PIERCE LEAHY CORP
S-1/A, 1997-05-27
PUBLIC WAREHOUSING & STORAGE
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<PAGE>
 
      
   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 27, 1997     
 
                                                     REGISTRATION NO. 333-23121
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                                 ------------
                                
                             AMENDMENT NO. 2     
                                      TO
                                   FORM S-1
                            REGISTRATION STATEMENT
                                     UNDER
                          THE SECURITIES ACT OF 1933
 
                                 ------------
 
                              PIERCE LEAHY CORP.
            (exact name of registrant as specified in its charter)
 
      PENNSYLVANIA                   4226                    23-2588479
     (State or other     (Primary Standard Industrial     (I.R.S. Employer
     jurisdiction of      Classification Code Number)    Identification No.)
    incorporation or
      organization)
 
                                631 PARK AVENUE
                      KING OF PRUSSIA, PENNSYLVANIA 19406
                                (610) 992-8200
  (Address, including zip code, and telephone number, including area code, of
                 the registrant's principal executive offices)
 
                              DOUGLAS B. HUNTLEY
                            CHIEF FINANCIAL OFFICER
                                631 PARK AVENUE
                      KING OF PRUSSIA, PENNSYLVANIA 19406
                                (610) 992-8200
(Name, address, including zip code, and telephone number, including area code,
                             of agent for service)
 
                                  COPIES TO:
      RICHARD J. BUSIS, ESQUIRE                  JOSEPH A. COCO, ESQUIRE
         COZEN AND O'CONNOR               SKADDEN, ARPS, SLATE, MEAGHER & FLOM
         1900 MARKET STREET                                LLP
  PHILADELPHIA, PENNSYLVANIA 19103                  919 THIRD AVENUE
                                                NEW YORK, NEW YORK 10022
 
  APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
 
  If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, 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, please 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(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
 
  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
 
  THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
 
                    
                 SUBJECT TO COMPLETION, DATED MAY 27, 1997     
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A         +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE   +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY  +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT        +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR   +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE      +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE    +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF  +
+ANY SUCH STATE.                                                               +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS
                                
                             5,312,614 SHARES     
[LOGO OF PIERCE                PIERCE LEAHY CORP.
LEAHY CORP. APPEARS              COMMON STOCK
     HERE]
                                   --------
   
  Of the 5,312,614 shares of Common Stock of Pierce Leahy Corp. (the "Company")
offered hereby, 5,100,000 shares are being sold by the Company and 212,614
shares are being sold by certain shareholders of the Company (the "Selling
Shareholders"). See "Principal and Selling Shareholders." The Company will not
receive any of the proceeds from the sale of shares by the Selling
Shareholders.     
   
  Of the 5,312,614 shares of Common Stock offered hereby, 4,250,091 shares are
being offered for sale in the United States and Canada (the "U.S. Equity
Offering") by the U.S. Underwriters (as defined herein) and 1,062,523 shares
are being offered in a concurrent international offering (the "International
Equity Offering" and, together with the U.S. Equity Offering, the "Equity
Offerings") outside the United States and Canada by the Managers (as defined
herein).     
   
  Prior to the Equity Offerings, there has not been a public market for the
Common Stock of the Company. It is currently estimated that the initial public
offering price will be between $15.00 and $18.00 per share. See "Underwriting"
for information relating to the factors considered in determining the initial
public offering price.     
 
  Concurrently with the Equity Offerings, the Company is offering $100,000,000
aggregate principal amount of  % Senior Subordinated Notes due 2007 by a
separate prospectus (the "Notes Offering" and together with the Equity
Offerings, the "Offerings"). The consummation of the Equity Offerings is not
conditioned upon the consummation of the Notes Offering.
   
  The Common Stock has been approved for listing on the New York Stock Exchange
under the symbol "PLH," subject to official notice of issuance.     
 
   SEE "RISK FACTORS" COMMENCING ON PAGE 10 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
                                    HEREBY.
 
                                   --------
 
THESE SECURITIES  HAVE NOT BEEN APPROVED  OR DISAPPROVED BY  THE SECURITIES AND
EXCHANGE COMMISSION  OR ANY STATE SECURITIES COMMISSION NOR HAS  THE SECURITIES
 AND EXCHANGE COMMISSION  OR ANY  STATE SECURITIES COMMISSION  PASSED UPON THE
 ACCURACY OR  ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION  TO THE CONTRARY
  IS A CRIMINAL OFFENSE.
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
                      UNDERWRITING              PROCEEDS TO
            PRICE TO DISCOUNTS AND  PROCEEDS TO   SELLING
             PUBLIC  COMMISSIONS(1) COMPANY(2)  SHAREHOLDERS
- ------------------------------------------------------------
<S>         <C>      <C>            <C>         <C>
Per Share     $           $            $            $
- ------------------------------------------------------------
Total(3)     $           $             $           $
</TABLE>    
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) For information regarding indemnification of the U.S. Underwriters and the
    Managers, see "Underwriting."
   
(2) Before deducting expenses estimated at $725,000, all of which are payable
    by the Company.     
   
(3) The Company and certain of the Selling Shareholders have granted the U.S.
    Underwriters a 30-day option to purchase up to an aggregate of 796,892
    additional shares of Common Stock solely to cover over-allotments, if any.
    See "Underwriting." If such option is exercised in full, the total Price to
    Public, Underwriting Discounts and Commissions, Proceeds to Company and
    Proceeds to Selling Shareholders will be $   , $   , $    and $   ,
    respectively.     
 
                                   --------
 
  The shares of Common Stock are being offered by the several U.S. Underwriters
named herein, subject to prior sale, when, as and if accepted by them and
subject to certain conditions. It is expected that certificates for the shares
of Common Stock offered hereby will be available for delivery on or about    ,
1997 at the office of Smith Barney Inc., 333 West 34th Street, New York, New
York 10001.
 
                                   --------
 
SMITH BARNEY INC.
            MERRILL LYNCH & CO.
                                                      
                                                   PAINEWEBBER INCORPORATED     
 
     , 1997
<PAGE>

    
[OUTSIDE GATEFOLD ARTWORK]      
 
     [Four color map of the United States and Canada with 45 plots indicating
North American Coverage]


CERTAIN PERSONS PARTICIPATING IN THE EQUITY OFFERINGS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK, 
INCLUDING OVER-ALLOTTING, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH 
SECURITIES, AND THE IMPOSITION OF A PENALTY BID.  FOR A DESCRIPTION OF THESE 
ACTIVITIES, SEE "UNDERWRITING."

<PAGE>

                               
                           [INSIDE GATEFOLD ARTWORK]      
 
        [Four color collage of 12 photographs, together with an illustrated flow
plan depicting the storage and retrieval process for a box]

<PAGE>
 
                               PROSPECTUS SUMMARY
   
  The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and financial
statements contained elsewhere in this Prospectus. Except as otherwise
indicated by the context, references to the "Company" include Pierce Leahy
Corp. and its consolidated subsidiaries. Management is not aware of any
definitive information about the size or nature of the North American records
management market (vended and unvended, active and inactive). Estimates of such
numbers and percentages contained in this Prospectus have been developed by the
Company from internal sources and reflect the Company's current estimates;
however, no assurance can be given regarding the accuracy of such estimates.
Unless otherwise indicated, the information in this Prospectus assumes (i) no
exercise of the U.S. Underwriters' over-allotment option and (ii) gives effect
to the Stock Recapitalization (as hereinafter defined) and the Offerings. In
addition, unless otherwise indicated, the pro forma financial information
regarding the Company in this Prospectus does not include the acquisition of
Advanced File Storage Systems described under "Business--The 1997 Acquisitions"
or the Pending Acquisitions described under "Business--Pending Acquisitions."
    
                                  THE COMPANY
   
  The Company is the largest archive records management company in North
America, as measured by its 50 million cubic feet of records currently under
management. The Company operates a total of 161 records management facilities
of which 148 are in the United States, serving 58 markets, including the 16
largest U.S. markets. In addition, the Company operates 13 records management
facilities in five of Canada's six largest markets.     
 
  The Company is a full-service provider of records management and related
services, enabling customers to outsource their data and records management
functions. The Company offers storage for all major media, including paper
(which has typically accounted for approximately 95% of the Company's storage
revenues), computer tapes, optical discs, microfilm, video tapes and X-rays. In
addition, the Company provides next day or same day records retrieval and
delivery, allowing customers prompt access to all stored material. The Company
also offers other data management services, including customer records
management programs, imaging services and records management consulting
services.
   
  The Company believes it is the most technologically advanced records
management company in the industry by virtue of its Pierce Leahy User
Solution(R) (PLUS(R)) computer system. The PLUS(R) system fully integrates the
Company's records management, data retrieval and billing functions on a
centralized basis through the use of proprietary, real-time software. The
PLUS(R) system assists the Company in efficiently managing records in multiple
locations for national and local customers, rapidly integrating acquisitions of
records management companies and maintaining a low-cost operating structure.
The Company serves a diversified group of over 22,000 customer accounts in a
variety of industries such as financial services, manufacturing,
transportation, healthcare and law. The Company's storage and related services
are typically provided pursuant to contracts that include recurring monthly
storage fees, which continue until such records are permanently removed (for
which the Company charges a fee), and additional charges for services such as
retrieval on a per unit basis.     
 
  The Company's revenues and operating income before non-recurring charges (on
a pro forma basis as defined herein) for the year ended December 31, 1996 were
$167.8 million and $23.4 million, respectively. From 1992 to 1996, the
Company's revenues and operating income before non-recurring charges grew at
compound annual growth rates of 19.9% and 28.7%, respectively. The Company
attributes this growth to the expansion of its business with new and existing
customers, which has been primarily driven by the trend towards outsourcing of
records management functions by companies and the ongoing consolidation of the
fragmented records management industry. The Company has successfully acquired
and integrated 26 companies from 1992 to 1996.
 
                                       3
<PAGE>
 
 
  The Company's growth strategy is to expand its business in new and existing
markets through (i) targeting new customers, (ii) growing with existing
customers and (iii) continuing its acquisition program. The Company has adopted
the following approaches to pursue its growth objectives:
     
  . Targeting New Customers. The Company has a dual sales strategy focused on
    both larger, typically multi-location accounts and smaller accounts, with
    a dedicated sales force for each. The Company's sales and marketing force
    has increased from 41 persons at the end of 1995 to 73 persons currently.
    For large regional and national accounts, the Company believes its
    national presence, sophisticated systems and low-cost operating structure
    provide a competitive advantage. These organizations are increasingly
    outsourcing such noncore activities, which enables their management to
    focus on their core business and to reduce space requirements and records
    management costs. For smaller accounts, the Company combines the cost
    benefits of its centralized systems with quality local service. From 1992
    to 1996, the average annual growth rate of cubic feet of storage from new
    customers was approximately 8%.     
 
  . Growing with Existing Customers. The Company services its existing
    customers through both a centralized customer service organization and
    local client service representatives. Existing customers typically
    generate additional records annually which are stored with the Company.
    From 1992 to 1996, the average annual growth rate of cubic feet of
    storage from existing customers was approximately 6%.
     
  . Continuing Acquisition Program. The Company believes that the records
    management industry is highly fragmented and offers substantial
    opportunity for consolidation. The Company targets potential acquisitions
    both in the markets it already services and in new markets which it is
    not yet servicing. From 1992 to 1996, the Company successfully completed
    and integrated 26 acquisitions, totalling approximately 12.4 million
    cubic feet of records at the time of acquisition. Since January 1, 1997,
    the Company has completed six acquisitions, totalling approximately 6.8
    million cubic feet of records at the time of acquisition. As a result of
    its centralized organizational structure and the PLUS(R) system, the
    Company has been able to rapidly achieve significant economies of scale
    in its acquisitions. From 1992 to 1996, the average annual growth rate of
    cubic feet of storage from acquisitions was approximately 10%. See
    "Business--Acquisition and Growth Strategy."     
 
  The Company's growth strategy is supported by an operating strategy which
emphasizes providing premium standardized services while maintaining a low-cost
operating structure. As a result, the Company's operating income before non-
recurring charges as a percentage of total revenues increased from 13.3% in
1992 to 17.7% in 1996. The Company expects to continue its growth and enhance
its position by implementing its strategy based on the following elements:
 
  . Using Sophisticated Centralized Systems to Provide High Quality
    Service. In tandem with the Company's centralized customer service
    organization and local field support personnel, the Company utilizes its
    PLUS(R) system to provide a high and consistent level of service (24
    hours a day, seven days a week) to its customers on a national and local
    basis, including providing its customers with real-time access to the
    database. Although PLUS(R) is centralized, the system permits local
    management flexibility through a variety of pre-programmed options to
    customize the system and enhance its utility to different types of
    customers.
 
  . Maintaining its Position as a Low-Cost Provider through Economies of
    Scale. The Company strives to remain a low-cost operator through
    achieving economies of scale in labor, real estate, transportation,
    computer systems and administrative expenses. The PLUS(R) system allows
    the Company to enhance the efficiency of its facilities while reducing
    fixed and operating costs. This system eliminates the need to designate
    permanent locations for an individual customer's records within a
    facility by using sophisticated bar-coding technology which enables
    records to be stored wherever space is available and to be positioned
    within the Company's facilities based on retrieval frequency, thereby
    reducing labor costs. PLUS(R) is similarly valuable in helping to achieve
    cost savings in acquisitions.
 
                                       4
<PAGE>
 
 
                        THE RECORDS MANAGEMENT INDUSTRY
 
  According to a 1994 study by the Association of Commercial Record Centers
(the "ACRC"), an industry trade group with over 500 members, approximately
2,800 companies offer records storage and related services in North America.
The Company believes that only 25% of the potential market outsources its
records management functions and that approximately 75% is still "unvended," or
internally managed. The Company estimates that the North American vended
records management industry generates annual revenues in excess of $1.0
billion. Management believes that the industry is highly fragmented, with most
industry participants operating on a regional or local basis.
 
  Saved documents, or records, generally fall into two categories: active and
inactive. Active records refer to information that is frequently referenced and
usually stored on-site by the originator. Inactive records are not needed for
frequent access, but must be retained for future reference, legal requirements
or regulatory compliance. Inactive records, which the Company estimates
comprise approximately 80% of all records, are the principal focus of the
records management industry.
 
  The Company believes that the records management industry is characterized by
the following trends:
 
  . Industry Consolidation. The records management industry is undergoing a
    period of consolidation as larger, better capitalized industry
    participants acquire smaller regional or local participants. Management
    believes that consolidation is primarily driven by the needs of large
    customers for fully integrated coverage and the ability to realize
    economies of scale, especially with respect to labor, real estate,
    transportation, computer systems and administrative expenses. Industry
    consolidation also provides private owners of smaller records management
    companies the ability to obtain liquidity.
 
  . Movement Towards Outsourcing. Outsourcing of internal records management
    functions represents the largest single source of new business for
    records management companies. The Company believes that as more
    organizations become aware of the advantages of professional records
    management, such as net cost reductions and enhanced levels of service,
    the records management industry will continue to gain a growing portion
    of the unvended segment. The Company also believes that the establishment
    of national providers with well-known brand names will help to accelerate
    this trend.
 
  . Increasing Production of Paper. Increasingly widespread technologies such
    as facsimiles, copiers, personal computers, laser printers and advanced
    software packages have enabled organizations to create, copy and
    distribute documents more easily and broadly. In spite of new "paperless"
    technologies (including the Internet and "e-mail"), information remains
    predominantly paper based. Additionally, the cost of storing records on
    paper is currently less expensive than the cost of converting paper
    records to, and storing on, other media (e.g., computer media, imaging,
    microfilm, CD-Rom and optical disc).
 
  . Expanded Record Keeping Needs. While technology has augmented the growth
    of paper generation, several external forces and concerns have played an
    important role in organizations' decisions to store and retain access to
    records. For example, the continued growth of regulatory requirements and
    the proliferation of litigation has resulted in increased volumes and
    lengthened holding periods of documents. Retained records are also
    remaining in storage for extended periods of time because the process of
    determining which records to destroy is time consuming and often more
    costly in the short-term than continued storage.
 
                              RECENT ACQUISITIONS
   
  Since January 1997, the Company has acquired six records management
companies, adding an aggregate of 6.8 million cubic feet of records (an
increase of approximately 17% from December 31, 1996) at the time of
acquisition, including the acquisition of Records Management Services, Inc.
("RMS") on April 2, 1997 (collectively, the "1997 Acquisitions"). The
acquisition of RMS added 5.2 million cubic feet of records in eight     
 
                                       5
<PAGE>
 
   
cities, of which three were in new markets for the Company and five were in
existing markets. Additionally, the Company has recently entered into
agreements to purchase two records management companies with an aggregate of
0.4 million cubic feet of records (the "Pending Acquisitions").     
 
  During 1996, the Company acquired 12 records management companies, adding an
aggregate of 6.9 million cubic feet of records at the time of acquisition, the
majority of which were completed during the second half of 1996.
 
                              CONCURRENT OFFERING
 
  Concurrent with the Equity Offerings, the Company is offering, by separate
prospectus, $100,000,000 aggregate principal amount of  % Senior Subordinated
Notes due 2007 (the "1997 Notes"). The Equity Offerings are not conditioned
upon the consummation of the offering of the 1997 Notes.
 
                                  RISK FACTORS
 
  Prospective purchasers should consider carefully the information set forth
under the caption "Risk Factors," and all other information set forth in this
Prospectus, in evaluating the shares offered hereby and the Company.
 
                              THE EQUITY OFFERINGS
 
<TABLE>   
<S>                                     <C>
Total number of shares of Common Stock  5,312,614 shares
 offered...............................
By the Company(1)
  U.S. Equity Offering................. 4,080,000 shares
  International Equity Offering........ 1,020,000 shares
                                        ---------
    Total(1)........................... 5,100,000 shares
By the Selling Shareholders
  U.S. Equity Offering.................   170,091 shares
  International Equity Offering........    42,523 shares
                                        ---------
    Total..............................   212,614 shares
Common Stock to be outstanding after
 the Equity Offerings(1)(2)............ 15,585,090 shares
Use of proceeds........................ The net proceeds of the Equity
                                        Offerings will be primarily used to
                                        redeem a portion of the Company's 11
                                        1/8% Senior Subordinated Notes due
                                        2006 (the "1996 Notes"). The net
                                        proceeds of the Notes Offering will be
                                        primarily used to repay outstanding
                                        borrowings under the Company's credit
                                        facility. Any remaining proceeds of
                                        the Offerings will be used for general
                                        corporate purposes, including possible
                                        acquisitions. See "Use of Proceeds."
New York Stock Exchange Symbol......... PLH
</TABLE>    
- --------
   
(1) Does not include shares that are subject to the U.S. Underwriters' over-
    allotment option.     
   
(2) Does not include 1,114,174 shares of Common Stock issuable upon exercise of
    outstanding options. See "Management--Stock Incentive Plan."     
 
                                       6
<PAGE>
 
                SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
   
  The following summary historical and pro forma financial data, insofar as it
relates to each of the five years in the period ended December 31, 1996, has
been derived from the audited Consolidated Financial Statements, including the
consolidated balance sheets at December 31, 1995 and 1996 and the related
consolidated statements of operations for each of the three years in the period
ended December 31, 1996 and the notes thereto appearing elsewhere in this
Prospectus. The summary historical and pro forma consolidated statements of
operations and balance sheet data as of and for the three months ended March
31, 1997 and the summary historical statements of operations data for the three
months ended March 31, 1996 have been derived from unaudited consolidated
financial statements, which in the opinion of management, include all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of the results of the unaudited interim period. Results for the
three months ended March 31, 1997 are not necessarily indicative of results
that may be expected for the entire year.     
          
  The following summary pro forma statements of operations, other data and
balance sheet give effect to, among other things, acquisitions completed in
1996, the 1997 Acquisitions (other than Advanced File Storage Systems ("AFSS"))
(all such 1996 and 1997 acquisitions (other than AFSS), the "1996 and 1997
Acquisitions"), the termination of the Company's status as a Subchapter S
corporation for income tax purposes and the impact of the Offerings, as if each
of these items had occurred on January 1, 1996 or as of March 31, 1997 in the
case of the balance sheet. The summary pro forma statements of operations and
balance sheet do not reflect the acquisition of AFSS or the Pending
Acquisitions, which are not significant.     
   
  The pro forma items and certain management assumptions and adjustments are
described in the accompanying notes hereto. This pro forma information is not
necessarily indicative of the results that would have occurred had the 1996 and
1997 Acquisitions, the Subchapter S corporation termination and the Offerings
been completed on the dates indicated or of the Company's actual or future
results or financial position. The summary historical and pro forma
consolidated statements of operations, other data and balance sheets should be
read in conjunction with the information contained in the Company's
Consolidated Financial Statements and the notes thereto, "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Selected Historical and Pro Forma Consolidated Statements of Operations, Other
Data and Balance Sheets" and "Pro Forma Financial Data" included elsewhere in
this Prospectus.     
 
 
                                       7
<PAGE>
 
                SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
 
<TABLE>   
<CAPTION>
                                                                                               THREE MONTHS
                                       YEAR ENDED DECEMBER 31,                                ENDED MARCH 31,
                          ----------------------------------------------------------     ------------------------------
                                                                           PRO FORMA                          PRO FORMA
                           1992     1993     1994     1995      1996        1996(A)       1996     1997        1997(A)
                          -------  -------  -------  -------  --------     ---------     -------  -------     ---------
                                         (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                       <C>      <C>      <C>      <C>      <C>          <C>           <C>      <C>         <C>
STATEMENT OF OPERATIONS
 DATA:
Revenues
 Storage................  $37,633  $42,122  $47,123  $55,501  $ 75,900     $ 98,885      $16,969  $23,322      $26,112
 Service and storage
  material sales........   25,202   31,266   35,513   39,895    53,848       68,953       12,730   16,910       18,519
                          -------  -------  -------  -------  --------     --------      -------  -------      -------
 Total revenues.........   62,835   73,388   82,636   95,396   129,748      167,838       29,699   40,232       44,631
Cost of sales, excluding
 depreciation and
 amortization...........   39,702   45,391   49,402   55,616    73,870       93,299       17,406   22,298       24,948
Selling, general and
 administrative.........    9,012   11,977   15,882   16,148    20,007       33,018        4,856    6,762        8,052
Depreciation and
 amortization...........    5,734    6,888    8,436    8,163    12,869       18,169        2,572    4,214        4,808
Consulting payments to
 related parties(b).....      --       --       500      500       --           --           125      --           --
Non-recurring
 charges(c).............      --       --       --       --      3,254        3,254          --       --           --
Foreign currency
 translation............      --       --       --       --        --           --           --       182          182
                          -------  -------  -------  -------  --------     --------      -------  -------      -------
 Operating income.......    8,387    9,132    8,416   14,969    19,748       20,098        4,740    6,776        6,641
Interest expense........    6,388    6,160    7,216    9,622    17,225       25,250        2,846    6,712        6,728
                          -------  -------  -------  -------  --------     --------      -------  -------      -------
 Income before income
  taxes and
  extraordinary charge..    1,999    2,972    1,200    5,347     2,523       (5,152)       1,894       64          (87)
Income taxes............      --       --       --       --        --          (350)(d)      --       --           372 (d)
Extraordinary
 charge(e)..............      --     9,174    5,991    3,279     2,015          --           --       --           --
                          -------  -------  -------  -------  --------     --------      -------  -------      -------
Net income (loss).......    1,999   (6,202)  (4,791)   2,068       508       (4,802)       1,894       64         (459)
Accretion (cancellation)
 of redeemable
 warrants...............      --      (746)      16      889     1,561          --         1,561      --           --
                          -------  -------  -------  -------  --------     --------      -------  -------      -------
Net income (loss)
 applicable to Common
 shareholders...........  $ 1,999  $(5,456) $(4,807) $ 1,179  $ (1,053)    $ (4,802)     $   333  $    64      $  (459)
                          =======  =======  =======  =======  ========     ========      =======  =======      =======
Pro forma data
 (unaudited):
 Pro forma adjustment
  for income taxes
  excluding
  extraordinary charge..                                      $  1,659 (d)                        $   291 (d)
 Historical income
  (loss) before
  extraordinary charge,
  as adjusted for pro
  forma income taxes....                                      $    864                            $  (227)
 Historical income
  (loss) before
  extraordinary charge
  per Common share, as
  adjusted for pro forma
  income taxes..........                                      $    .08 (f)                        $  (.02)(f)
 Historical net loss
  applicable to Common
  shareholders, as
  adjusted for pro forma
  income taxes..........                                      $ (1,958)                           $  (227)
 Historical net loss
  applicable to Common
  shareholders per
  Common share, as
  adjusted for pro forma
  income taxes..........                                      $  (.18)(f)                         $  (.02)(f)
 Shares used in
  computing per share
  amounts...............                                        10,612                             10,550
 Pro forma net loss
  applicable to Common
  shareholders per
  Common share..........                                                   $   (.45)(g)                        $  (.04)(g)
 Pro forma shares used
  in computing per share
  amount................                                                     10,612                             10,550
OTHER DATA:
Total revenue growth
 rate...................     12.9%    16.8%    12.6%    15.4%     36.0%        75.9%        33.6%    35.5%        50.3%
Operating income (before
 non-recurring charges)
 margin.................     13.3%    12.4%    10.2%    15.7%     17.7%        13.9%        16.0%    16.8%        14.9%
EBITDA(h)...............  $14,121  $16,020  $17,352  $23,632  $ 35,871     $ 41,521      $ 7,437  $11,172      $11,631
EBITDA, as adjusted(i)..      --       --       --       --        --      $ 52,342          --       --       $13,642
EBITDA margin...........     22.5%    21.8%    21.0%    24.8%     27.6%        24.7%        25.0%    27.8%        26.1%
EBITDA, as adjusted
 margin.................      --       --       --       --        --          31.2%         --       --          30.6%
Capital
 expenditures(j)........  $ 5,565  $ 5,827  $ 6,352  $16,288  $ 23,493          --       $ 3,553  $10,794          --
Cubic feet of storage
 under management at end
 of period (000s).......   16,248   19,025   22,160   29,523    40,410       47,191       31,088   43,354       49,983 (k)
</TABLE>    
 
<TABLE>   
<CAPTION>
                                                 MARCH 31, 1997
                                   --------------------------------------------
                                                 PRO FORMA FOR
                                    ACTUAL   ACQUISITION OF RMS(L) PRO FORMA(M)
                                   --------  --------------------- ------------
                                             (DOLLARS IN THOUSANDS)
<S>                                <C>       <C>                   <C>
BALANCE SHEET DATA:
Working capital deficit........... $ (6,778)       $ (6,363)         $   (463)
Total assets......................  266,462         330,921           337,306
Total long-term debt..............  254,170         316,170           249,095
Shareholders' equity (deficit)....  (25,394)        (25,394)           39,466
</TABLE>    
 
                                       8
<PAGE>
 
            NOTES TO SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
   
(a) Gives effect to the (i) 1996 and 1997 Acquisitions, (ii) termination of the
    Company's status as a Subchapter S corporation and (iii) impact of the
    Offerings, as if each of these items had occurred on January 1, 1996. See
    "Pro Forma Financial Data" and Note 2 of the Notes to Consolidated
    Financial Statements. The pro forma statements of operations and balance
    sheets do not reflect the acquisition of AFSS or the Pending Acquisitions,
    which are not significant. Upon termination of the Company's status as a
    Subchapter S corporation, the Company will record a deferred income tax
    provision of approximately $6,645 for the tax effect of differences in the
    basis of assets and liabilities for financial reporting and income tax
    purposes. This deferred income tax provision has not been reflected in the
    Pro Forma Condensed Consolidated Statement of Operations. Also not
    reflected in the Pro Forma Condensed Consolidated Statement of Operations
    is the extraordinary charge for the early extinguishment of a portion of
    the 1996 Notes that will occur in the quarter in which the redemption
    occurs (see (e) below) and an unusual charge of approximately $1,752
    (pretax), or $.07 per share, for the write-off of the estimated unamortized
    compensation expense associated with options granted on January 1, 1997,
    due to the acceleration of vesting upon the completion of the Offerings.
        
(b) Represents aggregate payments made to eight Pierce family members.
   
(c) Represents non-recurring charges in 1996 of $2,764 paid to a related party
    partnership to assume the partnership's position in certain leases with
    third parties and of $490 for the establishment of an annual pension for
    Leo W. Pierce, Sr. and his spouse.     
          
(d) The Company has historically been taxed as a Subchapter S corporation. Such
    status will be terminated in connection with the completion of the Equity
    Offerings. See "Management's Discussion and Analysis of Financial Condition
    and Results of Operations" and Note 2 of Notes to Consolidated Financial
    Statements.     
   
(e) Represents loss on early extinguishment of debt due to refinancings in
    1993, 1994, 1995 and 1996. Amounts include write-off of unamortized
    deferred financing costs and discount, along with prepayment penalties and
    other costs. A similar charge for the early extinguishment of a portion of
    the 1996 Notes of approximately $9,975 (pretax), or $.39 per share, will
    occur in the quarter in which the redemption occurs. Such charge has not
    been reflected in the Pro Forma Condensed Consolidated Statement of
    Operations. See "Use of Proceeds" and "Management's Discussion and Analysis
    of Financial Condition and Results of Operations."     
   
(f) See Note 2 of Notes to Consolidated Financial Statements for information
    concerning the computation of historical net loss per share as adjusted for
    pro forma income taxes. Excluding the non-recurring charges incurred in
    1996, pro forma net income and net income per share as adjusted for income
    taxes would have been $27 and $0, respectively.     
   
(g) Excluding $10,821 and $2,011 of operating expenses included in the pro
    forma statements of operations for 1996 and for the three months ended
    March 31, 1997, respectively, specifically identified by management that
    would not have been incurred had the 1996 and 1997 Acquisitions occurred as
    of January 1, 1996 and such cost savings been fully implemented as of such
    date, and excluding the non-recurring charges incurred in 1996, pro forma
    net income and net income per share would have been $3,765 and $.34,
    respectively, in 1996 and $768 and $.07 for the three months ended March
    31, 1997.     
   
(h) "EBITDA" is defined as net income (loss) before interest expense, taxes,
    depreciation and amortization, consulting payments to related parties, non-
    recurring charges, foreign currency translation, and extraordinary charge.
    EBITDA is not a measure of performance under GAAP. While EBITDA should not
    be considered in isolation or as a substitute for net income, cash flows
    from operating activities and other income or cash flow statement data
    prepared in accordance GAAP, or as a measure of profitability or liquidity,
    management understands that EBITDA is customarily used as a criteria in
    evaluating records management companies. Moreover, substantially all of the
    Company's financing agreements, including the Notes (as hereinafter
    defined), contain covenants in which EBITDA is used as a measure of
    financial performance. See "Management's Discussion and Analysis of
    Financial Condition and Results of Operations" for a discussion of other
    measures of performance determined in accordance with GAAP and the
    Company's sources and applications of cash flows.     
   
(i) EBITDA, as adjusted is defined as EBITDA plus $10,821 and $2,011 of
    operating expenses included in the pro forma statements of operations in
    1996 and for the three months ended March 31, 1997, respectively,
    specifically identified by management that would not have been incurred had
    the 1996 and 1997 Acquisitions occurred as of January 1, 1996 and such cost
    savings been fully implemented as of such date. See Note (b) of Notes to
    Pro Forma Condensed Consolidated Statement of Operations. Management
    expects to realize additional cost savings beyond the $10,821 and $2,011
    specifically identified.     
 
(j) Capital expenditures for 1996 are comprised of $11.0 million for new
    shelving, $4.0 million for leasehold and building improvements, $3.8
    million for new facility purchases and related improvements, $2.9 million
    for data processing and $1.8 million for the purchase of transportation,
    warehouse and office equipment. Of the total 1996 capital expenditures,
    management estimates that approximately $2.5 million was for upgrading and
    restructuring of existing facilities to accommodate growth or for
    maintenance capital expenditures. The 1996 capital expenditures do not
    include $11.0 million paid for real estate and other assets acquired from
    related parties (see Note 10 of Notes to the Consolidated Financial
    Statements).
   
(k) The pro forma cubic feet of storage as of March 31, 1997 includes cubic
    feet of storage from the acquisition of AFSS and the Pending Acquisitions.
           
(l) Gives effect to the acquisition of RMS as if it had occurred on March 31,
    1997. See "Pro Forma Financial Data," and "Use of Proceeds."     
   
(m) Gives effect to the (i) acquisition of RMS, (ii) termination of the
    Company's Subchapter S corporation status and (iii) impact of the
    Offerings, as if each of these items had occurred on March 31, 1997. See
    "Pro Forma Financial Data," "Use of Proceeds," and Note 2 to Notes to
    Consolidated Financial Statements.     
 
                                       9
<PAGE>
 
                                 RISK FACTORS
 
  Prospective purchasers of the Common Stock should consider carefully the
following risk factors, in addition to the other information set forth in this
Prospectus, before making an investment.
 
HIGH LEVEL OF INDEBTEDNESS AND LEVERAGE; ABILITY TO SERVICE DEBT
   
  As of March 31, 1997, on a pro forma basis after giving effect to the 1997
Acquisitions completed after such date, the Pending Acquisitions, the
Offerings and the estimated use of the net proceeds therefrom, the Company's
consolidated indebtedness would have been approximately $257.2 million and its
shareholders' equity would have been $39.5 million. This level of indebtedness
will have important consequences to holders of the Common Stock, including:
(i) a substantial part of the Company's anticipated cash flow from operations
will be required for the payment of principal and interest; (ii) the Company's
ability to obtain additional financing in the future may be limited; (iii) the
Company's leveraged position and covenants contained in the 1996 Notes, the
1997 Notes (together with the 1996 Notes, the "Notes") and the Credit Facility
(as defined herein) (or any replacement thereof) could limit its ability to
expand and make capital improvements and acquisitions; and (iv) the Company's
level of indebtedness could make it more vulnerable to economic downturns,
limit its ability to withstand competitive pressures, and limit its
flexibility in reacting to changes in its industry and economic conditions
generally. See "Description of Certain Indebtedness."     
 
  The Company's ability to meet its debt service obligations will be dependent
upon its future operating performance (including the performance of any
acquired businesses), debt levels and financial results which, in turn, will
be subject to general economic conditions and to financial, business and other
factors affecting the operations of the Company, many of which are beyond its
control. Although management believes that the Company's cash flow from
operations and available borrowings under the Credit Facility will be
sufficient to meet its anticipated requirements for capital expenditures,
working capital and future debt service requirements, there can be no
assurance that the Company will generate cash flows at levels sufficient to
meet these requirements. To the extent that the Company's existing resources
and future earnings are insufficient to fund the Company's activities or to
repay indebtedness, the Company may need to raise additional funds through
public or private financings. If additional funds are raised through the
issuance of equity securities, the percentage ownership of the Company's
shareholders at that time would be diluted. Further, such equity securities
may have rights, preferences or privileges senior to those of the Common
Stock. See "Description of Capital Stock."
 
RISKS ASSOCIATED WITH ACQUISITIONS
 
  One of the Company's strategies is to acquire records management businesses
that will complement its existing operations or provide it with an entree into
areas it does not presently serve. There can be no assurance that the Company
will be able to acquire or profitably manage additional acquisitions or
successfully integrate them into the Company. Furthermore, certain risks are
inherent in the Company's acquisition strategy, such as increasing leverage
and debt service requirements, diversion of management time and attention, and
combining disparate company cultures and facilities, which could adversely
affect the Company's operating results. The success of any acquisition will
depend in part on the Company's ability to integrate effectively the acquired
records management business into the Company. See "Business--Acquisition and
Growth Strategy."
 
  The size, timing and integration of possible future acquisitions may cause
substantial fluctuations in operating results from quarter to quarter. As a
result, operating results for any quarter may not be indicative of results
that may be achieved for any subsequent quarter or for a full fiscal year.
Further, there can be no assurance that acquisitions will not have an adverse
effect on the Company's operating results, particularly in quarters
immediately following the consummation of such transactions, while the
operations of the acquired businesses are being integrated into the Company's
operations. Once integrated, acquisitions may not achieve levels of net sales
or profitability comparable to those achieved by the Company's existing
operations, or otherwise perform
 
                                      10
<PAGE>
 
as expected. In addition, earnings may be adversely affected by transaction-
related expenses in the quarter in which an acquisition is consummated. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The Company may, in the future, utilize equity as all or a
portion of the consideration for future acquisitions. Any such issuances will
dilute the percentage ownership of the Company's shareholders at such time.
Further, such equity securities may have rights, preferences or privileges
senior to those of the Common Stock. See "Description of Capital Stock."
 
COMPETITION
 
  The Company faces competition from numerous competitors in all geographic
areas where it operates. The Company believes that competition for customers
is based on price, reputation for reliability, and quality and scope of
service and technology. As a result of this competition, the records
management industry has for the past several years experienced downward
pricing pressures. Should a further downward trend in pricing occur or
continue for an extended period of time, it could have a material adverse
effect on the Company's results of operations. The Company also competes for
acquisition candidates. Some of the Company's competitors possess greater
financial and other resources than the Company. If any such competitor were to
devote additional resources to the records storage business and/or such
acquisition candidates or to focus its strategy on the Company's areas of
operation, the Company's results of operations could be adversely affected.
 
  The Company also faces competition from the internal document handling
capability of its current and potential customers. There can be no assurance
that these organizations will outsource more of their document management
needs or that they will not bring in-house some or all of the functions they
currently outsource. See "Business--The Records Management Industry" and
"Business--Competition."
 
ALTERNATIVE TECHNOLOGIES
 
  The substantial majority of the Company's revenues have been derived from
the storage of paper documents and from related services. Such storage
requires significant physical space. Alternative technologies for generating,
capturing, managing, transmitting and storing information have been developed,
many of which require significantly less space than paper. Such technologies
currently include computer media, imaging, microfilming, audio/video tape,
film, CD-Rom and optical disc. None of these technologies has replaced paper
as the principal means for storing information. However, there can be no
assurance that one or more non-paper-based technologies (whether now existing
or developed in the future) may not in the future reduce or supplant the use
of paper as a preferred medium, which could in turn adversely affect the
Company's business.
 
DEPENDENCE ON KEY PERSONNEL
 
  The Company's success depends, in part, upon the efforts, abilities and
expertise of its executive officers and other key employees, including in
particular, J. Peter Pierce, the Company's President and Chief Executive
Officer. The Company has no employment contracts with any of its executive
officers. There can be no assurance that the Company will be able to retain
such officers, the loss of any of whom could have a material adverse effect
upon the Company. See "Management."
 
CASUALTY
 
  The Company currently maintains and intends to continue to maintain, to the
extent such insurance is available on commercially reasonable terms,
comprehensive liability, fire, flood and earthquake (where appropriate) and
extended coverage insurance with respect to the properties that it now owns or
leases or that it may in the future own or lease, with customary limits and
deductibles. Certain types of loss, however, may not be fully insurable on a
cost-effective basis. In the future, should uninsured losses or damages occur,
the Company could lose both its investment in and anticipated profits from the
affected property and may continue to be obligated on any leasehold
obligations, mortgage indebtedness or other obligations related to such
property. As a result, any such material loss could materially adversely
affect the Company. See "Business--Insurance."
 
                                      11
<PAGE>
 
ENVIRONMENTAL MATTERS
   
  As of May 1, 1997, the Company owned or leased approximately 10 million
square feet of facilities. Under various federal, state, local and foreign
environmental laws, regulations and ordinances ("environmental laws"), the
Company's properties and operations may subject it to liability for the costs
of investigation, removal or remediation of soil and groundwater, on or off-
site, contaminated by hazardous substances and other contaminants or hazardous
materials such as petroleum products ("hazardous materials"), as well as
damages to natural resources. Certain such laws impose cleanup responsibility
and liability without regard to whether the owner or operator of the real
estate or business thereon knew of or was responsible for the contamination,
and whether or not operations at the property have been discontinued or title
to the property has been transferred. In addition, the presence of such
materials, or the failure to properly remediate such property, may adversely
affect the current property owner's or operator's ability to sell, rent or use
such property or to borrow using such property as collateral. The owner or
operator of contaminated property also may be subject to statutory and common
law claims by third parties based on any damages and costs resulting from off-
site migration of the contamination.     
 
  Certain environmental laws govern the removal, encapsulation or disturbance
of asbestos-containing materials ("ACMs") in buildings. Such laws may impose
liability for improper handling and release of ACMs and third parties may seek
to recover from owners or operators of real estate for personal injury
associated with exposure to such materials. Certain facilities operated by the
Company contain ACMs.
 
  Certain of the properties formerly or currently owned or operated by the
Company were previously used for industrial or other purposes that involved
the use or storage of hazardous materials or the generation and disposal of
hazardous wastes, and the use of underground storage tanks ("USTs") for
hazardous materials. The Company has from time to time conducted certain
environmental investigations, and remedial activities have been performed, at
certain of its former and current properties, but an in-depth environmental
review of each of the properties and related operations has not been conducted
by or on behalf of the Company. In connection with its former and current
ownership or operation of certain properties and businesses, the Company may
be subject to environmental liability as discussed above and as more
specifically described under "Business--Environmental Matters."
 
  The Company has not received any written notice from any governmental
authority or third party asserting, and is not otherwise aware of, any
material environmental non-compliance, liability or claim relating to
hazardous materials or otherwise under any environmental laws applicable to
the Company in connection with any of its present or former properties or
operations other than as described under "Business--Environmental Matters."
However, no assurance can be given that there are no environmental conditions
for which the Company might be liable in the future or that future regulatory
action, or compliance with future environmental laws, will not require the
Company to incur costs with respect to its properties or operations that could
have a material adverse effect on the Company's financial condition or results
of operations.
 
CONTROL BY EXISTING SHAREHOLDERS
   
  Prior to the Equity Offerings, all of the outstanding stock of the Company
was owned by members of the Pierce family. Substantially all of the members of
the Pierce family, who are expected to own approximately 66% of the shares of
Common Stock outstanding after the Equity Offerings, have indicated their
intention to enter into a ten-year voting trust agreement (the "Voting Trust
Agreement") pursuant to which all of the shares subject to the Voting Trust
Agreement will be voted at the direction of Leo W. Pierce, Sr. and J. Peter
Pierce (the "Voting Trustees"). Consequently, the Voting Trustees will be able
to elect the Company's directors, to determine the outcome of corporate
actions requiring shareholder approval and otherwise to control the business
affairs of the Company. See "Principal and Selling Shareholders--Voting Trust
Agreement."     
 
SHARES ELIGIBLE FOR FUTURE SALE
 
  The Company can make no prediction as to the effect, if any, that sales of
additional shares of Common Stock or the availability of shares for future
sale will have on the market price of the Common Stock. Sales in
 
                                      12
<PAGE>
 
   
the public market of substantial amounts of Common Stock after the Equity
Offerings (including shares issued upon the exercise of outstanding options)
or the perception that such sales could occur may adversely affect the market
price of the Common Stock and may make it more difficult for the Company to
sell equity securities or equity related securities in the future at a time
and price it deems appropriate. After giving effect to the sale of the shares
of Common Stock offered hereby, the Company will have outstanding 15,585,090
shares of Common Stock. Of these shares, 5,312,614 shares of Common Stock sold
in the Equity Offerings will be freely tradeable without restriction under the
Securities Act of 1933, as amended (the "Securities Act"), except for any
shares purchased by "affiliates," as that term is defined under the Securities
Act, of the Company. The remaining 10,272,476 shares are "restricted
securities" within the meaning of Rule 144 promulgated under the Securities
Act and will be eligible for sale pursuant to Rule 144 immediately after the
closing of the Equity Offerings subject, in the case of affiliates, to
applicable volume and other restrictions contained therein.     
 
  The Company, its executive officers and directors, the Selling Shareholders
and certain other shareholders of the Company have agreed that, for a period
of 180 days after the date of this Prospectus (the "lock-up period"), they
will not, without the prior consent of Smith Barney Inc., offer, sell,
contract to sell or otherwise dispose of any shares of Common Stock or any
securities convertible into or exchangeable for Common Stock subject to
certain limited exceptions, including the issuance of shares by the Company in
connection with possible future acquisitions. Such consent permitting shares
to be sold before the expiration of the lock-up period may be granted without
prior notice to the other shareholders of the Company or to any public market
in which the Common Stock trades. See "Shares Eligible for Future Sale."
 
ABSENCE OF PUBLIC MARKET; DETERMINATION OF OFFERING PRICE; POSSIBLE VOLATILITY
OF STOCK PRICE
 
  Prior to the Equity Offerings, there has been no public market for the
Common Stock and there can be no assurance an active trading market will
develop or be sustained. The initial offering price for the Common Stock was
determined by negotiations among the Company, the Representatives (as
hereinafter defined) and the Managers, and may not be indicative of the market
price of the Common Stock after the Equity Offerings. See "Underwriting" for a
discussion of the factors considered in determining the initial public
offering price. From time to time after the Equity Offerings, there may be
significant volatility in the market price of the Common Stock. Quarterly
operating results of the Company, deviations in results of operations from
estimates of securities analysts, changes in general conditions in the economy
or the records management industry or other developments affecting the Company
or its competitors could cause the market price of the Common Stock to
fluctuate substantially. The equity markets have, on occasion, experienced
significant price and volume fluctuations that have affected the market prices
for many companies' securities and that have been unrelated to the operating
performance of such companies. Any such fluctuations that occur following
completion of the Equity Offerings may adversely affect the market price of
the Common Stock.
 
DILUTION
   
  The purchasers of the shares of Common Stock offered hereby will experience
immediate and substantial dilution in the net tangible book value of their
shares of Common Stock in the amount of $24.58 per share (after giving effect
to the underwriting discounts and commissions and estimated offering expenses,
at an assumed initial public offering price of $16.50 per share). See
"Dilution." In the event the Company issues additional shares of Common Stock
in the future, including shares that may be issued in connection with future
acquisitions, purchasers of Common Stock in the Equity Offerings may
experience further dilution in the net tangible book value per of Common
Stock.     
 
FORWARD-LOOKING STATEMENTS
 
  This Prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934, as amended, and is subject to the safe-harbor created by
such sections. Such forward-looking statements concern the Company's
operations, economic performance and financial condition, including in
particular the 1997 Acquisitions and their integration into the
 
                                      13
<PAGE>
 
   
Company's existing operations. Such statements involve known and unknown
risks, uncertainties and other factors, including those identified under this
"Risk Factors" section and elsewhere in this Prospectus that may cause the
actual results, performance or achievements of the Company, or industry
results, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: general economic and business
conditions; changes in customer preferences; competition; changes in
technology; the integration of any acquisitions; changes in business strategy;
the indebtedness of the Company; quality of management, business abilities and
judgment of the Company's personnel; the availability, terms and deployment of
capital; and various other factors referenced in this Prospectus. See
"Summary," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business." The forward-looking statements are made
as of the date of this Prospectus, and the Company assumes no obligation to
update the forward-looking statements or to update the reasons why actual
results could differ from those projected in the forward-looking statements.
    
ANTI-TAKEOVER PROVISIONS
 
  The Company's Articles of Incorporation and Bylaws contain certain
provisions that may have the effect of discouraging certain transactions
involving an actual or threatened change of control of the Company. Such
provisions could limit the price that certain investors might be willing to
pay in the future for shares of Common Stock. In addition, shares of preferred
stock may be issued by the Board of Directors without shareholder approval on
such terms and conditions, and having such rights, privileges and preferences,
as the Board of Directors may determine. The rights of the holders of the
Common Stock will be subject to, and may be adversely affected by, the rights
of the holders of any preferred stock that may be issued in the future. The
Company has no current plans to issue any shares of preferred stock. See
"Description of Capital Stock."
 
NO DIVIDENDS
 
  The Company does not anticipate paying any cash dividends on the Common
Stock in the foreseeable future and intends to retain any future earnings for
use in its business. Additionally, the Company's ability to pay cash dividends
is limited by the terms of the Notes and the Credit Facility.
 
                                      14
<PAGE>
 
                                  THE COMPANY
 
  The Company was incorporated in Pennsylvania in March 1997 and is the
successor by merger immediately preceding the Offerings to Pierce Leahy Corp.
which was incorporated in New York in 1990 ("PLC"). From inception, PLC had an
authorized capitalization consisting of two classes of Common Stock: Class A
Common Stock which was voting and Class B Common Stock which was nonvoting.
Immediately preceding the merger, PLC effected a stock split and
recapitalization pursuant to which each outstanding share of Class A and Class
B Common Stock was converted into shares of voting Common Stock. Immediately
thereafter, PLC was redomesticated into Pennsylvania pursuant to the merger.
Such transactions are collectively referred to herein as the "Stock
Recapitalization."
 
  The Company's operations date to 1957 when its predecessor company, L.W.
Pierce Co., Inc., was founded to provide filing systems and related equipment
to companies in the Philadelphia area. L.W. Pierce Co., Inc. expanded
primarily through internal growth until 1990 when it acquired Britannia
Security Group, Inc. (doing business as Leahy Business Archives), which
approximately doubled the size of the Company. PLC was formed at that time
from the consolidation of the predecessor company with Leahy Business
Archives.
   
  From its incorporation in 1990, PLC had elected to be taxed as a corporation
under Subchapter S (a "Subchapter S corporation") of the Internal Revenue Code
of 1986, as amended (the "Code"). As a result of the Equity Offerings, PLC's
status as a Subchapter S corporation will terminate. In connection with tax
liabilities of the Company's former Subchapter S shareholders for the portion
of 1997 during which the Company was a Subchapter S corporation, the Company
is obligated to make distributions to such shareholders to cover their tax
liabilities related to the Company. See "Management--Compensation Committee
Interlocks and Insider Participation."     
 
  The Company's Canadian business is operated by Pierce Leahy Command Company
("PLC Command"), a Nova Scotia unlimited liability company. As a result of
PLC's status as a Subchapter S corporation prior to the Equity Offerings, all
of the capital stock of PLC Command is owned by two limited partnerships. Two
separate corporations owned by J. Peter Pierce are the general partner of each
partnership, respectively, and the Company has a 99% limited partnership
interest in each partnership. Accordingly, the Company has an indirect 99%
equity interest in PLC Command.
 
  The principal executive offices of the Company are located at 631 Park
Avenue, King of Prussia, Pennsylvania 19406, and its telephone number is (610)
992-8200.
 
