Leased Property on the Interim Term Commencement Date; any
action of any court, administrative agency or other governmental authority; any
environmental condition affecting any Leased Property; or any other cause,
whether similar or dissimilar to the foregoing, any present or future law
notwithstanding.
(c) Lessee will remain obligated under this Lease in accordance with
its terms, and will not take any action to terminate, rescind or avoid this
Lease for any reason, notwithstanding any bankruptcy, insolvency,
reorganization, liquidation, dissolution or other proceeding affecting Lessor,
or any assignee of Lessor, or any action with respect to this Lease which may be
taken by any receiver, trustee or liquidator, or any assignee of Lessor or by
any court in any such proceeding. Lessee waives all rights at any time conferred
by statute or otherwise to quit, terminate or surrender this Lease or any Leased
Property (except as otherwise expressly provided hereinabove), or to any
abatement or deferment of any Basic Rent, Additional Obligations or other sum
payable by Lessee hereunder, on account of any cause referred to in this Article
5 or otherwise.
6. Taxes and Other Charges; Law and Agreements.
(a) Lessee shall pay and discharge, on or before the last day upon
which the same may be paid without interest or penalty, and shall indemnify each
Indemnified Party on an after tax basis, from and against, all taxes, including
any tax based upon or measured by gross rentals or receipts from any Leased
Property, assessments, levies, fees, water and sewer rents and other
governmental and similar charges, general and special, ordinary or
extraordinary, and whether or not the same shall have been within the express
contemplation of the parties hereto, and any interest and penalties thereon,
which are levied, assessed or due against (i) such Indemnified Party and which
relate to such Indemnified Party's interest in any Leased Property, the use,
<PAGE>
-6-
occupancy, operation or possession of any Leased Property or any part thereof or
the transactions contemplated by the Operative Documents, (ii) any Leased
Property or the interest of Lessee or Lessor therein, (iii) Basic Rent or
Additional Obligations or other sums payable by Lessee hereunder, (iv) this
Lease or the interest of Lessee or the Indemnified Parties hereunder, (v) the
use, occupancy, construction, repair or rebuilding of any Leased Property or any
portion thereof, (vi) gross receipts from any Leased Property or (vii) Taxes and
Other Taxes and "Taxes" or terms of like import as defined in the Loan
Agreement. If any tax or assessment levied or assessed against any Leased
Property may legally be paid in installments, Lessee shall have the option to
pay such tax or assessment in installments; provided, however, that upon the
termination or expiration of the Term of this Lease with respect to such Leased
Property, Lessee shall pay any such tax or assessment which it has been paying
in installments in full, on or prior to such termination or expiration date,
unless such Leased Property is being purchased by Lessee hereunder, and no
liability could result to any Indemnified Party due to Lessee's failure to pay
such tax or assessment in full. Nothing in this Lease shall require payment by
Lessee of any franchise, estate, inheritance, succession, transfer, net income
or profits taxes of any Indemnified Party (including any minimum taxes and
withholding taxes), except for (x) withholding taxes for which Lessor is liable
under Section 5.9 of the Loan Agreement or Section 3.8 of the Deed of Trust to
Agent Bank and for which Lessee shall be liable hereunder, (y) transfer taxes,
recording fees, or similar charges payable in connection with a conveyance
hereunder to Lessee or in connection with Lessor's or Agent Bank's exercise of
remedies after an Event of Default hereunder and (z) any gross receipts or
similar taxes imposed or levied upon, assessed against or measured by the Basic
Rent, Additional Obligations or any other sums payable by Lessee hereunder or
levied upon or assessed against any Leased Property, (but excluding from this
clause (z), any such taxes which are in substitution for an income, profit or
revenue tax of any Indemnified Party, but then only to the extent of such
substitution and only to the extent that such tax, assessment or other charge
would be payable if such Leased Property were the only property of such
Indemnified Party subject thereto) (the foregoing, collectively, Excluded
Taxes). Lessee shall prepare and file or cause to be filed on a timely basis all
returns and other materials required in connection with any taxes, assessments
or other charges that Lessee is required to pay pursuant to this Article 6;
provided, however, where legally required, Lessor will sign such return or
related power of attorney. Lessee shall furnish to Lessor promptly, and in any
event within 30 days after the later of the date the same becomes due and
payable and the date of written demand by Lessor, as the case may be, proof of
the payment of any such tax, assessment, fee, rent or charge which is payable by
Lessee and, upon written demand of Lessor, proof of the filing of all returns
and other materials required in connection therewith.
(b) Lessee shall pay all charges for utility, communication and other
services to the extent rendered or used during the Term of this Lease on or
about any Leased Property, whether or not payment therefor shall become due
after the Term of this Lease.
<PAGE>
-7-
(c) Lessee shall at all times during the Term of this Lease, at
Lessee's own cost and expense, perform and comply in all material respects with
all laws, rules, orders, ordinances, regulations and requirements now existing
or (except to the extent any exemption or so called "grandfathering" provision
is available to Lessee) hereafter enacted or promulgated, of every government
and municipality having jurisdiction over each Leased Property and of any agency
thereof, relating to such Leased Property, or the improvements thereon, or the
facilities or equipment thereon or therein, or the appurtenances to such Leased
Property, or the franchises and privileges connected therewith, or, to the
extent that Lessor or Lessee has any obligation or responsibility therefor, the
streets, sidewalks, vaults, vault spaces, curbs and gutters adjoining such
Leased Property (collectively, Legal Requirements), whether or not such Legal
Requirements so involved shall necessitate structural changes, improvements,
interference with use and enjoyment of such Leased Property, replacements or
repairs, extraordinary as well as ordinary, and Lessee shall so perform and
comply, whether or not such Legal Requirements shall now exist or shall
hereafter be enacted or promulgated, and whether or not such Legal Requirements
can be said to be within the present contemplation of the parties hereto. Lessee
shall at all times during the Term of this Lease, at Lessee's own cost and
expense, perform and comply with the terms of all Permitted Encumbrances and any
easement granted or released pursuant to Article 34 hereof and shall perform all
of the obligations of Lessor under such Permitted Encumbrances and of the
grantor or releasor under the related instrument of grant or release. Lessee
shall, at its expense, comply with all provisions of insurance policies required
pursuant to Article 13 hereof, and shall, at its expense comply with the
provisions of all contracts, agreements, instruments and restrictions existing
at the commencement of this Lease or thereafter suffered or permitted by Lessee
(the noncompliance with which would adversely affect any Leased Property or any
part thereof or the ownership, occupancy, use, operation or possession thereof).
Lessee shall at all times during the Term of this Lease comply with the terms of
and perform its obligations under the Assignment and any consent of Lessee to
the Assignment.
(d) Notwithstanding the provisions of paragraphs (a) through (c) of
this Article 6 and those of Article 7, Lessee shall have the right to contest,
by appropriate legal proceedings, any tax, charge, levy, assessment, lien or
other encumbrance, and/or any Legal Requirement affecting any Leased Property,
and to postpone payment of or compliance with the same during the pendency of
such contest, provided that (i) the commencement and continuation of such
proceedings shall suspend the collection thereof from, and suspend the
enforcement thereof against, Lessor and any Leased Property, (ii) no part of any
Leased Property nor any Basic Rent or Additional Obligations or other sums
payable by Lessee hereunder shall be in imminent danger of being sold,
forfeited, attached or lost, (iii) there shall not exist (x) any interference
with the use and occupancy of any Leased Property or any part thereof that has
or would have a material adverse effect on the fair market value, utility or
useful life of any Leased Property, or (y) any interference with the payment of
Basic Rent or any Additional Obligations (other than the portion subject to the
contest), (iv) Lessee shall promptly prosecute such contest to a final
<PAGE>
-8-
settlement or conclusion, or if Lessee deems it advisable to abandon such
contest, Lessee shall promptly pay or perform the obligation which was the
subject of such contest and (v) at no time during the permitted contest shall
there be a risk of the imposition of criminal liability or civil liability on
Lessor arising from non-payment of the contested item or non-compliance with the
contested Legal Requirement. If any Default or Event of Default hereunder shall
have occurred and be continuing, and any such contest or contests, individually
or in the aggregate, at any one time pending with respect to any Leased Property
shall involve an amount of money or potential loss (including fines and similar
charges) in excess of $1,000,000, plus any security theretofore provided
pursuant to this provision, then Lessee shall either (i) deposit with the
Depositary (as defined in subparagraph (i) of paragraph (b) of Article 12 of
this Lease) an amount equal to 100% of the tax, charge, levy, assessment, lien
or other encumbrance affecting such Leased Property, which amount may be
invested in accordance with the terms and provisions set forth in subparagraph
(iv) of paragraph (b) of Article 12 of this Lease or (ii) post an equivalent
bond, or letter of credit from an institution (other than Lessee or its
Affiliates) meeting the requirements to be a Depositary under this Lease, for
security. Lessee shall not postpone the payment of any such tax, charge, levy,
assessment, lien or other encumbrance for such length of time as shall permit
any Leased Property, or any lien thereon created by such item being contested,
to be sold by federal, state, county or municipal authority for the non-payment
thereof; Lessee shall not postpone compliance with any such law, rule, order,
ordinance, regulation or other governmental requirement if Lessor will thereby
be subject to criminal prosecution or civil liability, or if any municipal or
other governmental authority shall be in a position according to applicable law
to commence to foreclose or sell any lien affecting all or part of any Leased
Property which shall have arisen by reason of such postponement or failure of
compliance.
(e) Without limiting the generality of any of the other provisions of
this Article 6, Lessee shall at all times during the Term of this Lease promptly
comply with the terms of and fully and faithfully pay and perform its
obligations, as agent, incurred under the Agency Agreement. In the event of the
termination of this Lease as herein provided or Lessee's abandonment of any
Leased Property, the obligations and liabilities of Lessee with respect to each
Indemnified Party, actual or contingent, under this Article 6 shall survive such
termination or abandonment.
(f) Further without limiting the generality of the foregoing, as set
forth in Schedule B hereto, Lessee agrees to pay as Additional Obligations
hereunder all Taxes and Other Taxes and further agrees to perform on behalf of
Lessor all obligations with respect thereto set forth in Section 5.9 of the Loan
Agreement.
7. Title; Liens. Lessee represents and warrants to, and covenants with,
Lessor that Lessor has and shall have good fee simple title to each and every
Leased Property, subject only to Permitted Encumbrances, and that Lessee shall
warrant and defend the same to Lessor against the lawful claims and demands of
all persons. Subject to the provisions of paragraph (d) of
<PAGE>
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Article 6, Lessee will promptly, but in any event no later than the earlier of
30 days after its Actual Knowledge of the filing thereof or the enforcement of
the same, at its own expense, remove, satisfy or discharge of record, by bond or
otherwise, any charge, lien, security interest or encumbrance upon any Leased
Property, upon any Basic Rent, or upon any Additional Obligations or other sums
payable by Lessee under this Lease which arises for any reason (except for
Lessor Liens and any other acts or omissions of Lessor or anyone claiming by,
through or under Lessor, without the consent of Lessee), including all liens
which arise out of Lessee's possession, use, operation and occupancy of any
Leased Property, but not including any Permitted Encumbrances. Nothing contained
in this Lease shall be construed as constituting the consent or request of
Lessor, express or implied, to or for the performance by any contractor,
laborer, materialman, or vendor of any labor or services or for the furnishing
of any materials for any construction, alteration, addition, repair or
demolition of or to any Leased Property or any part thereof. Notice is hereby
given that Lessor will not be liable for any labor, services or materials
furnished or to be furnished to Lessee, or to anyone holding an interest in any
Leased Property or any part thereof through or under Lessee, and that no
mechanic's or other liens for any such labor, services or materials shall attach
to or affect the interest of Lessor in and to any Leased Property. In the event
of the failure of Lessee to discharge any charge, lien, security interest or
encumbrance within the time period set forth above and otherwise as aforesaid,
except during the pendency of any contest permitted and conducted pursuant to
paragraph (d) of Article 6, after 10 days prior notice to Lessee (or after
shorter notice or without notice if prudent under the circumstances to prevent
enforcement or other action against Lessor or any Leased Property), Lessor or
Agent Bank may discharge such items by payment or bond or both, and Lessee will
repay to Lessor, upon demand, any and all amounts paid therefor, or by reason of
any liability on such bond, and also any and all reasonable incidental expenses,
including reasonable attorneys' fees, incurred by Lessor in connection
therewith.
8. Indemnification; Fees and Expenses. Lessee shall pay, and shall
protect, defend and indemnify Lessor, Deed of Trust Trustee, Agent Bank, Bank,
the Lenders, Beneficiary, LC Issuer, Placement Agent, and any registered owners
from time to time of the Debt Notes and their successors in interest, and each
and all of such parties' shareholders, officers, directors, partners, employees,
attorneys and agents, licensees and any holder of any beneficial interest in any
of them but only in their capacity as such (each, an Indemnified Party and
collectively, the Indemnified Parties) against and hold each Indemnified Party
harmless from all liabilities, losses, damages, costs (but excluding general
administrative costs of such Indemnified Party unrelated to the claim of
indemnity hereunder), expenses (including reasonable attorneys' fees and
expenses), claims, demands or judgments of any nature actually imposed upon or
incurred by such Indemnified Party to the extent (a) arising or alleged to arise
from or in connection with or relating to the Overall Transaction or during the
Term of this Lease, the condition, use, operation, maintenance, subletting and
management of any Leased Property, (b) arising from or in connection with or
relating to the use and occupancy of any Leased Property by Lessee or anyone
claiming by, through or under Lessee as Lessee hereunder or (c) arising from or
in
<PAGE>
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connection with any of the following: (i) any injury to, or the death of, any
person or any damage to or loss of property on or adjacent to any Leased
Property or growing out of or connected with, the ownership, use, nonuse,
occupancy, operation, possession, condition, construction, repair or rebuilding
of any Leased Property or adjoining property, sidewalks, streets or ways or
resulting from the condition of any thereof, (ii) any liability actually
incurred by the Indemnified Party seeking indemnification hereunder arising from
claims by third parties resulting from any violation by Lessee of (A) any
provision of this Lease, or (B) any Legal Requirement affecting any Leased
Property, or (C) any provision of any lease (other than this Lease) or other
agreement relating to any Leased Property as of the date hereof or hereafter in
effect to which Lessee is a party or by which Lessee is bound, or (D) any
contract or agreement to which Lessee is a party, or any restriction, law,
ordinance or regulation, affecting any Leased Property or the ownership, use,
nonuse, occupancy, condition, operation, possession, construction, repair or
rebuilding thereof or of adjoining property, sidewalks, streets or ways; (iii)
any contest permitted by paragraph (d) of Article 6; and (iv) any violation or
alleged violation by Lessee of any of the terms and provisions hereof; provided,
however, that any such indemnity and hold harmless provided for in this Article
8 shall not, as to any Indemnified Party, be available (A) to the extent but
only to the extent that any such losses, claims, damages, liabilities, costs,
demands or judgments or related expenses resulted from (x) the gross negligence
or willful misconduct of, (y) a material breach of a covenant by, or (z) a
material misrepresentation by, in each case, such Indemnified Party; (B) with
respect to Lessor Liens; or (C) for Excluded Taxes. The foregoing shall not give
rise to any third party beneficiary rights with respect to any Person who is not
an Indemnified Party.
With respect to any amount that the Lessee is requested by an
Indemnified Party to pay by reason of this Article 8, such Indemnified Party
shall, if so requested by the Lessee, submit such additional information to the
Lessee as the Lessee may reasonably request and which is in the possession of
such Indemnified Party to describe the requested payment; but failure by such
Indemnified Party to provide such information shall in no way reduce Lessee's
indemnified obligations hereunder or in any way delay its payment or performance
of its obligations hereunder.
In case any action, suit or proceeding shall be brought against any
Indemnified Party, such Indemnified Party shall notify the Lessee of the
commencement thereof, and the Lessee shall be entitled, at its expense, to
participate in, and, to the extent that the Lessee desires to, assume and
control the defense thereof; provided, however, that the Lessee shall have
acknowledged in writing its obligation to fully indemnify such Indemnified Party
in respect of such action, suit or proceedings, and, the Lessee shall keep such
Indemnified Party fully apprised of the status of such action, suit or
proceeding and shall provide such Indemnified Party with all information with
respect to such action, suit or proceeding as such Indemnified Party shall
reasonably request, and provided, further, that the Lessee shall not be entitled
to assume and control the defense of any such action, suit or proceeding (and
shall pay all costs and reasonable
<PAGE>
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attorneys' fees incurred by such Indemnified Party in assuming such control) if,
(A) in the reasonable opinion of such Indemnified Party, (x) such action, suit
or proceeding involves any risk of imposition of criminal liability or any risk
of imposition of material civil liability on such Indemnified Party or will
involve a material risk of the sale, forfeiture or loss of, or the creation of
any Lien (other than a Permitted Encumbrance) on any Leased Property or any part
thereof unless, in the case of civil liability, the Lessee shall have posted a
bond or other security satisfactory to the relevant Indemnified Parties in
respect to such risk or (y) the control of such action, suit or proceeding
would, in the reasonable opinion of the Indemnified Party, involve a likely
potential conflict of interest, (B) such proceeding involves Claims not fully
indemnified by the Lessee which the Lessee and the Indemnified Party have been
unable to sever from the indemnified Claim(s), or (C) an Event of Default has
occurred and is continuing. Subject to the previous sentence, if Lessee is
permitted to so control such defense, the Indemnified Party may participate at
its own expense and with its own counsel in any proceeding conducted by the
Lessee in accordance with the foregoing. The Lessee shall not enter into any
settlement or other compromise with respect to any Claim subject to
indemnification under this Article 8 without the prior written consent of the
Indemnified Party, which consent shall not be unreasonably withheld in the case
of a money settlement not involving an admission of liability of such
Indemnified Party; provided, however, that in the event that such Indemnified
Party withholds consent to any settlement or other compromise, the Lessee shall
not be required to indemnify such Indemnified Party under this Article 8 to the
extent that the applicable Claim (x) is for legal fees and expenses incurred
after the date of the proposed settlement or (y) results in a judgment in excess
of such offered money settlement.
If such Indemnified Party shall control such defense, unless an Event
of Default shall have occurred and be continuing no Indemnified Party shall
enter into any settlement or other compromise with respect to any Claim for
which it is entitled to be indemnified under this Article 8 without the prior
written consent of the Lessee, which consent shall not be unreasonably withheld,
unless such Indemnified Party waives its right to be indemnified under this
Article 8 with respect to such Claim.
Upon payment in full of any Claim by the Lessee pursuant to this
Article 8 to or on behalf of an Indemnified Party, the Lessee, without any
further action, shall be subrogated to any and all claims that such Indemnified
Party may have relating thereto and such Indemnified Party shall execute such
instruments of assignment and conveyance, evidence of claims and payment and
such other documents, instruments and agreements as may be reasonably necessary
to preserve any such subrogation rights.
In the event of the termination of this Lease as herein provided or
Lessee's abandonment of any Leased Property, the obligations and liabilities of
Lessee with respect to each Indemnified Party, actual or contingent, under this
Article 8 shall survive such termination or abandonment.
<PAGE>
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9. Environmental Matters. Lessee represents and warrants (with respect
to statements made as of a particular date) and covenants (with respect to
future or ongoing obligations) to the Indemnified Parties that:
(i) at all times during the Term of this Lease, each and every
Leased Property, Lessee, all sublessees and any assignee of
Lessee shall comply in all material respects with all
applicable Environmental Laws, including the effecting of
cures in compliance with Environmental Laws, if applicable;
Lessee has, and has ensured that all sublessees of each Leased
Property have, obtained all permits, licenses, and any other
authorizations to conduct operations at such Leased Property
that are required under applicable Environmental Laws
(collectively, Environmental Permits) as of the applicable
Lease Closing Date with respect to each Leased Property and
shall obtain and shall ensure that all sublessees of each
Leased Property shall obtain and maintain in full force and
effect, at all times during the Term of this Lease, all
Environmental Permits that are now or hereafter required;
Lessee is, and has ensured that all sublessees of each Leased
Property are in compliance in all material respects with all
terms and conditions of all Environmental Permits as of the
applicable Lease Closing Date, and Lessee shall, and shall
ensure that all sublessees of each Leased Property shall,
comply in all material respects with all terms and conditions
of all Environmental Permits now or hereafter required; Lessee
shall cause any alterations of, or construction on, each
Leased Property to be done in compliance with applicable
Environmental Laws, and in connection with any such
alterations or construction, shall remove and dispose of, in
compliance with applicable Environmental Laws, any Hazardous
Substances present upon any Leased Property to the extent
required or authorized (as to such disposal) by applicable
Environmental Laws;
(ii) as of the applicable Lease Closing Date with respect to each
Leased Property, (a) no notices, complaints or orders of
violation or non-compliance regarding alleged violations of,
or strict liability under, Environmental Laws have been
received by Lessee or, to the best of its knowledge, by any
Person regarding such Leased Property; (b) no federal, state
or local governmental environmental investigation or legal
action by a private party is pending or, to the best of
Lessee's knowledge, overtly threatened, arising under or
pursuant to Environmental Laws with regard to such Leased
Property; and (c) no liens have been placed upon such Leased
Property in connection with any actual or alleged liability
under any Environmental Laws;
(iii) no Leased Property (a) as of the applicable Lease Closing Date
with respect thereto has been used by Lessee or, to the best
of Lessee's knowledge, by any other Person to generate,
manufacture, refine, produce or process any Hazardous
<PAGE>
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Substance or to store, handle, treat, dispose, transfer or
transport any Hazardous Substance other than as set forth in
Schedule E, as the same may be supplemented from time to time
by Lease Supplements as contemplated by Article 1, solely with
respect to the Leased Premises which is the subject thereof,
and (b) will be used by Lessee or any sublessee or assignee of
Lessee at any time during the Term of this Lease to generate,
manufacture, refine, produce or process any Hazardous
Substance or to store, handle, treat, dispose, transfer or
transport any Hazardous Substance, other than normal and
lawful uses of such Hazardous Substances in lawful quantities
and in compliance with Environmental Laws in connection with
Lessee's intended use of such Leased Property in accordance
with the provisions of Article 4, where such uses will have no
material adverse effect upon such Leased Property;
(iv) other than as set forth in Schedule E hereto, as the same may
be supplemented from time to time by Lease Supplements, as of
the applicable Lease Closing Date with respect to each Leased
Property, no surface impoundments are (and during the Term of
this Lease, none will be) constructed, operated or maintained
in or on such Leased Property and no above ground tanks or
other containment structures will be constructed, operated or
maintained on any Leased Property in violation of applicable
Environmental Laws and no underground storage tanks are (and
during the Term of this Lease, none will be) constructed,
operated or maintained in or on any Leased Property; as of the
applicable Lease Closing Date with respect to each Leased
Property, there is no asbestos nor asbestos-containing
material (except commercially produced product in non-friable
bonded form, the presence of which complies with all
Environmental Laws) located in, on, at or under such Leased
Property nor is there any PCB-containing equipment, including
PCB-containing transformers located in, on, at or under such
Leased Property nor will any of the foregoing be located in,
on, at or under any Leased Property at any time during the
Term of this Lease;
(v) as of the applicable Lease Closing Date with respect to each
Leased Property, other than as set forth in Schedule E, as the
same may be supplemented from time to time by Lease Supplement
as contemplated by Article 1, solely with respect to the
Leased Premises which is the subject thereof, each Leased
Property is free of Hazardous Substances at, in, on, over or
under such Leased Property, regardless of the source of any
such Hazardous Substances, except in concentrations that do
not exceed those allowed under or pursuant to applicable
Environmental Laws in connection with Lessee's development and
intended use of such Leased Property in accordance with the
provisions of Article 4 and none of which will have a material
adverse effect upon such Leased Property; and
<PAGE>
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(vi) at all times during the Term of this Lease, other than normal
and lawful uses of such Hazardous Substances in lawful
quantities and in compliance with Environmental Laws in
connection with Lessee's intended use of any Leased Property
in accordance with the provisions of Article 4, where such
uses will have no material adverse effect upon such Leased
Property, neither Lessee nor any sublessee or assignee of
Lessee shall, directly or indirectly, place Hazardous
Substances at, in, on, over or under such Leased Property.
Promptly upon obtaining Actual Knowledge thereof, Lessee shall give to
Lessor notice of the occurrence of any of the following events: (i) the failure
of any Leased Property, Lessee, any sublessee or assignee of Lessee to comply,
in all material respects, with any Environmental Law; (ii) the issuance to
Lessee or any sublessee of space in any Leased Property or any assignee of
Lessee, of any written notice, complaint or order of violation or non-compliance
in any material respect with regard to any Leased Property or the use thereof
with respect to Environmental Laws; (iii) any written notice of a pending or
threatened investigation to determine whether Lessee's (or any sublessee's or
assignee's) operations on any Leased Property are in violation, in any material
respect, of any Environmental Law; (iv) any written notice from any governmental
agency requiring any corrective action with respect to any Leased Property or
any portion thereof under any Environmental Law; (v) any written notice or other
written communication with respect to a pending or threatened private party
judicial or administrative action relating to violation, of any Environmental
Law in connection with the use, occupancy or operation of any Leased Property;
(vi) the existence or threat of a release of a Hazardous Substance at or to or
under any Leased Property or any condition regulated by any Environmental Law
which is or must be reported to a governmental agency or that could have a
material adverse effect upon any Leased Property; or (vii) any other occurrence
or discovery of any condition at, adjacent to or under any Leased Property
related to Environmental Laws and which would constitute a material adverse
effect on such Leased Property.
At any time if Lessor receives notice that an adverse change in the
environmental condition of any Leased Property has occurred or that an adverse
environmental condition with respect to any Leased Property has been discovered,
Lessor shall give notice thereof to Lessee, and Lessee shall (i) diligently
commence (or cause another Person to commence) to cure such condition, to the
extent required by applicable Environmental Laws (including any evaluations or
assessment of such conditions and to develop an appropriate plan with respect
thereto (or cause another Person to do so) within 30 days after receipt of such
notice (or such shorter period as may be required by law or in the event of an
emergency) and (ii) thereafter diligently prosecute (or cause another Person to
diligently prosecute) to completion such cure. If Lessee (or such other Person)
defaults in its obligations hereunder in respect of such condition, then Lessor
may, after reasonable prior notice to Lessee, take such actions as it may deem
necessary to cure such condition. Notwithstanding the foregoing, Lessor shall
not be obligated to take any actions in response to any such condition. All
costs and expenses reasonably incurred by Lessor
<PAGE>
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in connection with curing any such condition shall be paid by Lessee upon
demand. Notwithstanding anything to the contrary contained in this paragraph,
if, in the reasonable professional opinion of Lessor's environmental engineer,
such cure would cost in excess of $500,000 at the option of Lessor (with the
consent of Agent Bank) Lessor may require that Lessee purchase such Leased
Property. The purchase price for such Leased Property payable in cash or
immediately available federal funds shall be equal to (i) the Termination Value
payable as of the date of purchase, together with accrued and unpaid Basic Rent,
Additional Obligations and other sums payable by Lessee under this Lease, to the
date of purchase, in each case as allocable to such Leased Property, plus (ii)
an amount equal to the costs and expenses of Lessor (including reasonable
attorneys' fees) reasonably incurred in connection with such sale. The sale of
such Leased Property shall be in accordance with the terms of Article 16 hereof.
Lessee agrees to indemnify, defend and hold harmless each Indemnified
Party from and against any and all losses, liabilities (including third party
liabilities), injuries, damages, judgments, decrees, orders, penalties, claims,
charges, costs and expenses (including, without limitation, reasonable fees and
disbursements of counsel, consultants and expert witnesses for such Indemnified
Party), which may be suffered or incurred by, or asserted against such
Indemnified Party to the extent arising directly or indirectly out of any breach
or violation of this Article 9 or out of the presence, use, storage,
transportation, disposal, treatment, release, threatened release, discharge,
emission, generation or presence of any Hazardous Substances at, from, on, over,
under or in any Leased Property, regardless of whether occurring before, during
or, except as otherwise provided herein, after the Term of this Lease and
regardless of the source of any such Hazardous Substances, provided that no
Indemnified Party will be indemnified by Lessee hereunder for environmental
contamination caused solely by the grossly negligent acts of such Indemnified
Party, its employees, agents or assigns, other than at the direction of Lessee
or resulting from Lessee's failure to comply with this Article 9, and with
respect to Lessor, other than any such liability which is imputed to Lessor (and
not due solely to Lessor's own gross negligence or willful misconduct), by
reason of its interest in any Leased Property.
The warranties and obligations of Lessee, and the rights and remedies
of each Indemnified Party under this Article 9 are in addition to and not in
limitation of any other warranties, obligations, rights and remedies provided in
this Lease or otherwise at law or in equity.
In the event of the termination of this Lease as to any Leased Property
as herein provided or Lessee's abandonment of any Leased Property, the
obligations and liabilities of Lessee with respect to each Indemnified Party,
actual or contingent, under this Article 9 and relating to the period through
the end of the Term of this Lease, whether arising before or after the end of
the Term of this Lease, shall survive such termination or abandonment.
<PAGE>
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10. Maintenance and Repair; Additions; Completion Improvements.
(a) Lessee acknowledges that it has received each Leased Property in
good condition, repair and appearance on and as of the Lease Closing Date
applicable thereto. Lessee will, at its cost and expense, keep and maintain each
Leased Property, including any altered, rebuilt, additional or substituted
buildings, structures and other improvements thereto, in good condition and
repair, ordinary wear and tear (including, without limitation, from the
elements) excepted, and (except as otherwise provided in paragraph (c) of
Article 12) will make all structural and non-structural, and ordinary and
extraordinary changes, repairs and replacements, foreseen or unforeseen, which
may be required, whether or not caused by its act or omission, to be made upon
or in connection with the improvements to any Leased Property in order to keep
the same in such condition, ordinary wear and tear (including, without
limitation, from the elements) and the circumstances described in paragraph (c)
of Article 12 excepted, including taking, or causing to be taken, action
necessary to maintain each Leased Property in compliance in all material
respects with any applicable Legal Requirements, including all applicable
Environmental Laws. Lessee covenants to perform or observe all terms, covenants
or conditions of any reciprocal easement or maintenance agreement to which it
may at any time be a party or to which any Leased Property is subject as of the
Lease Closing Date with respect to such Leased Property. Lessee shall, at its
expense, use its reasonable efforts to enforce compliance in all material
respects with any reciprocal easement, maintenance or other agreement
benefitting any Leased Property by any other Person subject to such agreement
without the imposition of any Lien. Lessor shall not be required to maintain,
alter, repair, rebuild or replace any improvements on any Leased Property or to
maintain any Leased Property, and Lessee expressly waives the right to make
repairs at the expense of Lessor pursuant to any law at any time in effect.
Lessee shall not abandon any Leased Property.
(b) If it is determined that any Improvements situated on any Leased
Property at any time during the term of this Lease shall encroach upon any
property, street or right-of-way adjoining or adjacent to such Leased Property,
or shall violate the agreements or conditions contained in any restrictive
covenant affecting such Leased Property or any part thereof, or shall impair the
rights of others under or obstruct any easement or right-of-way to which such
Leased Property is subject, then, Lessee shall promptly notify Lessor of such
development, and at the written request of Lessor, Lessee shall, at its expense,
either (i) obtain effective waivers or settlements of all claims, liabilities
and damages resulting from each such encroachment, violation, impairment or
obstruction whether the same shall affect Lessor, Lessee or both, or (ii) make
such changes in the improvements on such Leased Property and take such other
action as shall be necessary to remove such encroachments or obstructions and to
end such violations or impairments, including, if necessary, the alteration or
removal of any improvement on such Leased Property. Any such alteration or
removal shall be made in conformity with the following requirements of this
Article 10 to the same extent as if such alteration or removal were an
alteration under the provisions of paragraph (c) of this Article 10 and there
shall be no abatement of rent by reason of such alteration or removal.
<PAGE>
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(c) During the Term of this Lease, so long as no Default or Event of
Default hereunder has occurred and is continuing, after notice to Lessor, Lessee
may make any alterations, additions, modifications or improvements to any Leased
Property whether or not structurally integrated with the existing Improvements
on such Leased Property (each an Addition), provided that: (A) no such Addition
(i) reduces the fair market value of such Leased Property, taking into account
any increase in the fair market value of such Leased Property caused by prior
improvements to such Leased Property made by Lessee as permitted by this Lease
at any time during the Maximum Lease Term, (ii) adversely affects the structural
integrity of such Improvements, or impairs the utility or operation of such
Leased Property (other than during the construction period with respect to such
Addition), (iii) reduces the remaining useful life of such Improvements, or (iv)
violates (in any material respect) any agreement or restriction (x) to which
such Leased Property is subject or (y) which benefits such Leased Property; (B)
Lessee shall finance construction of any Addition at its sole cost and expense
(i) using its own funds, or (ii) through a borrowing unsecured by any interest
in any Leased Property; (C) in addition to satisfying the requirements of clause
(A) above, any Addition to any Leased Property the cost of which exceeds
$250,000 shall be consented to by Lessor and Agent Bank in writing prior to
commencement thereof; (D) any Addition shall be made in a good and workmanlike
manner using a quality of material and workmanship at least as good as the
original work or installation of such Improvements and otherwise in conformance
with the character and quality of such existing Improvements and in compliance
with all applicable Legal Requirements; (E) prior to undertaking any Addition,
Lessee shall deliver to Lessor an Officer's Certificate with respect to
satisfaction of the conditions set forth in the foregoing clauses (A)(i),
(A)(ii) and (A)(iii); (F) upon the reasonable request by Lessor, the fair market
value and the remaining useful life of such Improvements shall be determined by
an Appraisal of the applicable Leased Property, performed at Lessee's sole cost
and expense; (G) any Addition may not be encumbered by any Lien (other than a
Permitted Encumbrance); and shall become the property of Lessor and subject to
this Lease, the Assignment and the Deed of Trust related thereto; (H) at
Lessor's request, Lessee shall within 10 Business Days thereafter execute and
deliver to Lessor a Lease Supplement with respect to any such Additions; and (I)
Lessee's execution of a Lease Supplement for any such Addition shall constitute
(i) Lessee's acknowledgment and certification that any work associated therewith
complies with the requirements of this Article 10 and (ii) as between Lessor and
Lessee and for purposes of the Operative Documents but for no other purpose,
Lessee's unconditional and irrevocable acceptance of such Addition for lease
hereunder, which acceptance shall not constitute a waiver of any rights against
third parties.
(d) In addition to Lessee's right to construct Additions as set forth
in subparagraph (c) above, if Lessor shall receive an Advance and an Additional
Equity Investment to construct Completion Improvements under and in accordance
with the Loan Agreement and the Agency Agreement, respectively, Lessee may
construct or cause to be constructed on such Leased Property such Completion
Improvements upon compliance with the following provisions:
<PAGE>
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(i) Lessee shall comply with the provisions of Section 4.2 (b) of
the Agency Agreement;
(ii) the Completion Date for such Completion Improvements shall be
no more than 180 days after commencement of the construction
thereof;
(iii) Lessee shall comply with the provisions of clauses (A), (D),
(G), (H), and (I) of subparagraph (c);
(iv) Lessee shall cause the Completion Improvements to be
substantially completed in accordance with plans and
specifications reasonably satisfactory to Lessor and Agent
Bank (as the same may be modified from time to time with the
approval of Agent Bank, the Approved Plans);
(v) Lessee shall employ or cause to be employed a competent work
force at all times during construction of the Completion
Improvements and all indemnities set forth in this Lease shall
apply with respect to such Completion Improvements;
(vi) Lessee shall at all times during the construction of the
Completion Improvements keep or cause to be maintained and
kept with respect to the construction of the Completion
Improvements, accurate books, records and accounts showing all
materials ordered and received and all disbursements and
accounts payable in connection with the construction of the
Completion Improvements;
(vii) Lessee shall allow Lessor, Agent Bank, the Lenders,
Beneficiary and LC Issuer to enter the Completion Improvements
upon reasonable prior written notice and during normal
business hours for purposes of inspecting the progress of
construction of the Completion Improvements and to examine all
books, accounts, plans, drawings, and records with respect
thereto;
(viii) the Completion Improvements shall be Substantially Complete by
no later than the applicable Completion Date; and
(ix) upon Substantial Completion of such Completion Improvements,
Lessee shall deliver to Lessor and Agent Bank the following:
(A) a new "as-built" survey plan of such Leased Property
(including the Completion Improvements) to the extent
that the building "footprint" is altered by such
Completion Improvements;
<PAGE>
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(B) an updated "Phase I", and if requested by Lessor,
Agent Bank or LC Issuer in its reasonable judgment
based upon the "Phase I" with respect thereto, an
updated "Phase II" environmental site assessment
report of such Leased Property performed by an
independent environmental engineer selected or
approved by Lessor and approved by Agent Bank, the
Lenders and LC Issuer, at sole cost and expense, and
which report shall (x) confirm that the performance
of the Completion Improvements did not disclose or
cause any adverse environmental conditions not
previously disclosed, and (y) reveal no actual or
potential environmental liabilities. If any updated
environmental site assessment report required by this
clause (C) reveals a need for additional review in
the reasonable judgment of Lessor, Agent Bank or LC
Issuer, Lessee, at its sole cost and expense, shall
provide such additional environmental site assessment
reports as are required by Lessor, Agent Bank or the
Lenders. The results of all such environmental site
assessment reports must be satisfactory to Lessor,
Agent Bank, the Lenders, Beneficiary and LC Issuer;
(C) within 60 days of Substantial Completion of such
Completion Improvements, a final certificate of
occupancy; and
(D) such other documents reasonably required by the Agent
Bank.
If for any reason, the sum of (x) the proceeds from the Advance made by
Lenders under the Loan Agreement, and (ii) the Additional Equity Investment, are
insufficient to pay all costs of Lessee with respect to the Completion
Improvements, Lessee shall, nonetheless, be bound and required to fulfill its
obligations hereunder and to pay all costs of the Completion Improvements and,
under no circumstances, shall the insufficiency of the funds available to Lessee
reduce or release Lessee from any of its obligations hereunder.
(e) All work done in accordance with this Article 10 shall comply with
the requirements of all insurance policies required to be maintained by Lessee
under Article 13 hereof. Lessee shall promptly pay all costs and expenses of
each such Addition and Completion Improvements, discharge all liens arising
therefrom and procure and pay for all permits and licenses required in
connection therewith.
11. Trade Fixtures; Inspection.
(a) Lessor acknowledges and agrees that the racking systems, shelving
systems, security systems and items of racking, shelving trade fixtures, cabling
and networks running from the utility closets to work stations, machinery and
equipment for each Leased Property (but specifically excluding Improvements)
that are not financed by Owner Advances under and as
<PAGE>
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defined in the Agency Agreement as part of the Cost of the Property related to
the respective Leased Property are and shall remain the property of Lessee
(Trade Fixtures) and be treated as "trade fixtures" for the purposes of this
Lease and Lessee may remove the same from such Leased Property at any time prior
to the termination of this Lease, provided that such removal does not impair the
fair market value, utility or useful life of such Leased Property and that
Lessee shall repair any damage to such Leased Property resulting from such
removal. Lessee may, at its own cost and expense, install or place or reinstall
or replace upon or remove from any Leased Property any such Trade Fixtures. Any
such Trade Fixtures shall not become the property of Lessor (other than
replacements of fixtures, machinery and equipment which are the property of
Lessor, which replacement shall also be the property of Lessor). Replacements of
fixtures, machinery and equipment which are property of the Lessor shall be of
at least equal quality to the replaced fixtures, machinery and equipment at the
time of such replacement. Lessee will be responsible for the repair and
maintenance of Trade Fixtures. Lessor, at Lessee's request and expense, will
waive or subordinate its lien on Lessee's personal property and Trade Fixtures
for the benefit of any equipment lessor or other person providing financing.
(b) Upon the request of Lessor, Agent Bank or Lenders, Lessee shall
make Lessee's records pertaining to the maintenance of each Leased Property
available to Lessor, Agent Bank and Lenders for inspection as hereinafter
provided. Lessee shall permit Lessor, Beneficiary, Agent Bank, Lenders, LC
Issuer and their agents, at any such party's risk and expense and after
reasonable notice to visit and inspect (in the company of a representative of
Lessee) any Leased Property, in a manner that does not unreasonably interfere
with Lessee's use and operation of such Leased Property at such reasonable times
during normal business hours and as often as may be reasonably requested,
including, without limitation, to make such inspections as any such party deems
necessary or desirable to insure compliance with the provisions of Article 9,
Article 10, this Article 11 and Article 26.
12. Condemnation and Casualty.
(a) Lessee hereby assigns to Lessor any award, compensation, insurance
proceeds or other payment to which Lessee may become entitled by reason of its
interest in any Leased Property (i) if any Leased Property, or any portion
thereof, is damaged or destroyed by fire or other casualty or cause, or (ii) by
reason of any condemnation, requisition or other taking or sale of the use,
occupancy or title to any Leased Property or any portion thereof in, by or on
account of any actual or threatened eminent domain proceeding or other action by
any governmental authority, civil or military, or other Person having the power
of eminent domain. So long as there is no Event of Default continuing hereunder,
Lessee is hereby authorized and empowered to, at its cost and expense, in the
name and behalf of Lessor, Lessee, Agent Bank or otherwise, to appear in any
such proceeding or other action, to negotiate, accept and prosecute any claim
for any award, compensation, insurance proceeds or other payment on account of
any such loss, damage or destruction, condemnation, requisition or other taking
or sale and to cause any such
<PAGE>
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award, compensation, insurance proceeds or other payment to be paid to Lessor.
In addition, so long as there is no Event of Default continuing hereunder,
Lessee, at its sole cost and expense, shall be entitled to submit, negotiate,
accept and prosecute a claim for any award, compensation or insurance proceeds
or other payment payable to Lessee to the extent payable for interruption of
business, moving expenses or any property owned by Lessee that is not part of
any Leased Property (any such insurance proceeds or other payment payable to
Lessee to the extent made for interruption of business, moving expenses or any
property owned by Lessee that is not part of any Leased Property hereinafter
referred to as Lessee's Loss), and Lessee shall retain any award applicable
thereto. Furthermore, Lessee shall use reasonable efforts to achieve the maximum
award obtainable under the circumstances. Lessor, Agent Bank, Beneficiary and LC
Issuer may, at their respective cost and expense (unless (x) an Event of Default
shall have occurred and be continuing; or (y) any such Person shall reasonably
determine that such appearance is necessary to protect its respective rights
under the Operative Documents, in which event such appearance shall be at
Lessee's sole cost and expense), appear in any such proceeding or other action,
in a manner consistent with the foregoing. All amounts so paid or payable to
Lessor or Lessee shall be retained by, or paid over to, the party entitled
thereto in accordance with the provisions of any Deed of Trust and this Article
12. To the extent that Lessor, Agent Bank, Beneficiary or LC Issuer do not
appear and act at such proceeding, Lessee shall take all reasonable appropriate
action in connection with each such claim, proceeding or other action, and shall
pay its costs and expenses in connection therewith.
(b) If any Leased Property or any part thereof shall be condemned or
taken in the exercise of the power of eminent domain by any sovereign,
municipality or other public or private authority or shall be damaged or
destroyed by fire or other casualty, and Lessee may not, or does not, elect to
terminate the Lease with respect to such Leased Property pursuant to paragraph
(c) of this Article 12, then Lessee shall give prompt written notice of such
condemnation or casualty to Lessor and shall, at Lessee's own cost and expense,
proceed with diligence and promptness to carry out any necessary demolition and
to restore, repair, replace, and/or rebuild such Leased Property in order to
restore such Leased Property, as nearly as practicable, to a condition and fair
market value not less than the condition required to be maintained and fair
market value thereof immediately prior to such taking, damage or destruction. No
repair work done by Lessee pursuant to this paragraph shall violate the terms of
any restriction, easement, condition or covenant or other matter affecting title
to any Leased Property, and shall be undertaken and completed in a good and
workmanlike manner and in compliance in all material respects with the
requirements of Article 10 and with all Legal Requirements then in effect with
respect to the affected Leased Property. All work done in accordance with this
paragraph (b) of Article 12 shall comply with the requirements of all insurance
policies required to be maintained pursuant to this Lease.
Basic Rent and Additional Obligations shall not abate hereunder at any
time during the Term of this Lease by reason of any taking of, damage to or
destruction of any Leased Property,
<PAGE>
-22-
and this Lease shall continue in full force and effect and Lessee shall continue
to perform and fulfill all of Lessee's obligations, covenants and agreements
hereunder notwithstanding such taking, damage or destruction.
If a Default or Event of Default is continuing hereunder, Lessor or
Agent Bank shall retain the Net Award (as defined in paragraph (c) of this
Article 12) to be applied to effect compliance with Lessee's obligations then
due under Article 22 and the Net Award will be applied on account of and
credited against Lessee's obligations then due under Article 22. If the Net
Award is less than the estimated cost of restoring or rebuilding the
Improvements on the affected Leased Property to the condition and fair market
value required above in this paragraph (b), and Lessee shall not be qualified to
be the Depositary, as provided below, then Lessee shall deposit the amount by
which such estimated cost exceeds the Net Award with the Depositary as described
below or shall post an equivalent bond, whereupon such deposit or bonded amount
shall be part of the Net Award for purposes of this paragraph (c) of this
Article 12. If the Net Award does not exceed $1,000,000, provided that there is
no Default or Event of Default continuing hereunder, then the Net Award shall be
promptly paid to Lessee to be applied to the repair and rebuilding work required
by this paragraph (b). If the Net Award exceeds $1,000,000, provided that there
is no Default or Event of Default continuing hereunder, then:
(i) the full amount thereof shall be paid to a depositary (the
Depositary) to be selected as hereinafter provided. The
Depositary shall be either (x) Lessee, so long as no Default
or Event of Default shall have occurred and be continuing, or
(y) a bank or trust company located in Arizona, New York or
Massachusetts, selected by Lessee and reasonably satisfactory
to Lessor which is authorized to do business in the state in
which the affected Leased Property is located, New York or
Massachusetts, as the case may be, and which has a net worth
of $500,000,000 or more and has a senior unsecured debt credit
rating from Standard & Poor's Ratings Group (S&P) or Moody's
Investor Service, Inc. (Moody's), or any successor to either
entity, of "A" or better. The Depositary (if other than
Lessee) shall have no affirmative obligation to prosecute a
determination of the amount of, or to effect the collection
of, any insurance proceeds or condemnation award or awards,
unless the Depositary shall have given an express written
undertaking to do so. Moneys received by the Depositary
pursuant to the provisions of this Lease shall not be
commingled with the Depositary's own funds and shall be held
by the Depositary in trust separately for the uses and
purposes provided in this Lease. The Depositary shall place
any moneys held by it into an interest bearing account; any
interest paid or received by the Depositary on the moneys so
held in trust shall be added to the moneys so held in trust by
the
<PAGE>
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Depositary. In disbursing monies pursuant to clause (ii)
of this paragraph (b), the Depositary may rely conclusively on
the information contained in any notice given to the
Depositary by Lessee in accordance with the provisions of said
clause (ii), unless Lessor shall notify the Depositary in
writing as provided in said clause (ii) that Lessor intends to
dispute such information, in which case the disputed amount
shall not be disbursed but shall continue to be held by the
Depositary until such dispute shall have been resolved.
(ii) Lessee may request payment out of the Net Award for the actual
costs and expenses incurred by Lessee in connection with such
repair and rebuilding. Such requests shall be made by written
notice to the Depositary, with a copy to Lessor, setting forth
in reasonable detail all of such costs and expenses then
incurred by Lessee. The Depositary shall promptly disburse
(but not prior to the expiration of the five Business Day
period set forth in the last sentence of this clause (ii) and
not at any time during which a dispute shall exist between
Lessor and Lessee as to such amount) to Lessee out of the Net
Award the amount of such costs and expenses. If Lessor shall
in good faith desire to dispute the information contained in
any notice given by Lessee pursuant to this clause (ii),
Lessor shall so notify Lessee and the Depositary in writing
within five business days after the giving of such notice (the
Dispute Notice), specifying the amount intended to be disputed
and the nature of the dispute, and Lessor and Lessee shall
negotiate in good faith to promptly settle any such dispute.
Within five days after delivery of the Dispute Notice, a duly
authorized representative of Lessee and Lessor shall meet to
discuss and to attempt to resolve such dispute. If no such
resolution has been reached within 15 days after delivery of
the Dispute Notice, the dispute shall be referred to the
Applicable Officer of Lessee and to the most senior authorized
representative of Lessor charged with the administration of
this Lease for resolution. Such officers shall meet to discuss
and attempt to resolve such dispute within 10 days after the
expiration of such 15 day period. If such parties are unable
to agree on an appropriate resolution within 15 days after the
end of such 15 day period, both parties may pursue any rights
and remedies they may have hereunder, at law or in equity, and
the Depositary shall hold such amounts in trust pending the
outcome thereof. The failure or refusal of either Lessor or
Lessee to meet and discuss any dispute as provided above shall
entitle the Depositary to immediately disburse the moneys held
by it at the direction of the party not so failing or
refusing. Any portion which is not in dispute will be paid
promptly.
<PAGE>
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(iii) After reimbursement pursuant to clause (ii) above, any
remaining Net Award shall be paid pursuant to paragraph (b) of
Article 13.
(iv) Lessee may direct the investment of the amounts deposited with
the Depositary pursuant to clause (i) above in the following:
(A) repurchase obligations of one or more financial
institutions reasonably acceptable to Lessor and
Agent Bank at all times fully secured by direct and
general obligations of the United States of America
or obligations guaranteed as to principal and
interest by the United States of America;
(B) direct and general obligations of the United
States of America or obligations guaranteed as to
principal and interest by the United States of
America purchased at a price of not more than par;
(C) certificates of deposit of one or more financial
institutions reasonably acceptable to Lessor and
Agent Bank at all times insured by the Federal
Deposit Insurance Corporation or collateralized by
obligations of the types described in the foregoing
clauses (A) and (B); or
(D) commercial paper which is rated "A-1" or better
(or comparable ratings) by S&P or "P-1" or better (or
comparable ratings) by Moody's, or the successors to
such rating organizations.
Such investments of such funds shall mature in such
amounts and on such dates as to provide that amounts
sufficient to pay the amounts requested, and due to,
Lessee shall be available on the due dates. The
Depositary shall not be liable for any loss resulting
from the liquidation of any such investment in order
to pay such amounts. The Lessee shall be responsible
for any loss of principal as a result of any
investments Lessee has directed the Depositary to
make or has made itself in its capacity as the
Depositary.
(c) If, at any time during the Term of this Lease all or "substantially
all" (as defined below) of any Leased Property shall be condemned or taken in
the exercise of the power of eminent domain by any sovereign, municipality or
other public or private authority or shall be damaged or destroyed by fire or
other casualty or if, after any condemnation, taking or casualty of any Leased
Property, Lessee shall have, in good faith, determined that such condemnation,
taking or casualty has rendered such Leased Property permanently unsuitable for
continued use in Lessee's business for operations similar to those utilized by
Lessee prior to the casualty or condemnation in question, and shall have
provided to Lessor an Officer's Certificate to that
<PAGE>
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effect, then so long as there is no Default or Event of Default continuing
hereunder, Lessee may give notice to Lessor of Lessee's intention to terminate
this Lease with respect to such Leased Property.
"Substantially all" of a Leased Property shall be deemed to have been
condemned, damaged, destroyed or taken, as the case may be, if Lessee shall
have, in good faith, determined that the remaining portion of such Leased
Property shall not be of sufficient size or character to permit the continued
operation by Lessee of its business operations on an economically feasible
basis, assuming that such remaining portion had been repaired and restored to
the fullest extent reasonably practicable.
If, pursuant to the foregoing provisions of this paragraph (c) of this
Article 12, Lessee shall have determined not to restore an affected Leased
Property, then Lessee shall give notice to Lessor of Lessee's intention to
terminate this Lease with respect to such Leased Property. Lessee's notice to
Lessor shall (i) contain a description of the relevant condemnation, taking or
casualty, (ii) specify the date on which this Lease shall terminate with respect
to such Leased Property which shall be the Payment Date first occurring upon or
after the earlier to occur of (A) receipt by the party entitled thereto of the
applicable Net Award, and (B) 180 days after the occurrence of such condemnation
or taking or 180 days after the occurrence of such casualty (subject to
reasonable extension in the event the insurer has not notified Lessee within 30
days after the occurrence of any such casualty regarding the amount of proceeds
to be awarded under the applicable insurance policy), whichever is applicable
(the Termination Date), and (iii) contain the irrevocable commitment of Lessee
to purchase Lessor's interest in such Leased Property (and, if applicable, the
Net Award hereinafter referred to), on such Termination Date for the applicable
Termination Value with respect to such Leased Property together with any accrued
and unpaid Basic Rent and Additional Obligations then due. On such Termination
Date Lessor shall transfer, and Lessee shall purchase, Lessor's interest in the
affected Leased Property (and the Net Award, if applicable) in accordance with
the provisions of Article 16 hereof. Upon completion of such purchase, and
payment by Lessee of the Termination Value with respect to such Leased Property,
the accrued and unpaid Basic Rent due on such Termination Date, any accrued and
unpaid Additional Obligations then due, and any other sums owed by Lessee
pursuant to Article 16 hereof, the entire award, compensation, insurance
proceeds or other payment, if any, on account of any such condemnation, taking
or casualty, less any expenses reasonably incurred by Lessor in collecting such
award, compensation, insurance proceeds or other payment and not already paid
(or reimbursed to Lessor) by Lessee pursuant to the third to the last sentence
of paragraph (a) of Article 12, shall be paid and belong to Lessee (such award,
compensation, insurance proceeds or other payment, less such expenses, plus, in
the case of any award with respect to a condemnation or taking, any investment
income earned with respect to the foregoing amounts, being herein called the Net
Award).
<PAGE>
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In the event that this Lease terminates with respect to a Leased
Property as described in this Article 12, Lessee agrees to vacate and use its
best efforts to dispose of such Leased Property and agrees that no use will be
made of such Leased Property in the business of Lessee or any subsidiary or
Affiliate thereof for a period of one year following the date of purchase by
Lessee.
(d) Notwithstanding any other provision to the contrary contained in
this Article 12, in the event of a temporary condemnation with respect to any
Leased Property, this Lease shall remain in full force and effect and Lessee
shall be entitled to the Net Award allowable to such temporary condemnation;
except that any portion of the Net Award allocable to the time period after the
expiration or termination of the Term of this Lease with respect to such Leased
Property shall be paid to Lessor.
13. Insurance.
(a) Lessee shall, during the Term hereof, at its cost and expense,
maintain or cause to be maintained valid and enforceable insurance of the
following character and shall cause to be delivered to Lessor and Agent Bank
annual certificates of the insurers as to such coverage:
(i) "all risks" property insurance (including flood insurance with
respect to any Leased Property located in a flood hazard zone)
covering each Leased Property and all replacements and
additions thereto, and all building materials and other
property which constitute part of any Leased Property in a
manner consistent with insurance maintained by Lessee on
properties similar to the Leased Properties and in any event
in amounts not less than the actual replacement cost of each
Leased Property (without depreciation) less land and other
uninsurable items.
(ii) public liability insurance covering legal liability against
claims for bodily injury, death or property damage, occurring
on, in or about any Leased Property and the adjoining land,
streets, sidewalks or ways or occurring as a result of
construction and use and occupancy of facilities located on
any Leased Property or as a result of the construction thereof
or the use of products or materials manufactured, processed,
constructed or sold, or services rendered, on any Leased
Property, in the minimum amount of $10,000,000 with respect to
any one occurrence, accident or disaster or incidence of
negligence and with aggregate liability coverage in the amount
of $25,000,000. Coverage should include "premises/operations",
"independent contractors", and "blanket contractual"
liabilities.
<PAGE>
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(iii) insurance during the course of any construction or repair of
any Improvements (including Completion Improvements) against
"all risks", including collapse and transit coverage, during
construction or repair of such Improvements, covering the
total value of work performed and equipment, supplies and
materials furnished, in an amount equal to the actual
replacement cost of such Improvements (without depreciation)
less uninsurable items.
(iv) worker's compensation insurance (or other similar insurance or
self insurance program permitted and in compliance with the
laws of the state where each Leased Property is located)
covering all Persons employed by Lessee in connection with any
work done on or about each Leased Property with respect to
which claims for death or bodily injury could be asserted
against Lessor, Agent Bank, Lessee or any Leased Property,
complying with the laws of the state where each Leased
Property is located.
(v) such other insurance, in such amounts, against such risks, and
with such other provisions as is customarily and generally
maintained by Lessee and its Affiliates with respect to its
other warehouse facilities (which shall be substantially
similar to operators of similar properties of a financial
standing similar to Lessee).
Such insurance shall be effected under standard or manuscript form
policies, issued by stock or mutual company insurers of recognized
responsibility authorized to do business in the state in which the respective
Leased Property is located which are rated with a General Policy Rating of A- or
better in Best's Key Rating Guide or similar rating by a national or
international rating organizations and shall name Lessee as insured and Lessor,
Bank, Beneficiary, LC Issuer Agent Bank and the Lenders as additional insureds
with respect to insurance described in clause (ii) and, to the extent
applicable, clause (v), above, and shall name Agent Bank as loss payee, for
distribution to itself (for the benefit of the Lenders), Lessor, Beneficiary, LC
Issuer and Lessee, as their interests may appear, with respect to insurance
described in clauses (i), (iii) or, to the extent applicable, clause (v) above.
Such insurance may provide for such deductible amounts of up to $250,000 per
occurrence and may be obtained by Lessee by endorsement on its blanket insurance
policies provided that each Leased Property shall be separately scheduled so
that no loss at any other property shall reduce the amount payable with respect
to such Leased Property except for the perils of flood and earthquake, where
aggregate limits are usual and customary.
(b) Any portion of the Net Award remaining after Lessee has repaired
any affected Leased Property pursuant to paragraph (b) of Article 12 and has
been reimbursed for all of its expenses incurred in connection with obtaining
the Net Award and effecting such repairs, shall
<PAGE>
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be delivered to Lessee, provided that either the fair market value of such
Leased Property after such repair is no less than the fair market value of such
Leased Property immediately prior to the event of loss with respect to which
such Net Award was paid, or that the aggregate amount of (i) such portion of the
Net Award so remaining and (ii) all amounts thereto paid to Lessee pursuant to
this sentence, does not exceed $250,000. If the fair market value of any
affected Leased Property has been diminished, taking into account any increase
in the fair market value of such Leased Property caused by prior improvements to
such Leased Property made by Lessee as permitted by this Lease or such aggregate
amounts exceed $250,000, the excess shall be retained by Lessor and shall be
applied pari passu in reduction of the principal amount of the Debt Notes and
the Equity Investment, together with accrued and unpaid interest and any amounts
payable pursuant to the terms thereof or in respect thereof from such excess
amount and not from any additional funds of Lessee or Lessor. After the
retention of any such amount by Lessor, (i) each installment of Basic Rent
payable on and after the second Payment Date occurring after such retention
shall be reduced by an amount equal to the amount of the reduction, if any, in
payments of principal and interest on the Debt Notes and the Equity Investment
resulting from the application of such retained amount to prepayment of the
principal of the Debt Notes and the Equity Investment, and (ii) the Purchase
Price, Termination Values, Maximum Lessor Risk Amount and Maximum Lessee Risk
Amount for such Leased Property shall be reduced by amounts that reflect the
reductions, if any, in principal outstanding on the Debt Notes and the Equity
Investment from time to time as a result of the application of such retained
amount to prepayment of principal on the Debt Notes and the Equity Investment;
provided however, that Basic Rent as so reduced shall be at least sufficient to
pay each installment of interest on the Debt Notes and the Equity Return when
due and the Purchase Price and Termination Values (together with all Additional
Obligations and Basic Rent) shall be at least sufficient at all times during the
Maximum Lease Term to pay all outstanding principal and interest under the Debt
Notes, the Equity Investment and the Equity Return. Any reductions in
Termination Values, Purchase Prices, Maximum Lessor Risk Amounts and Maximum
Lessee Risk Amounts made in accordance with this paragraph (b) of Article 13
shall be set forth with specificity on supplements to Schedules C, F and G
hereto, respectively, prepared by Lessor or Agent Bank.
(c) In addition to the foregoing, every insurance policy maintained in
accordance with clauses (i) or (iii) of paragraph (a) of this Article 13 shall:
(i) name Agent Bank and LC Issuer as loss payee, in accordance with paragraph
(a); (ii) contain a standard mortgagee endorsement in substantially the form of
Schedule D hereto naming Agent Bank and LC Issuer, as its interests may appear,
provided that any recovery under any such policy shall be applied by Agent Bank
and LC Issuer in the manner provided in paragraphs (b) or (c) of Article 12 or
paragraph (b) of this Article 13, as applicable; and (iii) provide that the
issuer waives all rights of subrogation against Lessor, any successor to
Lessor's interests in the related Leased Property and Agent Bank and LC Issuer;
and every insurance policy maintained in accordance with clauses (i), (ii),
(iii) or (v) of paragraph (a) of this Article 13 shall: (i) provide that 30 days
advance written notice (10 days with respect to nonpayment of premiums) of
cancellation, modification,
<PAGE>
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termination or lapse of coverage shall be given to Lessor, Agent Bank and LC
Issuer and that such insurance, as to the interest of Lessor, Agent Bank and LC
Issuer, shall not be invalidated by any act or neglect of Lessor, Lessee or any
party, nor by any foreclosure or any other proceedings relating to any Leased
Property, nor by use or occupation of any Leased Property for purposes more
hazardous than are permitted by such policy; (ii) be primary and without right
or provision of contribution as to any other insurance carried by Lessor or any
other interested party; and (iii) in the event any insuring company is not
domiciled within the United States of America, include a United States Service
of Suit clause (providing any actions against the insurer by the named insured
or Lessor are conducted within the jurisdiction of the United States of
America).
(d) Nothing in this Article 13 shall prevent Lessee from taking out
insurance of the kind and in the amount provided for under the preceding
paragraphs of this Article under a blanket insurance policy (which policy or
certificates thereof acceptable to Lessor shall be delivered to Lessor) which
may cover other properties owned, operated, leased or occupied by Lessee as well
as the Leased Properties; provided, however, that any such blanket insurance of
the kind provided for shall not contain any clause which would result in the
insured thereunder being required to create a reserve or carry any insurance
with respect to the property covered thereby in an amount not less than any
specific percentage of the actual replacement cost of such property in order to
prevent the named insureds from becoming a co-insurer of any loss with the
insurer under such policy. Further, such policies of blanket insurance shall, as
respects the Leased Properties, contain the various provisions required of such
an insurance policy by the foregoing provisions of this Article 13.
(e) Lessee shall not obtain or carry separate insurance concurrent in
form or contributing in the event of loss with that required in this Article 13
to be furnished by Lessee, unless Lessor, Agent Bank and LC Issuer are included
therein as an additional insured, with loss payable as in this Lease provided
and otherwise complying with the requirements of paragraph (c) of this Article
13. Lessee shall immediately notify Lessor whenever any such separate insurance
is obtained and shall deliver to Lessor, Agent Bank and LC Issuer certificates
of insurers evidencing such insurance.
(f) Lessee shall deliver to Lessor and Agent Bank prior to the
execution of this Lease (or in the case of a Leased Property which first becomes
subject to this Lease thereafter, on the Lease Closing Date with respect
thereto) certificates of insurance, satisfactory to Agent Bank, evidencing all
of the insurance required under paragraph (a) of Article 13 hereof. Lessee
shall, in connection with the expiration of any required insurance policy,
deliver to Lessor, Agent Bank and LC Issuer certificates (and upon written
request, actual policies) of insurers evidencing the renewal of any such policy.
If Lessee fails to maintain or renew any insurance required by this Lease, or to
pay the premium therefor, or to so deliver any such certificate, then Lessor, at
its option, but without obligation to do so, may, upon ten Business Days' notice
to Lessee, procure
<PAGE>
-30-
such insurance, pay such premium or deliver such certificate. Any sums so
expended by Lessor shall be Additional Obligations hereunder and shall be repaid
by Lessee within five Business Days after notice to Lessee of such expenditure
and the amount thereof. With respect to any insurance policy required to be
maintained pursuant to this Lease, upon request of Lessor, Agent Bank, or LC
Issuer, Lessee shall deliver to such requesting party a copy of such insurance
policy.
(g) Lessee shall comply with all of the terms and conditions of each
insurance policy maintained pursuant to the terms of this Lease, to the extent
necessary to avoid invalidating such insurance policy or impairing the coverage
available thereunder. In the event of the termination of this Lease as herein
provided or Lessee's abandonment of any Leased Property, the obligations and
liabilities of Lessee with respect to each Indemnified Party, actual or
contingent, under this Article 13, shall survive such termination or
abandonment.
14. Financial Statements; Other Information.
(a) Lessee will deliver to Lessor, Agent Bank, the Lenders, the
Beneficiary and LC Issuer the financial statements and other documents of
Guarantor and its Subsidiaries described in paragraph 9 of the Guaranty.
Concurrently with the delivery of annual financial statements pursuant thereto,
Lessee will deliver to Lessor, Agent Bank, the Lenders, the Beneficiary and LC
Issuer an Officer's Certificate that there exists no Default or Event of Default
under this Lease or if any such Default or Event of Default exists, specifying
the nature thereof, the period of existence thereof and what action Lessee
proposes to take with respect thereto and a certificate substantially in the
form of Schedule L hereto. Lessee will keep adequate records and books of
account reflecting all its financial transactions with respect to this Lease and
the transactions contemplated hereby. In addition, Lessee agrees upon prior
written request to meet with Lessor, LC Issuer, Agent Bank, Lenders and any
registered owners of indebtedness secured by the Deeds of Trust during normal
business hours at mutually convenient times, from time to time, to discuss this
transaction and Lessee's business and financial condition generally.