                              CONCURRENT OFFERING
 
  Concurrent with the Equity Offerings, the Company is offering, by separate
prospectus, $100,000,000 aggregate principal amount of  % Senior Subordinated
Notes due 2007 (the "1997 Notes"). The 1997 Notes are redeemable, at the
option of the Company, at any time on or after      , 2002, at specified
prices plus accrued interest. The Equity Offerings are not conditioned upon
the consummation of the offering of the 1997 Notes (the "Notes Offering").
 
                                      15
<PAGE>
 
                                USE OF PROCEEDS
   
  The net proceeds to the Company from the sale of 5,100,000 shares of Common
Stock by the Company in the Equity Offerings, after deducting underwriting
discounts and commissions and estimated offering expenses, are estimated to be
approximately $77.5 million ($86.2 million if the U.S. Underwriters' over-
allotment option is exercised in full), assuming an initial public offering
price of $16.50 per share. The Company will not receive any proceeds from the
sale of Common Stock by the Selling Shareholders. The Company expects to use
approximately $77.0 million of the net proceeds of the Equity Offerings to
repurchase a portion of the 1996 Notes (as defined below). Under the Indenture
for the 1996 Notes, up to an aggregate of $70.0 million principal amount of
the $200.0 million principal amount of 1996 Notes outstanding may be redeemed
by the Company with the net proceeds of the Equity Offerings at 110% of the
principal amount plus any accrued but unpaid interest to the date of
redemption. The 1996 Notes bear interest at 11 1/8% per annum and are due July
15, 2006. See "Description of Certain Indebtedness--The 1996 Notes." The Notes
were issued primarily to retire certain existing indebtedness of the Company
under its previous credit facility.     
   
  The net proceeds from the sale of the 1997 Notes, after deducting
underwriting discounts and commissions and estimated offering expenses, are
estimated to be approximately $96.5 million. The Company expects to use
substantially all of the net proceeds of the Notes Offering to repay
outstanding borrowings under the U.S. dollar portion of its Credit Facility.
As of May 1, 1997, the effective interest rate on the U.S. dollar portion of
the Credit Facility was approximately 7.7%. The borrowings under the Credit
Facility which will be repaid by the net proceeds of the sale of the Notes
were primarily used to fund the Company's acquisitions in 1996 and the 1997
Acquisitions, including the acquisition of RMS. See "Business--Acquisition
History and Growth Strategy" and "Business--The 1997 Acquisitions."     
 
  The balance of any net proceeds from the Offerings will be used for general
corporate purposes, including possible acquisitions.
 
                                DIVIDEND POLICY
 
  The Company does not anticipate paying any cash dividends in the foreseeable
future. The current policy of the Company's Board of Directors is to retain
any earnings to support operations and to finance the expansion of the
Company's business. In addition, the Credit Facility and the indentures
governing the Notes contain provisions limiting the Company's ability to pay
cash dividends on the Common Stock. See "Description of Certain Indebtedness."
 
  Prior to the Offerings, the Company has been taxed as a Subchapter S
corporation and has made distributions to its former Subchapter S shareholders
with respect to taxes related to the Company. After the Equity Offerings, the
Company will no longer be taxed as a Subchapter S corporation. The Company
will, however, make distributions to its former Subchapter S shareholders with
respect to any taxes related to the Company during the period it was taxed as
a Subchapter S corporation.
 
                                      16
<PAGE>
 
                                   DILUTION
   
  The deficit in net tangible book value of the Company as of March 31, 1997
(after giving effect to the Stock Recapitalization) was $(139.3) million or
$(13.28) per share. Deficit in net tangible book value per share represents
the amount by which the Company's liabilities exceeds its tangible assets,
divided by the number of shares of Common Stock then outstanding.     
   
  Net tangible book value dilution per share represents the difference between
the amount per share paid by purchasers of the 5,100,000 shares of Common
Stock offered by the Company in the Equity Offerings and the deficit in net
tangible book value per share of Common Stock immediately after completion of
the Equity Offerings. After giving effect to the sale of the shares of Common
Stock offered by the Company and the Notes Offering (assuming an initial
public offering price of $16.50 per share in the Equity Offerings and after
deducting the estimated underwriting discounts and commissions and estimated
offering expenses and after giving effect to the 1996 and 1997 Acquisitions),
the pro forma deficit in net tangible book value of the Company as of March
31, 1997 would have been $(126.0) million or $(8.08) per share. This
represents an immediate increase in pro forma net tangible book value of $5.20
per share to existing shareholders and an immediate dilution in net tangible
book value of $24.58 per share to purchasers of Common Stock in the Equity
Offerings as illustrated in the following table:     
 
<TABLE>   
   <S>                                                        <C>      <C>
   Assumed initial public offering price per share...........          $16.50
     Deficit in net tangible book value per share at March
      31, 1997............................................... $(13.28)
     Increase per share attributable to new investors........    5.20
                                                              -------
   Pro forma net tangible book value per share after the
    Equity Offerings.........................................           (8.08)
                                                                       ------
   Dilution per share to new investors.......................          $24.58
                                                                       ======
</TABLE>    
   
  The following table sets forth, as of March 31, 1997, the difference between
the existing shareholders and new investors (assuming an initial public
offering price of $16.50 per share) with respect to the number of shares
owned, the total consideration paid and the average price per share paid to
the Company. The table does not give effect to the sale of Common Stock by the
Selling Shareholders.     
 
<TABLE>   
<CAPTION>
                             SHARES PURCHASED  TOTAL CONSIDERATION
                            ------------------ ------------------- AVERAGE PRICE
                              NUMBER   PERCENT   AMOUNT    PERCENT   PER SHARE
                            ---------- ------- ----------- ------- -------------
<S>                         <C>        <C>     <C>         <C>     <C>
Existing shareholders...... 10,485,090   67.3% $    24,000    -- %     $ --
New investors(1)(2)........  5,100,000   32.7   84,150,000  100.0      16.50
                            ----------  -----  -----------  -----
  Total.................... 15,585,090  100.0% $84,174,000  100.0%
                            ==========  =====  ===========  =====
</TABLE>    
- --------
   
(1) Excludes as of March 31, 1997, stock options to purchase a total of
    1,114,174 shares of Common Stock. To the extent such options are
    exercised, there may be further dilution to new investors.     
   
(2) Sales by Selling Shareholders in the Equity Offerings will reduce the
    number of shares held by existing shareholders to 10,272,476 or 65.9% of
    the total number of shares of Common Stock to be outstanding after the
    Equity Offerings (10,039,601 or 62.2% if the over-allotment option is
    exercised in full), and will increase the number of shares held by new
    investors to 5,312,614 or 34.1% of the total number of shares of Common
    Stock outstanding after the Equity Offerings (6,109,506 or 37.8% if the
    over-allotment option is exercised in full).     
 
                                      17
<PAGE>
 
                                CAPITALIZATION
   
  The following table sets forth the capitalization of the Company as of March
31, 1997 (i) on an actual basis, (ii) on a pro forma basis to give effect to
the acquisition of RMS as if it had occurred as of March 31, 1997 and (iii) as
further adjusted to give effect to the sale by the Company of 5,100,000 shares
of Common Stock in the Equity Offerings at an assumed initial public offering
price of $16.50 per share, the sale of the 1997 Notes in the Notes Offering
and the application of the estimated net proceeds from the Offerings as
described under "Use of Proceeds." This table should be read in conjunction
with the Company's Pro Forma Financial Data and Consolidated Financial
Statements and notes thereto and the other information included elsewhere in
this Prospectus (amounts in thousands):     
 
<TABLE>   
<CAPTION>
                                                    AS OF MARCH 31, 1997
                                               -------------------------------
                                                          PRO FORMA
                                                          FOR THE
                                                         ACQUISITION
                                                ACTUAL     OF RMS    PRO FORMA
                                               --------  ----------- ---------
<S>                                            <C>       <C>         <C>
Cash.......................................... $  1,064   $  1,240   $  1,240
                                               ========   ========   ========
Credit Facility (a)........................... $ 49,900   $111,900   $ 14,825
11 1/8% Senior subordinated notes due 2006....  200,000    200,000    130,000
  % Senior subordinated notes due 2007........      --         --     100,000
Seller notes..................................      500        500        500
Other indebtedness............................    4,362      4,362      4,362
Less--Current portion.........................     (592)      (592)      (592)
                                               --------   --------   --------
  Total long-term debt (b)....................  254,170    316,170    249,095
                                               --------   --------   --------
Preferred stock (c)...........................      --         --         --
Common stock (d)..............................      --         --         156
Additional paid-in capital....................       24         24     77,379
Accumulated deficit (e).......................  (25,418)   (25,418)   (38,069)
                                               --------   --------   --------
  Total shareholders' equity (deficit)........  (25,394)   (25,394)    39,466
                                               --------   --------   --------
    Total capitalization...................... $228,776   $290,776   $288,561
                                               ========   ========   ========
</TABLE>    
- --------
          
(a) Does not include $7,500 of additional borrowings under the Credit Facility
    for the acquisitions of AFSS and the Pending Acquisitions.     
   
(b) See Note 6 of the Notes to Financial Statements for information concerning
    the Company's debt obligations.     
   
(c) In connection with the Recapitalization, the Company authorized 10,000,000
    shares of undesignated Preferred Stock.     
   
(d) Actual outstanding Common Stock consisted of Class A and Class B Common
    Stock.     
   
(e) Does not include an unusual charge that will occur in the quarter in which
    the Offerings are completed of approximately $1,752 (pretax) for the
    write-off of the estimated unamortized compensation expense associated
    with options granted on January 1, 1997, due to the acceleration of
    vesting upon the completion of the Offerings.     
 
                                      18
<PAGE>
 
                           PRO FORMA FINANCIAL DATA
   
  The unaudited pro forma condensed consolidated balance sheet as of March 31,
1997 gives effect to, among other things, the Offerings, the acquisition of
RMS and termination of the Company's status as a Subchapter S corporation as
if they occurred on March 31, 1997. The unaudited pro forma condensed
consolidated statements of operations for the year ended December 31, 1996 and
for the three months ended March 31, 1997 give effect to, among other things,
the Offerings and the 1996 and 1997 Acquisitions for periods prior to their
acquisition by the Company, as if they occurred on January 1, 1996. The pro
forma condensed consolidated balance sheet and statements of operations do not
reflect the acquisition of AFSS or the Pending Acquisitions, which are not
significant.     
   
  The Offerings, the 1996 and 1997 Acquisitions, the Subchapter S termination
and certain management assumptions and adjustments are described in the
accompanying notes hereto. This pro forma information is not necessarily
indicative of the results that would have occurred had the 1996 and 1997
Acquisitions, the Subchapter S termination and the Offerings been completed on
the dates indicated or of the Company's actual or future results or financial
position. The unaudited pro forma condensed consolidated balance sheet and
statements of operations should be read in conjunction with the Company's
Consolidated Financial Statements and notes thereto, as of December 31, 1996
and for each of the three years in the period ended December 31, 1996,
appearing elsewhere in this Prospectus.     
   
  The unaudited pro forma condensed consolidated balance sheet at March 31,
1997 and the unaudited pro forma condensed consolidated statements of
operations for the year ended December 31, 1996 and for the three months ended
March 31, 1997 assume the completion of the Notes Offering and the application
of the net proceeds therefrom. The consummation of the Equity Offerings is not
conditioned upon consummation of the Notes Offering.     
 
                                      19
<PAGE>
 
                               PIERCE LEAHY CORP.
 
                 PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
                                 
                              MARCH 31, 1997     
                             (DOLLARS IN THOUSANDS)
 
<TABLE>   
<CAPTION>
                                                PRO FORMA
                                                   FOR     ADJUSTMENTS
                                   ACQUISITION ACQUISITION  FROM THE
                          ACTUAL    OF RMS(A)    OF RMS     OFFERINGS     PRO FORMA
                         --------  ----------- ----------- -----------    ---------
<S>                      <C>       <C>         <C>         <C>            <C>
         ASSETS
CURRENT ASSETS:
 Cash................... $  1,064    $   176    $  1,240    $ 174,075 (b) $  1,240
                                                             (167,075)(b)
                                                               (7,000)(c)
 Accounts receivable....   21,473      2,370      23,843          --        23,843
 Inventories............      687        133         820          --           820
 Prepaid expenses and
  other.................    1,171        195       1,366          --         1,366
 Deferred income taxes..      --         --          --         3,900 (c)    5,900
                                                                2,000 (d)
                         --------    -------    --------    ---------     --------
  Total current assets..   24,395      2,874      27,269        5,900       33,169
PROPERTY AND EQUIPMENT,
 net....................  124,420     10,500     134,920          --       134,920
OTHER ASSETS, primarily   117,647     51,085     168,732        3,460 (b)  169,217
 intangibles............                                       (2,975)(c)
                         --------    -------    --------    ---------     --------
                         $266,462    $64,459    $330,921    $   6,385     $337,306
                         ========    =======    ========    =========     ========
           LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
 Current portion of
  long-term debt and
  noncompete
  obligations........... $    592    $   --     $    592    $     --      $    592
 Accounts payable.......    3,558      1,258       4,816          --         4,816
 Accrued expenses.......   16,586      1,201      17,787          --        17,787
 Deferred revenues......   10,437        --       10,437          --        10,437
                         --------    -------    --------    ---------     --------
  Total current
   liabilities..........   31,173      2,459      33,632          --        33,632
LONG-TERM DEBT AND
 NONCOMPETE               254,170     62,000     316,170      100,000 (b)  249,095
 OBLIGATIONS............                                     (167,075)(b)
DEFERRED RENT...........    3,070        --        3,070          --         3,070
DEFERRED INCOME TAXES...    3,443        --        3,443        8,600 (d)   12,043
SHAREHOLDERS' EQUITY      (25,394)       --      (25,394)      77,535 (b)   39,466
 (DEFICIT)..............                                       (9,975)(c)
                                                                3,900 (c)
                                                               (6,600)(d)
                         --------    -------    --------    ---------     --------
                         $266,462    $64,459    $330,921    $   6,385     $337,306
                         ========    =======    ========    =========     ========
</TABLE>    
 
         The accompanying notes are an integral part of this statement.
 
                                       20
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
                                 
                              MARCH 31, 1997     
                    
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE)     
   
(a) Represents the balance sheet for RMS acquired by the Company after March
    31, 1997 (see "Business--Acquisition History and Growth Strategy"), after
    application of the purchase method of accounting. The purchase price of
    the RMS acquisition was $62,000, including transaction costs.     
   
(b) Reflects the sale of 5,100,000 shares of Common Stock resulting in
    estimated net proceeds to the Company of $77,535 (at an assumed public
    offering price of $16.50 per share and after deducting discounts and
    commissions and estimated offering expenses of $6,615) and net proceeds of
    $96,540 from the Notes Offering (after deducting underwriting discounts
    and commissions and estimated offering expenses of $3,460). A substantial
    portion of the Equity Offerings will be used to redeem $70,000 of the 1996
    Notes. The proceeds from the Notes Offering will be used to repay existing
    Senior Indebtedness of $49,900 at March 31, 1997 and a portion ($47,175)
    of the Senior Indebtedness of $62,000 incurred in connection with the
    acquisition of RMS.     
   
(c) Represents the payment of the $7,000 (pretax) prepayment penalty to be
    incurred in connection with the redemption of a portion of the 1996 Notes
    and the related write-off of $2,975 (pretax) in related unamortized
    deferred financing costs. This extraordinary charge of $9,975 (pretax)
    relating to the early extinguishment of debt will be recorded in the
    quarter in which the redemption occurs. A tax benefit of approximately
    $3,900 will be recorded for these charges.     
   
(d) The Company operates as a Subchapter S corporation and will terminate such
    status in connection with the Equity Offerings. Upon the termination of
    the Company's status as a Subchapter S corporation, the Company will
    record a deferred income tax provision of approximately $6,600 for the tax
    effect of the differences in the basis of assets and liabilities for
    financial reporting and income tax purposes. This deferred tax provision
    will be recorded in the quarter in which the Subchapter S status
    terminates.     
 
                                      21
<PAGE>
 
                               PIERCE LEAHY CORP.
 
            PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
 
                      FOR THE YEAR ENDED DECEMBER 31, 1996
                             (DOLLARS IN THOUSANDS)
 
<TABLE>   
<CAPTION>
                                                     ADJUSTMENTS     PRO FORMA
                                                        FOR             FOR       ADJUSTMENTS    PRO FORMA
                           ACTUAL  ACQUISITIONS(A) ACQUISITIONS(B)  ACQUISITIONS FROM OFFERINGS     (B)
                          -------- --------------- ---------------  ------------ --------------  ---------
<S>                       <C>      <C>             <C>              <C>          <C>             <C>
REVENUES................  $129,748     $38,090        $    --         $167,838      $   --       $167,838
                          --------     -------        --------        --------      -------      --------
OPERATING EXPENSES
Cost of sales, excluding
 depreciation and
 amortization...........    73,870      19,429             --           93,299          --         93,299
Selling, general and
 administrative.........    20,007      13,011             --           33,018          --         33,018
Depreciation and
 amortization...........    12,869       2,085           3,215 (c)      18,169          --         18,169
Non-recurring charges...     3,254         --              --            3,254          --          3,254
                          --------     -------        --------        --------      -------      --------
  Total operating
   expenses.............   110,000      34,525           3,215         147,740          --        147,740
                          --------     -------        --------        --------      -------      --------
  Operating income......    19,748       3,565          (3,215)         20,098          --         20,098
INTEREST EXPENSE........    17,225       1,341           8,764 (d)      27,330       (2,080)       25,250 (e)
                          --------     -------        --------        --------      -------      --------
  Income (loss) before
   income taxes and
   extraordinary
   charge...............     2,523       2,224         (11,979)         (7,232)       2,080        (5,152)
INCOME TAXES............       --          --              --              --          (350)(f)      (350)(f)
                          --------     -------        --------        --------      -------      --------
INCOME (LOSS) BEFORE
 EXTRAORDINARY CHARGE...  $  2,523     $ 2,224        $(11,979)       $ (7,232)     $ 2,430      $ (4,802)
                          ========     =======        ========        ========      =======      ========
</TABLE>    
 
         The accompanying notes are an integral part of this statement.
 
                                       22
<PAGE>
 
                               
                            PIERCE LEAHY CORP.     
            
         PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS     
                    
                 FOR THE THREE MONTHS ENDED MARCH 31, 1997     
                             
                          (DOLLARS IN THOUSANDS)     
 
<TABLE>   
<CAPTION>
                                                  ADJUSTMENTS     PRO FORMA  ADJUSTMENTS
                                       RMS          FOR RMS        FOR RMS      FROM       PRO FORMA
                          ACTUAL  ACQUISITION(A) ACQUISITION(B)  ACQUISITION  OFFERINGS       (B)
                          ------- -------------- --------------  ----------- -----------   ---------
<S>                       <C>     <C>            <C>             <C>         <C>           <C>
REVENUES................  $40,232     $4,399        $   --         $44,631     $   --       $44,631
                          -------     ------        -------        -------     -------      -------
OPERATING EXPENSES
Cost of sales, excluding
 depreciation and
 amortization...........   22,298      2,650            --          24,948         --        24,948
Selling, general and
 administrative.........    6,762      1,290            --           8,052         --         8,052
Depreciation and
 amortization...........    4,214        238            356 (c)      4,808         --         4,808
Non-recurring charges...      --         --             --             --          --           --
Foreign currency
 translation............      182        --             --             182         --           182
                          -------     ------        -------        -------     -------      -------
  Total operating
   expenses.............   33,456      4,178            356         37,990         --        37,990
                          -------     ------        -------        -------     -------      -------
  Operating income......    6,776        221           (356)         6,641         --         6,641
INTEREST EXPENSE........    6,712        104         (1,369)(d)      8,185      (1,457)       6,728 (e)
                          -------     ------        -------        -------     -------      -------
  Income (loss) before
   income taxes and
   extraordinary
   charge...............       64        117         (1,725)        (1,544)      1,457          (87)
INCOME TAXES............      --          41            (41)           --          372 (f)      372 (f)
                          -------     ------        -------        -------     -------      -------
INCOME (LOSS) BEFORE
 EXTRAORDINARY CHARGE...  $    64     $   76        $(1,684)       $(1,544)    $ 1,085      $  (459)
                          =======     ======        =======        =======     =======      =======
</TABLE>    
         
      The accompanying notes are an integral part of this statement.     
 
                                       23
<PAGE>
 
                              PIERCE LEAHY CORP.
 
                   NOTES TO PRO FORMA CONDENSED CONSOLIDATED
                            
                         STATEMENTS OF OPERATIONS     
 
                            (DOLLARS IN THOUSANDS)
   
(a) Represents the historical results of operations of the 1996 and 1997
    Acquisitions for the periods from January 1, 1996 to their dates of
    acquisition by the Company. See "Business--Acquisition and Growth
    Strategy."     
   
(b) Management expects to achieve cost savings from the 1996 and 1997
    Acquisitions as a result of the factors described below. The Pro Forma
    Condensed Consolidated Statements of Operations for the year ended
    December 31, 1996 and three months ended March 31, 1997 reflect only the
    cost savings actually achieved in 1996 and to date in 1997 from the
    acquisitions and none of the additional expected savings. Because most of
    the 1996 acquisitions occurred in the second half of 1996, and there is
    typically a lag after an acquisition to fully realize such savings, the
    Company expects to achieve additional savings from the 1996 and 1997
    Acquisitions.     
      
   The integration of an acquired company entails, among other things,
   converting the database of stored records to the PLUS(R) system,
   reorganizing archive operating activities and eliminating certain back
   office activities which can be handled through the PLUS(R) system or the
   Company's centralized corporate organization. Cost savings start to be
   realized a short time after an acquisition. Management has specifically
   identified approximately $10,821 and $2,011 of estimated operating expenses
   included in the pro forma 1996 and three months ended March 31, 1997
   statements of operations, respectively, that would not have been incurred
   had the acquisitions occurred as of January 1, 1996. These savings relate
   to (i) the termination of certain employees due to the efficiency of the
   PLUS(R) system and integration and consolidation of facilities, (ii) a
   reduction in warehouse rent expense related to facilities the Company has
   vacated or will vacate or has negotiated changes in lease terms and (iii) a
   reduction of other operating costs due to the Company's economies of scale.
   Management expects to realize additional cost savings beyond the $10,821
   and $2,011 specifically identified.     
   
(c) A pro forma adjustment has been made to reflect additional depreciation
    and amortization expense based on the fair market value of the assets
    acquired, as if the 1996 and 1997 Acquisitions had occurred as of January
    1, 1996. Such depreciation and amortization has been recorded in
    accordance with the Company's accounting policies as stated in Notes 3 and
    4 to the Consolidated Financial Statements. The purchase price allocation
    may change upon the final appraisal of the fair market value of the net
    assets acquired. However, management believes that any change in value
    will not materially impact the amount of depreciation and amortization
    recorded.     
   
(d) Represents interest expense of $8,764 and $1,369 in 1996 and for the three
    months ended March 31, 1997, respectively, on debt incurred to finance the
    1996 and 1997 Acquisitions, using an effective annual interest rate of
    8.3% and 9.5%, respectively.     
   
(e) Reflects interest expense on $200,000 of 1996 Notes at 11 1/8%, $100,000
    of 1997 Notes at an assumed rate, net interest expense of $149 and $393 on
    other pro forma indebtedness, commitment fees on existing Senior
    Indebtedness of $471 and $113 and amortization of deferred financing costs
    of $1,238 and $311, offset by the elimination of interest expense on
    $70,000 of the 1996 Notes that will be redeemed from the proceeds of the
    Equity Offerings and elimination of $322 and $79 of related amortization
    of the deferred financing costs in 1996 and for the three months ended
    March 31, 1997, respectively. The redemption of the 1996 Notes will
    require a prepayment penalty equal to 10% of the portion of the 1996 Notes
    redeemed and the write-off of deferred financing costs of approximately
    $2,975, which will be recorded in the quarter in which the redemption
    occurs and has not been reflected in the Pro Forma Condensed Consolidated
    Statements of Operations.     
   
(f) The Company operates as a Subchapter S corporation for income tax purposes
    and will terminate such status in connection with the Equity Offerings.
    The pro forma income taxes represent taxes on the pro forma loss before
    income taxes and extraordinary charge after addback of all pro forma non-
    deductible expenses of approximately $4,000 in 1996 and $1,000 for the
    three months ended March 31, 1997.     
 
                                      24
<PAGE>
 
         SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED STATEMENTS OF
                   OPERATIONS, OTHER DATA AND BALANCE SHEETS
   
  The following selected consolidated statements of operations and balance
sheets, insofar as it relates to each of the five years in the period ended
December 31, 1996, have been derived from the Consolidated Financial
Statements of the Company which have been audited by Arthur Andersen LLP,
independent public accountants. The report of Arthur Andersen LLP with respect
to the Company's Consolidated Financial Statements for the years ended
December 31, 1994, 1995 and 1996 appears elsewhere in this Prospectus. The
selected historical and pro forma consolidated statements of operations and
balance sheet data as of and for the three months ended March 31, 1997 and the
summary historical statement of operations data for the three months ended
March 31, 1996 have been derived from unaudited consolidated financial
statements which, in the opinion of management, include all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation
of the results of the unaudited interim period. Results for the three months
ended March 31, 1997 are not necessarily indicative of results that may be
expected for the entire year.     
          
  The following selected pro forma statements of operations, other data and
balance sheet give effect to, among other things, the 1996 and 1997
Acquisitions, the termination of the Company's status as a Subchapter S
corporation for income tax purposes and the impact of the Offerings, as if
each of these items had occurred on January 1, 1996 or as of March 31, 1997 in
the case of the balance sheet. The selected pro forma statements of operations
and balance sheet do not reflect the acquisition of AFSS or the Pending
Acquisitions, which are not significant.     
   
  The pro forma items are described in the accompanying notes hereto. The pro
forma information should be read in conjunction with the Company's
Consolidated Financial Statements and notes thereto as of December 31, 1996
and for the three years in the period then ended, appearing elsewhere in this
Prospectus. This pro forma information is not necessarily indicative of the
results that would have occurred had the 1996 and 1997 Acquisitions, the
Subchapter S corporation termination and the Offerings been completed on the
dates indicated or the Company's actual or future results or financial
position.     
 
  The information set forth below should be read in conjunction with the Pro
Forma Condensed Consolidated Financial Statements, the Company's Consolidated
Financial Statements and the related notes thereto, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
appearing elsewhere in this Prospectus.
 
                                      25
<PAGE>
 
          SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED STATEMENTS OF
                   OPERATIONS, OTHER DATA AND BALANCE SHEETS
 
 
<TABLE>   
<CAPTION>
                                                                                              THREE MONTHS
                                       YEAR ENDED DECEMBER 31,                               ENDED MARCH 31,
                          ---------------------------------------------------------     ------------------------------
                                                                          PRO FORMA                          PRO FORMA
                           1992     1993     1994     1995     1996        1996(A)       1996     1997        1997(A)
                          -------  -------  -------  -------  -------     ---------     -------  -------     ---------
                                         (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                       <C>      <C>      <C>      <C>      <C>         <C>           <C>      <C>         <C>
STATEMENT OF OPERATIONS
 DATA:
Revenues
 Storage................  $37,633  $42,122  $47,123  $55,501  $75,900     $ 98,885      $16,969  $23,322      $26,112
 Service and storage
  material sales........   25,202   31,266   35,513   39,895   53,848       68,953       12,730   16,910       18,519
                          -------  -------  -------  -------  -------     --------      -------  -------      -------
 Total revenues.........   62,835   73,388   82,636   95,396  129,748      167,838       29,699   40,232       44,631
Cost of sales, excluding
 depreciation and
 amortization...........   39,702   45,391   49,402   55,616   73,870       93,299       17,406   22,298       24,948
Selling, general and
 administrative.........    9,012   11,977   15,882   16,148   20,007       33,018        4,856    6,762        8,052
Depreciation and
 amortization...........    5,734    6,888    8,436    8,163   12,869       18,169        2,572    4,214        4,808
Consulting payments to
 related parties(b).....      --       --       500      500      --           --           125      --           --
Non-recurring
 charges(c).............      --       --       --       --     3,254        3,254          --       --           --
Foreign currency
 translation............      --       --       --       --       --           --           --       182          182
                          -------  -------  -------  -------  -------     --------      -------  -------      -------
 Operating income.......    8,387    9,132    8,416   14,969   19,748       20,098        4,740    6,776        6,641
Interest expense........    6,388    6,160    7,216    9,622   17,225       25,250        2,846    6,712        6,728
                          -------  -------  -------  -------  -------     --------      -------  -------      -------
 Income before income
  taxes and
  extraordinary charge..    1,999    2,972    1,200    5,347    2,523       (5,152)       1,894       64          (87)
Income taxes............      --       --       --       --       --          (350)(d)      --       --           372 (d)
Extraordinary
 charge(e)..............      --     9,174    5,991    3,279    2,015          --           --       --           --
                          -------  -------  -------  -------  -------     --------      -------  -------      -------
Net income (loss).......    1,999   (6,202)  (4,791)   2,068      508       (4,802)       1,894       64         (459)
Accretion (cancellation)
 of redeemable
 warrants...............      --      (746)      16      889    1,561          --         1,561      --           --
                          -------  -------  -------  -------  -------     --------      -------  -------      -------
Net income (loss)
 applicable to Common
 shareholders...........  $ 1,999  $(5,456) $(4,807) $ 1,179  $(1,053)    $ (4,802)     $   333  $    64      $  (459)
                          =======  =======  =======  =======  =======     ========      =======  =======      =======
Pro forma data
 (unaudited):
 Pro forma adjustment
  for income taxes
  excluding
  extraordinary charge..                                      $ 1,659 (d)                        $   291 (d)
 Historical income
  (loss) before
  extraordinary charge,
  as adjusted for pro
  forma income taxes....                                      $   864                            $  (227)
 Historical income
  (loss) before
  extraordinary charge
  per Common share, as
  adjusted for pro forma
  income taxes..........                                      $   .08 (f)                        $  (.02)(f)
 Historical net loss
  applicable to Common
  shareholders, as
  adjusted for pro forma
  income taxes..........                                      $(1,958)                           $  (227)
 Historical net loss
  applicable to Common
  shareholders per
  Common share, as
  adjusted for pro forma
  income taxes..........                                      $  (.18)(f)                        $  (.02)(f)
 Shares used in
  computing per share
  amounts...............                                       10,612                             10,550
 Pro forma net loss
  applicable to Common
  shareholders per
  Common share..........                                                  $   (.45)(g)                          $(.04)(g)
 Pro forma shares used
  in computing per share
  amount................                                                    10,612                             10,550
OTHER DATA:
Total revenue growth
 rate...................     12.9%    16.8%    12.6%    15.4%    36.0%        75.9%        33.6%    35.5%        50.3%
Operating income (before
 non-recurring charges)
 margin.................     13.3%    12.4%    10.2%    15.7%    17.7%        13.9%        16.0%    16.8%        14.9%
EBITDA(h)...............  $14,121  $16,020  $17,352  $23,632  $35,871     $ 41,521      $ 7,437  $11,172      $11,631
EBITDA, as adjusted
 (i)....................      --       --       --       --       --      $ 52,342          --       --       $13,642
EBITDA margin...........     22.5%    21.8%    21.0%    24.8%    27.6%        24.7%        25.0%    27.8%        26.1%
EBITDA, as adjusted
 margin.................      --       --       --       --       --          31.2%         --       --          30.6%
Capital
 expenditures(j)........  $ 5,565  $ 5,827  $ 6,352  $16,288  $23,493          --       $ 3,553  $10,794          --
Cubic feet of storage
 under management at end
 of period (000s).......   16,248   19,025   22,160   29,523   40,410       47,191       31,088   43,354       49,983 (k)
</TABLE>    
 
<TABLE>   
<CAPTION>
                                      AS OF DECEMBER 31,                      AS OF MARCH 31,
                         ------------------------------------------------  ----------------------
                                                                                     PRO FORMA(L)
                           1992      1993      1994      1995      1996      1997        1997
                         --------  --------  --------  --------  --------  --------  ------------
                                               (DOLLARS IN THOUSANDS)
<S>                      <C>       <C>       <C>       <C>       <C>       <C>       <C>
BALANCE SHEET DATA:
Working capital
 deficit................ $(11,656) $ (9,143) $ (5,202) $ (8,139) $(23,933) $ (6,778)   $   (463)
Total assets............   65,869    74,621    79,746   131,328   234,820   266,462     337,306
Total debt (including
 redeemable warrants)...   55,027    69,736    77,683   120,071   217,423   254,762     249,687
Shareholders' equity
 (deficit)..............   (9,028)  (14,508)  (19,341)  (18,201)  (25,438)  (25,394)     39,466
</TABLE>    
 
                                       26
<PAGE>
 
            NOTES TO SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED
            STATEMENTS OF OPERATIONS, OTHER DATA AND BALANCE SHEETS
   
(a) Gives effect to the (i) 1996 and 1997 Acquisitions, (ii) termination of
    the Company's status as a Subchapter S corporation and (iii) impact of the
    Offerings, as if each of these items had occurred on January 1, 1996. See
    "Pro Forma Financial Data" and Note 2 of the Notes to Consolidated
    Financial Statements. The pro forma statements of operations and balance
    sheet do not reflect the acquisition of AFSS and the Pending Acquisitions,
    which are not significant. Upon the termination of the Company's status as
    a Subchapter S corporation, the Company will record a deferred income tax
    provision of approximately $6,645 for the tax effect of differences in the
    basis of assets and liabilities for financial reporting and income tax
    purposes. This deferred income tax provision has not been reflected in the
    Pro Forma Condensed Consolidated Statement of Operations. Also not
    reflected in the Pro Forma Condensed Consolidated Statement of Operations
    is the extraordinary charge for the early extinguishment of a portion of
    the 1996 Notes that will occur in the quarter in which the redemption
    occurs (see (e) below) and an unusual charge of approximately $1,752
    (pretax), or $.07 per share, for the write-off of the estimated
    unamortized compensation expense associated with options granted on
    January 1, 1997, due to the acceleration of vesting upon the completion of
    the Offerings.     
 
(b) Represents aggregate payments made to eight Pierce family members.
   
(c) Represents non-recurring charges in 1996 of $2,764 paid to a related party
    partnership to assume the partnership's position in certain leases with
    third parties and of $490 for the establishment of an annual pension for
    Leo W. Pierce, Sr. and his spouse.     
   
(d) The Company has historically been taxed as a Subchapter S corporation.
    Such status will be terminated in connection with the completion of the
    Equity Offerings. See "Management's Discussion and Analysis of Financial
    Condition and Results of Operations" and Note 2 of Notes to Consolidated
    Financial Statements.     
   
(e) Represents loss on early extinguishment of debt due to refinancings in
    1993, 1994, 1995 and 1996. Amounts include write-off of unamortized
    deferred financing costs and discount, along with prepayment penalties and
    other costs. A similar charge for the early extinguishment of a portion of
    the 1996 Notes of approximately $9,975 (pretax), or $.39 per share, will
    occur in the quarter in which the redemption occurs. Such charge has not
    been reflected in the Pro Forma Condensed Consolidated Statement of
    Operations. See "Use of Proceeds" and "Management's Discussion and
    Analysis of Financial Condition and Results of Operations."     
          
(f) See Note 2 of Notes to Consolidated Financial Statements for information
    concerning the computation of historical net loss per share as adjusted
    for pro forma income taxes. Excluding the non-recurring charges incurred
    in 1996, pro forma net income and net income per share as adjusted for
    income taxes would have been $27 and $0, respectively.     
   
(g) Excluding $10,821 and $2,011 of operating expenses included in the pro
    forma statements of operations for 1996 and for the three months ended
    March 31, 1997, respectively, specifically identified by management that
    would not have been incurred had the 1996 and 1997 Acquisitions occurred
    as of January 1, 1996 and such cost savings been fully implemented as of
    such date, and excluding the non-recurring charges incurred in 1996, pro
    forma net income and net income per share would have been $3,765 and $.34,
    respectively, in 1996 and $768 and $.07 for the three months ended March
    31, 1997.     
   
(h) "EBITDA" is defined as net income (loss) before interest expense, taxes,
    depreciation and amortization, consulting payments to related parties,
    non-recurring charges, foreign currency translation, and extraordinary
    charge. EBITDA is not a measure of performance under GAAP. While EBITDA
    should not be considered in isolation or as a substitute for net income,
    cash flows from operating activities and other income or cash flow
    statement data prepared in accordance GAAP, or as a measure of
    profitability or liquidity, management understands that EBITDA is
    customarily used as a criteria in evaluating records management companies.
    Moreover, substantially all of the Company's financing agreements,
    including the Notes, contain covenants in which EBITDA is used as a
    measure of financial performance. See "Management's Discussion and
    Analysis of Financial Condition and Results of Operations" for a
    discussion of other measures of performance determined in accordance with
    GAAP and the Company's sources and applications of cash flows.     
   
(i) EBITDA, as adjusted is defined as EBITDA plus $10,821 and $2,011 of
    operating expenses in 1996 and the three months ended March 31, 1997,
    respectively, specifically identified by management that would not have
    been incurred had the 1996 and 1997 Acquisitions occurred as of January 1,
    1996 and such cost savings been fully implemented as of such date. See
    Note (b) of Notes to Pro Forma Condensed Consolidated Statements of
    Operations. Management expects to realize additional cost savings beyond
    the $10,821 and $2,011 specifically identified.     
 
(j) Capital expenditures for 1996 are comprised of $11.0 million for new
    shelving, $4.0 million for leasehold and building improvements, $3.8
    million for new facility purchases and related improvements, $2.9 million
    for data processing and $1.8 million for the purchase of transportation,
    warehouse and office equipment. Of the total 1996 capital expenditures,
    management estimates that approximately $2.5 million was for upgrading and
    restructuring of existing facilities to accommodate growth or for
    maintenance capital expenditures. The 1996 capital expenditures do not
    include $11.0
 
                                      27
<PAGE>
 
   million paid for real estate and other assets acquired from related parties
   (see Note 10 of Notes to the Consolidated Financial Statements).
   
(k) The pro forma cubic feet of storage as of March 31, 1997 includes cubic
    feet of storage from the acquisition of AFSS and the Pending Acquisitions.
           
(l) Gives effect to the (i) acquisition of RMS, (ii) termination of the
    Company's Subchapter S corporation status upon completion of the Equity
    Offerings and (iii) impact of the Offerings, as if each of these items had
    occurred on March 31, 1997. See "Pro Forma Financial Data," "Use of
    Proceeds" and Note 2 to Notes to Consolidated Financial Statements.     
 
                                      28
<PAGE>
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
GENERAL
   
  The Company is the largest archive records management company in North
America, as measured by its 50 million cubic feet of records currently under
management. The Company's operations date to 1957 when its predecessor
company, L.W. Pierce Co., Inc., was founded to provide filing systems and
related equipment to companies in the Philadelphia area. The Company expanded
primarily through internal growth until 1990, when it acquired Leahy Business
Archives which effectively doubled its size. Since 1992, the Company has
pursued an expansion strategy combining growth from new and existing customers
with the completion and successful integration of 26 acquisitions through 1996
and the completion of six acquisitions since January 1, 1997. The Company's
ability to pursue this acquisition strategy was substantially enhanced by the
implementation of the PLUS(R) system which began at the end of 1993 and was
completed in the beginning of 1995, and the expansion of the Company's credit
facilities beginning in 1994.     
 
  The Company has experienced significant growth in its revenues and operating
income as a result of its successful expansion and acquisition strategy.
During the five-year period ended December 31, 1996, revenues increased from
$62.8 million to $129.7 million, representing a compound annual growth rate of
19.9%. The Company has also made substantial investments in its facilities and
management information systems, the benefits of which are now being realized
through economies of scale and increased operating efficiencies. The Company's
operating income as a percentage of total revenues improved from 13.3% in 1992
to 15.2% in 1996 (17.7% excluding the non-recurring charges in 1996), while
operating income increased from $8.4 million in 1992 to $19.7 million in 1996
($23.0 million excluding the non-recurring charges in 1996). This increase
represents a compound annual growth rate of 23.9% as reported and 28.7%
excluding the non-recurring charges incurred in 1996. As the Company's volume
of business grows, the Company believes its substantial investment in
infrastructure will be amortized over a larger base of business, creating
further economies of scale.
          
  The Company's net income (loss) was $2.0 million, $(6.2) million, $(4.8)
million, $2.1 million and $.5 million in 1992, 1993, 1994, 1995 and 1996,
respectively. Although the Company's operating income has increased over the
five-year period, net income (loss) has fluctuated as a result of increases in
interest expense and extraordinary charges related to the early extinguishment
of debt due to refinancings in 1993, 1994, 1995 and 1996.     
   
  Another tool for measuring the performance of records management companies
is EBITDA. Substantially all of the Company's financing agreements, including
the Notes, contain covenants in which EBITDA is used as a measure of financial
performance. However, EBITDA should not be considered an alternative to
operating or net income (as determined in accordance with generally accepted
accounting principles ("GAAP")) as an indicator of the Company's performance
or to cash flow from operations (as determined in accordance with GAAP) as a
measure of liquidity. The Company's EBITDA as a percentage of total revenues
improved from 22.5% in 1992 to 27.6% in 1996, while EBITDA increased from
$14.1 million in 1992 to $35.9 million in 1996, representing a compound annual
growth rate of 26.2%.     
 
                                      29
<PAGE>
 
  The following table illustrates the growth in stored cubic feet from
existing customers, new customers and acquisitions from 1992 through 1996:
 
              NET ADDITIONS OF CUBIC FEET OF STORAGE BY CATEGORY
                           (CUBIC FEET IN THOUSANDS)
 
<TABLE>   
<CAPTION>
                                                                          THREE MONTHS
                               YEAR ENDED DECEMBER 31,                       ENDED
                          ------------------------------------------       MARCH 31,
                           1992    1993    1994    1995        1996           1997
                          ------  ------  ------  ------      ------      ------------
<S>                       <C>     <C>     <C>     <C>         <C>         <C>
Additions of Cubic Feet:
  New Customer
   Accounts(a)..........     995   1,494   1,038   2,018       2,994            746
  Existing Customer
   Accounts(b)..........   1,101   1,166   1,657     722  (c)    962  (c)       586
  Acquisitions..........     294     117     440   4,623       6,931          1,612
                          ------  ------  ------  ------      ------         ------
    Total...............   2,390   2,777   3,135   7,363      10,887          2,944
% Increase From:
  New Customer
   Accounts(a)..........       7%      9%      5%      9%         10%          *
  Existing Customer
   Accounts(b)..........       8%      7%      9%      3%(c)       3%(c)       *
  Acquisitions..........       2%      1%      2%     21%         24%          *
                          ------  ------  ------  ------      ------         ------
    Total...............      17%     17%     16%     33%         37%          *
Cubic Feet Under
 Management:
  Beginning of Period...  13,858  16,248  19,025  22,160      29,523         40,410
  End of Period.........  16,248  19,025  22,160  29,523      40,410         43,354
</TABLE>    
- --------
   
 * Not applicable.     
(a) For the first twelve months after the establishment of a customer account,
    records added to such account are classified as additions to new customer
    accounts in the period in which they are received.
(b) Net of permanent removals.
   
(c) Includes effect of a records destruction program of 372 and 475 cubic feet
    of records in 1995 and 1996, respectively, for a major customer, as
    recommended by the Company pursuant to a consulting agreement with the
    Company.     
 
 Revenues
   
  The Company's revenues consist of storage revenues (58.5% of total revenues
in 1996), and related service and storage material sales revenues (41.5% of
total revenues in 1996). The Company provides records storage and related
services under annual or multi-year contracts that typically provide for
recurring monthly storage fees which continue until such records are
permanently removed (for which the Company charges a service fee) and service
charges based on activity with respect to such records. The Company's current
average monthly storage rate is approximately $0.186 per cubic foot (or $2.23
per year). Permanent removal fees typically range from $2.00 to $5.75 per
cubic foot. Since there are relatively little direct ongoing marketing, labor
or capital expenditures associated with storing a box of records, recurring
storage fees contribute significantly to the Company's operating results.     
   
  While the Company's total revenues have increased at a compound annual
growth rate of 19.9% from 1992 to 1996, total revenue per annual average cubic
foot during such period has declined 8.4% from $4.17 to $3.82.* The decline is
principally attributable to (i) increases in sales to large volume accounts
under long-term contracts with discounted rates, which generate lower revenue
per cubic foot, but typically generate increased operating income, (ii)
renegotiation of contracts with existing customers to provide for longer term
contracts at lower rates, and (iii) competition. Declines in revenues per
cubic foot have been more than offset by improvements in operating
efficiencies and greater productivity as demonstrated by the increase in
EBITDA and EBITDA as a percentage of total revenues over the same period.     
 
- --------
   
*  For periods through 1994, average cubic feet is the average of cubic feet
   at the beginning and the end of the period; for periods beginning on or
   after January 1, 1995, average cubic feet is the average of the cubic feet
   at the end of each month in such period.     
 
                                      30
<PAGE>
 
 Operating Expenses and Productivity
 
  Operating expenses consist primarily of cost of sales, selling, general and
administrative expenses, and depreciation and amortization. Cost of sales are
comprised mainly of wages and benefits, facility occupancy costs, equipment
costs and supplies. The major components of selling, general and
administrative expenses are management, administrative, marketing and data
processing wages and benefits and also include travel, communication and data
processing expenses, professional fees and office expenses.
   
  In recent years, the Company has undertaken several steps to reduce
operating expenses, particularly labor and facility occupancy costs, which are
its two highest cost components. From 1992 to 1996, annual operating expenses
(before depreciation, amortization and consulting payments) per average annual
cubic foot declined 14.8% from $3.24 to $2.76.*     
   
  The installation of the PLUS(R) system (which took approximately five years
and over $8 million to develop and implement and an additional $2.1 million to
upgrade and expand capacity) has significantly reduced the Company's labor
requirements by streamlining administrative and warehouse work processes,
thereby reducing the labor required to process customer orders. The PLUS(R)
system also has increased the speed at which the Company can obtain labor
efficiencies when acquiring new records management companies, which in
conjunction with the Company's centralized corporate administrative functions,
has generally enabled the company to integrate several acquisition sites
concurrently and to reduce the workforce of acquired businesses by at least
20%.     
 
  The following table illustrates the Company's improvement in labor
productivity from 1992 to 1996:
 
                        ANALYSIS OF LABOR PRODUCTIVITY
 
<TABLE>
<CAPTION>
                                         1992    1993    1994    1995    1996
                                        ------- ------- ------- ------- -------
<S>                                     <C>     <C>     <C>     <C>     <C>
Cubic Feet Under Management Per
 Employee(a)..........................   19,961  23,033  24,405  24,521  26,021
EBITDA Per Employee(b)................  $18,162 $19,537 $20,014 $22,379 $26,022
Number of Employees at End of Period..      814     826     908   1,204   1,553
</TABLE>
- --------
(a) Based on end of period cubic footage under management and end of period
    number of employees.
(b) Based on the average of the number of employees at the beginning and end
    of period.
   
  The Company has begun to operate in larger, more efficient regional
facilities in some areas which generate economies of scale in both labor and
facility occupancy costs. For example, in 1995 the Company secured two new
facilities, one in New Jersey and one in Massachusetts, which expanded the
Company's storage capacity by 17 million cubic feet. The Company is in the
process of consolidating certain individual warehouses into these facilities
and anticipates realizing further economics of scale as it consolidates other
warehouses over the next two or three years as existing leases expire. This
added capacity is expected to satisfy the Company's growth requirements in its
Northeast region for several years. The Company intends to pursue this
consolidation strategy, when feasible, in other locations. Primarily as a
result of the new facilities in New Jersey and Massachusetts, warehouse
utilization has declined to approximately 64% at the end of 1996 from
historical levels of 70% to 80%. Increases in utilization rates at existing
facilities generally result in increased operating income because of the
relatively minimal incremental operating costs associated with such increased
utilization.     
 
- --------
   
*  For periods through 1994, average cubic feet is the average of cubic feet
   at the beginning and the end of the period; for periods beginning on or
   after January 1, 1995, average cubic feet is the average of the cubic feet
   at the end of each month in such period.     
 
                                      31
<PAGE>
 
  The Company's depreciation and amortization charges result primarily from
the capital-intensive nature of its business and the acquisitions the Company
has completed. The principal components of depreciation relate to shelving,
facilities and leasehold improvements, equipment for new facilities and
computer systems. Amortization primarily relates to the amortization of
intangible assets associated with acquisitions, including goodwill, and to the
amortization of client acquisition costs. The Company has accounted for all of
its acquisitions under the purchase method. Since the purchase price for
records management companies is usually substantially in excess of the fair
market value of their assets, these purchases have given rise to significant
goodwill and, accordingly, significant levels of amortization. Although
amortization is a non-cash charge, it does decrease reported net income.
       
 Capital Expenditures and Client Acquisition Costs
 
  The majority of the Company's capital expenditures are related to expansion.
The largest single component is the purchase of shelving which is directly
related to the addition of new records. The marginal cost of adding a cubic
foot of storage capacity in an existing facility is approximately $2.60, of
which approximately $2.00 is attributable to shelving costs. Shelving has a
relatively long life and rarely needs to be replaced. The remaining $.60 is
attributed to the installation of lighting and security systems and other
storage related modifications. Most of the Company's storage facilities (both
in number and square feet) are leased, but the Company will purchase
facilities on an opportunistic basis. The Company's data processing capital
expenditures are also largely related to growth.
 
  In 1996, capital expenditures of $23.5 million consisted of $11.0 million
for new shelving, $4.0 million for leasehold and building improvements, $3.8
million for new facility purchases and related improvements, $2.9 million for
data processing, and $1.8 million for the purchase of transportation,
warehouse and office equipment. Of the total 1996 capital expenditures,
management estimates that approximately $2.5 million was for maintenance
capital expenditures.
   
  In addition, in August 1996 in connection with the offering of the 1996
Notes, the Company purchased certain real estate interests and other assets
from affiliates for $14.9 million, of which $11.0 million was for the purchase
of facilities.     
 
  In connection with the acquisition of new large volume accounts, the Company
often incurs client acquisition costs, primarily sales commissions and move-in
costs. Client acquisition costs are capitalized and amortized over six years.
In 1996, the Company incurred $6.5 million of client acquisition costs.
Amortization of client acquisition costs amounted to $1.7 million in 1996.
 