(b) Lessee shall deliver or cause to be delivered to Lessor, LC Issuer,
Agent Bank and Lenders such additional information with respect to Lessee, the
Leased Properties, the New Facilities under the Agency Agreement, this Lease and
the transactions contemplated hereby, as Lessor, LC Issuer, Agent Bank and
Lenders may reasonably request from time to time.
15. Mergers; Acquisitions; Asset Sales.
Provided no Event of Default has occurred and is continuing,
Lessee shall have the right to (i) merge or consolidate with, acquire or be
acquired by another corporation, or (ii) sell, transfer, lease or otherwise
convey all or substantially all its assets as an entirety, provided that in the
case of any such merger, consolidation, acquisition, sale, transfer, lease or
other
<PAGE>
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transaction (x) such successor entity assumes all of the obligations of Lessee
under the Operative Documents, and (y) such successor entity remains (or
becomes) a Subsidiary of Guarantor.
16. Purchase Procedure.
(a) In the event of the purchase of Lessor's interest in any Leased
Property by Lessee pursuant to any provision of this Lease, the terms and
conditions of this Article 16 shall apply.
(b) On the closing date fixed for the purchase of Lessor's interest in
any or all of the Leased Properties:
(i) Lessee shall pay to Lessor, in lawful money of the United
States in immediately available funds, at Lessor's address
hereinabove stated or at any other place in the United States
which Lessor may designate, the Purchase Price pursuant to
Article 28 or Termination Value for such Leased Property or
Leased Properties and related amounts required to be paid
pursuant to Article 9, paragraph (c) of Article 12 or
paragraph (h) of Article 22, or paragraph (c) of Article 35,
whichever is applicable;
(ii) Lessor shall execute and deliver to Lessee good and sufficient
special warranty deeds, assignments or such other instrument
or instruments as may be appropriate, which shall transfer all
of Lessor's interest in certain or all of the Leased
Properties, as appropriate, including any rights of Lessor
against any party through whom Lessor derived its title to
such Leased Properties, subject to (A) any encumbrances
existing on the Lease Closing Date with respect thereto, (B)
Permitted Encumbrances as defined in clauses (a) through (c),
and (i) of the definition thereof, (C) all liens,
encumbrances, charges, exceptions and restrictions attaching
to such Leased Properties after the Lease Closing Date with
respect thereto (other than the Deed of Trust or those created
or caused by or through Lessor without the written consent of
Lessee), and (D) all Legal Requirements. In the case of a
purchase of Lessor's interest in a Leased Property by Lessee
pursuant to paragraph (c) of Article 12 hereof, Lessor shall
also pay to Lessee the Net Award, if any, and assign to Lessee
all rights to any award not yet received; and
(iii) Lessee shall pay all charges incident to such transfer,
including but not limited to all transfer taxes, recording
fees, title insurance premiums and federal, state and local
taxes, except for any net income or profit taxes of Lessor,
Beneficiary, Agent Bank and the holders from time to time of
indebtedness secured by the Deed of Trust, and reasonable
attorneys' fees
<PAGE>
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and expenses of Lessor's counsel and counsel to the holders
from time to time of the indebtedness secured by the Deed of
Trust; and
(iv) Lessee shall pay to Lessor all Basic Rent, Additional
Obligations and other sums payable by Lessee under this Lease
relating to such Leased Properties, due and payable through
the date Lessee purchases Lessor's interest in such Leased
Properties; and
(v) Except as otherwise provided herein, this Lease shall
terminate and be of no further force and effect with respect
to each Leased Property purchased by Lessee pursuant to this
Article 16.
17. Reserved.
18. Quiet Enjoyment. So long as no Event of Default under this Lease
shall have occurred and be continuing, Lessor covenants (subject to the first
sentence of Section 7) that Lessee shall and may at all times peaceably and
quietly have, hold and enjoy the Leased Properties during the Term of this
Lease. Notwithstanding the preceding sentence upon the occurrence and during the
continuance of an Event of Default, Lessor may exercise its rights and remedies
under paragraph (b) of Article 22 and Lessor, Agent Bank and LC Issuer or their
agents may enter upon and inspect the Leased Properties in accordance with the
provisions of Article 11 hereof. Lessor shall keep the Leased Properties free of
Lessor Liens. Any failure by Lessor to comply with the foregoing warranty shall
not give Lessee any right to cancel or terminate the Lease, or to abate, reduce
or make deduction from or offset against any Basic Rent or Additional
Obligations or other sum payable under this Lease, or to fail to perform or
observe any other covenant, agreement or obligation hereunder. Subject to the
foregoing sentence, Lessee shall have the right to obtain injunctive or other
relief against Lessor for breach of the aforesaid covenant of peaceful and quiet
possession and enjoyment of each Leased Property.
19. Survival. In the event of the termination of this Lease with
respect to one or more Leased Property, or all of the Leased Properties, as
herein provided, the obligations and liabilities of Lessor and Lessee, actual or
contingent, under this Lease which arose at or prior to such termination shall
survive such termination except as otherwise expressly provided herein.
20. Subletting; Assignment.
(a) Subject to paragraphs (c) and (d) of this Article 20, Lessee may
sublet the Leased Property or any portion or portions thereof, provided that (i)
no Default or Event of Default under this Lease has occurred and is continuing
on the date such sublease is entered into, (ii) each sublease shall expressly be
made subject and subordinate to the provisions of this Lease and any Deed of
Trust and shall be expressly subject to termination in the event this Lease is
<PAGE>
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terminated pursuant to Article 28(b), Article 30(b) or an Event of Default
hereunder, (iii) each such sublease shall contain standards with regard to
maintenance, repair, use, condition upon surrender and other matters relevant to
the fair market value of Lessor's interest in the affected Leased Property, or
the utility and useful life of such Leased Property which are no less strict
than those hereunder, and shall prohibit further subleasing and (iv) Lessee
shall give Lessor, Agent Bank and LC Issuer the 30 days prior written notice of
any such sublease in accordance with subsection (d) below.
(b) Lessee may not assign its interest under this Lease except with the
prior written consent of Lessor, which consent may be withheld in Lessor's sole
and absolute discretion, and subject to paragraphs (c) and (d) of this Article
20 and provided that such assignment shall expressly be made subject and
subordinate to the terms of this Lease.
(c) No such sublease or assignment shall affect or reduce any
obligations of Lessee or rights of Lessor hereunder, and all obligations of
Lessee hereunder shall continue in full effect as the obligations of a principal
and not of a guarantor or surety, as though no subletting or assignment had been
made.
(d) Lessee shall, (i) at least 30 days prior to the execution of any
such sublease, deliver to Lessor an Officer's Certificate providing notice of
Lessee's intention to sublet in each case, which shall include the identity of
the proposed sublessee and stating that such sublease complies with the
provisions of paragraph (a) of this Article 20 and contains the express
subordination required thereby and that Lessee has made a good faith
determination that such sublease does not adversely affect the fair market value
of Lessor's interest in the affected Leased Property, or the utility or useful
life of such Leased Property and (ii) within 30 days after such execution, shall
so deliver a conformed copy of such sublease (with acknowledgments) and a
conformed copy of any short form lease or memorandum of lease which has been
prepared for recording purposes.
(e) Neither this Lease nor the Term of this Lease shall be mortgaged by
Lessee, nor shall Lessee mortgage or pledge the interest of Lessee in and to any
sublease of any Leased Property or any portion thereof or the rental payable
thereunder except as permitted hereunder. Any such prohibited mortgage or
pledge, and any sublease or assignment not permitted by this Article 20, shall
be void.
(f) Lessor may assign, convey or otherwise transfer its estate, right,
title and interest hereunder or in the Leased Properties, or any portion thereof
in the manner provided by the Operative Documents (i) to Agent Bank, or (ii) to
LC Issuer or any Person controlled by or controlling or under common control of
LC Issuer (subject to any restrictions on such right of Lessor set forth in the
Deed of Trust); provided, however, that the execution and delivery of any such
assignment, conveyance or other transfer shall not impair or diminish any
obligations of
<PAGE>
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Lessor hereunder. Any such assignment, conveyance or other transfer shall be
subject to this Lease. In connection with any such assignment, conveyance or
other transfer, Lessee hereby agrees to make any payments due to Lessor
hereunder to any assignee or other successor in interest at the written
direction of Lessor. In the absence of any such written direction, Lessee is
authorized to continue to make all payments to Lessor or in accordance with the
most recent Lessor direction.
21. Advances by Lessor. If Lessee shall fail to make or perform any
payment or act required by this Lease, then, upon 30 days' notice to Lessee (or
upon shorter notice, or with no notice at all, to the extent necessary to meet
an emergency or a governmental or municipal time limitation or to prevent an
event of default (after applicable notice and cure periods) under any mortgage
affecting any Leased Property), Lessor or Agent Bank may at its option make such
payment or perform such act for the account of Lessee, and Lessor shall not
thereby be deemed to have waived any default or released Lessee from any
obligation hereunder. Lessor shall give Lessee prompt notice of any such payment
or act including the amount and payee, but failure to give such notice shall not
impair Lessor's rights to reimbursement for amounts so paid or otherwise limit
Lessee's obligations hereunder in any way whatsoever. Amounts so paid by Lessor
and all incidental costs and expenses (including reasonable attorneys' fees and
expenses) incurred in connection with such payment or performance, together with
interest thereon at the Overdue Rate with respect to Additional Obligations
provided in Article 3, from the date advanced through the date repaid by Lessee,
shall constitute Additional Obligations and shall be paid by Lessee to Lessor on
demand.
22. Conditional Limitations -- Events of Default and Remedies.
(a) Any of the following occurrences or acts shall constitute an Event
of Default under this Lease and Lessee shall promptly notify Lessor of the
occurrence thereof:
(i) if Lessee shall (A) default in making payment of any
installment of Basic Rent or Additional Obligations (other
than as provided in (viii) below) which default shall continue
for two days after the same shall be due, or (B) fail to
observe or perform any of the covenants, agreements or
obligations of Lessee set forth in Articles 13, 15, 20, 26, 28
or 30 hereof; or
(ii) if Lessee shall default in the performance of any covenant,
agreement or obligation on the part of Lessee to be performed
under this Lease, other than such covenants, agreements or
obligations that are specifically referred to in other clauses
of this paragraph (a) of Article 22, or in any agreement or
certificate furnished to Lessor, Beneficiary or any Lender, in
connection with this Lease, and such default shall continue
for any
<PAGE>
-35-
specific period expressly provided with respect to such
covenant, agreement or obligation, or if no such specific
period is provided, for a period of 30 days after written
notice thereof from Lessor or Agent Bank; provided, however,
that with respect to any contest by Lessee pursuant to
paragraph (d) of Article 6 hereof, any failure to comply with
the conditions precedent to the right to so contest shall
constitute an immediate Event of Default hereunder; or
(iii) (A) if Lessee or Guarantor or any successor thereto shall be
in default (after the passage of any applicable grace period)
(i) under any lease, loan agreement or similar agreement,
instrument or document heretofore, now or hereafter entered
into between Lessee or Guarantor or any successor thereto and
Beneficiary or any parent, subsidiary or affiliate of
Beneficiary and such default shall have been declared by the
party entitled to declare the same, or (ii) under any
promissory note heretofore, now or hereafter executed by
Lessee or Guarantor or any successor thereto and delivered to
Beneficiary or any parent, subsidiary or affiliate of
Beneficiary evidencing a loan made by any such party to Lessee
or Guarantor or any successor thereto, as applicable, or (iii)
an attachment or other lien shall be filed or levied against a
substantial part of the property of Lessee or Guarantor or any
successor thereto, and such attachment or lien shall continue
unstayed, undischarged or bonded (to Agent Bank's reasonable
satisfaction) for a period of 30 days thereafter; or (B) (i)
non- payment of any indebtedness owed to any Lender by
Guarantor or any Subsidiary; or (ii) the occurrence of a
default by Guarantor or any Subsidiary under any credit
agreement (including, without limitation, the Credit
Agreement), promissory note or similar agreement with or in
favor of any Lender, where such default entitles such Lender
(or the agent or representative of such Lender) to accelerate
such indebtedness;
(iv) if Lessee, Guarantor, or any entity succeeding to Lessee or
Guarantor by merger, consolidation or acquisition of all or
substantially all of its assets, shall file a petition in
bankruptcy or for reorganization or for an arrangement
pursuant to the Bankruptcy Act, or shall be adjudicated a
bankrupt or become insolvent or shall make an assignment for
the benefit of its creditors, or shall admit in writing its
inability to pay its debts generally as they become due, or
shall be dissolved, or shall suspend payment of its
obligations, or shall take any corporate action in furtherance
of any of the foregoing; or
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(v) if a petition or answer shall be filed proposing the
adjudication of Lessee, Guarantor or any entity succeeding to
Lessee or Guarantor by merger, consolidation or acquisition of
all or substantially all of its assets as a bankrupt or its
reorganization pursuant to the Bankruptcy Act, and (A) Lessee,
Guarantor or any successor entity shall consent to the filing
thereof, or (B) such petition or answer shall not be
discharged or denied within 60 days after the filing thereof;
or
(vi) if a receiver, trustee or liquidator (or other similar
official) shall be appointed for or take possession or charge
of Lessee, Guarantor or any entity succeeding to Lessee or
Guarantor by merger, consolidation or acquisition of all or
substantially all of its assets, or of all or substantially
all of the business or assets of Lessee, Guarantor or any
successor entity or of Lessee's, Guarantor's or any successor
entity's estate or interest in any Leased Property, and shall
not be discharged within 60 days thereafter, or if Lessee,
Guarantor or any successor entity shall consent to or
acquiesce in such appointment; or
(vii) if Lessee or Guarantor or any successor thereto fails to
maintain its legal existence in good standing, other than in
accordance with the provisions of this Lease; or
(viii) if Lessee shall fail to pay any Adjustment Price, Termination
Value, Purchase Price, or Maximum Lessee Risk Amount payable
to Lessor as required by this Lease; or
(ix) if any Leased Property shall have been left unattended,
unsecured and without maintenance in violation of Article 10
hereof for a period of 30 days; or
(x) if, as of the time when the same shall have been made, any
representation or warranty of Lessee or Guarantor set forth
herein or in the Guaranty or in any consent, notice,
certificate, demand, request or other instrument delivered by
or on behalf of Lessee or Guarantor, as applicable, in
connection with or pursuant to this Lease or the Guaranty
shall prove to have been incorrect or misleading in any
material respect when made; or
(xi) if a final judgment for the payment of money in excess of
$5,000,000 (net of insurance proceeds or escrows received and
held under escrow arrangements satisfactory to Lessor and to
Agent Bank) shall be rendered against Lessee or Guarantor and
Lessee or Guarantor, as applicable, shall
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not comply with such judgment, or discharge the same or cause
it to be discharged within 30 days from the entry thereof (or
until the expiration of the period in which an appeal may be
filed if such period should be longer), or shall not appeal
therefrom or from the order, decree or process upon which or
pursuant to which said judgment was granted, based or entered,
and secure a stay of execution pending such appeal; or
(xii) if Lessee or Guarantor has failed to make one or more payments
due or has otherwise defaulted on any indebtedness for
borrowed money or under any capital leases which failure or
default has resulted in $10,000,000 or more in the aggregate
becoming due before its stated maturity or becoming subject to
a mandatory prepayment, redemption or purchase obligation
before its regularly scheduled dates of payment; or
(xiii) if any Event of Default (as defined therein) shall have
occurred and be continuing under the Agency Agreement or the
Guaranty; or
(xiv) if Lessee shall fail to surrender any Leased Property as and
when required and in the condition required in accordance with
Article 26; or
(xv) if any default (subject to any applicable grace periods) shall
have occurred and be continuing under the Assignment or the
Assignment of Guaranty; or
(xvi) if Agent Bank fails to draw under the Letter of Credit or if
the LC Issuer refuses to honor a draft presented under the
Letter of Credit in either case by reason of a Default or an
alleged Default under this Lease specified by the LC Issuer by
notice to Lessee, Lessor, Beneficiary or Agent Bank, or the
existence or alleged existence of a lien or encumbrance
affecting any Leased Property (except a Permitted Encumbrance
or a lien or encumbrance granted or placed thereon by Lessor,
Beneficiary or any Lender); or
(xvii) Lessee shall fail to deliver to Agent Bank the consent of LC
Issuer as provided in the second paragraph of Section 28(b)
hereof.
(b) This Lease and the term and estate hereby granted are subject to
the limitation that whenever an Event of Default shall have occurred and be
continuing, Lessor may, at Lessor's option, elect to (i) lawfully re-enter the
Leased Properties, without notice except as otherwise provided by applicable
law, and remove all Persons and property therefrom, either by summary
proceedings or by any other suitable action or proceeding at law, or by other
lawful
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means, without being liable to indictment, prosecution or damages therefor, and
may have, hold and enjoy the Leased Properties, together with the appurtenances
thereto and the improvements thereon; and/or (ii) terminate this Lease at any
time by giving notice in writing to Lessee, electing to terminate this Lease and
specifying the date of termination, and the Term of this Lease shall expire by
limitation at midnight on the date specified in such notice as fully and
completely as if said date were the date herein originally fixed for the
expiration of the Term hereby granted, and Lessee shall thereupon quit and
peacefully surrender the Leased Properties to Lessor in accordance with the
provisions of Article 26 hereof, without any payment therefor by Lessor, and
upon the date following the date specified in such notice, or at any time
thereafter, Lessor may re-enter the Leased Properties as provided in the
preceding clause (i).
(c) In case of any such re-entry, termination and/or dispossession by
summary proceedings or otherwise as provided in the immediately preceding
paragraph, (i) the Basic Rent and Additional Obligations shall become due
thereupon and be paid up to the time of such re-entry, dispossession and/or
expiration, together with such expenses, including reasonable attorneys' fees,
as Lessor shall incur in connection with such re-entry, termination and/or
dispossession by summary proceedings or otherwise; and (ii) Lessor may in good
faith relet any Leased Property or any part or parts thereof (but shall be under
no obligation to do so), either in the name of Lessor or otherwise, for a term
or terms which may, at Lessor's option, be equal to or less than or exceed the
period which would otherwise have constituted the balance of the Term of this
Lease; and (iii) Lessee shall also pay to Lessor the amount by which the Basic
Rent provided for in this Lease exceeds the net amount, if any, of the rents
collected on account of the leases of the Leased Properties for each monthly
portion of the period which would otherwise have constituted the Term of this
Lease, which amounts shall be paid in monthly installments by Lessee on the
respective Payment Dates specified therefor, and any suit brought to collect
said amounts for any monthly period shall not prejudice in any way the rights of
Lessor to collect the deficiency in any subsequent monthly period by a similar
action or proceeding; and (iv) Lessee shall also pay to Lessor all other damages
and expenses which Lessor shall reasonably have sustained by reason of the
breach of any provision of this Lease, including without limitation reasonable
attorneys' fees and expenses, brokerage commissions and expenses incurred in
altering, repairing and putting the Leased Properties and any buildings and
improvements thereon in good order and condition and in preparing the same for
reletting, which expenses shall be paid by Lessee as they are incurred by
Lessor; or (v) at the option of Lessor exercised at any time, Lessor forthwith
shall be entitled to recover upon demand from Lessee as liquidated damages, in
addition to any other proper claims but in lieu of and not in addition to any
amount which would thereafter have become payable under the preceding clause
(iii) the Termination Value for the date on which Lessor demands such payment,
together with any accrued and unpaid Basic Rent, Additional Obligations and
other sums payable as of the date of such demand by Lessee under this Lease and
any Assignment, whereupon Lessor shall transfer and convey to Lessee all of
Lessor's right, title and interest in and to the Leased Properties pursuant to
the terms of Article 16. In the event of Lessor's acting under the foregoing
clauses (i), (ii), (iii) or (iv),
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Lessor, at Lessor's option, may make such alterations, repairs or decorations to
the existing Improvements on any Leased Property for uses similar to those
originally intended, as Lessor, in Lessor's sole judgment, considers advisable
and necessary for the purpose of reletting such Leased Property; and the making
of such alterations or decorations shall not operate or be construed to release
Lessee from liability hereunder as aforesaid. Any amounts received by Lessor
pursuant to the exercise of Lessor's remedies shall be applied to Lessee's
obligations hereunder and credited against any amounts payable by Lessee under
this Lease.
(d) No receipt of moneys by Lessor from Lessee after a termination of
this Lease by Lessor shall reinstate, continue or extend the Term of this Lease
or affect any notice theretofore given to Lessee, or operate as a waiver of the
right of Lessor to enforce the payment of Basic Rent and Additional Obligations,
and any Purchase Price, Termination Value or related amounts to be paid by
Lessee to Lessor for the purchase of the Leased Properties then due or
thereafter falling due, it being agreed that after the commencement of suit for
possession of the Leased Properties, or after final order or judgment for the
possession of the Leased Properties, Lessor may demand, receive and collect any
moneys due or thereafter falling due without in any manner affecting such suit,
order or judgment, all such moneys collected being deemed payments on account of
the use and occupation of the Leased Properties or, at the election of Lessor,
on account of Lessee's liability hereunder. Lessee hereby waives any and all
rights of redemption provided by any law, statute or ordinance now in effect or
which may hereafter be enacted. Lessor shall have, receive and enjoy as Lessor's
sole and absolute property, without right or duty to account therefor to Lessee,
any and all sums collected by Lessor as rent or otherwise upon reletting any
Leased Property after Lessor shall resume possession thereof as hereinbefore
provided, including, without limitation upon the generality of the foregoing,
any amounts by which the sum or sums so collected shall exceed the continuing
liability of Lessee hereunder.
(e) The word "re-enter", as used in this Lease, is not and shall not be
restricted to its technical legal meaning, but is used in the broadest sense
under applicable law. No such taking of possession of any Leased Property by
Lessor shall constitute an election to terminate the Term of this Lease unless
notice of such intention be given to Lessee or unless such termination be
decreed by a court having jurisdiction.
(f) If an action shall be brought for the enforcement of any provision
of this Lease, Lessee shall pay to Lessor all reasonable out-of-pocket costs and
expenses which may become payable as a result thereof, including reasonable
attorneys' fees and expenses.
(g) No right or remedy herein conferred upon or reserved to Lessor is
intended to be exclusive of any other right or remedy, and every right and
remedy shall be cumulative and in addition to any other legal or equitable right
or remedy given hereunder, or at any time existing. The failure of Lessor to
insist upon the strict performance of any provision or to exercise any option,
right, power or remedy contained in this Lease shall not be construed as a
waiver or a
<PAGE>
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relinquishment thereof for the future. Receipt by Lessor of any Basic Rent or
Additional Obligations or any other sum payable hereunder with knowledge of the
breach of any provision contained in this Lease shall not constitute a waiver of
such breach, and no waiver by Lessor of any provision of this Lease shall be
deemed to have been made unless made under signature of an authorized
representative of Lessor.
(h) Notwithstanding anything to the contrary contained in this Lease,
not later than 30 days after the occurrence and during the continuance of an
Event of Default (other than an Event of Default pursuant to clauses (i)(A),
(iv), (v) or (vi) of Article 22(a)), Lessee shall have the right to pay to
Lessor in cash or immediately available federal funds all amounts then owed to
Lessor, Beneficiary and Lenders pursuant to this Lease (including, without
limitation, all accrued and unpaid amounts of Basic Rent and any Additional
Obligations) and an amount equal to Termination Value and upon such payment the
Leased Properties shall be reconveyed to Lessee or its designee in accordance
with the provisions of Article 16 hereof.
23. Notices. All notifications, notices, demands, requests and other
communications herein provided for or made pursuant hereto shall be in writing
and shall sent by (i) registered or certified mail, return receipt requested,
and the giving of such communication shall be deemed complete on the third
Business Day after the same is deposited in a United States Post Office with
postage charges prepaid, or (ii) reputable overnight delivery service, and the
giving of such communication shall be deemed complete on the immediately
succeeding Business Day after the same is deposited with such delivery service:
(a) if to Lessor, addressed to such party at 10 State House
Square, Hartford, Connecticut 06103, Attention: Corporate
Trust Administration, or at such other address in the
continental United States as Lessor may furnish to Lessee in
writing, or
(b) if to Lessee, addressed to such party at 745 Atlantic Avenue,
Boston, Massachusetts 02111 Attention: Treasurer, or at such
other addresses in the continental United States as Lessee may
furnish to Lessor in writing.
24. Estoppel Certificates. Each party hereto agrees that at any time
and from time to time during the term of this Lease, it will promptly, but in no
event later than 21 days after request by the other party hereto (which in the
case of Lessor may include Agent Bank or the Lenders), execute, acknowledge and
deliver to such other party or to any prospective purchaser, assignee or
mortgagee designated by such other party, a certificate stating, to the best of
such party's knowledge, (a) that this Lease is unmodified and in full force and
effect (or if there have been modifications, that this Lease is in full force
and effect as modified, and setting forth any modifications); (b) the date to
which Basic Rent, Additional Obligations and other sums payable hereunder have
been paid; (c) whether or not there is an existing Default by Lessee in the
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payment of Basic Rent or any other sum of money due or required to be paid
hereunder, and whether or not there is any other existing Default by Lessee with
respect to which a notice of Default has been served or of which the signer has
Actual Knowledge, and, if there is any such Default, specifying the nature and
extent thereof; (d) whether or not there are any setoffs, defenses or
counterclaims against enforcement of the obligations to be performed hereunder
existing in favor of the party executing such certificate; and (e) stating that
Lessee is in possession of the Leased Properties or setting forth the parties in
possession and identifying the instruments pursuant to which they took
possession. Any such estoppel certificates delivered by the Lessee shall be
directed to Lessor, Agent Bank and the Lenders,
25. No Merger. As an inducement to the purchasers of any Debt Notes to
purchase such Debt Notes, and to consummate the transactions contemplated
thereby and by the Loan Agreement, and acknowledging that such purchasers would
not advance funds without this Lease, and that Lessor would not enter into this
Lease without the prospect of obtaining such borrowed funds, Lessee agrees that
there shall be no merger of this Lease or of any sublease under this Lease or of
any leasehold or subleasehold estate hereby or thereby created with the fee or
any other estate or ownership interest in any Leased Property or any part
thereof by reason of the fact that the same person, firm, corporation or other
entity may acquire or own or hold, directly or indirectly, (a) this Lease or any
sublease or any leasehold or subleasehold estate created hereby or thereby or
any interest in this Lease or any such sublease or in any such leasehold or
subleasehold estate and (b) (i) the fee estate or other estate or ownership
interest in any Leased Property or any part thereof or (ii) the Beneficial
Interest, and this Lease shall not be terminated for any cause except as
expressly provided herein and any instrument of transfer shall so provide.
26. Surrender and Return.
(a) Upon the expiration or earlier termination of the Term of this
Lease with respect to each Leased Property, and provided that Lessee, if so
entitled, has not exercised its option to purchase the Leased Properties
pursuant to Article 28 or otherwise hereunder, Lessee shall peaceably leave and
surrender and return each Leased Property to Lessor in the condition in which
such Leased Property existed on the applicable Lease Closing Date with respect
thereto, except as repaired, rebuilt, restored, altered or added to as required
by or permitted by any provision of this Lease (ordinary wear and tear
excepted). Lessee shall remove from each Leased Property on or prior to such
expiration or earlier termination all property situated thereon which is not the
property of Lessor, and each Leased Property shall be broom clean and Lessee
shall repair any damage caused by such removal. Property not so removed shall
become the property of Lessor, and Lessor may cause such property to be removed
from the Leased Properties and disposed of, and Lessee shall pay the reasonable
cost of any such removal and disposition and of repairing any damage caused by
such removal.
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(b) Except for surrender upon the expiration or earlier termination of
the Term in accordance with the express terms hereof, no surrender to Lessor of
this Lease or of any Leased Property shall be valid or effective unless agreed
to and accepted in writing by Lessor.
(c) Without limiting the generality of the foregoing, upon the
surrender and return of any Leased Property to Lessor pursuant to this Article
26, (i) the appraisal delivered pursuant to Section 5.1.16 of the Agency
Agreement shall have been satisfactory to LC Issuer, (ii) each Leased Property
shall (A) be capable of being immediately utilized by a third-party purchaser or
third-party lessee without further inspection, repair, replacement, alterations
or improvements, licenses, permits, or approvals, except for any of the
foregoing required solely by virtue of the change in ownership (other than to
Lessor or Agent Bank), use or occupancy of such Leased Property, and shall be
free of any conditions that would interfere with such a purchaser's or lessee's
use and enjoyment of such Leased Property in accordance with Legal Requirements
and Environmental Laws, (B) be in accordance and compliance with all Legal
Requirements and Environmental Laws including, without limitation, any of the
foregoing required by virtue of a change in ownership, use or occupancy of such
Leased Property, (C) be free and clear of any charge, lien, security interest or
encumbrance except for Permitted Encumbrances described in clauses (a) and (c)
through (g) of the definition thereof, any liens for taxes, assessments and
other governmental charges, which are not then due and payable and which are not
allocable to the period before the date of termination or expiration of this
Lease, and Lessor Liens and any other liens or encumbrances arising solely from
any acts or omissions of Lessor or anyone claiming by, through or under Lessor,
without the consent of Lessee and (iii) the Lessee shall represent and warrant
as to the accuracy in all respects of each of the preceding matters to each of,
and for the benefit of, Lessor, Agent Bank, and Beneficiary and any prospective
purchaser, lessee or other user, which representation and warranty shall be in
form and substance acceptable to Lessor, Agent Bank, and any prospective
purchaser, lessee or other user, including, without limitation, a provision that
the warranty shall extend for a period from the closing of the sale or other
transfer that is commercially reasonable or "market" for the specific
representation or warranty involved.
(d) In addition to and not in limitation of any other provision of this
Lease, on or prior to the date of such surrender and return of any Leased
Property, Lessor shall have received from Lessee, at Lessee's expense, evidence
satisfactory to Lessor and LC Issuer of compliance with the provisions of this
Article 26, including without limitation, a "Phase I" or then comparable
environmental assessment for such Leased Property addressed and in form and
substance satisfactory to Lessor and LC Issuer or, in lieu of addressing such
assessment to such parties, accompanied by a letter permitting Lessor and LC
Issuer to rely thereon, performed by an independent, licensed professional
engineer reasonably satisfactory to Lessor and LC Issuer, and which assessment
(y) shall be sufficient in scope to determine compliance with the then
applicable Environmental Laws, and (z) shall reveal no actual or potential
environmental liabilities which have not been remediated by the Lessee in
compliance with all Environmental
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Laws and to the satisfaction of Lessor, Agent Bank and LC Issuer, and, if such
environmental assessment reveals the need for additional review, Lessee shall
have provided such additional information or environmental assessments as are
required by Lessor, Agent Bank and LC Issuer and any remediation recommended
therein to be performed shall have been performed in compliance with all
Environmental Laws and to the satisfaction of Lessor, Agent Bank and LC Issuer,
and evidence of compliance with Article 26(c)(ii) shall have been provided.
(e) Lessee acknowledges and agrees that a breach of any of the
provisions of this Article 26 may result in damages to Lessor that are difficult
or impossible to ascertain and that may not be compensable at law. Accordingly,
upon application to any court of equity having jurisdiction over a Leased
Property, Lessor shall be entitled to a decree against Lessee requiring specific
performance of the covenants of Lessee set forth in this Article 26 with respect
to such Leased Property.
(f) Upon the request of the Lessor, Lessee shall, at Lessor's expense,
continue to maintain its insurance policies for the Leased Properties for a
reasonable period of time, to the extent permitted by such policies.
27. Separability. Each covenant of Lessee contained in this Lease shall
be separate and independent and the breach of any provision of this Lease by
Lessor shall not discharge or relieve Lessee from its obligation to perform each
obligation of this Lease to be performed by Lessee. If any provision of this
Lease or the application thereof to any Person or circumstance shall to any
extent be invalid and unenforceable, the remainder of this Lease, or the
application of such provision to persons or circumstances other than those as to
which it is invalid or unenforceable, shall not be affected thereby, and each
provision of this Lease shall be valid and shall be enforceable to the extent
permitted by law.
28. Lessee's End of Term Purchase Options.
(a) If (i) no Event of Default hereunder shall have occurred and be
continuing and (ii) this Lease shall not have been earlier terminated, Lessee
shall be entitled, upon written notice to Lessor as hereinafter provided, to (x)
purchase all, but not less than all, of the Leased Properties, effective with
respect to each Leased Property on the last day of the Basic Term applicable
thereto, each for an amount, payable in immediately available funds, equal to
the Purchase Price applicable to such Leased Property or (y) to return
possession of such Leased Properties to Lessor as set forth in subparagraph (b)
below. Lessee shall exercise either such option granted hereunder, by written
notice to Lessor to such effect not later than April 1, 2003, which shall be
effective as to all Leased Properties irrespective of their Term Termination
Date (a Termination Notice); provided, however, if Lessee fails to give Lessor
such notice by April 1, 2003 Lessee shall be deemed on such date to have elected
to purchase all of the Leased Properties pursuant to this paragraph (a) of this
Article 28. Such actual or deemed exercise of the purchase option shall
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constitute a binding obligation of Lessee to purchase each and every Leased
Property and to pay Lessor the applicable Purchase Price on the Term Termination
Date applicable thereto. Any purchase by Lessee pursuant to this Article 28(a)
shall be consummated in accordance with the terms of Article 16 hereof.
(b) If Lessee has exercised its option in clause (a) (y) above, Lessor
shall have the right, and Lessee shall have the obligation, as agent for Lessor
(during the last 360 days of the Basic Term applicable to the Group 1 Leased
Properties, and the Group 2 Leased Properties, as the case may be (the
Remarketing Period)), to use best efforts to obtain bona fide cash bids for each
such Leased Property from prospective purchasers who are financially capable of
purchasing such Leased Property for cash in accordance with the terms of this
Lease. Upon the request of Lessor and at Lessee's sole cost and expense, Lessee
shall provide Lessor with a written report describing in reasonable detail
Lessee's efforts during the Remarketing Period to obtain bona fide bids for the
purchase of the affected Leased Property, including, without limitation, a list
of all brokers retained and Persons approached for the purpose of soliciting
bids to purchase such Leased Property. All bids received by Lessor or Lessee
prior to the end of the applicable Basic Term shall be certified by Lessor or
Lessee, as the case may be, in writing, stating the name and address of the
bidder and the amount of such bid. Notwithstanding the foregoing, LC Issuer
shall have the right, but not the obligation, to seek bids for the affected
Leased Property during the Remarketing Period.
Not later than the Term Termination Date for the Group 1 Leased
Properties, and the Group 2 Leased Properties, Lessor agrees to sell all of the
Group 1 Leased Properties or Group 2 Leased Properties respectively to the cash
bidder submitting the highest bid, in accordance with the terms of Article 16 of
this Lease, with such changes as are necessary to reflect that the sale was to a
third party and not Lessee; provided, however, that (x) any such sale to a third
party shall be consummated, and the sales price for all such Leased Properties
shall be paid to Lessor in immediately available funds, at Lessor's address
hereinabove stated or at any other place in the United States which Lessor may
designate, on or before the applicable Term Termination Date; and (y) Lessor
shall not be obligated to consummate any proposed sale of any Leased Property if
(I) the aggregate Net Proceeds from the sale of all such Group 1 Leased
Properties or Group 2 Leased Properties, as the case may be, would be less than
the aggregate Maximum Lessor Risk Amount applicable to all such Group 1 Leased
Properties or Group 2 Leased Properties, as the case may be, as of such Term
Termination Date and Lessor has not received the prior written consent of LC
Issuer to sell all such Leased Properties, or (II) if Lessor has not received
the amounts, if any, payable by Lessee pursuant to paragraph (a) of Article 30
with respect to all of the Group 1 Leased Properties, or all of the Group 2
Leased Properties, as applicable. After a sale under this clause (b) with
respect to all of the Group 1 Leased Properties or Group 2 Leased Properties, as
the case may be, the provisions of paragraph (a) of Article 30 shall apply with
respect thereto and if such a sale has not occurred with respect to all Group 1
Leased Properties or Group 2 Leased Properties, as the case may be, the
provisions of Section 30(b) shall apply
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with respect thereto. At the time of any sale of a Leased Property to a third
party as contemplated by this paragraph(b), Lessee shall deliver an Officer's
Certificate setting forth the Net Proceeds from the sale and a detailed
calculation thereof.
29. Signs; Showing. If Lessee has not given timely notice pursuant to
paragraph (a) of Article 28 of its intention to purchase the Leased Properties
on the applicable Term Termination Dates, during the Remarketing Period, Lessor
may, subject to all applicable governmental laws, restrictive covenants, rules
and regulations and without unreasonably interfering with Lessee's business
operations, (a) place signs in, on and around the Leased Properties advertising
that the same will be available for rent or purchase, and (b) upon not less than
48 hours notice to Lessee, show the Leased Properties to prospective lessees or
purchasers at such reasonable times during normal business hours as Lessor may
elect. Lessee will be responsible for hiring one or more brokers, whose services
shall be compensated on a commission basis, and making the Leased Properties
available for inspection by prospective purchasers. Lessee shall promptly upon
notice permit inspection of the Leased Properties and any maintenance records
relating to the Leased Properties by the Lessor, Agent Bank, LC Issuer and any
potential purchasers, during normal business hours, and shall otherwise do all
things necessary to sell and deliver possession of the Leased Properties to any
purchaser. All such marketing fees, commissions, costs and expenses of the
Leased Properties shall be included among the deductions set forth in clause
(ii) of the definition of Net Proceeds, equitably apportioned among the Leased
Properties.
30. End of Term Adjustment. (a) The provisions of this paragraph (a)
shall apply only if a sale of all of the Group 1 Leased Properties or the Group
2 Leased Properties, as the case may be, to a third party pursuant to paragraph
(b) of Article 28 has been consummated on or before the applicable Term
Termination Date. If the Net Proceeds following such a sale of the Group 1
Leased Properties or the Group 2 Leased Properties, as the case may be, sold in
accordance with paragraph (b) of Article 28 hereof are less than the aggregate
Termination Value for such Group 1 Leased Properties or Group 2 Leased
Properties, respectively, on the applicable Term Termination Date as set forth
in paragraph (a) of Article 28 hereof, Lessee shall, on such Term Termination
Date, pay to Lessor, as an adjustment to the Basic Rent payable under this Lease
and allocable to such Group 1 Leased Properties or Group 2 Leased Properties, as
applicable, by wire transfer of immediately available federal funds, an amount
equal to such deficiency (the Adjustment Price), provided, however, that if all
of the Limited Lessee Risk Conditions have been satisfied as to all such Leased
Properties, the amount of the Adjustment Price payable by Lessee shall not
exceed the then applicable Maximum Lessee Risk Amount for such Group 1 Leased
Properties or Group 2 Leased Properties, as the case may be; and, otherwise, the
Adjustment Price shall not be so limited to the Maximum Lessee Risk Amount. In
addition to any such Adjustment Price, Lessee shall pay to Lessor on such
Termination Date, the Basic Rent, if any, due and payable on the applicable Term
Termination Date, plus any Additional Obligations then due and owing to Lessor
hereunder, in each case with respect to
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Group 1 Leased Properties or Group 2 Leased Properties, as the case may be. If
the sum of the Net Proceeds following such a sale of all of the Group 1 Leased
Properties or Group 2 Leased Properties, as the case may be, pursuant to
paragraph (b) of Article 28 on or before the Term Termination Date with respect
to such Group 1 Leased Properties or Group 2 Leased Properties, as the case may
be, exceed the aggregate Termination Value for all of the Group 1 Leased
Properties or all of the Group 2 Leased Properties, as the case may be, and
Lessee shall have paid to Lessor all such amounts due and payable on or before
the Term Termination Date with respect to such Group 1 Leased Properties or such
Group 2 Leased Properties, respectively, including all Basic Rent, Additional
Obligations and all amounts due under this Article 30 with respect to such Group
1 Leased Properties or such Group 2 Leased Properties, respectively, then Lessor
shall, on the applicable Term Termination Date, pay to Lessee (subject to the
second proviso hereafter) by wire transfer of immediately available federal
funds, an amount equal to such excess, as an adjustment to the Basic Rent
payable under this Lease; provided, however, that Lessor shall have the right to
offset against such adjustment payable by Lessor, any amounts then due and
payable from Lessee to Lessor hereunder; and provided further that any such
excess Net Proceeds with respect to the sale of the Group 1 Leased Properties up
to but not in excess of the maximum amount that may be drawn under the Letter of
Credit for the Group II Leased Properties shall be held by the Agent Bank for
application in accordance with Section 10.2 of the Loan Agreement.
(b) If this Lease expires or terminates on a Term Termination Date and
a sale of all Group 1 Leased Properties or Group 2 Leased Properties, as the
case may be (with respect to which such Term Termination Date has occurred),
pursuant to paragraph (b) of Article 28 has not been consummated on or before
the applicable Term Termination Date for any reason, then Lessee shall, on the
applicable Term Termination Date, pay to Lessor by wire transfer of immediately
available funds, an amount equal to, with respect to all such Group 1 Leased
Properties or Group 2 Leased Properties, as the case may be, (i) the applicable
Maximum Lessee Risk Amount for all such Leased Properties, if all of the Limited
Lessee Risk Conditions for all of the Group 1 Properties or Group 2 Properties,
as the case may be, have been met as of such Term Termination Date, or (ii) the
applicable Termination Value for all such Leased Properties, in all other cases;
plus, in either case, the Basic Rent due and payable on the applicable Term
Termination Date, plus all Additional Obligations then due and owing. In
addition, Lessee shall promptly vacate all such Group 1 Leased Properties or the
Group 2 Leased Properties, as the case may be, and surrender them to Lessor on
the applicable Term Termination Date in accordance with the provisions of this
Lease, including Article 26. Notwithstanding the termination of this Lease with
respect to any of the Leased Properties, Lessee shall remain liable for the
payment of all applicable sales, excise and other taxes imposed as a result of
the sale of all of the Leased Properties, other than Excluded Taxes. This
obligation shall survive the termination of this Lease with respect to all of
the Leased Properties, and upon the consummation of the sale of all such Leased
Properties at any time after the applicable Term Termination Date, Lessee shall
pay on demand, or reimburse Lessor
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on demand for the payment of, all such sales, excise and other taxes. In the
event of any such sale of the Leased Properties at any time after the Term
Termination Date with respect thereto, Lessor shall retain the full proceeds of
such sale.
(c) The provisions of Articles 28 and 30 are of the essence of this
Lease, and time is of the essence for payment and performance of the obligations
of Lessee set forth therein.
31. Reserved.
32. Nature of Lessor's Obligations; Limitations on Liability. Anything
in this Lease to the contrary notwithstanding, except for the representations
(w) made by Lessor in its individual capacity as set forth in Article 6 of the
Loan Agreement, (x) set forth in Article 8 of the Agency Agreement, (y) set
forth in Section 3.5 of the Owner Trust Agreement with respect to Beneficiary
and (z) with respect to Lessor Liens, it is understood and agreed that
(irrespective of any breach of any representation, covenant, agreement or
undertaking of any nature whatsoever made in this Lease), no recourse shall be
had under any rule of law, statute or constitution or by the enforcement of any
assessments or penalties or otherwise for the payment of any sum hereunder or
for any other claim hereunder against (i) Lessor, Beneficiary or any other
holder of the Beneficial Interest, or any past, present or future Affiliate,
partner, officer, director, any owner, shareholder, agent or employee of or in
any thereof or of any partner thereof or their legal representatives, successors
or assigns, (ii) any Successor Owner or (iii) any Person for whom Lessor,
Beneficiary or any other holder of the Beneficial Interest was acting as an
agent for the account and benefit of such Person in entering into the
transactions evidenced by this Lease, and that such Person was or was alleged to
be the principal of Lessor, Beneficiary or any other holder of the Beneficial
Interest. Subject to the exceptions set forth above, it is expressly understood
that by the execution of this Lease all such liability (a) of Lessor, Bank,
Beneficiary or any other holder of the Beneficial Interest or any past, present
or future Affiliate, partner, officer, director, any shareholder, agent or
employee thereof or director or shareholder of any partner thereof or any of
their respective legal representatives, successors or assigns, (b) of any
Successor Owner or (c) of such other Person, is and is being expressly waived
and released as a condition of and as a consideration for the execution of this
Lease by Lessor, that Lessee and its successors and assigns as lessee hereunder
agree to look solely to the Leased Properties for the payment of any such sums
or satisfaction of any such other claims. The provisions of this Article 32
shall survive the termination of this Lease and the other Operative Documents.
33. Lessee's Representations and Warranties. Lessee hereby represents
and warrants that (a) Lessee is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation set forth
above, and is qualified to do business in, and is in good standing in, each
state or other jurisdiction in which the nature of its business makes such
qualification necessary (including, without limitation, each state in which a
Leased Property is located); (b) Lessee has the corporate power and authority to
execute and perform this Lease and
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to lease the Leased Properties hereunder, and has duly authorized the execution,
delivery and performance of this Lease; (c) the leasing of the Leased Properties
from Lessor by Lessee, the execution and delivery of this Lease and any
documents or instruments related hereto, and the compliance by Lessee with the
terms hereof and thereof, and the payments and performance by Lessee of all of
its obligations hereunder and thereunder (i) have been duly and legally
authorized by appropriate corporate action taken by Lessee, (ii) are not in
contravention of, and will not result in a violation or breach of, any of the
terms of Lessee's Certificate of Incorporation (or equivalent document), its
By-Laws, or of any provisions relating to shares of the capital stock of Lessee,
and (iii) will not violate or constitute a breach of any provision of law, any
order of any court or other agency of government, or any indenture, agreement or
other instrument to which Lessee is a party, or by or under which Lessee or any
of Lessee's property is bound, or be in conflict with, result in a breach of, or
constitute (with due notice and/or lapse of time) a default under any such
indenture, agreement or instrument, or result in the creation or imposition of
any lien upon any of Lessee's property or assets; (d) this Lease and all other
documents or instruments related hereto have been executed by the duly
authorized officer or officers of Lessee and delivered to Lessor and are the
legal, valid and binding obligations of Lessee, enforceable in accordance with
their terms; (e) neither the execution and delivery of this Lease and all other
documents and instruments related hereto, nor the payment and performance by
Lessee of all of its obligations hereunder and thereunder, requires the consent
or approval of, the giving of notice to, or the registration, filing or
recording with, or the taking of any other action in respect of, any federal,
state, local or foreign government or governmental authority or agency or any
other Person; (f) no mortgage, deed of trust, or other lien which now covers or
affects, or which may hereafter cover or affect, any property or interest
therein of Lessee, now attaches or hereafter will attach to any Leased Property
or any portion thereof, the proceeds thereof or this Lease, or in any manner
affects or will affect adversely Lessor's rights and security interest therein;
(g) Lessee holds all licenses, certificates and permits from governmental
authorities necessary to use and operate the Leased Properties in accordance
with the provisions of this Lease; (h) there is no litigation or other
proceeding now pending or, to the best of Lessee's knowledge, threatened,
against or affecting Lessee, in any court or before any regulatory commission,
board or other administrative governmental agency which would directly or
indirectly adversely affect or impair the title of Lessor to the Leased
Properties, or which, if decided adversely to Lessee, would materially adversely
affect the business operations or financial condition of Lessee; and (i) all
balance sheets, statements of profit and loss and other financial data that have
been delivered to Lessor with respect to Lessee (x) are complete and correct in
all material respects, (y) accurately present the financial condition of Lessee
on the dates for which, and the results of its operations for the periods for
which, the same have been furnished, and (z) have been prepared in accordance
with generally accepted accounting principles consistently followed throughout
the periods covered thereby; and there has been no change in the condition of
Lessee, financial or otherwise, since the date of the most recent financial
statements delivered to Lessor with respect to Lessee.
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34. Granting of Easements, Etc. If no Event of Default hereunder has
occurred and is continuing, Lessor shall from time to time upon the written
request of Lessee join with Lessee (and at Lessee's sole cost and expense), with
respect to their interests in the Leased Properties to (i) grant easements,
licenses, rights of way and other rights and privileges in the nature of
easements for the purposes of providing utilities and the like to the Leased
Properties or for purposes of operating the Leased Properties and adjacent
properties (such as office park reciprocal easement agreements and the like),
(ii) release existing easements and appurtenances relating to the provision of
utilities and the like to the Leased Properties or for purposes of operating the
Leased Properties and adjacent properties (such as office park reciprocal
easement agreements and the like) and (iii) execute and deliver any instrument,
in form and substance reasonably acceptable to Lessor, necessary or appropriate
to make or confirm such grants or releases to any Person, with or without
consideration, but only if such grant or release is in compliance with the terms
of the Deed of Trust and Lessee shall obtain the consent of Agent Bank to any
such release or grant (at Lessee's cost, including the legal fees and expenses
of Agent Bank), which consent shall not unreasonably be withheld; provided that
such grant or release does not (x) interfere with and is not detrimental to the
conduct of business on the affected Leased Property, (y) impair the usefulness
or useful life of such Leased Property or (z) impair the fair market value of
such Leased Property or cause a default under any other agreement to which
Lessee is a party or benefitting such Leased Property which default would be
reasonably likely to have an adverse effect on the usefulness or useful life of
such Leased Property or impair the fair market value of such Leased Property and
shall have delivered such other instruments, certificates, surveys, title
insurance policy endorsements and opinions of counsel as Lessor or Agent Bank
may reasonably request; and provided further that Lessor, Agent Bank and LC
Issuer shall have the right, but not the obligation, to obtain an independent
Appraisal, at the expense of the Person requesting such appraisal, to verify the
certification of Lessee as to the effect of the proposed action on fair market
value and if such appraisal concludes that the proposed action will impair the
fair market value of such Leased Property by 1% or more, Lessee shall reimburse
Lessor, Agent Bank or LC Issuer, as applicable, for the costs of such appraisal
and Lessor, Agent Bank and LC Issuer shall either withhold their consents or
condition their consents upon payment by Lessee of an amount equal to the
diminution of fair market value. Any such request by Lessee shall be accompanied
by an Officer's Certificate as to compliance with the conditions set forth in
the foregoing clauses (x), (y) and (z).
35. Lessee's Right to Terminate; Exchange of Leased Properties.
(a) Lessee may, upon compliance with the provisions of this Article 35,
(i) in the event that any change in generally accepted accounting principles
subsequent to the date of execution and delivery hereof would preclude the
Lessee from treating this Lease as "off-balance sheet" for accounting purposes,
terminate this Lease with respect to all, but not less than all, the Leased
Properties, on any Payment Date during the Basic Term, by purchasing all of the
Leased Properties for the purchase price set forth in paragraph (c) of this
Article 35, payable in
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immediately available Federal funds, (ii) on any Payment Date during the Basic
Term, terminate this Lease with respect to less than all of the Leased
Properties, by causing a property or properties (each such property an Exchange
Property and, collectively Exchange Properties) to be conveyed to Lessor and
subjected to this Lease as a Leased Property in exchange for each Leased
Property with respect to which Lessee has elected to terminate this Lease
pursuant to this clause (ii) provided that the aggregate Cost of the Property
allocable to all Leased Properties with respect to which this Lease is
terminated pursuant to this clause (ii) does not at any time exceed 15% of the
aggregate Cost of the Properties as to all Leased Properties, and (iii) on any
Payment Date occurring after September 30, 2000, terminate this Lease with
respect to all, but not less than all, Leased Properties, by purchasing all of
the Leased Properties for the purchase price set forth in paragraph (c) of this
Article 35, payable in immediately available Federal funds.
(b) Lessee shall give Lessor, Agent Bank and LC Issuer at least 60
days' prior notice of its election to effect a termination of this Lease or an
exchange of an Exchange Property pursuant to this Article 35, which notice shall
specify the Payment Date on which such termination or exchange shall be
effected.
(c) Termination of this Lease with respect to all or less than all of
the Leased Properties pursuant to clauses (i) or (iii) of paragraph (a) of this
Article 35 shall be effected in accordance with the provisions of Article 16.
The purchase price for the Leased Properties payable by Lessee pursuant to
clauses (i) and (iii) of paragraph (a) of this Article 35 shall be equal to (i)
the Termination Value payable as of the date of purchase, together with accrued
and unpaid Basic Rent, Additional Obligations and other sums payable by Lessee
under this Lease, to the date of purchase, plus (ii) an amount equal to the
costs and expenses of Lessor (including reasonable attorneys' fees) reasonably
incurred in connection with such sale. The sale of the Leased Properties shall
occur in the case of a sale pursuant to clauses (i) and (iii) of paragraph (a)
of this Article 35, on the date specified by Lessor in the notice given pursuant
to paragraph (b) of this Article 35, in any case in accordance with the terms of
Article 16 hereof.
Upon payment of all amounts payable by Lessee hereunder, and
application of such amounts to payment of the Term Loan and the Equity
Investment, this Lease shall terminate and the Leased Properties shall be
conveyed to Lessee pursuant to Article 16 hereof. If Lessee fails to purchase
the Leased Properties on such purchase date in accordance with the terms hereof,
such failure shall immediately constitute an Event of Default hereunder.
(d) In the event that Lessee shall elect to cause an Exchange Property
to be conveyed to Lessor in exchange for any Leased Property pursuant to clause
(ii) of paragraph (a) of this Article 35, the following conditions shall be
satisfied:
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(A) The Exchange Property shall (i) be a warehouse storage
facility of the same general type and use as the Leased
Property with respect to which such exchange is being made,
and (ii) if construction of the Exchange Property was
completed within one year prior to such substitution, have a
cost equal to or greater than the Cost of the Property related
to the replaced Leased Property.
(B) Lessor and Agent Bank shall have received an Appraisal and a
"Phase I" Environmental Report of the Exchange Property made
by an independent appraiser and environmental engineer,
respectively, selected by Lessee, subject to the approval of
Lessor, Agent Bank and LC Issuer, which approval shall not be
unreasonably withheld, which Appraisal and Environmental
Report shall have been made at the expense of Lessee. Such
Appraisal shall be delivered at least 30 days prior to the
date of such proposed substitution and shall indicate that the
fair market value and useful life of the Exchange Property is
equal to or greater than the fair market value and useful life
of the affected Leased Property at the time of the
substitution and at the end of each remaining year of the
Maximum Lease Term (assuming in each case that the affected
Leased Property had been maintained and operated in accordance
with the terms of this Lease). Fair market value shall be
determined by the same methodology as was employed by the
original appraiser in the original appraisal of the replaced
Leased Property. Such Environmental Report shall be delivered
at least 15 days prior to the date of such proposed
substitution, shall speak as of a date not more than six
months prior to the date of such proposed substitution and
shall not disclose any conditions which are not satisfactory
to Lessor, Agent Bank or LC Issuer. Lessee shall certify to
the best of its knowledge that as of the substitution date
there has been no change in the status of the Exchange
Property from that described in the Environmental Report with
regard to environmental matters. If such Environmental Report
recommends further review, Lessee, at its own expense, will
provide such additional environmental assessments as are
required by Lessor, Agent Bank or LC Issuer. The results of
such Reports shall be satisfactory to Lessor, Agent Bank and
LC Issuer. Lessor, LC Issuer and Agent Bank and each holder of
indebtedness secured by the Deed of Trust shall receive a
letter from the environmental engineer, permitting such
addressee to rely on such Environmental Reports.
(C) Lessor and Agent Bank shall have received a Lease Supplement
in the form of Schedule I annexed hereto and, if appropriate,
a memorandum or short form of lease with respect thereto, duly
authorized, executed and delivered by Lessee, as lessee,
adding and subjecting the Exchange Property to, and releasing
the affected Leased Property from, the terms of this Lease,
and containing such other terms as Lessor, Agent Bank or LC
Issuer or their respective counsel may reasonably
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deem necessary or appropriate by reason of the transactions
contemplated by this paragraph (d).
(D) On the date of substitution, Lessor shall have received a deed
conveying to Lessor good and marketable fee simple title to
the Exchange Property, subject only to Permitted Encumbrances.
Lessee shall have caused to be executed and delivered to
Lessor, Agent Bank and LC Issuer (x) a supplement to the
Assignment, including the legal description of the Exchange
Property, and (y) a new Deed of Trust and LC Deed of Trust
with respect to such Exchange Property, each in form
sufficient for recording and enforceability in the applicable
jurisdiction. Lessor, Agent Bank and LC Issuer shall have
received (i) an owner's and a mortgagee's policy of title
insurance, as applicable, on the standard ALTA form formerly
known as 1970 form (or if the 1970 form is not available in a
particular jurisdiction, a more recent form which has been
endorsed or had exclusions removed to achieve the equivalent)
with respect to the Exchange Property (or a commitment
therefor) with mechanics' lien coverage and containing no
survey exception, insuring Lessor or Agent Bank or LC Issuer,
respectively, against loss with respect to the Exchange
Property and otherwise reasonably satisfactory to Lessor,
Agent Bank and LC Issuer and (ii) a survey of the Exchange
Property, satisfactory in form and substance to Lessor, Agent
Bank and LC Issuer, certified within 90 days prior to the date
of substitution, by a surveyor licensed in the state in which
the Exchange Property is located.
(E) All necessary approvals, authorizations and consents of all
governmental bodies (including courts) having jurisdiction
with respect to the transactions contemplated by this
paragraph (d) shall have been obtained and all taxes (which,
if permitted by law, may be paid in installments), fees and
other charges payable in connection therewith shall have been
paid.
(F) Lessor, Agent Bank and LC Issuer shall have received such
other instruments and such certificates, including without
limitation, an estoppel certificate from Lessee, evidence of
the insurance required by this Lease, certificates as to
representations and warranties, and opinions of counsel, each
in form and substance satisfactory to Lessor, Agent Bank and
LC Issuer, in connection with the transactions contemplated by
this paragraph (d) as Lessor, Agent Bank and LC Issuer may
reasonably request. Where required, such instruments shall
have been duly recorded by Lessee. Lessee shall pay all fees
and expenses in connection with the transaction contemplated
by this paragraph (d), including reasonable attorney's fees of
Lessor, Agent Bank and LC Issuer.
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If such conditions are satisfied, Lessor agrees to convey the affected
Leased Property to Lessee in accordance with the provisions of Article 16,
terminate this Lease with respect to the affected Leased Property and enter into
a Lease Supplement subjecting the Exchange Property to this Lease and releasing
the affected Leased Property from this Lease, and such Exchange Property shall
thereafter constitute a Leased Property and for purposes of the Schedules
attached hereto and any calculations in this Lease, shall be treated as if it
were the affected Leased Property.
36. Recording. Lessor and Lessee will execute, acknowledge, deliver and
cause to be recorded or filed in the manner and place required by any present or
future law, this Lease or a memorandum thereof, and all other instruments,
including, without limitation, financing statements, continuation statements,
releases and instruments of similar character, which shall be reasonably
requested by Lessor, Agent Bank, Lessee or LC Issuer as being necessary or
appropriate in order to protect their respective interests in the Leased
Properties or to publish notice of or to create, maintain and protect or
terminate or release the lien and security interest intended to be created by
any Deed of Trust upon, and the interest of Agent Bank in, the Leased
Properties. Lessee shall pay all recording and filing fees and taxes, stamp
taxes, mortgage or lease taxes, and other costs of such recordation and filing.
If Lessee shall fail to comply with this Article 36 within five days after
notice from Lessor, Lessor shall be and is hereby irrevocably appointed the
agent and attorney-in-fact of Lessee to comply therewith, but this sentence
shall not prevent any default in the observance of this Article 36 by the Lessee
from constituting an Event of Default in accordance with the provisions of
paragraph (a)(ii) of Article 22 hereof.
37. Miscellaneous. This Lease and the other Operative Documents embody
the entire agreement between Lessor and Lessee relating to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter. This Lease shall be binding upon and shall inure to the benefit
of and be enforceable by the parties hereto and their respective successors and
assigns permitted hereunder. No term or provision hereof may be amended,
changed, waived, discharged or terminated orally, but only by an instrument
specifically evidencing an intent to amend signed by the party against whom
enforcement thereof is sought and with the prior written consent of Agent Bank
and LC Issuer. No failure, delay, forbearance or indulgence on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, or as an acquiescence in any breach, nor shall any single or
partial exercise of any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
Any provision of this Lease which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. This Lease and the rights and obligations in respect hereof
shall be governed by, and construed and
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interpreted in accordance with, the laws of the Commonwealth of Massachusetts,
except to the extent that in seeking to enforce this Lease with respect to a
Leased Property, the laws of the state in which such Leased Property is located
require that its laws govern, notwithstanding the express intent of the parties
hereto. Lessee hereby agrees to non-exclusive personal jurisdiction and venue in
the state courts of the Commonwealth of Massachusetts (City of Boston) and the
United States District Courts located in the Commonwealth of Massachusetts, the
choice of such forum to be at Lessor's sole discretion. All headings are for
reference only and shall not be considered as part of this Lease. This Lease may
be executed in any number of counterparts, each of which shall be an original,
and such counterparts together shall constitute but one and the same instrument.
Lessee may cause to be performed any obligation of Lessee under this Lease in
lieu of performing such obligation itself.
Agent Bank, the Lenders, Beneficiary and LC Issuer shall be third party
beneficiaries of this Lease with respect to those provisions that explicitly or
implicitly are for the benefit of Agent Bank, the Lenders, Beneficiary or LC
Issuer.
The dating of this Lease "as of October 1, 1998" is for convenience of
reference only, and this Lease shall become effective only upon its execution
and delivery by Lessor and Lessee.
To the extent that (not withstanding Article 38 hereof) this Agreement
is characterized under applicable law as being a financing transaction, Lessor
and Lessee hereby acknowledge and agree as follows: (1) the amount of interest
shall be equal to the difference between (a) the aggregate amount of payments
due under this Lease (the Payments) and (b) the aggregate cost of the Leased
Properties to Lessor (the Cost); (2) Lessee has been informed of the Cost or, in
the alternative, acknowledges that it has been given an opportunity to determine
the Cost; (3) the rate of interest agreed to and specified by Lessor and Lessee
in such event shall be that rate per annum that may be calculated based upon the
Cost (i.e. the principal amount) and the Payments (i.e., the principal and
interest payments); and (4) if the rate of interest so calculated is ever deemed
to exceed the maximum rate permitted by applicable law, then the Payments shall
be automatically reduced to ensure that such rate of interest does not exceed
the maximum rate permitted by applicable law.
38. Ownership of the Leased Properties.
(a) Lessor and Lessee intend that (i) for financial accounting purposes
with respect to Lessee, this Lease will be treated as an "operating lease"
pursuant to Statement of Financial Accounting Standards No. 13, as amended, but
(ii) for federal and all state and local income tax purposes, (A) this Lease
will be treated as a financing arrangement, (B) Agent Bank, the Lenders and any
subsequent registered owners of the Debt Notes will be deemed lenders making
loans for the benefit of the Lessee, which loans are secured by all of the
Leased Properties, and (C) Lessee will be treated as the owner of all of the
Leased Properties and will be entitled to all tax
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benefits ordinarily available to an owner of a property similar to the Leased
Properties for such tax purposes. So long as no Event of Default shall have
occurred, Lessor and Beneficiary shall take no action inconsistent with such
intent for tax purposes, provided, that nothing in this Article 38 shall be
deemed to restrict Lessor's right to exercise any remedies after the occurrence
of an Event of Default.
(b) Lessee hereby grants and conveys, with power of sale, to Lessor a
lien on and security interest in all of the Lessee's right, title and interest
in and to the Leased Properties, together with any substitutions, replacements
and additions thereto, all of Lessee's rights in and to the Approved Plans and
all general intangibles related to the Leased Properties and all of Lessee's
rights, claims and damages arising from warranties (whether express or implied)
of architects, contractors and subcontractors and any other vendors with respect
to the development and construction of the Improvements and all proceeds of the
conversion, voluntary or involuntary, of the foregoing into cash, securities or
other property, whether in the form of cash, investments, securities or other
property. Lessor (upon request) and Lessee shall, to the extent consistent with
this Lease, take such actions and execute, deliver, file and record such other
documents, financing statements, mortgages and deeds of trust as may be
necessary to ensure that, if this Lease were deemed to create a lien on and
security interest in the Leased Properties in accordance with this Article 38,
such security interest would be deemed to be a perfected lien on and security
interest of first priority under applicable federal, state and local law,
subject only to Permitted Encumbrances and Lessor Liens, and will be maintained
as such throughout the Term of this Lease.
(c) Lessor and Lessee intend and agree that with respect to the nature
of the transaction evidenced by this Lease for all commercial law purposes and
in the context of the exercise of remedies under the Operative Documents,
including, without limitation, in the case of any insolvency or receivership
proceedings or a petition under the United States bankruptcy laws or any other
applicable insolvency laws or statute of the United States of America or any
State or Commonwealth thereof affecting Lessee, Lessor, Agent Bank or the
Lenders or any enforcement or collection actions and for all other purposes
(except as provided in paragraph (a) of this Article 38), the transactions
evidenced by this Lease shall be regarded as loans made by Agent Bank and the
Lenders as unrelated third party lenders to Lessee secured by all of the Leased
Properties (it being understood that Lessee hereby mortgages and warrants and
grants a lien on and security interest in all of the Leased Properties to Lessor
and Agent Bank to secure such loans).