 Extraordinary Charge
   
  To provide capital to fund its growth oriented business strategy, the
Company has incurred substantial indebtedness. The Company has completed
several expansions of its credit facilities, primarily utilizing bank debt,
which have resulted in one-time charges, including the repurchase of warrants
and the write- off of deferred financing costs of $6.0 million, $3.3 million
and $2.0 million in 1994, 1995 and 1996, respectively.     
   
  In connection with the use of the proceeds from the Equity Offerings, the
Company will incur a prepayment penalty of $7.0 million (pretax) to redeem a
portion of the 1996 Notes. In addition, approximately $3.0 million (pretax) of
unamortized deferred financing costs will be written off. This extraordinary
charge of approximately $10.0 million (pretax) will be recorded in the quarter
in which the redemption occurs. Upon the completion of the Equity Offerings,
the Company's status as a Subchapter S corporation will terminate and a
deferred income tax provision of approximately $6.6 million will be recorded.
In addition, due to the acceleration of the vesting of certain options which
will occur upon the completion of the Equity Offerings, the Company will also
record an unusual charge of approximately $1.8 million (pretax) the estimated
unamortized compensation expense associated with stock options granted on
January 1, 1997 in the quarter in which the Offerings are consummated. See
Note 8 of Notes to Consolidated Financial Statements.     
 
                                      32
<PAGE>
 
RESULTS OF OPERATIONS
 
  The following table sets forth, for the periods indicated, information
derived from the Company's consolidated statements of operations, expressed as
a percentage of revenue. There can be no assurance that the trends in revenue
growth or operating results shown below will continue in the future.
 
<TABLE>   
<CAPTION>
                                                               THREE MONTHS
                                YEARS ENDED DECEMBER 31,      ENDED MARCH 31,
                               -----------------------------  ----------------
                                 1994       1995      1996     1996     1997
                               --------   --------  --------  -------  -------
   <S>                         <C>        <C>       <C>       <C>      <C>
   REVENUES:
     Storage..................     57.0%      58.2%     58.5%    57.1%    58.0%
     Service and storage
      material sales..........     43.0       41.8      41.5     42.9     42.0
                               --------   --------  --------  -------  -------
       Total revenues.........    100.0      100.0     100.0    100.0    100.0
   Cost of sales, excluding
    depreciation and
    amortization..............     59.8       58.3      57.0     58.6     55.4
   Selling, general and
    administrative............     19.2       16.9      15.4     16.3     16.8
   Depreciation and
    amortization..............     10.2        8.6       9.9      8.7     10.5
   Consulting payments to
    related parties...........      0.6        0.5         0      0.4        0
   Foreign currency
    translation...............        0          0         0        0      0.4
   Non-recurring charges......        0          0       2.5        0        0
                               --------   --------  --------  -------  -------
     Operating income.........     10.2       15.7      15.2     16.0     16.9
   Interest expense...........      8.7       10.1      13.3      9.6     16.7
                               --------   --------  --------  -------  -------
     Income before
      extraordinary charge....      1.5        5.6       1.9      6.4      0.2
   Extraordinary charge.......      7.3        3.4       1.5        0        0
                               --------   --------  --------  -------  -------
     Net income (loss)........     (5.8%)      2.2%      0.4%     6.4%     0.2%
                               ========   ========  ========  =======  =======
   OTHER DATA:
     EBITDA...................     21.0%      24.8%     27.7%    25.0%    27.8%
     Operating income before
      non-recurring charges
      and foreign currency
      translation.............     10.2%      15.7%     17.7%    16.0%    17.3%
</TABLE>    
   
 Three Months Ended March 31, 1996 Compared to Three Months Ended March 31,
1997     
   
  Total revenues increased from $29.7 million for the first quarter of 1996 to
$40.2 million for the first quarter of 1997, an increase of $10.5 million, or
35.5%. Sixteen acquisitions completed from March 1996 to January 1997
accounted for $7.2 million, or 68.6%, of such increase in total revenues. The
balance of the revenue growth resulted from sales to new customers and from
net increases in cubic feet stored from existing customers.     
   
  Storage revenues increased from $17.0 million for the first quarter of 1996
to $23.3 million for the first quarter of 1997, an increase of $6.3 million,
or 37.4%. Service and storage material sales revenues increased from $12.7
million for the first quarter of 1996 to $16.9 million for the first quarter
of 1997, an increase of $4.2 million, or 32.8%.     
   
  Cost of sales (excluding depreciation and amortization) increased from $17.4
million in the three months ended March 31, 1996 to $22.3 million in the three
months ended March 31, 1997, an increase of $4.9 million, or 28.1%, but
decreased as a percentage of total revenues from 58.6% in 1996 to 55.4% in
1997. The $4.9 million increase in cost of sales resulted primarily from an
increase in cubic feet stored from internal growth and acquisitions. The
decrease in cost of sales as a percentage of total revenues was due primarily
to the realization of operating efficiencies.     
   
  Selling, general and administrative expenses increased from $4.9 million for
the first quarter of 1996 to $6.8 million for the first quarter of 1997, an
increase of $1.9 million, or 39.3%, and increased as a percentage of revenues
from 16.3% for the first quarter of 1996 to 16.8% for the first quarter of
1997. The dollar increase was primarily attributable to increases in
administrative staffing, including increases due to acquisitions. The increase
as a percentage of total revenues was due primarily to increased marketing
expenses related to the recent expansion of the sales and marketing force and
employee training.     
   
  Depreciation and amortization expense increased from $2.6 million for the
first quarter of 1996 to $4.2 million for the first quarter of 1997, an
increase of $1.6 million, or 63.8%, and increased as a percentage of     
 
                                      33
<PAGE>
 
   
revenues from 8.7% for the first quarter of 1996 to 10.5% for the first
quarter of 1997. The increase was primarily attributable to the additional
depreciation and amortization expense related to the sixteen acquisitions
completed from March 1996 to January 1997, plus capital expenditures for
buildings, shelving, improvements to records management facilities and
information systems, and client acquisition costs.     
   
  Interest expense increased from $2.8 million for the first quarter of 1996
to $6.7 million for the first quarter of 1997, an increase of $3.9 million, or
135.8%. The increase was primarily attributable to increased indebtedness
related to financing acquisitions and capital expenditures, as well as the
higher interest rate on the Company's 11 1/8% Senior Subordinated Notes
compared to the bank debt repaid upon the issuance of such Notes.     
   
  As a result of the foregoing factors, the Company had net income of $1.9
million (6.4% of revenues) for the first quarter of 1996 compared to net
income of $0.1 million (.2% of revenues) for the first quarter of 1997.     
   
  EBITDA increased from $7.4 million for the first quarter of 1996 to $11.2
million for the first quarter of 1997, an increase of $3.8 million, or 50.2%.
As a percentage of revenues, EBITDA increased from 25.0% for the first quarter
of 1996 to 27.8% for the first quarter of 1997.     
 
 Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
 
  Total revenues increased from $95.4 million in 1995 to $129.7 million in
1996, an increase of $34.3 million or 36.0%. Revenues from acquisitions
represented $25.7 million or 74.9% of this increase, including $16.3 million
from a full year of operations of five acquisitions made in 1995 and $9.4
million from a partial year of operations of twelve acquisitions made in 1996.
Approximately $8.6 million or 25.1% of the total revenue growth resulted from
sales to new customers and increases in cubic feet stored from existing
customers.
 
  Storage revenues increased from $55.5 million in 1995 to $75.9 million in
1996, an increase of $20.4 million or 36.8%. Service and storage material
sales revenues increased from $39.9 million in 1995 to $53.8 million in 1996,
an increase of $13.9 million or 35.0%.
 
  The annual average cubic feet stored increased from approximately 25.1
million in 1995 to approximately 34.0 million in 1996, an increase of 35.5% as
a result of acquisitions, new customer accounts and growth from existing
customer accounts.
 
  Cost of sales (excluding depreciation and amortization) increased from $55.6
million in 1995 to $73.9 million in 1996, an increase of $18.3 million or
32.8%, but decreased as a percentage of total revenues from 58.3% in 1995 to
57.0% in 1996. The $18.3 million increase was due primarily to increases in
wages and benefits resulting from an increased number of employees and to
increases in facility occupancy costs associated with the growth in business.
The decrease as a percentage of total revenue was due primarily to increased
operating and storage efficiencies.
 
  Selling, general and administrative expenses increased from $16.1 million in
1995 to $20.0 million in 1996, an increase of $3.9 million or 23.9%, and
decreased as a percentage of total revenues from 16.9% in 1995 to 15.4% in
1996. The decrease as a percentage of total revenues was due to operating
efficiencies and the implementation of programs to control and reduce certain
administrative expenses. The purchase of certain real estate interests from
affiliates in August 1996 contributed $0.9 million to the reduction in cost of
sales or 0.7% as a percentage of revenues.
 
  Depreciation and amortization expenses increased from $8.2 million in 1995
to $12.9 million in 1996, an increase of $4.7 million or 57.7%, and increased
as a percentage of total revenues from 8.6% in 1995 to 9.9% in 1996. This
increase was the result of increased capital expenditures for shelving and
improvements to record management facilities and information systems and the
amortization of goodwill from the Company's acquisitions.
 
 
                                      34
<PAGE>
 
   
  The Company incurred non-recurring charges of $3.3 million in 1996 in
connection with the assumption of leasehold interests in certain facilities
from affiliated parties and with the establishment of a pension for Leo W.
Pierce, Sr. See "Management--Compensation Committee Interlocks and Insider
Participation."     
 
  As a result of the foregoing factors, excluding the non-recurring charges in
1996, operating income increased from $15.0 million in 1995 to $23.0 million
in 1996, an increase of 53.7%, and increased as a percentage of total revenues
from 15.7% in 1995 to 17.7% in 1996. The increase reflected the growth in the
Company's business, economies of scale and increased operating efficiencies.
 
  Interest expense increased from $9.6 million in 1995 to $17.2 million in
1996, an increase of $7.6 million or 79.0%, due primarily to higher levels of
indebtedness. The Company recorded extraordinary charges of $3.3 million in
1995 and $2.0 million in 1996 related to the early extinguishment of debt as a
result of refinancing and expanding its existing credit agreement in 1995 and
again in 1996.
 
  As a result of the foregoing factors, net income was $0.5 million in 1996
compared to net income of $2.1 million in 1995.
 
  EBITDA increased from $23.6 million in 1995 to $35.9 million in 1996, an
increase of $12.3 million or 51.8%, and increased as a percentage of total
revenues from 24.8% in 1995 to 27.7% in 1996. The increase as a percentage of
the total revenues reflected growth in the Company's business, economies of
scale and increased operating efficiencies.
 
 Year Ended December 31, 1995 Compared to Year Ended December 31, 1994
 
  Total revenues increased from $82.6 million in 1994 to $95.4 million in
1995, an increase of $12.8 million or 15.4%. Almost one-half of the total
revenue growth resulted from sales to new customers and increases in cubic
feet stored from existing customers, partially offset by the reduction of
records of a major customer pursuant to a records destruction program
recommended by the Company pursuant to a consulting agreement with the
Company. Five acquisitions completed from February 1995 to October 1995
accounted for $6.6 million (or 51.6%) of the increase.
 
  Storage revenues increased from $47.1 million in 1994 to $55.5 million in
1995, an increase of $8.4 million or 17.8%. Service and storage material sales
revenues increased from $35.5 million in 1994 to $39.9 million in 1995, an
increase of $4.4 million or 12.3%.
 
  The annual average cubic feet stored increased from approximately 20.6
million in 1994 to approximately 25.1 million in 1995, an increase of 21.8% as
a result of acquisitions, new customer accounts and growth from existing
customer accounts.
 
  Cost of sales (excluding depreciation and amortization) increased from $49.4
million in 1994 to $55.6 million in 1995, an increase of $6.2 million or
12.6%, but decreased as a percentage of total revenues from 59.8% in 1994 to
58.3% in 1995. The $6.2 million increase was due primarily to increases in
storage volume and the associated cost of additional storage capacity. The
decrease as a percentage of total revenues was due primarily to increased
operating and storage efficiencies, in part reflecting the full implementation
of the PLUS(R) system during the first quarter of 1995.
 
  Selling, general and administrative expenses increased from $15.9 million in
1994 to $16.1 million in 1995, an increase of $0.2 million or 1.7%, and
decreased as a percentage of total revenues from 19.2% in 1994 to 16.9% in
1995. The decrease as a percentage of total revenues was due to operating
efficiencies and the implementation of programs to control and reduce certain
administrative expenses.
 
  Depreciation and amortization expenses decreased from $8.4 million in 1994
to $8.2 million in 1995, a decrease of $0.2 million or 3.2%, and decreased as
a percentage of total revenues from 10.2% in 1994 to 8.6% in 1995. This
decrease, both in dollars and as a percentage of total revenues, was due
primarily to the Company's
 
                                      35
<PAGE>
 
revision of the estimated useful lives of certain long-term assets, effective
January 1, 1995, to more accurately reflect the estimated economic lives of
the related assets and to be more in conformity with industry practices. The
aggregate effect of adopting these revised lives was to decrease amortization
and depreciation expense by approximately $4.9 million. This change more than
offset what would have been an increase in depreciation charges resulting from
capital expenditures for shelving and improvements to records management
facilities and information systems and the amortization of goodwill from the
Company's acquisitions.
 
  As a result of the foregoing factors, operating income increased from $8.4
million in 1994 to $15.0 million in 1995, an increase of 77.9%, and increased
as a percentage of the total revenues from 10.2% in 1994 to 15.7% in 1995. The
increases reflect the growth in the Company's business, economies of scale and
increased operating efficiencies.
 
  Interest expense increased from $7.2 million in 1994 to $9.6 million in
1995, an increase of $2.4 million or 33.3%, due primarily to higher levels of
indebtedness. The Company recorded extraordinary charges of $6.0 million in
1994 and $3.3 million in 1995 related to the early extinguishment of debt as a
result of refinancing and expanding its then existing credit agreement in 1994
and again in 1995.
 
  As a result of the foregoing factors, net income was $2.1 million in 1995
compared to a net loss of $4.8 million in 1994.
 
  EBITDA increased from $17.4 million in 1994 to $23.6 million in 1995, an
increase of $6.2 million or 36.2%, and increased as a percentage of total
revenues from 21.0% in 1994 to 24.8% in 1995. The increase as a percentage of
total revenues reflected growth in the Company's business, economies of scale
and increased operating efficiencies.
 
LIQUIDITY AND CAPITAL RESOURCES
 
  The Company's primary sources of capital have been cash flows from
operations and borrowings under various revolving credit facilities and other
senior indebtedness. Historically, the Company's primary uses of capital have
been acquisitions, capital expenditures and client acquisition costs.
   
  The net proceeds from the Equity Offerings will be primarily used to redeem
a portion of the 1996 Notes, and the net proceeds of the Notes Offering will
be primarily used to repay outstanding amounts under the Credit Facility. The
result of the use of proceeds from the Offerings will be to reduce the
Company's leverage and improve its financial flexibility. As of March 31,
1997, on a pro forma basis after giving effect to the 1997 Acquisitions
completed after such date, the Pending Acquisitions, the Offerings and the
estimated use of the net proceeds therefrom, the Company's consolidated
indebtedness would have been approximately $257.2 million. As of March 31,
1997, the Company's consolidated indebtedness was $254.8 million, and adjusted
for the 1997 Acquisitions completed after such date and the Pending
Acquisitions, the Company's consolidated indebtedness would have been $324.3
million. The Company believes that future cash flows from operations, together
with borrowings under the Credit Facility and any net proceeds of the
Offerings not used to repay indebtedness, will be sufficient to fund future
working capital needs, capital expenditure requirements and debt service
requirements of the Company for the foreseeable future.     
 
 Capital Investments
   
  For 1994, 1995 and 1996 and the three months ended March 31, 1997, capital
expenditures were $6.4 million, $16.3 million, $23.5 million and $10.8
million, respectively, and client acquisition costs were $1.9 million, $2.2
million, $6.5 million and $1.8 million, respectively. Capital expenditures for
1996 were comprised of $11.0 million for new shelving, $4.0 million for
leasehold and building improvements, $3.8 million for new facility purchases
and related improvements, $2.9 million for data processing, and $1.8 million
for the purchase of transportation, warehouse and office equipment.     
   
  In addition, in August 1996 in connection with the offering of the 1996
Notes, the Company purchased certain real estate interests and other assets
from affiliates for $14.9 million, of which $11.0 million was for the purchase
of facilities.     
 
                                      36
<PAGE>
 
   
  In 1997, the Company expects its aggregate capital expenditures will
approximate $34 million. Of this amount, approximately $10 million is expected
to be related to the purchase of facilities. Of the remaining $24 million,
over 85% is anticipated to be growth related, principally for shelving for new
records.     
 
 Acquisitions
   
  In order to capitalize on industry consolidation opportunities, the Company
has actively pursued acquisitions since the beginning of 1994, which has
significantly impacted liquidity and capital resources. From 1994 to 1996, the
Company acquired 21 records management companies for an aggregate cash
purchase price of $97.6 million. Since the beginning of 1997, the Company has
made six acquisitions for an aggregate cash purchase price of $82.1 million.
The Company has historically financed its acquisitions with borrowings under
its credit agreements and the 1996 Notes and with cash flows from existing
operating activities. In the past, the Company has relied solely upon cash as
consideration for its acquisitions; however, following the Offerings, the
Company may also use equity securities or a combination of cash and equity
securities to purchase other records management companies. The Company
currently has two acquisitions pending for an aggregate purchase price of $6.4
million which are expected to be financed with borrowings under the Credit
Facility.     
 
  To the extent that future acquisitions are financed by additional borrowings
under its Credit Facility or other types of indebtedness, the resulting
increase in debt and interest expense could have a negative effect on such
measures of liquidity as debt to equity.
 
 Certain Effects Resulting from Acquisitions
   
  As a result of its substantial acquisition experience, the Company has
developed a standardized program by which it integrates acquired companies
into its existing infrastructure. The integration of an acquired company
entails, among other things, converting the database of stored records to the
PLUS(R) system, reorganizing archive operating activities and eliminating
certain back office activities which can be handled through the PLUS(R) system
or the Company's centralized corporate organization. Certain savings start to
be realized a short time after an acquisition. The pro forma operating
expenses reflected in the Pro Forma Condensed Consolidated Statement of
Operations for the year ended December 31, 1996 and the three months ended
March 31, 1997 would have been reduced by an estimated $10,821 and $2,011,
respectively, for specifically identified items had the acquisitions completed
in 1996 and the 1997 Acquisitions occurred as of January 1, 1996. See Note (b)
to the Pro Forma Condensed Consolidated Statement of Operations. These savings
relate to (i) the termination of certain employees due to the efficiency of
the PLUS(R) system and integration and consolidation of facilities, (ii) a
reduction in warehouse rent expense related to facilities the Company has
vacated or will vacate or has negotiated changes in lease terms and (iii) a
reduction of other operating costs due to the Company's economies of scale.
Management expects to realize additional cost savings beyond the $10,821 and
$2,011 specifically identified.     
 
 Sources of Funds
   
  Net cash flows provided by operating activities were $11.0 million, $17.5
million and $26.4 million for 1994, 1995 and 1996, respectively, and net cash
flows used in operating activities was $5.5 million for the three months ended
March 31, 1997. The $6.5 million increase from 1994 to 1995 was primarily
comprised of a $6.9 million increase in net income and a $3.4 million decrease
in working capital offset in part by a $2.7 million decline in extraordinary
charges. The $8.9 million increase from 1995 to 1996 was primarily comprised
of a $4.7 million increase in depreciation and amortization and a $6.8 million
decrease in working capital, offset by a $1.6 million decrease in net income
and a $1.3 million decline in extraordinary charges.     
   
  Net cash flows used in investing activities were $13.9 million, $51.3
million, $108.8 million and $31.9 million, for 1994, 1995, 1996 and the three
months ended March 31, 1997, respectively. The uses of such cash flows were
primarily for acquisitions, capital expenditures and client acquisition
expenditures detailed above.     
   
  Net cash flows provided by financing activities were $2.8 million, $34.2
million, $82.9 million and $37.3 million, for 1994, 1995, 1996 and the three
months ended March 31, 1997, respectively. In 1994, the Company's previous
credit facility was expanded to $120.0 million and included a substantial
acquisition facility. In 1995,     
 
                                      37
<PAGE>
 
   
the Company's previous credit facility was expanded to $170.0 million,
including a substantial acquisition facility, and provided funds for the
acquisition of PLC Command in Canada. In July 1996, the Company issued $200.0
million of the 1996 Notes and used the net proceeds to retire all of the debt
outstanding under the Company's previous credit facility, to purchase certain
properties from affiliates of the Company, to redeem stock from a shareholder
of the Company, to fund an acquisition and for general corporate purposes. In
August 1996, the Company entered into the Credit Facility which provides
$100.0 million in U.S. dollar borrowings and Cdn $35.0 million in Canadian
dollar borrowings. The amount of U.S. dollar borrowings provided for under the
Credit Facility was subsequently increased to $110.0 million. The Credit
Facility contains a number of financial and other covenants restricting the
Company's ability to incur additional indebtedness and make certain types of
expenditures. Covenants in the Indenture governing the 1996 Notes also
restrict borrowings under the Credit Facility. As of March 31, 1997, after
giving effect to the 1997 Acquisitions completed after such date, the Pending
Acquisitions and pro forma for the Offerings and the application of the
estimated net proceeds therefrom (at an assumed initial public offering price
of $16.50 per share), the Company could have borrowed $66.9 under the Credit
Facility. The interest rate on the Credit Facility, pro forma for the
Offerings, the 1997 Acquisitions completed after such date and the Pending
Acquisitions, would have been 7.7%. Although there can be no assurances, the
Company anticipates that subsequent to the Offerings, it will amend its Credit
Facility to permit, at the Company's option, an increase in the total
availability of U.S. dollar borrowings of up to an aggregate of $150.0 million
and to change certain other provisions of the Credit Facility. See
"Description of Certain Indebtedness--Credit Facility."     
 
 Future Capital Needs
 
  Management believes that cash flow from operations in conjunction with the
net proceeds of the Offerings and borrowings under the Credit Facility will be
sufficient for the foreseeable future to meet working capital requirements and
to make possible future acquisitions and capital expenditures. Depending on
the pace and size of future possible acquisitions, the Company may elect to
seek additional debt or equity financing. There can be no assurance that the
Company will be able to obtain any future financing, if required, or that the
terms for any such future financing would be favorable to the Company.
 
                                      38
<PAGE>
 
                                   BUSINESS
 
GENERAL
   
  The Company is the largest archive records management company in North
America, as measured by its 50 million cubic feet of records currently under
management. The Company operates a total of 161 records management facilities
of which 148 are in the United States, serving 58 markets, including the 16
largest U.S. markets. In addition, the Company operates 13 records management
facilities in five of Canada's six largest markets.     
 
  The Company is a full-service provider of records management and related
services, enabling customers to outsource their data and records management
functions. The Company offers storage for all major media, including paper
(which has typically accounted for approximately 95% of the Company's storage
revenues), computer tapes, optical discs, microfilm, video tapes and X-rays.
In addition, the Company provides next day or same day records retrieval and
delivery, allowing customers prompt access to all stored material. The Company
also offers other data management services, including customer records
management programs, imaging services and records management consulting
services.
 
  The Company believes it is the most technologically advanced records
management company in the industry by virtue of its Pierce Leahy User
Solution(R) (PLUS(R)) computer system. The PLUS(R) system fully integrates the
Company's records management, data retrieval and billing functions on a
centralized basis through the use of proprietary, real time software. The
PLUS(R) system assists the Company in efficiently managing records in multiple
locations for national and local customers, rapidly integrating acquisitions
of records management companies and maintaining a low-cost operating
structure. The Company serves a diversified group of over 22,000 customer
accounts in a variety of industries such as financial services, manufacturing,
transportation, healthcare and law. The Company's storage and related services
are typically provided pursuant to contracts that include recurring monthly
storage fees, which continue until such records are permanently removed (for
which the Company charges a fee), and additional charges for services such as
retrieval on a per unit basis.
 
  The Company's revenues and operating income before non-recurring charges (on
a pro forma basis as defined herein) for the year ended December 31, 1996 were
$167.8 million and $23.4 million, respectively. From 1992 to 1996, the
Company's revenues and operating income before non-recurring charges grew at
compound annual growth rates of 19.9% and 28.7%, respectively. The Company
attributes this growth to the expansion of its business with new and existing
customers, which has been primarily driven by the trend towards outsourcing of
records management functions by companies and the ongoing consolidation of the
fragmented records management industry. The Company has successfully acquired
and integrated 26 companies from 1992 to 1996.
 
  The Company's growth strategy is to expand its business in new and existing
markets through (i) targeting new customers, (ii) growing with existing
customers and (iii) continuing its acquisition program. The Company has
adopted the following approaches to pursue its growth objectives:
   
  Targeting New Customers. The Company has a dual sales strategy focused on
both larger, typically multi-location accounts and smaller accounts, with a
dedicated sales force for each. The Company's sales and marketing force has
increased from 41 persons at the end of 1995 to 73 persons currently. For
large regional and national accounts, the Company believes its national
presence, sophisticated systems and low-cost operating structure provide a
competitive advantage. These organizations are increasingly outsourcing such
noncore activities, which enables their management to focus on their core
business and to reduce space requirements and records management costs. For
smaller accounts, the Company combines the cost benefits of its centralized
systems with quality local service. From 1992 to 1996, the average annual
growth rate of cubic feet of storage from new customers was approximately 8%.
    
  Growing with Existing Customers. The Company services its existing customers
through both a centralized customer service organization and local client
service representatives. Existing customers typically
 
                                      39
<PAGE>
 
generate additional records annually which are stored with the Company. From
1992 to 1996, the average annual growth rate of cubic feet of storage from
existing customers was approximately 6%.
   
  Continuing Acquisition Program. The Company believes that the records
management industry is highly fragmented and offers substantial opportunity
for consolidation. The Company targets potential acquisitions both in the
markets it already services and in new markets which it is not yet servicing.
From 1992 to 1996, the Company successfully completed and integrated 26
acquisitions, totalling approximately 12.4 million cubic feet of records at
the time of acquisition. Since January 1, 1997, the Company has completed six
acquisitions, totalling approximately 6.8 million cubic feet of records at the
time of acquisition. As a result of its centralized organizational structure
and the PLUS(R) system, the Company has been able to rapidly achieve
significant economies of scale in its acquisitions. From 1992 to 1996, the
average annual growth rate of cubic feet of storage from acquisitions was
approximately 10%. See "--Acquisition and Growth Strategy."     
 
  The Company's growth strategy is supported by an operating strategy which
emphasizes providing premium standardized services while maintaining a low-
cost operating structure. As a result, the Company's operating income before
non-recurring charges as a percentage of total revenues increased from 13.3%
in 1992 to 17.7% in 1996 and 13.9% in 1996 on a pro forma basis. The Company
expects to continue its growth and enhance its position by implementing its
strategy based on the following elements:
 
  Using Sophisticated Centralized Systems to Provide High Quality Service. In
tandem with the Company's centralized customer service organization and local
field support personnel, the Company utilizes its PLUS(R) system to provide a
high and consistent level of service (24 hours a day, seven days a week) to
its customers on a national and local basis, including providing its customers
with real-time access to the database. Although PLUS(R) is centralized, the
system permits local management flexibility through a variety of pre-
programmed options to customize the system and enhance its utility to
different types of customers. For example, PLUS(R) offers (i) specialized
inventory reporting formats (e.g., by insurance policy, law case file number
or mortgage file), (ii) specialized invoicing (e.g., to local division with
information reporting to the customer's corporate office, and vice versa, and
departmental invoicing), (iii) pre-set inventory review dates based on the
assigned retention period for a particular class of document and (iv)
authorized users with security passwords.
 
  Maintaining its Position as a Low-Cost Provider through Economies of
Scale. The Company strives to remain a low-cost operator through achieving
economies of scale in labor, real estate, transportation, computer systems and
administrative expenses. The PLUS(R) system allows the Company to enhance the
efficiency of its facilities while reducing fixed and operating costs. This
system eliminates the need to designate permanent locations for an individual
customer's records within a facility, by using sophisticated bar-coding
technology which enables records to be stored wherever space is available and
to be positioned within the Company's facilities based on retrieval frequency,
thereby reducing labor costs. PLUS(R) is similarly valuable in helping to
achieve cost savings in acquisitions.
 
THE RECORDS MANAGEMENT INDUSTRY
 
  According to a 1994 study by the Association of Commercial Record Centers
(the "ACRC"), an industry trade group with over 500 members, approximately
2,800 companies offer records storage and related services in North America.
The Company believes that only 25% of the potential market outsources its
records management functions and that approximately 75% is still "unvended,"
or internally managed. The Company estimates that the North American vended
records management industry generates annual revenues in excess of $1.0
billion. Management believes that the industry is highly fragmented, with most
industry participants operating on a regional or local basis.
 
                                      40
<PAGE>
 
   
  Saved documents, or records, generally fall into two categories: active and
inactive. Active records refer to information that is frequently referenced and
usually stored on-site by the originator. Inactive records are not needed for
frequent access, but must be retained for future reference, legal requirements
or regulatory compliance.     
 
              [DRAWING SHOWING FILING SPACE UTILIZATION OF FILE 
                    CABINET AND STORAGE BOXES APPEARS HERE]
 
Filing cabinets are an inefficient way to store inactive records. Professional
records management companies can store twice the amount of records in the same
amount of space and do so in real estate that is typically substantially less
expensive than prime office space.
   
  Inactive records, which the Company estimates comprise approximately 80% of
all records, are the principal focus of the records management industry.     
 
  The Company believes that the records management industry is characterized by
the following trends:
 
  Industry Consolidation. The records management industry is undergoing a
period of consolidation as larger, better capitalized industry participants
acquire smaller regional or local participants. Management believes that
consolidation is primarily driven by the needs of large customers for fully
integrated coverage and the ability to realize economies of scale, especially
with respect to labor, real estate, transportation and computer systems and
administrative expenses. Industry consolidation also provides private owners of
smaller records management companies the ability to obtain liquidity.
 
  Movement Towards Outsourcing. Outsourcing of internal records management
functions represents the largest single source of new business for records
management companies. The Company believes that as more organizations become
aware of the advantages of professional records management, such as net cost
reductions and enhanced levels of service, the records management industry
will continue to gain a growing portion of the unvended segment. The Company
also believes that the establishment of national providers with well-known
brand names will help to accelerate this trend.
 
  Increasing Production of Paper. Increasingly widespread technologies such as
facsimiles, copiers, personal computers, laser printers and advanced software
packages have enabled organizations to create, copy and distribute documents
more easily and broadly. In spite of new "paperless" technologies (including
the Internet and "e-mail"), information remains predominantly paper based.
Additionally, the cost of storing records on paper is currently less expensive
than the cost of converting paper records to, and storing on, other media
(e.g., computer media, imaging, microfilm, CD-Rom and optical disc).
 
  Expanded Record Keeping Needs. While technology has augmented the growth of
paper generation, several external forces and concerns have played an
important role in organizations' decisions to store and retain access to
records. For example, the continued growth of regulatory requirements and the
proliferation of litigation has resulted in increased volumes and lengthened
holding periods of documents. Retained records are also remaining in storage
for extended periods of time because the process of determining which records
to destroy is time consuming and often more costly in the short-term than
continued storage.
 
ACQUISITION HISTORY AND GROWTH STRATEGY
   
  The Company believes that the consolidation trend occurring in the North
American records management industry will continue and that acquisitions will
remain an important part of the Company's growth strategy. Acquisitions
provide the Company with the ability to expand and achieve additional
economies of scale. From 1992 to 1996, the Company successfully completed and
integrated 26 acquisitions, totaling approximately 12.4 million cubic feet of
records at the time of acquisition. Since January 1, 1997, the Company has
completed six acquisitions, totalling approximately 6.8 million cubic feet of
records at the time of acquisition. As a result of its     
 
                                      41
<PAGE>
 
substantial acquisition experience, the Company has developed a standardized
program through which it integrates acquired companies into its existing
infrastructure. In each of these acquisitions, staffing levels were initially
reduced with further reductions typically taking place in the following months
as general and administrative functions were integrated into the Company's
centralized operating system.
   
  The following table summarizes certain information for each acquisition
completed since 1990:     
 
<TABLE>   
<CAPTION>
                                                       EXISTING/      DATE OF
ACQUISITION               LOCATION                    NEW LOCATION  ACQUISITION
- -----------               --------                    ------------ --------------
<S>                       <C>                         <C>          <C>
Leahy Business Archives   Multiple*                   Existing/New February 1990
Muhlenhaupt Records
 Management               Long Island                 Existing     April 1992
Arcus Data                New York                    Existing     July 1992
File Away                 Baltimore/Washington, D.C.  Existing     July 1992
Taylor Document           Richmond                    New          August 1992
Data Management of
 Tennessee                Nashville                   New          April 1993
Command Records           Chicago                     Existing     June 1994
Fidelity Archives         Philadelphia                Existing     July 1994
ProFilers                 Jacksonville                New          October 1994
Fileminders               Jacksonville                New          October 1994
Vital Archives            New York                    Existing     February 1995
Bestway Archival
 Services                 Miami                       Existing     May 1995
Curtis Archives           Seattle                     New          August 1995
Command Records Service   Canada**                    New          October 1995
AMK Documents             Phoenix                     New          October 1995
Brambles (Ottawa
 Division)                Ottawa                      Existing     March 1996
The File Cabinet          Atlanta                     Existing     March 1996
File Box                  Austin                      New          April 1996
Security Archives         Dallas                      Existing     May 1996
Archives America of San
 Diego                    San Diego                   New          July 1996
Security Archives of
 Denver                   Denver                      New          August 1996
Data Protection Services  Birmingham                  New          September 1996
Info-Stor                 Calgary                     Existing     October 1996
Archives                  Denver                      Existing     October 1996
InTrust                   Denver, Albuquerque,
                          Colorado Springs, Ft. Wayne Existing/New October 1996
Security Archives of Las
 Vegas                    Las Vegas                   New          October 1996
Records Management        Birmingham                  Existing     December 1996
Security Archives &
 Storage Company          Wilmington                  Existing     January 1997
The Records Center        Tampa                       Existing     January 1997
Data Archives             Trenton                     Existing     January 1997
Professional Records
 Storage & Delivery       West Palm Beach             Existing     January 1997
Advanced File Storage
 Systems                  Jacksonville                Existing     April 1997
Records Management
 Services                 Multiple***                 Existing/New April 1997
</TABLE>    
- --------
  * Los Angeles, Houston, New York, New Jersey, Boston, Connecticut, Chicago,
    Dallas and Miami/Ft. Lauderdale.
 ** Toronto, Montreal, Vancouver, Ottawa and Calgary.
*** Chicago, Indianapolis, Cincinnati, Los Angeles, Phoenix, Houston, New York
    and St. Louis.
 
  The Company's centralized organizational structure and management
information systems are essential elements for both the successful integration
of acquired records management operations and the ability of the Company to
achieve economies of scale. The rapid conversion of an acquired company's
records into the PLUS(R) system and the integration of all corporate functions
(order processing, accounting, payroll, etc.) into the Company's corporate
organization in an efficient, standardized process allows the Company to
realize cost savings as a result of reduced labor and overhead costs and
improved facility utilization. The Company also believes that its centralized
approach permits better quality measurement and control procedures than a
decentralized approach to integrating acquisitions. See "Risk Factors--Risks
Associated with Acquisitions."
 
 
                                      42
<PAGE>
 
  The Company targets potential acquisitions both in locations it already
services (existing markets) and in new areas which it is not yet servicing.
Existing market acquisitions typically provide the highest degree of operating
leverage as a result of eliminating redundant overhead, such as overlapping
delivery runs, and when economically feasible, consolidating with an existing
Company facility in the same market. New market acquisitions allow the Company
to both expand its business generally and enhance its ability to serve multi-
location customer accounts. These acquisitions are typically either the result
of following an existing customer into a new location or are on a more
opportunistic basis when an attractive acquisition comes to the attention of
the Company. Once in the new area, the Company seeks to obtain records from
its existing multi-location customers which may have operations in that area.
Additionally, operating in the new locations assists the Company's sales force
in more effectively targeting new customers in that area.
 
  In the past, the Company has relied solely upon cash as consideration for
its acquisitions; however, following the Offerings, the Company may also use
equity securities or a combination of cash and equity securities to purchase
other records management companies.
 
THE 1997 ACQUISITIONS
   
  In January 1997, the Company successfully completed and has subsequently
integrated four acquisitions with facilities in Wilmington, Tampa, Trenton and
West Palm Beach. On April 1, 1997, the Company completed the acquisition of
Advanced File Storage Systems with facilities in Jacksonville, Florida. On
April 2, 1997, the Company completed the acquisition of RMS with facilities in
Chicago, Indianapolis, Cincinnati, Los Angeles, Phoenix, Houston, New York and
St. Louis. The aggregate cash consideration paid for the 1997 Acquisitions was
approximately $82.1 million.     
   
PENDING ACQUISITIONS     
   
  The Company has entered into agreements to purchase two records management
companies with operations in Chicago and Austin for an aggregate purchase
price of approximately $6.4 million. The closing of each Pending Acquisition
is subject to various conditions, and there can be no assurance that any
Pending Acquisition will be completed. See "Risk Factors--Risks Associated
with Acquisitions." The Offerings are not dependent upon the completion of the
Pending Acquisitions and no Pending Acquisition is dependent upon completion
of the Offerings. The Pending Acquisitions are expected to be financed through
borrowings under the Credit Facility.     
 
DESCRIPTION OF SERVICES
 
  The Company's records management services are focused on storage, retrieval
and data management of hard copy documents.
 
 Storage
 
  Storage revenues have averaged 58% of total revenues during the Company's
last five fiscal years. Nearly all of the Company's storage fees are derived
from hard copy storage. During 1996, the Company generated 94% of its storage
revenues from hard copy storage and 6% from vault storage for special items
such as computer tapes, X-rays, films or other valuable items. Storage charges
typically are billed monthly on a per cubic foot basis.
 
  The Company tracks all of its records stored in cartons, from initial pick-
up through permanent removal, with the use of its PLUS(R) system. Bar-coded
boxes are packed by the customer and transported by the Company's
transportation department to the appropriate facility where they are scanned
and placed into storage at the locations designated by PLUS(R). At such time,
the Company's data input personnel enter the data twice (i.e., double key
verifying) to enhance the integrity of the information entered into the
system.
 
  The Company offers secure, climate-controlled facilities for the storage of
non-paper forms of media such as computer tapes, optical discs, microfilm,
video tapes and X-rays. These types of media often require special
 
                                      43
<PAGE>
 
facilities due to the nature of the records. The Company's storage fees for
non-paper media are higher than for typical paper storage. The Company also
provides ancillary services for non-paper records in the same manner as it
provides for its hard copy storage operations.
 
 Service and Product Sales
 
  The Company's principal services include adding records to storage,
temporary removal of records from storage to support a customer's need to
review the files, replacing temporarily removed records and permanent
withdrawals from storage or destruction of records. Pick-up and delivery of
customer records can be tailored to a customer's specific needs and range from
standard service (typically requests received by 10:30 a.m. are delivered or
picked up that afternoon and requests received by 3:30 p.m. are delivered or
picked up the next day) to emergency service (typically within three hours or
less). Pick-up and delivery operations are supported by the Company's fleet of
over 400 owned or leased vehicles. The Company charges for pick-up and
delivery services on a per-unit basis depending on the immediacy of delivery
requested.
 
  A small percentage of the Company's customers manage their records on a file
by file basis, allowing the customer direct access and traceability of a
specific file (rather than on a box by box basis). The Company provides data
entry services to such customers to input the file by file listings into the
PLUS(R) system.
 
  The Company also offers a records destruction service, which provides
customers with a secure, controlled program to periodically review and remove
records which no longer need to be retained. Although boxes destroyed no
longer generate monthly storage fees, the Company charges for the destruction
of records and increases its available shelving space as a result. The Company
believes its ability to manage destruction programs for customers efficiently
through the PLUS(R) system also enhances its ability to attract large
accounts.
 
  In addition to providing traditional storage, customers may contract with
the Company to manage their on-site records or file services center. Such
management services generally include providing Company personnel to manage
the customer's active files (including records storage and tracking) at the
customer's facilities, supplemented by off-site storage at the Company's
facilities. As part of this service, the Company can use its own internally
developed file management software, or maintain the customer's existing
system. The Company also provides consulting and other services on an
individualized basis, including advisory work for customers setting up in-
house records management systems. In addition, the Company sells cardboard
boxes and other storage containers to its customers.
 
CUSTOMER SERVICE
 
  Customer calls are routed into one of the Company's two centralized customer
service departments located in the Company's U.S. and Canadian corporate
headquarters. Both customer service departments are staffed and can receive
customer calls 24 hours a day, seven days a week. The Company currently
employs approximately 70 customer service representatives. Routine pick-up and
delivery requests are dispatched directly by customer service representatives
to local facilities as directed by PLUS(R).
 
  PLUS(R), in tandem with a centralized order processing organization and
local field support personnel, enables the Company to provide a high and
consistent level of service (24 hours a day, seven days a week) to its
customers in a cost-effective manner. The centralized order entry system
allows (i) efficient workload balancing as the daily "peak" call-in periods
can be spread over three time zones, (ii) centralized quality control
monitoring to increase delivery of consistent and high-quality service, and
(iii) the employment of Spanish- speaking customer service representatives
whose language skills can serve any of the Company's U.S. customers, primarily
for its operations in Florida, Texas and California.
 
  As a complement to its centralized customer service departments, the Company
provides client service representatives to work with existing customers at the
local level. In addition to maintaining personal contacts with customers, the
local client service representatives help meet the Company's customers'
changing records management needs through advice in efficient recordkeeping
procedures, and, when appropriate, by offering the sale of additional
services.
 
 
                                      44
<PAGE>
 
MANAGEMENT INFORMATION SYSTEMS
 
  The Company believes that PLUS(R), its core management information system,
is the most sophisticated records management system in the industry, and
provides the Company with a significant customer service and cost advantage in
attracting and retaining major accounts with records storage needs in multiple
locations and acquiring other records management companies. The Company's
centralized customer service and billing functions eliminate the need for
redundant functions at individual facilities. In addition, the PLUS(R) system
enables the Company to offer its customers full life cycle records management,
from file creation to destruction, and coordinates inventory control, order
entry, billing, material sales, service activity, accounts receivable and
management reporting on a centralized basis. PLUS(R) utilizes database
technology, proprietary software and extensive bar coding in a flexible,
enterprise-wide, client/server environment.
 
  During 1993, the Company completed an extensive two and one-half year
development program and began to install the PLUS(R) system in each of its
facilities. The Company invested approximately $8 million in developing
PLUS(R), primarily in conjunction with Andersen Consulting, together with
input from Hewlett Packard, Racal, Progress and Symbol Technologies. The
system has been designed on a modular basis which provides the Company with
the ability to expand the system's capacity as its business grows. The Company
also has devised certain backups designed to protect against loss of data and
computer failures. Company-wide installation of PLUS(R) commenced at the end
of 1993 and was completed during the first quarter of 1995. Since initial
development, the Company has also invested an additional $2.1 million to
upgrade and expand the capacity of the PLUS(R) system and to further increase
its functionality.
 
  Implementation of the PLUS(R) system has improved the Company's operating
efficiency by streamlining a number of its daily work processes:
 
  . PLUS(R) allows the Company real time access to locate each unit of a
    customer's records, regardless of geographic location, through an
    enterprise-wide, shared database and to centrally receive and dispatch
    pick-up and delivery orders to the appropriate location for processing.
    Management believes that no other records management system in the
    industry offers such real time access for multiple locations.
 
  . The PLUS(R) system reduces the number of employees required to handle the
    inbound/outbound movement of boxes through the use of sophisticated
    algorithms which allow archive employees to process multiple customer
    requests in an efficient manner.
 
  . PLUS(R) facilitates the integration of acquired records management
    companies in an efficient, standardized process. By converting the
    acquired company's records into the PLUS(R) system, the Company is able
    to reduce the labor and overhead costs associated with the acquisition,
    resulting in cost savings.
 
  . The PLUS(R) system assists the Company in efficiently utilizing its
    storage space by eliminating the need for permanent locations for
    individual records. At any one time, approximately 2% of total cubic feet
    of records managed by the Company are temporarily returned to customers,
    freeing up storage space which PLUS(R) enables the Company to use
    productively. When a box is temporarily returned to a customer, a new box
    may be placed in the original box's location. Upon return of the original
    box to the Company, PLUS(R) automatically assigns the box a new location
    within a facility in the market in which the Company determines to store
    the box.
 
  PLUS(R) offers several additional features which enhance the Company's
customer support functions. The system is continuously updated when any
account activity is undertaken, providing customers with real time access to
information regarding box location and retrievals. The PLUS(R) system is
flexible and allows the Company to design and implement customized records
management solutions for various industries utilizing a set of standardized
options. The PLUS(R) system's on-line customer support network allows certain
customers to place orders for both records storage and retrieval directly from
their own in-house terminals resulting in a more efficient system of records
management. PLUS(R) can also perform sophisticated searches to locate
inventory items even when the customers do not have the specific number of the
box they are seeking. In addition, the Company has recently initiated a trial
program, PLUS(R) Link, which is designed to transfer information directly
between the Company's centralized database and a customer's local file room.
 
 
                                      45
<PAGE>
 
  In marketing its services, the Company believes it can point to the
following direct benefits to a customer of the PLUS(R) system:
 
  . Through the PLUS(R) system central data base, a customer is able to
    obtain real time access to any file listing which is stored in any
    location. In addition to the benefits of immediate access to file listing
    information, this centralized data base is likely to reduce the time
    required to locate a file that a client might have stored in one of
    several locations.
 
  . With PLUS(R), a file can be retained in any Company warehouse and
    delivered only if and when it is needed at a specific location. Customers
    with multiple locations typically do not have large enough records
    management requirements to justify their own dedicated warehouse in each
    area. In order to increase the efficiency of warehouse facilities, such
    companies sometimes require operations in disparate locations to ship
    their records to a central or a regional warehouse. This process
    increases the costs as such companies must pay to ship files a
    substantial distance to inactive storage and incur additional costs, and
    typically time delay, to subsequently return the files to the initial
    location.
 
  . Through utilization of the PLUS(R) system, customers eliminate the need
    for expensive in-house computer systems and programming support staff to
    maintain an inventory management system. Companies which store their own
    records typically cannot achieve the economies of scale available to the
    Company.
 
SALES AND MARKETING
   
  During the past five years, the Company has invested significant effort in
developing its sales and marketing department, which is comprised of 73
employees in the United States and Canada, excluding any additions that may
result from the acquisition of RMS. Sales representatives are trained to sell
a "total systems approach," in which a customer's records management
requirements are surveyed and evaluated in order to determine the file
management system which best meets the customer's needs and offer
recommendations on how to implement such a system. From 1992 to 1996, the
Company's sales representatives secured over 3,600 new customer accounts
comprising over 8.5 million cubic feet of records from new accounts.     
 
                         NEW CUSTOMER ACCOUNT GROWTH*
               
           [BAR GRAPH OF NEW CUSTOMER ACCOUNT GROWTH APPEARS HERE]*     
 
           Cubic feet in millions:

                                 1994 - 1,038
                                 1995 - 2,018
                                 1996 - 2,994

* For the first twelve months after the establishment of a customer account, 
records added to such account are classified as additions to new customer 
accounts in the period in which they are received.
 
  The Company's sales and marketing department is divided into five regions:
Northeast; South; Midwest; West; and Canada. The Company's Vice President,
Sales and Marketing directs five regional sales managers who
 
                                      46
<PAGE>

are each responsible for one of the regions. In addition, the Company's sales
force is divided between sales representatives who focus on large accounts
which are frequently multi- location and a recently expanded group of sales
representatives who focus on smaller, single-location customers. The sales
force is primarily compensated on a commission basis with incentives tied to
the Company's sales goals. The Company also uses telemarketing, direct
response and print advertising to assist in its marketing programs.
 
CUSTOMERS
   
  The Company serves a diversified group of over 22,000 customers accounts in
a variety of industries, including financial services, manufacturing,
transportation, healthcare and law. The Company tracks customer accounts,
which are based on invoices. Accordingly, depending on how invoices have been
arranged at the request of a customer, one customer may have multiple customer
accounts. None of the Company's customers accounted for more than 3% of the
Company's total revenues during any of the last three years. The Company
services all types of customers from small to medium size companies (such as
professional groups and law firms that often have one location) to Fortune 500
companies that have operations in multiple locations. The Company provides
records management services to approximately one-half of the Fortune 500
companies and has 50 customers with over 100,000 cubic feet of records under
management with the Company. Larger companies with multiple locations that
have performed their own records management services to date are a principal
focus for new customers by the Company. The Company believes that its presence
in multiple locations in conjunction with the PLUS(R) system enable it to
provide the sophisticated file management services frequently required by such
customers.     
 
  The Company's contracts with larger, typically multi-location customers
usually provide for an initial term of five or more years, and contracts with
other customers typically provide for initial terms of one or two years. Both
types of contracts generally provide for annual renewals thereafter (with
either party having the right to terminate the contract). Customers are
generally charged monthly storage fees until their records are destroyed or
permanently removed, for which fees are charged. In addition, services such as
file retrieval are separately charged. During 1996, approximately 3% of cubic
feet of records under management by the Company were permanently removed
(other than as part of an organized records destruction program). The Company
believes this relatively low attrition rate is due to a number of factors,
including satisfaction with the Company's services as well as the effort and
expense of transferring records to another service provider or back in-house.
 
FACILITIES
   
  The Company operates a total of 161 records management facilities of which
148 are in the United States, serving 58 markets, including the 16 largest
U.S. markets, and 13 facilities in Canada serving five of Canada's six largest
markets. Of the 10.2 million square feet of floor space (representing over 75
million cubic feet of storage capacity) in the Company's records storage
facilities, approximately 36% and 64% (41% and 59% on a cubic footage basis)
are in owned and leased facilities, respectively. The Company's facilities are
located as follows:     
 
<TABLE>   
<CAPTION>
                                                          RECORDS
                                                         MANAGEMENT  CUBIC FEET
                         REGION                          FACILITIES OF CAPACITY
                         ------                          ---------- ------------
<S>                                                      <C>        <C>
United States
  Southern Region.......................................     27      7.4 million
   (includes Alabama, Florida,
   Georgia, North Carolina and
   Tennessee)
  Northern Region.......................................     48     39.4 million
   (includes Connecticut, Delaware,
   Maryland, Massachusetts, New Jersey,
   New York, Ohio, Pennsylvania and
   Virginia)
</TABLE>    
 
 
                                      47
<PAGE>
 
<TABLE>   
<CAPTION>
                                                          RECORDS
                                                         MANAGEMENT  CUBIC FEET
                         REGION                          FACILITIES OF CAPACITY
                         ------                          ---------- ------------
<S>                                                      <C>        <C>
  Midwest Region........................................       53   16.8 million
   (includes Colorado, Illinois,
   Indiana, Michigan, Missouri,
   New Mexico and Texas)
  Western Region........................................       20    5.4 million
   (includes Arizona, California,                          ------   ------------
   Nevada and Washington)
  Total U.S.............................................      148   69.0 million
Canada..................................................       13    6.1 million
   (includes Calgary, Montreal, Ottawa,                    ------   ------------
   Toronto and Vancouver)
  Total.................................................      161   75.1 million
                                                           ======   ============
</TABLE>    
   
  In response to certain opportunities that arose, the Company has made
significant new facility investments, substantially increasing the Company's
available storage capacity in its Northeast region. During 1995, the Company
purchased a storage facility in New Jersey with 12 million cubic feet of
storage capacity and leased (with an option to purchase) a storage facility in
Massachusetts with five million cubic feet of storage capacity. The Company is
in the process of consolidating certain individual warehouses into these
facilities and will consolidate other warehouses over the next two or three
years as existing leases expire. The addition of these facilities provides the
Company with substantial excess storage capacity in such region and is
expected to satisfy the Company's facility expansion requirements in its
Northeast region for several years. The Company intends to consolidate
facilities in other locations when appropriate. Primarily as a result of the
new facilities in New Jersey and Massachusetts, warehouse utilization has
declined to approximately 66% from historical levels of 70% to 80%.     
 
COMPETITION
   
  The Company competes with numerous records management companies in all
geographic areas in which it operates. The Company believes that competition
for customers is based on price, reputation for reliability, quality of
service and scope and scale of technology, and believes that it generally
competes effectively based on these factors. Management believes that, except
for Iron Mountain Incorporated, all of these competitors have records
management revenues significantly lower than those of the Company. The Company
believes that the trend towards consolidation in the industry will continue,
and the Company also faces competition in identifying attractive acquisition
candidates. In addition, the Company faces competition from the internal
document handling capability of its current and potential customers.     
 
  The substantial majority of the Company's revenues are derived from the
storage of paper records and from related services. Alternative technologies
for generating, capturing, managing, transmitting and storing information have
been developed, many of which require significantly less space than paper.
Such technologies include computer media, microforms, audio/video tape, film,
CD-Rom and optical disc. Management believes that conversion of paper
documents into these smaller storage media is currently not cost-effective for
inactive records, primarily due to the high labor cost of preparing and
converting the documents for imaging.
 
EMPLOYEES
   
  As of May 10, 1997, the Company had 1,952 employees, including 242 employees
in Canada. None of the Company's employees is covered by a collective
bargaining agreement. Management considers its employee relations to be good.
    
INSURANCE
 
  The Company carries comprehensive property insurance covering replacement
costs of real and personal property. Subject to certain limitations and
deductibles, such policies also cover extraordinary expenses
 
                                      48
<PAGE>
 
   
associated with business interruption and damage or loss from fire, flood or
earthquakes (in certain geographic areas), and losses at the Company's
facilities up to approximately $225 million.     
 
ENVIRONMENTAL MATTERS
 
  The Company's properties and operations may be subject to liability under
various environmental laws, regardless of fault, for the investigation,
removal or remediation of soil or groundwater, on or off-site, resulting from
the release or threatened release of hazardous materials, as well as damages
to natural resources. The owner or operator of contaminated property may also
be subject to claims for damages and remediation costs from third parties
based upon the migration of any hazardous materials to other properties.
 
  At certain of the properties owned or leased by the Company, petroleum
products or other hazardous materials, are or were stored in USTs. Some
formerly used USTs have been removed; others were abandoned in place. The
Company believes all of the USTs are registered, where required under
applicable law. The Company also is aware of the presence in some of its
facilities of ACMs, but believes that no action is presently required to be
taken as a result of such material.
 
  At the Company's New Jersey facility, certain contamination has been
discovered resulting from operations of the prior owner thereof. The prior
owner, which has agreed to be responsible for the cost of such remediation, is
completing remediation of the property under a consent order with the New
Jersey Department of Environmental Protection ("NJDEP"). The prior owner has
posted a $1.1 million letter of credit with the NJDEP. The Company has
purchased an environmental liability insurance policy covering the cleanup
costs to the Company, if any, resulting from any on- or off-site environmental
condition existing at the time of the Company's acquisition of this property,
with a $250,000 deductible and policy limits of $4 million per occurrence/$8
million in the aggregate, provided the claim first arises during the term of
the policy, which is August 10, 1995 through August 11, 1998.
 
  The Company has not received any written notice from any governmental
authority or third party asserting, and is not otherwise aware of, any
material noncompliance, liability or claim under environmental laws applicable
to the Company other than as described above. No assurance can be given that
there are no environmental conditions for which the Company may be liable in
the future or that future regulatory action, or compliance with future
environmental laws, will not require the Company to incur costs that could
have a material adverse effect on the Company's financial condition or results
of operations.
 
LEGAL PROCEEDINGS
   
  The Company is involved in litigation from time to time in the ordinary
course of its business. In the opinion of management, no material legal
proceedings are pending to which the Company, or any of its property, is
subject.     
 
                                      49
<PAGE>
 
                                  MANAGEMENT
 
EXECUTIVE OFFICERS AND DIRECTORS
 
  Set forth below is certain information regarding the Company's directors,
executive officers and other significant management personnel:
 
<TABLE>   
<CAPTION>
                 NAME                 AGE POSITION
                 ----                 --- --------
 <C>                                  <C> <S>
 Leo W. Pierce, Sr...................  78 Chairman of the Board
 J. Peter Pierce.....................  51 President, Chief Executive Officer and
                                           Director
 Douglas B. Huntley..................  36 Vice President, Chief Financial Officer and
                                           Director
 Joseph A. Nezi......................  50 Vice President, Sales and Marketing
 David Marsh.........................  48 Vice President, Chief Information Officer
 Ross M. Engelman....................  33 Vice President, Operations--South
 J. Michael Gold.....................  37 Vice President, Operations--Northeast
 Christopher J. Williams.............  38 Vice President, Operations--West
 Leo W. Pierce, Jr...................  52 Vice President, Contracts Administration
                                           and Director
 Michael J. Pierce...................  47 Vice President, Equipment Sales and
                                           Distribution Group and Director
 Raul A. Fernandez...................  46 Vice President, Information Services
 Joseph P. Linaugh...................  47 Vice President, Treasurer
 Thomas Grogan.......................  42 Vice President and Controller
 Ronald P. Muhlenhaupt...............  42 Vice President, Assistant to the President
 Lisa G. Goldschmidt.................  29 General Counsel
 Alan B. Campell.....................  46 Director
 Delbert S. Conner...................  67 Director
</TABLE>    
 
  Leo W. Pierce, Sr. has served as Chairman of the Board of the Company since
its formation in 1957. Mr. Pierce served as the Chief Executive Officer of the
Company from formation to January 1995 and as its President from formation to
January 1984. Prior to forming the Company, Mr. Pierce was a sales
representative for Lefebure Corporation and an accountant for Price
Waterhouse. Mr. Pierce holds a B.A. degree from St. John's University.
 
  J. Peter Pierce has served as President and Chief Executive Officer of the
Company since January 1995 and has been a director since the early 1970s. Mr.
Pierce served as President and Chief Operating Officer of the Company from
January 1984 to January 1995, prior to which time he served in various other
capacities with the Company, including as Vice President of Operations,
General Manager of Connecticut, New York and New Jersey and Sales Executive.
Mr. Pierce attended the University of Pennsylvania and served in the United
States Marine Corps.
 
  Douglas B. Huntley has served as Chief Financial Officer since January 1994
and as a director of the Company since September 1994. From May 1993 until
December 1993, Mr. Huntley served as Assistant to the President of the
Company. From August 1989 to March 1993, he was an Executive Advisor and a
Project Manager of Rockwell International in connection with a multi-billion
dollar NASA contract. Prior thereto, Mr. Huntley was an accountant for
Deloitte Haskin & Sells. Mr. Huntley holds a B.S. degree from Bucknell
University and an M.B.A. from the University of Pennsylvania, Wharton School
of Business and is a Certified Public Accountant.
 
  Joseph A. Nezi has served as Vice President, Sales and Marketing of the
Company since September 1991. From July 1990 to September 1991, Mr. Nezi was
the Vice President, Sales and Marketing of Delaware Valley Wholesale Florist
where he was responsible for the sales and marketing of a firm with $30
million of sales. Prior thereto, Mr. Nezi was the President and General
Manager of Pomerantz and Company following 17 years in various sales positions
of increasing responsibility with Xerox. Mr. Nezi holds a B.A. degree from
Villanova University.
 
                                      50
<PAGE>
 
  David Marsh has served as Vice President and Chief Information Officer of
the Company since January 1995 and was Assistant to the President of the
Company from November 1994 to December 1994. From August 1986 to May 1994, Mr.
Marsh was Manager--Corporate Relations for the Massachusetts Institute of
Technology where he was responsible for the management and development of
MIT's relationships with U.S. and European information technology,
communications and service companies. Prior to August 1986, Mr. Marsh held
positions as President of MEA Management Systems, Director of Corporate
Strategic Planning with Public Service Company of New Hampshire, Senior
Consultant with Booz, Allen & Hamilton and Second Vice President with the
Chase Manhattan Bank. Mr. Marsh holds a B.S. degree from University of
Salford, U.K. and S.M. degrees in Management and Nuclear Engineering from MIT.
 
  Ross M. Engelman has served as Vice President, Operations--South since
October 1994. From June 1993 to October 1994, Mr. Engelman was Vice President,
Information Systems and from September 1991 to June 1993, he was Assistant to
the President of the Company. From August 1985 to September 1991, Mr. Engelman
was a management consultant with Andersen Consulting. Mr. Engelman holds a
B.S.E. degree from the University of Pennsylvania, Wharton School of Business.
 
  J. Michael Gold has served as Vice President, Operations--Northeast of the
Company since June 1993. Prior thereto, Mr. Gold was Vice President,
Operations from February 1992 to June 1993, Vice President, New York
Metropolitan Region from January 1990 to February 1992 and General Manager of
the New Jersey Archive from April 1985 to February 1989. Prior to joining the
Company, Mr. Gold was the Budget Administration Manager for SmithKline
Beecham. Mr. Gold holds a B.A. degree from Villanova University.
 
  Christopher J. Williams has served as Vice President, Operations--West since
June 1993. From February 1992 to June 1993, Mr. Williams was the Company's
Vice President, Information Services. Prior thereto, Mr. Williams held a
number of additional positions with the Company since he joined it in 1980,
including most recently as General Manager of the New York Archive and
Regional Vice President--New England. Mr. Williams holds a B.S. degree from
Western New England College.
 
  Leo W. Pierce, Jr. has served as Vice President, Contract Administration of
the Company since January 1990 and as a director since the early 1970s. Mr.
Pierce has been affiliated with the Company since its inception in various
capacities, including as manager of the Philadelphia Archive and Vice
President, Facilities Management. Mr. Pierce holds a B.A. degree from LaSalle
University.
 
  Michael J. Pierce has served as Vice President, Equipment Sales and
Distribution Group of the Company since February 1990 and as a director since
the early 1970s. Mr. Pierce has been affiliated with the Company since its
inception in various sales capacities. Mr. Pierce attended Temple University
and served in the United States Army.
 
  Raul A. Fernandez has served as Vice President, Information Systems of the
Company since February 1990. From March 1988 to February 1990, Mr. Fernandez
was Director of Information Systems. Prior to joining the Company, Mr.
Fernandez was employed by RCA Pictures Division and Sperry-Unisys as District
Manager. Mr. Fernandez holds a B.A. degree from Kings College.
 
  Joseph P. Linaugh has served as Vice President and Treasurer of the Company
since January 1994. From January 1990 to December 1993, Mr. Linaugh served as
Vice President, Chief Financial Officer and a director of the Company. Prior
to joining the Company, Mr. Linaugh worked in various financial positions with
private and publicly held companies and for Laventhol & Horwath in public
accounting. Mr. Linaugh holds a B.S. degree from LaSalle University and is a
Certified Public Accountant.
 
  Thomas Grogan has served as Vice President and Controller of the Company
since January 1994. From April 1985 to December 1993, Mr. Grogan was the
Company's Vice President of Finance and Administration. Prior to joining the
Company, Mr. Grogan worked for Dunn, Dunn and Associates in public accounting
from
 
                                      51
<PAGE>
 
May 1979 to March 1985 and in private industry from June 1977 to April 1979.
Mr. Grogan holds a B.S. degree from Widener College and is a Certified Public
Accountant.
   
  Ronald P. "Rip" Muhlenhaupt has served as Vice President, Assistant to the
President since October 1994, with responsibility for the Customer Response
Group and corporate communications, as well as company-wide training and
education initiatives for both customers and staff. From April 1992 to October
1994, Mr. Muhlenhaupt was Vice President, Corporate Development. Mr.
Muhlenhaupt provided service as Creative Consultant from November 1989 to
April 1992 when he joined the Company upon the acquisition, by Pierce Leahy,
of the records management division of his family-owned business, The
Muhlenhaupt Corporation, where he was President. Mr. Muhlenhaupt holds a B.S.
degree from Fairfield University.     
 
  Lisa G. Goldschmidt has served as General Counsel of the Company since
October 1995. From September 1992 to October 1995, Ms. Goldschmidt was an
attorney at Reed Smith Shaw & McClay. Ms. Goldschmidt holds a B.A. and a J.D.
degree from the University of Pennsylvania.
 
  Alan B. Campell has served as a director of the Company since September
1994. Mr. Campell is one of the founders of Campell Vanderslice Furman, an
investment banking firm, and has been a Managing Director of the firm since
its formation in 1986. Prior thereto, Mr. Campell was a Vice President at
Chase Manhattan Bank, N.A. Mr. Campell holds a B.A. degree from Brown
University and an M.A. from the University of Southern California.
 
  Delbert S. Conner has served as a director of the Company since September
1990. Since May 1995, Mr. Conner has served as the Vice Chairman of USCO
Distribution Services, Inc. on a semi-retired basis. From January 1994 through
April 1995, he was the Vice Chairman of USCO on a full-time basis and its
President and Chief Executive Officer from February 1983 to December 1993. Mr.
Conner holds a B.S. degree from Bryant College.
 
  Messrs. J. Peter Pierce, Leo W. Pierce, Jr. and Michael J. Pierce are
brothers. Leo W. Pierce, Sr. is their father. For purposes of the above
biographical information, the Company includes L.W. Pierce Company, Inc., the
predecessor to the Company. See "The Company."
 
BOARD OF DIRECTORS
   
  As of the closing of the Offerings, the Company's Board of Directors will be
classified into three classes with staggered three-year terms, each class to
contain as nearly as possible one-third of the number of members of the Board.
One class of directors will be elected for a three-year term at each annual
meeting of shareholders commencing in 1998. It is currently contemplated that
within 90 days after the closing of the Offerings, Leo W. Pierce, Jr. and
Michael J. Pierce will resign and the Board of Directors will add one or two
independent directors to the Board. The terms of J. Peter Pierce, Michael J.
Pierce and Alan B. Campell will expire at the 1998 annual meeting of
shareholders; the terms of Douglas B. Huntley and Delbert S. Conner will
expire at the 1999 annual meeting of shareholders; and the terms of Leo W.
Pierce, Sr. and Leo W. Pierce, Jr. will expire at the 2000 annual meeting of
shareholders.     
 
  The Company's Board of Directors has a Compensation Committee, which prior
to the Offerings has been comprised of Leo W. Pierce, Sr., J. Peter Pierce and
Alan B. Campell. The Compensation Committee recommends to the Board both
salary levels and bonuses for the officers of the Company. The Compensation
Committee also reviews and makes recommendations with respect to the Company's
existing and proposed compensation plans, and serves as the committee
responsible for administrating the Company's Nonqualified Option Plan (as
hereinafter defined).
 
  Following the Offerings, the Board of Directors intends to reconstitute the
Compensation Committee and establish an Audit Committee, each of which will be
comprised of two or more directors. It is anticipated that the Compensation
Committee and the Audit Committee will be comprised of Mr. Conner and a second
nonemployee director. The Compensation Committee is expected to determine
compensation for executive officers of the Company and administer the
Company's stock option plans. The Audit Committee is expected to
 
                                      52
<PAGE>
 
recommend the appointment of the Company's independent public accountants and
review the scope and results of audits and internal accounting controls.
 
  All directors receive reimbursement of reasonable out-of-pocket expenses
incurred in connection with meetings of the Board of Directors. Mr. Conner
also receives $3,500 for each meeting of the Board of Directors which he
attends. No other director receives separate compensation for services
rendered as a director. It is currently anticipated that any other outside
directors added to the Board of Directors will be compensated similarly to Mr.
Conner, although the Board may in the future consider using stock options or a
combination of cash and stock options to compensate outside directors.
 
EXECUTIVE COMPENSATION
 
  The following table sets forth the compensation received by the Company's
Chief Executive Officer and the five other highest paid executive officers
(together with the Chief Executive Officer, the "Named Executive Officers")
for services to the Company in 1995 and 1996.
 
                          SUMMARY COMPENSATION TABLE
<TABLE>   
<CAPTION>
                                                                LONG-TERM
                                                               COMPENSATION
                                   ANNUAL COMPENSATION            AWARDS
                              -------------------------------- ------------
                                                     OTHER      SECURITIES
        NAME AND                                     ANNUAL     UNDERLYING   ALL OTHER
   PRINCIPAL POSITION    YEAR  SALARY   BONUS     COMPENSATION   OPTIONS    COMPENSATION
   ------------------    ---- -------- -------    ------------ ------------ ------------
<S>                      <C>  <C>      <C>        <C>          <C>          <C>
J. Peter Pierce......... 1996 $251,485 $93,400        --             --        $6,967(a)
 President and Chief     1995  186,800  93,400        --             --         6,681(a)
 Executive Officer
Ross M. Engelman........ 1996  130,500  65,000        --          54,014        5,216(b)
 Vice President,         1995  130,422  65,000        --          90,024        4,830(b)
 Operations--South
J. Michael Gold......... 1996  130,000  65,000        --          54,014        3,739(c)
 Vice President,         1995  129,905  65,000        --          90,024        3,417(c)
 Operations--Northeast
Douglas B. Huntley...... 1996  130,000  65,000        --          54,014        5,231(d)
 Vice President and      1995  129,520  65,000        --          90,024        4,802(d)
 Chief Financial Officer
Joseph A. Nezi.......... 1996  130,000  92,370(e)     --          32,068        6,256(f)
 Vice President, Sales   1995  133,020  97,841(e)     --          90,024        5,748(f)
 and Marketing
Christopher J.           1996  130,000  65,000        --          54,014        5,339(g)
 Williams...............
 Vice President,         1995  129,905  65,000        --          90,024        5,089(g)
 Operations--West
</TABLE>    
- --------
(a) Included in such amounts for 1996 and 1995, respectively, are $2,268 and
    $2,310 representing an employer match under the 401(k) Plan (as defined
    herein), $1,699 and $1,371 in net premiums for a guaranteed term life
    insurance policy on behalf of Mr. Pierce and $3,000 and $3,000
    representing contributions made by the Company under the Profit Sharing
    Plan (as defined herein).
(b) Included in such amounts for 1996 and 1995, respectively, are $2,249 and
    $2,107 representing an employer match under the 401(k) Plan, $158 and $98
    in net premiums for a guaranteed term life insurance policy on behalf of
    Mr. Engelman and $2,809 and $2,608 representing contributions made by the
    Company under the Profit Sharing Plan.
(c) Included in such amounts for 1996 and 1995, respectively, are $750 and
    $700 representing an employer match under the 401(k) Plan, $191 and $119
    in net premiums for a guaranteed term life insurance policy on behalf of
    Mr. Gold and $2,798 and $2,598 representing contributions made by the
    Company under the Profit Sharing Plan.
(d) Included in such amounts for 1996 and 1995, respectively, are $2,250 and
    $2,093 representing an employer match under the 401(k) Plan, $191 and $119
    in net premiums for a guaranteed term life insurance policy on
 
                                      53
<PAGE>
  
    behalf of Mr. Huntley and $2,790 and $2,590 representing contributions made
    by the Company under the Profit Sharing Plan.
(e) Includes $27,370 and $32,842 paid as commissions in 1996 and 1995,
    respectively.
(f) Included in such amounts for 1996 and 1995, respectively, are $2,260 and
    $2,310 representing an employer match under the 401(k) Plan, $996 and $438
    in net premiums for a guaranteed term life insurance policy on behalf of
    Mr. Nezi and $3,000 and $3,000 representing contributions made by the
    Company under the Profit Sharing Plan.
(g) Included in such amounts for 1996 and 1995, respectively, are $2,250 and
    $2,066 representing an employer match under the 401(k) Plan, $191 and $125
    in net premiums for a guaranteed term life insurance policy on behalf of
    Mr. Williams and $2,898 and $2,898 representing contributions made by the
    Company under the Profit Sharing Plan.
 
OPTION GRANTS IN 1996
 
  The following table sets forth certain information concerning stock options
granted to the Named Executive Officers during 1996 (all of which were granted
on January 1, 1996) after giving effect to the Stock Recapitalization.
 
<TABLE>   
<CAPTION>
                                                                      
                                      INDIVIDUAL GRANTS               
                         --------------------------------------------  POTENTIAL REALIZABLE
                         NUMBER OF                                       VALUE AT ASSUMED
                         SECURITIES  % OF TOTAL                        ANNUAL RATES OF STOCK
                         UNDERLYING   OPTIONS                         PRICE APPRECIATION FOR
                          OPTIONS    GRANTED TO  EXERCISE                 OPTION TERM(B)
                          GRANTED   EMPLOYEES IN   PRICE   EXPIRATION -----------------------
      NAME                 (#)(A)       1996     ($/SHARE)    DATE        5%          10%
      ----               ---------- ------------ --------- ---------- ----------- -----------
<S>                      <C>        <C>          <C>       <C>        <C>         <C>
J. Peter Pierce.........      --         --          --       --              --          --
Ross M. Engelman........   54,014       15.0%      $5.86        *     $   199,145 $   504,673
J. Michael Gold.........   54,014       15.0        5.86        *         199,145     504,673
Douglas B. Huntley......   54,014       15.0        5.86        *         199,145     504,673
Joseph A. Nezi..........   37,068       10.3        5.86        *         136,668     346,344
Christopher J.
 Williams...............   54,014       15.0        5.86        *         199,145     504,673
</TABLE>    
- --------
 *  The options have no specified expiration date.
(a) All options were granted under the Nonqualified Option Plan. The options
    vest in five equal annual installments commencing on the first anniversary
    of the date of grant, and vested options become exercisable on the earlier
    of ten years from the date of grant or the date the Company is no longer a
    Subchapter S corporation. The Company may make loans with respect to
    vested options. See "--Stock Incentive Plan."
(b) Illustrates the value that might be received upon exercise of options
    immediately prior to the assumed expiration of their term at the specified
    compounded rates of appreciation based on the market price for the Common
    Stock when the options were granted. At the time of grant, there was no
    established trading market for the Common Stock and, accordingly, the
    market price is based upon the formula set forth in the Nonqualified
    Option Plan which is based upon a multiple of EBITDA, as well as the
    amount of cash, cash equivalents, outstanding indebtedness and other
    obligations of the Company. Since the options granted to the Named
    Executive Officers do not have a specified expiration date, for purposes
    of calculating the assumed appreciation, the options have been deemed to
    expire ten years from the date of grant.
 
                                      54
<PAGE>
 
STOCK OPTION EXERCISES AND HOLDINGS
 
  The following table sets forth the value of options held by each of the
Named Executive Officers at December 31, 1996 after giving effect to the Stock
Recapitalization. None of the Named Executives exercised any options during
1996.
 
                    AGGREGATED OPTION EXERCISES IN 1996 AND
                      OPTION VALUES AT DECEMBER 31, 1996
 
<TABLE>   
<CAPTION>
                                                  NUMBER OF SECURITIES
                                                 UNDERLYING UNEXERCISED      VALUE OF UNEXERCISED
                                                       OPTIONS AT           IN-THE-MONEY OPTIONS AT
                                                   DECEMBER 31, 1996         DECEMBER 31, 1996(A)
                                              ---------------------------- -------------------------
                           SHARES
                         ACQUIRED ON  VALUE
NAME                     EXERCISE(#) REALIZED EXERCISABLE/UNEXERCISABLE(B) EXERCISABLE/UNEXERCISABLE
- ----                     ----------- -------- ---------------------------- -------------------------
<S>                      <C>         <C>      <C>                          <C>
J. Peter Pierce.........     --        --              --/--                         --/--
Ross M. Engelman........     --        --              --/144,038                    --/$0
J. Michael Gold.........     --        --              --/144,038                    --/ 0
Douglas B. Huntley......     --        --              --/144,038                    --/ 0
Joseph A. Nezi..........     --        --              --/127,092                    --/ 0
Christopher J.
 Williams...............     --        --              --/144,038                    --/ 0
</TABLE>    
- --------
(a) There was no established market for the Common Stock as of December 31,
    1996, and, accordingly, the values are based on the exercise price of
    options granted on January 1, 1997 in accordance with the formula set
    forth in the Nonqualified Option Plan.
   
(b) As of December 31, 1996, none of the options were exercisable although of
    such totals, options to purchase 46,812 shares of Common Stock were vested
    for each of Messrs. Engelman, Gold, Huntley and Williams and options to
    purchase 43,423 shares of Common Stock were vested for Mr. Nezi. Pursuant
    to the terms of the Nonqualified Option Plan, vested options become
    exercisable on the earlier of ten years from the date of grant or the date
    the Company is no longer a Subchapter S corporation. Accordingly, upon the
    consummation of the Offerings and the termination of the Company's status
    as a Subchapter S corporation, the vested options set forth above will
    become exercisable.     
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
  Prior to the Offerings, the Compensation Committee of the Board of Directors
has been comprised of Leo W. Pierce, Sr., J. Peter Pierce and Alan B. Campell.
Leo W. Pierce, Sr. is the former Chief Executive Officer and President of the
Company and J. Peter Pierce is the Company's Chief Executive Officer and
President.
   
  In August 1996, the Company purchased for $14.9 million all of the interests
of the two partnerships owned by members of the Pierce family in six
facilities previously leased to the Company and 16 facilities previously
subleased, as well as minority interests in five other properties currently
leased by the Company. The purchase price was based on third party appraisals
or the recent acquisition price for the six facilities and management's
estimates of the value of the leasehold and minority ownership interests based
on the net present value of the cash flows generated by such interests. The
leases and subleases were entered into during the period from March 1980 to
April 1995. The aggregate rental payments for the leases and subleases were
$7,658,000, $8,201,000 and $4,624,000 in 1994, 1995 and the portion of 1996
prior to the purchase, respectively.     
 
  The Company also leases from four separate limited partnerships its
corporate headquarters in King of Prussia, Pennsylvania and its facilities in
Suffield, Connecticut, Orlando, Florida and Charlotte, North Carolina. J.
Peter Pierce, the Company's President and Chief Executive Officer, is the
general partner of three of the limited partnerships and members of the Pierce
family and certain other officers and directors of the Company and their
affiliates own substantial limited partnership interests in each of the four
limited partnerships. The lease
 
                                      55
<PAGE>
 
on the Company's corporate headquarters expires on April 30, 2003, without any
renewal options. The leases for the Suffield, Orlando and Charlotte facilities
terminate on December 31, 2005, October 31, 2004 and August 31, 2001,
respectively. Each of such leases contains two five-year renewal options. The
aggregate rental payments by the Company for such properties during 1994, 1995
and 1996 were $531,000, $773,000 and $894,000, respectively.
 
  The Company believes that the terms of its leases with the related parties
are as favorable to the Company as those generally available from unaffiliated
third parties. There are no plans by the Company to lease additional
facilities from officers, directors or other affiliated parties.
   
  In December 1993, the Company's Chairman, Leo W. Pierce, Sr., advanced
$80,000 to the Company. The Company repaid the loan, together with interest at
7%, in three equal installments in December 1994, December 1995 and May 1996.
In July, 1996, the Company redeemed 100 shares of voting Class A Common Stock
(equivalent to 105,910 shares of Common Stock after the Stock
Recapitalization) from Mr. Pierce for an aggregate price of $1.45 million,
which price was based on the Company's EBITDA. The Company had previously
undertaken to pay $60,000 per year for a five-year period to Mr. Pierce's
spouse upon his death. The Company replaced this arrangement by providing an
annual pension in the amount of $96,000 to Mr. Pierce and then to his spouse,
if she survives him.     
 
  The Company has entered into a tax indemnification agreement with the
current shareholders of the Company which provides for: (i) the distribution
to such shareholders of cash equal to the product of the Company's taxable
income for the period from January 1, 1997 until the date the Offerings are
completed and the sum of the highest effective federal and state income tax
rate applicable to any current shareholder (or in the case of shareholders
that are trusts, any beneficiaries), less any prior distributions to such
shareholders to pay taxes for such period, and (ii) an indemnification of such
shareholders for any losses or liabilities with respect to any additional
taxes (including interest, penalties and legal fees) resulting from the
Company's operations during the period in which it was a Subchapter S
corporation.
   
  Alan B. Campell is a managing director of Campell Vanderslice Furman
("CVF"), an investment banking firm that has provided investment banking
services to the Company since 1992. Mr. Campell became a director of the
Company in 1994. During 1994, 1995 and 1996, the Company paid CVF $0.8
million, $0.7 million and $0.8 million, respectively, with respect to
investment banking services. CVF will receive a fee estimated to be
approximately $    in connection with the Offerings.     
 
STOCK INCENTIVE PLAN
 
  The Company established a Nonqualified Stock Option Plan (the "Nonqualified
Option Plan") in September 1994 to provide incentives to Key Employees
(defined below) who contribute significantly to the strategic and long-term
performance objectives and growth of the Company. The Nonqualified Option Plan
is administered by the Compensation Committee of the Board of Directors.
   
  The Nonqualified Option Plan provides for the issuance of stock options not
intended to qualify as incentive stock options under Section 422 of the Code
("NQSOs") to "Key Employees," defined as employees of the Company who are
members of a select group of management or highly compensated employees. As of
December 31, 1996, there were nine Key Employees. Under the Nonqualified
Option Plan, options exercisable for an aggregate of 38,217 shares of Common
Stock are available for grant. The exercise price per share of Common Stock of
options granted under the Nonqualified Option Plan shall be equal to or
greater than the fair market value of the Common Stock as of the last day of
the calendar quarter coinciding with or immediately preceding the date of the
grant. Options granted under the Nonqualified Option Plan become exercisable,
to the extent they are vested, at the earlier of the tenth anniversary of the
date of grant or the date the Company is no longer a Subchapter S Corporation.
    
                                      56
<PAGE>
 
  The Board, in its sole discretion, may direct the Company to make a loan to
a Key Employee whose Vested Percentage (defined below) with respect to one or
more stock options is at least 60%. The maximum amount of any such loan shall
be 25% of the amount which would be payable to the Key Employee had he
terminated employment other than on account of death or total and permanent
disability as of the date of the loan as set forth in the following paragraph.
Vested Percentage is based upon the options vesting in five equal annual
installments commencing on the first anniversary of the date of grant;
provided, however, that 100% shall be deemed to be vested in the case of a Key
Employee who terminates employment on account of death or total and permanent
disability.
 
  If a Key Employee's employment is terminated for any reason, each stock
option which has not been exercised shall terminate; provided, however, that
if a Key Employee terminates employment after the Class B Common Stock has
become readily tradeable in an established securities market, other than
pursuant to a termination for cause, his option shall not expire until the end
of the 90-day period following the date of termination. Upon termination of
employment (other than for cause or when the Class B Common Stock is tradeable
in an established securities market), the Company is required to pay the Key
Employee the Vested Percentage of the value of any options held by the Key
Employee. The value of the options for this purpose is equal to the aggregate
fair market value of the underlying shares (determined by a formula set forth
in the Nonqualified Option Plan), less (i) the principal amount of any
outstanding loans pursuant to the Nonqualified Option Plan and (ii) the
aggregate exercise price of the underlying shares.
 
1997 STOCK OPTION PLAN
 
  In April 1997, the Company adopted its 1997 Stock Option Plan (the "1997
Plan") which provides for grants of stock options ("Options") to selected
employees, officers, directors, consultants and advisers of the Company. By
encouraging stock ownership, the Company seeks to attract, retain and motivate
such persons and to encourage them to devote their best efforts to the
business and financial success of the Company.
   
  The 1997 Plan authorizes up to 1,500,000 shares of Common Stock (subject to
adjustment in certain circumstances) for issuance pursuant to the terms of the
1997 Plan. If Options expire or are terminated for any reason without being
exercised, the shares of Common Stock subject to such Options again will be
available for grant.     
   
  The 1997 Plan may be administered by the Board of Directors (the "Board") or
by a committee of the Board (references to the "Committee" refers to the
committee, if one is appointed, and otherwise to the Board). Grants under the
1997 Plan may consist of (i) options intended to qualify as incentive stock
options ("ISOs") within the meaning of Section 422 of the Code or (ii) NQSOs.
Options may be granted to any employee (including officers and directors) of
the Company, members of the Board who are not employees and consultants and
advisers who perform services to the Company or any of its subsidiaries ("Key
Advisers"). During any calendar year, no grantee may receive Options for more
than 500,000 shares of Common Stock.     
   
  The option price of any ISO granted under the 1997 Plan will not be less
than the fair market value of the underlying shares of Common Stock on the
date of grant. The option price of a NQSO will be determined by the Committee,
in its sole discretion, and may be greater than, equal to or less than the
fair market value of the underlying shares of Common Stock on the date of
grant. The Committee will determine the term of each Option, provided that the
exercise period may not exceed ten years from the date of grant. The option
price of an ISO granted to a person who owns more than 10% of the total
combined voting power of all classes of stock of the Company must be at least
equal to 110% of the fair market value of Common Stock on the date of grant,
and the ISO's term may not exceed five years. A grantee may pay the option
price (i) in cash, (ii) by delivering shares of Common Stock owned by the
grantee for more than six months and having a fair market value on the date of
exercise equal to the option price, or (iii) by such other method as the
Committee may approve. The Committee may impose on Options such vesting and
other conditions as the Committee deems appropriate. Options may be exercised
while the grantee is an employee, Key Adviser or member of the Board or within
a specified period after termination of the grantee's employment or services.
    
                                      57
<PAGE>
 
   
  In the event of a change of control (as defined in the 1997 Plan), all
outstanding Options will become fully exercisable.     
       
  All Options will be granted subject to any applicable federal, state and
local withholding requirements; the Company can deduct from wages paid to the
grantee any such taxes required to be withheld with respect to the Options. If
the Company so permits, a grantee may choose to satisfy the Company's income
tax withholding obligation with respect to an Option by having shares withheld
up to an amount that does not exceed the grantee's maximum marginal tax rate
for federal, local and state taxes.
   
  The Board may amend or terminate the 1997 Plan at anytime; provided that,
the Board may not (a) change the class of individuals eligible to receive an
ISO, (b) increase the maximum number of shares as to which Options may be
granted or (c) make any other change or amendment to which shareholder
approval is required in order to satisfy the conditions set forth in Rule 16b-
3 promulgated under the Exchange Act or Section 162(m) of the Code, in each
case without obtaining shareholder approval. To date, no Options have been
granted under the 1997 Plan. The 1997 Plan will terminate in April 2007,
unless terminated earlier by the Board or extended by the Board with approval
of the shareholders.     
 
401(K) PLAN; PROFIT SHARING PLAN
 
  The Company has a savings and investment plan under Section 401(k) of the
Code (the "401(k) Plan") and a profit sharing plan also under Section 401(k)
(the "Profit Sharing Plan"). The 401(k) Plan covers substantially all full-
time employees over the age of 20 1/2 and with more than 1,000 hours of
service. Participants in the 401(k) Plan may elect to defer a specified
percentage of their compensation into the 401(k) Plan on a pre-tax basis. The
Company is required to make matching contributions under the 401(k) Plan equal
to 25% of the employee's contributions up to a maximum of 2% of the employee's
annual compensation. The contributions to the 401(k) Plan by a participant
vest immediately. Participants earn a vested right to their matching
contributions in increasing amounts over a period of five years, commencing
after three full years of employment. After seven years of service, the
participant's right to his or her matching contribution is fully vested.
Thereafter, the participant may receive a distribution of the entire value of
his or her account upon termination of employment or upon retirement,
disability or death.
 
  The Profit Sharing Plan covers substantially all full-time employees over
the age of 21 with more than 1,000 hours of service. The Company may make
discretionary profit sharing contributions in amounts as the Board of
Directors of the Company may determine. The Company's contributions under the
Profit Sharing Plan have historically ranged from 2-3% of a participant's
annual eligible income. Participants are not permitted to contribute to the
Profit Sharing Plan directly. Participants earn a vested right to their profit
sharing contribution in increasing amounts over a period of five years,
commencing after three full years of employment. After seven years of service,
the participant's right to his or her profit sharing contribution is fully
vested. Thereafter, the participant may receive a distribution of the entire
value of his or her account upon termination of employment or upon retirement,
disability or death.
 
                             CERTAIN TRANSACTIONS
 
  The Company has entered into a consulting agreement with Maurice Cox, Jr., a
shareholder of the Company, to provide consulting services to the Company
through 2004 for an annual payment of $40,000.
   
  In December 1994, the Company loaned $60,000 to J. Michael Gold, its Vice
President, Operations--Northeast. During 1996, an additional $38,516 was
loaned to Mr. Gold. As of April 30, 1997, $77,000 of the principal amount,
together with interest accruing at a rate of 8.875%, was outstanding.     
 
  See also "Management--Compensation Committee Interlocks and Insider
Participation."
 
                                      58
<PAGE>
 
                      PRINCIPAL AND SELLING SHAREHOLDERS
   
  The following table sets forth, as of May 15, 1997, after giving effect to
the Stock Recapitalization, certain information regarding the ownership of
Common Stock by (i) each person known by the Company to beneficially own 5% or
more of the outstanding shares of Common Stock, (ii) each Selling Shareholder,
(iii) each director and Named Executive Officer and (iv) all directors and
executive officers of the Company as a group.     
 
<TABLE>   
<CAPTION>
                          SHARES OF COMMON STOCK                   SHARES OF COMMON STOCK
                            BENEFICIALLY OWNED                       BENEFICIALLY OWNED
                          PRIOR TO THE OFFERINGS                   AFTER THE OFFERINGS(1)
                          ------------------------------  SHARES   --------------------------------
NAME                        NUMBER         PERCENTAGE   TO BE SOLD   NUMBER           PERCENTAGE
- ----                      -------------    ----------------------- --------------     -------------
<S>                       <C>              <C>          <C>        <C>                <C>
Leo W. Pierce, Sr.(2)...     10,485,090(3)      100.0%       --        10,272,476(3)         65.9%
J. Peter Pierce(2)......     10,485,090(3)      100.0        --        10,272,476(3)         65.9
Leo W. Pierce, Jr.(4)...      1,476,386          14.1     58,250        1,418,136             9.1
Michael J. Pierce(5)....      1,418,135          13.5        --         1,418,135             9.1
Mary E. Pierce..........      1,396,953          13.3        --         1,396,953             9.0
Barbara P. Quinn(6).....      1,396,954          13.3     40,564        1,356,390             8.7
Constance P. Buck-
 ley(7).................      1,386,362          13.2     56,715        1,329,647             8.5
Kathryn Cox(8)..........      1,334,461          12.7     17,475        1,277,376             8.2
Maurice Cox, Jr.(9).....      1,334,461          12.7     39,610        1,277,376             8.2
Alan B. Campell.........            --            --         --               --              --
Delbert S. Conner.......            --            --         --               --              --
Ross M. Engelman........            --            --         --            46,812(10)           *
J. Michael Gold.........            --            --         --            46,812(10)           *
Douglas B. Huntley......            --            --         --            46,812(10)           *
Joseph A. Nezi..........            --            --         --            43,423(10)           *
Christopher J. Wil-
 liams..................            --            --         --            46,812(10)           *
All directors and
 executive officers as a
 group (13 persons).....     10,485,090         100.0%       --        10,555,255(11)        66.5
</TABLE>    
- --------
          
*  Less than 1%     
   
(1) In the event the U.S. Underwriters' over-allotment option is exercised in
    full, Leo W. Pierce, Jr., Barbara P. Quinn and Maurice Cox, Jr. will
    beneficially own 1,324,871 shares (8.2%), 1,256,390 shares (7.8%) and
    1,237,766 shares (7.7%), respectively, of the shares outstanding after the
    Equity Offerings, and all directors and executive officers as a group will
    beneficially own 10,322,380 (62.8%).     
   
(2) The business address for Leo W. Pierce, Sr., J. Peter Pierce, Leo W.
    Pierce, Jr., Michael J. Pierce, Mary E. Pierce, Barbara P. Quinn,
    Constance P. Buckley and Kathryn Cox is c/o Pierce Leahy Corp., 631 Park
    Avenue, King of Prussia, Pennsylvania 19406. The address for Maurice Cox,
    Jr. is 731 E. Manoa Road, Havertown, Pennsylvania 19083.     
   
(3) Messrs. Leo W. Pierce, Sr. and J. Peter Pierce are the Voting Trustees of
    the Voting Trust Agreement described below. Substantially all of the
    members of the Pierce family are expected to enter into the Voting Trust
    Agreement, and, accordingly, the beneficial ownership of the Voting
    Trustees includes 10,485,090 and 10,272,476 shares of stock to be held by
    members of the Pierce family before and after the Offerings, respectively,
    of which 408,813 shares are owned directly by Leo W. Pierce, Sr. and
    746,668 shares are owned directly by J. Peter Pierce.     
   
(4) Includes 311,376 shares of Common Stock held for the benefit of Mr.
    Pierce's children.     
   
(5) Includes 151,981 shares of Common Stock held for the benefit of Mr.
    Pierce's child.     
   
(6) Includes 585,683 shares of Common Stock held for the benefit of Ms.
    Quinn's children.     
   
(7) Includes 252,066 shares of Common Stock held for the benefit of Ms.
    Buckley's children.     
   
(8) Includes 792,207 shares of Common Stock held by Ms. Cox's husband and
    192,751 shares held by or for the benefit of Ms. Cox's children.     
   
(9) Includes 349,503 shares of Common Stock held by Mr. Cox's wife and 192,751
    shares held by or for the benefit of Mr. Cox's children.     
   
(10) Consists of options to purchase shares of Common Stock which will become
     exercisable upon termination of the Company's Subchapter S corporation
     status in connection with the Offerings.     
   
(11) Includes 10,272,476 shares of Common Stock beneficially owned by Messrs.
     Leo W. Pierce, Sr. and J. Peter Pierce pursuant to the Voting Trust
     Agreement and options to purchase an aggregate of 282,779 shares of
     Common Stock that will become exercisable upon termination of the
     Company's Subchapter S corporation status in connection with the
     Offerings.     
 
                                      59
<PAGE>

VOTING TRUST AGREEMENT
   
  Prior to the Offerings, all of the outstanding capital stock of the Company
was owned by members of the Pierce family. Substantially all of the members of
the Pierce family, who are expected to own approximately 66% of the shares of
Common Stock to be outstanding after the Offerings, have indicated their
intention to enter into a ten-year voting trust agreement (the "Voting Trust
Agreement") which appoints Leo W. Pierce, Sr. and J. Peter Pierce as the
Voting Trustees (the "Voting Trustees"). All shares subject to the Voting
Trust Agreement shall be voted at the direction of the Voting Trustees. In the
event the Voting Trustees cannot agree on how to vote with respect to a
certain matter, one-half of the shares subject to the Voting Trust Agreement
will be voted according to the direction of each Voting Trustee. In the event
that a Voting Trustee becomes unable or unwilling to continue serving as a
Voting Trustee, the remaining Voting Trustee will act as sole Voting Trustee.
The Voting Trust Agreement will terminate in the event both Trustees become
unable or unwilling to continue serving as Voting Trustees. The Voting Trust
Agreement does not place any restriction on the transfer of shares held
subject to the Voting Trust Agreement; such shares will be released from the
Voting Trust Agreement upon their transfer to a person not subject to the
Voting Trust Agreement.     
 
                                      60
<PAGE>
 
                         DESCRIPTION OF CAPITAL STOCK
   
  The authorized capital stock of the Company consists of 80,000,000 shares of
Common Stock, par value $.01 per share, and 10,000,000 shares of Preferred
Stock, par value $.01 per share (the "Preferred Stock"). Immediately prior to
the Offerings, there were 10,485,090 shares of Common Stock outstanding. No
shares of Preferred Stock are currently outstanding.     
   
  Prior to the Stock Recapitalization, the Company had outstanding two classes
of Common Stock: Class A Common Stock, which was voting, and Class B Common
Stock, which was nonvoting. In connection with the Stock Recapitalization, all
of the shares of Class A and Class B Common Stock were converted into an
aggregate of 10,485,090 shares of Common Stock.     
 
COMMON STOCK
 
  The holders of Common Stock are entitled to one vote per share on each
matter to be decided by the shareholders and do not have cumulative voting
rights. Accordingly, the holders of a majority of Common Stock entitled to
vote in any election of directors may elect all of the directors standing for
election. The holders of Common Stock have no preemptive, redemption or
conversion rights. The holders of Common Stock will be entitled to receive
ratably such dividends, if any, as the Board of Directors may declare from
time to time out of funds legally available for such purpose. In the event of
liquidation, dissolution or winding up of the affairs of the Company, after
payment or provision for payment of all of the Company's debts and obligations
and any preferential distributions to holders of Preferred Stock, if any, the
holders of the Common Stock will be entitled to share ratably in the Company's
remaining assets. All outstanding shares of Common Stock are, and the Common
Stock offered hereby will be, validly issued, fully paid and nonassessable.
 
PREFERRED STOCK
 
  The Board of Directors is authorized, without further action by the
shareholders, to provide for the issuance of shares of Preferred Stock as a
class without series or in one or more series, to establish the number of
shares in each class or series and to fix the designations, powers,
preferences and rights of each such class or series and the qualifications,
limitations or restrictions thereof. Because the Board of Directors has the
power to establish the preferences and rights of each class or series of
Preferred Stock, the Board of Directors may afford the holders of any class or
series of Preferred Stock preferences, powers and rights, voting or otherwise,
senior to the rights of holders of Common Stock. The issuance of Preferred
Stock could have the effect of delaying or preventing a change in control of
the Company. As of the date of this Prospectus, the Company has not authorized
the issuance of any Preferred Stock and there are no plans, agreements or
understandings for the issuance of any shares of Preferred Stock.
 
CERTAIN PROVISIONS OF PENNSYLVANIA LAW AND THE COMPANY'S ARTICLES OF
INCORPORATION AND BYLAWS
 
  The Company is subject to the provisions of Section 2538 and Sections 2551-
2556 of the Pennsylvania Business Corporation Law of 1988, as amended (the
"PBCL"), which in certain cases provide for supermajority shareholder approval
of business combinations involving the Company and any "interested
shareholder" (as defined in such statute and includes generally, in the case
of Section 2538, shareholders who are a party to the business combination or
who are treated differently from other shareholders, and, in the case of
Sections 2551-2556, shareholders beneficially owning 20% or more of the voting
power of a "registered" corporation, such as the Company). In addition,
Sections 2551-2556 also impose certain restrictions on business combinations
involving the Company and any "interested shareholder." The term "business
combination" includes a merger, asset sale or other transaction involving an
interested shareholder.
 
  The PBCL also provides that the directors of a corporation, making decisions
concerning takeovers or any other matters, may consider, to the extent that
they deem appropriate, among other things, (i) the effects of any proposed
transaction upon any or all groups affected by such action, including, among
others, shareholders,
 
                                      61
<PAGE>

employees, suppliers, customers and creditors, (ii) the short-term and long-
term interests of the corporation and (iii) the resources, intent and conduct
of the person seeking control.
   
  The Company's Bylaws provide that the Company's Board of Directors is to be
composed of three classes, with staggered three-year terms, each class to
contain as nearly as possible one-third of the number of members of the Board.
Accordingly, at each annual meeting of shareholders, only approximately one-
third of the Company's directors will be elected.     
 
  Certain other provisions of the Company's Articles of Incorporation and
Bylaws could also have the effect of preventing or delaying any change in
control of the Company, including (i) the advance notification procedures
governing certain shareholder nominations of candidates for the Board of
Directors and for certain other shareholder business to be conducted at an
annual meeting, (ii) the absence of authority for shareholders to call special
shareholder meetings of the Company, except in certain limited circumstances
mandated by the PBCL, and (iii) the absence of authority for shareholder
action by written consent by less than all of the Company's shareholders.
These provisions, the classified board and "supermajority" voting rights,
could have the effect of making it more difficult for a third party to
acquire, or discouraging a third party from seeking to acquire, control of the
Company.
 
  As permitted by the PBCL, the Bylaws provide that a director shall not be
personally liable in such capacity for monetary damages for any action taken,
or any failure to take any action, unless the director breaches or fails to
perform the duties of his office under the PBCL, and the breach or failure to
perform constitutes self-dealing, willful misconduct or recklessness. These
provisions of the Bylaws, however, do not apply to the responsibility or
liability of a director pursuant to any criminal statute, or to the liability
of a director for the payment of the Company's taxes pursuant to local,
Pennsylvania or federal law. These provisions offer persons who serve on the
Board of Directors of the Company protection against awards of monetary
damages for negligence in the performance of their duties.
   