(d) Lessor and Lessee further intend and agree that, for the purpose of
securing Lessee's obligations for the repayment of the above-described loans
from Agent Bank and the Lenders to Lessee, (i) this Lease shall also be deemed
to be a security agreement and financing statement within the meaning of Article
9 of the Uniform Commercial Code and a real property mortgage; (ii) the
conveyance provided for in paragraph (b) of this Article 38 shall be deemed to
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be a grant by Lessee to Lessor and Agent Bank of a mortgage lien and security
interest in all of the Lessee's right, title and interest in and to the Leased
Properties, together with any substitutions, replacements and additions thereto,
all of the Lessee's rights in and to the Approved Plans and all general
intangibles related to the Leased Properties and all of Lessee's rights, claims
and damages arising from warranties (whether express or implied) of architects,
contractors and subcontractors with respect to the development and construction
of the Improvements, and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, investments, securities or other
property, whether in the form of cash, investments, securities or other property
(it being understood that Lessee hereby mortgages and warrants and grants a lien
on and security interest in all of the Leased Properties to Lessor and Agent
Bank to secure the loans described in paragraph (a) above); (iii) the possession
by Lessor or any of its agents of notes and such other items of property as
constitute instruments, money, negotiable documents or chattel paper shall be
deemed to be "possession by the secured party" for purposes of perfecting the
security interest pursuant to Section 9-305 of the Uniform Commercial Code; and
(iv) notifications to Persons holding such property, and acknowledgments,
receipts or confirmations from financial intermediaries, bankers or agents (as
applicable) of Lessee shall be deemed to have been given for the purpose of
perfecting such security interest under applicable federal, state and local law.
Lessor (upon request) and Lessee shall, to the extent consistent with this
Lease, take such actions and execute, deliver, file and record such other
documents, financing statements, mortgages and deeds of trust as may be
necessary to ensure that, if this Lease were deemed to create a lien on and
security interest in the Leased Properties in accordance with this Article 38,
such lien and security interest would be deemed to be a perfected lien on and
security interest of first priority under applicable federal, state and local
law, subject only to Permitted Encumbrances, and will be maintained as such
throughout the Term of this Lease.
39. Louisiana Provisions.
(a) As to any Leased Property located in Louisiana, the
following shall apply:
(i) Lessor shall mean and include both First Union
National Bank, as Trustee of the Iron Mountain Statutory Trust - 1998, a
Connecticut statutory trust having an address at 10 State House Square,
Hartford, Connecticut 06103 (Prime Trust) and First Union National Bank as
Trustee of the Iron Mountain Statutory Trust - 1998 Louisiana Subtrust, such
subtrust being referred hereinafter as the "Louisiana Subtrust". All references
hereunder to the Lessor shall be deemed to include the Louisiana Subtrust as
applicable.
(ii) As used in this Lease, the terms "real property" and
"real estate" shall be deemed to include immovable property; the term "fee
estate" shall include full ownership; the term "personal property" shall be
deemed to include movable property; the term "tangible property" shall be deemed
to include corporeal property; the term "intangible property"
<PAGE>
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shall be deemed to include incorporeal property; the term "easements" shall be
deemed to include servitudes; the phrase "covenant running with the land" and
other words of similar import shall be deemed to include a real right or a
recorded lease of immovable property; the term "county" shall be deemed to mean
parish' the term "joint and several liability" shall be deemed to include in
solido liability; the terms "deed in lieu of foreclosure," "conveyance in lieu
of foreclosure and words of similar import shall include a dation en paiement;
and the terms "UCC," "Uniform Commercial Code," or "Code" and words of similar
import shall include the Louisiana Commercial Laws, La R.S. ss.ss. 10:1-101 et
seq.
(iii) If a conveyance is to be made by the Lessor without
recourse of warranty, the conveyance shall be made without any warranty as to
title or condition, whether express or implied, including but not limited to any
warranty against redhibitory defects.
(b) As to any Leased Property located in the State of
Louisiana, Lessee also waives all representations and warranties on the part of
Lessor, whether oral or written, express or implied, including, without
limitation, all warranties that the Leased Property are free from defects and
deficiencies, whether hidden or apparent, and all warranties with respect to the
condition of the Leased Property under Louisiana Civil Code Articles 2692
through 2704 or any other provision of Louisiana law. Except as may be
specifically provided for in this Lease, lessor will have no obligation to make
any repairs, improvements or changes to the Leased Property located in Louisiana
prior to or during the term of this Lease.
(c) Except for any notices specifically provided for in this
Lease, Lessee waives any notice to vacate the Leased Property, including, but
not limited to, the notice to vacate provided for in Louisiana Code of Civil
Procedure Articles 4701, et seq.
(d) Should one or more Events of Default occur or exist under
Lease, Lessor, at is option, may exercise any one or more of the following
rights and remedies, in additional to any other rights and remedies provided by
law.
(i) Seizure and Sale of Leased Properties. In the event
that Lessor elects to commence appropriate Louisiana foreclosure proceedings
under the Lease, Lessor may cause the Leased Properties, or any part or parts
thereof, to be immediately seized and sold, whether in term of court or in
vacation, under ordinary or executory process, in accordance with applicable
Louisiana law, to the highest bidder for cash, with or without appraisement, and
without the necessity of making additional demand upon or notifying Lessee or
placing Lessee in default, all of which are expressly waived.
(ii) Confession of Judgment. For purposes of foreclosure
under Louisiana executory process procedures, Lessee confesses judgment and
acknowledges to be indebted unto and in favor of Lessor, up to the full amount
of its obligations under the Lease, in
<PAGE>
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principal, interest, costs, expenses, attorneys' fees and other fees and
charges. Lessee further confesses judgment and acknowledges to be indebted unto
and in favor of Lessor in the amount of all advances that Lessor may make on
Lessee's behalf pursuant to the Lease or any other Operative Document, together
with interest thereon. To the extent permitted under applicable Louisiana law,
Lessee additionally waives: (a) the benefit of appraisal as provided in Articles
2332, 2336, 2723 and 2724 of the Louisiana Code of Civil Procedure, and all
other laws with regard to appraisal upon judicial sale; (b) the demand and three
(3) days' delay as provided under Articles 2639 and 2721 of the Louisiana Code
of Civil Procedure; (c) the notice of seizure as provided under Articles 2293
and 2721 of the Louisiana Code of Civil Procedure; (d) the three (3) days' delay
provided under Articles 2331 and 2722 of the Louisiana Code of Civil Procedure;
and (e) all other benefits provided under Articles 2331, 2722 and 2723 of the
Louisiana Code of Civil Procedure and all other Articles not specifically
mentioned above.
(iii) Keeper. Should any or all of the Leased Properties
be seized as an incident to an action for the recognition or enforcement of the
Lease, by executory process, sequestration, attachment, writ of fieri facias or
otherwise, Lessee hereby agrees that the court issuing any such order shall, if
requested by Lessor, Appoint Lessor, or any agent designated by Lessor, or any
person or entity named by Lessor at the time such seizure is requested, or any
time thereafter, as Keeper of the Leased Properties as provided under La. R.S.
ss.ss.9:5136, et seq. Such a Keeper shall be entitled to reasonable
compensation. Lessee agrees to pay the reasonable fees of such Keeper, which
compensation to the Keeper shall also be secured by the Lease, in the form of an
Advance as provided herein.
(iv) Declaration of Fact. Should it become necessary for
Lessor to foreclose under the Lease, all declarations of fact, which are made
under an authentic act before a Notary Public in the presence of two witnesses,
by a person declaring such facts to lie within his or her knowledge, shall
constitute authentic evidence for purposes of executory process and also for
purposes of La. R.S. ss.9:3509.1, La. R.S. ss.9:3504(D)(6) and La. R.S.
ss.10:9-508, where applicable.
(v) Separate Sale of Lessee's Leased Properties Following
Default. Should one or more Events of Default occur or exist under the Lease,
Lessor shall have the additional right, at its sole option, to separately sell
the Leased Properties, or any part or parts thereof, at private or public sale,
at such price or prices as Lessor may deem best, either for cash or for any
other compensation, or on credit, or for future delivery, without the assumption
of any credit risk. The sale of the Leased Properties may be without
appraisement, the benefit of which is also expressly waived by Lessee. Lessor
may exercise any other remedies with regard to Lessee's Leased Properties as may
be authorized under the Louisiana Commercial Laws (La. R.S. 10:9-101, et seq.).
The sale, lease or other disposition of the Leased Properties after default may
be for cash, credit, or any combination thereof. Lessor may purchase all or any
part of such Leased Properties at public sale (or if permitted by law, at
private sale) and in lieu of actual
<PAGE>
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payment of any such purchase price, may set-off the amount of such price against
then outstanding balance of the Lease obligations and all Advances that Lessor
may have advanced on Lessee's behalf, together with the interest thereon, as
provided under the Lease. Any notice required to be given by Lessor of a sale,
lease or other disposition, or other intended action with respect to Lessee's
Leased Properties, given at least ten (10) calendar days prior to such proposed
action, shall constitute reasonable and fair notice to Lessee of such action.
To the full extent permitted by applicable law, Lessee
hereby waives and releases Lessor of and from any and all liability and
penalties for failure of Lessor to comply with any statutory or other
requirement imposed upon Lessor relating to notices of sale, holding of sale, or
reporting of any sale. Lessor shall have the right to postpone or adjourn any
sale or other disposition of the Leased Properties at any time without giving of
notice of any such postponed or adjourned dates. In the event Lessor seeks to
take possession of any or all of the Leased Properties by court process, or
otherwise, Lessee hereby irrevocably waives any bonds and surety or security
relating thereto required by any statute, court rule or otherwise as an incident
to such possession. Lessee further waives any demand for possession prior to the
commencement of any suit or action and waives the right to trial by jury with
respect thereto, and any other action in which Lessor is a party.
(vi) Automatic Transfer of Lease Property. In the event of
foreclosure under the Lease, or other transfer of title or assignment of the
Leased Properties, or any part of parts thereof, in lieu of payment of the
obligations under the Lease, whether in whole or in part, all policies of
insurance applicable to the foreclosed upon or transferred Property shall
automatically inure to the benefit of and shall pass to the purchaser(s) or
transferee(s) thereof, subject to the rights of the purchaser(s) or
transferee(s) to reject such insurance coverage and/or Leased Properties at its
or their sole option and election.
(vii) Specific Performance. Lessor may, in addition to the
foregoing remedies, or in lieu thereof, in Lessor's sole discretion, commence an
appropriate action against Lessee seeking specific performance or any covenant
contained herein, or in aid of the execution or enforcement of any power herein
granted.
(viii) Assignees. Any remedies contained herein may be
exercised by Lessor or any assignee of Lessor, including without limitation,
Agent Bank as assignee under the Assignment of Lease and Agency Agreement dated
as of October 1, 1998.
(e) As for any Leased Property in Louisiana:
(i) Lessee grants a security interest in all of the
Lessee's right, title and interest in and to the Leased Properties, together
with any substitutions, replacements and additions thereto, all of Lessee's
rights in and to the Approved Plans and all general intangibles
<PAGE>
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related to the Leased Properties and all of Lessee's rights, claims and damages
arising from warranties (whether express or implied) of architects, contractors
and subcontractors and any other vendors with respect to the development and
construction of the Improvements and all proceeds of the conversion, voluntary
or involuntary, of the foregoing into cash, securities or other property,
whether in the form of cash, investments, securities or other property. Lessor
(upon request) and Lessee shall, to the extent consistent with this Lease, take
such actions and execute, deliver, file and record such other documents,
financing statements, mortgages and deeds of trust as may be necessary to ensure
that, if this Lease were deemed to create a lien on and security interest in the
Leased Properties in accordance with Article 38, such security interest would be
deemed to be a perfected lien on and security interest of first priority under
applicable federal, state and local law, subject only to Permitted Encumbrances
and Lessor Liens, and will be maintained as such throughout the Term of this
Lease. In order to secure Lessee's obligations under the Lease and any and all
other obligations, liabilities or indebtedness of Lessee to Lessor whether now
existing or hereafter arising under the Operative Documents, (the "Lessor
Obligations") up to a maximum amount of $100,000,000 (the "Amount"), Lessee
hereby mortgages, pledges, hypothecates, assigns, collaterally assigns and
grants and conveys with power of sale to Lessor and grants to Lessor a
continuing together with all accounts, equipment, inventory, chattel paper, good
and general intangibles, documents, instruments and investment property used in
connection with, arising out of or in any way related to the Leased Properties.
(ii) Lessor and Lessee further intend and agree that, for
the purpose of securing Lessee's obligations for the repayment of the
above-described loans from Agent Bank and the Lenders to Lessee, (i) this Lease
shall also be deemed to be a security agreement and financing statement within
the meaning of Article 9 of the Uniform Commercial Code and a real property
mortgage; (ii) the mortgage and security interest provided for in paragraph (b)
of Article 38 shall be deemed to be a grant by Lessee to Lessor and Agent Bank
of a mortgage lien and security interest in all of the Lessee's right, title and
interest in and to the Leased Properties, together with any substitutions,
replacements and additions thereto, all of the Lessee's rights in and to the
Approved Plans and all general intangibles related to the Leased Properties and
all of Lessee's rights, claims and damages arising from warranties (whether
express or implied) of architects, contractors and subcontractors with respect
to the development and construction of the Improvements, and all proceeds of the
conversion, voluntary or involuntary, of the foregoing into cash, investments,
securities or other property, whether in the form of cash, investments,
securities or other property (it being understood that Lessee hereby mortgages
and warrants and grants a lien on and security interest in all of the Leased
Properties to Lessor and Agent Bank to secure the loans described in paragraph
(a) above); (iii) the possession by Lessor or any of its agents of notes and
such other items of property as constitute instruments, money, negotiable
documents or chattel paper shall be deemed to be "possession by the secured
party" for purposes of perfecting the security interest pursuant to Section
9-305 of the Uniform Commercial Code; and (iv) notifications to Persons
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holding such property, and acknowledgments, receipts or confirmations from
financial intermediaries, bankers or agents (as applicable) of Lessee shall be
deemed to have been given for the purpose of perfecting such security interest
under applicable federal, state and local law. Notwithstanding anything to the
contrary, the Lease shall secure the Lessor Obligations up to the Maximum
Amount. Lessor (upon request) and Lessee shall, to the extent consistent with
this Lease, take such actions and execute, deliver, file and record such other
documents, financing statements, mortgages and deeds of trust as may be
necessary to ensure that, if this Lease were deemed to create a lien on and
security interest in the Leased Properties in accordance with Article 38, such
lien and security interest would be deemed to be a perfected lien on and
security interest of first priority under applicable federal, state and local
law, subject only to Permitted Encumbrances, and will be maintained as such
throughout the Term of this Lease.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Lease as of the
day and year first above written.
Lessor:
IRON MOUNTAIN STATUTORY TRUST -
1998
By: FIRST UNION NATIONAL BANK, not in
its individual capacity except as expressly
set forth herein, but solely as Trustee under
the Amended and Restated Owner Trust
Agreement dated as of October 1, 1998
By: /s/ Diane M. Welsh
Name: Diane M. Welsh
Title: Vice President
Lessee:
IRON MOUNTAIN RECORDS
MANAGEMENT, INC.
By: /s/ John P. Lawrence
Name: John P. Lawrence
Title: Vice President and Treasurer
<PAGE>
THUS DONE AND PASSED, as of the day, month and year first written above
in the City of Boston, County/Parish of Suffolk, Commonwealth of Massachusetts,
in the presence of the undersigned competent witnesses, who hereunto sign their
names with Lessor, Lessee and me, notary, after due reading of the whole.
Lessor:
WITNESS: FIRST UNION NATIONAL BANK, a national
banking institution, not in its individual
capacity, but solely as Trustee of the
IRON MOUNTAINSTATUTORY TRUST - 1998
LOUISIANA SUBTRUST
/s/ Scott C. Altonian
Printed Name: Scott C. Altonian
By: /s/ Diane M. Welsh
/s/ Louise A. Handler Name: Diane M. Welsh
Printed Name: Louise A. Handler Title: Vice President
Lessee:
IRON MOUNTAIN RECORDS MANAGEMENT,
INC.
By: /s/ John P. Lawrence
Name: John P. Lawrence
Title: Vice President and Treasurer
/s/ Carolyn D. Killian
Printed Name: Carolyn D. Killian
NOTARY PUBLIC
My Commission Expires: 11/22/02
[SEAL]
Exhibit 10.21
UNCONDITIONAL GUARANTY
from
IRON MOUNTAIN INCORPORATED
as Guarantor
to
IRON MOUNTAIN STATUTORY TRUST - 1998
as Owner
Dated as of October 1, 1998
<PAGE>
THIS UNCONDITIONAL GUARANTY, dated as of October 1 , 1998 (herein,
together with all amendments and supplements hereto, called this Guaranty), is
from Iron Mountain Incorporated, a Delaware corporation (herein, together with
its successors and assigns, called Guarantor), having an address at 745 Atlantic
Avenue, Boston, Massachusetts 02111, Attention: Treasurer, to Iron Mountain
Statutory Trust - 1998, a Connecticut statutory trust (herein together with its
successors and assigns, called Owner), having an address at c/o First Union
National Bank, 10 State House Square, Hartford, Connecticut 06103, Attention:
Corporate Trust Administration. Terms not otherwise defined herein shall have
the meanings set forth in Appendix I to the Lease (as hereinafter defined).
Preliminary Statement
Owner has entered into a Lease Agreement dated as of the date hereof
with Iron Mountain Records Management, Inc. (herein called Lessee) (said Lease
Agreement, as supplemented or amended from time to time, including without
limitation by a Lease Supplement, herein called the Lease) relating to the
Leased Properties. Pursuant to the terms of the Lease, Lessee shall lease the
Leased Properties from Owner for a term of years, as more particularly set forth
in the Lease. Owner has also entered into an Amended and Restated Agency
Agreement dated as of the date hereof (herein called the Agency Agreement) with
Lessee, as agent. Pursuant to the terms of the Agency Agreement, Lessee shall,
as agent for Owner, acquire additional Properties (as defined in the Agency
Agreement and hereunder, together with the Leased Properties, the Properties)
and otherwise perform certain obligations relating thereto, all as more
particularly set forth in the Agency Agreement. Guarantor is the owner of all of
the issued and outstanding stock of Lessee. In order to induce Owner to enter
into the Lease and the Agency Agreement and to enter into the leasing and agency
arrangements with Lessee, as more particularly described therein, Guarantor has
entered into this Guaranty with respect to the obligations of Lessee under the
Lease and the Agency Agreement.
NOW, THEREFORE, in consideration of the premises, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Guarantor agrees as follows:
<PAGE>
2
1. Guarantor unconditionally and irrevocably guaranties to (a) Owner,
and (b) to the extent of Lessee's obligations to the Indemnified Parties, the
Indemnified Parties, the prompt payment and performance of all obligations of
Lessee under the Lease and the Agency Agreement (all of the foregoing
collectively, the Guaranteed Obligations). This Guaranty is an irrevocable,
absolute, present, primary, continuing, unlimited and unconditional promise with
respect to the full and punctual payment and performance by Lessee of each of
the Guaranteed Obligations, and is not a promise of collectibility only, and is
in no way conditional upon the requirement that Owner first attempt to collect
payment or demand performance from Lessee or that Owner resort to any security
or other means of obtaining such payment or performance or upon any other
contingency. If for any reason (i) any such sums shall not be paid promptly by
Lessee when due, or (ii) any such covenant, agreement, term or condition is not
performed or observed by Lessee in accordance with the Lease or the Agency
Agreement, Guarantor, shall, without notice or demand of any nature, pay the
same by wire transfer of immediately available federal funds to the Person or
Persons entitled thereto pursuant to the provisions of said instruments and
shall perform and observe or cause to be promptly performed and observed every
such covenant, agreement, term and condition, in each case regardless of (i) any
defenses or rights of set-off or counterclaims which Guarantor or Lessee may
have or assert, (ii) whether Owner shall have taken any steps to enforce any
rights against Lessee or any other remedy thereunder as a result of the default
of Lessee thereunder and (iii) any other event, condition, contingency or
circumstance whatsoever. Guarantor also agrees to pay to such Persons such
further amounts as shall be sufficient to cover the costs and expenses of
collecting such sums or any part thereof, or of otherwise enforcing or
protecting the rights of such Persons under the Lease, the Agency Agreement and
this Guaranty, including reasonable fees and expenses of its attorneys and to
Owner and its attorneys for all services rendered in that connection and in any
related proceeding.
2. The obligations, covenants, agreements and duties of Guarantor under
this Guaranty shall be absolute and unconditional, shall not be subject to any
counterclaim, setoff, deduction, diminution, abatement, recoupment, suspension,
deferment, reduction or defense based upon any claim that Guarantor or any other
Person may have against Lessee, Owner or any
<PAGE>
3
other Person, and, until the payment or performance in full of the Guaranteed
Obligations, shall remain in full force and effect without regard to, and shall
not be released, discharged or in any way affected by, any circumstance or
condition whatsoever (whether or not Owner, Guarantor or Lessee shall have any
knowledge or notice thereof), including, without limitation, the happening from
time to time of any of the following, although without notice to, or the consent
of, Guarantor:
(a) the waiver by Owner of the performance or observance by
Lessee, Guarantor or any other party of any of the agreements,
covenants, terms or conditions contained in the Lease, the
Agency Agreement, this Guaranty or any other instrument;
(b) the extension, in whole or in part, of the time for payment by
Lessee or Guarantor of any sums owing or payable under the
Lease, the Agency Agreement or this Guaranty, as applicable,
or of any other sums of obligations under or arising out of or
on account of the Lease, the Agency Agreement, this Guaranty
or the renewal or extension of either thereof;
(c) any assignment or subsequent reassignment of the Lease, the
Agency Agreement or this Guaranty, in whole or in part, or the
leasing or subletting of the Properties or any part thereof;
(d) the modification or amendment (whether material or otherwise)
of any of the obligations of Lessee or Guarantor under the
Lease, the Agency Agreement or this Guaranty, as applicable;
(e) the taking or the omission of any of the acts referred to in
the Lease, the Agency Agreement or this Guaranty (including,
without limitation, the giving of any consent referred to
herein or therein, but excepting therefrom those acts and
omissions permitted in compliance with and pursuant to the
terms of the Lease or the Agency Agreement, as the case may
be, and any assignment or reassignment thereof or this
Guaranty and any assignment or reassignment hereof, as
appropriate);
(f) any failure, omission or delay on the part of Owner to
enforce, assert or exercise any right, power or remedy
conferred on or available to Owner in or by the Lease, the
Agency Agreement, this Guaranty or any other instrument, or
any action on the part of Owner granting indulgence or
extension in any form whatsoever;
(g) the voluntary or involuntary liquidation, dissolution, sale of
all or substantially all of the assets, marshaling of assets
and liabilities, receivership, conservatorship, insolvency,
bankruptcy, assignment for the benefit of creditors,
reorganization,
<PAGE>
4
arrangement, composition or readjustment of, or other similar
proceeding affecting, Owner, Lessee or Guarantor or any of
their respective assets;
(h) the release of Lessee or Guarantor from the performance or
observance of any of the agreements, covenants, terms or
conditions contained in the Lease, the Agency Agreement, or
this Guaranty, as applicable, by operation of law or
otherwise, except for those releases given or made in
compliance with and pursuant to the terms of the Lease or the
Agency Agreement, as applicable, and any assignment or
reassignment thereof, or this Guaranty and any assignment or
reassignment hereof, as applicable, or any invalidity or
unenforceability of the Lease, the Agency Agreement or this
Guaranty or any other Operative Document;
(i) any defect in the title, or any damage to or loss or
destruction of, or any interruption or cessation in the use of
the Properties or any portion thereof by Lessee for any reason
whatsoever (including, without limitation, any governmental
prohibition or restriction, condemnation, requisition, or any
other act on the part of any governmental authority, or any
act of force majeure) regardless of the duration thereof (even
though such duration would otherwise constitute a frustration
of the Lease or the Agency Agreement, as the case may be),
whether or not resulting from accident and whether or not
without fault on the part of Lessee or any other Person;
(j) the inability of Owner or Lessee to enforce any provision of
the Lease or the Agency Agreement for any reason;
(k) any merger or consolidation of Lessee or Guarantor into or
with any other corporation or any sale, lease or transfer of
any of the assets of Lessee or Guarantor to any other Person;
(l) any change in the corporate relationship between Guarantor and
Lessee;
(m) the acceptance and release by Owner of any other security or
guarantor for any obligation hereunder;
(n) any value, estimation, termination, rejection, discharge or
disaffirmance by any Person (including trustees, trustees in
bankruptcy, liquidators or representatives) of the Guaranteed
Obligations in connection with any insolvency, bankruptcy,
reorganization or liquidation of Lessee or any proceeding
relating thereto;
(o) any determination or claim that Owner's claims against Lessee
are or may be limited by Section 502(b) (6) of the Bankruptcy
Code, as amended, or to any similar or successor provision of
law upon any rejection of the Lease or the Agency Agreement in
a bankruptcy proceeding filed by or against Lessee;
<PAGE>
5
(p) any failure or recharacterization of title with respect to
Owner's, Lessee's or any other Person's interest in the
Properties; or
(q) any other occurrence or circumstance whatsoever, whether
similar or dissimilar to the foregoing and any other
circumstance that might otherwise constitute a legal or
equitable defense or discharge of the liabilities of a
guarantor or surety or that might otherwise limit recourse
against Guarantor.
The obligations of Guarantor set forth herein constitute the full
recourse obligations of Guarantor enforceable against Guarantor to the full
extent of all its assets and properties. In no event shall the obligations of
Guarantor hereunder be subordinated in any manner to any other full recourse
obligations of Guarantor.
3. Guarantor unconditionally waives (i) notice of any of the matters
referred to in Section 2, (ii) all notices that may be required by statute, rule
of law or otherwise, now or hereafter in effect, to preserve intact any rights
against Guarantor, including, without limitation, any demand, presentment and
protest, proof of notice of non-payment under the Lease or the Agency Agreement
and notice of default or Event of Default under the Lease or the Agency
Agreement or this Guaranty, or any failure on the part of Lessee to perform and
comply with any covenant, agreement, term or condition of the Lease or the
Agency Agreement, (iii) any right to the enforcement, assertion or exercise
against Lessee of any right, power, privilege or remedy conferred in the Lease
or the Agency Agreement or otherwise, (iv) any requirement of diligence on the
part of Owner or any other Person, (v) any requirement that Owner take any steps
to enforce any rights against Lessee under the Lease or the Agency Agreement or
any other remedy thereunder or any other requirement to exhaust any remedies or
to mitigate the damages resulting from any default or Event of Default under the
Lease or the Agency Agreement or this Guaranty, (vi) any notice of any sale,
transfer or other disposition of any right, title to or interest in the Lease or
the Agency Agreement or the Properties covered thereby by Owner, (vii) all
rights of Guarantor under the laws of the states in which the Properties are
located, as the same may be amended, and (viii) any other circumstance
whatsoever that might otherwise constitute a legal or equitable discharge,
release or defense of a guarantor or surety, or that might otherwise limit
recourse against Guarantor hereunder.
<PAGE>
6
4. Notwithstanding any payment or payments made or obligation performed
by Guarantor by reason of this Guaranty, Guarantor hereby waives (i) any claim,
right or remedy that Guarantor may now or hereafter acquire against Lessee that
arises hereunder and/or by reason of any one or more payments or acts of
performance by Guarantor hereunder, including without limitation, any claim,
remedy or right of subrogation, reimbursement, exoneration, contribution,
indemnification or participation in any claim, right or remedy of the Owner
against Lessee or any security that Owner now has or hereafter acquires, whether
or not such claim, right or remedy arises in equity, under contract, by statute,
under common law or otherwise, (ii) any right to enforce any remedy which Lessee
or any other guarantor of Lessee's obligations now has or may hereafter have
against Owner or its assigns, and (iii) any right to enforce or exercise the
benefit of and any right to participate in, any security now or hereafter held
by Owner, in each case until all of the obligations guarantied hereby are
performed in full. If any amount shall nevertheless be paid to Guarantor by
Lessee in violation of this Guaranty, such amount shall be held by Guarantor in
trust for the benefit of Owner and shall forthwith be paid to Owner. Guarantor
further waives any defense to the recovery by Owner from Guarantor of any
deficiency or otherwise to the enforcement of this Guaranty after a judicial or
nonjudicial sale or other disposition of any security for or any of the
obligations of Lessee under the Lease or the Agency Agreement, even though such
a sale may prevent Guarantor from exercising rights of subrogation, if any,
contribution or reimbursement against Lessee or any other party. No payment
hereunder by Guarantor shall give rise to any claim by Guarantor against Owner,
except for payments made in error by Guarantor to the extent such payments are
in excess of amounts due hereunder. Unless and until all obligations of Lessee
under and pursuant to the Lease and the Agency Agreement, and of Guarantor
hereunder, shall have been discharged by payment or performance in full,
Guarantor shall not assign or otherwise transfer any such claim against Lessee
to any other Person.
5. The following events shall constitute Events of Default under this
Guaranty: (i) Guarantor shall fail to make any payment due hereunder upon
demand, or (ii) (a) there shall occur a breach of any of the covenants contained
in paragraph 10 hereof; or (b) Guarantor shall fail to perform or observe any
other provision hereof and such failure shall
<PAGE>
7
continue for 10 days after written notice thereof to Guarantor from Owner, or
(iii) if any representation or warranty made by Guarantor herein or in any
document, certificate or notice furnished by Guarantor to Owner in connection
herewith or pursuant hereto shall prove to be false or misleading as of the time
when made in any material respect as of the time made, or (iv) (a) if Guarantor
shall commence a voluntary case under the federal Bankruptcy Act or file a
petition in bankruptcy or for reorganization or for an arrangement pursuant to
any federal or state bankruptcy law or any similar federal or state law; (b) if
Guarantor shall file an order of relief or be adjudicated a debtor or a bankrupt
under any federal or state bankruptcy law or become insolvent; (c) if Guarantor
shall generally not pay its debts as such debts become due or shall make an
assignment for the benefit of creditors or shall admit in writing its inability
to pay its debts generally as they become due; or (d) if an involuntary case
against Guarantor as debtor is commenced by a petition for reorganization or
liquidation under any federal bankruptcy or similar law, or if a petition or
answer proposing the adjudication of Guarantor as a bankrupt or its
reorganization pursuant to any state insolvency law or similar state law shall
be filed in any court and Guarantor shall consent to or acquiesce in the filing
thereof or such case, petition or answer shall not be dismissed, discharged or
denied within 60 days after filing thereof; or (v) if a custodian for purposes
of any federal bankruptcy or state insolvency law of substantially all
Guarantor's assets is appointed or otherwise takes possession thereof and such
appointment remains in effect for more than 60 days; or (vi) if a receiver, U.S.
Trustee, trustee or liquidator of Guarantor or all or substantially all of the
assets of Guarantor shall be appointed in any proceeding brought by Guarantor,
or if any such receiver, U.S. Trustee, trustee or liquidator shall be appointed
in any proceeding brought against Guarantor and shall not be discharged within
60 days after such appointment, or if Guarantor shall consent to or acquiesce in
such appointment; or (vii) if there is an Event of Default under the Lease or
the Agency Agreement; then, in each such case, so long as the same shall be
continuing, Owner may, at its option, declare this Guaranty in default, and at
any time thereafter, so long as Guarantor shall not have remedied all
outstanding Events of Default hereunder, Owner shall be entitled to exercise any
remedy available to it at law or in equity. No express or implied waiver by
Owner of an Event of Default hereunder shall in any way be, or be construed to
be a waiver of any further or subsequent Event of Default.
<PAGE>
8
Guarantor hereby waives any right now or hereinafter conferred upon it by
statute or otherwise which may limit or modify any of Owner's rights and
remedies contained herein. Guarantor agrees to give written notice to Owner (a)
of any Event of Default hereunder promptly after the occurrence thereof and (b)
of any Event of Default hereunder or under the Lease or the Agency Agreement,
immediately after the President or Chief Financial Officer of Guarantor obtains
actual knowledge of the occurrence thereof.
6. (a) In the event of a default or Event of Default under the Agency
Agreement, Guarantor may, and in the event of the rejection or disaffirmation of
the Agency Agreement by Lessee as debtor in possession or Lessee's trustee in
bankruptcy pursuant to any Bankruptcy Law or any other law affecting creditors'
rights, Guarantor shall and does hereby (without the necessity of any further
agreement or act), assume all obligations and liabilities of Lessee under the
Agency Agreement to the same extent as if it had been originally named instead
of such Lessee as a party to such documents and there had been no such rejection
or disaffirmance; and Guarantor shall confirm such assumption in writing at the
request of Owner upon or after such rejection or disaffirmance. Guarantor, upon
such assumption, will have all rights of Lessee under the Agency Agreement. From
and after the date of such assumption, as provided in this Section 6(a), all
provisions of this Guaranty shall continue in full force and effect as separate
and independent undertakings of Guarantor, binding upon and enforceable against
Guarantor without regard to the validity or enforceability of such assumption,
and all provisions of this Guaranty applicable to the Agency Agreement and to
Owner and Lessee in respect of the Agency Agreement shall also apply to such
assumption and to Owner and Guarantor in respect of such assumption to the same
extent and in the same manner as such provisions are applicable to the Agency
Agreement and to Owner and Lessee in respect of the Agency Agreement.
(b) In the event of a default or Event of Default under the
Lease, Guarantor may, and in the event of the rejection or disaffirmation of the
Lease by Lessee as debtor in possession or Lessee's trustee in bankruptcy
pursuant to any Bankruptcy Law or any other law affecting creditors' rights,
Guarantor shall and does hereby (without the necessity of any further agreement
or act), assume all obligations and liabilities of Lessee under the Lease to the
same extent as if it had been originally named instead of such Lessee as a party
to such documents and there had
<PAGE>
9
been no such rejection or disaffirmance; and Guarantor shall confirm such
assumption in writing at the request of Owner upon or after such rejection or
disaffirmance. Guarantor, upon such assumption, will have all rights of Lessee
under the Lease. From and after the date of such assumption, as provided in this
Section 6(b), all provisions of this Guaranty shall continue in full force and
effect as separate and independent undertakings of Guarantor, binding upon and
enforceable against Guarantor without regard to the validity or enforceability
of such assumption, and all provisions of this Guaranty applicable to the Lease
and to Owner and Lessee in respect of the Lease shall also apply to such
assumption and to Owner and Guarantor in respect of such assumption to the same
extent and in the same manner as such provisions are applicable to the Lease and
to Owner and Lessee in respect of the Lease.
7. It is agreed that the liabilities and obligations of Guarantor
hereunder are primary and those of a principal, and are enforceable either
before, simultaneously with or after proceeding against Lessee or against any
property or security available to Owner.
8. This Guaranty may not be modified or amended except by a written
agreement duly executed by Guarantor with the consent in writing of Owner, the
Agent Bank and the Lenders. Neither this Guaranty, nor any of the obligations of
Guarantor hereunder may be assigned to any person or entity by Guarantor.
9. Guarantor shall furnish the following financial statements to Owner:
(a) as soon as practicable, copies of all such financial
statements, proxy statements, notices, other
communications and reports as Guarantor shall send on
a regular basis to its shareholders and other
information, if any, generally made available to
banks and other lenders (exclusive of proprietary
information);
(b) for any period that Guarantor is a public company,
copies of all regular, current or periodic reports
(including reports on Form 10-K, Form 8-K and Form
10-Q) which Guarantor is or may be required to file
with the Securities and Exchange Commission or any
governmental body or agency succeeding to the
functions of the Securities and Exchange Commission;
and
(c) for any period that Guarantor is not a public company
required to file such reports with the Securities and
Exchange Commission, then within 105 days after the
end of each fiscal year, and within 60 days after the
end of
<PAGE>
10
any other fiscal quarter, financial statements
containing substantially the same information as the
information that would be included in such reports on
Form 10-K or Form 10-Q, as the case may be, and in
any event, all in reasonable detail and satisfactory
in scope to Owner and Owner's mortgagee, all prepared
in accordance with GAAP and, with respect to the
annual statements, audited, by independent certified
public accountants of recognized national standing
selected by Guarantor.
Concurrently with the delivery of quarterly financial statements pursuant
hereto, Guarantor shall cause to be delivered to Owner an Officer's Certificate
(i) stating that to the best of the knowledge of the Applicable Officer
executing such Officer's Certificate based on reasonable inquiry, there exists
no default or Event of Default under the Lease, the Agency Agreement or this
Guaranty or if any such default or Event of Default exists, specifying the
nature thereof, the period of existence thereof and what action Guarantor
proposes to take with respect thereto and (ii) setting forth such information as
shall be necessary for Owner and the Agent Bank to confirm compliance by
Guarantor with the covenants contained in Paragraph 10 hereof.
10. (a) Guarantor hereby covenants and agrees as follows:
(i) Leverage Ratio. (A) The Guarantor will not, as at the
end of any fiscal quarter, permit the ratio, calculated as at the end of such
fiscal quarter for the period of four fiscal quarters then ended, of (i) the
excess of (x) the aggregate outstanding principal amount of Funded Indebtedness
(on a consolidated basis) of the Guarantor and its Subsidiaries at such date
over (y) the aggregate amount of cash and Liquid Investments of the Guarantor
and its Subsidiaries at such date to (ii) EBITDA for such period (the Leverage
Ratio) to exceed the ratio set forth below:
Period Leverage Ratio
------ --------------
From the date hereof through December 31, 1998 6.00 to 1
From January 1, 1999 through June 30, 1999 5.75 to 1
From July 1, 1999 through December 31, 1999 5.50 to 1
From January 1, 2000 through June 30, 2000 5.25 to 1
From July 1, 2000 through December 31, 2000 5.00 to 1
From January 1, 2001 through June 30, 2001 4.75 to 1
From July 1, 2001 and at all times thereafter 4.50 to 1
<PAGE>
11
(B) The Guarantor will not, as at the end of any fiscal quarter, permit
the ratio, calculated as at the end of such fiscal quarter for the period of
four fiscal quarters then ended, of (i) the excess of (x) the aggregate
outstanding principal amount of Indebtedness (on a consolidated basis) of the
Pond Joint Venture and each Excluded Subsidiary at such date over (y) the
aggregate amount of cash and Liquid Investments of the Pond Joint Venture and
each Excluded Subsidiary at such date to (ii) EBITDA for such period (the
Foreign Leverage Ratio) to exceed 3.50 to 1. Solely for purposes of this
paragraph (B), in determining the Foreign Leverage Ratio, EBITDA shall be
determined by including only the Pond Joint Venture and each Excluded
Subsidiary.
(ii) Interest Coverage Ratio. Guarantor will not, as at
the end of any fiscal quarter, permit the ratio, calculated as at the end of
such fiscal quarter for the period of four fiscal quarters then ended, of (i)
EBITDA for such period to (ii) Interest Expense for such period to be less than
the ratio set forth below for the period in which such fiscal quarter ends:
Period Interest Coverage Ratio
------ -----------------------
From the date hereof through December 31, 1998 1.70 to 1
From January 1, 1999 through December 31, 1999 1.85 to 1
From January 1, 2000 through December 31, 2000 2.00 to 1
From January 1, 2001 through September 30, 2001 2.25 to 1
From October 1, 2001 and all times thereafter 2.50 to 1
For purposes of calculating any ratio set forth in this clause
(ii), if Guarantor elects pursuant to the penultimate sentence of the definition
of EBITDA set forth in paragraph (c) below to include in EBITDA for the period
to which such ratio relates the pro forma amounts referred to in such sentence,
there shall be included in Interest Expense for such period, on a pro forma
basis, interest accruing during such period on Indebtedness (and the interest
portion of payments under Capitalized Lease Obligations) assumed or incurred by
Guarantor and its
<PAGE>
12
Subsidiaries (on a consolidated basis) in connection with any Permitted
Acquisition having Acquisition Consideration of more than $500,000 during such
period.
(iii) Fixed Charges Coverage Ratio. Guarantor will not, as
at the end of any fiscal quarter, permit the ratio, calculated as at the end of
such fiscal quarter for the period of four fiscal quarters then ended, of (i)
Adjusted EBITDA for such period to (ii) Fixed Charges for such period to be less
than the ratio set forth below for the period in which such fiscal quarter ends:
Fixed Charges
Period Coverage Ratio
------ --------------
From the date hereof through December 31, 1998 1.20 to 1
From January 1, 1999 through December 31, 1999 1.40 to 1
From January 1, 2000 through December 31, 2000 1.75 to 1
From January 1, 2001 and at all times thereafter 1.75 to 1
For purposes of calculating any ratio set forth in this clause
(iii), if Guarantor elects pursuant to the penultimate sentence of the
definition of EBITDA to include in EBITDA for the period to which such ratio
relates the pro forma amounts referred to in such sentence, there shall be
included in Interest Expenses for such period, on a pro forma basis, interest
accruing during such period on Indebtedness (and the interest portion of
payments under Capitalized Lease Obligations) assumed or incurred by Guarantor
and its Subsidiaries (on a consolidated basis) in connection with any Permitted
Acquisition having Acquisition Consideration of more than $500,000 during such
period.
(iv) Liens. Guarantor will not, and will not permit any of
its Subsidiaries to, create or suffer to exist any Lien upon any property or
assets, now owned or hereafter acquired, securing any Indebtedness or other
obligation, except: (i) Liens in favor of the agent bank and lenders under the
Credit Agreement on the capital stock and related proceeds of all Subsidiaries
of the Guarantor from time to time; (ii) the Liens existing on September 26,
1997 and Liens arising out of the refinancing, extension, renewal or refunding
of any Indebtedness secured by any Lien set forth on Schedule III to the Credit
Agreement, provided that the
<PAGE>
13
principal amount of such Indebtedness is not increased and is not secured by any
additional assets; (iii) Liens otherwise permitted by the Operative Documents
contemplated by or securing Indebtedness described in clauses (ii), (iv), (v)
and (vii) of the definition of Permitted Indebtedness set forth in the Credit
Agreement; (iv) attachment, judgment or other similar Liens arising in
connection with litigation or other legal proceedings, provided that either (A)
the claims in respect of such Liens are fully covered by insurance or (B) the
execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are in an amount not to exceed $1,000,000 in the
aggregate and are being contested in good faith by appropriate proceedings
diligently prosecuted; (v) Liens on properties or assets of an Excluded
Subsidiary securing Indebtedness of such Excluded Subsidiary permitted under the
Credit Agreement; (vi) other Liens arising in the ordinary course of the
business of the Guarantor or such Subsidiary which are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
and which do not materially detract from the value of its property or assets or
materially impair the use thereof in the operation of its business; (vii) Liens
securing Indebtedness created or incurred by the Pond Joint Venture or any
Excluded Subsidiary, provided that such Liens extend only to the assets of the
Pond Joint Venture or any Excluded Subsidiary incurring such Indebtedness as a
primary obligor (and not as a guarantor) or Capital Stock of the Pond Joint
Venture or such Excluded Subsidiary; and (viii) Liens arising under or created
pursuant to the Lease.
(v) Other Covenants. Guarantor will throughout the Term of
the Lease comply with all covenants of Guarantor contained in Section 9 of the
Credit Agreement, all of which are incorporated herein by reference; provided,
however, to the extent that any such covenant is inconsistent with any covenant
in the Operative Documents, including, without limitation contained in this
subparagraph (a), such covenant in the Operative Documents shall control and
shall not be subject to (b) below.
(b) The covenants incorporated by reference in (a)(v) above,
and the related definitions shall, without further action hereunder, be amended
to conform to any amendment, written waiver, or modification to such covenants
(or related definitions) contained in the Credit Agreement; provided however,
that if the Credit Agreement shall be terminated for any reason,
<PAGE>
14
the form of the covenants and the related definitions incorporated by reference
in (a)(v) above at the time of such termination shall continue hereunder and
Guarantor shall execute such amendments or supplements hereto evidencing such
survival as the Agent Bank may reasonably request.
(c) As used in this paragraph 10, the following terms shall
have the following meanings:
"Acquisition" shall mean an acquisition of assets of, or all
or substantially all of the Capital Stock of, another business by Guarantor
and/or one or more of its Subsidiaries.
"Acquisition Consideration" shall mean, with respect to any
Acquisition, the aggregate amount of consideration paid by Guarantor and its
Subsidiaries in connection therewith, inclusive of (a) Stock Consideration and
(b) other consideration on account of (i) any expenses incurred in connection
with such Acquisition, (ii) liabilities under agreements not to compete incurred
in connection with such Acquisition, (iii) the principal amount of Indebtedness
assumed in connection with such Acquisition and (iv) Additional Expenditures
related to such Acquisition.
"Additional Expenditures" shall mean, with respect to any
Acquisition, amounts expended or to be expended by Guarantor and its
Subsidiaries within twelve months after the date of such Acquisition to acquire
or construct facilities and equipment that are not part of the assets acquired
pursuant to such Acquisition but which are deemed by Guarantor to be essential
for the integration or restructuring of the assets so acquired.
"Adjusted EBITDA" shall mean, for any period, EBITDA for such
period, minus the tax provision for such period currently payable.
<PAGE>
15
"Arcus UK" shall mean Arcus Data Security Limited, an English
company that, prior to the formation of the Pond Joint Venture, was wholly owned
by Arcus Data Security, Inc., a Delaware corporation and Wholly Owned Subsidiary
of the Guarantor.
"Capital Expenditures" shall mean expenditures in respect of
fixed assets by Guarantor or any of its Subsidiaries, including the capitalized
amount of Capital Lease Obligations incurred during the relevant period, other
than (i) expenditures for the restoration or replacement of fixed assets to the
extent financed by the proceeds of an insurance policy described in clause (i)
of Section 9.03 of the Credit Agreement or through a condemnation award, (ii)
Permitted Acquisitions, (iii) Qualifying Sale-Leaseback Transactions (except to
the extent any lease of Property by Guarantor or any of its Subsidiaries in
connection therewith would constitute a capital lease), (iv) Additional
Expenditures related to Permitted Acquisitions and (v) Large Volume Account
Capitalized Expenditures.
"Capital Lease Obligations" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board) and,
for purpose of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP (including such
Statement No. 13).
"Dollars" and "$" shall mean lawful money of the United States
of America.
"EBITDA" shall mean for any period, the sum (without
duplication), determined on a consolidated basis for Guarantor and its
Subsidiaries, of (a) net income for such period plus (b) to the extent deducted
in determining net income for such period, the sum of (i) depreciation and
amortization (including deferred financing costs, organization costs, goodwill
and non-compete amortization) for such period, (ii) other non-cash expenses for
such period, (iii) interest
<PAGE>
16
expense for such period, (iv) provision for income taxes for such period, (v)
extraordinary losses (including without limitation losses arising from any
natural disasters) for such period, (vi) non-compete expenses for such period to
the extent not capitalized in accordance with GAAP and (vii) losses on sales of
fixed assets not in the ordinary course of business for such period after giving
effect to any related charges for, reductions of or provisions for taxes thereon
minus (c) to the extent included in the calculation of net income for such
period, the sum of (i) other income (including interest income) for such period,
(ii) extraordinary gains for such period and (iii) gains on sales of fixed
assets not in the ordinary course of business for such period after giving
effect to any related charges for, reduction of or provisions for taxes thereon.
For the purposes of calculating the ratios set forth in
clauses (i)(A), (ii) and (iii) of paragraph 10(a) there may, at the Guarantor's
option, and for purposes of calculating the ratio set forth in clause (i)(B) of
paragraph 10(a) there will be included in EBITDA for any relevant period, on a
pro forma basis (adjusted to give effect to expenses that will not be ongoing),
the net income (and the additions and subtractions thereto referred to above)
for such period of any Person (or assets) acquired after the commencement of
such period in connection with any acquisition not prohibited hereunder or under
the Credit Agreement where the aggregate amount of consideration paid is more
than $500,000. The net income (and the related additions and subtractions) of
the Person or assets acquired pursuant to such acquisition for such period shall
be calculated by reference to the most recent available quarterly financial
statement of the acquired business, annualized.
"Excluded Subsidiary" shall mean any Subsidiary of the
Guarantor principally engaged in the records management business domiciled
(within the meaning of the Code) outside the United States.
"Fixed Charges" shall mean for any period the sum of (i)
Scheduled Amortization for such period plus (ii) Interest Expense for such
period plus (iii) the aggregate amount of
<PAGE>
17
Maintenance Capital Expenditures for such period plus (iv) the aggregate amount
of non-compete expenses for such period to the extent not capitalized in
accordance with GAAP.
"Foreign Leverage Ratio" has the meaning set forth in Section
10(a)(i)(B)(ii) hereof.
"Funded Indebtedness" shall mean, without duplication, (a)
Indebtedness that matures or otherwise becomes due more than one year after the
incurrence thereof or is extendible, renewable or refundable, at the option of
the obligor, to a date more than one year after the incurrence thereof
(including the current portion thereof) and (b) Indebtedness outstanding under
the Credit Agreement.
"GAAP" shall mean generally accepted accounting principles as
in effect from time to time consistently applied.
"Guaranty" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness (whether arising by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise, other
than agreements to purchase goods at an arm's length price in the ordinary
course of business) or (ii) entered into for the purpose of assuring in any
other manner the holder of such Indebtedness of the payment thereof or to
protect such holder against loss in respect thereof (in whole or in part),
provided that the term Guaranty shall not include endorsements for collection or
deposit in the ordinary course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
"Indebtedness" shall mean, as to any Person (determined
without duplication):
<PAGE>
18
(i) indebtedness of such Person for borrowed money (whether by
loan or the issuance and sale of debt securities) or for the deferred
purchase or acquisition price of property or services (including
amounts payable under agreements not to compete and other similar
arrangements), other than accounts payable (other than for borrowed
money) incurred in the ordinary course of business and accrued expenses
incurred in the ordinary course of business;
(ii) obligations of such Person in respect of letters of
credit or similar instruments issued or accepted by banks and other
financial institutions for the account of such Person;
(iii) Capital Lease Obligations of such Person;
(iv) obligations of such Person to redeem or otherwise retire
shares of Capital Stock of such Person;
(v) indebtedness of others of the type described in clauses
(i) through (iv) above secured by a Lien on the property of such
Person, whether or not the respective obligation so secured has been
assumed by such Person; and
(vi) indebtedness of others of the type described in clause
(i) through (v) above Guaranteed by such Person.
Notwithstanding anything to the contrary contained in clause (i) of the
preceding sentence, indebtedness of any Person in respect of amounts payable
under an agreement not to compete shall be the amount carried on the balance
sheet of such Person in respect of such agreement in accordance with GAAP.
<PAGE>
19
"Interest Expense" shall mean, for any period, the sum
(determined without duplication) of the aggregate amount of interest accruing
during such period on Indebtedness of Guarantor and its Subsidiaries (on a
consolidated basis), including the interest portion of payments under Capital
Lease Obligations and any capitalized interest, and excluding amortization of
debt discount and expense and interest paid in kind.
"Large Volume Account Capitalized Expenditures" shall mean any
expenditures incurred by Guarantor or its Subsidiaries in connection with new
customers initially storing with Guarantor or its Subsidiaries in excess of
10,000 boxes, to the extent that such expenditures are capitalized in accordance
with GAAP.
"Lender" shall have the meaning assigned to such term in the
Credit Agreement.
"Leverage Ratio" has the meaning set forth in Section
10(a)(i)(A)(ii) hereof.
"Lien" shall mean, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such asset. For the purposes of this paragraph 10, Guarantor and each of its
Subsidiaries shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Liquid Investments" shall mean:
(i) certificates of deposit maturing within 90 days of the
acquisition thereof denominated in Dollars and issued by (X) a Lender
or (Y) a bank or trust company having combined capital and surplus of
at least $500,000,000 and which has (or which is a Subsidiary of a bank
holding company which has) publicly traded debt securities rated A or
higher by Standard & Poor's Ratings Services or A-2 or higher by
Moody's Investors Service, Inc.;
<PAGE>
20
(ii) repurchase obligations with a term of nor more than seven
days for underlying securities of the types described in clause (i)
above entered into with (x) any Lender or (y) any bank or trust company
meeting the qualifications specified in clause (i)(Y) above;
(iii) obligations issued or guaranteed by the United States of
America, with maturities not more than one year after the date of
issue;
(iv) commercial paper with maturities of not more than 90 days
and a publishing rating of not less than A-2 and P-2 (or the equivalent
rating); and
(v) investments in money market funds substantially all of
whose assets are comprised of securities and other obligations of the
types described in clauses (i) through (iv) above.
"Maintenance Capital Expenditures" shall mean Capital
Expenditures required to maintain, reconfigure, or replace existing assets (as
distinguished from Capital Expenditures relating to growth and as distinguished
from Additional Expenditures), as certified consistent with the provisions of
Section 9.01(i) of the Credit Agreement.
"Permitted Acquisition" has the meaning set forth in Section
9.12 of the Credit Agreement.
"Permitted Indebtedness" shall have the meaning assigned to
such term in the Credit Agreement.
"Permitted Investment" shall have the meaning assigned to such
term in the Credit Agreement.
<PAGE>
21
"Person" shall mean an individual, a corporation, a company, a
voluntary association, a partnership, a limited liability company, a trust, an
unincorporated organization of a government or any agency, instrumentality or
political subdivision thereof.
"Pond Joint Venture" shall mean Britannia Data Management
Limited, an English company, a majority of the shares of Capital Stock of which
(immediately after giving effect to the Pond Transaction) will be owned by the
Guarantor or a Subsidiary of the Guarantor.
"Pond Transaction" shall mean (i) the contribution by the
Guarantor or a Subsidiary of the Guarantor to the Pond Joint Venture of Capital
Stock of Arcus UK having a fair market value of up to but not exceeding
(pound)2,000,000 and (ii) the purchase by the Guarantor or a Subsidiary of the
Guarantor of Capital Stock of the Pond Joint Venture for an aggregate
consideration of up to but not exceeding (pound)37,250,000.
"Property" shall have the meaning assigned to such term in the
Credit Agreement.
"Qualifying Sale-Leaseback Transaction" shall mean any
arrangement by which Guarantor or any of its Subsidiaries enters into an
arrangement with any bank, insurance company or other lender or investor
providing for the leasing to Guarantor or a Subsidiary thereof of any real
property which has been or is to be sold or transferred by Guarantor or such
Subsidiary to such lender or investor or to any Person to whom funds have been
or are to be advanced by such lender or investor and where the real property in
question has been constructed after September 26, 1997.
"Scheduled Amortization" shall mean, for any period, the sum
(calculated without duplication) of all payments of principal of Indebtedness of
Guarantor (other than Indebtedness under the Credit Agreement) scheduled to be
made during such period.
<PAGE>
22
"Security Documents" shall have the meaning assigned to such
term in the Credit Agreement.
"Stock Consideration" shall mean, with respect to any
Acquisition, the aggregate amount of consideration paid by Guarantor and its
Subsidiaries in connection therewith consisting of Guarantor's common stock or
with proceeds of the issuance of Guarantor's common stock within twelve months
prior to the date of such Acquisition. For purposes hereof, the amount of Stock
Consideration paid by Guarantor in respect of any Acquisition where the Stock
Consideration consists of Guarantor's common stock shall be deemed to be equal
to the fair market value of Guarantor's common stock so paid, determined in good
faith by Guarantor at the time of such Acquisition.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership, limited liability company or other entity of which at
least a majority of the securities or other ownership interests having by the
terms thereof ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions of such corporation,
partnership, limited liability company or other entity (irrespective of whether
or not at the time securities or other ownership interests of any other class or
classes of such corporation, partnership, limited liability company or other
entity shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by such
Person or one or more Subsidiaries of such Person or by such Person and one or
more Subsidiaries of such Person.
(d)(x) Guarantor shall not merge into or consolidate with any
other Person or sell, transfer, lease or otherwise convey all or substantially
all its assets as an entirety; provided that, so long as no Default or Event of
Default shall have occurred and be continuing or would result therefrom, the
Guarantor may merge with another Person so long as (i) the Guarantor is the
surviving entity, and (ii) after giving effect to such merger, the Guarantor, as
the surviving entity, would have a tangible net worth (as hereinafter defined)
equal to or greater than Guarantor's tangible net worth immediately prior to
such merger.
<PAGE>
23
(y) Guarantor shall not permit any of its Subsidiaries to
merge into or consolidate with any other Person or sell, transfer, lease or
otherwise convey all or substantially all their assets as an entirety; provided
(a) Lessee may merge into or consolidate with any other Person or sell,
transfer, lease or otherwise convey all or substantially all its assets as an
entirety in accordance with Article 15 of the Lease and (b) so long as no
Default or Event of Default shall have occurred and be continuing or would
result therefrom, that any Subsidiary may (A) sell, transfer, lease or otherwise
convey all or substantially all of its assets to the Guarantor or any Person
that is, or becomes, a Subsidiary of the Guarantor or (B) merge into the
Guarantor or any of its Subsidiaries, and any Subsidiary (other than Lessee) may
merge into another Person if, contemporaneously therewith, such Person becomes a
Subsidiary of the Guarantor.
(z) The Guarantor shall not, and shall not permit any of its
Subsidiaries to, issue or sell any stock of any Subsidiary that is not an
Excluded Subsidiary to any Person or Persons, other than to the Guarantor or its
Subsidiaries, except to the extent otherwise permitted by clause (x) of this
subparagraph (d) above.
"tangible net worth" of the Guarantor means, at any date, the excess of
the consolidated total assets of Guarantor and its Subsidiaries at such date
over the consolidated total liabilities of Guarantor and its Subsidiaries at
such date, and less the sum at such date of : (i) all goodwill, organizational
expenses, research and development expenses, trademarks, trade names,
copyrights, patents, patent applications, licenses and rights in any thereof,
and other similar intangibles, (ii) all reserves carried and not deducted from
assets, (iii) securities which are not readily marketable, (iv) any
subscriptions receivable and (v) any items not included in clauses (i) through
(iii) above, which are treated as intangibles in conformity with GAAP, all of
the foregoing as determined for any such date as of the end of the immediately
preceding fiscal quarter in accordance with GAAP.
<PAGE>
24
(e) Guarantor shall at all times during the Term of the Lease carry a
footnote on its financial statements required by paragraph 9 hereof referring to
the transactions contemplated by the Operative Documents, in the form agreed to
on the date hereof.
(f) Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all determinations with respect to accounting matters
hereunder shall be made, and all financial statements and certificates and
reports as to financial matters required to be delivered hereunder shall be
prepared, in accordance with GAAP; provided that if any change in GAAP proposed
after the date hereof in itself materially affects the calculation of any
financial covenant in this paragraph 10 (or incorporated by reference herein),
the Guarantor may by notice to the Owner and Agent Bank, or the Owner or Agent
Bank may by notice to the Guarantor, require that such covenant thereafter be
calculated in accordance with GAAP as in effect, and applied by the Guarantor,
immediately before such change in GAAP occurs.
11. Guarantor will permit Owner and the Indemnified Parties to visit
the offices of Guarantor at its address set forth herein and to examine its
records and books of account and to discuss its affairs, finances and accounts
with its officers upon reasonable notice at such reasonable times as may be
requested by Owner or such Indemnified Party or any assignee of Owner's rights
hereunder.
12. Guarantor understands and acknowledges that Owner may enter into
one or more financings to finance the Costs of the Properties pursuant to which
Owner will encumber its interest in the Properties. In connection with any such
financing, Guarantor understands and acknowledges that Owner may assign its
rights in and to this Guaranty and Guarantor hereby agrees that: (i) Owner may
assign its rights hereunder in connection therewith; (ii) in connection with any
such assignment by Owner, Guarantor will consent in writing thereto; and (iii)
from and after such assignment, the rights and benefits of Owner hereunder shall
inure to the benefit of, and be exercisable by any assignee, pursuant to and in
accordance with the terms of such assignment.
<PAGE>
25
13. Guarantor agrees that at any time and from time to time so long as
this Guaranty is in effect, it will promptly, but in no event later than 15 days
after request by Owner, execute, acknowledge and deliver to Owner a certificate
stating: (i) that this Guaranty is unmodified and in full force and effect (or
if there have been modifications, that this Guaranty is in full force and effect
as modified, and identifying such modification agreements); (ii) whether or not
there is an existing Event of Default hereunder and, if there is any such Event
of Default, specifying the nature and extent thereof; and (iii) whether or not
there are any setoffs, defenses or counterclaims against enforcement of the
obligations to be performed hereunder existing in favor of Guarantor. Guarantor
further agrees that it will upon five day's prior notice from Owner execute and
deliver to Owner's mortgagee a certificate stating the above.
14. Guarantor represents and warrants that:
(a) Guarantor (i) is a corporation duly organized and
validly existing under the laws of the State of
Delaware, and (ii) has all requisite legal power and
authority to enter into this Guaranty, to perform and
observe the terms and conditions hereof, and has all
requisite legal power and authority to own its
properties and conduct its business as currently
conducted except for such licenses, permits and
approvals which would not, individually or in the
aggregate, have a material adverse effect on
Guarantor's ability to perform the Guaranteed
Obligations. Guarantor is qualified to do business as
a foreign corporation in all jurisdictions where its
ownership of property or the nature of its business
required such qualification. This Guaranty has been
duly authorized, executed and delivered by Guarantor
and constitutes the legal, valid and binding
obligation by Guarantor enforceable against Guarantor
in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency,
reorganization and other laws of general application
relating to or affecting the enforcement of
creditors' rights and general principles of equity.
(b) There are no actions, suits or proceedings pending
or, to its actual knowledge, threatened against or
affecting Guarantor at law or in equity before any
court or administrative officer or agency an adverse
determination in which could, individually or in the
aggregate, have a material adverse effect on
Guarantor's ability to perform the Guaranteed
Obligations. Guarantor is not in default (i) in the
payment of any taxes levied or assessed against it or
its assets or (ii) under or in violation of any
statute, rule, order, decree, writ, injunction or
regulation of any governmental body (including any
court) except, where the failure to pay such taxes or
the existence of such defaults or violations would,
<PAGE>
26
individually or in the aggregate, not have a material
adverse effect on Guarantor's ability to perform the
Guaranteed Obligations.
(c) Guarantor is not a party to any contract or agreement
or subject to any restriction or to any order, rule,
regulation, writ, injunction or decree of any court
or governmental authority or to any statue which
materially and adversely affects its ability to
perform the Guaranteed Obligations. Neither the
execution, delivery or performance by Guarantor of
this Guaranty nor its compliance herewith or
therewith (i) conflicts or will conflict with or
results or will result in a breach of or constitutes
or will constitute a default under (A) any law in
effect as of the date of delivery of this Guaranty,
(B) the articles of incorporation or by-laws of
Guarantor, (C) any agreement or instrument to which
Guarantor is a party or by which it is bound, or (D)
any order, writ, injunction or decree of any court or
other governmental authority, or (ii) results or will
result in the creation or imposition of any lien,
charge or encumbrance upon Guarantor's property
pursuant to such agreement or instrument.
(d) The execution, delivery and performance by Guarantor
of this Guaranty do not require (i) any stockholder
approval or the consent or approval of any of
Guarantor's creditors (except as have already been
obtained in writing), or (ii) any authorization,
consents, or approvals, of or filings with any
governmental authority, except for such
authorization, consents, approvals or filings which
have been obtained and are in full force and effect.
(e) No event has occurred and is continuing with respect
to Guarantor which would constitute a default or an
Event of Default hereunder. No default or Event of
Default by Agent exists under the Agency Agreement.
Guarantor is not in default in the payment of the
principal or interest on any indebtedness for
borrowed money or for its deferred purchase of
property or in default under any instrument or
agreement under and subject to which any such
indebtedness has been issued or under any lease, in
any case involving the likelihood of any actions or
proceedings against it which would materially and
adversely affect Guarantor or its ability to
perform under this Guaranty.
(f) Guarantor is in compliance in all material respects
with all applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended
(ERISA), and the regulations and published
interpretations thereunder. No "reportable event", as
such term is defined in Section 4043 of ERISA, has
occurred with respect to any employee pension benefit
plan (as defined in ERISA), and Guarantor has not
incurred, nor does it reasonably expect to incur, any
liability to the Pension Benefit Guaranty
<PAGE>
27
Corporation under Section 44062 of ERISA or to any
multiemployer plan (as defined in ERISA) under
Section 4201 of ERISA. Guarantor has not incurred any
accumulated funding deficiency within the meaning of
Section 302 of ERISA nor is it subject to any lien
arising under Section 307 of ERISA or Section
401(a)(29) or 412(n) of the Internal Revenue Code of
1986, as amended.
(g) Guarantor's assets are not less than its liabilities,
both determined in accordance with GAAP, and
Guarantor is solvent. The transactions contemplated
by this Guaranty are in furtherance of Guarantor's
ordinary business purposes and in furtherance of its
corporate purposes with no contemplation of
insolvency and with no intent to hinder, delay or
defraud any of its present or future creditors.
Neither before nor as a result of the transactions
contemplated by this Guaranty will Guarantor be or be
rendered insolvent or have an unreasonably small
capital for the conduct of its business and the
payment of its anticipated obligations. Guarantor's
assets and cash flow enable it to meet its present
obligations in the ordinary course of business as
they become due, and Guarantor does not believe that
it will incur debts beyond its ability to pay such
debts.
(h) Neither (i) the consolidated financial statements for
Guarantor's fiscal year ending in December 31, 1997,
(ii) this Guaranty, nor (iii) any written statement
furnished by Guarantor in connection with the
transactions contemplated by the Operative Documents,
contains any untrue statement of a material fact or
omits a material fact necessary to make the
statements contained therein not misleading. There is
no fact applicable to Guarantor which Guarantor has
not disclosed in writing which materially affects
adversely nor so far as Guarantor can now reasonably
foresee will materially affect adversely the
properties, business, prospects, profits or condition
(financial or otherwise) of Guarantor. Guarantor
represents that the consolidated financial statements
specified above (i) fairly present in all material
respects the financial condition of Guarantor on the
dates for which, and the results of its operations
for the periods for which, the same have been
furnished, and (ii) have been prepared in accordance
with GAAP consistently applied, except as otherwise
disclosed therein.
(i) There has been no material adverse change in
Guarantor's business or financial condition since
December 31, 1997 that individually or the aggregate
would adversely affect Guarantor's ability to perform
the Guaranteed Obligations.