  The Bylaws also provide that every person who is or was a director or
officer of the Company, or a director, officer, employee, agent, partner or
fiduciary of, or in any other capacity for any corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise which he served as
such at the request or for the benefit of the Company, shall be indemnified by
the Company to the fullest extent permitted by law against all expenses and
liabilities reasonably incurred by or imposed upon him, in connection with any
proceeding to which he may be made, or threatened to be made, a party, or in
which he may become involved by reason of his being or having been a director
or officer of the Company, or a director, officer, employee, agent, partner or
fiduciary of, or in any other capacity for such other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
whether or not he is a director or officer of the Company or a director,
officer, employee, agent, partner or fiduciary of, or in any other capacity
for such other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise at the time the expenses or liabilities are
incurred.     
 
TRANSFER AGENT
   
  The transfer agent and registrar for the Common Stock will be State Street
Bank and Trust Company.     
 
 
                                      62
<PAGE>
 
                      DESCRIPTION OF CERTAIN INDEBTEDNESS
 
THE 1996 NOTES
 
  General. In July 1996, the Company issued $200,000,000 principal amount of
11 1/8% Senior Subordinated Notes due 2006 (the "Original Notes"). In November
1996, the Company exchanged the Original Notes for $200,000,000 principal
amount of 11 1/8% Senior Subordinated Notes due 2006 (the "1996 Notes"), which
are substantially identical to the Original Notes except that the 1996 Notes
are registered under the Securities Act. The 1996 Notes mature on July 15,
2006, and bear interest at 11 1/8% per annum, payable semi-annually in arrears
on January 15 and July 15.
 
  The following is a summary of the material terms of the Company's 1996 Notes
and is qualified in its entirety by reference to the indenture governing the
1996 Notes (the "1996 Indenture"). The 1996 Notes are general unsecured
obligations of the Company, subordinated in right of payment to Senior
Indebtedness of the Company (as defined in the 1996 Indenture).
   
  Redemption. Except as set forth in the following sentence, the Company may
not redeem the 1996 Notes prior to July 15, 2001. The Company may redeem up to
an aggregate of $70,000,000 principal amount of the 1996 Notes at any time
prior to July 15, 1999 with the net proceeds of the one or more Public Equity
Offerings (as defined in the 1996 Indenture) at a redemption price equal to
110% of the aggregate principal amount so redeemed plus accrued interest to
the Redemption Date. After July 15, 2001, the Company may redeem the 1996
Notes in whole or in part at specified redemption prices (expressed as a
percentage of principal amount), together, in each case, with accrued and
unpaid interest to the Redemption Date. The Company expects to use a
substantial portion of the net proceeds of the Equity Offerings to redeem
$70,000,000 principal amount of the 1996 Notes. See "Use of Proceeds."     
   
  Covenants; Events of Default. The 1996 Indenture contains provisions which,
among other things, limit (i) the incurrence of additional debt, (ii) the
payment of dividends on and issuance of any Capital Stock of a Restricted
Subsidiary (as defined in the 1996 Indenture), (iii) the payment of cash
dividends by the Company, (iv) the use of proceeds from the sale of assets,
(v) transactions with affiliates, (vi) the creation of liens, (vii) the
creation of investments, (viii) the creation of subsidiaries and (ix) sale and
lease-back transactions.     
 
  The 1996 Indenture provides that an Event of Default will occur upon, among
other occurrences, (i) a default by the Company for 30 days in the payment of
any interest installment due and payable on the 1996 Notes, (ii) a default in
payment of the principal when due on the 1996 Notes or upon the failure to
redeem or purchase the 1996 Notes when required, (iii) a default by the
Company or by any of its domestic subsidiaries that may become a guarantor of
the 1996 Notes in performance of any covenant or agreement in the 1996
Indenture after written notice to the Company by the trustee under the 1996
Indenture or the holders of not less than 25% in aggregate principal amount of
the 1996 Notes, and (iv) the occurrence of a default of $3.0 million or more
with respect to any Indebtedness of the Company or any Restricted Subsidiary.
 
  Guarantee. The 1996 Notes are secured on a second priority basis, by a
pledge of 65% of the capital stock of the Company's Canadian subsidiary
subordinate to a pledge of such shares in favor of the lenders and the
administrative agent under the Credit Facility and senior to a pledge of such
shares in favor of the holders of the 1997 Notes. The 1996 Notes will be
guaranteed, pari passu with the 1997 Notes, on an unsecured senior
subordinated basis, by any future domestic subsidiaries of the Company.
 
THE 1997 NOTES
 
  General. Concurrent with the Equity Offerings, the Company will issue
$100,000,000 principal amount of    % Senior Subordinated Notes due 2007 (the
"1997 Notes") pursuant to the Notes Offering. The 1997 Notes will be
substantially similar to the 1996 Notes. The 1997 Notes mature on    , 2007
and bear interest at    %, payable semi-annual in arrears on     and    .
 
                                      63
<PAGE>
 
  The following is a summary of the material terms of the 1997 Notes and is
qualified in its entirety by reference to the indenture governing the 1997
Notes (the "1997 Indenture"). The 1997 Notes will be general unsecured
obligations of the Company, subordinated in right of payment to senior
indebtedness of the Company (as defined in the 1997 Indenture).
   
  Redemption. Except as set forth in the following sentence, the Company may
not redeem the 1997 Notes prior to    , 2002. The Company may redeem up to an
aggregate of $35 million principal amount of the 1997 Notes at any time prior
to    , 2000 with the net proceeds of the one or more Public Equity Offerings
(as defined in the 1997 Indenture) at a redemption price equal to    % of the
aggregate principal amount so redeemed plus accrued interest to the Redemption
Date. After    , 2002, the Company may redeem the 1997 Notes in whole or in
part at specified redemption prices (expressed as a percentage of principal
amount), together, in each case, with accrued and unpaid interest to the
Redemption Date.     
   
  Covenants; Events of Default. The 1997 Indenture will contain provisions
which, among other things, limit (i) the incurrence of additional debt, (ii)
the payment of dividends on and issuance of any Capital Stock of a Restricted
Subsidiary (as defined in the 1997 Indenture), (iii) the payment of cash
dividends by the Company, (iv) the use of proceeds from the sale of assets,
(v) transactions with affiliates, (vi) the creation of liens, (vii) the
creation of investments, (viii) the creation of subsidiaries and (ix) sale and
lease-back transactions.     
 
  The 1997 Indenture will provide that an Event of Default will occur upon,
among other occurrences, (i) a default by the Company for 30 days in the
payment of any interest installment due and payable on the 1997 Notes, (ii) a
default in payment of the principal when due on the 1997 Notes or upon the
failure to redeem or purchase the 1997 Notes when required, (iii) a default by
the Company or by any of its domestic subsidiaries that may become a guarantor
of the 1997 Notes in performance of any covenant or agreement in the 1997
Indenture after written notice to the Company by the trustee under the 1997
Indenture or the holders of not less than 25% in aggregate principal amount of
the 1997 Notes, and (iv) the occurrence of a default of $3.0 million or more
with respect to any Indebtedness of the Company or any Restricted Subsidiary.
 
  Guarantee. The 1997 Notes will be secured on a third priority basis, by a
pledge of 65% of the capital stock of the Company's Canadian subsidiary
subordinate to pledges of such stock in favor of the lenders and the
administrative agent under the Credit Facility and in favor of the holders of
the 1996 Notes. The 1997 Notes will be guaranteed, pari passu with the 1996
Notes, on an unsecured senior subordinated basis, by any future domestic
subsidiaries of the Company.
 
CREDIT FACILITY
   
  In August 1996, the Company and its Canadian subsidiary entered into the
Credit Facility with Canadian Imperial Bank of Commerce ("CIBC" or "Agent") as
the Agent, and the syndicate banks, providing for a senior secured revolving
line of credit in an aggregate principal amount of $100 million in U.S. dollar
borrowings and Cdn $35 million in Canadian dollar borrowings by the Company's
Canadian subsidiary. The amount of U.S. dollar borrowings provided for under
the Credit Facility was subsequently increased to $110 million. The following
is a summary of the material terms of the Credit Facility and does not purport
to be complete and is subject to and qualified by reference to the Credit
Facility which is filed as an exhibit to the Registration Statement of which
this Prospectus forms a part.     
 
  The Credit Facility matures on June 30, 2002, unless previously terminated,
and the aggregate available commitment under the Credit Facility will be
reduced incrementally on a quarterly basis, beginning September 30, 1999.
 
  Borrowings under the U.S. dollar portion of the Credit Facility bear
interest at a rate equal to, at the option of the Company, either (i) the base
rate (which is based on as the Federal Funds rate or the prime rate most
recently announced by the Agent) or (ii) LIBOR, in each case plus an
applicable margin determined by reference to the ratio of Total Net Debt to
EBITDA of the Company (as defined in the Credit Facility). Borrowings under
 
                                      64
<PAGE>
 
the Canadian Dollar portion of the Credit Facility also bear interest based on
various methods plus an applicable margin.
 
  The obligations of the Company under the Credit Facility are unconditionally
guaranteed, jointly and severally, by all subsidiaries of the Company. The
obligations of the Company and such guarantors under the Credit Facility are
secured primarily by a first priority pledge of the stock of all material
subsidiaries of the Company and a first priority lien on all of the assets of
the Company and such guarantors. Obligations under the Canadian facility are
guaranteed by the Company.
   
  The Credit Facility contains, among other things, covenants restricting the
ability of the Company and its subsidiaries to dispose of assets, pay
dividends, repurchase or redeem capital stock and indebtedness, create liens,
make capital expenditures, make certain investments or acquisitions, enter
into transactions with affiliates and otherwise restrict corporate activities.
The Credit Facility also contains a number of financial covenants. Although
there can be no assurances, the Company anticipates that subsequent to the
Offerings, it will amend its Credit Facility to permit, at the Company's
option, an increase in the total availability of U.S. dollar borrowings of up
to an aggregate of $150 million and to change certain other provisions of the
Credit Facility.     
 
                        SHARES ELIGIBLE FOR FUTURE SALE
   
  Prior to the Equity Offerings, there has not been any public market for the
Common Stock. Upon completion of the Equity Offerings, the Company will have
15,585,090 shares of Common Stock outstanding, assuming no exercise of
1,114,174 outstanding options under the Plan. Of these shares, the 5,312,614
shares registered in the Equity Offerings will be freely tradable without
restriction under the Securities Act, except any shares purchased by persons
deemed to be "affiliates" of the Company which will be subject to certain
resale limitations of Rule 144 under the Securities Act. The remaining shares
of Common Stock outstanding upon completion of the Equity Offerings, including
those shares issued pursuant to the exercise of outstanding options, will be
"restricted securities" within the meaning of Rule 144. Such securities, as
well as any Common Stock held by any person deemed to be an affiliate of the
Company, may be sold only if registered under the Securities Act or sold in
accordance with an available exemption from registration. For purposes of Rule
144, an "affiliate" of an issuer is a person that, directly or indirectly,
through the use of one or more intermediaries, controls, or is controlled by
or is under common control with such issuer.     
   
  In general, under Rule 144 as it shall be in effect after the Equity
Offerings, a person who has beneficially owned shares for at least one year,
including an "affiliate," as that term is defined in the Act, is entitled to
sell within any three-month period a number of shares that does not exceed the
greater of one percent of the then outstanding shares of Common Stock
(approximately 156,000 shares after giving effect to the Equity Offerings), or
the average weekly trading volume during the four calendar weeks preceding
filing of notice of such sale. Sales under Rule 144 are also subject to
certain manner of sale provisions, notice requirements and the availability of
current public information about the Company. A person who is not an affiliate
at any time during the three months preceding a sale, and who has beneficially
owned shares for at least two years, is entitled to sell such shares under
Rule 144(k) without regard to the volume limitations, manner of sale
provisions or public information requirements.     
   
  In addition to the 5,312,614 shares offered hereby, all of the shares of
Common Stock owned by current shareholders of the Company will be eligible for
sale under Rule 144 of the Securities Act, subject, in the case of affiliates,
to applicable volume and other restrictions contained therein and subject to
the 180-day lock-up period for certain shareholders as described under
"Underwriting." In addition, the Company expects to file a registration
statement covering shares issuable under the stock option plans.     
 
  Sales of substantial amounts of Common Stock in the public market after the
restrictions lapse, or the perception that such sales could occur, could
adversely affect the prevailing market price and the ability of the Company to
raise equity capital in the future. The Company can make no prediction as to
the effect, if any, that
 
                                      65
<PAGE>
 
sales of shares of its Common Stock, or the availability of shares for future
sale, will have on the market price of the Common Stock prevailing from time
to time. Such sales may also make it more difficult for the Company to sell
equity securities or equity-related securities in the future at a time and
price which it deems appropriate.
 
            CERTAIN U.S. TAX CONSEQUENCES TO NON-U.S. SHAREHOLDERS
 
  The following is a general discussion of certain U.S. federal tax
consequences of the acquisition, ownership and disposition of Common Stock by
a holder that, for U.S. federal income tax purposes, is not a "United States
person" (a "Non-U.S. Holder"). This discussion is based upon the U.S. federal
tax law now in effect, which is subject to change, possibly retroactively. For
purposes of this discussion, a "U.S. person" means a citizen or resident of
the United States; a corporation, partnership, or other entity created or
organized in the United States or under the laws of the United States or of
any political subdivision thereof; an estate whose income is includable in
gross income for U.S. federal income tax purposes regardless of its source; or
a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more U.S. trustees
have the authority to control all substantial decisions of the trust. This
discussion does not consider any specific facts or circumstances that may
apply to a particular Non-U.S. Holder. Prospective investors are urged to
consult their tax advisors regarding the U.S. federal tax consequences of
acquiring, holding and disposing of Common Stock, as well as any tax
consequences that may arise under the laws of any foreign, state, local or
other taxing jurisdiction.
 
DIVIDENDS
 
  Dividends paid to a Non-U.S. Holder will generally be subject to withholding
of U.S. federal income tax at the rate of 30% unless the dividend is
effectively connected with the conduct of a trade or business within the
United States by the Non-U.S. Holder, in which case the dividend will be
subject to the U.S. federal income tax or net income that applies to U.S.
persons generally (and, with respect to corporate holders and under certain
circumstances, the branch profits tax). Non-U.S. Holders should consult any
applicable income tax treaties that may provide for a lower rate of
withholding or other rules different from those described above. A Non-U.S.
Holder may be required to satisfy certain certification requirements in order
to claim treaty benefits or otherwise claim a reduction of or exemption from
withholding under the foregoing rules.
 
GAIN ON DISPOSITION
 
  A Non-U.S. Holder will generally not be subject to U.S. federal income tax
on gain recognized on a sale or other disposition of Common Stock unless (i)
the gain is effectively connected with the conduct of a trade or business
within the United States by the Non-U.S. Holder, (ii) in the case of a Non-
U.S. Holder who is a nonresident alien individual and holds the Common Stock
as a capital asset, such holder is present in the United States for 183 or
more days in the taxable year and certain other requirements are met or (iii)
the Company is or becomes a "United States real property holding corporation"
for U.S. federal income tax purposes (in which case the gain realized by a
more than 5% holder will generally be treated as effectively connected with a
trade or business in the United States and subject to withholding). The
Company believes that it is not currently a United States real property
holding corporation, but no assurances can be given in this regard. Gain that
is effectively connected with the conduct of a trade or business within the
United States by the Non-U.S. Holder will be subject to the U.S. federal
income tax on net income that applies to U.S. persons generally (and, with
respect to corporate holders and under certain circumstances, the branch
profits tax) but will not be subject to withholding. Non-U.S. Holders should
consult any applicable treaties that may provide for different rules.
 
FEDERAL ESTATE TAXES
 
  Common Stock owned or treated as owned by an individual who is not a citizen
or resident (as specially defined for U.S. federal estate tax purposes) of the
United States at the date of death will be included in such individual's
estate for U.S. federal estate tax purposes unless an applicable estate tax
treaty provides otherwise.
 
 
                                      66
<PAGE>
 
INFORMATION REPORTING AND BACKUP WITHHOLDING
 
  The Company must report annually to the Internal Revenue Service and to each
Non-U.S. Holder the amount of dividends paid to and the tax withheld with
respect to, such holder, regardless of whether any tax was actually withheld.
This information may also be made available to the tax authorities of a
country in which the Non-U.S. Holder resides.
 
  Certain U.S. information reporting requirements and backup withholding tax
will generally not apply to dividends paid on the Common Stock to a Non-U.S.
Holder at an address outside the United States. Payments by a U.S. office of a
broker of the proceeds of a sale of the Common Stock is subject to both backup
withholding at a rate of 31% and information reporting unless the holder
certifies its Non-U.S. Holder status under penalties of perjury or otherwise
establishes an exemption. Information reporting requirements (but not backup
withholding) will also apply to payments of the proceeds of sales of the
Common Stock by non-U.S. offices of U.S. brokers, or foreign brokers with
certain types of relationships to the U.S. unless the broker has documentary
evidence in its records that the holder is a Non-U.S. Holder and certain other
conditions are met, or the holder otherwise establishes an exemption.
 
  Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the Non-U.S.
Holder's U.S. federal income tax liability, provided that the required
information is furnished to the Internal Revenue Service.
 
                                 UNDERWRITING
   
  Under the terms and subject to the conditions stated in the U.S.
Underwriting Agreement dated the date hereof, each of the underwriters of the
United States and Canadian offering (the "U.S. Offering") of Common Stock
named below (the "U.S. Underwriters"), for whom Smith Barney Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and PaineWebber Incorporated are
acting as the Representatives (the "Representatives"), has severally agreed to
purchase, and the Company and the Selling Shareholders have agreed to sell to
each U.S. Underwriter, the aggregate number of shares of Common Stock set
forth opposite the name of such U.S. Underwriter.     
 
<TABLE>   
<CAPTION>
                                  NUMBER                                     NUMBER  
U.S. UNDERWRITER                 OF SHARES       U.S. UNDERWRITER           OF SHARES
- ----------------                 ---------       ----------------           ---------
<S>                              <C>             <C>                        <C>      
Smith Barney Inc. .............                     .......................          
Merrill Lynch, Pierce, Fenner &                     .......................          
         Smith                                                              ---------
         Incorporated..........                    Total................... 4,250,091
PaineWebber Incorporated.......                                             ========= 
 
</TABLE>    

  Under the terms and subject to the conditions contained in the International
Underwriting Agreement dated the date hereof, each of the managers of the
concurrent international offering of Common Stock named below (the
"Managers"), for whom Smith Barney Inc., Merrill Lynch International Limited
and PaineWebber International (U.K.) Ltd. are acting as lead managers (the
"Lead Managers"), has severally agreed to purchase, and the Company and the
Selling Shareholders have agreed to sell to each Manager, the aggregate number
of shares of Common Stock set forth opposite the name of such Manager below:
 
<TABLE>   
<CAPTION>
                               NUMBER                                        NUMBER  
MANAGER                       OF SHARES          MANAGER                    OF SHARES
- -------                       ---------          -------                    ---------
<S>                           <C>                <C>                        <C>      
Smith Barney Inc. ...........                       .......................          
Merrill Lynch International                         .......................          
 Limited.....................                                               ---------
PaineWebber International                          Total................... 1,062,523
 (U.K.) Ltd. ................                                               ========= 
 
</TABLE>    
 
                                      67
<PAGE>
 
  The U.S. Underwriters and the Managers (collectively, the "Underwriters")
initially propose to offer part of the shares of Common Stock directly to the
public at the public offering price set forth on the cover page of this
Prospectus and part to certain dealers at a price that represents a concession
not in excess of $   .    per share below the public offering price. The U.S.
Underwriters and the Managers may allow, and such dealers may reallow, a
concession not in excess of $   .   per share to the other U.S. Underwriters
or Managers, respectively, or to certain other dealers. After the initial
offering of the shares to the public, the public offering price and such
concessions may be changed by the U.S. Underwriters and the Managers. The
Representatives and the Lead Managers have advised the Company that the U.S.
Underwriters and the Managers do not intend to confirm any shares to any
accounts over which they exercise discretionary authority.
   
  The Company and certain Selling Shareholders have granted to the U.S.
Underwriters an option, exercisable for thirty days from the date of this
Prospectus, to purchase up to an aggregate of 564,017 and 232,875 additional
shares of Common Stock, respectively, at the public offering price set forth
on the cover page of this Prospectus less the underwriting discounts and
commissions. The U.S. Underwriters may exercise such option solely for the
purpose of covering over-allotments, if any, in connection with the sale of
the shares offered hereby. To the extent such option is exercised, each U.S.
Underwriter will be obligated, subject to certain conditions, to purchase
approximately the same percentage of such additional shares as the number of
shares set forth opposite each U.S. Underwriter's name in the preceding table
bears to the total number of shares listed in such table.     
   
  The Company, its executive officers and directors, the Selling Shareholders
and certain other shareholders of the Company have agreed that, for a period
of 180 days from the date of this Prospectus, they will not without the prior
written consent of Smith Barney Inc., offer, sell, contract to sell, or
otherwise dispose of, any shares of Common Stock of the Company or any
securities convertible into, or exercisable or exchangeable for, Common Stock
of the Company, subject to certain limited exceptions, including the issuance
of shares by the Company for possible acquisitions.     
   
  The U.S. Underwriters and the Managers have entered into an Agreement
Between U.S. Underwriters and Managers pursuant to which each U.S. Underwriter
has agreed that, as part of the distribution of the 4,250,091 shares offered
in the U.S Offering (together with the 796,892 shares which may be offered to
cover over-allotments) (i) it is not purchasing any such shares for the
account of anyone other than a U.S. or Canadian Person (as defined below) and
(ii) it has not offered or sold and will not offer, sell, resell or deliver,
directly or indirectly, any of such shares or distribute any prospectus
relating to the United States and Canadian offering outside the United States
or Canada to anyone other than a U.S. or Canadian Person. In addition, each
Manager has agreed that as part of the distribution of the 1,062,523 shares
offered in the International Offering (i) it is not purchasing any such shares
for the account of any U.S. or Canadian Person and (ii) it has not offered or
sold, and will not offer, sell, resell or deliver, directly or indirectly, any
of such shares or distribute any prospectus relating to the International
Offering in the United States or Canada or to any U.S. or Canadian Person.
Each Manager has agreed that it will offer to sell shares only in compliance
with all relevant requirements of any applicable law.     
 
  The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the U.S. Underwriting Agreement, the
International Underwriting Agreement and the Agreement Between U.S.
Underwriters and Managers, including (i) certain purchases and sales between
the U.S. Underwriters and the Managers, (ii) certain offers, sales, resales,
deliveries or distributions to or through investment advisors or other persons
exercising investment discretion, (iii) purchases, offers or sales by a U.S.
Underwriter who is acting as Manager or by a Manager who is also acting as a
U.S. Underwriter and (iv) other transactions specifically approved by the
Representatives and the Lead Managers. As used herein, "U.S. or Canadian
Person" means any resident or national of the United States or Canada, any
corporation, partnership or other entity created or organized in or under the
laws of the United States or Canada or any estate or trust, the income of
which is subject to United States or Canadian income taxation regardless of
the source of its income (other than the foreign branch of any U.S. or
Canadian Person), and includes any United States or Canadian branch of a
person other than a U.S. or Canadian Person.
 
                                      68
<PAGE>
 
  In order to facilitate the offering of the Common Stock, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Common Stock. Specifically, the Underwriters may over-allot in
connection with the Equity Offerings, creating a short position in the Common
Stock for their own account. In addition, to cover over-allotments or to
stabilize the price of the Common Stock, the Underwriters may bid for, and
purchase, shares of Common Stock, in the open market. Finally, the
underwriting syndicate may reclaim selling concessions allowed to an
underwriter of a dealer for distributing the Common Stock in the Equity
Offerings, if the syndicate repurchases previously distributed Common Stock in
transactions to cover syndicate short positions, in stabilization transactions
or otherwise. Any of these activities may stabilize or maintain the market
price of the Common Stock above independent market levels. The Underwriters
are not required to engage in these activities, and may end any of these
activities at any time.
   
  Any offer of shares in Canada will only be made pursuant to an exemption
from the requirement to file a prospectus in the relevant province of Canada
in which such offer is made.     
 
  Each Manager has represented and agreed during the period of six months from
the date hereof (i) that it has not offered or sold and will not offer or sell
in the United Kingdom any shares except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments
(whether as principal or agent) for the purposes of their businesses or in
other circumstances which do not constitute an offer to the public in the
United Kingdom for the purpose of the Public Offers of Securities Regulation
1995 (the "Regulations"), (ii) that it has complied and will comply with all
applicable provisions of the Regulations and of the Financial Services Act
1986 with respect to anything done by it in relation to the shares in, from,
or otherwise involving the United Kingdom and (iii) that it has only issued or
passed on and will only issue or pass on to any person in the United Kingdom
any document received by it in connection with the issue of these shares if
that person is of a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to
whom such documents may otherwise lawfully be issued or passed on.
 
  No action has been or will be taken in any jurisdiction by the Company, the
Selling Shareholders or the Managers that would permit an offering to the
general public of the shares offered hereby in any jurisdiction other than the
United States.
 
  Purchasers of the shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the offering price set forth on the cover page hereof.
 
  Pursuant to the Agreement Between U.S. Underwriters and Managers, sales may
be made between the U.S. Underwriters and the Managers of such number of
shares as may be mutually agreed. The price of any shares so sold shall be the
public offering price as then in effect for shares being sold by the U.S.
Underwriters and the Managers, less all or any part of the selling concession
unless otherwise determined by mutual agreement. To the extent that there are
sales between the U.S. Underwriters and the Managers pursuant to the Agreement
Between U.S. Underwriters and Managers, the number of shares initially
available for sale by the U.S. Underwriters and by the Managers may be more or
less than the number of shares appearing on the front cover of this
Prospectus.
 
  The Underwriting Agreements provide that the obligations of the several
Underwriters to pay for and accept delivery of the shares are subject to
approval of certain legal matters by counsel and to certain other conditions.
The Underwriters are obligated to take and pay for all shares of Common Stock
offered hereby (other than those covered by the over-allotment option
described above) if any such shares are taken.
   
  Prior to the Equity Offerings, there has not been any public market for the
Common Stock of the Company. Consequently, the initial public offering price
for the shares of Common Stock included in the Equity Offerings has been
determined by negotiations between the Company and the Representatives. Among
the factors     
 
                                      69
<PAGE>
 
considered in determining such price were the history of and prospects for the
Company's business and the industry in which it competes, an assessment of the
Company's management and the present state of the Company's development, the
past and present revenues and earnings of the Company, the prospects for
growth of the Company's revenues and earnings, the current state of the
economy in the United States and the current level of economic activity in the
industry in which the Company competes and in related or comparable
industries, and currently prevailing conditions in the securities markets,
including current market valuations of publicly traded companies which are
comparable to the Company.
 
  The Company, the Selling Shareholders, the U.S. Underwriters and the
Managers have agreed to indemnify each other against certain liabilities,
including liabilities under the Securities Act.
   
  CVF will receive a fee estimated to be approximately $     in connection
with the Offerings.     
 
                                 LEGAL MATTERS
 
  The validity of the Common Stock offered hereby will be passed upon for the
Company by Cozen and O'Connor, Philadelphia, Pennsylvania. Two members of
Cozen and O'Connor are limited partners in certain limited partnerships that
lease facilities to the Company. Certain legal matters will be passed upon for
the Underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New
York.
 
                                    EXPERTS
 
  The consolidated financial statements and schedules of Pierce Leahy Corp. as
of December 31, 1995 and 1996, and for each of the three years in the period
ended December 31, 1996, included in this Prospectus and elsewhere in the
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and
are included herein in reliance upon the authority of said firm as experts in
giving said reports.
 
  The financial statements of Security Archives, Inc. as of June 30, 1994 and
1995, and for the years then ended, included in this Prospectus have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report appearing herein and are included in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
 
  The financial statements of Records Management Services, Inc. as of
September 30, 1996 and for the year then ended, included in this Prospectus
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report appearing herein and are included in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
 
                                      70
<PAGE>
 
                             AVAILABLE INFORMATION
   
  The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 under the Securities Act
with respect to the Common Stock offered hereby (including all amendments and
supplements thereto, the "Registration Statement"). As permitted by the rules
and regulations of the Commission, this Prospectus, which constitutes part of
the Registration Statement, omits certain information, exhibits and
undertakings contained in the Registration Statement. For further information
with respect to the Company and the Common Stock offered hereby, reference is
made to the Registration Statement. Statements contained in this Prospectus as
to the contents of any contract or other document are not necessarily complete
and in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.     
   
  The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Commission. The
Registration Statement (and the exhibits and schedules thereto), as well as
such reports and other information filed by the Company with the Commission,
may be inspected and copied at the Public Reference Section of the Commission
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the regional offices of the Commission located at Room 1400, 75 Park
Place, New York, New York 10007 and Suite 1400, Northwestern Atrium Center,
500 West Madison Street, Chicago, Illinois 60661. Copies of such materials may
be obtained from the Public Reference Section of the Commission, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Copies of such material will be available for inspection at the offices
of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
Such information can also be reviewed through the Commission's Electronic Data
Gathering, Analysis and Retrieval System ("EDGAR") which is publicly available
through the Commission's Web Site on the Internet (http:\\www.sec.gov).     
 
                                      71
<PAGE>
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
Consolidated Financial Statements of Pierce Leahy Corp.:
  Report of Independent Public Accountants.................................  F-2
  Consolidated Balance Sheets..............................................  F-3
  Consolidated Statements of Operations....................................  F-4
  Consolidated Statements of Shareholders' Deficit.........................  F-5
  Consolidated Statements of Cash Flows....................................  F-6
  Notes to Consolidated Financial Statements...............................  F-7
Financial Statements of Security Archives, Inc............................. F-17
Financial Statements of Records Management Services, Inc. ................. F-23
</TABLE>

                                      F-1
<PAGE>
 
  After the recapitalization discussed in Note 2 to the Company's consolidated
financial statements is effected, we expect to be in a position to render the
following audit report.
 
                                          /s/ Arthur Andersen LLP
 
                                          February 28, 1997, except for the
                                           recapitalization discussed in Note
                                           2, as to which the date is
                                             .
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To Pierce Leahy Corp.:
 
  We have audited the accompanying consolidated balance sheets of Pierce Leahy
Corp. (a New York corporation) and Subsidiary as of December 31, 1995 and
1996, and the related consolidated statements of operations, shareholders'
deficit and cash flows for each of the three years in the period ended
December 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
 
  In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Pierce Leahy Corp. and
Subsidiary as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
 
Philadelphia, Pa.
 
                                      F-2
<PAGE>
 
                               PIERCE LEAHY CORP.
 
                          CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
 
<TABLE>   
<CAPTION>
                                                   DECEMBER 31
                                                ------------------   MARCH 31
                                                  1995      1996       1997
                                                --------  --------  -----------
                                                                    (UNAUDITED)
<S>                                             <C>       <C>       <C>
                    ASSETS
CURRENT ASSETS:
  Cash......................................... $    722  $  1,254   $  1,064
  Accounts receivable, net of allowance for
   doubtful accounts of $487,  $795 and $982...   14,182    17,828     21,473
  Inventories..................................      762       611        687
  Prepaid expenses and other...................    1,025       688      1,171
                                                --------  --------   --------
    Total current assets.......................   16,691    20,381     24,395
                                                --------  --------   --------
PROPERTY AND EQUIPMENT.........................  109,755   158,154    171,234
  Less--Accumulated depreciation and
   amortization................................  (35,328)  (45,020)   (46,814)
                                                --------  --------   --------
    Net property and equipment.................   74,427   113,134    124,420
                                                --------  --------   --------
OTHER ASSETS:
  Intangible assets, net.......................   38,621    97,544    113,873
  Other........................................    1,589     3,761      3,774
                                                --------  --------   --------
    Total other assets.........................   40,210   101,305    117,647
                                                --------  --------   --------
                                                $131,328  $234,820   $266,462
                                                ========  ========   ========
     LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
  Current portion of long-term debt............ $  1,478  $  7,310   $    205
  Current portion of noncompete obligations....      200       466        387
  Accounts payable.............................    4,641     6,757      3,558
  Accrued expenses.............................    9,533    20,563     16,586
  Deferred revenues............................    8,978     9,218     10,437
                                                --------  --------   --------
    Total current liabilities..................   24,830    44,314     31,173
LONG-TERM DEBT.................................  116,812   209,330    253,868
NONCOMPETE OBLIGATIONS.........................      517       317        302
DEFERRED RENT..................................    2,814     2,841      3,070
DEFERRED INCOME TAXES..........................    3,492     3,456      3,443
COMMITMENTS AND CONTINGENCIES (Note 9)
REDEEMABLE WARRANTS............................    1,064       --         --
SHAREHOLDERS' DEFICIT..........................  (18,201)  (25,438)   (25,394)
                                                --------  --------   --------
                                                $131,328  $234,820   $266,462
                                                ========  ========   ========
</TABLE>    
 
        The accompanying notes are an integral part of these statements.
 
                                      F-3
<PAGE>
 
                               PIERCE LEAHY CORP.
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
 
<TABLE>   
<CAPTION>
                                 FOR THE YEAR ENDED       FOR THE THREE MONTHS
                                    DECEMBER 31              ENDED MARCH 31
                             ---------------------------  ---------------------
                              1994     1995      1996       1996       1997
                             -------  ------- ----------  ---------------------
                                                               (UNAUDITED)
<S>                          <C>      <C>     <C>         <C>       <C>
REVENUES:
  Storage..................  $47,123  $55,501 $   75,900   $ 16,969 $    23,322
  Service and storage
   material sales..........   35,513   39,895     53,848     12,730      16,910
                             -------  ------- ----------  --------- -----------
    Total revenues.........   82,636   95,396    129,748     29,699      40,232
                             -------  ------- ----------  --------- -----------
OPERATING EXPENSES:
  Cost of sales, excluding
   depreciation and
   amortization............   49,402   55,616     73,870     17,406      22,298
  Selling, general and
   administrative..........   15,882   16,148     20,007      4,856       6,762
  Depreciation and
   amortization............    8,436    8,163     12,869      2,572       4,214
  Consulting payments to
   related parties.........      500      500        --         125         --
  Non-recurring charges....      --       --       3,254        --          --
  Foreign currency
   translation.............      --       --         --         --          182
                             -------  ------- ----------  --------- -----------
    Total operating
     expenses..............   74,220   80,427    110,000     24,959      33,456
                             -------  ------- ----------  --------- -----------
    Operating income.......    8,416   14,969     19,748      4,740       6,776
INTEREST EXPENSE...........    7,216    9,622     17,225      2,846       6,712
                             -------  ------- ----------  --------- -----------
    Income before
     extraordinary item....    1,200    5,347      2,523      1,894          64
EXTRAORDINARY CHARGE--Loss
 on early extinguishment of
 debt......................    5,991    3,279      2,015        --          --
                             -------  ------- ----------  --------- -----------
NET INCOME (LOSS)..........   (4,791)   2,068        508      1,894          64
ACCRETION OF REDEEMABLE
 WARRANTS..................       16      889      1,561      1,561         --
                             -------  ------- ----------  --------- -----------
NET INCOME (LOSS)
 APPLICABLE TO COMMON
 SHAREHOLDERS..............  $(4,807) $ 1,179 $   (1,053) $     333 $        64
                             =======  ======= ==========  ========= ===========
PRO FORMA DATA (UNAUDITED)
 (Note 2):
  Historical net income
   (loss) applicable to
   Common shareholders.....                   $   (1,053)           $        64
  Pro forma provision for
   income taxes............                          905                    291
                                              ==========            ===========
  Pro forma net loss.......                   $   (1,958)           $      (227)
                                              ==========            ===========
  Pro forma net loss per
   share...................                   $     (.18)           $      (.02)
                                              ==========            ===========
  Shares used in computing
   pro forma net loss per
   share...................                   10,611,650             10,549,870
                                              ==========            ===========
  Supplemental pro forma
   net income per share....                   $      .19            $       .06
                                              ==========            ===========
  Shares used in computing
   supplemental pro forma
   net income per share....                   15,711,449             15,611,270
                                              ==========            ===========
</TABLE>    
 
        The accompanying notes are an integral part of these statements.
 
                                      F-4
<PAGE>
 
                               PIERCE LEAHY CORP.
 
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
                                 (IN THOUSANDS)
 
<TABLE>   
<CAPTION>
                         COMMON STOCK
                         --------------  ADDITIONAL             CUMULATIVE
                         CLASS   CLASS    PAID-IN   ACCUMULATED TRANSLATION
                           A       B      CAPITAL     DEFICIT   ADJUSTMENT   TOTAL
                         ------  ------  ---------- ----------- ----------- --------
<S>                      <C>     <C>     <C>        <C>         <C>         <C>
BALANCE, JANUARY 1,
 1994................... $  --   $  --      $ 24     $(14,532)     $--      $(14,508)
  Accretion of
   redeemable warrants..    --      --       --           (16)      --           (16)
  Net loss..............    --      --       --        (4,791)      --        (4,791)
  Distributions to
   shareholders.........    --      --       --           (26)      --           (26)
                         ------  ------     ----     --------      ----     --------
BALANCE, DECEMBER 31,
 1994...................    --      --        24      (19,365)      --       (19,341)
  Accretion of
   redeemable warrants..    --      --       --          (889)      --          (889)
  Net income............    --      --       --         2,068       --         2,068
  Distributions to
   shareholders.........    --      --       --           (39)      --           (39)
                         ------  ------     ----     --------      ----     --------
BALANCE, DECEMBER 31,
 1995...................    --      --        24      (18,225)      --       (18,201)
  Accretion of
   redeemable warrants..    --      --       --        (1,561)      --        (1,561)
  Repurchase of Class A
   common stock (Note
   7)...................    --      --       --        (1,450)      --        (1,450)
  Deemed distribution
   due to purchase of
   real estate and other
   assets from related
   parties (Note 10)....    --      --       --        (4,132)      --        (4,132)
  Net income............    --      --       --           508       --           508
  Distributions to
   shareholders.........    --      --       --          (602)      --          (602)
                         ------  ------     ----     --------      ----     --------
BALANCE, DECEMBER 31,
 1996...................    --      --        24      (25,462)      --       (25,438)
  Change in cumulative
   translation
   adjustment
   (unaudited)..........    --      --       --           --        (20)         (20)
  Net income
   (unaudited)..........    --      --       --            64       --            64
                         ------  ------     ----     --------      ----     --------
BALANCE, MARCH 31, 1997
   (unaudited).......... $  --   $  --      $ 24     $(25,398)     $(20)    $(25,394)
                         ======  ======     ====     ========      ====     ========
</TABLE>    
 
        The accompanying notes are an integral part of these statements.
 
                                      F-5
<PAGE>
 
                               PIERCE LEAHY CORP.
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
<TABLE>   
<CAPTION>
                                                               FOR THE THREE
                                   FOR THE YEAR ENDED           MONTHS ENDED
                                       DECEMBER 31                MARCH 31
                               -----------------------------  -----------------
                                 1994      1995      1996      1996      1997
                               --------  --------  ---------  -------  --------
                                                                (UNAUDITED)
<S>                            <C>       <C>       <C>        <C>      <C>
CASH FLOWS FROM OPERATING
 ACTIVITIES:
 Net income (loss)...........  $ (4,791) $  2,068  $     508  $ 1,894  $     64
 Adjustments to reconcile net
  income (loss) to net cash
  provided by (used in)
  operating activities--
  Extraordinary charge.......     5,991     3,279      2,015      --        --
  Depreciation and
   amortization..............     8,436     8,163     12,869    2,421     4,214
  Loss (gain) on sale of
   property and equipment....       --        --         (32)     --          3
  Amortization of deferred
   financing costs...........     1,068       533        516      111       233
  Imputed interest on long-
   term debt and noncompete
   obligation................       229       --         --       --        --
  Increase in deferred rent..        50        29        302       43       229
  Foreign currency adjustment
   of long-term debt.........       --        --          31       79      (110)
  Change in assets and
   liabilities, net of the
   effects from the purchase
   of businesses--
   (Increase) decrease in--
    Accounts receivable......    (2,061)     (360)    (2,408)  (1,402)   (2,968)
    Inventories..............       (46)     (347)       150      107       (75)
    Prepaid expenses and
     other...................       (91)       57        747     (580)     (450)
    Other assets.............       255      (536)      (486)     162        (9)
   Increase (decrease) in--
    Accounts payable.........     1,763      (978)     1,630       39    (3,754)
    Accrued expenses.........      (170)    4,693     10,732     (628)   (4,038)
    Deferred revenues........       367       921         (8)     244     1,125
    Deferred income taxes....       --        --        (128)     --        (13)
                               --------  --------  ---------  -------  --------
   Net cash provided by (used
    in) operating
    activities...............    11,000    17,522     26,438    2,490    (5,549)
                               --------  --------  ---------  -------  --------
CASH FLOWS FROM INVESTING
 ACTIVITIES:
 Payments for businesses
  acquired, net of cash
  acquired...................    (4,663)  (28,355)   (61,176)  (2,865)  (18,463)
 Capital expenditures........    (6,352)  (16,288)   (23,493)  (3,553)  (10,794)
 Purchase of real estate and
  other assets from related
  parties....................       --        --     (11,018)     --        --
 Client acquisition costs....    (1,905)   (2,245)    (6,477)  (1,108)   (1,788)
 Deposits on pending
  acquisitions...............       --        --        (850)     --        --
 Increase in intangible
  assets.....................      (943)   (4,274)    (5,618)    (763)     (706)
 Payments on noncompete
  agreements.................       (70)     (153)      (333)     (50)     (155)
 Proceeds from sale of
  property and equipment.....       --        --         123      --        --
                               --------  --------  ---------  -------  --------
   Net cash used in investing
    activities...............   (13,933)  (51,315)  (108,842)  (8,339)  (31,906)
                               --------  --------  ---------  -------  --------
CASH FLOWS FROM FINANCING
 ACTIVITIES:
 Net borrowings (payments) on
  revolving line of credit...    (7,700)     (900)     5,237    4,236    44,628
 Proceeds from issuance of
  long-term debt.............    76,850   128,420    210,229    1,700       --
 Payments on long-term debt
  and capital lease
  obligations................   (61,195)  (90,958)  (118,570)    (335)   (7,213)
 Prepayment penalties and
  cancellation of warrants...    (1,781)      --      (2,625)     --        --
 Payment of debt financing
  costs......................    (3,385)   (2,366)    (9,283)     --       (150)
 Repurchase of Common stock..       --        --      (1,450)     --        --
 Distributions to
  shareholders...............       (26)      (39)      (602)     --        --
                               --------  --------  ---------  -------  --------
   Net cash provided by
    financing activities.....     2,763    34,157     82,936    5,601    37,265
                               --------  --------  ---------  -------  --------
NET INCREASE (DECREASE) IN
 CASH........................      (170)      364        532     (248)     (190)
CASH, BEGINNING OF PERIOD....       528       358        722      722     1,254
                               --------  --------  ---------  -------  --------
CASH, END OF PERIOD..........  $    358  $    722  $   1,254  $   474  $  1,064
                               ========  ========  =========  =======  ========
SUPPLEMENTAL DISCLOSURE--CASH
 PAID FOR INTEREST...........  $  6,738  $  8,356  $   7,443  $ 3,594  $ 11,768
                               ========  ========  =========  =======  ========
</TABLE>    
        The accompanying notes are an integral part of these statements.
 
                                      F-6
<PAGE>
 
                              PIERCE LEAHY CORP.
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
                               DECEMBER 31, 1996
                 
              (IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)     
     
  (INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
                       1996 AND 1997 IS UNAUDITED)     
 
1. BACKGROUND:
 
  Pierce Leahy Corp. and its majority-owned subsidiary, Pierce Leahy Command
Company (together, the "Company"), stores and services business records for
clients throughout the United States and Canada. The Company also sells
storage containers and provides records management consulting services and
imaging services.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
   
 Interim Consolidated Financial Statements     
   
  The consolidated balance sheet as of March 31, 1997 and the consolidated
statements of operations for the three months ended March 31, 1996 and 1997
are unaudited and, in the opinion of management of the Company, include all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the results for those interim periods. The results of
operations for the three months ended March 31, 1996 and 1997 are not
necessarily indicative of the results to be expected for the full year.     
 
 Principles of Consolidation
 
  The consolidated financial statements include the accounts of Pierce Leahy
Corp. and its 99%-owned subsidiary, Pierce Leahy Command Company. All
intercompany accounts and transactions have been eliminated in consolidation.
The minority interest in Pierce Leahy Command Company is not material to the
consolidated financial statements.
 
 Use of Estimates
 
  The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
 Inventories
 
  Inventories, which consist of storage containers, are stated at the lower of
cost (first-in, first-out) or market.
 
 Property and Equipment
 
  Property and equipment are stated at cost. Depreciation is provided using
straight-line and accelerated methods over the estimated useful lives of the
assets.
 
 Goodwill
 
  Goodwill reflects the cost in excess of fair value of the net assets of
companies acquired in purchase transactions. Goodwill is amortized using the
straight-line method from the date of acquisition over the expected period to
be benefited, estimated at 30 years. The Company assesses the recoverability
of goodwill, as well as other long-lived assets, based upon expectations of
future undiscounted cash flows in accordance with Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of."
 
 Client Acquisition Costs
 
  The unreimbursed costs of moving the records of new clients into the
Company's facilities and sales commissions related to new client contracts
have been capitalized and are included in intangible assets in the
accompanying balance sheets (see Note 4). All such costs are being amortized
on a straight-line basis over six years, which represent the average initial
contract term.
 
                                      F-7
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
 Deferred Rent
 
  Certain of the Company's leases for warehouse space provide for scheduled
rent increases over the lease terms. The Company recognizes rent expense on a
straight-line basis over the lease terms, with the excess of the rent charged
to expense over the amount paid recorded as deferred rent in the accompanying
balance sheets.
 
 Health Insurance Reserve
 
  The Company self-insures for benefit claims under a health insurance plan
provided to employees. The self-insurance was limited to $75 and $100 in
claims per insured individual per year in 1995 and 1996, respectively, and a
liability for claims incurred but not reported is reflected in the
accompanying balance sheets. Specific stop loss insurance coverage is
maintained to cover claims in excess of the coverage per insured individual
per year.
 
 Income Taxes
 
  The Company is a Subchapter S corporation and, therefore, any taxable income
or loss for federal income tax purposes is passed through to the shareholders.
While not subject to federal income taxes, the Company is subject to income
taxes in certain states. The Company reports certain expenses in different
periods for financial reporting and income tax purposes.
 
  The Tax Reform Act of 1986 provides for a tax at the corporate level on
gains realized on asset sales for a specified period following the election of
Subchapter S status. Deferred taxes have been provided for taxes which may be
triggered if the Company disposes of certain assets acquired in connection
with an acquisition.
 
 Recapitalization
   
  In June 1997, the Company is expected to effect a stock split, reclassify
its Class A and Class B common stock as common stock, authorize 10,000,000
shares of undesignated preferred stock and increase its authorized common
stock to 80,000,000 shares. All references in the accompanying financial
statements to the number of common shares and per-share amounts have been
retroactively restated to reflect the stock split.     
 
 Revenue Recognition
 
  Storage and service revenues are recognized in the month the respective
service is provided. Storage material sales are recognized when shipped to the
customer. Deferred revenues represent amounts invoiced for storage services in
advance of the rendering of the services. The costs of storage and service
revenues are not separately distinguishable, as the revenue producing
activities are interdependent and costs are not directly attributable or
allocable in a meaningful way to those activities.
 
 Change in Accounting Estimates
 
  Effective January 1, 1995, the Company revised its estimates of the useful
lives of certain long-term assets, as management re-evaluated in 1995 the
appropriate useful lives of these types of assets given the significant
increase in the level of capital expenditures and payments for businesses
acquired (see Note 13) over prior years. The revised useful lives were
determined based on an analysis of the Company's actual experiences in the use
of such assets, along with other information gained during the acquisition
process and the availability of other industry data. The revised useful lives
are as follows:
 
<TABLE>
<CAPTION>
                                                            USEFUL LIFE (YEARS)
                                                            --------------------
      LONG-TERM ASSET                                          OLD       NEW
      ---------------                                       --------- ----------
     <S>                                                    <C>       <C>
     Buildings.............................................        25         40
     Warehouse equipment...................................        12      12-20
     Client acquisition costs..............................         3          6
     Other intangibles.....................................         3         10
     Goodwill..............................................      5-20         30
</TABLE>
 
  The change in accounting estimates was effective January 1, 1995, and the
aggregate effect of adopting these revised lives was to decrease amortization
and depreciation expense and increase net income for the year ended December
31, 1995 by approximately $4,868.
 
 
                                      F-8
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 Foreign Currency Translation
 
  The balance sheets and statements of operations of the Canadian operations
are translated into U.S. dollars using the rates of exchange at period end.
All foreign currency transaction gains and losses are included in operations
in the period in which they occur. The cumulative translation adjustment at
December 31, 1995 and 1996 was not material to the consolidated financial
statements.
 
 New Accounting Pronouncements
 
  The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation." The
Company has adopted the disclosure requirement of this pronouncement for the
year ended December 31, 1996 (see Note 8). The adoption of this pronouncement
had no impact on the Company's consolidated statements of operations.
 
 Fair Value of Financial Instruments
   
  For certain of the Company's financial instruments, including accounts
receivable, accounts payable and accrued expenses, management believes that
the carrying amounts approximate fair value due to their short maturities. The
carrying amount and estimated fair value of the Company's Senior Subordinated
Notes at December 31, 1996 were $200,000 and $182,648. The estimated fair
value of the Senior Subordinated Notes at March 31, 1997 was $183,486. The
fair value of the Senior Subordinated Notes was estimated based on the quoted
market prices offered for the Company's publicly traded debt securities.     
 
 Pro Forma Statement of Operations
   
  Upon completion of the equity offerings referred to in this prospectus, the
Company will terminate its status as a Subchapter S Corporation and will be
subject to federal and state income taxes thereafter. Accordingly, for
informational purposes, the accompanying statements of operations for the year
ended December 31, 1996 and three months ended March 31, 1997 include an
unaudited pro forma provision of $905 and $291, respectively, for the income
taxes which would have been recorded if the Company had not been a Subchapter
S Corporation, based on the tax laws in effect during the period. The pro
forma income tax provisions reflect the add back of all non-deductible
expenses, which primarily relate to goodwill amortization on stock
acquisitions.     
 