15. All agreements, representations and warranties contained herein or
made in writing by Guarantor shall survive the execution and delivery of this
Guaranty.
<PAGE>
28
16. This Guaranty shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and assigns.
17. This Guaranty shall be construed and enforced in accordance with,
and governed by, the laws of the Commonwealth of Massachusetts. In connection
with this Guaranty and the transactions contemplated by the Operative Documents,
Guarantor hereby agrees to the non-exclusive personal jurisdiction of and venue
in the state courts of the Commonwealth of Massachusetts, and the United States
District Courts located in the Commonwealth of Massachusetts.
18. Any provision of this Guaranty which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
19. Any notice to be given under this Guaranty shall be given in the
manner provided in the Lease, addressed to Guarantor or Owner at its address set
forth at the beginning of this Guaranty, or as either such party may otherwise
provide by notice to the other party.
20. As to any Leased Property located in Louisiana, the following shall
apply: Owner shall mean and include both Iron Mountain Statutory Trust - 1998, a
Connecticut statutory trust having an address as stated above and First Union
National Bank as trustee of the Iron Mountain Statutory Trust - 1998 Louisiana
Subtrust, such subtrust being referred hereinafter as the "Louisiana Subtrust".
All references hereunder to the Owner shall be deemed to include the Louisiana
Subtrust as applicable.
***
<PAGE>
29
IN WITNESS WHEREOF, Guarantor has caused this Unconditional Guaranty to
be executed under seal and delivered as of the day and year first above written.
ATTEST: IRON MOUNTAIN INCORPORATED
(Seal)
By: /s/ Garry B. Watzke By: /s/ John P. Lawrence
Name: Garry B. Watzke Name: John P. Lawrence
Title: Assistant Secretary Title: Vice President and Treasurer
(Affix Corporate Seal)
Exhibit 10.22
AMENDED AND RESTATED
AGENCY AGREEMENT
by and between
IRON MOUNTAIN STATUTORY TRUST - 1998
and
IRON MOUNTAIN RECORDS MANAGEMENT, INC.
Dated as of October 1, 1998
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C> <C>
PRELIMINARY STATEMENT.............................................................................................1
ARTICLE 1 DEFINED TERMS.................................................................................2
ARTICLE 2 AGENCY........................................................................................2
2.1 Appointment...................................................................................2
2.2 Payment for Costs of the Properties...........................................................2
2.3 Other Payments................................................................................2
2.4 Suits and Actions.............................................................................3
ARTICLE 3 OWNER'S ADVANCES AND REIMBURSEMENTS...........................................................3
3.1 Owner's Obligations...........................................................................3
3.2 Advances......................................................................................4
3.3 Owner's Cooperation...........................................................................5
ARTICLE 4 INITIAL CLOSING, DESIGNATION OF ADDITIONAL PROPERTIES
BY AGENT, AND ADDITIONAL CLOSINGS.............................................................5
4.1 Initial Closing...............................................................................5
4.2 Designation of Additional Properties..........................................................5
4.3 Limits on Acquisition of Existing Facilities and New Facilities. ............................6
4.4 Additional Closings...........................................................................7
4.5 Loan Financing................................................................................7
ARTICLE 5 CONDITIONS OF OWNER'S OBLIGATIONS.............................................................8
5.1 Conditions to the Closings....................................................................8
5.1.1 Operative Documents...........................................................................8
5.1.2 Taxes.........................................................................................9
5.1.3 Status of Title...............................................................................9
5.1.4 Title Insurance...............................................................................9
5.1.5 Survey; Zoning................................................................................9
5.1.6 Opinions of Counsel..........................................................................10
5.1.7 Certificates.................................................................................10
5.1.8 Legal Restrictions...........................................................................10
5.1.9 No Adverse Change............................................................................10
5.1.10 Environmental Reports........................................................................10
5.1.11 Evidence of Insurance........................................................................11
5.1.12 Closing of Loans and Equity Investment.......................................................11
5.1.13 Proceedings and Documents....................................................................11
5.1.14 Fees and Expenses............................................................................11
5.1.15 Requisition..................................................................................12
<PAGE>
- ii -
5.1.16 Appraisals...................................................................................12
5.1.17 Other Requirements...........................................................................12
ARTICLE 6 CONDITIONS OF AGENT'S OBLIGATIONS AT CLOSINGS................................................12
6.1 Operative Documents..........................................................................12
6.2 Opinions of Counsel..........................................................................13
6.3 Certificates.................................................................................13
6.4 Legal Restrictions...........................................................................13
6.5 Equity Investment............................................................................13
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF AGENT......................................................13
7.1 Organization and Power.......................................................................13
7.2 Full Disclosure..............................................................................14
7.3 Litigation...................................................................................14
7.4 No Adverse Change............................................................................14
7.5 No Defaults..................................................................................14
7.6 No Violation.................................................................................14
7.7 Agreements are Legal and Authorized..........................................................15
7.8 Insurance....................................................................................15
7.9 Consents.....................................................................................15
7.10 Approvals....................................................................................15
7.11 Compliance; Taxes............................................................................15
7.12 Use of Advances..............................................................................16
7.13 Lease........................................................................................16
7.14 Use..........................................................................................16
7.15 ERISA........................................................................................16
7.16 Property Related Information.................................................................16
7.17 Location of Office and Records...............................................................16
7.18 Brokers......................................................................................16
ARTICLE 8 REPRESENTATIONS AND WARRANTIES OF OWNER......................................................17
8.1 Organization and Power.......................................................................17
8.2 Agreements Legal and Authorized. ............................................................17
8.3 Litigation...................................................................................17
8.4 No Violation.................................................................................17
8.5 Consents.....................................................................................18
ARTICLE 9 DEFAULTS AND REMEDIES........................................................................18
9.1 Events of Default............................................................................18
9.2 Remedies.....................................................................................19
9.3 Costs of Enforcement.........................................................................19
9.4 Cumulative Remedies..........................................................................20
<PAGE>
- iii -
ARTICLE 10 MISCELLANEOUS................................................................................20
10.1 Governing Law; Jurisdiction and Venue........................................................20
10.2 Notices; Modification; Waiver................................................................20
10.3 Illegal Provision............................................................................20
10.4 Binding Effect; Third Party Beneficiary......................................................21
10.5 Counterparts.................................................................................21
10.6 Headings.....................................................................................21
10.7 Reproduction of Documents....................................................................21
10.8 Time of Essence..............................................................................21
10.9 Payment of Expenses..........................................................................21
10.10 Advisory Fee.................................................................................22
10.11 Limitations on Liability.....................................................................22
10.12 Conveyance of Houston Parcel.................................................................23
10.13 Louisiana Provisions.........................................................................23
</TABLE>
Appendix I Definitions
Schedule A Land Parcels
Schedule 4.1 Existing Facilities
<PAGE>
This AMENDED AND RESTATED AGENCY AGREEMENT, is dated as of October 1,
1998 (this Agreement), by and between IRON MOUNTAIN STATUTORY TRUST - 1998, a
Connecticut statutory trust (together with its successors and assigns, Owner),
and IRON MOUNTAIN RECORDS MANAGEMENT, INC., a Delaware corporation (together
with its successors and assigns, Agent). This Agreement amends, restates and
supersedes in its entirety that certain Agency Agreement between Owner and Agent
dated as of August 6, 1998, as amended by the Supplement and Amendment No. 1 to
Agency Agreement dated as of October 1, 1998.
PRELIMINARY STATEMENT
Agent has accepted the Lease Proposal made by Placement Agent for the
lease financing of Properties consisting of approximately seventeen new or
existing warehouse storage facilities to be located in several states. As of
August 6, 1998, Agent arranged for the Owner to acquire two Land Parcels, one in
San Antonio, Texas and one in Houston, Texas ("Houston Parcel") and the Existing
Improvements on the San Antonio Land Parcel ('San Antonio Facility") and to
maintain and/or operate the Land Parcels as agent for Owner. On such date, Agent
caused the Land Parcels and the Existing Improvements to be conveyed to Owner
pursuant to the Conveyance Documents. On October 1, 1998, Agent arranged for
Owner to acquire the Land Parcel and the Existing Improvements thereon located
in Harahan, Louisiana. Prior to the date hereof, Owner conveyed the San Antonio
Facility to Agent. Agent, as agent for Owner, desires from time to time to
acquire the Existing Facilities and the New Facilities in each case, as set
forth in Article 4 below. Upon acquisition by Owner of the Existing Facilities,
and any New Facilities, Owner will lease each Land Parcel and the Existing
Improvements thereon to Agent pursuant to the Lease. Owner will appoint Agent as
its agent to undertake the acquisition of the Existing Facilities and the New
Facilities and will own the Improvements for all Properties. For each Existing
Facility and New Facility, Agent will pay for or cause to be paid, the Costs of
the Property with the payments made and to be made by Owner pursuant to Article
III hereof and, to the extent required in this Agreement, with its own funds.
Pursuant to the Loan Agreement, Owner will borrow up to 97% of the funds
necessary to make such payments. In connection therewith, and in order to induce
the Lenders to enter into the loan transactions contemplated by the Loan
Agreement, Owner is entering into the Loan Agreement, granting a first deed of
trust or mortgage on each Property to Agent Bank for the benefit of the Lenders
and assigning its rights under the Lease, this Agreement and the Guaranty to
Agent Bank for the benefit of the Lenders. Owner will provide the remaining 3%
of the required funds in the form of the Equity Investment. Beneficiary will
deliver to the Bank, as Trustee under the Owner Trust Agreement, funds in the
amount of the Equity Investment, to be applied as provided herein and therein.
The obligations of Agent hereunder are unconditionally guaranteed by Guarantor
pursuant to the Guaranty.
<PAGE>
- 2 -
ARTICLE 1
DEFINED TERMS
Capitalized terms used in this Agreement and not otherwise defined have
the meanings set forth in Appendix I.
ARTICLE 2
AGENCY
2.1 Appointment. Solely for the limited purposes hereinafter set forth,
Owner hereby designates Agent as its agent, and Agent hereby accepts such
appointment, to acquire the Properties strictly in accordance with the terms and
conditions of this Agreement and the other Operative Documents, to pay (with
funds borrowed or provided by Owner) all Costs of the Property with respect to
each Property, and to cause title to the same to vest in Owner. Agent shall have
no authority to act for or on behalf of Owner except with respect to the
acquisition of the Properties. The acceptance by Agent on behalf of Owner of any
property or any contractual obligation with respect to which Agent does not have
authority to act on behalf of Owner as described in this Agreement shall be
ineffective, ab initio, to create in or transfer to Owner any legal or
beneficial right or interest in such property or any contractual obligation or
to impose on Owner any liability, obligation or responsibility with respect
thereto. Agent shall cause any agreement, contract, purchase order, or other
writing purporting to be binding upon Owner to refer to Agent as agent for
Owner. The authority of Agent hereunder shall terminate on the earliest to occur
of (i) the New Facility Acquisition Outside Date, (ii) the acquisition of all
New Facilities and (iii) notice by Owner to Agent of such termination after the
occurrence and continuance of an Event of Default. The termination of Agent's
authority hereunder shall not discharge Agent or limit in any way Agent's
liability hereunder with respect to obligations arising out of this Agreement
and Agent's performance hereunder prior to the date of such termination of
Agent's authority including, without limitation, with respect to Agent's
indemnification of the Indemnified Parties pursuant to Section 2.3, or with
respect to Agent's obligations under Article 10.
2.2 Payment for Costs of the Properties. Agent shall pay or cause to be
paid the Cost of the Properties using (a) the proceeds of the Initial Advance,
(b) the proceeds of Additional Advances and (c) its own funds to the extent
required under Article 10(d) of the Lease.
2.3 Other Payments. Notwithstanding the agency created hereby, and in
addition to all other indemnities contained herein or in the Lease, Agent shall
indemnify and defend the Indemnified Parties (with counsel selected by Agent,
reasonably approved by such Indemnified Parties, and paid for by Agent) and hold
the Indemnified Parties harmless from any and all claims arising out of Agent's
actions or omissions on behalf of Owner whether with or without
<PAGE>
- 3 -
authority hereunder, except anything resulting from the gross negligence or
wilful misconduct of any such Indemnified Party.
2.4 Suits and Actions. If in the performance of its obligations under
this Agreement, Agent suffers any loss or damage or otherwise has a claim
against any third party with respect to any Property, Agent may bring lawsuits
or other actions in its own name or in Owner's name, as appropriate, and in any
case at Agent's sole cost and expense, subject to the following conditions:
(a) Agent may control such action unless at any time Owner determines
in its reasonable judgment that control of such action by Agent could have a
material adverse impact on or material risk to Owner, in which case Owner shall
have the right to control such action.
(b) Agent shall have agreed to pay Owner on demand all reasonable costs
and expenses that Owner actually incurs in connection with such action.
(c) No Event of Default shall have occurred and shall have been
continuing.
Owner shall cooperate with Agent with respect to any such action
controlled by Agent, and Agent shall consult with Owner regarding the conduct of
such action, including keeping Owner reasonably informed of the progress of such
action, allowing Owner to receive and comment on written submissions and
considering in good faith Owner's suggestions regarding such action. Subject to
satisfaction of the foregoing conditions, including payment by Agent of any
indemnity payments to Owner or any other Indemnified Party, the damages or other
proceeds of any such action shall be payable to Agent.
ARTICLE 3
OWNER'S ADVANCES AND REIMBURSEMENTS
3.1 Owner's Obligations. Subject to the terms and conditions of the
Loan Agreement and of this Agreement, including satisfaction of the applicable
conditions set forth in Articles 4 and 5 hereof, Owner agrees to pay or cause to
be paid the Costs of the Properties to Agent or to Persons designated by Agent
in writing. Owner shall make (i) the Initial Advance solely out of the proceeds
to Owner of the initial Equity Investment and the proceeds of any Loans at the
Initial Closing and (ii) any Additional Advances on account of the Costs of the
Properties from time to time solely out of advances available to Owner from the
proceeds of the Loans and any Additional Equity Investment, in each case subject
to the terms and conditions of this Agreement and the Loan Agreement. Nothing
contained in this Agreement shall in any way obligate Owner to pay any debt or
meet any financial obligation under this Agreement or otherwise with respect to
Costs of the Properties, except from monies actually received by Owner from the
sources specified in this Section 3.1.
<PAGE>
- 4 -
3.2 Advances. (a) Subject to the terms and conditions hereof, on the
Initial Closing Date, Owner shall make an advance to Agent or designated Persons
on account of the Costs of the Properties with respect to the Existing
Facilities acquired on such Date (the "Initial Advance") from Loans and the
Equity Investment upon a Requisition therefor delivered in substantial
accordance with the provisions hereof and of the Loan Agreement.
(b) Subject to the terms and conditions of the Loan Agreement and of
this Agreement, and so long as no Event of Default has occurred and is
continuing hereunder, Owner shall make an Additional Equity Investment and shall
cause Agent Bank to make additional payments to Agent or designated Persons upon
Agent's written request from time to time no more frequently than monthly, on
account of the Costs of the Properties incurred by Agent with respect to the
acquisition of New Facilities or Existing Facilities after the Initial Closing
Date (each such payment referred to herein as an "Additional Advance," and such
payments together with the Initial Advance, collectively, "Owner Advances").
Additional Advances shall be made upon Agent's delivery of Requisitions in
accordance with the provisions of Article 5 hereof and Article 3 of the Loan
Agreement, subject to the satisfaction of all conditions to each Additional
Advance. Agent shall submit all Requisitions and related materials directly to
Agent Bank, and any Requisitions under the Loan Agreement shall serve as the
Requisitions contemplated by this Agreement.
(c) Each Additional Advance shall be in an amount not to exceed 100% of
the Costs of the Property or Properties being acquired on such Closing Date, but
in any case only out of funds available to Owner from the proceeds of the Loans
and any Additional Equity Investment.
(d) The aggregate of all Owner Advances made under this Agreement shall
not exceed (i) the Existing Facility Maximum Amount with respect to Existing
Facilities, (ii) the New Facility Maximum Amount with respect to any New
Facilities, or (iii) the Total Property Cost in the aggregate. Owner shall make
or cause to be made each Additional Advance by wire transfer to Agent, at Union
Bank of California, ABA No. 122000496, account in the name of "Iron Mountain
Records Management, Inc.", account number 1000-132-337, or to such other
accounts or persons and in such manner as Agent may designate in writing no
later than four Banking Days before the date of any Additional Advance. Any
Additional Advance that would otherwise be required to be made on a day that is
not a Banking Day shall be made on the next following Banking Day.
3.3 Owner's Cooperation. Owner agrees to cooperate with Agent in all
reasonable respects, at Agent's sole cost and expense, in satisfying conditions
precedent to Advances under the Loan Agreement.
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ARTICLE 4
INITIAL CLOSING, DESIGNATION OF ADDITIONAL PROPERTIES
BY AGENT, AND ADDITIONAL CLOSINGS
4.1 Initial Closing
Subject to compliance with the provisions of this Agreement, the
initial closing of the Loans and the execution and delivery of the Lease as to
the initial group of Existing Facilities (the "Initial Closing") shall take
place at 10:00 a.m., Boston time, on October 6, 1998 (the "Initial Closing
Date"), at the offices of Day, Berry & Howard LLP, 260 Franklin Street, Boston,
Massachusetts 02110. At the Initial Closing, subject to compliance by Agent with
its obligations under Article 5 and Owner of its obligations under Article 6,
Agent and Owner shall enter into the Lease with respect to those Existing
Facilities designated on Schedule 4.1 attached hereto which are ready to be
acquired at the Initial Closing, all in accordance with the terms and conditions
set forth herein.
If, on the Initial Closing Date, Agent shall not perform its
obligations in accordance with this Agreement or if the conditions specified in
Article 5 have not been satisfied to Owner's reasonable satisfaction, Owner
shall, at its option exercisable on the Initial Closing Date, be relieved of its
obligations hereunder. Similarly, if on the Initial Closing Date, Owner shall
not perform its obligations in accordance with this Agreement or if the
conditions specified in Article 6 with respect to parties other than Agent shall
not have been satisfied to Agent's satisfaction, Agent shall, at its option
exercisable on the Initial Closing Date, but subject to Section 10.9 hereof, be
relieved of its obligations hereunder, except as otherwise provided herein or as
separately agreed. Furthermore, in either of such events, to the extent any
documents have been delivered with respect to the Initial Closing, they shall be
returned to the appropriate parties and to the extent any documents have been
recorded, they shall be released of record.
4.2 Designation of Additional Properties. In addition to Existing
Facilities, Owner and Agent anticipate that Agent will designate additional
warehouse storage facilities as New Facilities hereunder. To the extent that
Agent desires to so designate any such additional New Facility ("Additional
Property"), Agent shall provide Owner and Agent Bank with 15 Business Days
advance written notice ("Additional Property Designation Notice") thereof, which
notice shall be attached to the Requisition and shall include the following:
(a) each Additional Property Designation Notice shall include the
following:
(i) a detailed description of any Existing Improvements,
including the type of structure, the square footage, the number of floors and
the size of the Land Parcel,
(ii) a detailed estimate of the applicable Costs of the
Property with respect to such New Facility, and
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(iii) an Appraisal (which Appraisal shall assume that any
Completion Improvements have been timely completed by the Completion Date)
reasonably acceptable to Owner and Agent Bank.
(b) to the extent that such proposed Additional Property includes
Completion Improvements, such Additional Property Designation Notice shall also
include the following:
(i) a complete set of plans and specifications describing any
proposed Completion Improvements,
(ii) a detailed budget estimating the applicable Costs of the
Property with respect to such Completion Improvements, and
(iii) a firm date for achievement of Substantial Completion as
to all Completion Improvements for such Property, not to exceed 180 days from
commencement of construction thereof ("Completion Date").
(c) No proposed Additional Property shall become a Property hereunder
or under the Lease without the prior written consent of Owner, LC Issuer and the
Lenders, which consent shall not be unreasonably withheld or delayed.
4.3 Limits on Acquisition of Existing Facilities and New Facilities.
(a) Existing Facilities. Notwithstanding any other provision hereof, in
no event shall Agent be entitled to acquire any Existing Facility if (i) the
acquisition of such Existing Facility and the commencement of the Basic Lease
Term with respect thereto pursuant to the Lease would commence after the
Existing Facility Acquisition Outside Date, (ii) the Cost of the Property with
respect to such proposed Existing Facility would, when combined with the actual
or projected Costs of the Property attributable to all other current or proposed
Existing Facilities exceed the Existing Facility Maximum Amount, or (iii) the
Costs of the Property with respect to such proposed Existing Facility would,
when combined with the actual or projected Costs of the Property attributable to
all other actual or pending Existing Facilities and New Facilities exceed the
Total Property Cost.
(b) New Facilities. Notwithstanding any other provision hereof in no
event shall Agent be entitled to designate any New Facility hereunder if (i)
such proposed New Facility would not be acquired by the earlier of the New
Facility Acquisition Outside Date or the New Facility Acquisition Date likely
(in the reasonable judgment of Owner) to be applicable to such proposed New
Facility, (ii) the Costs of the Property attributable to such proposed New
Facility would, if combined with the actual or projected Costs of the Property
for all other existing or proposed New Facilities exceed the New Facility
Maximum Amount, or (iii) the Costs of the Property attributable to such proposed
New Facility would, in combination with the actual or projected Costs of the
Property attributable to all other existing or proposed New Facilities and
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Existing Facilities cause the total Costs of the Properties attributable thereto
to exceed to the Total Property Cost.
4.4. Additional Closings. Subject to compliance by Agent with its
obligations under Article 5 and Owner of its obligations under Article 6, each
Closing hereunder for any Additional Property designated pursuant to Section 4.2
above or with respect to an Existing Facility shall be an "Additional Closing"
for the purposes of this Agreement; provided, however, that with respect to any
New Facilities, the aggregate Costs of the Properties to be acquired at such
Additional Closing shall exceed $4,000,000. Each Additional Closing shall take
place at the offices of Day, Berry & Howard LLP, Boston, Massachusetts on such
dates as may from time to time be designated by Agent (subject to the reasonable
approval of Owner and the Agent Bank), provided that no Additional Closing shall
take place with respect to any Existing Facility after the Existing Facility
Acquisition Outside Date or with respect to any New Facility after the New
Facility Acquisition Outside Date.
4.5 Loan Financing. At the Initial Closing, Owner will enter into the
Loan Agreement and the other Operative Documents to which it is a party in order
to obtain financing for Owner Advances with respect to the New Facilities and
the Existing Facilities. Agent acknowledges that Owner will assign its rights
under this Agreement to Agent Bank pursuant to the Assignment, and Agent
covenants and agrees that it shall perform its obligations under this Agreement
for the benefit of Agent Bank in accordance with the provisions of such
Assignment.
Owner and Agent also contemplate that Loans for Existing Facilities and
New Facilities will be obtained by Owner at Additional Closings pursuant to the
Loan Agreement, each in the aggregate principal amount of 96.98% of the
respective Costs of the Properties. Owner agrees with Agent that it will (i)
forward to Agent copies of all notices received or given by Owner under the Loan
Agreement and (ii) not agree to or enter into any consent, waiver, approval,
modification or amendment under the Loan Agreement or any of the Deeds of Trust
without the prior written consent of Agent.
ARTICLE 5
CONDITIONS OF OWNER'S OBLIGATIONS
5.1 Conditions to the Closings. The obligations of Owner to enter into
the applicable Operative Documents and amendments with respect to a Closing for
any Properties, and to make any Owner Advances in connection therewith are
subject to (a) the accuracy and correctness as of the applicable Closing Date of
the representations and warranties of Agent contained herein with respect to
such Property, (b) the accuracy and correctness as of the applicable Closing
Date of the representations of Agent contained in each of the Operative
Documents and in any other document or certificate delivered pursuant hereto or
thereto with respect to such Property, (c) the performance by Agent of its
agreements contained herein and to be performed by it on or prior to
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the applicable Closing Date, and (d) the satisfaction or waiver by Owner of all
of the following conditions:
5.1.1 Operative Documents. Each of the following documents
with respect to each Property (herein, collectively, the "Operative Documents")
shall have been duly authorized, executed and delivered by the parties thereto,
shall be in full force and effect and no Default or Event of Default shall exist
thereunder, and special counsel to Owner, Agent, Beneficiary, Agent Bank and LC
Issuer shall each have received on Lessor's, Agent's, Beneficiary's or LC
Issuer's behalf, as the case may be, a fully executed copy of each of such
documents (or, for Additional Properties, an amendment thereto):
(a) this Agreement;
(b) the Lease (and at each Additional Closing, a
Supplement to the Lease with respect to each Property
shall be entered into as contemplated by the Lease);
(c) the Memorandum of Lease or such Supplement;
(d) the Loan Agreement;
(e) the Notes in the form contemplated by the Loan Agreement;
(f) a Deed of Trust to Agent Bank with respect to such Property;
(g) the Assignment;
(h) the Letter of Credit;
(i) the Reimbursement Agreement;
(j) the LC Security Documents;
(k) the Owner Trust Agreement;
(l) the Deed with respect to such Property;
(m) the Assignment of Guaranty; and
(n) the Guaranty.
The Operative Documents or memoranda or short forms thereof shall have
been recorded, registered and filed, if necessary (or delivered to the Title
Company for recordation, registration or filing, as the case may be), in such
manner as to impart notice thereof and/or to perfect the lien thereof and to
enable local counsel in each state in which a Property is located, special
counsel to Owner and Beneficiary and special counsel to Agent to render the
opinions referred to in Section 5.1.6.
5.1.2 Taxes. All taxes, fees and other charges in connection
with the execution, delivery, recording, filing and registration of this
Agreement and the other Operative Documents shall have been paid (or, with
respect to recording, filing or registration fees, sufficient funds therefor
shall have been deposited with the Title Company).
5.1.3 Status of Title. Owner shall have a valid fee simple
interest in the Land Parcel and all Existing Improvements located thereon with
respect to such Property, free and
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clear of all liens, encumbrances, charges and other exceptions to title, except
for Permitted Encumbrances.
5.1.4 Title Insurance. Owner shall have received a policy of
owner's title insurance with respect to such Property and Agent Bank and LC
Issuer shall have each received a policy of mortgage title insurance, on
American Land Title Association standard policy, revised coverage, form formerly
known as 1970 form (or commitments therefor) from a title insurance company
acceptable to Owner and Agent Bank and dated the applicable Closing Date, which
policies or commitments and all reinsurance agreements shall insure the
applicable Loan as fully disbursed and shall otherwise be satisfactory to Owner,
Agent Bank and LC Issuer in form, substance (including affirmative coverages and
endorsements) and amount.
5.1.5 Survey; Zoning. At least fifteen days prior to such
Closing, Owner, Agent Bank, Beneficiary and LC Issuer have received an
instrument survey plan of the Land Parcel with respect to such Property, showing
all Existing Improvements located thereon, satisfactory in form and substance to
Owner, Agent Bank, Beneficiary and LC Issuer and certified to Owner, Agent Bank,
Beneficiary, LC Issuer and the Title Company, by a surveyor licensed in the
State in which such Property is located. Owner shall have received evidence
reasonably satisfactory to Owner, Agent Bank, Beneficiary and LC Issuer that the
Land Parcel with respect to such Property is properly zoned for the construction
and use of such Property contemplated hereby.
5.1.6 Opinions of Counsel. Owner, Agent Bank, Beneficiary and
LC Issuer shall have received opinions from special counsel to Owner, from local
counsel in each state in which such Property is located, and from counsel to
Agent and Guarantor. Each opinion shall be dated the applicable Closing Date and
be addressed to and in form and substance satisfactory to Owner, Agent Bank,
Beneficiary, LC Issuer and their respective special counsel. Without limiting
the foregoing, Owner, Bank and Agent Bank shall have received such opinions and
assurances as each shall require that each is either qualified to transact
business as a foreign corporation in the state in which the applicable Property
is located, or has been advised by local counsel that such qualification is not
necessary in such state in order to engage in the transactions contemplated by
this Agreement.
5.1.7 Certificates. Owner, Agent Bank, Beneficiary and LC
Issuer shall have received certificates of Agent, Owner and Guarantor, each
dated as of the applicable Closing Date and reasonably satisfactory in form and
substance to Owner, Agent Bank, Beneficiary and LC Issuer.
5.1.8 Legal Restrictions. Neither Owner, Agent Bank,
Beneficiary nor LC Issuer shall be prohibited or restricted by law from engaging
in the transactions contemplated hereby on the Closing Date. The transactions
contemplated by this Agreement on the terms and conditions herein provided shall
not violate any applicable law or governmental regulation and shall not subject
Owner, Agent Bank, Beneficiary or LC Issuer to any tax, penalty, liability or
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other onerous condition under or pursuant to any applicable law or governmental
regulation on the applicable Closing Date.
5.1.9 No Adverse Change. There shall have been no material
adverse change in the condition, financial or otherwise, of Guarantor and its
Subsidiaries since December 31, 1997.
5.1.10 Environmental Reports. At least 15 days prior to the
Closing Date, Owner, Agent Bank, Beneficiary and LC Issuer shall have received a
copy of a "Phase I" and, if requested by Owner, Agent Bank, Beneficiary or LC
Issuer in its reasonable judgment based upon the "Phase I" with respect thereto,
a "Phase II" environmental site assessment report(s) for such Property,
addressed to Owner, Agent Bank, Beneficiary and LC Issuer or accompanied by a
letter permitting Owner, Agent Bank, Beneficiary and LC Issuer to rely thereon,
performed by an independent environmental engineer selected or approved by Owner
and satisfactory to Agent Bank, Beneficiary and LC Issuer. If any such
environmental site assessment report reveals the need for additional review for
such Property, Agent shall have provided such additional environmental site
assessment reports as are required by Owner, Agent, Beneficiary or LC Issuer and
any remediation recommended therein to be performed shall have been performed to
the satisfaction of Owner, Agent Bank, Beneficiary and LC Issuer. Owner, Agent
Bank, Beneficiary or LC Issuer shall notify Agent of any unsatisfactory
conditions, and if such conditions are not cured within a reasonable time period
to the satisfaction of Owner, Agent Bank, Beneficiary and LC Issuer (but in no
event less than seven days prior to such Closing Date), such Property shall not
become an Existing Facility or a New Facility hereunder and Agent shall have no
right or authorization to act on behalf of Owner with respect to such Property
or to receive any reimbursements for Costs of the Property with respect thereto.
5.1.11 Evidence of Insurance. Owner and Agent Bank each shall
have received a certificate relating to insurance substantially in the form of
Schedule J to the Lease, together with policies or certificates of insurance
evidencing the compliance by Agent with the provisions of Article 13 of the
Lease.
5.1.12 Closing of Loans and Equity Investment. The applicable
Loan shall have closed with respect to such Property, any Equity Investment with
respect to such Property shall have been made such that the aggregate Equity
Investment with respect to all Properties shall at no time be less than 3.02% of
the Cost of the Properties, the Letter of Credit shall have been issued or
amended with respect to such Property and delivered to Agent Bank and Owner
shall be entitled to and shall have received the advance of the proceeds of the
applicable Loan with respect to each Property.
5.1.13 Proceedings and Documents. All opinions, certificates
and other instruments required hereunder with respect to such Property or by any
other Operative Document with respect to such Property, and all proceedings in
connection with the transactions contemplated by this Agreement with respect to
such Closing shall be reasonably satisfactory in form and substance to Owner,
Agent Bank, Beneficiary, LC Issuer and their respective special
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counsel. Owner, Agent Bank, Beneficiary and LC Issuer shall have received copies
of all instruments and other evidence as Owner, Agent Bank, Beneficiary or LC
Issuer may reasonably request, in form and substance satisfactory to Owner,
Agent Bank, Beneficiary, LC Issuer and their respective special counsel, with
respect to such transactions and the taking of all corporate proceedings in
connection therewith. If any provision of this Agreement requires the
certification of the existence or non-existence of any particular fact or
implies as a condition the existence or non-existence of such fact, then Owner
shall be free after notice to and consultation with Agent to establish to its
reasonable satisfaction the existence or non-existence of any such fact.
5.1.14 Fees and Expenses. Subject to the provisions of Section
10 hereof, Agent shall have made adequate provision for payment or reimbursement
to Owner, Agent Bank, the Lenders, Beneficiary and LC Issuer of all out of
pocket expenses and counsel fees reasonably incurred by each of them in
connection with the transactions contemplated by this Agreement and the other
Operative Documents with respect to such Property. In connection with out of
pocket expenses and counsel fees of the Lenders, it is expressly agreed that the
payment and reimbursement obligations hereof shall apply only to Lenders'
Counsel as counsel to the group of Lenders.
5.1.15 Requisition. Agent Bank shall have received a
Requisition from Agent with respect to such Property in the form required by the
Loan Agreement. The Requisition shall comply with all requirements hereof and of
the Loan Agreement, shall be subject to review and approval by Agent Bank and
shall set forth the dollar amount of any Additional Equity Investment required
in connection therewith.
5.1.16 Appraisals. Agent shall have provided, at its sole cost
and expense, an Appraisal of the Property, addressed to Owner, Beneficiary and
LC Issuer or accompanied by a letter permitting Owner, Beneficiary and LC Issuer
to rely thereon, satisfactory in form and substance to Agent Bank, Owner,
Beneficiary and LC Issuer. Without limiting the generality of the foregoing,
each such Appraisal shall indicate an estimated fair market value and useful
life of the subject Property at the time of such Closing. Further, without
limiting the generality of the foregoing, in order for such Appraisal to be
satisfactory to Beneficiary, such Appraisal must establish to Beneficiary's
satisfaction that the Equity Investment does not exceed the fair market value of
the Property as of the applicable Closing Date.
5.1.17 Other Requirements. Owner, Agent Bank, Beneficiary and
LC Issuer shall have received such other documents, reports, and other materials
as any of them may reasonably request with respect to such Property evidencing
Agent's compliance with the terms and conditions of this Agreement.
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ARTICLE 6
CONDITIONS OF AGENT'S OBLIGATIONS AT CLOSINGS
The obligations of Agent to enter into those Operative Documents to
which Agent is a party (or amendments or supplements thereof, as applicable) are
subject to (a) the accuracy and correctness of the representations and
warranties of Owner contained herein, (b) the accuracy and correctness of the
representations of Owner and Beneficiary contained in each of the Operative
Documents and in any other document or certificate delivered pursuant hereto or
thereto, (c) the performance by (x) Owner of its agreements contained herein and
to be performed by it and (y) Beneficiary of their respective agreements
contained in the Owner Trust Agreement and to be performed by each thereof, in
each case on or prior to the date of each Closing, and (d) the satisfaction or
waiver by Agent of all of the following conditions:
6.1 Operative Documents. Each of the Operative Documents (including, as
required, amendments and supplements thereto) shall have been duly authorized,
executed and delivered by the parties thereto, shall be in full force and effect
and no Default or Event of Default shall exist thereunder, and counsel to Agent
shall have received on Agent's behalf a fully executed copy of each of such
documents.
6.2 Opinions of Counsel. Agent shall have received from special counsel
to Owner an opinion dated the applicable Closing and addressed to and in form
and substance satisfactory to Agent.
6.3 Certificates. Agent shall have received a certificate of Owner,
dated the applicable Closing Date, satisfactory in form and substance to Agent.
6.4 Legal Restrictions. Agent shall not be prohibited or restricted by
law from engaging in the transactions contemplated by this Agreement on the
applicable Closing Date. The transactions contemplated by this Agreement on the
terms and conditions herein provided shall not violate any applicable law or
governmental regulation and shall not subject Agent, to any tax, penalty,
liability or other onerous condition under or pursuant to any applicable law or
governmental regulation.
6.5 Equity Investment. Agent shall have received the Equity Investment
or Additional Equity Investment from Owner for application against the Cost of
the Properties.
<PAGE>
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ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF AGENT
Agent warrants and represents to Lender, Owner, Bank, Agent Bank,
Beneficiary and LC Issuer as follows as of the each Closing Date and as to each
Property now or hereafter acquired:
7.1 Organization and Power. Agent (a) is a corporation duly formed,
validly existing and in good standing under the laws of the State of Delaware
and is duly qualified as a foreign corporation in all other jurisdictions in
which such qualification is required in order for Agent to carry on its business
as now conducted including without limitation each state in which any Property
is located, except where the failure to be so qualified will not have a material
adverse effect on Agent; and (b) has the full corporate power, authority and
legal right to lease each Existing Facility from Owner and to construct the
Completion Improvements and has the requisite corporate power and authority to
carry on its business as now conducted and to execute, deliver and perform the
Operative Documents to which it is a party.
7.2 Full Disclosure. No written statement delivered to Owner, Agent
Bank, Beneficiary or LC Issuer by Agent in connection with the negotiation of
the transactions contemplated hereby or contained in this Agreement or any other
Operative Document to which Agent is a party contains any untrue statement of a
material fact or omits a material fact necessary to make the statements
contained therein or herein not misleading in any material respect. There is no
fact peculiar to Agent which is not disclosed in writing which materially and
adversely affects Agent's ability to perform under the Lease or any other
Operative Document to which Agent is a party.
7.3 Litigation. There is no action, suit or proceeding pending, or to
the best of Agent's knowledge threatened, against or affecting Agent at law or
in equity before any court, or by or before any federal, state, municipal or
other governmental department, commission, board, bureau, agency, or
instrumentality or arbitrator which if adversely determined (i) individually or
in the aggregate would materially and adversely affect the performance by Agent
of its obligations under this Agreement or any other Operative Document to which
it is a party or the business and operations of Agent, taken as a whole, or (ii)
would affect in any material respect the consummation or validity of the
Operative Documents to which it is a party, or the transactions contemplated
thereby.
7.4 No Adverse Change. There has been no material adverse change in the
condition of Guarantor and its Subsidiaries, financial or otherwise, since
December 31, 1997.
7.5 No Defaults. No Default or Event of Default has occurred and is
continuing. Agent is not in default in the payment of the principal or interest
on any indebtedness for borrowed money or for its deferred purchase of property
or in default under any instrument or agreement under and subject to which any
such indebtedness has been issued or under any lease,
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in each case involving the likelihood of any actions or proceedings against it
which will materially and adversely affect Agent or its ability to perform under
this Agreement, under the Lease or any other Operative Document to which Agent
is a party.
7.6 No Violation. Neither the execution, delivery or performance by
Agent of this Agreement or the other Operative Documents to be delivered by
Agent nor compliance herewith with respect to any of the Properties or therewith
(a) conflicts or will conflict with or results or will result in a breach of or
constitutes or will constitute a default under (i) any law in effect as of the
Closing Date for such Property or (ii) any order, writ, injunction or decree of
any court or other governmental authority, or (b) results or will result in the
creation or imposition of any lien, charge or encumbrance upon its property
pursuant to such agreement or instrument except for Permitted Encumbrances.
Neither the execution, delivery or performance by the Agent of this Agreement,
or the Operative Documents to be delivered by Agent nor compliance by Agent
herewith or therewith conflicts or will conflict with or results or will result
in a breach of or constitutes or will constitute a default under (i) the
certificate of incorporation or by-laws of Agent or (ii) any agreement or
instrument to which Agent is a party or by which it is bound.
7.7 Agreements are Legal and Authorized. This Agreement and the other
Operative Documents to which Agent is a party have been duly authorized by Agent
as to all of the Properties by all necessary corporate action (including any
necessary action by its shareholders) and duly executed and delivered by it,
and, assuming the due authorization, execution and delivery thereof by the other
parties thereto, are legal, valid and binding obligations of Agent enforceable
against it in accordance with their respective terms.
7.8 Insurance. All insurance required by Article 13 of the Lease is in
effect with respect to each Property, and all premiums now due and payable in
respect of such insurance have been paid.
7.9 Consents. No consent, license, approval or authorization of, or
filing, registration or declaration with, or exemption or other action by, any
governmental or public body, authority, bureau or agency (including courts)
under the laws of the United States of America, the States of Delaware,
Massachusetts, Connecticut, or of any other state in which a Property is located
is required in connection with the execution and delivery or performance by
Agent of this Agreement or any other Operative Document to which it is a party,
except for such approvals, consents or permits which may be required as of the
date hereof in connection with the construction, use and occupancy of the
Properties (all of which have been obtained and are in full force except for
those that are not yet obtainable or are not material). All actions, consents
and approvals of Agent required to be performed on or prior to the Closing Date
for such Property in connection with the issuance of the related Note and the
making of the Equity Investment and the transactions contemplated by the
Operative Documents have been performed in accordance with their respective
terms or have been obtained and remain in full force and effect as of each
Closing Date.
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7.10 Approvals. Agent holds or, if not required on the date hereof,
will obtain in the ordinary course on or before the date required all licenses,
certificates, consents, approvals, and permits from governmental authorities
materially necessary to perform any Completion Improvements in accordance with
the Lease, to use and operate each Property in accordance with the provisions
hereof and of the Lease and to enter into and perform this Agreement, the Lease
and the other Operative Documents.
7.11 Compliance; Taxes. Each Existing Facility and each New Facility,
will comply in all material respects with all applicable Legal Requirements.
Agent will use and occupy each Property, and each Property is acceptable (or
will be upon completion of the Completion Improvements) to Agent, for its
business purposes. There has been no material damage to any Property nor are any
condemnation or eminent domain proceedings pending, or to Agent's knowledge,
threatened with respect thereto. Agent is not in default in the payment of any
taxes levied or assessed against it or its assets, non-payment of which would
materially and adversely affect Agent or its ability to perform under this
Agreement, under the Lease or any other Operative Document to which Agent is a
party.
7.12 Use of Advances. Agent has used or will use all Owner Advances
provided to it solely for application against the Cost of the Properties, as
agent of Owner, in accordance with the terms and conditions of this Agreement,
the Lease and the Loan Agreement.
7.13 Lease. Agent has unconditionally accepted and will unconditionally
accept each Leased Property under the Lease, no offset exists with respect to
any Basic Rent or other sums payable under the Lease and no Basic Rent or other
sum payable under the Lease has been prepaid.
7.14 Use. None of the Permitted Encumbrances applicable to any Property
interfere in any material respect with the intended use by Agent of such
Property.
7.15 ERISA. Agent is not entering into this Agreement or any other
Operative Document or transaction contemplated hereby or thereby, directly or
indirectly, in connection with any arrangement in any way involving any
"prohibited transaction," within the meaning of ERISA and the Code.
7.16 Property Related Information. All information provided by or on
behalf of Agent to the engineers in connection with the environmental site
assessment reports contemplated by Section 5.1.10 hereof or to the appraiser in
connection with any Appraisal contemplated by Section 5.1.16 hereof is true,
accurate and complete in all material respects.
7.17 Location of Office and Records. Agent's office and principal place
of business in the Commonwealth of Massachusetts is located in the City of
Boston and the office where Agent will keep its corporate records concerning the
Properties and the Operative Documents is in Boston or such other location as
the Agent shall indicate to Owner and Agent Bank in writing.
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Agent will notify Owner, Beneficiary, Agent Bank and LC Issuer promptly (but in
no event later than five Business Days after any such change) of any change in
any of the information set forth in this Section 7.17.
7.18 Brokers. Except for Placement Agent, Agent has not retained any
broker, finder or financial advisor in connection with the transactions
contemplated by the Operative Documents. Agent will hold the Indemnified Parties
harmless from any fee due Placement Agent or in connection with any breach of
the representations contained in the first sentence of this Section 7.18.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF OWNER
Owner and, to the extent set forth in the last paragraph of this
Article 8, Bank, represent and warrant to Agent as follows as of the each
Closing Date:
8.1 Organization and Power. (a) Bank is a national banking association,
duly formed, validly existing and in good standing under the laws of the United
States and duly qualified to transact business in Connecticut; and (b) Owner and
Bank have the full corporate power and authority and all necessary licenses and
permits pertaining to its banking and trust powers under the laws of the United
States of America (i) to execute, deliver and perform the terms and provisions
of this Agreement and the other Operative Documents to which Owner is a party,
and (ii) to acquire and hold a fee estate in each Property. All of the
Beneficial Interest is owned by Beneficiary. Owner is not engaged and shall not
engage in any other business and has and shall have no other liabilities; in
each case except as expressly permitted by this Agreement and the other
Operative Documents.
8.2 Agreements Legal and Authorized. This Agreement and the other
Operative Documents to which Owner is a party have been duly authorized by Owner
and Bank by all necessary corporate action and duly executed and delivered by it
and, assuming the due authorization, execution and delivery thereof by the other
parties thereto, are legal, valid and binding obligations of Owner, enforceable
against it in accordance with their respective terms.
8.3 Litigation. There is no action, suit or proceeding pending, or to
the best of Owner's or Bank's knowledge threatened, against or affecting Owner
or Bank at law or in equity before any court, or by or before any federal,
state, municipal or other governmental department, commission, bound, bureau,
agency, or instrumentality or arbitration which, if adversely determined, would
materially and adversely affect any Property or would question the right, power
and authority of Owner or Bank to enter into or perform this Agreement or any
other Operative Document to which it is a party.
<PAGE>
- 17 -
8.4 No Violation. Neither the execution, delivery or performance by
Owner of this Agreement or the other Operative Documents to be delivered by
Owner nor compliance herewith or therewith (a) conflicts or will conflict with
or results or will result in a breach of or constitutes or will constitute a
default under (i) any law in effect as of the date of delivery of this Agreement
or (ii) any order, writ, injunction or decree of any court or other governmental
authority, or (b) results or will result in the creation or imposition of any
lien, charge or encumbrance upon its property pursuant to such agreement or
instrument, except the liens and security interests created, and as permitted,
by the Operative Documents. Neither the execution, delivery or performance by
the Owner of this Agreement, or the Operative Documents to be delivered by Owner
nor compliance by Owner herewith or therewith conflicts or will conflict with or
results or will result in a breach of or constitutes or will constitute a
default under (i) the certificate of incorporation or by-laws of Owner or Bank
or (ii) any agreement or instrument to which Owner or Bank is a party or by
which it is bound.
8.5 Consents. No consent, license, approval or authorization of, or
filing, registration or declaration with, or exemption or other action by, any
governmental or public body, bureau or agency (including courts) under the laws
of the United States of America or the State of Connecticut is required in
connection with the execution and delivery or performance by Owner of this
Agreement or any other Operative Document to which Owner is a party.
The foregoing representations are made by Owner not in its individual
capacity but solely as Trustee under the Owner Trust Agreement, except with
respect to the following representations which are made by Bank in its
individual capacity: the representations in the first sentence of Section 8.1,
the first clause of Section 8.2 (i.e., as to Bank's corporate authority to
execute and deliver the Operative Documents), the matters contained in Section
8.3 as they relate to any such proceedings affecting Bank in its individual
capacity, the matters set forth in Section 8.4 to the extent that they relate to
agreements to which Bank is a party in its individual capacity and the matters
set forth in Section 8.5 to the extent that they relate to laws of the United
States of America applicable to Bank in its individual capacity pertaining to
its banking or trust powers.
ARTICLE 9
DEFAULTS AND REMEDIES
9.1 Events of Default. Any of the following shall constitute an Event
of Default by Agent under this Agreement and under all of the Operative
Documents:
(a) If Agent defaults in making payment of any sum payable
hereunder and such default continues for two days; or
(b) If, as of the time when the same shall have been made or
repeated, any representation or warranty of Agent set forth herein or in any
consent, notice, certificate, demand, request or other instrument delivered by
or on behalf of Agent in connection with or
<PAGE>
- 18 -
pursuant to this Agreement or any of the Operative Documents or the transactions
contemplated hereby or thereby shall prove to have been incorrect or misleading
in any material respect when made; or
(c) If Agent defaults in the performance in any covenant,
agreement, or obligation on the part of Agent to be performed under this
Agreement, and such default continues for a period of 30 days after notice
thereof from Owner; or
(d) An Event of Default, as defined in the Lease shall have
occurred and be continuing under the Lease; or
(e) An Event of Default shall occur and be continuing under
the Guaranty, or any default shall occur and be continuing under the Assignment
or the Assignment of Guaranty.
9.2 Remedies. After any Event of Default hereunder, Owner shall have
all rights and remedies available at law and in equity and without limiting the
generality of the foregoing, may elect to exercise any or all of the following
remedies which shall be cumulative and not exclusive:
(a) Terminate Agent's authority and all of Agent's rights and
privileges under this Agreement;
(b) Exercise all rights and remedies under any or all of the
Operative Documents, including, without limitation, demand payment of liquidated
damages under clause (v) of paragraph (c) of Article 22 of the Lease;
(c) Demand immediate payment of all sums due hereunder
together with interest thereon at the Overdue Rate until paid; and
(d) Recover from Agent all other damages and expenses that
Owner may have sustained by reason of the Event of Default, including, without
limitation, reasonable attorneys' fees and expenses, which damages and expenses
shall be paid by Agent as they are incurred by Owner, together with interest
thereon at the Overdue Rate until paid.
9.3 Costs of Enforcement. If an action shall be brought by Owner for
the enforcement of any provision of this Agreement, Agent shall pay to Owner all
out-of-pocket costs and other expenses that may become payable as a result
thereof, including, without limitation, reasonable attorneys' fees and expenses.
9.4 Cumulative Remedies. No right or remedy herein conferred upon or
reserved to Owner is intended to be exclusive of any other right or remedy and
every right and remedy shall be cumulative and in addition to any other legal or
equitable right or remedy given hereunder, or at any time existing. The failure
of Owner to insist upon the strict performance of any provision
<PAGE>
- 19 -
or to exercise any option, right, power or remedy contained in this Agreement
shall not be construed as a waiver or a relinquishment thereof for the future.
ARTICLE 10
MISCELLANEOUS
10.1 Governing Law; Jurisdiction and Venue. This Agreement shall be
construed and enforced in accordance with, and governed by, the laws of the
Commonwealth of Massachusetts. Agent hereby agrees to non-exclusive personal
jurisdiction and venue in the state courts of the Commonwealth of Massachusetts
and the United States District Courts located in the City of Boston and
Commonwealth of Massachusetts, the choice of such forum to be at Owner's sole
discretion.
10.2 Notices; Modification; Waiver. (a) All notifications, notices,
demands, requests and other communications herein provided for or made pursuant
hereto shall be in writing and shall be sent by (i) registered or certified
mail, return receipt requested, and such communication shall be deemed complete
on the third Business Day after the same is deposited in a United States Post
Office with postage charges prepaid, or (ii) reputable overnight delivery
service and the giving of such communication shall be deemed complete on the
immediately succeeding Business Day after the same is deposited with such
delivery service: (a) if to Owner, addressed to such party at 10 State House
Square, Hartford, Connecticut 06103, Attention: Corporate Trust Administration,
or (b) if to Agent, addressed to such party at 745 Atlantic Avenue, Boston,
Massachusetts 02110, Attention: Treasurer, or at such other address as Owner or
Agent shall have specified to the other in writing, and, except as otherwise set
forth above, such notifications, notices, demands, requests or other
communications shall be deemed given on the date of receipt.
(b) This Agreement may not be modified or discharged except by an
instrument in writing executed by Owner and Agent. No requirement hereof may be
waived at any time except by an instrument in writing signed by the party
against whom such waiver is sought, nor shall any waiver be deemed a waiver of
any subsequent breach or default of Agent.
10.3 Illegal Provision. If any provision herein contained shall be held
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision hereof, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
10.4 Binding Effect; Third Party Beneficiary. (a) The covenants,
conditions and agreements herein contained shall bind, and the benefits and
advantages shall inure to, the respective heirs, executors, administrators,
successors and assigns of the parties hereto. Agent acknowledges that Owner's
rights hereunder, but not Owner's obligations, are being assigned to Agent and
that Agent may exercise all of Owner's rights under this Agreement in accordance
<PAGE>
- 20 -
with the provisions hereof and of the Assignment. Whenever used, the singular
shall include the plural, the plural include the singular and the use of any
gender shall include all genders.
(b) Agent Bank, Lenders, Beneficiary and LC Issuer shall be third party
beneficiaries of this Agreement with respect to those provisions that explicitly
or implicitly are for the benefit of Agent Bank, Lenders, Beneficiary or LC
Issuer.
10.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same instrument.
10.6 Headings. The Table of Contents preceding this Agreement and the
headings to the various sections of this Agreement have been inserted for the
convenience of reference only and shall not limit or otherwise affect any of the
terms hereof.
10.7 Reproduction of Documents. This Agreement and all documents
relating thereto, (except any notes) including, without limitation, (a)
consents, waivers and modifications which may hereafter be executed, (b)
documents delivered at any closing, and (c) financial statements and other
information previously or hereafter furnished to either party, may be reproduced
by any photographic, photostatic, microfilm, micro-card, miniature photographic
or other similar process, and such party may destroy any original document so
reproduced. Owner and Agent each stipulate that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by such party in the regular course of business) and that
any enlargement, facsimile or further reproduction of such reproduction shall
otherwise be admissible in evidence.
10.8 Time of Essence. Time is of the essence of this Agreement.
10.9 Payment of Expenses. Agent shall pay or cause to be paid,
regardless of whether the transactions contemplated hereunder shall occur, the
reasonable fees and expenses of Owner, Agent Bank, Lenders, Beneficiary, LC
Issuer, and their respective counsel, including local counsel (it being
understood that such costs shall not include the costs of any special counsel
retained by any individual Lender (other than Lenders' Counsel) to represent
such Lender separately prior to any Event of Default), together with all other
reasonable out-of-pocket expenses incurred by such parties for third-party
costs, whether or not capitalized by Agent, including but not limited to fees
and expenses of consultants, appraisal fees, environmental site assessment
costs, title insurance fees, survey costs, transfer costs and recordation fees,
in connection with each Closing regardless of whether the transactions
contemplated hereby are consummated. Agent shall pay or cause to be paid from
time to time the fees of Bank for its trust services as Owner and Trustee under
the Owner Trust Agreement. Agent agrees to indemnify and hold harmless the
Indemnified Parties from and against any and all liability and loss with respect
to or resulting from the non-payment or delayed payment of any of the foregoing
fees and
<PAGE>
- 21 -
expenses including any interest or penalties thereon, and from and against any
and all finders' or brokerage fees and commissions that may be payable to any
party claiming to have dealt with, or acted on behalf of Agent, in connection
with any of the transactions contemplated hereunder.
10.10 Advisory Fee. In connection with the transactions contemplated by
this Agreement, Agent shall pay a fee to Placement Agent as set forth in a
separate fee agreement between the parties.
10.11 Limitations on Liability. Anything in this Agreement to the
contrary notwithstanding, except for the representations made (w) by Owner in
its individual capacity as set forth in Article 8 hereof, (x) set forth in
Article 6 of the Loan Agreement, (y) set forth in Section 3.5 of the Owner Trust
Agreement with respect to Beneficiary, and (z) with respect to Lessor Liens, it
is understood and agreed that (irrespective of any breach of any representation,
covenant, agreement or undertaking of any nature whatsoever made in this
Agreement), no recourse shall be had under any rule of law, statute or
constitution or by the enforcement of any assessments or penalties or otherwise
for the payment of any sum hereunder or for any other claim hereunder against
(i) Owner, Bank, except for their gross negligence, fraud or willful misconduct,
Deed of Trust Trustee, Beneficiary or any other holder of the Beneficial
Interest, or any past, present or future Affiliate, partner, officer, director,
any owner, shareholder, agent or employee of or in any thereof or of any partner
thereof or their legal representatives, successors or assigns, (ii) any
Subsequent Owner except as a result of its gross negligence, fraud or willful
misconduct or (iii) any Person for whom Owner, Bank, Deed of Trust Trustee,
Beneficiary or any other holder of the Beneficial Interest was or was purporting
to be acting as an agent for the account and benefit of such Person in entering
into the transactions evidenced by this Agreement. Subject to the exceptions set
forth above, it is expressly understood that by the execution of this Agreement
all such liability (a) of Owner, Bank, Deed of Trust Trustee, Beneficiary or any
other holder of the Beneficial Interest or any past, present or future
Affiliate, partner, officer, director, any shareholder, agent or employee
thereof or director or shareholder of any partner thereof or any of their
respective legal representatives, successors or assigns, (b) of any Subsequent
Owner or (c) of such other Person, is and is being expressly waived and released
as a condition of and as a consideration for the execution of this Agreement by
Owner, that Agent and its successors and assigns as agent hereunder agree to
look solely to the Properties for the payment of any such sums or satisfaction
of any such other claims.
In addition to and not in limitation of the foregoing, it is understood
and agreed that (i) this Agreement is executed and delivered by Bank, not in its
individual capacity but solely as trustee under the Owner Trust Agreement in the
exercise of the power and authority conferred and vested in it as such trustee,
(ii) (except as pertaining to Owner Liens attributable to Owner and except as
expressly set forth in Article 8 hereof with respect to certain representations
made by Bank in its individual capacity) each of the representations,
undertakings and agreements made herein by Owner are not personal
representations, undertakings and agreements of Bank, but are binding only on
Owner, as trustee and (iii) actions to be taken by Owner pursuant to its
<PAGE>
- 22 -
obligations hereunder may, in certain instances, be taken by Owner only upon
specific authority of Beneficiary as provided in the Owner Trust Agreement.
10.12 Conveyance of Houston Parcel. Notwithstanding any other provision
of this Agency Agreement or any other Operative Document, in no event shall any
Advance or Loan be made in connection with the Houston Parcel. The Agent hereby
covenants and agrees to cause the Houston Parcel to be conveyed from the Owner
to a third party by not later than November 15, 1998, upon terms and conditions
acceptable to Owner and the Agent Bank. Upon such conveyance, the Houston Parcel
shall cease to be a Property or Leased Property under the Operative Documents.
10.13 Louisiana Provisions. As to any Property located in Louisiana,
Owner shall mean and include both Iron Mountain Statutory Trust - 1998, a
Connecticut statutory trust having an address at c/o First Union National Bank,
10 State House Square, Hartford, Connecticut 06103 and First Union National Bank
as trustee of the Iron Mountain Statutory Trust - 1998 Louisiana Subtrust, such
subtrust being referred herein as the "Louisiana Subtrust". All references
hereunder to the Owner shall be deemed to include the Louisiana Subtrust as
applicable.
<PAGE>
IN WITNESS WHEREOF, the undersigned set their hands under seal
as of the day and year first above written.
IRON MOUNTAIN STATUTORY TRUST - 1998
BY: FIRST UNION NATIONAL BANK, not in its
individual capacity except as expressly set forth
herein, but solely as Trustee under the Amended
and Restated Owner Trust Agreement dated as of
October 1, 1998
By: /s/ Diane M. Welsh
Name: Diane M. Welsh
Title: Vice President
IRON MOUNTAIN RECORDS MANAGEMENT, INC.
By: /s/ John P. Lawrence
Name: John P. Lawrence
Title: Vice President and Treasurer
<PAGE>
THUS DONE, READ AND SIGNED, as of the day, month and year first written
above in the City of Boston, County/Parish of Suffolk, Commonwealth of
Massachusetts, in the presence of the undersigned competent witnesses, who
hereunto sign their names with the undersigned and with me, notary, after due
reading of the whole.
WITNESS: FIRST UNION NATIONAL BANK, a national
banking institution, not in its individual
capacity, but solely as Trustee of the IRON
MOUNTAIN STATUTORY TRUST - 1998 LOUISIANA
/s/ Scott C. Altonian SUBTRUST
Name: Scott C. Altonian
/s/ Louise A. Handler By: /s/ Diane M. Welsh
Name: Louise A. Handler Name: Diane M. Welsh
Title: Vice President
IRON MOUNTAIN RECORDS MANAGEMENT, INC.
By: /s/ John P. Lawrence
Name: John P. Lawrence
Title: Vice President and Treasurer
/s/ Carolyn D. Killian
Printed Name: Carolyn D. Killian
NOTARY PUBLIC
My Commission Expires: 11/22/02
[SEAL]
Exhibit 21
<TABLE>
<CAPTION>
LIST OF SUBSIDIARIES OF REGISTRANT
Subsidiaries Jurisdiction of Incorporation
------------ -----------------------------
<S> <C>
Iron Mountain Records Management, Inc. DE
Data Securities International, Inc. DE
Iron Mountain/Safesite, Inc. DE
Iron Mountain Records Management of Ohio, Inc. DE
IM San Diego, Inc. DE
Iron Mountain Consulting Services, Inc. DE
Iron Mountain Records Management of San Antonio-FP, Inc. DE
Iron Mountain Records Management of San Antonio, Inc. DE
Criterion Atlantic Property, Inc. DE
Hollywood Property, Inc. CA
IM Earhart, Inc. DE
IM Billerica, Inc. MA
Iron Mountain Records Management of Michigan, Inc. DE
Iron Mountain Safe Deposit Corporation MI
National Underground Storage Inc. PA
Iron Mountain Records Management of Maryland, Inc. DE
Iron Mountain Records Management of Missouri, LLC DE
Arcus Data Security, Inc. DE
Towler Data Services, Inc. OK
Arcus Data Security Limited (UK) (UK)
HIMSCORP of Philadelphia, Inc. DE
HIMSCORP of Pittsburgh, Inc. DE
HIMSCORP of New Orleans, Inc. DE
HIMSCORP of San Diego, Inc. DE
HIMSCORP of Los Angeles, Inc. DE
Recordkeepers, Inc. MD
HIMSCORP of Cleveland, Inc. DE
HIMSCORP of Portland, Inc. DE
<PAGE>
<CAPTION>
Subsidiaries Jurisdiction of Incorporation
------------ -----------------------------
<S> <C>
HIMSCORP of Detroit, Inc. DE
HIMSCORP of Houston, Inc. DE
Copyright, Inc. DE
IM-AEI Acquisition Corp. DE
Iron Mountain Records Management of Utah, Inc. DE
Arcus Staffing Resources, Inc. DE
Records and Filing Consultants, Inc. OH
Commercial Archives, Inc. NY
Iron Mountain Global, Inc. DE
</TABLE>
2
Exhibit 23.1
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-4 of our reports dated March
13, 1998, February 25, 1998 and August 21, 1998 for Sloan Vaults, Inc. and
Affiliate, Midwest Records Management and InterMation, Inc., respectively,
included in Iron Mountain Incorporated's Form 8-K filed with the Securities and
Exchange Commission on September 18, 1998, and to all references to our Firm
included in this registration statement.
/s/ Arthur Andersen LLP
San Diego, California
Omaha, Nebraska
Seattle, Washington
November 13, 1998
Exhibit 23.2
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-4 of our report dated July
30, 1998 for National Underground Storage, Inc. included in Iron Mountain
Incorporated's Form 8-K/A filed with the Securities and Exchange Commission on
August 7, 1998, and to all references to our Firm included in this registration
statement.
/s/ Carbis Walker & Associates, LLP
Butler, Pennsylvania
November 13, 1998
Exhibit 23.3
Consent of Independent Public Accountants
We consent to the reference to our firm under the caption "Experts" in this
Registration Statement on Form S-4 of Iron Mountain Incorporated to be filed on
or about November 19, 1998 and to the incorporation by reference therein of our
report dated February 23, 1998, with respect to the consolidated financial
statements of Arcus Technology Services, Inc. and Arcus, Inc. (Predecessor
Company) included in Iron Mountain Incorporated's Form 8-K filed with the
Securities and Exchange Commission on March 9, 1998.
/s/ Ernst & Young LLP
Dallas, Texas
November 13, 1998
Exhibit 23.4
Consent of Independent Public Accountants
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement Form S-4 and related Prospectus of Iron Mountain
Incorporated for the registration of 2,500,000 shares of common stock and to the
incorporation by reference therein of our report dated February 21, 1997, with
respect to the consolidated financial statements of HIMSCORP, Inc. and
Subsidiaries included in Iron Mountain Incorporated's Form 8-K filed with the
Securities and Exchange Commission on November 25, 1997.
/s/ Ernst & Young LLP
Chicago, Illinois
November 13, 1998
Exhibit 23.5
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-4 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 Iron Mountain Incorporated's Form
8-K filed with the Securities and Exchange Commission on November 25, 1997, and
to all references to our Firm included in this registration statement.
/s/ Stout, Causey & Horning, P.A.
Cockeysville, Maryland
November 13, 1998
Exhibit 23.6
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-4 of our report dated August
7, 1997, for Records Retention/FileSafe included in Iron Mountain Incorporated's
Form 8-K filed with the Securities and Exchange Commission on November 25, 1997,
and to all references to our Firm included in this registration statement.
/s/ Abbott, Stringham & Lynch
Campbell, California
November 13, 1998
Exhibit 23.7
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-4 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 Iron Mountain Incorporated's Form
8-K filed with the Securities and Exchange Commission on October 30, 1997, and
to all references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
Minneapolis, Minnesota
Detroit, Michigan
San Jose, California
November 13, 1998
Exhibit 23.8
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-4 of our report dated August
8, 1997, for Concorde Group, Inc. and Neil Tucker Trust included in Iron
Mountain Incorporated's Form 8-K filed with the Securities and Exchange
Commission on October 30, 1997, and to all references to our Firm included in
this registration statement.
/s/ Fisher, Schacht & Oliver, LLP
Rochester, New York
November 13, 1998
Exhibit 23.9
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-4 of our reports dated March
14, 1997 for Safesite Records Management Corporation included in Iron Mountain
Incorporated's Form S-4/A filed with the Securities and Exchange Commission on
May 13, 1997, and to all references to our Firm included in this registration
statement.
/s/ Arthur Andersen LLP
Boston, Massachusetts
November 13, 1998
Exhibit 23.10
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-4 of our reports dated
February 20, 1998, for Iron Mountain Incorporated included in Iron Mountain
Incorporated's Form 10-K for the year ended December 31, 1997, filed with the
Securities and Exchange Commission on March 27, 1998, and to all references to
our Firm included in this registration statement.
/s/ Arthur Andersen LLP
Boston, Massachusetts
November 13, 1998