  Based on the tax effect of the cumulative difference between the financial
reporting and income tax bases of assets and liabilities at December 31, 1996,
a deferred income tax provision of approximately $6,600 would have been
recorded had the Subchapter S Corporation status been terminated at that time.
The actual deferred income tax provision to be recorded will reflect the
effect of operations of the Company for the period from January 1, 1997
through the termination of its Subchapter S Corporation status.
 
 Pro Forma Net Loss Per Share
   
  Pro forma net loss per share was calculated by dividing pro forma net loss
by the weighted average number of shares of common stock outstanding. Pursuant
to the requirements of the Securities and Exchange Commission, common stock
equivalents issued by the Company during the 12 months immediately preceding
the equity offerings contemplated by this prospectus have been included in the
calculation of the shares used in computing pro forma net loss per share as if
they were outstanding for the period presented (using the treasury stock
method and an assumed equity offerings price of $16.50 per share). All other
common stock equivalents have been excluded from the calculation as the impact
is anti-dilutive.     
   
 Supplemental Pro Forma Net Income Per Share     
   
  Supplemental pro forma net income per share is based on the weighted average
number of shares of common stock and common stock equivalents used in the
calculation of pro forma net loss per share and the other common stock
equivalents previously excluded, plus the number of shares that would need to
be issued in the equity offerings contemplated by this prospectus to repay
$70,000 of Senior Subordinated Notes and the related prepayment penalties of
$7,000, at an assumed equity offerings price of $16.50 per share. Pro forma
net     
 
                                      F-9
<PAGE>
 
                               PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
   
loss is reduced by $4,947 and $1,237 for the year ended December 31, 1996 and
the three months ended March 31, 1997, respectively, for the elimination of
interest expense, net of tax, on the Senior Subordinated Notes including the
amortization of a portion of deferred financing costs. The redemption will
result in an extraordinary charge of approximately $6,085, net of tax, in the
quarter in which the redemption occurs.     
 
3. PROPERTY AND EQUIPMENT:
<TABLE>   
<CAPTION>
                                                    DECEMBER 31
                                                 ------------------  MARCH 31
                                        LIFE       1995      1996      1997
                                     ----------- --------  --------  --------
   <S>                               <C>         <C>       <C>       <C>
   Land.............................         --  $  4,780  $  7,353  $  8,138
   Buildings and improvements....... 10-40 years   35,758    57,296    64,042
   Warehouse equipment (primarily
    shelving)....................... 12-20 years   53,943    71,773    75,827
   Data processing equipment and
    software........................     7 years   10,684    14,363    15,186
   Furniture and fixtures...........     7 years    2,970     3,823     3,908
   Transportation equipment.........     5 years    1,620     3,546     4,133
                                                 --------  --------  --------
                                                  109,755   158,154   171,234
   Less--Accumulated depreciation
    and amortization................              (35,328)  (45,020)  (46,814)
                                                 --------  --------  --------
     Net property and equipment.....             $ 74,427  $113,134  $124,420
                                                 ========  ========  ========
</TABLE>    
   
  Depreciation expense was $5,066, $4,325, $6,652, $1,305 and $1,794 for the
years ended December 31, 1994, 1995, and 1996 and for the three months ended
March 31, 1996 and 1997, respectively.     
 
4. INTANGIBLE ASSETS:
<TABLE>   
<CAPTION>
                                                      DECEMBER 31
                                                   ------------------  MARCH 31
                                                     1995      1996      1997
                                                   --------  --------  --------
   <S>                                             <C>       <C>       <C>
   Goodwill....................................... $ 25,857  $ 69,417  $ 85,307
   Client acquisition costs.......................    8,680    15,157    16,945
   Noncompete agreements..........................    6,980    11,287    11,706
   Deferred financing costs.......................    2,248     9,267     9,416
   Other intangible assets........................    9,399    13,377    14,113
                                                   --------  --------  --------
                                                     53,164   118,505   137,487
   Less--Accumulated amortization.................  (14,543)  (20,961)  (23,614)
                                                   --------  --------  --------
     Net intangible assets........................ $ 38,621  $ 97,544  $113,873
                                                   ========  ========  ========
</TABLE>    
 
<TABLE>   
<CAPTION>
                                                         MARCH 31, 1997
                                                 ------------------------------
                                                          ACCUMULATED  NET BOOK
                                         LIFE      COST   AMORTIZATION  VALUE
                                      ---------- -------- ------------ --------
   <S>                                <C>        <C>      <C>          <C>
   Goodwill..........................   30 years $ 85,307   $ (4,574)  $ 80,733
   Client acquisition costs..........    6 years   16,945     (5,645)    11,300
   Noncompete agreements.............  1-7 years   11,706     (7,242)     4,464
   Deferred financing costs..........   10 years    9,416       (618)     8,798
   Other intangible assets........... 3-15 years   14,113     (5,535)     8,578
                                                 --------   --------   --------
                                                 $137,487   $(23,614)  $113,873
                                                 ========   ========   ========
</TABLE>    
 
 
                                      F-10
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
   
  Amortization of all intangible assets, other than deferred financing costs
which are charged to interest expense, was $3,370, $3,838, $6,217, $1,116 and
$2,420 for the years ended December 31, 1994, 1995, and 1996 and for the three
months ended March 31, 1996 and 1997, respectively. Amortization of deferred
financing costs was $1,068, $533, $516, $111 and $233 for the years ended
December 31, 1994, 1995, and 1996 and for the three months ended March 31,
1996 and 1997, respectively. Capitalized client acquisition costs were $1,905,
$2,245, $6,477, $1,108 and $1,788 and related amortization expense was $1,536,
$909, $1,688, $297 and $593 for the years ended December 31, 1994, 1995, 1996
and for the three months ended March 31, 1996 and 1997, respectively.     
 
  The Company continually evaluates whether events or circumstances have
occurred that indicate that the remaining useful lives of the intangible
assets should be revised or that the remaining balance of such assets may not
be recoverable. As of December 31, 1996, the Company believes that no
revisions to the remaining useful lives or write-downs of intangible assets
are required.
 
5. ACCRUED EXPENSES:
<TABLE>   
<CAPTION>
                                                          DECEMBER 31
                                                         -------------- MARCH 31
                                                          1995   1996     1997
                                                         ------ ------- --------
   <S>                                                   <C>    <C>     <C>
   Accrued salaries and commissions..................... $2,190 $ 2,613 $ 3,582
   Accrued vacation.....................................  2,140   2,866   3,005
   Accrued interest.....................................    583   9,840   4,784
   Other................................................  4,620   5,244   5,215
                                                         ------ ------- -------
                                                         $9,533 $20,563 $16,586
                                                         ====== ======= =======
</TABLE>    
 
6. LONG-TERM DEBT:
<TABLE>   
<CAPTION>
                                                     DECEMBER 31
                                                  ------------------  MARCH 31
                                                    1995      1996      1997
                                                  --------  --------  --------
   <S>                                            <C>       <C>       <C>
   11 1/8% Senior Subordinated Notes, due 2006..  $    --   $200,000  $200,000
   U.S. Revolver, interest at prime (9.75% at
    March 31, 1997).............................       --        --     49,900
   Canadian Revolver, interest at prime (5.4% at
    December 31, 1996)..........................       --      5,327       --
   Seller Notes.................................       --      7,600       500
   Mortgage Notes...............................       --      3,679     3,607
   Borrowings under previous credit agreement
    (repaid in July 1996).......................   118,208       --        --
   Other........................................        82        34        66
                                                  --------  --------  --------
                                                   118,290   216,640   254,073
   Less--Current portion........................    (1,478)   (7,310)     (205)
                                                  --------  --------  --------
                                                  $116,812  $209,330  $253,868
                                                  ========  ========  ========
</TABLE>    
 
  In July 1996, the Company issued $200,000 of Senior Subordinated Notes (the
"Notes") in a private offering. The Notes are general unsecured obligations of
the Company, subordinated in right of payment to the senior indebtedness of
the Company and senior in right of payment to any current or future
subordinated indebtedness. The Notes mature on July 15, 2006, and bear
interest at 11 1/8% per year, payable semiannually in arrears on January 15
and July 15, commencing January 15, 1997. The proceeds from the sale of the
Notes were used to retire certain existing indebtedness of the Company under
its previous credit facilities, to purchase certain properties from related
party partnerships (see Note 10), to redeem stock from a shareholder (see Note
7), to fund an acquisition and for general purposes. The Company must comply
with all financial and operating covenants under the indenture for the Notes
while the Notes are outstanding.
 
  In August 1996, the Company entered into a new credit facility (the "Credit
Facility") providing a revolving line of credit of U.S. $100 million in
borrowings and CDN $35 million in borrowings by the Company's Canadian
subsidiary. The Credit Facility is senior to all other indebtedness the
Company may have
 
                                     F-11
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
and is secured by the stock of the Company's shareholders. Borrowings under
the facility bear interest at prime plus an applicable margin, or at LIBOR
plus an applicable margin, at the option of the Company. In addition to
interest and other customary fees, the Company is obligated to remit a fee of
0.375% per year on unused commitments, payable quarterly. The aggregate
available commitment under the Credit Facility will be reduced on a quarterly
basis, beginning September 30, 1999. The Credit Facility matures on June 30,
2002, unless previously terminated. The Company must comply with all financial
and operating covenants under the Credit Facility during the term of the
agreement. The Company's available borrowing capacity under the Credit
Facility is contingent upon the Company meeting certain financial ratios and
other criteria.
 
  The highest amount outstanding under the current Canadian revolver during
the year ended December 31, 1996, was $5,691. The average amount outstanding
on the Canadian revolver during the year was $5,037, while the weighted
average interest rate was 5.8%. There were no borrowings under the current
U.S. revolver in 1996. The highest amount outstanding under the previous
credit facility for the year ended December 31, 1996 was $6,582, the average
amount outstanding was $3,251, and the weighted average interest rate was
9.62%.
 
  In connection with certain acquisitions completed in 1996, notes for $7,600
were issued to the sellers. The notes bear interest at 5% per year and $7,100
was repaid in 1997. The remaining note is due in 1998.
 
  In connection with the purchase of real estate from related parties (see
Note 10) and an acquisition completed in 1996, the Company assumed $1,114 and
$2,630 of mortgage notes, respectively. The notes bear interest at 10.5% and
8%, respectively, and require monthly principal and interest payments of $20
and $22, with balloon payments due in 2002 and 2001, respectively.
 
  Future scheduled principal payments on the Company's long-term debt at
December 31, 1996 are as follows:
 
<TABLE>
     <S>                                                                <C>
     1997.............................................................. $  7,310
     1998..............................................................      705
     1999..............................................................      207
     2000..............................................................      218
     2001..............................................................      231
     2002 and thereafter...............................................  207,969
                                                                        --------
                                                                        $216,640
                                                                        ========
</TABLE>
   
  Upon entering into the previous credit facilities in 1993 and 1994, the
Company issued warrants to certain lenders to purchase common stock. Warrants
to purchase 229,825 shares at $.01 per share were issued in 1993 and 55,073
shares at $2.68 per share were issued in 1994.     
 
  Management assigned an initial value of $338 to the 1993 warrants and $87 to
the 1994 warrants for financial reporting purposes. The Company called the
warrants in February 1996 at an amount which was determined by a formula
defined in the credit agreement. The change in value of the redeemable
warrants from the initial value has been accreted through a charge to
shareholders' deficit in the accompanying financial statements. The warrants
were redeemed for $2,625 in 1996 and there are no outstanding warrants at
December 31, 1996.
 
  Debt refinancings occurred in 1994, 1995 and 1996, resulting in the write-
off of previously deferred financing costs of $3,980, $2,779 and $2,015,
respectively, and prepayment and other charges (including the write-off of
unamortized debt discount) of $2,011 in 1994 and $500 in 1995. Such write-offs
and charges have been recorded as extraordinary items in the accompanying
consolidated statements of operations.
 
                                     F-12
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
   
7. CAPITAL STOCK:     
   
  At December 31, 1995 and 1996, and March 31, 1997 the Company's capital
stock was comprised of the following:     
 
<TABLE>   
<CAPTION>
                                                          PREFERRED    COMMON
                                                          ---------- ----------
     <S>                                                  <C>        <C>
     Par value........................................... $      .01 $      .01
     Shares authorized................................... 10,000,000 80,000,000
     Shares issued and outstanding December 31, 1995.....        --  10,591,000
     Shares issued and outstanding December 31, 1996.....        --  10,485,090
     Shares issued and outstanding March 31, 1997........        --  10,485,090
</TABLE>    
   
  In 1996, the Company redeemed 105,910 shares of common stock for $1,450 and
canceled these shares.     
 
8. STOCK OPTIONS:
   
  In September 1994, the Company established a nonqualified stock option plan
which provides for the granting to key employees of options to purchase an
aggregate of 1,208,453 shares of common stock. The shares available for grant
were increased by 284,898 in December 1996. Options to purchase 600,510 shares
at $5.10 per share were granted on January 1, 1995 and options to purchase
360,094 shares at $5.86 per share were granted on January 1, 1996. Option
grants, when vested, are exercisable at the earlier of the tenth anniversary
of the date of grant or the first date on which the Company ceases to be an S
Corporation, and have an exercise price equal to the fair market value of the
common stock on the date of grant. Fair market value is determined based on a
formula, as defined in the option plan. The options vest in five equal annual
installments beginning on the first anniversary of the date of grant. At
December 31, 1996, options for 119,678 shares were vested. As of December 31,
1995 and 1996, no options were exercisable.     
   
  At December 31, 1996, the total options outstanding are 960,604 with
exercise prices between $5.10 to $5.86 and a weighted average exercise price
of $5.38. The options contain no expiration dates, however, no options are
exercisable. The fair value of each option grant is estimated on the date of
the grant using the Black-Scholes option pricing model with the following
assumptions used for the grants in 1995 and 1996.     
 
<TABLE>
<CAPTION>
                                                                  1995    1996
                                                                 ------- -------
     <S>                                                         <C>     <C>
     Risk free interest rates...................................    8.0%    5.6%
     Expected lives of options.................................. 7 years 7 years
     Expected dividend yields...................................     N/A     N/A
     Expected volatility........................................     15%     15%
</TABLE>
 
  The fair value of each option granted in 1995 and 1996 is $2, as determined
under the provisions of Statement of Financial Accounting Standards No. 123.
The Company's net income would have been reduced and the following pro forma
results would have been reported had compensation cost been recorded for the
fair value of the options granted:
 
<TABLE>   
<CAPTION>
                                                                     1995  1996
                                                                    ------ ----
     <S>                                                            <C>    <C>
     Net income, as reported....................................... $2,068 $508
     Pro forma net income.......................................... $1,799 $ 91
</TABLE>    
 
  The Statement of Financial Accounting Standards No. 123 method of accounting
is applied only to options granted after January 1, 1995. The resulting pro
forma compensation cost may not be representative of the amount to be expected
in future years due to the vesting schedule of the options.
   
  On January 1, 1997, the Company granted options to acquire 153,570 shares of
common stock at $5.09 per share. The deferred compensation related to these
options will be amortized over the vesting period. Due to the     
 
                                     F-13
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
   
acceleration of the vesting of these options which will occur upon the
completion of the equity offerings contemplated by this prospectus, the
Company will record a charge of approximately $1,752 for the estimated
unamortized compensation on these options, using an assumed equity offerings
price of $16.50 per share.     
 
9. COMMITMENTS AND CONTINGENCIES:
 
 Operating Leases
 
  At December 31, 1996, the Company was obligated under noncancelable
operating leases, including the related-party leases discussed below, for
warehouse space, office equipment and transportation equipment. These leases
expire at various times through 2015 and require minimum rentals, subject to
escalation, as follows:
 
<TABLE>
     <S>                                                                <C>
     1997.............................................................. $ 22,632
     1998..............................................................   21,136
     1999..............................................................   18,870
     2000..............................................................   16,761
     2001..............................................................   15,566
     2002 and thereafter...............................................   39,487
                                                                        --------
                                                                        $134,452
                                                                        ========
</TABLE>
 
  Rent expense was approximately $12,262, $14,098, and $17,008 for the years
ended December 31, 1994, 1995 and 1996, respectively. Some of the leases for
warehouse space provide for purchase options on the facilities at certain
dates.
 
  The Company leases office and warehouse space at prices which, in the
opinion of management, approximate market rates from entities which are owned
by certain shareholders, officers and employees of the Company. Rent expense
on these leases was approximately $7,658, $8,201, and $9,019 for the years
ended December 31, 1994, 1995, and 1996, respectively. A significant portion
of the related party rent expense was reduced through the purchase of certain
real estate and the buy-out of certain lease interests in July 1996 (see Note
10).
 
 Other Matters
 
  The Company has entered into a consulting agreement with a shareholder of
the Company and consulting agreements with several of the former owners of
acquired businesses (see Note 12). These agreements require the following
minimum payments:
 
<TABLE>
     <S>                                                                    <C>
     1997.................................................................. $480
     1998..................................................................   98
     1999..................................................................   40
     2000..................................................................   40
     2001..................................................................   40
     2002 and thereafter...................................................  130
                                                                            ----
                                                                            $828
                                                                            ====
</TABLE>
 
  The Company is party to various claims arising in the ordinary course of
business. Although the ultimate outcome of these matters is presently not
determinable, management, after consultation with legal counsel, does not
believe that the resolution of these matters will have a material adverse
effect on the Company's financial position or results of operations.
 
                                     F-14
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
10. RELATED PARTY TRANSACTIONS:
   
  In July 1996, the Company purchased certain real estate previously leased
and other assets from two partnerships, whose partners are shareholders of the
Company. The payment for the purchased real estate and other assets was
$11,018 plus the assumption of a $1,114 mortgage. Since the transaction was
with related parties, the real estate was recorded at its depreciated cost and
the deferred rent liability on the leases was eliminated as a credit to
shareholders' deficit. The $4,132 difference between the purchase price and
the depreciated cost was charged to shareholders' deficit as a deemed
distribution. In addition, the Company bought out certain lease commitments
from a related party partnership for $2,764. This lease buy-out cost was
recorded as a non-recurring charge in the 1996 consolidated statement of
operations.     
 
  The Company had an agreement with a shareholder of the Company that required
payments of $60 per year for five years upon the death of the shareholder. The
present value of this benefit was recorded as a liability by the Company. In
July 1996, the Company decided to make monthly pension payments to the
shareholder and terminated the previous agreement. The pension payments are $8
per month until the death of the shareholder or his spouse. The $490
difference between the present value of this benefit and the liability
previously reported was recorded as a non-recurring charge in the 1996
consolidated statement of operations.
 
  The Company paid financial advisory fees to an investment banking firm of
which a director of the Company is the managing director. The fees were
approximately $800, $700 and $800 in 1996, 1995 and 1994 respectively.
 
  In December 1993, the Company borrowed $80 from a shareholder which bears
interest at 7%. The note was repaid in 1996.
 
11. EMPLOYEE BENEFIT PLANS:
 
  The Company maintains a discretionary profit sharing and a 401(k) plan for
substantially all full-time employees over the age of 20 1/2 and with more
than 1,000 hours of service. Participants in the 401(k) plan may elect to
defer a specified percentage of their compensation on a pretax basis. The
Company is required to make matching contributions equal to 25% of the
employee's contribution up to a maximum of 2% of the employee's annual
compensation. Participants become vested in the Company's matching
contribution over three to seven years. The expense relating to these plans
was $506, $591, and $1,122 for the years ended December 31, 1994, 1995 and
1996, respectively.
 
12. STOCK PURCHASE AGREEMENTS:
 
  The Company and certain shareholders are parties to an agreement which
provides that, in the event of a shareholder's desire to transfer his
ownership interest, the other shareholders party to the agreement and/or the
Company have the right of first refusal to purchase the stock under the terms
specified in the agreement. The agreement also provides that, in the event of
a shareholder's death, the Company will purchase the stock from the estate of
the deceased under the terms and at the amount per share, subject to periodic
adjustment, specified in the agreement. The purchase would be funded, in part,
from the proceeds of insurance policies currently in place ($37,700 face
value). The stock purchase agreement will be terminated upon completion of the
equity offerings.
 
                                     F-15
<PAGE>
 
                              PIERCE LEAHY CORP.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
13. ACQUISITIONS:
 
  In 1995, the Company completed five acquisitions of records management
businesses for an aggregate cash purchase price of $28,994. The most
significant of these acquisitions was for $16,022 in October 1995; all others
were individually less than $5,000. In 1996, the Company completed 12
acquisitions for an aggregate cash purchase price of $62,165 (of which $14,000
was for one transaction in May 1996 and $13,500 was for another transaction in
October 1996). In addition to these cash payments, an acquisition in 1995
provided for a $800 noncompete obligation payable over three years and an
acquisition during 1996 provided for a $400 noncompete obligation payable over
one year. The noncompete liability at December 31, 1996 was $783. Each of
these acquisitions was accounted for using the purchase method of accounting
and, accordingly, the results of operations for each acquisition have been
included in the consolidated results of the Company from the respective
acquisition dates. The excess of the purchase price over the underlying fair
value of the assets and liabilities acquired has been allocated to goodwill
($17,549 and $43,062 in 1995 and 1996, respectively) and is being amortized
over the estimated benefit period of 30 years. In connection with certain of
the acquisitions, the Company entered into consulting agreements with several
of the former owners of the acquired businesses which require aggregate
commitments of $498 at December 31, 1996 (see Note 9).
   
  Through March 31, 1997, the Company completed four acquisitions of record
management businesses for an aggregate purchase price of $18,512. The most
significant of these acquisitions was for $9,084 in January 1997; all others
were individually less than $5,000. Each of these acquisitions has been
accounted for using the purchase method of accounting. The $15,934 excess
purchase price over the underlying fair value of the assets and liabilities
acquired has been allocated to goodwill.     
 
  A summary of the cash paid for the purchase price as of the acquisitions is
as follows:
 
<TABLE>   
<CAPTION>
                                                                   THREE MONTHS
                                                                      ENDED
                                                 1995     1996    MARCH 31, 1997
                                                -------  -------  --------------
     <S>                                        <C>      <C>      <C>
     Fair value of assets acquired............. $36,171  $63,598     $19,322
     Liabilities assumed.......................  (7,177)  (1,432)       (810)
     Cash acquired.............................    (639)    (990)        (49)
                                                -------  -------     -------
       Net cash paid........................... $28,355  $61,176     $18,463
                                                =======  =======     =======
</TABLE>    
          
  The following unaudited pro forma information shows the results of the
Company's operations for the years ended December 31, 1995 and 1996 and for
the three months ended March 31, 1997 as though each of the completed
acquisitions had occurred as of January 1, 1995:     
 
<TABLE>   
<CAPTION>
                                                                    THREE MONTHS
                                          YEAR ENDED DECEMBER 31       ENDED
                                          ------------------------   MARCH 31,
                                             1995         1996          1997
                                          -----------  -----------  ------------
     <S>                                  <C>          <C>          <C>
     Total revenues...................... $   154,438  $   167,838    $44,631
     Net income (loss)................... $    (9,239) $    (7,232)   $(1,544)
</TABLE>    
 
  The pro forma results have been prepared for comparative purposes only and
are not necessarily indicative of the actual results of operations had the
acquisitions taken place as of January 1, 1995, or the results that may occur
in the future. Furthermore, the pro forma results do not give effect to all
cost savings or incremental costs which may occur as a result of the
integration and consolidation of the acquired companies.
 
  Subsequent to December 31, 1996, the Company signed a definitive agreement
to purchase a regional records management company for approximately $62,000,
which it intends to finance through borrowings under its Credit Facility. The
acquisition is subject to due diligence and customary conditions.
 
 
                                     F-16
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
 
To the Board of Directors and Stockholders of Security Archives, Inc.:
 
  We have audited the accompanying balance sheets of Security Archives, Inc.
as of June 30, 1995 and 1994, and the related statements of income and
retained earnings and of cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audits provide a reasonable basis for
our opinion.
 
  In our opinion, such financial statements present fairly, in all material
respects, the financial position of Security Archives, Inc. as of June 30,
1995 and 1994, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
 
  As discussed in Notes 1, 2 and 4 to the financial statements, during 1994,
the Company changed its methods of accounting for investments in equity
securities and income taxes to conform with Statements of Financial Accounting
Standards No. 115 and No. 109, respectively.
 
Deloitte & Touche LLP
 
Dallas, Texas
August 14, 1995
 
 
                                     F-17
<PAGE>
 
                            SECURITY ARCHIVES, INC.
 
                                 BALANCE SHEETS
 
<TABLE>   
<CAPTION>
                                                JUNE 30,
                                         ------------------------   MARCH 31,
                                            1994         1995         1996
                                         -----------  -----------  -----------
                                                                   (UNAUDITED)
<S>                                      <C>          <C>          <C>
                 ASSETS
                 ------
CURRENT ASSETS:
  Cash and cash equivalents............. $   465,058  $   387,354  $   703,129
  Accounts receivable...................     205,599      245,839      253,966
  Prepaid expenses......................     169,191      243,886      325,272
                                         -----------  -----------  -----------
    Total current assets................     839,848      877,079    1,282,367
PROPERTY, PLANT AND EQUIPMENT:
  Land..................................   1,128,822    1,128,822    1,128,822
  Buildings and improvements............   2,533,200    2,646,548    3,260,627
  Equipment.............................   4,106,862    4,430,263    4,449,706
                                         -----------  -----------  -----------
                                           7,768,884    8,205,633    8,839,155
  Less accumulated depreciation.........  (3,892,935)  (3,849,502)  (3,845,308)
                                         -----------  -----------  -----------
                                           3,875,949    4,356,131    4,993,847
INVESTMENTS--Available for sale (Note
 2).....................................     989,795      341,264          --
DEFERRED INCOME TAXES (Note 4)..........      13,495          --           --
OTHER ASSETS............................     112,835      136,447      123,191
                                         -----------  -----------  -----------
    TOTAL ASSETS........................ $ 5,831,922  $ 5,710,921  $ 6,399,405
                                         ===========  ===========  ===========
  LIABILITIES AND STOCKHOLDERS' EQUITY
  ------------------------------------
CURRENT LIABILITIES:
  Current maturities of long-term debt
   (Note 3)............................. $   157,564  $       --   $       --
  Accounts payable......................      76,239      243,682       92,917
  Accrued expenses......................     123,201      153,768      107,788
  Deferred income taxes (Note 4)........      51,877       52,659       55,234
  Other.................................      23,000       23,000       23,000
                                         -----------  -----------  -----------
    Total current liabilities...........     431,881      473,109      278,939
LONG-TERM DEBT, NET OF CURRENT
 MATURITIES (Note 3)....................   1,477,994          --           --
DEFERRED INCOME TAXES (Note 4)..........         --         3,485        6,699
COMMITMENTS (Note 5)....................
STOCKHOLDERS' EQUITY (Notes 3 and 5):
  Common stock--par value $50 per share;
   100 shares authorized and issued.....       5,000        5,000        5,000
  Treasury stock--56 shares, at cost....  (2,475,958)  (2,475,958)  (2,475,958)
  Unrealized losses on investments (Note
   2)...................................     (46,877)     (10,384)         --
  Retained earnings.....................   6,439,882    7,715,669    8,584,725
                                         -----------  -----------  -----------
    Total stockholders' equity..........   3,922,047    5,234,327    6,113,767
                                         -----------  -----------  -----------
    TOTAL LIABILITIES AND STOCKHOLDERS'
     EQUITY............................. $ 5,831,922  $ 5,710,921  $ 6,399,405
                                         ===========  ===========  ===========
</TABLE>    
 
                       See notes to financial statements.
 
                                      F-18
<PAGE>
 
                            SECURITY ARCHIVES, INC.
 
                   STATEMENTS OF INCOME AND RETAINED EARNINGS
 
<TABLE>   
<CAPTION>
                                                           FOR THE NINE MONTHS
                          FOR THE YEARS ENDED JUNE 30,       ENDED MARCH 31,
                          ------------------------------  ----------------------
                               1994            1995          1995        1996
                          --------------  --------------  ----------  ----------
                                                               (UNAUDITED)
<S>                       <C>             <C>             <C>         <C>
REVENUE:
  Storage charges.......  $    2,470,703  $    2,812,673  $2,095,542  $2,295,615
  Pickup and delivery...         840,040         857,638     652,376     593,938
  Retrieval, refile and
   catalog..............         497,428         510,573     377,658     385,756
  Document
   disintegration.......         293,869         363,311     272,621     225,732
  Cart service..........          78,630          81,397      62,640      58,010
  Deposit on boxes......          71,326          70,151      55,112      59,601
  Miscellaneous.........         105,141         287,997     162,965     322,105
                          --------------  --------------  ----------  ----------
                               4,357,137       4,983,740   3,678,914   3,940,757
EXPENSES:
  Storage...............         553,977         651,482     483,724     393,011
  Handling..............       1,115,739       1,082,665     712,810     793,837
  General and
   administrative.......       1,085,490       1,192,996   1,000,197   1,462,215
                          --------------  --------------  ----------  ----------
                               2,755,206       2,927,143   2,196,731   2,649,063
                          --------------  --------------  ----------  ----------
OPERATING PROFIT........       1,601,931       2,056,597   1,482,183   1,291,694
OTHER INCOME (EXPENSE):
  Interest income.......          69,285          87,400      20,458       9,172
  Interest expense......        (154,326)       (112,938)   (106,068)        --
  Other.................          60,684         (52,624)    (16,082)      8,190
                          --------------  --------------  ----------  ----------
INCOME BEFORE INCOME
 TAXES AND CUMULATIVE
 EFFECT OF CHANGE IN
 ACCOUNTING PRINCIPLE...       1,577,574       1,978,435   1,380,491   1,309,056
PROVISION FOR INCOME
 TAXES (Note 4).........        (616,491)       (702,648)   (485,000)   (440,000)
                          --------------  --------------  ----------  ----------
INCOME BEFORE CUMULATIVE
 EFFECT OF CHANGE IN
 ACCOUNTING PRINCIPLE...         961,083       1,275,787     895,491     869,056
CUMULATIVE EFFECT OF
 CHANGE IN ACCOUNTING
 PRINCIPLE (Note 4).....          53,283             --          --          --
                          --------------  --------------  ----------  ----------
NET INCOME..............       1,014,366       1,275,787     895,491     869,056
RETAINED EARNINGS,
 BEGINNING OF YEAR......       5,425,516       6,439,882   6,439,882   7,715,669
                          --------------  --------------  ----------  ----------
RETAINED EARNINGS, END
 OF YEAR................  $    6,439,882  $    7,715,669  $7,335,373  $8,584,725
                          ==============  ==============  ==========  ==========
</TABLE>    
 
                       See notes to financial statements.
 
                                      F-19
<PAGE>
 
                            SECURITY ARCHIVES, INC.
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>   
<CAPTION>
                                                           FOR THE NINE MONTHS
                          FOR THE YEARS ENDED JUNE 30,       ENDED MARCH 31,
                          ------------------------------  -----------------------
                               1994            1995          1995        1996
                          --------------  --------------  ----------  -----------
                                                               (UNAUDITED)
<S>                       <C>             <C>             <C>         <C>
CASH FLOWS FROM
 OPERATING ACTIVITIES:
 Net Income.............  $    1,014,366  $    1,275,787  $  895,491  $   869,056
 Adjustments to
  reconcile net income
  to net cash provided
  by operating
  activities............
 Depreciation...........         463,797         509,516     371,980      437,161
 Loss (gain) on disposal
  of assets.............         (44,441)         28,454         --        61,556
 Loss on sale of
  investments...........          19,435          24,813      20,615       10,384
 Deferred income tax
  expense...............          26,400          (3,747)     17,763        5,789
 Changes in operating
  assets and
  liabilities:
  (Increase) decrease in
   accounts receivable..           9,563         (40,240)    (96,301)      (8,127)
  Decrease in income
   taxes receivable.....          31,066             --          --           --
  (Increase) decrease in
   prepaid expenses.....        (140,247)        (74,695)      1,380      (81,386)
  (Increase) decrease in
   other assets.........        (100,758)        (23,612)     19,171       13,256
  Increase (decrease) in
   accounts payable.....          17,107         167,443     (33,472)    (150,765)
  Increase (decrease) in
   accrued expenses.....         (73,916)         30,567     108,681      (45,980)
  Increase in other
   liabilities..........          23,000             --          --           --
                          --------------  --------------  ----------  -----------
    Net cash provided by
     operating
     activities.........       1,245,372       1,894,286   1,305,308    1,110,944
                          --------------  --------------  ----------  -----------
CASH FLOWS FROM
 INVESTING ACTIVITIES:
 Purchase of property,
  plant and equipment...      (1,193,989)     (1,018,150)   (660,593)  (1,136,433)
 Proceeds from sale of
  property..............          79,771             --          --           --
 Purchases of
  investments...........      (1,070,373)        (58,250)    (52,145)         --
 Proceeds from sale of
  investments...........       1,012,178         739,968      20,316      341,264
                          --------------  --------------  ----------  -----------
    Net cash used in
     investing
     activities.........      (1,172,413)       (336,432)   (692,422)    (795,169)
                          --------------  --------------  ----------  -----------
CASH FLOWS FROM
 FINANCING ACTIVITIES--
 Principal payments of
 long-term debt.........        (144,051)     (1,635,558)   (116,844)         --
                          --------------  --------------  ----------  -----------
NET INCREASE (DECREASE)
 IN CASH AND CASH
 EQUIVALENTS............         (71,092)        (77,704)    496,042      315,775
CASH AND CASH
 EQUIVALENTS, BEGINNING
 OF PERIOD..............         536,150         465,058     465,058      387,354
                          --------------  --------------  ----------  -----------
CASH AND CASH
 EQUIVALENTS, END OF
 PERIOD.................  $      465,058  $      387,354  $  961,100  $   703,129
                          --------------  --------------  ----------  -----------
SUPPLEMENTAL DISCLOSURE:
 Cash payments for:
  Interest..............  $      154,326  $      112,938  $  106,068  $       --
                          --------------  --------------  ----------  -----------
  Income taxes..........  $      413,255  $      485,000  $  400,000  $   400,000
                          --------------  --------------  ----------  -----------
 Noncash Investing
  activities:
  Unrealized loss on
   investments..........  $       46,877  $       10,384  $   12,576  $       --
                          ==============  ==============  ==========  ===========
</TABLE>    
 
                       See notes to financial statements.
 
                                      F-20
<PAGE>
 
                            SECURITY ARCHIVES, INC.
 
       NOTES TO FINANCIAL STATEMENTS, YEARS ENDED JUNE 30, 1995 AND 1994
 
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE NINE MONTHS ENDED MARCH 31, 1995
                            AND 1996 IS UNAUDITED)
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  General--Security Archives, Inc. (the "Company"), a Texas corporation, is
engaged in the storage, delivery, retrieval and destruction of documents for
companies in the north Texas area.
 
  Interim Consolidated Financial Statements--The consolidated balance sheets
as of March 31, 1996 and the consolidated statements of operations for the
three months ended March 31, 1995 and 1996 are unaudited and, in the opinion
of management of the Company, include all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the results
for those interim periods. The results of operations for the three months
ended March 31, 1995 and 1996 are not necessarily indicative of the results to
be expected for the full year.
 
  Investments--The Company adopted Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities"
("SFAS 115"), effective June 30, 1994. Under SFAS 115, investments are
classified as held-to-maturity, available-for-sale, or trading, depending on
the Company's ability and intent with respect to the use of individual
securities. The Company's investments at June 30, 1995 and 1994, are
classified as available-for-sale and are carried at fair value.
 
  Property, Plant and Equipment--Property, plant and equipment are carried at
cost. Depreciation is computed using the straight-line method over the
estimated useful lives of the related assets, ranging from 3 to 18 years. When
assets are retired or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is
reflected in income for the period. The cost of maintenance and repairs is
charged to expense as incurred; significant renewals and betterments are
capitalized. Deductions are made for retirements resulting from the renewals
or betterments.
 
  Income Taxes--Effective July 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"), which changed the method of accounting for income taxes from the
deferred method to the liability method. Under the liability method, deferred
income taxes are recognized for the tax consequences of temporary differences
by applying enacted statutory tax rates applicable to future years to
differences between the financial statement carrying amounts and the tax bases
of existing assets and liabilities.
 
  Cash Equivalents--The Company considers all highly liquid investments with
an original maturity of three months or less to be cash equivalents.
 
2. INVESTMENTS
 
  The Company adopted SFAS 115 effective June 30, 1994. Investments at June
30, 1995 and 1994, consisting of shares of the Phoenix Tax-Exempt Bond
Portfolio, are classified as available-for-sale and have a cost of $357,438
and $1,063,968 and a fair value, as determined by quoted market prices, of
$341,264 and $989,795, at June 30, 1995 and 1994, respectively. The net
unrealized losses included in stockholders' equity at June 30, 1995 and 1994,
was $10,384 and $46,877, net of income taxes of $5,790 and $27,296,
respectively.
 
  In fiscal year 1995, the Company sold shares with a cost of $764,781 for
$739,968, resulting in a realized loss of $24,813. The losses were calculated
using the average cost method.
 
                                     F-21
<PAGE>
 
                            SECURITY ARCHIVES, INC.
 
                  NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
 
 
3. LONG-TERM DEBT
 
  Long-term debt at June 30, 1994, consisted of a 9% note payable to the
former majority stockholder for the purchase of 56 shares of common stock in
the amount of $1,635,558, of which $157,564 represented amounts due in 1995.
During June 1995, the Company paid off the note in full.
 
4. INCOME TAXES
 
  Effective July 1, 1993, the Company adopted SFAS 109. The cumulative effect
of this accounting change has been credited to 1994 income as a separate item.
 
  The provision for income taxes consists of the following:
 
<TABLE>
<CAPTION>
                                                                1995      1994
                                                              --------  --------
     <S>                                                      <C>       <C>
     Current federal......................................... $641,704  $471,383
     Current state...........................................   78,706    58,260
     Deferred................................................  (17,762)   86,848
                                                              --------  --------
       Total................................................. $702,648  $616,491
                                                              ========  ========
</TABLE>
 
  Deferred income taxes at June 30, 1995 and 1994, principally related to the
use of accelerated depreciation methods for tax purposes on property, plant
and equipment and prepaid insurance.
 
  The Company's effective income tax rate differs from the federal statutory
rate primarily from state income taxes (net of federal tax benefit).
 
5. COMMITMENTS
 
  During 1989, the Company entered into a stock repurchase agreement with a
stockholder. Under the terms of the agreement, the Company will purchase the
stockholder's shares upon the stockholder's death at the greater of the book
value of the shares or the amount of the life insurance proceeds received by
the Company from a policy on the stockholder's life. Payment of the purchase
price would be made in quarterly payments over four years, bearing interest at
8% per annum. At June 30, 1995, the stockholder held 12 shares of stock at a
book value of $118,962 per share. The Company owns a $500,000 face value life
insurance policy on the stockholder.
 
                                     F-22
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT
 
To the Board of Directors of
Records Management Services, Inc. and Subsidiaries:
 
  We have audited the accompanying consolidated balance sheet of Records
Management Services, Inc. and subsidiaries (the "Company") as of September 30,
1996, and the related consolidated statements of operations, shareholders'
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
 
  We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
 
  In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Records Management Services,
Inc. and subsidiaries as of September 30, 1996, and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
 
  As described in Note 1, the Company changed its method of accounting for
customer acquisition costs effective October 1, 1995.
 
DELOITTE & TOUCHE LLP
 
Chicago, Illinois
November 22, 1996
(January 10, 1997 as to Note 11)
 
                                     F-23
<PAGE>
 
               RECORDS MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>   
<CAPTION>
                                                      SEPTEMBER 30,  MARCH 31,
                                                          1996         1997
                                                      ------------- -----------
                                                                    (UNAUDITED)
<S>                                                   <C>           <C>
                       ASSETS
CURRENT ASSETS:
  Cash...............................................  $   453,842  $    91,741
  Accounts receivable (net of allowance for doubtful
   accounts of $51,433
   and $28,670)......................................    2,117,947    2,751,542
  Carton inventory...................................      120,940       41,220
  Deposits...........................................      179,909      135,654
  Deferred income tax benefit (Note 9)...............       20,500       20,500
  Other current assets...............................       45,077      170,128
                                                       -----------  -----------
    Total current assets.............................    2,938,215    3,210,785
PROPERTY AND EQUIPMENT--Net..........................    6,075,578    6,185,181
OTHER ASSETS:
  Investment in partnership (Note 3).................      148,738          --
  Deferred customer acquisition costs (Note 1).......      444,905      433,632
  Deferred income tax benefit (net of valuation
   allowance of $76,600)
   (Note 9)..........................................      359,300      359,300
  Goodwill...........................................      199,295      185,681
                                                       -----------  -----------
    Total other assets...............................    1,152,238      978,613
                                                       -----------  -----------
TOTAL................................................  $10,166,031  $10,374,579
                                                       ===========  ===========
</TABLE>    
<TABLE>   
<S>                                                   <C>          <C>
        LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable................................... $ 1,264,004  $ 1,177,661
  Accrued liabilities................................   1,319,690    2,206,407
  Notes payable to shareholders (Note 6).............     225,000      250,000
  Current portion of notes payable (Note 6)..........      48,395      140,491
  Current portion of capital lease obligations (Note
   7)................................................     288,579    1,000,902
                                                      -----------  -----------
    Total current liabilities........................   3,145,668    4,775,461
BANK REVOLVING CREDIT AND TERM LOANS (Note 6)........   3,000,001    3,306,683
NOTES PAYABLE (Note 6)...............................     136,399          --
CAPITAL LEASE OBLIGATIONS (Note 7)...................     632,913          --
SHAREHOLDERS' EQUITY:
  Common stock and additional paid-in capital, no
   par; 1,000,000 shares authorized; 384,493 shares
   outstanding (Note 10).............................     151,738      235,620
  Loan to shareholder for purchase of common stock...     (71,899)     (71,899)
  Retained earnings..................................   3,171,211    2,128,714
                                                      -----------  -----------
    Total shareholders' equity.......................   3,251,050    2,292,435
                                                      -----------  -----------
TOTAL................................................ $10,166,031  $10,374,579
                                                      ===========  ===========
</TABLE>    
 
                See notes to consolidated financial statements.
 
                                      F-24
<PAGE>
 
               RECORDS MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
<TABLE>   
<CAPTION>
                                                          SIX MONTHS ENDED
                                          YEAR ENDED          MARCH 31
                                         SEPTEMBER 30, -----------------------
                                             1996         1996        1997
                                         ------------- ----------  -----------
                                                            (UNAUDITED)
<S>                                      <C>           <C>         <C>
REVENUE:
  Storage...............................  $10,533,695  $5,062,839  $ 5,668,388
  Service...............................    6,515,598   3,113,313    3,799,227
                                          -----------  ----------  -----------
                                           17,049,293   8,176,152    9,467,615
OPERATING EXPENSES:
  Cost of storage and service, excluding
   depreciation and amortization........   10,885,766   4,827,790    6,080,516
  Selling, general and administrative...    5,176,789   2,477,528    2,763,525
  Special compensation charge...........          --          --     1,026,643
  Depreciation and amortization.........      820,274     485,868      435,728
                                          -----------  ----------  -----------
                                           16,882,829   7,791,186   10,306,412
                                          -----------  ----------  -----------
    Operating income (loss).............      166,464     384,966     (838,797)
OTHER INCOME (EXPENSE):
  Interest income.......................        4,113       4,020        4,105
  Interest expense......................     (374,594)   (152,350)    (207,805)
  Loss on disposal of division..........     (225,000)        --           --
  Equity in income of partnership.......        4,834         --           --
                                          -----------  ----------  -----------
                                             (590,647)   (148,330)    (203,700)
                                          -----------  ----------  -----------
INCOME (LOSS) BEFORE INCOME TAXES.......     (424,183)    236,636   (1,042,497)
PROVISION (CREDIT) FOR INCOME TAXES
 (Note 9)...............................     (125,400)     85,913          --
                                          -----------  ----------  -----------
NET INCOME (LOSS).......................  $  (298,783) $  150,723  $(1,042,497)
                                          ===========  ==========  ===========
</TABLE>    
 
                See notes to consolidated financial statements.
 
                                      F-25
<PAGE>
 
               RECORDS MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
 
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
 
<TABLE>   
<CAPTION>
                                   COMMON
                                 STOCK AND
                                 ADDITIONAL    LOAN
                                  PAID-IN       TO       RETAINED
                                  CAPITAL   SHAREHOLDER  EARNINGS     TOTAL
                                 ---------- ----------- ----------  ----------
<S>                              <C>        <C>         <C>         <C>
BALANCE, OCTOBER 1, 1995........  $ 61,864   $    --    $3,469,994  $3,531,858
  Issuance of common stock upon
   exercise of options..........    89,874    (71,899)         --       17,975
  Net loss......................       --         --      (298,783)   (298,783)
                                  --------   --------   ----------  ----------
BALANCE, SEPTEMBER 30, 1996.....   151,738    (71,899)   3,171,211   3,251,050
  Exercise of stock options
   (unaudited)..................    83,882        --           --       83,882
  Net loss (unaudited)..........       --         --    (1,042,497) (1,042,497)
                                  --------   --------   ----------  ----------
BALANCE, MARCH 31, 1997
 (unaudited)....................  $235,620   $(71,899)  $2,128,714  $2,292,435
                                  ========   ========   ==========  ==========
</TABLE>    
 
                See notes to consolidated financial statements.
 
                                      F-26
<PAGE>
 
               RECORDS MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>   
<CAPTION>
                                                          SIX MONTHS ENDED
                                          YEAR ENDED          MARCH 31
                                         SEPTEMBER 30, -----------------------
                                             1996         1996        1997
                                         ------------- ----------  -----------
                                                            (UNAUDITED)
<S>                                      <C>           <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss).....................  $ (298,783)  $  150,723  $(1,042,497)
  Adjustments to reconcile net income
   (loss) to net cash flows from
   operating activities:
   Deferred income tax provision........    (167,400)         --           --
   Depreciation and amortization........     820,274      376,019      468,439
   Equity in income of partnership......      (4,834)         --           --
   Provision for loss on disposal of
    division............................     225,000          --           --
   Special compensation charge..........         --           --       600,000
   Changes in:
    Accounts receivable.................       1,187     (116,993)    (633,595)
    Carton inventory....................       3,081     (100,280)      79,720
    Deposits and other current assets...      18,173     (184,047)     (80,796)
    Accounts payable....................     192,400      318,682      (86,343)
    Accrued liabilities.................     357,868      161,247      286,717
                                          ----------   ----------  -----------
     Net cash flows from operating
      activities........................   1,146,966      605,351     (408,355)
                                          ----------   ----------  -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment....  (1,262,224)  (1,074,819)    (407,284)
  Customer acquisition costs............    (522,950)    (383,779)     (47,245)
  Proceeds from sale of investment in
   partnership..........................         --           --       148,738
  Repayment of loans to unconsolidated
   partnership..........................      91,500          --           --
                                          ----------   ----------  -----------
     Net cash flows from investing
      activities........................  (1,693,674)  (1,458,598)    (305,791)
                                          ----------   ----------  -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings (repayments) under term
   loan and revolving line of credit....     925,001      916,667      306,682
  Proceeds from notes payable to
   shareholders.........................     225,000          --        25,000
  Proceeds from exercise of stock
   options..............................      17,975          --        83,882
  Payments under capital leases.........    (217,007)     (25,763)     (63,519)
                                          ----------   ----------  -----------
     Net cash flows from financing
      activities........................     950,969      890,904      352,045
                                          ----------   ----------  -----------
NET CHANGE IN CASH......................     404,261       37,657     (362,101)
CASH--Beginning of year.................      49,581       49,581      453,842
                                          ----------   ----------  -----------
CASH--End of year.......................  $  453,842   $   87,238  $    91,741
                                          ==========   ==========  ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
 INFORMATION:
  Cash paid for:
   Interest.............................  $  334,089   $  151,754  $   210,315
   Income taxes.........................      47,628       38,921       81,315
SUPPLEMENTAL DISCLOSURES OF NONCASH
 INVESTING AND FINANCING ACTIVITIES--
 Year ended September 30, 1996:
  The Company incurred equipment capital
   lease obligations of $630,668.
  The purchase price of a 1995
   acquisition was adjusted, reducing
   notes payable and goodwill by
   $30,206.
  The Company purchased all the tangible
   assets of McClatchy Business Archives
   for cash of $150,000 and notes
   payable of $150,000.
  The Company issued common stock valued
   at $89,874 for cash of $17,975 and a
   note receivable of $71,899.
</TABLE>    
 
                See notes to consolidated financial statements.
 
                                      F-27
<PAGE>
 
              RECORDS MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         YEAR ENDED SEPTEMBER 30, 1996
       
    (INFORMATION FOR THE SIX-MONTH PERIODS ENDED MARCH 31, 1997 AND 1996 IS
                               UNAUDITED.)     
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  NATURE OF OPERATIONS--Records Management Services, Inc. (Illinois) (the
"Company") is a provider of business records management services including
storage, consulting, micro-imaging and contract management services.
 
  PRINCIPLES OF CONSOLIDATION--The accompanying financial statements include
the accounts of the Company and its wholly owned subsidiaries. All significant
intercompany accounts, transactions and profits have been eliminated.
 
  The Company's 50% interest in an unconsolidated partnership is accounted for
by the equity method.
 
  INTERIM FINANCIAL STATEMENTS--The consolidated balance sheet as of December
31, 1996 and the consolidated statements of operations and cash flows for the
three months ended December 31, 1996 and 1995 are unaudited and, in the
opinion of management of the Company, include all adjustments (consisting only
of normal recurring adjustments) necessary for a fair presentation of the
results for those interim periods. The results of operations for the three
months ended December 31, 1996 and 1995 are not necessarily indicative of the
results to be expected for the full year.
 
  USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
  PROPERTY AND EQUIPMENT--Depreciation is computed using accelerated and
straight-line methods over the following estimated useful lives: buildings and
improvements, 31.5 years; equipment, 3-12 years.
 
  GOODWILL--Goodwill represents the excess of purchase price of certain
subsidiaries over the fair value of net assets acquired and is amortized on a
straight-line basis over ten years. Accumulated amortization was $141,608 at
September 30, 1996.
 
  CHANGE IN ACCOUNTING PRINCIPLE--Effective October 1, 1995, the Company began
capitalizing customer acquisition costs. Costs, net of revenues received for
the initial transfer of the records, related to the acquisition of large
volume accounts (accounts consisting of 5,000 or more cartons) are capitalized
and amortized over the life of the related contract (currently ranging from
three to five years). Management believes such treatment to be preferable
because it conforms with prevalent industry practice. As of September 30,
1996, acquisition costs of $522,950 have been capitalized, including $105,600
capitalized in the three months ended December 31, 1995; accumulated
amortization totaled $78,045 at September 30, 1996.
 
2. ACQUISITION
 
  Effective November 30, 1995, the Company acquired all of the records storage
business of McClatchy Business Archives ("McClatchy") of Houston, Texas, for
$300,000 in a transaction accounted for as a purchase. The purchase price
included $150,000 in cash and a $150,000 note payable to the seller (see Note
6).
 
                                     F-28
<PAGE>
 
              RECORDS MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                         YEAR ENDED SEPTEMBER 30, 1996
       
    (INFORMATION FOR THE SIX-MONTH PERIODS ENDED MARCH 31, 1997 AND 1996 IS
                               UNAUDITED.)     
 
3. UNCONSOLIDATED PARTNERSHIP
 
  The Company owns a 50% partnership interest in Certified Document
Destruction of Illinois ("CDDI"). CDDI provided document destruction services
to the Company and others until it sold its business to Crown Recycling &
Waste Services, Inc. ("Crown") effective September 30, 1996 for approximately
$500,000. The Company's 50% share of the gain recognized on the sale was
$53,581 and its 50% share of CDDI's operating loss for fiscal year 1996 was
$48,747. In connection with the sale agreement, the Company agreed to provide
at least 15 million pounds of material for destruction or disposal by Crown
during the five-year period ending September 30, 2001 for a total cost, based
on current market prices, of approximately $600,000.
 
4. DISPOSAL OF GEORGIA DIVISION
 
  The Company closed the Georgia division effective September 30, 1996.
Existing assets will be transferred to other divisions. Property rental
agreements were terminated and approximately $225,000 was accrued at September
30, 1996 for these and other costs.
 
5. BALANCE SHEET INFORMATION
 
  Property and equipment as of December 31, 1996 comprises the following:
 
<TABLE>
   <S>                                                              <C>
   Land............................................................ $   164,804
   Buildings and improvements......................................   2,645,666
   Equipment.......................................................   9,415,568
                                                                    -----------
                                                                     12,226,038
   Accumulated depreciation........................................  (6,150,460)
                                                                    -----------
   Property and equipment--net..................................... $ 6,075,578
                                                                    ===========
 
Accrued liabilities as of September 30, 1996 comprise the following:
 
   Payroll......................................................... $   246,327
   Real estate taxes...............................................     272,791
   401(k) plan contributions.......................................     335,094
   Disposal of Georgia division....................................     225,000
   Other...........................................................     240,478
                                                                    -----------
   Total........................................................... $ 1,319,690
                                                                    ===========
</TABLE>
 
6. DEBT
 
  Effective December 1, 1995, the Company entered into a $2,000,000 secured
term loan (the "Term Loan") agreement and a $1,200,000 secured revolving line
of credit agreement (the "Line") with a bank. The Term Loan and the Line
(collectively, the "Loans") bear interest due monthly at the prime rate plus
1%. The Term Loan also requires monthly principal payments of $11,111. All
unpaid principal is due February 1, 1997. At September 30, 1996, total
outstanding borrowings were $3,000,001.
 
  The Term Loan is secured by first mortgages on certain real estate owned by
the Company. The Line is secured by a first priority lien on all of the
Company's assets. The Loans are cross-collateralized and cross-defaulted.
 
                                     F-29
<PAGE>
 
              RECORDS MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                         YEAR ENDED SEPTEMBER 30, 1996
       
    (INFORMATION FOR THE SIX-MONTH PERIODS ENDED MARCH 31, 1997 AND 1996 IS
                               UNAUDITED.)     
 
  See Note 11 regarding refinancing of the Loans.
 
  The $150,000 note payable issued in connection with the purchase of
McClatchy bears interest at 9% per annum and is payable in eight annual
installments of principal and interest of $27,101 (see Note 2). The $34,794
balance of a note payable issued in connection with a fiscal year 1995
acquisition is payable upon demand. Annual maturities of notes payable amount
to $48,395 for the year ending September 30, 1997 and range from $15,000 to
$19,200 for the succeeding four years.
 
  In 1996, certain shareholders agreed to loan $300,000 to the Company, of
which $225,000 was advanced prior to September 30, 1996. The notes bear
interest at 11% per annum and are due on September 30, 1997.
 
7. LEASING ARRANGEMENTS
 
  The Company has operating lease agreements for warehouse space expiring at
various dates through 2004. Leases covering a portion of the total leased
space are with entities controlled by directors and shareholders of the
Company. The leases contain renewal options for additional periods and
generally provide for rent adjustments based on changes in the Consumer Price
Index and actual real estate taxes and interest.
 
  The Company has guaranteed payment of all principal and interest due on a
loan payable by Morris West Limited Partnership ("Morris West"), which is
owned by certain directors and shareholders of the Company, to LaSalle
National Bank in the amount of $640,000. Morris West is one of the related
entities from which the Company leases warehouse space.
 
  The estimated future minimum rental payments required under the operating
leases as of September 30, 1996 are as follows:
 
<TABLE>
<CAPTION>
                                                 RELATED   UNRELATED
   FISCAL YEAR                                   ENTITIES   ENTITIES    TOTAL
   -----------                                  ---------- ---------- ----------
   <S>                                          <C>        <C>        <C>
   1997........................................ $  504,833 $  913,224 $1,418,057
   1998........................................    314,833    866,368  1,181,201
   1999........................................    241,558    736,601    978,159
   2000........................................     69,833    656,319    726,152
   2001........................................     69,833    656,319    726,152
   Thereafter..................................    151,305  1,460,228  1,611,533
                                                ---------- ---------- ----------
       Total................................... $1,352,195 $5,289,059 $6,641,254
                                                ========== ========== ==========
</TABLE>
 
  During fiscal year 1996, the Company recorded rent expense totaling
$1,638,953, including $732,900 of rent to related entities.
 
                                     F-30
<PAGE>
 
              RECORDS MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                         YEAR ENDED SEPTEMBER 30, 1996
       
    (INFORMATION FOR THE SIX-MONTH PERIODS ENDED MARCH 31, 1997 AND 1996 IS
                               UNAUDITED.)     
 
  The Company has entered into capitalized long-term leasing agreements for
shelving and various other equipment with an aggregate cost of $1,181,902 and
accumulated amortization of $137,297 at September 30, 1996. The future minimum
lease payments under the capitalized leases as of September 30, 1996 are as
follows:
 
<TABLE>
<CAPTION>
   FISCAL YEAR
   -----------
   <S>                                                                <C>
   1997.............................................................. $ 389,591
   1998..............................................................   373,042
   1999..............................................................   268,283
   2000..............................................................    54,730
   2001..............................................................    29,983
                                                                      ---------
                                                                      1,115,629
   Less amount representing interest.................................   194,137
                                                                      ---------
   Present value of future minimum lease payments....................   921,492
   Less principal due in one year....................................   288,579
                                                                      ---------
       Total......................................................... $ 632,913
                                                                      =========
</TABLE>
 
8. EMPLOYEE BENEFIT PLAN
 
  Eligible employees participate in the Records Management Services, Inc.
401(k) Profit Sharing Plan. Company contributions, consisting of a
discretionary profit-sharing contribution and a partial matching of employee
contributions, totaled approximately $161,000 for the year ended September 30,
1996.
 
9. INCOME TAXES
 
  The components of the income tax benefit for the year ended September 30,
1996 are as follows:
 
<TABLE>
   <S>                                                              <C>
   Current......................................................... $  42,000
   Deferred........................................................  (186,700)
                                                                    ---------
                                                                     (144,700)
   Change in valuation allowance...................................    19,300
                                                                    ---------
       Total....................................................... $(125,400)
                                                                    =========
 
  A reconciliation of the U.S. federal statutory rate of 35% to the effective
rate of tax benefit for the year ended September 30, 1996 is as follows:
 
   Statutory rate..................................................      35.0%
   Nondeductible expenses..........................................      (2.8)
   Adjustment of valuation allowance...............................      (4.5)
   Other, net......................................................       1.9
                                                                    ---------
   Effective rate..................................................      29.6%
                                                                    =========
 
</TABLE>
 
                                     F-31
<PAGE>
 
              RECORDS MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                         YEAR ENDED SEPTEMBER 30, 1996
       
    (INFORMATION FOR THE SIX-MONTH PERIODS ENDED MARCH 31, 1997 AND 1996 IS
                               UNAUDITED.)     
<TABLE>
  The components of deferred tax assets as of September 30, 1996 are as
follows:
 
   <S>                                                                <C>
   Current:
     Allowance for doubtful accounts................................. $ 20,500
                                                                      ========
   Long-term:
     AMT credit carry-forwards....................................... $100,500
     Net operating loss carry-forwards...............................  522,100
     Accrued expenses................................................  222,800
     Accumulated depreciation........................................ (372,600)
     Other...........................................................  (36,900)
     Valuation allowance.............................................  (76,600)
                                                                      --------
       Total......................................................... $359,300
                                                                      ========
</TABLE>
 
  The valuation allowance relates to state operating loss carry-forwards of
subsidiaries that have not achieved profitable operations.
 
10. STOCK OPTIONS
 
  In March 1996, the president of the Company exercised an option to purchase
4,993 shares of the Company's common stock at $18.00 per share in exchange for
cash of $17,975 (20%) and a note payable in the amount of $71,899 (80%). The
note bears interest at 6% per annum and requires monthly payments of principal
and interest of $607 from October 1996 until September 2002 when the remaining
principal ($51,143) is due.
 
  The president of the Company holds two other options, each to purchase 4,993
shares at $12.00 per share. One option expires July 31, 1997, while the other
expires September 30, 1998.
 
11. SUBSEQUENT EVENTS
 
  On January 10, 1997, the Company entered into a $2,500,000 secured term loan
agreement and a $1,500,000 secured revolving line of credit agreement bearing
interest at the prime rate. Proceeds were used to repay the existing Term Loan
and Line. The Term Loan requires monthly principal payments of $33,334. All
unpaid principal of both loans is due June 30, 1998. The Term Loan is secured
by certain equipment of the Company. The Line is secured by the Company's
accounts receivable. The loans are cross-collateralized and cross-defaulted.
 
  In December 1996, the Company issued another option to the president of the
Company to purchase 4,993 shares at $12.00 per share. This option expires
November 30, 1999.
   
12. SALE AGREEMENT (UNAUDITED)     
   
  In 1997 the Company signed a definitive sale agreement with Pierce Leahy
Corp. In connection with this agreement, in March 1997 the Company's board of
directors granted certain employees stock appreciation rights relating to
prior services provided. The statement of operations for the six months ended
March 31, 1997 reflects a charge of approximately $600,000 relating to such
grants. In addition, a shareholder of the Company agreed to provide additional
severance payments to certain employees for prior services which totaled
approximately $427,000. The statement of operations also reflects this special
compensation charge.     
 
                                     F-32
<PAGE>
 


[Inside Back Cover Artwork]

              [Three four-color photographs]





<PAGE>
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
 
 NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER
CONTAINED HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLDERS OR THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN
THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, THOSE TO WHICH IT RELATES IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT
LAWFUL TO MAKE SUCH OFFER IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS AT
ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
 
                                 ------------
 
                               TABLE OF CONTENTS
 
<TABLE>   
<CAPTION>
                                                                          PAGE
                                                                          ----
<S>                                                                       <C>
Prospectus Summary.......................................................   3
Risk Factors.............................................................  10
The Company..............................................................  15
Concurrent Offering......................................................  15
Use of Proceeds..........................................................  16
Dividend Policy..........................................................  16
Dilution.................................................................  17
Capitalization...........................................................  18
Pro Forma Financial Data.................................................  19
Selected Historical and Pro Forma Consolidated Statements of Operations,
 Other Data and Balance Sheets...........................................  25
Management's Discussion and Analysis of Financial Condition and Results
 of Operations...........................................................  29
Business.................................................................  39
Management...............................................................  50
Certain Transactions.....................................................  58
Principal and Selling Shareholders.......................................  59
Description of Capital Stock.............................................  61
Description of Certain Indebtedness......................................  63
Shares Eligible for Future Sale..........................................  65
Certain U.S. Tax Consequences to Non-U.S. Shareholders...................  66
Underwriting.............................................................  67
Legal Matters............................................................  70
Experts..................................................................  70
Available Information....................................................  71
Index to Consolidated Financial Statements............................... F-1
</TABLE>    
 
                                 ------------
 
 UNTIL      , 1997 (25 DAYS AFTER THE COMMENCEMENT OF THE EQUITY OFFERINGS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
                                
                             5,312,614 SHARES     
 
                              PIERCE LEAHY CORP.
 
                                 COMMON STOCK
 
                      [LOGO OF PIERCE LEAHY APPEARS HERE]
 
                                   --------
 
                                  PROSPECTUS
 
                                       , 1997
 
                                   --------
 
                               SMITH BARNEY INC.
 
                              MERRILL LYNCH & CO.
                            
                         PAINEWEBBER INCORPORATED     
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

                [ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS] 
                    
                 SUBJECT TO COMPLETION, DATED MAY 27, 1997     
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A         +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE   +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY  +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT        +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR   +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE      +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE    +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF  +
+ANY SUCH STATE.                                                               +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS
   
                             5,312,614 SHARES 
                               PIERCE LEAHY CORP.
[LOGO OF PIERCE                   COMMON STOCK
LEAHY APPEARS HERE]     
                                   --------
   
  Of the 5,312,614 shares of Common Stock of Pierce Leahy Corp. (the "Company")
offered hereby, 5,100,000 shares are being sold by the Company and 212,614
shares are being sold by certain shareholders of the Company (the "Selling
Shareholders"). See "Principal and Selling Shareholders." The Company will not
receive any of the proceeds from the sale of shares by the Selling
Shareholders.     
   
  Of the 5,312,614 shares of Common Stock offered hereby, 1,062,523 shares are
being offered for sale in an international offering outside of the United
States and Canada (the "International Equity Offering") by the Managers (as
defined herein) and 4,250,091 shares are being offered in a concurrent offering
in the United States and Canada (the "U.S. Equity Offering" and together with
the International Equity Offering, the "Equity Offerings") by the U.S.
Underwriters (as defined herein).     
   
  Prior to the Equity Offerings, there has not been a public market for the
Common Stock of the Company. It is currently estimated that the initial public
offering price will be between $15 and $18 per share. See "Underwriting" for
information relating to the factors considered in determining the initial
public offering price.     
   
  Concurrently with the Equity Offerings, the Company is offering $100,000,000
aggregate principal amount of  % Senior Subordinated Notes due 2007 by a
separate prospectus (the "Notes Offering" and together with the Equity
Offerings, the "Offerings"). The consummation of the Equity Offerings is not
conditioned upon the consummation of the Notes Offering.     
 
  This document may not be passed on in the United Kingdom to any person unless
that person is of a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to
whom this document may otherwise lawfully be issued or passed on.
   
  The Common Stock has been approved for listing on the New York Stock Exchange
under the symbol "PLH," subject to official notice of issuance.     
   
   SEE "RISK FACTORS" COMMENCING ON PAGE 10 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
                                  HEREBY.     
 
                                   --------
 
THESE SECURITIES  HAVE NOT BEEN APPROVED  OR DISAPPROVED BY  THE SECURITIES AND
EXCHANGE COMMISSION  OR ANY STATE SECURITIES COMMISSION NOR HAS  THE SECURITIES
 AND EXCHANGE COMMISSION  OR ANY  STATE SECURITIES COMMISSION  PASSED UPON THE
 ACCURACY OR  ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION  TO THE CONTRARY
  IS A CRIMINAL OFFENSE.
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
                                          UNDERWRITING              PROCEEDS TO
                                PRICE TO DISCOUNTS AND  PROCEEDS TO   SELLING
                                 PUBLIC  COMMISSIONS(1) COMPANY(2)  SHAREHOLDERS
- --------------------------------------------------------------------------------
<S>                             <C>      <C>            <C>         <C>
Per Share.....................     $           $            $            $
- --------------------------------------------------------------------------------
Total(3)......................   $           $             $           $
</TABLE>    
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) For information regarding indemnification of the Managers and the U.S.
    Underwriters, see "Underwriting."
   
(2) Before deducting expenses estimated at $725,000, all of which are payable
    by the Company.     
   
(3) The Company and certain of the Selling Shareholders have granted the U.S.
    Underwriters a 30-day option to purchase up to an aggregate of 796,892
    additional shares of Common Stock solely to cover over-allotments, if any.
    See "Underwriting." If such option is exercised in full, the total Price to
    Public, Underwriting Discounts and Commissions, Proceeds to Company and
    Proceeds to Selling Shareholders will be $   , $   , $    and $   ,
    respectively.     
 
                                   --------
 
  The shares of Common Stock are being offered by the several Managers named
herein, subject to prior sale, when, as and if accepted by them and subject to
certain conditions. It is expected that certificates for the shares of Common
Stock offered hereby will be available for delivery on or about   , 1997 at the
office of Smith Barney Inc., 333 West 34th Street, New York, New York 10001.
 
                                   --------
 
SMITH BARNEY INC.
                     MERRILL LYNCH INTERNATIONAL
                                                     
                                                  PAINEWEBBER INTERNATIONAL     
 
     , 1997
<PAGE>
                [ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
   
 NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER
CONTAINED HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLDERS OR THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE
TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY,
THOSE TO WHICH IT RELATES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS NOT
LAWFUL TO MAKE SUCH OFFER IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS AT ANY
TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.     
 
                                  -----------
 
                               TABLE OF CONTENTS
 
<TABLE>   
<CAPTION>
                                                                          PAGE
                                                                          ----
<S>                                                                       <C>
Prospectus Summary.......................................................   3
Risk Factors.............................................................  10
The Company..............................................................  15
Concurrent Offering......................................................  15
Use of Proceeds..........................................................  16
Dividend Policy..........................................................  16
Dilution.................................................................  17
Capitalization...........................................................  18
Pro Forma Financial Data.................................................  19
Selected Historical and Pro Forma Consolidated Statements of Operations,
 Other Data and Balance Sheets...........................................  25
Management's Discussion and Analysis of Financial Condition and Results
 of Operations...........................................................  29
Business.................................................................  39
Management...............................................................  50
Certain Transactions.....................................................  58
Principal and Selling Shareholders.......................................  59
Description of Capital Stock.............................................  61
Description of Certain Indebtedness......................................  63
Shares Eligible for Future Sale..........................................  65
Certain U.S. Tax Consequences to Non-U.S. Shareholders...................  66
Underwriting.............................................................  67
Legal Matters............................................................  70
Experts..................................................................  70
Available Information....................................................  71
Index to Consolidated Financial Statements............................... F-1
</TABLE>    
 
                                  -----------
 
 UNTIL      , 1997 (25 DAYS AFTER THE COMMENCEMENT OF THE EQUITY OFFERINGS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
                                
                             5,312,614 SHARES     
 
                               PIERCE LEAHY CORP.
 
                                  COMMON STOCK
 
                     [LOGO OF PIERCE LEAHY APPEARS HERE]
 
                                    -------
 
                                   PROSPECTUS
 
                                       , 1997
 
                                    -------
 
                               SMITH BARNEY INC.
 
                          MERRILL LYNCH INTERNATIONAL
                            
                         PAINEWEBBER INTERNATIONAL     
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
       
<PAGE>
 
                                    PART II
 
                    INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
 
  The following table sets forth fees payable to the Securities and Exchange
Commission, the National Association of Securities Dealers, Inc. and the New
York Stock Exchange and other expenses expected to be incurred in connection
with the issuance and distribution of the securities being registered. All of
the fees and expenses will be paid by the Company.
 
<TABLE>   
<S>                                                                   <C>
Securities and Exchange Commission Registration Fee.................. $ 33,334
National Association of Securities Dealers, Inc. Filing Fee..........   11,500
New York Stock Exchange Listing Fee..................................  130,000
Legal Fees and Expenses..............................................  150,000*
Accounting Fees and Expenses.........................................  200,000*
Blue Sky Fees and Expenses...........................................    5,000*
Transfer Agent Fees and Expenses.....................................   10,000*
Printing and Engraving Expenses......................................  175,000*
Miscellaneous........................................................   10,166*
                                                                      --------
  Total.............................................................. $725,000*
                                                                      ========
</TABLE>    
- --------
* Estimated
 
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
   
  Subchapter D (Sections 1741 through 1750) of Chapter 17 the Pennsylvania
Business Corporation Law of 1988, as amended (the "PBCL"), contains provisions
for mandatory and discretionary indemnification of a corporation's directors,
officers, employees and agents (collectively "Representatives") and related
matters.     
 
  Under Section 1741, subject to certain limitations, a corporation has the
power to indemnify directors, officers and other Representatives under certain
prescribed circumstances against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with a threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or investigative, to which
any of them is a party or threatened to be made a party by reason of his being
a Representative of the corporation or serving at the request of the
corporation as a Representative of another corporation, partnership, joint
venture, trust or other enterprise, if he acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal proceeding, had no reasonable
cause to believe his conduct was unlawful.
 
  Section 1742 provides for indemnification with respect to derivative and
corporate actions similar to that provided by Section 1741. However,
indemnification is not provided under Section 1742 in respect of any claim,
issue or matter as to which a Representative has been adjudged to be liable to
the corporation unless and only to the extent that the proper court determines
upon application that, despite the adjudication of liability but in view of
all the circumstances of the case, a Representative is fairly and reasonably
entitled to indemnity for the expenses that the court deems proper.
 
  Section 1743 provides that indemnification against expenses is mandatory to
the extent that a Representative has been successful on the merits or
otherwise in defense of any such action or proceeding referred to in Section
1741 or 1742.
 
  Section 1744 provides that unless ordered by a court, any indemnification
under Section 1741 or 1742 shall be made by the corporation as authorized in
the specific case upon a determination that indemnification of a
 
                                     II-1
<PAGE>
 
Representative is proper because the Representative met the applicable
standard of conduct, and such determination will be made by the board of
directors by a majority vote of a quorum of directors not parties to the
action or proceeding; if a quorum is not obtainable or if obtainable and a
majority of disinterested directors so directs, by independent legal counsel;
or by the shareholders.
 
  Section 1745 provides that expenses incurred by a Representative in
defending any action or proceeding referred to in Subchapter D of Chapter 17
of the PBCL may be paid by the corporation in advance of the final disposition
of such action or proceeding upon receipt of an undertaking by or on behalf of
the Representative to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the corporation.
 
  Section 1746 provides generally that except in any case where the act or
failure to act giving rise to the claim for indemnification is determined by a
court to have constituted willful misconduct or recklessness, the
indemnification and advancement of expenses provided by Subchapter D of
Chapter 17 of the PBCL shall not be deemed exclusive of any other rights to
which a Representative seeking indemnification or advancement of expenses may
be entitled under any bylaw, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding that office.
 
  Section 1747 grants a corporation the power to purchase and maintain
insurance on behalf of any Representative against any liability incurred by
him in his capacity as a Representative, whether or not the corporation would
have the power to indemnify him against that liability under Subchapter D of
Chapter 17 of the PBCL.
 
  Sections 1748 and 1749 apply the indemnification and advancement of expenses
provisions contained in Subchapter D of Chapter 17 of the PBCL to successor
corporations resulting from consolidation, merger or division and to service
as a representative of a corporation or an employee benefit plan.
   
  Section 7.2 of the Company's Bylaws provides indemnification to directors
and officers for all actions taken by them and for all failures to take action
to the fullest extent permitted by Pennsylvania law against all expense,
liability and loss reasonably incurred or suffered by them in connection with
any threatened, pending or completed action, suit or proceeding (including,
without limitation, an action, suit or proceeding by or in the right of the
Company), whether civil, criminal, administrative, investigative or through
arbitration. Section 7.2 also permits the Company, by action of its Board of
Directors, to indemnify officers, employees and other persons to the same
extent as directors. Amendments, repeals or modifications of Section 7.2 can
only be prospective and such changes require the affirmative vote of not less
than all of the directors then serving or holders of a majority of the
outstanding shares of stock of the Company entitled to vote in elections of
directors. Section 7.2 further permits the Company to maintain insurance, at
its expense, for the benefit of any person on behalf of whom insurance is
permitted to be purchased by Pennsylvania law against any such expenses,
liability or loss, whether or not the Company would have the power to
indemnify such person against such expense, liability or loss under
Pennsylvania or other law.     
   
  See Section 9 of the U.S. Underwriting Agreement and Section 9 of the
International Underwriting Agreement, filed as Exhibits 1.1 and 1.2 hereto,
respectively, pursuant to which the Underwriters agree to indemnify the
Company, its directors, officers and controlling persons against certain
liabilities, including liabilities under the Securities Act.     
 
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
 
  In April 1997, the Company undertook a recapitalization in which shares of
voting and nonvoting Common Stock were reclassified into one class of shares
of Common Stock. The Company was then redomesticated into Pennsylvania
pursuant to a merger (all such transactions, the "Stock Recapitalization").
The Stock Recapitalization was exempt from registration under Section 3(a)(9)
of the Securities Act of 1933 (the "Securities Act").
 
                                     II-2
<PAGE>
 
  In July 1996, the Company sold $200,000,000 aggregate principal amount of
11-1/8% Senior Subordinated Notes due 2006 (the "1996 Notes") to "qualified
institutional buyers," as defined in Rule 144A under the Securities Act. The
sale of the 1996 Notes was exempt from the registration provisions of the
Securities Act pursuant to Section 4(2) thereof.
 
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
 (a) Exhibits
 
<TABLE>   
<CAPTION>
 EXHIBIT
   NO.                                   EXHIBIT
 -------                                 -------
 <C>     <S>
  1.1*   Form of U.S. Underwriting Agreement
  1.2*   Form of International Underwriting Agreement
  3.1*   Articles of Incorporation of the Company
  3.2*   Bylaws of the Company
  5      Opinion of Cozen and O'Connor
  9*     Form of Voting Trust Agreement by and among certain shareholders of
         the Company
 10.1    Pierce Leahy Corp. Non-Qualified Stock Option Plan (incorporated by
         reference to Exhibit 10.3 to the Company's Registration Statement on
         Form S-4, File No. 333-9963)
 10.2*   Pierce Leahy Corp. 1997 Stock Option Plan
 10.3    Credit Agreement, dated as of August 13, 1996, among the Company,
         Pierce Leahy Command Company, the several lenders from time to time
         parties thereto, Canadian Imperial Bank of Commerce, as Canadian Ad-
         ministrative Agent, and Canadian Imperial Bank of Commerce, New York
         Agency, as U.S. administrative agent, together with certain collateral
         documents attached thereto, including the form of US$ Note, the form
         of Canadian$ Note, the form of the U.S. Global Guarantee and Security
         Agreement made by the Company, certain of its affiliates and subsidi-
         aries and its shareholders in favor of the U.S. Administrative Agent,
         the form of Canadian Security Agreement between Pierce Leahy Command
         Company and the Canadian Administrative Agent and the form of Pledge
         and Intercreditor Agreement among certain of the Company's affiliates,
         the US Administrative Agent and the Canadian Administrative Agent (in-
         corporated by reference to Exhibit 10.4 to the Company's Registration
         Statement on Form S-4, File No. 333-9963)
 10.4    Indenture, dated as of July 15, 1996, among the Company, as issuer,
         and United States Trust Company of New York, as trustee (incorporated
         by reference to Exhibit 4.4 to the Company's Registration Statement on
         Form S-4, File No. 333-9963)
 10.5*   Form of Indenture among the Company, as issuer, and The Bank of New
         York, as trustee
 10.6    Share Purchase Agreement dated September 30, 1995 between the Company
         and Moore Corporation Limited (incorporated by reference to Exhibit
         10.5 to the Company's Registration Statement on Form S-4, File No.
         333-9963)
 10.7    Stock Purchase Agreement dated April 17, 1996 among the Company and
         Security Archives, Inc. and Patrick G. Clayton, Carol A. Clayton and
         Byron Wood Clayton (incorporated by reference to Exhibit 10.6 to the
         Company's Registration Statement on Form S-4, File No. 333-9963)
 10.8    Stock Purchase Agreement dated as of February 27, 1997 between the
         Company, Records Management Services, Inc. and certain shareholders of
         Records Management Services, Inc. (incorporated by reference to Ex-
         hibit 10.7 to the Company's Annual Report on Form 10-K for the year
         ended December 31, 1996)
 10.9*   Form of Tax Indemnification Agreement among the Company and certain of
         its shareholders
 10.10*  First Amendment, dated as of October 23, 1996, to the Credit Agreement
 10.11*  Second Amendment and Consent, dated as of March 27, 1997, to the Credit
         Agreement
 11*     Statement re: computation of per share earnings
 21*     Subsidiaries of the Registrant
 23.1    Consent of Cozen and O'Connor (included in Exhibit 5)
 23.2*   Consent of Arthur Andersen LLP
 23.3*   Consent of Deloitte & Touche LLP
 23.4*   Consent of Deloitte & Touche LLP
 24**    Power of Attorney (included on signature page)
</TABLE>    
- --------
* Filed herewith.
** Previously filed.
 
                                     II-3
<PAGE>
 
 (b) Financial Statement Schedules
 
  Schedule II--Valuation and Qualifying Accounts
 
ITEM 17. UNDERTAKINGS
 
  Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
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 the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant 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, the Registrant 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.
 
  The undersigned Registrant hereby undertakes that:
 
    (1) For determining any liability under the Securities Act, the
  information omitted from the form of prospectus filed as part of this
  registration statement in reliance upon Rule 430(A) and contained in a form
  of prospectus filed by the Registrant pursuant to Rule 424(b)(1), or (4),
  or 497(h) under the Securities Act shall be deemed to be part of this
  registration statement as of the time it was declared effective.
 
    (2) For determining any liability under the Securities Act, each post-
  effective amendment that contains a form of prospectus shall be deemed to
  be a new registration statement relating to the securities offered in the
  registration statement, and the offering of such securities at that time
  shall be deemed to be the initial bona fide offering thereof.
 
                                     II-4
<PAGE>

                                   SIGNATURES
   
  PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN KING OF PRUSSIA, PENNSYLVANIA, ON
MAY 23, 1997.     
 
                                         Pierce Leahy Corp.
                                             
                                                                         
                                         By:     /s/ J. Peter Pierce      
                                             ----------------------------------
                                                     J. PETER PIERCE,
                                              PRESIDENT AND CHIEF EXECUTIVE
                                                         OFFICER
 
  PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.

<TABLE>     
<CAPTION> 
 
             SIGNATURE                       TITLE                 DATE
<S>                                   <C>                      <C>  
                 *                    Chairman of the          May 23, 1997 
- ------------------------------------   Board of Directors                   
         LEO W. PIERCE, SR.                                               
                                                                             
      /s/ J. Peter Pierce             President, Chief         May 23, 1997  
- ------------------------------------   Executive Officer       
          J. PETER PIERCE              and Director       
                                       (Principal         
                                       Executive Officer) 

    /s/ Douglas B. Huntley            Vice President,          May 23, 1997  
- ------------------------------------   Chief Financial         
         DOUGLAS B. HUNTLEY            Officer and       
                                       Director          
                                       (Principal        
                                       Financial and     
                                       Accounting        
                                       Officer)          

                 *                    Director                 May 23, 1997 
- ------------------------------------                                        
         LEO W. PIERCE, JR.                                    
 
                 *                    Director                 May 23, 1997 
- ------------------------------------                           
         MICHAEL J. PIERCE                                     
 
                 *                    Director                 May 23, 1997 
- ------------------------------------                           
          ALAN B. CAMPELL                                      
 
 
                 *                    Director                 May 23, 1997 
- ------------------------------------                           
         DELBERT S. CONNER                                     
</TABLE>      

                                
                                
By:    /s/ J. Peter Pierce     
    --------------------------------
           J. PETER PIERCE
                                 
                                 
By:  /s/ Douglas B. Huntley            
    --------------------------------
          DOUGLAS B. HUNTLEY
Attorneys-in-fact pursuant to the powers
 of attorney previously provided as part
     of this Registration Statement.
 
                                      II-5
<PAGE>

                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To Pierce Leahy Corp.:
   
  We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements for Pierce Leahy Corp. and have issued
our report thereon dated February 28, 1997. Our audit was made for the purpose
of forming an opinion on the basic financial statements taken as a whole. The
schedule of valuation and qualifying accounts is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.     
 
                                          Arthur Andersen LLP
 
Philadelphia, Pa.,
   
February 28, 1997     
 
                                      S-1
<PAGE>

                               PIERCE LEAHY CORP.
 
                       VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)
 
<TABLE>   
<CAPTION>
                                        BALANCE,   CHARGES              BALANCE,
                                      BEGINNING OF   TO     DEDUCTIONS   END OF
                                         PERIOD    EXPENSE FROM RESERVE  PERIOD
                                      ------------ ------- ------------ --------
<S>                                   <C>          <C>     <C>          <C>
March 31, 1997 (unaudited):
  Reserve for doubtful accounts......     $795      $234       $ 47       $982
December 31, 1996:
  Reserve for doubtful accounts......     $487      $467       $159       $795
December 31, 1995:
  Reserve for doubtful accounts......     $554      $418       $485       $487
December 31, 1994:
  Reserve for doubtful accounts......     $513      $180       $139       $554
</TABLE>    
 
                                      S-2
<PAGE>
 
                                 EXHIBIT INDEX
 
 
<TABLE>   
<CAPTION>
 EXHIBIT
   NO.                                   EXHIBIT
 -------                                 -------
 <C>     <S>
  1.1*   Form of U.S. Underwriting Agreement
  1.2*   Form of International Underwriting Agreement
  3.1*   Articles of Incorporation of the Company
  3.2*   Bylaws of the Company
  5      Opinion of Cozen and O'Connor
  9*     Form of Voting Trust Agreement by and among certain shareholders of
         the Company
 10.1    Pierce Leahy Corp. Non-Qualified Stock Option Plan (incorporated by
         reference to Exhibit 10.3 to the Company's Registration Statement on
         Form S-4, File No. 333-9963)
 10.2*   Pierce Leahy Corp. 1997 Stock Option Plan
 10.3    Credit Agreement, dated as of August 13, 1996, among the Company,
         Pierce Leahy Command Company, the several lenders from time to time
         parties thereto, Canadian Imperial Bank of Commerce, as Canadian Ad-
         ministrative Agent, and Canadian Imperial Bank of Commerce, New York
         Agency, as U.S. administrative agent, together with certain collateral
         documents attached thereto, including the form of US$ Note, the form
         of Canadian$ Note, the form of the U.S. Global Guarantee and Security
         Agreement made by the Company, certain of its affiliates and subsidi-
         aries and its shareholders in favor of the U.S. Administrative Agent,
         the form of Canadian Security Agreement between Pierce Leahy Command
         Company and the Canadian Administrative Agent and the form of Pledge
         and Intercreditor Agreement among certain of the Company's affiliates,
         the US Administrative Agent and the Canadian Administrative Agent (in-
         corporated by reference to Exhibit 10.4 to the Company's Registration
         Statement on Form S-4, File No. 333-9963)
 10.4    Indenture, dated as of July 15, 1996, among the Company, as issuer,
         and United States Trust Company of New York, as trustee (incorporated
         by reference to Exhibit 4.4 to the Company's Registration Statement on
         Form S-4, File No. 333-9963)
 10.5*   Form of Indenture among the Company, as issuer, and The Bank of New
         York, as trustee
 10.6    Share Purchase Agreement dated September 30, 1995 between the Company
         and Moore Corporation Limited (incorporated by reference to Exhibit
         10.5 to the Company's Registration Statement on Form S-4, File No.
         333-9963)
 10.7    Stock Purchase Agreement dated April 17, 1996 among the Company and
         Security Archives, Inc. and Patrick G. Clayton, Carol A. Clayton and
         Byron Wood Clayton (incorporated by reference to Exhibit 10.6 to the
         Company's Registration Statement on Form S-4, File No. 333-9963)
 10.8    Stock Purchase Agreement dated as of February 27, 1997 between the
         Company, Records Management Services, Inc. and certain shareholders of
         Records Management Services, Inc. (incorporated by reference to Ex-
         hibit 10.7 to the Company's Annual Report on Form 10-K for the year
         ended December 31, 1996)
 10.9*   Form of Tax Indemnification Agreement among the Company and certain of
         its shareholders
 10.10*  First Amendment, dated as of October 23, 1996, to the Credit Agreement
 10.11*  Second Amendment and Consent, dated as of March 27, 1997, to the
         Credit Agreement
 11*     Statement re: computation of per share earnings
 21*     Subsidiaries of the Registrant
 23.1    Consent of Cozen and O'Connor (included in Exhibit 5)
 23.2*   Consent of Arthur Andersen LLP
 23.3*   Consent of Deloitte & Touche LLP
 23.4*   Consent of Deloitte & Touche LLP
 24**    Power of Attorney (included on signature page)
</TABLE>    
- --------
 * Filed herewith.
** Previously filed.

<PAGE>
 
                              [          ] Shares

                               PIERCE LEAHY CORP.

                                  Common Stock


                      FORM OF U.S. UNDERWRITING AGREEMENT
                      -----------------------------------


                                                                          , 1997


SMITH BARNEY INC.
MERRILL LYNCH & CO.
PAINEWEBBER INCORPORATED

     As Representatives of the Several Underwriters

c/o  SMITH BARNEY INC.
     388 Greenwich Street
     New York, New York 10013

Dear Sirs:

          Pierce Leahy Corp., a New York corporation (together with its
successor by merger to Pierce Leahy Inc., a Pennsylvania corporation that upon
effectiveness of the merger will change its name to Pierce Leahy Corp., the
"Company"), proposes to issue and sell an aggregate of [          ] shares of 
its common stock, par value $.01 per share, and the persons named in Part A of 
Schedule I hereto (the "Selling Shareholders") propose to sell an aggregate of 
[           ] shares of common stock of the Company (together with the [    ] 
shares of common stock to be issued and sold by the Company, the "Firm Shares")
to the several Underwriters named in Schedule II hereto (the "U.S.
Underwriters") for whom Smith Barney Inc., Merrill Lynch & Co. and PaineWebber
Incorporated are acting as representatives (the "Representatives"). In addition,
solely for the purpose of covering over-allotments, the Company proposes to sell
to the U.S. Underwriters, upon the terms and conditions set forth in Section 2
hereof, up to an additional [ ] shares (the "Additional Shares") of the
Company's common stock. The Company and the Selling Shareholders are hereinafter
sometimes referred to as the "Sellers." The Firm Shares and the Additional
Shares are hereinafter collectively referred to as the "Shares." The Company's
common stock, par value $.01 per share, including the Shares and the
International Shares (as defined herein), is hereinafter referred to as the
"Common Stock."
<PAGE>
 
          It is understood that the Company and the Selling Shareholders are
concurrently entering into an International Underwriting Agreement, dated the
date hereof (the "International Underwriting Agreement"), providing for the sale
of [          ] shares of the Common Stock (the "Firm International Shares"), of
which [          ] shares will be sold by the Company and [          ] will be
sold by the Selling Shareholders (plus an option granted by the Company to
purchase up to an additional [          ] shares of Common Stock (the
"Additional International Shares") solely for the purpose of covering over-
allotments) through arrangements with certain underwriters outside the United
States and Canada (the "Managers"), for whom Smith Barney Inc., Merrill Lynch
International and PaineWebber International are acting as lead Managers (the
"Lead Managers"). All shares of Common Stock proposed to be offered to the
Managers pursuant to the International Underwriting Agreement, including the
Firm International Shares and the Additional International Shares, are herein
called the "International Shares"; the International Shares and the Shares,
collectively, are herein called the "Underwritten Shares."

          The Company and the Selling Shareholders also understand that the
Representatives and the Lead Managers have entered into an agreement (the
"Agreement Between U.S. Underwriters and Managers") contemplating the
coordination of certain transactions between the U.S. Underwriters and the
Managers and that, pursuant thereto and subject to the conditions set forth
therein, the U.S. Underwriters may purchase from the Managers a portion of the
International Shares or sell to the Managers a portion of the Shares.  The
Company and the Selling Shareholders understand that any such purchases and
sales between the U.S. Underwriters and the Managers shall be governed by the
Agreement Between U.S. Underwriters and Managers and shall not be governed by
the terms of this Agreement or the International Underwriting Agreement.

          The Company and the Selling Shareholders wish to confirm as follows
their respective agreements with you and the other several Underwriters on whose
behalf you are acting, in connection with the several purchases of the Shares by
the Underwriters.

     1.   Registration Statement and Prospectus.  The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-1, including prospectuses subject to
completion, relating to the Underwritten Shares.  The term "Registration
Statement" as used in this Agreement means the

                                       2
<PAGE>
 
registration statement (including all financial schedules and exhibits), as
amended at the time it becomes effective, or, if the registration statement
became effective prior to the execution of this Agreement, as supplemented or
amended prior to the execution of this Agreement.  If it is contemplated, at the
time this Agreement is executed, that a post-effective amendment to the
registration statement will be filed and must be declared effective before the
offering of the Shares may commence, the term "Registration Statement" as used
in this Agreement means the registration statement as amended by said post-
effective amendment.  If an abbreviated registration statement is prepared and
filed with the Commission in accordance with Rule 462(b) under the Act ("an
Abbreviated Registration Statement"), the term "Registration Statement" as used
in this Agreement includes the Abbreviated Registration Statement.  The term
"Prospectuses" as used in this Agreement means the prospectuses in the forms
included in the Registration Statement, or, if the prospectuses included in the
Registration Statement omit information in reliance on Rule 430A under the Act
and such information is included in prospectuses filed with the Commission
pursuant to Rule 424(b) under the Act, the term "Prospectuses" as used in this
Agreement means the prospectuses in the forms included in the Registration
Statement as supplemented by the addition of the Rule 430A information contained
in the prospectuses filed with the Commission pursuant to Rule 424(b).  The term
"Prepricing Prospectuses" as used in this Agreement means the prospectuses
subject to completion in the forms included in the Registration Statement at the
time of the initial filing of the Registration Statement with the Commission,
and as such prospectuses shall have been amended from time to time prior to the
date of the Prospectuses.

          It is understood that two forms of Prepricing Prospectus and two forms
of Prospectus are to be used in connection with the offering and sale of the
Underwritten Shares:  a Prepricing Prospectus and a Prospectus relating to the
Shares that are to be offered and sold in the United States (as defined herein)
or Canada (as defined herein) to U.S. or Canadian Persons (the "U.S. Prepricing
Prospectus" and the "U.S. Prospectus," respectively), and a Prepricing
Prospectus and a Prospectus relating to the International Shares which are to be
offered and sold outside the United States or Canada to persons other than U.S.
or Canadian Persons (the "International Prepricing Prospectus" and the
"International Prospectus," respectively).  The U.S. Prospectus and the
International Prospectus are herein collectively called the "Prospectuses," and
the U.S. Prepricing Prospectus and the International Prepricing Prospectus are
herein called the "Prepricing Prospectuses."  For purposes of this Agreement:
"Rules

                                       3
<PAGE>
 
and Regulations" means the rules and regulations adopted by the Commission under
either the Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as applicable; "U.S. or Canadian Person" means any resident or national
of the United States or Canada, any corporation, partnership or other entity
created or organized in or under the laws of the United States or Canada or any
estate or trust the income of which is subject to United States or Canadian
income taxation regardless of the source of its income (other than the foreign
branch of any U.S. or Canadian Person), and includes any United States or
Canadian branch of a person other than a U.S. or Canadian Person; "United
States" means the United States of America (including the states thereof and the
District of Columbia) and its territories, its possessions and other areas
subject to its jurisdiction; and "Canada" means Canada and its territories, its
possessions and other areas subject to its jurisdiction.

     2.   Agreements to Sell and Purchase.  Upon the basis of the
representations, warranties and agreements contained herein and subject to all
the terms and conditions set forth herein and to such adjustments as you may
determine to avoid fractional shares, the Company hereby agrees to issue and
sell to each U.S. Underwriter and each U.S. Underwriter agrees, severally and
not jointly, to purchase from the Company, at a purchase price of $     per
share (the "purchase price per share"), the number of Firm Shares that bears the
same proportion to the aggregate number of Firm Shares to be issued and sold by
the Company as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule II hereto (or such number of Firm Shares increased as
set forth in Section 12 hereof) bears to the aggregate number of Firm Shares to
be sold by the Company and the Selling Shareholders.

          Upon the basis of the representations, warranties and agreements
contained herein and subject to all the terms and conditions set forth herein
and to such adjustments as you may determine to avoid fractional shares, each
Selling Shareholder agrees to sell to each U.S. Underwriter and each U.S.
Underwriter agrees, severally and not jointly, to purchase from each Selling
Shareholder, at the purchase price per share, the number of Firm Shares that
bears the same proportion to the number of Firm Shares set forth opposite the
name of such Selling Shareholder in Schedule I hereto as the number of Firm
Shares set forth opposite the name of such U.S. Underwriter in Schedule II
hereto (or such number of Firm Shares increased as set forth in Section 12
hereof) bears to the aggregate number of Firm Shares to be sold by the Company
and the Selling Shareholders.

                                       4
<PAGE>
 
          Upon the basis of the representations, warranties and agreements
contained herein and subject to all the terms and conditions set forth herein,
the Company also agrees to sell to the U.S. Underwriters, and the U.S.
Underwriters shall have the right to purchase from the Company, at the purchase
price per share, pursuant to an option (the "over-allotment option") which may
be exercised prior to 5:00 p.m., New York City time, on the 30th day after the
date of the U.S. Prospectus (or, if such 30th day shall be a Saturday or Sunday
or a holiday, on the next business day thereafter when the New York Stock
Exchange is open for trading), up to an aggregate of [          ] Additional
Shares from the Company.  Upon any exercise of the over-allotment option, each
U.S. Underwriter, severally and not jointly, agrees to purchase from the Company
the number of Additional Shares (subject to such adjustments as you may
determine in order to avoid fractional shares) that bears the same proportion to
the number of Additional Shares to be sold by the Company as the number of Firm
Shares set forth opposite the name of such U.S. Underwriter in Schedule II
hereto (or such number of Firm Shares increased as set forth in Section 12
hereof) bears to the aggregate number of Firm Shares to be sold by the Company.

          Certificates in transferable form for the Shares that each of the
Selling Shareholders agrees to sell pursuant to this Agreement have been placed
in custody with [          ] (the "Custodian") for delivery under this Agreement
pursuant to a Custody Agreement and Power of Attorney (the "Custody Agreement")
executed by each of the Selling Shareholders appointing            and
as agents and attorneys-in-fact (the "Attorneys-in-Fact").  Each Selling
Shareholder agrees that (i) the Shares represented by the certificates held in
custody pursuant to the Custody Agreement are subject to the interests of the
U.S. Underwriters, the Company and each other Selling Shareholder, (ii) the
arrangements made by the Selling Shareholders for such custody are, except as
specifically provided in the Custody Agreement, irrevocable, and (iii) the
obligations of the Selling Shareholders hereunder and under the Custody
Agreement shall not be terminated by any act of such Selling Shareholder or by
operation of law, whether by the death or incapacity of any Selling Shareholder
or the occurrence of any other event or, if the Selling Shareholder is not a
natural person, upon any dissolution, winding up, distribution of assets or
other event affecting the legal existence of such Selling Shareholder.  If any
Selling Shareholder shall die or be incapacitated or if any other event shall
occur before the delivery of the Shares hereunder or if the Selling Shareholder
is not a natural person, shall dissolve, wind up, distribute assets or if any
other event affecting the legal existence of such Selling

                                       5
<PAGE>
 
Shareholder shall occur before the delivery of the Shares hereunder,
certificates for the Shares of such Selling Shareholder shall be delivered to
the Underwriters by the Attorneys-in-Fact in accordance with the terms and
conditions of this Agreement and the Custody Agreement as if such death or
incapacity, dissolution, winding up or distribution of assets or other event had
not occurred, regardless of whether or not the Attorneys-in-Fact or any U.S.
Underwriter shall have received notice of such death, incapacity, dissolution,
winding up or distribution of assets or other event.  Each Attorney-in-Fact is
authorized, on behalf of each of the Selling Shareholders, to execute this
Agreement and any other documents necessary or desirable in connection with the
sale of the Shares to be sold hereunder by such Selling Shareholder, to make
delivery of the certificates for such Shares, to receive the proceeds of the
sale of such Shares, to give receipts for such proceeds, to pay therefrom any
expenses to be borne by such Selling Shareholder in connection with the sale and
public offering of such Shares, to distribute the balance thereof to such
Selling Shareholder, and to take such other action as may be necessary or
desirable in connection with the transactions contemplated by this Agreement.
Each Attorney-in-Fact agrees to perform his duties under the Custody Agreement.

          Each U.S Underwriter represents, warrants, covenants and agrees that,
except as contemplated under Section 2 of the Agreement Between U.S.
Underwriters and Managers dated the date hereof, (i) it is not purchasing any
Shares for the account of anyone other than a U.S. or Canadian Person, (ii) it
has not offered or sold, and will not offer, sell, resell or deliver, directly
or indirectly, any Shares or distribute any U.S. Prospectus outside the United
States or Canada or to anyone other than a U.S. or Canadian Person, and (iii)
any offer of Shares in Canada will be made only pursuant to an exemption from
the requirement to file a prospectus in the relevant province of Canada in which
such offer is made.

     3.   Terms of Public Offering.  The Sellers have been advised by you that
the U.S. Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable and initially
to offer the Shares upon the terms set forth in the U.S. Prospectus.

     4.   Delivery of the Shares and Payment Therefor.  Delivery to the U.S.
Underwriters of and payment for the Firm Shares shall be made at the office of
Smith Barney Inc., 388 Greenwich Street, New York, NY 10013, at 10:00 A.M., New
York City time, on            ,

                                       6
<PAGE>
 
1997 (the "Closing Date").  The place of closing for the Firm Shares and the
Closing Date may be varied by agreement among you, the Company and the
Attorneys-in-Fact.

          Delivery to the U.S. Underwriters of and payment for any Additional
Shares to be purchased by the U.S. Underwriters shall be made at the
aforementioned office of Smith Barney Inc. at such time on such date (the
"Option Closing Date"), which may be the same as the Closing Date but shall in
no event be earlier than the Closing Date nor earlier than two nor later than
ten business days after the giving of the notice hereinafter referred to, as
shall be specified in a written notice from you on behalf of the U.S.
Underwriters to the Company of the U.S. Underwriters' determination to purchase
a number, specified in such notice, of Additional Shares.  The place of closing
for any Additional Shares and the Option Closing Date for such Shares may be
varied by agreement between you and the Company.

          Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request by written notice, it being understood that a facsimile
transmission shall be deemed written notice, prior to 9:30 A.M., New York City
time, on the second business day preceding the Closing Date or any Option
Closing Date, as the case may be.  Such certificates shall be made available to
you in New York City for inspection and packaging not later than 9:30 A.M., New
York City time, on the business day next preceding the Closing Date or the
Option Closing Date, as the case may be.  The certificates and stock powers
evidencing the Firm Shares and any Additional Shares to be purchased hereunder
shall be delivered to you on the Closing Date or the Option Closing Date, as the
case may be, against payment of the purchase price therefor in immediately
available funds.

     5.   Agreements of the Company.  The Company agrees with the several U.S.
Underwriters as follows:

          (a)  If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
Company will endeavor to cause the Registration Statement or such post-effective
amendment to become effective as soon as possible and will advise you promptly
and, if requested by you, will confirm such advice in writing, when the
Registration Statement or such post-effective amendment has become effective.

                                       7
<PAGE>
 
          (b)  The Company will advise you promptly and, if requested by you,
will confirm such advice in writing:  (i) of any request by the Commission for
amendment of or a supplement to the Registration Statement, any Prepricing
Prospectuses or the Prospectuses or for additional information; (ii) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction or the initiation of any proceeding for
such purpose; and (iii) within the period of time referred to in paragraph (f)
below, of any change in the Company's condition (financial or other), business,
prospects, properties, net worth or results of operations, or of the happening
of any event, including the filing of any information, documents or reports
pursuant to the Exchange Act, that makes any statement of a material fact made
in the Registration Statement or the Prospectuses (as then amended or
supplemented) untrue or which requires the making of any additions to or changes
in the Registration Statement or the Prospectuses (as then amended or
supplemented) in order to state a material fact required by the Act or the
regulations thereunder to be stated therein or necessary in order to make the
statements therein not misleading, or of the necessity to amend or supplement
the Prospectuses (as then amended or supplemented) to comply with the Act or any
other law.  If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible time.

          (c)  The Company will furnish to you, without charge, three signed
copies of the Registration Statement as originally filed with the Commission and
of each amendment thereto, including financial statements and all exhibits to
the Registration Statement and will also furnish to you, without charge, such
number of conformed copies of the Registration Statement as originally filed and
of each amendment thereto, but without exhibits, as you may reasonably request.

          (d)  The Company will not (i) file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectuses of which you
shall not previously have been advised or to which you shall reasonably object
in writing after being so advised or (ii) so long as, in the written opinion of
counsel for the U.S. Underwriters (a copy of which shall be delivered to the
Company), a prospectus is required to be delivered in connection with sales by
any U.S. Underwriter or dealer, file any information, documents or reports
pursuant to the Exchange Act, without delivering a copy of such information,
documents or reports to you,

                                       8
<PAGE>
 
as Representatives of the U.S. Underwriters, prior to or concurrently with such
filing.

          (e)  Prior to the execution and delivery of this Agreement, the
Company has delivered or will deliver to you, without charge, in such quantities
as you have reasonably requested or may hereafter reasonably request, copies of
each form of the U.S. Prepricing Prospectus.  The Company consents to the use,
in accordance with the provisions of the Act and with the securities or Blue Sky
laws of the jurisdictions in which the Shares are offered by the several U.S.
Underwriters and by dealers, prior to the date of the U.S. Prospectus, of each
U.S. Prepricing Prospectus so furnished by the Company.

          (f)  As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the written
opinion of counsel for the U.S. Underwriters a U.S. Prospectus is required by
the Act to be delivered in connection with sales by any U.S. Underwriter or
dealer, the Company will expeditiously deliver to each U.S. Underwriter and each
dealer, without charge, as many copies of the U.S. Prospectus (and of any
amendment or supplement thereto) as you may reasonably request.  The Company
consents to the use of the U.S. Prospectus (and of any amendment or supplement
thereto) in accordance with the provisions of the Act and with the securities or
Blue Sky laws of the jurisdictions in which the Shares are offered by the
several U.S. Underwriters and by all dealers to whom Shares may be sold, both in
connection with the offering and sale of the Shares and for such period of time
thereafter as the U.S. Prospectus is required by the Act to be delivered in
connection with sales by any U.S. Underwriter or dealer.  If during such period
of time any event shall occur that in the judgment of the Company or in the
written opinion of counsel for the U.S. Underwriters is required to be set forth
in the U.S. Prospectus (as then amended or supplemented) or should be set forth
therein in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
to supplement or amend the U.S. Prospectus to comply with the Act or any other
law, the Company will make every reasonable effort to prepare and, subject to
the provisions of paragraph (d) above, file with the Commission an appropriate
supplement or amendment thereto and will expeditiously furnish to the U.S.
Underwriters and dealers a reasonable number of copies thereof.  In the event
that the Company and you, as Representatives of the several Underwriters, agree
that the Prospectus should be amended or supplemented, the Company, if requested
by you, will

                                       9
<PAGE>
 
promptly issue a press release announcing or disclosing the matters to be
covered by the proposed amendment or supplement.

          (g)  The Company will cooperate with you and with counsel for the U.S.
Underwriters in connection with the registration or qualification of the Shares
for offering and sale by the several U.S. Underwriters and by dealers under the
securities or Blue Sky laws of such jurisdictions as you may reasonably
designate and will file such consents to service of process or other documents
necessary or appropriate in order to effect such registration or qualification;
provided that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take any
action that would subject it to taxation or to service of process in suits,
other than those arising out of the offering or sale of the Shares, in any
jurisdiction where it is not now so subject.

          (h)  The Company will make generally available to its security holders
a consolidated earnings statement, which need not be audited, covering a twelve-
month period commencing after the effective date of the Registration Statement
and ending not later than 15 months thereafter, as soon as reasonably
practicable after the end of such period, which consolidated earnings statement
shall satisfy the provisions of Section 11(a) of the Act.

          (i)  During the period of five years hereafter, the Company will
furnish to you (i) as soon as available, a copy of each report of the Company
mailed to stockholders or filed with the Commission or the New York Stock
Exchange and (ii) from time to time such other information concerning the
Company as you may reasonably request.

          (j)  If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 12 hereof or by notice given by you terminating this
Agreement pursuant to Section 12 or Section 13 hereof) or if this Agreement
shall be terminated by the U.S. Underwriters because of any failure or refusal
on the part of the Company or any of the Selling Shareholders to comply, in any
material respect, with the terms or fulfill, in any material respect, any of the
conditions of this Agreement, the Company agrees to reimburse the
Representatives for all reasonable out-of-pocket expenses (including reasonable
fees and expenses of counsel for the U.S. Underwriters) incurred by you in
connection herewith.

                                       10
<PAGE>
 
          (k)  The Company will apply the net proceeds from the sale of the
Shares to be sold by it hereunder substantially in accordance with the
description set forth in the Prospectuses.

          (l)  If Rule 430A of the Act is employed, the Company will make every
reasonable effort to timely file the Prospectuses pursuant to Rule 424(b) under
the Act and will advise you of the time and manner of such filing.

          (m)  For a period of 180 days after the date hereof (the "Lock-up
Period"), the Company will not, without the prior written consent of Smith
Barney Inc., offer, sell, contract to sell or otherwise dispose of any Common
Stock (or any securities convertible into or exercisable or exchangeable for
Common Stock) or grant any options or warrants to purchase Common Stock that are
exercisable during the Lock-up Period, except for (i) sales to the U.S.
Underwriters pursuant to this Agreement and the Managers pursuant to the
International Underwriting Agreement, (ii) the issuance of Shares upon exercise
of outstanding options and [(iii) the issuance of Shares in connection with
acquisitions, provided that the recipients of such Shares agree not to sell the
Shares during the Lock-up Period.]

          (n)  The Company has furnished or will furnish to you "lock-up"
letters, in form and substance satisfactory to you, signed by each of its
current executive officers and directors and each of its stockholders designated
by you.

          (o)  Except as stated in this Agreement and in the International
Underwriting Agreement and in the Prepricing Prospectuses and Prospectuses, the
Company has not taken, nor will it take, directly or indirectly, any action
designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Common Stock to facilitate the
sale or resale of the Shares.

          (p)  The Company will use its best efforts to have the Common Stock
listed, subject to notice of issuance, on the New York Stock Exchange
concurrently with the effectiveness of the Registration Statement.

     6.   Agreements of the Selling Shareholders.  Each of the Selling
Shareholders agrees with the several U.S. Underwriters as follows:

          (a) Such Selling Shareholder will cooperate to the extent reasonably
necessary to cause the Registration Statement or

                                       11
<PAGE>
 
any post-effective amendment thereto to become effective at the earliest
possible time.

          (b) Such Selling Shareholder will pay all Federal and other taxes, if
any on the transfer or sale of such Shares that are sold by the Selling
Shareholder to the U.S. Underwriters.

          (c) Such Selling Shareholder will do or perform all things required to
be done or performed by the Selling Shareholder prior to the Closing Date, as
the case may be, to satisfy all conditions precedent to the delivery of the
Shares pursuant to this Agreement.

          (d) Such Selling Shareholder has executed or will execute a "lock-up"
letter as provided in Section 5(n) above and will not sell, contract to sell or
otherwise dispose of any Common Stock, except as provided therein or for the
sale of Shares to the Underwriters pursuant to this Agreement, prior to the
expiration of 180 days after the date of the Prospectus, without the prior
written consent of Smith Barney Inc.

          (e) Except as stated in this Agreement and the International
Underwriting Agreement and in the Prepricing Prospectuses and the Prospectuses,
such Selling Shareholder has not taken, nor will it take, directly or
indirectly, any action designed to or that might reasonably be expected to cause
or result in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares.

          (f) To the extent that any statements or omissions made in the 
Registration Statement or the Prospectuses (as amended or supplemented, if
amended or supplemented) specifically refer to the information regarding a
Selling Shareholder under the caption "Principal and Selling Shareholders,"
such Selling Shareholder will advise you promptly upon becoming aware, and if
requested by you, will confirm such advice in writing, within the period of time
referred to in Section 5(f) hereof, of any change in such information that comes
to the attention of such Selling Shareholder that makes any statement made in
the Registration Statement or the Prospectuses (as then amended or supplemented)
untrue or which requires the making of any additions to or changes in the
Registration Statement or the Prospectuses (as then amended or supplemented) in
order to state a material fact required by the Act or the regulations thereunder
to be stated therein or necessary in order to make the statements therein not
misleading, or of the necessity to amend or supplement the Prospectuses (as then
amended or supplemented) to comply with the Act or any other law.

     7.   Representations and Warranties of the Company.  The Company represents
and warrants to each U.S. Underwriter that:

                                       12
<PAGE>
 
          (a) Each U.S. Prepricing Prospectus included as part of the
registration statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Act, complied when
so filed in all material respects with the provisions of the Act; except that
this representation and warranty does not apply to statements in or omissions
from such U.S. Prepricing Prospectus (or any amendment or supplement thereto)
made in reliance upon and in conformity with information relating to any Selling
Shareholder or to any U.S. Underwriter or Manager furnished to the Company in
writing by a U.S. Underwriter through the Representatives or by a Manager
through the Lead Managers expressly for use therein.  The Commission has not
issued any order preventing or suspending the use of any Prepricing Prospectus.

          (b) The Registration Statement in the form in which it became or
becomes effective, including the information deemed to be part of the
Registration Statement at the time of effectiveness pursuant to Rule 430A(b),
and also in such form as it may be when any post-effective amendment thereto
shall become effective and the Prospectuses and any supplement or amendment
thereto when filed with the Commission under Rule 424(b) under the Act, complied
or will comply in all material respects with the provisions of the Act and will
not at any such times contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; except that this representation and warranty
does not apply to statements in or omissions from the Registration Statement or
the Prospectuses made in reliance upon and in conformity with information
relating to any Selling Shareholder or to any U.S. Underwriter or Manager
furnished to the Company in writing by a U.S. Underwriter through the
Representatives or by a Manager through the Lead Managers expressly for use
therein.

          (c) All the outstanding shares of Common Stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable and
are free of any preemptive or similar rights; the Shares to be issued and sold
by the Company have been duly authorized and, when issued and delivered to the
U.S. Underwriters against payment therefor in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable and free of any preemptive
or similar rights; and the capital stock of the Company conforms to the
description thereof in the Registration Statement and the Prospectuses.

          (d) The Company is a corporation duly organized and validly existing
in good standing under the laws of the State of New York, and within fourteen
days of the Closing Date will be a

                                       13
<PAGE>
 
corporation duly organized and validly subsisting under the Commonwealth of
Pennsylvania with full corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Registration
Statement and the Prospectuses, and is duly registered and qualified to conduct
its business and is in good standing in each jurisdiction where the nature of
its properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does not and
will not (1) have a material adverse effect on the condition (financial or
other), business affairs, prospects, properties, shareholder's equity or results
of operations of the Company and the Subsidiaries (as hereinafter defined),
taken as a whole, (2) adversely affect the issuance, validity or enforceability
of the Shares or (3) adversely affect the consummation of any of the
transactions contemplated by this Agreement (each of (1), (2) and (3) above, a
"Material Adverse Effect").

          (e) All the Company's subsidiaries (as defined in Rule 1-02(x) of
Regulation S-X and as required to be identified by Item 601(b)(21) of Regulation
S-K) are listed in an exhibit to the Registration Statement (collectively, the
"Subsidiaries").  Each Subsidiary is either (i) a corporation duly organized,
validly existing and in good standing in the jurisdiction of its incorporation,
or (ii) a partnership duly organized and validly existing under the applicable
laws of the Commonwealth of Pennsylvania.  Each Subsidiary has the requisite
corporate or partnership, as the case may be, and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus, and is duly registered and qualified
to conduct its business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify does not and will not individually or in the aggregate have a Material
Adverse Effect.  All the outstanding shares of capital stock of each of the
corporate Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable, and are owned by the Company directly, or indirectly
through one or more of the other Subsidiaries, free and clear of any lien,
adverse claim, security interest, equity or other encumbrance, except that
Pierce Leahy Command Company is only 99% owned (indirectly) by the Company.

          (f) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened, against the Company or any of its
Subsidiaries which are materially adverse

                                       14
<PAGE>
 
to the Company and its Subsidiaries, taken as a whole, or to which the Company
or any of the Subsidiaries, or to which any of their respective properties, is
subject which are material to the Company and its Subsidiaries, taken as a
whole, that are required to be described in the Registration Statement or the
Prospectuses but are not described as required, and there are no agreements,
contracts, indentures, leases or other instruments relating to the Company that
are required to be described in the Registration Statement or the Prospectuses
or to be filed as an exhibit to the Registration Statement that are not
described or filed as required by the Act or the Exchange Act.  The descriptions
of the terms of any such agreements, contracts, indentures, leases or other
instruments contained in the Registration Statement or the Prospectuses are
correct in all material respects.

          (g) Neither the Company nor any of the Subsidiaries is in (i)
violation of its certificate or articles of incorporation or by-laws, or other
organizational documents, (ii) in violation of any statute, law, ordinance,
administrative or governmental rule or regulation applicable to the Company or
any of the Subsidiaries or of any ruling, judgment, injunction, order or decree
of any court or governmental agency or body having jurisdiction over the Company
or any of the Subsidiaries (except where any such violation or violations in the
aggregate would not have a Material Adverse Effect), or (iii) in default in any
material respect in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
in any material agreement, indenture, lease or other instrument to which the
Company or any of the Subsidiaries is a party or by which any of them or any of
their respective properties may be bound, and no condition or state of facts
exists, which with the passage of time or the giving of notice or both, would
constitute such a default (except where any such default or defaults in the
aggregate would not have a Material Adverse Effect).

          (h) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement or the International Underwriting
Agreement by the Company nor the consummation by the Company of the transactions
contemplated hereby and thereby (i) requires any consent, approval,
authorization or other order of or registration or filing with, any court,
regulatory body, administrative agency or other governmental body, agency or
official (except as may be required for the registration of the Shares under the
Act and the Exchange Act (which has been effected) and such as may be required
under state or foreign securities laws) or conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, the certificate

                                       15
<PAGE>
 
or articles of incorporation or bylaws, or other organizational documents, of
the Company or any of the Subsidiaries or (ii) conflicts or will conflict with
or constitutes or will constitute a breach of, or a default under, any
agreement, indenture, lease or other instrument to which the Company or any of
the Subsidiaries is a party or by which any of them or any of their respective
properties may be bound, or violates or will violate any statute, law,
regulation or filing (except as may be required for the registration of the
Shares under the Act and the Exchange Act (which has been effected) and such as
may be required under state or foreign securities laws) or judgment, injunction,
order or decree applicable to the Company or any of the Subsidiaries or any of
their respective properties, or will result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any of
the Subsidiaries pursuant to the terms of any agreement or instrument to which
any of them is a party or by which any of them may be bound or to which any of
the property or assets of any of them is subject other than security interests
granted pursuant to the Credit Agreement.

           (i)   The accountants, Arthur Andersen LLP and Deloitte & Touche LLP,
who have certified or shall certify the financial statements filed or to be
filed as part of the Registration Statement or the Prospectuses (or any
amendment or supplement thereto) are independent public accountants as required
by the Act.

           (j)   The historical consolidated financial statements of the 
Company, together with related schedules and notes forming part of the
Registration Statement and the Prospectuses (and any amendment or supplement
thereto), and, to the knowledge of the Company, the historical financial
statements of Security Archives, Inc. and Records Management Services, Inc.,
together with related schedules and notes forming part of the Registration
Statement and the Prospectus (and any amendment or supplement thereto) comply
with the requirements of the Act and present fairly the consolidated financial
position, results of operations, cash flows and changes in financial position of
the Company and the Subsidiaries and Security Archives, Inc. and Records
Management Services, Inc., as the case may be, on the basis stated in the
Registration Statement at the respective dates or for the respective periods to
which they apply; the statements and related schedules and notes of the Company
and, to the knowledge of the Company, the statements and related schedules and
notes of Security Archives, Inc. and Records Management Services, Inc., have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; the pro forma financial information, 

                                       16
<PAGE>
 
and the related notes thereto, included in the Registration Statement and the
Prospectuses (and any amendment or supplement thereto) have been prepared in
accordance with the applicable requirements of the Act and the assumptions used
in preparing such information are reasonable; and the other historical and pro
forma financial and statistical information and data set forth in the
Registration Statement and the Prospectuses (and any amendment or supplement
thereto) are accurately presented and prepared on a basis consistent with the
books and records of the Company and its Subsidiaries.

           (k)   The execution and delivery of, and the performance by the 
Company of its obligations under, each of this Agreement and the International
Underwriting Agreement have been duly and validly authorized by the Company, and
each of this Agreement and the International Underwriting Agreement has been
duly executed and delivered by the Company and constitutes the valid and legally
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except (i) the enforceability hereof or thereof may be limited
by bankruptcy, insolvency, reorganization, fraudulent conveyance moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, (ii) the remedy of specific performance and other forms of equitable
relief may be subject to certain equitable defenses and to the discretion of the
court before which the proceedings may be brought and (iii) rights to indemnity
and contribution hereunder or thereunder may be limited by federal or state
securities laws or the public policy underlying such laws.

           (l)   Except as disclosed in the Registration Statement and the
Prospectuses (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectuses (or any amendment or supplement thereto), neither
the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any change in the capital
stock of the Company, or material increase in the short-term debt or long-term
debt, of the Company or any of the Subsidiaries, or any development having or
which may reasonably be expected to involve, a prospective Material Adverse
Effect.

           (m)   Each of the Company and the Subsidiaries has good and valid 
title to all property (real and personal) described in the Prospectuses as being
owned by it which is material to the business of the Company and its
Subsidiaries taken as a whole, free

                                       17
<PAGE>
 
and clear of all liens, claims, security interests or other encumbrances except
such as are described in the Registration Statement and the Prospectuses or in a
document filed as an exhibit to the Registration Statement and all the property
described in the Prospectuses as being held under lease by each of the Company
and the Subsidiaries which is material to the business of the Company and its
Subsidiaries taken as a whole is held by it under valid, subsisting and
enforceable leases with only such exceptions as in the aggregate do not
interfere in any material respect with the conduct of the business of the
Company and the Subsidiaries, taken as a whole or the use made or proposed to be
made of such property by the Company or its Subsidiaries.

           (n)   The Company has not distributed and, prior to the later to 
occur of (i) the Closing Date or the Option Closing Date, if any, and (ii)
completion of the distribution of the Shares, will not distribute any offering
material in connection with the offering and sale of the Shares other than the
Registration Statement, the Prepricing Prospectuses, the Prospectuses or other
materials, if any, permitted by the Act.

           (o)   Except as described in clause (d) above, the Company and each 
of the Subsidiaries has such permits, licenses, franchises and authorizations of
governmental or regulatory authorities ("Permits") as are necessary to own its
respective properties and to conduct its business in the manner described in the
Prospectuses, except where the failure to so possess would not, individually or
in the aggregate, have a Material Adverse Effect and subject to such
qualifications as may be set forth in the Prospectuses; the Company and each of
the Subsidiaries has fulfilled and performed all its material obligations with
respect to such Permits and no event has occurred that allows, or after notice
or lapse of time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the holder of any such Permit,
subject in each case to such qualification as may be set forth in the
Prospectuses, except where any such revocation, termination or impairment would
not have a Material Adverse Effect; and, except as described in the
Prospectuses, none of such Permits contains any restriction that is materially
burdensome to the Company or any of the Subsidiaries.

           (p)   The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to

                                       18
<PAGE>
 
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

           (q)   To the Company's knowledge, neither the Company nor any of its
Subsidiaries nor any employee or agent of the Company or any Subsidiary has made
any payment of funds of the Company or any Subsidiary or received or retained
any funds in violation of any law, rule or regulation, which payment, receipt or
retention of funds is of a character required to be disclosed in the
Prospectuses.

           (r)   The Company and, to the Company's knowledge, each of the
Subsidiaries have filed all tax returns required to be filed, which returns are
true and correct in all material respects, or extensions therefor, and neither
the Company nor any Subsidiary is in default in the payment of any taxes which
were payable pursuant to said returns or any assessments with respect thereto,
except where the failure to file such returns or to pay such taxes is not
reasonably likely to have a Material Adverse Effect.

           (s)   Except as described in the Prospectuses, no holder of any 
security of the Company has any right to require registration of shares of
Common Stock or any other security of the Company because of the filing of the
Registration Statement or consummation of the transactions contemplated by this
Agreement or the International Underwriting Agreement, or otherwise. Except as
described in or contemplated by the Prospectuses, there are no outstanding
options, warrants or other rights calling for the issuance of, and there are no
commitments, plans or arrangements to issue, any shares of Common Stock of the
Company or any security convertible into or exchangeable or exercisable for
Common Stock of the Company.

           (t)   The Company and the Subsidiaries own or possess all patents,
trademarks, trademark registration, service marks, service mark registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
described in the Prospectuses as being owned by them or any of them or necessary
for the conduct of their respective businesses except where the lack of such
ownership or possession would not, individually or in the aggregate, have a
Material Adverse Effect, and the Company is not aware of any claim to the
contrary or any challenge by any other person to the rights of the Company and
the Subsidiaries with respect to the foregoing.

                                       19
<PAGE>
 
           (u)   The Company is not and, upon sale of the Shares to be issued 
and sold in accordance herewith and upon application of the net proceeds to the
Company from such sale as described in the Prospectuses under the caption "Use
of Proceeds," will not be an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.

           (v)   The Company and the Subsidiaries have complied with all 
provisions of Florida Statutes, (S)517.075, relating to issuers doing business
with Cuba.

           (w)   The businesses of the Company and the Subsidiaries as presently
conducted and as described in the Prospectuses comply with all statutes, laws,
ordinances, administrative or governmental rules or regulations applicable to
the Company or any of the Subsidiaries (collectively, "Laws") and with all
orders, rulings, judgments, injunctions or decrees of any court or governmental
agency or body having jurisdiction over the Company or any of the Subsidiaries,
except for any failure to comply which would not, individually or in the
aggregate, have a Material Adverse Effect.

           (x)   The Company and each of its Subsidiaries are insured by 
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged; neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for; and neither the Company nor any such
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect, except as
described in or contemplated by the Prospectuses.

           (y)   No Subsidiary of the Company is currently prohibited, directly
or indirectly, from paying any dividends to the Company, from making any other
distribution on such Subsidiary's capital stock, from repaying to the Company
any loans or advances to such Subsidiary from the Company or from transferring
any of such Subsidiary's property or assets to the Company or any other
Subsidiary of the Company, except as described in or contemplated by the
Prospectuses.

           (z)   Except for the shares of capital stock or partnership 
interests of each of the Subsidiaries owned by the Company and such
Subsidiaries, neither the Company nor any such Subsidiary owns any shares of
stock or any other equity securities

                                       20
<PAGE>
 
of any corporation or has any equity interest in any firm, partnership,
association or other entity, except as described in or contemplated by the
Prospectuses.

           (aa)  There are no labor disputes with the Company's employees or 
with employees of the Subsidiaries that exist or, to the Company's knowledge,
are imminent that could materially adversely affect the Company and the
Subsidiaries taken as a whole, and the Company is not aware of any existing or
imminent labor disturbance by any of its or the Subsidiaries' principal
suppliers, contractors or customers that could be expected to have a Material
Adverse Effect.

           (ab)  With respect to each employee benefit plan, program and
arrangement (including, without limitation, any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), maintained or contributed to by the Company or the
Subsidiaries, or with respect to which the Company or the Subsidiaries could
incur any liability under ERISA (collectively, the "Benefit Plans"), no event
has occurred and there exists no condition or set of circumstances in connection
with which the Company or the Subsidiaries could be subject to any liability
under the terms of such Benefit Plan or applicable law (including, without
limitation, ERISA and the Internal Revenue Code of 1986, as amended (the
"Code")) that could have a Material Adverse Effect.

           (ac)  The Company and the Subsidiaries are (i) (A) in full compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (B) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses, and (C) and are in full compliance with all terms
and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, singly or in the aggregate,
have a Material Adverse Effect; (ii) except as disclosed in the Registration
Statement and the Prospectuses, there are no past or present actions,
activities, circumstances, conditions, events or incidents, including, without
limitation, the release, threatened release, or disposal of any material
(including radiation and noise), that could form the basis of any claim (whether
by a governmental authority or other person or entity) under

                                       21
<PAGE>
 
Environmental Laws for cleanup costs, damages, penalties, fines, or otherwise,
against any of the Company or the Subsidiaries, or against any person or entity
whose liability for such claim may have been retained by any of the Company or
the Subsidiaries, whether by contract or law; and (iii) the Company and the
Subsidiaries have fully disclosed to the Underwriters and their counsel all
studies, reports, assessments, audits and other information in their possession
or control relating to any pollution or release, threatened release or disposal
of materials regulated under Environmental Laws on, at, under, from or
transported from any of their currently or formerly owned, leased or operated
properties, including, without limitation, all information relating to
underground storage tanks and asbestos containing materials.  Neither the
Company nor any of the Subsidiaries has been named as a "potentially responsible
party" under the Comprehensive Environmental Response Compensation and Liability
Act of 1980, as amended ("CERCLA").

     8.    Representations and Warranties of the Selling Shareholders.    Each
Selling Shareholder represents and warrants to each U.S. Underwriter that:

           (a)   Such Selling Shareholder now has, and on the Closing Date will
have, valid and marketable title to the Shares to be sold by such Selling
Shareholder, free and clear of any lien, claim, security interest or other
encumbrance, including, without limitation, any restriction on transfer, except
as otherwise described in the Prospectuses.

           (b)   Such Selling Shareholder now has, and on the Closing Date will
have, full legal right, power and authorization, and any approval required by
law, to sell, assign, transfer and deliver such Shares in the manner provided in
this Agreement and the International Underwriting Agreement, and upon delivery
of and payment for such Shares hereunder, the several U.S. Underwriters will
acquire valid and marketable title to such Shares free and clear of any lien,
claim, security interest, or other encumbrance.

           (c)   This Agreement, the International Underwriting Agreement and 
the Custody Agreement have been duly authorized, executed and delivered by or on
behalf of such Selling Shareholder and are the valid and binding agreements of
such Selling Shareholder enforceable against such Selling Shareholder in
accordance with their terms, except that (i) the enforceability hereof or
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, (ii) the remedy

                                       22
<PAGE>
 
of specific performance and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before which the
proceedings may be brought and (iii) rights to indemnity and contribution
hereunder or thereunder may be limited by federal or state securities laws or
the public policy underlying such laws.

           (d)   Neither the sale of the Shares, the execution, delivery or
performance of this Agreement, the International Underwriting Agreement or the
Custody Agreement by or on behalf of such Selling Shareholder nor the
consummation by or on behalf of such Selling Shareholder of the transactions
contemplated hereby and thereby (i) requires any consent, approval,
authorization or other order of, or registration or filing with, any court,
regulatory body, administrative agency or other governmental body, agency or
official (except as may be required for the registration of the Shares under the
Act and the Exchange Act (which has been effected) and such as may be required
under state or foreign securities laws), or (ii) conflicts or will conflict with
or constitutes or will constitute a breach of, or a default under, any
agreement, indenture, lease or other instrument to which such Selling
Shareholder is a party or by which such Selling Shareholder is or may be bound,
or violates or will violate any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to such Selling Shareholder, or will
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of such Selling Shareholder pursuant to the terms of any
agreement or instrument to which such Selling Shareholder is a party or by which
such Selling Shareholder may be bound or to which any of the property or assets
of such Selling Shareholder is subject.

           (e)   The information pertaining to such Selling Shareholder 
provided to the Company for inclusion under the caption "Principal and Selling
Shareholders" in the Prospectuses, does not and will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.

           (f)   The representations and warranties of such Selling Shareholder
in the Custody Agreement are, and on the Closing Date and any Option Closing
Date will be, true and correct.

           (g)   Such Selling Shareholder has not taken, directly or indirectly,
any action designed to or that might reasonably be expected to cause or result
in stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of the

                                       23
<PAGE>
 
Shares, except for the lock-up arrangements referred to in the Prospectuses.

           (h)   Such Selling Shareholder has not distributed and, prior to the
later to occur of (i) the Closing Date and (ii) completion of the distribution
of the Shares, will not distribute any offering material in connection with the
offering and sale of the Shares.

     9.    Indemnification and Contribution.  (a) The Company agrees to 
indemnify and hold harmless you and each other U.S. Underwriter and each person,
if any, who controls any U.S. Underwriter within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act from and against any and all
losses, claims, damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any U.S. Prepricing Prospectus
or in the Registration Statement or the U.S. Prospectus or in any amendment or
supplement thereto, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of or are based upon
any untrue statement or omission or alleged untrue statement or omission which
has been made therein or omitted therefrom in reliance upon and in conformity
with the information relating to such U.S. Underwriter or Manager furnished in
writing to the Company by or on behalf of any U.S. Underwriter through you or by
or on behalf of any Manager through a Lead Manager expressly for use in
connection therewith; provided, however, that the indemnification contained in
this paragraph (a) with respect to any U.S. Prepricing Prospectus shall not
inure to the benefit of any U.S. Underwriter (or to the benefit of any person
controlling such U.S. Underwriter) on account of any such loss, claim, damage,
liability or expense arising from the sale of the Shares by such U.S.
Underwriter to any person if a copy of the U.S. Prospectus shall not have been
delivered or sent to such person within the time required by the Act and the
regulations thereunder, and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in such U.S.
Prepricing

                                       24
<PAGE>
 
Prospectus was corrected in the U.S. Prospectus, provided that the Company has
delivered the U.S. Prospectus to the several U.S. Underwriters in requisite
quantity on a timely basis to permit such delivery or sending.

           (b)   If any action, suit or proceeding shall be brought against any
U.S. Underwriter or any person controlling any U.S. Underwriter in respect of
which indemnity may be sought against the Company or any Selling Shareholder,
such U.S. Underwriter or such controlling person shall promptly notify the
parties against whom indemnification is being sought (the "indemnifying
parties"), and such indemnifying parties shall assume the defense thereof,
including the employment of counsel and payment of all fees and expenses;
provided, however, that the failure so to notify the indemnifying parties shall
not relieve the indemnifying parties from any obligation or liability except to
the extent that the indemnifying parties have been prejudiced materially by such
failure.  Such U.S. Underwriter or any such controlling person shall have the
right to employ separate counsel in any such action, suit or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such U.S. Underwriter or such controlling person
unless (i) the indemnifying parties have agreed in writing to pay such fees and
expenses, (ii) the indemnifying parties have failed to assume the defense and
employ counsel, or (iii) the named parties to any such action, suit or
proceeding (including any impleaded parties) include both such U.S. Underwriter
or such controlling person and the indemnifying parties and such U.S.
Underwriter or such controlling person shall have been advised by its counsel in
writing that representation of such indemnified party and any indemnifying party
by the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to actual or potential differing interests between them (in
which case the indemnifying party shall not have the right to assume the defense
of such action, suit or proceeding on behalf of such U.S. Underwriter or such
controlling person).  It is understood, however, that the indemnifying parties
shall, in connection with any one such action, suit or proceeding or separate
but substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for all such U.S.
Underwriters and controlling persons not having actual or potential differing
interests with you or among themselves, which firm shall be designated in
writing by Smith Barney Inc., and that all such fees and expenses as required

                                       25
<PAGE>
 
to be paid by the indemnifying parties hereunder shall be reimbursed as they are
incurred.  The indemnifying parties shall not be liable for any settlement of
any such action, suit or proceeding effected without their written consent, but
if settled with such written consent, or if there be a final judgment for the
plaintiff in any such action, suit or proceeding, the indemnifying parties agree
to indemnify and hold harmless any U.S. Underwriter, to the extent provided in
the preceding paragraph, and any such controlling person from and against any
loss, claim, damage, liability or expense by reason of such settlement or
judgment.

           (c)   Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless each of you and each other Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, the Company, its directors, its
officers who sign the Registration Statement, and any person who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
each Underwriter, but only with respect to the information furnished in writing
by or on behalf of such Selling Shareholder expressly for use in the
Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto; provided, however, the liability of a Selling
Shareholder under this paragraph (c) shall not exceed the proceeds received by
such Selling Shareholder from the sale of such Selling Shareholder's shares
hereunder. If any action, suit or proceeding shall be brought against any
Underwriter, any such controlling person of any Underwriter, the Company, any of
its directors, any such officer, or any such controlling person of the Company,
based on the Registration Statement, the Prospectus or any Prepricing Prospectus
or any amendment or supplement thereto, and in respect of which indemnity may be
sought against any Selling Shareholder pursuant to this paragraph (c), such
Selling Shareholder shall have the rights and duties given to the Company by
paragraph (b) above (except that if the Company shall have assumed the defense
thereof such Selling Shareholder shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof, but the fees
and expenses of such counsel shall be at such Selling Shareholder's expense),
and each Underwriter, each such controlling person of any Underwriter, the
Company, its directors, any such officer, and any such controlling person of the
Company shall have the rights and duties given to the Underwriters by paragraph
(b) above. The foregoing indemnity agreement shall be in addition to any
liability which any Selling Shareholder may otherwise have.

           (d)   Each U.S. Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement, any person who controls the Company within the
meaning of Section 15 of the Act or

                                       26
<PAGE>
 
Section 20(a) of the Exchange Act and the Selling Shareholders, to the same
extent as the foregoing indemnity from the Company and the Selling Shareholders
to each U.S. Underwriter, insofar as such losses, claims, damages, liabilities
and expenses arise out of or are based upon the untrue statement or alleged
untrue statement of a material fact contained in any U.S. Prepricing Prospectus
or in the Registration Statement or the U.S. Prospectus or in any amendment or
supplement thereto, or arise out of or are based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such U.S. Underwriter through you
specifically for use therein.  If any action, suit or proceeding shall be
brought against the Company, any of its directors, any such officer, any such
controlling person or any Selling Shareholder based on the Registration
Statement, the U.S. Prospectus or any U.S. Prepricing Prospectus, or any
amendment or supplement thereto, and in respect of which indemnity may be sought
against any U.S. Underwriter pursuant to this paragraph (d), such U.S.
Underwriter shall have the rights and duties given to the Company by paragraph
(b) above (except that if the Company or the Selling Shareholders shall have
assumed the defense thereof such U.S. Underwriter shall not be required to do
so, but may employ separate counsel therein and participate in the defense
thereof, but the fees and expenses of such counsel shall be at such U.S.
Underwriter's expense), and the Company, its directors, any such officer, any
such controlling person, and the Selling Shareholders, shall have the rights and
duties given to the U.S. Underwriters by paragraph (b) above.

           (e)   If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under paragraphs (a), (c) or (d) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Shareholders on the one hand and the U.S. Underwriters
on the other hand from the offering of the Shares, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Selling Shareholders on the one hand

                                       27
<PAGE>
 
and the U.S. Underwriters on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations.  The relative
benefits received by the Company and the Selling Shareholders on the one hand
and the U.S. Underwriters on the other hand shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company and the Selling Shareholders bear to the total
underwriting discounts and commissions received by the U.S. Underwriters, in
each case as set forth in the table on the cover page of the U.S. Prospectus;
provided that, in the event that the U.S. Underwriters shall have purchased any
Additional Shares hereunder, any determination of the relative benefits received
by the Company, the Selling Shareholders or the U.S. Underwriters from the
offering of the Shares shall include the net proceeds (before deducting
expenses) received by the Company, and the underwriting discounts and
commissions received by the U.S. Underwriters, from the sale of such Additional
Shares, in each case computed on the basis of the respective amounts set forth
in the notes to the table on the cover page of the U.S. Prospectus.  The
relative fault of the Company and the Selling Shareholders on the one hand and
the U.S. Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Selling Shareholders on the one hand
or by the U.S. Underwriters on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

           (f)   The Company, the Selling Shareholders and the U.S. Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by a pro rata allocation (even if the U.S.
Underwriters were treated as one entity for such purpose) or by any other method
of allocation that does not take account of the equitable considerations
referred to in paragraph (e) above.  The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities and
expenses referred to in paragraph (e) above shall be deemed to include, subject
to the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating any claim or
defending any such action, suit or proceeding.  Notwithstanding the provisions
of this Section 9, no U.S. Underwriter shall be required to contribute any
amount in excess of the amount by which the total price of the Shares
underwritten by it and distributed to the public exceeds the

                                       28
<PAGE>
 
amount of any damages which such U.S. Underwriter has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission.  Notwithstanding the provisions of this Section 9, no Selling
Shareholder shall be required to contribute any amount in excess of the total
net proceeds of the Shares sold by such Selling Shareholder.  No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.  The U.S. Underwriters' obligations to contribute
pursuant to this Section 9 are several in proportion to the respective numbers
of Firm Shares set forth opposite their names in Schedule II hereto (or such
numbers of Firm Shares increased as set forth in Section 12 hereof) and not
joint.

           (g)   No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.

           (h)   Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under this
Section 9 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 9 and the
representations and warranties of the Company and the Selling Shareholders set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any U.S. Underwriter
or any person controlling any U.S. Underwriter, the Company, its directors or
officers or the Selling Shareholders, any director, officer or partner of a
Selling Shareholder or any person controlling the Company or any Selling
Shareholder, (ii) acceptance of any Shares and payment therefor hereunder, and
(iii) any termination of this Agreement. A successor to any U.S. Underwriter or
any person controlling any U.S. Underwriter, or to the Company, its directors or
officers, or to a Selling Shareholder, any director, officer or partner of a
Selling Shareholder or any person controlling the Company or any Selling
Shareholder, shall be entitled to the benefits of the indemnity, contribution
and reimbursement agreements contained in this Section 9.

                                       29
<PAGE>
 
     10.   Conditions of U.S. Underwriters' Obligations.    The several 
obligations of the U.S. Underwriters to purchase the Firm Shares hereunder are
subject to the following conditions:

           (a)   If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
Registration Statement or such post-effective amendment shall have become
effective not later than 5:30 P.M. New York City time, on the date hereof, or at
such later date and time as shall be consented to in writing by you, and all
filings, if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the knowledge of the Company or any U.S. Underwriter,
threatened by the Commission, and any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectuses or
otherwise) shall have been complied with to your reasonable satisfaction.

           (b)   Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change, or any development involving a prospective
change, in or affecting the condition (financial or other), business,
properties, net worth, or results of operations of the Company or the
Subsidiaries not contemplated by the Prospectuses, which in your opinion, as
Representatives of the several U.S. Underwriters, would materially adversely
affect the market for the Shares, or (ii) any event or development relating to
or involving the Company or any officer or director of the Company or any
Selling Shareholder which makes any statement made in the Prospectuses untrue or
which, in the opinion of the Company and its counsel or the U.S. Underwriters
and their counsel, requires the making of any addition to or change in the
Prospectuses in order to state a material fact required by the Act or any other
law to be stated therein or necessary in order to make the statements therein
not misleading, if amending or supplementing the Prospectuses to reflect such
event or development would, in your opinion, as Representatives of the several
U.S. Underwriters, materially adversely affect the market for the Shares.

           (c)   You shall have received on the Closing Date an opinion of Cozen
and O'Connor, counsel for the Company and the Selling Shareholders, dated the
Closing Date and addressed to you, as Representatives of the several U.S.
Underwriters, to the effect that:

                                       30
<PAGE>
 
           (i)   The Company is a corporation duly incorporated and validly
subsisting under the laws of the Commonwealth of Pennsylvania with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectuses, [and is duly registered and qualified to conduct its business and
is in good standing in each jurisdiction or place where the nature or the
conduct of the business transacted or property owned or leased by it makes such
registration or qualification necessary, except where the failure so to register
or qualify or be in good standing would not have a Material Adverse Effect];

           (ii)  Each of the Subsidiaries is either (A) a corporation duly
organized and validly existing in good standing under the laws of the
jurisdiction of its organization, or (B) a limited partnership duly organized
under the laws of the Commonwealth of Pennsylvania; [with full corporate power
and authority to own, lease, and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectuses (and
any amendment or supplement thereto); and all the outstanding shares of capital
stock of each of the Subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable, and are owned by the Company directly, free
and clear of any perfected security interest, or, to the best knowledge of such
counsel after reasonable inquiry, any other security interest, lien, adverse
claim, equity or other encumbrance];

           (iii) The authorized and outstanding capital stock of the Company is
as set forth under the caption "Capitalization" in the Prospectuses; and the
authorized capital stock of the Company conforms in all material respects as to
legal matters to the description thereof contained in the Prospectuses under the
caption "Description of Capital Stock";

           (iv)  All the shares of capital stock of the Company outstanding 
prior to the issuance of the Shares to be issued and sold by the Company
pursuant to the Underwriting Agreements have been duly authorized and validly
issued, are fully paid and nonassessable;

           (v)   The Underwritten Shares to be issued and sold to the U.S.
Underwriters and Managers by the Company under the U.S. Underwriting Agreement
and the International Underwriting Agreement have been duly authorized and when
issued and delivered to the U.S. Underwriters and Managers against payment
therefor in accordance with the terms of the U.S. Underwriting Agreement and the
International Underwriting Agreement, will be validly issued, fully

                                       31
<PAGE>
 
paid and nonassessable and free of any (A) preemptive rights or (B) to the best
knowledge of such counsel after reasonable inquiry, similar rights that entitle
or will entitle any person to acquire any Shares upon the issuance thereof by
the Company;

                 (vi)     The form of certificates for the Shares conforms to
the requirements of the Pennsylvania Business Law of 1988, as amended;

                 (vii)    The Registration Statement and all post-effective
amendments, if any, have become effective under the Act and, to the knowledge of
such counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose are pending before
or contemplated by the Commission; and any required filing of the Prospectuses
pursuant to Rule 424(b) has been made in accordance with Rule 424(b);

                 (viii)   The Company has the requisite corporate power and
authority to enter into the U.S. Underwriting Agreement and the International
Underwriting Agreement and to issue, sell and deliver the Underwritten Shares to
be sold by it to the U.S. Underwriters and Managers as provided therein, and
each of the U.S. Underwriting Agreement and the International Underwriting
Agreement have been duly authorized, executed and delivered by the Company and
is a legal, valid and binding agreement of the Company,

                 (ix)     Neither the Company nor any of the Subsidiaries is (A)
in violation of its respective certificate of incorporation or bylaws or other
organizational documents or (B) to the knowledge of such counsel, in default in
the performance of any material obligation, agreement or condition contained in
any bond, debenture, note or other evidence of indebtedness, except as may be
disclosed in the Prospectuses or where any such default or defaults in the
aggregate would not, singularly or in the aggregate, have a Material Adverse
Effect;

                 (x)      Neither the offer, issuance, sale or delivery of the
Underwritten Shares, nor the execution, delivery or performance of the U.S.
Underwriting Agreement or the International Underwriting Agreement, or
compliance by the Company with all provisions of this Agreement and the
International Underwriting Agreement, nor consummation by the Company of the
transactions contemplated hereby or by the International Underwriting Agreement
conflicts or will conflict with or constitutes or will constitute a breach of,
or a default under, the certificate of incorporation or bylaws or other
organizational document of the Company or any of

                                       32
<PAGE>
 
the Subsidiaries or any material agreement, indenture, lease or other instrument
known to such counsel to which the Company is a party or by which it or any of
its properties is bound that is made an exhibit to the Registration Statement,
or, except as disclosed in the Registration Statement, will result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of the Subsidiaries under any such agreement,
indenture, lease or other instrument, nor, to such counsel's knowledge will any
such action result in any violation of any existing law, regulation, ruling
(assuming compliance with all applicable state securities and Blue Sky laws), or
any ruling, judgment, injunction, order or decree of any court or governmental
entity or instrumentality known to such counsel, and applicable to the Company,
the Subsidiaries or any of their respective properties;

                 (xi)     No consent, approval, authorization or other order, or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency, or official is required on the part of the
Company (except as have been obtained under the Act or such as may be required
under state or foreign securities or Blue Sky laws governing the purchase and
distribution of the Shares) for the valid issuance and sale of the Shares to the
U.S. Underwriters as contemplated by the U.S. Underwriting Agreement;

                 (xii)    The Registration Statement and the Prospectuses and
any supplements or amendments thereto (except for the financial statements,
schedules, and notes thereto and other financial and statistical data included
therein, as to which such counsel need not express any opinion) comply as to
form in all material respects with the requirements of the Act;

                 (xiii)   To the knowledge of such counsel, (A) other than as
described or contemplated in the Prospectuses, there are no legal or
governmental proceedings pending or threatened against the Company or any of the
Subsidiaries, or to which the Company, the Subsidiaries or any of their
respective properties, is subject which are required to be described in the
Registration Statement or Prospectuses (or any amendment or supplement thereto)
and (B) there are no agreements, contracts, indentures, leases or other
instruments relating to the Company or any of the Subsidiaries, of a character
that are required to be described in the Registration Statement or the
Prospectuses (or any amendment or supplement thereto) or to be filed as an
exhibit to the Registration Statement that are not described or filed as
required, as the case may be;

                                       33
<PAGE>
 
                 (xiv)    To the knowledge of such counsel, the U.S.
Underwriting Agreement, the International Underwriting Agreement and the Custody
Agreement have each been duly authorized, executed and delivered by or on behalf
of each of the Selling Shareholders [and are valid and binding agreements of
each Selling Shareholder enforceable against each Selling Shareholder in
accordance with their respective terms except that (i) enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally, (ii)
the remedy of specific performance and other forms of equitable relief may be
subject to certain equitable defenses and to the discretion of the court before
which the proceedings may be brought and (iii) rights to indemnity and
contribution thereunder may be limited by Federal or state securities laws or
the public policy underlying such laws];

                 [(xv)    To the best knowledge of such counsel after reasonable
inquiry and except as set forth in the Prospectuses, neither the Company nor any
of the Subsidiaries is in violation of any Laws or of any ruling, judgment,
injunction, order or decree of any court or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries which violation or
violations would not, singularly or in the aggregate, have a Material Adverse
Effect;]

                 [(xvi)   The Company and each of the Subsidiaries has all
necessary orders, consents, approvals, permits, licenses, franchises and
authorizations of and from all regulatory authorities to conduct their
respective businesses as described in the Registration Statement and
Prospectuses, except, in any case, where the failure to so possess would not,
singularly or in the aggregate, have a Material Adverse Effect, and to the best
of such counsel's knowledge after due inquiry, neither the Company nor the
Subsidiaries has received any actual notification from any regulatory authority
to the effect that any additional approval is required to be obtained by the
Company or the Subsidiaries;]

                 (xvii)   The statements in the Registration Statement and
Prospectuses, insofar as they are descriptions of contracts, agreements or other
legal documents, or refer to statements of law or legal conclusions, are
accurate in all material respects and present fairly the information required to
be shown;

                 (xviii)  Except as described in the Prospectuses, such counsel
does not know of any outstanding option, warrant or other right calling for the
issuance of, and such counsel does not know of any commitment, plan or
arrangement to issue, any share of

                                       34
<PAGE>
 
capital stock of the Company or any security convertible into or exchangeable or
exercisable for capital stock of the Company; and such counsel does not know of
any holder of any security of the Company or any other person who has the right,
contractual or otherwise, to cause the Company to sell or otherwise issue to
them, or permit them to underwrite the sale of, any of the Shares or the right
to have any Common Stock or other securities of the Company included in the
Registration Statement or the right, as a result of the filing of the
Registration Statement, to require registration under the Act of Common Stock or
other securities of the Company;

                 (xix)    The Company is not now and upon the sale of the Shares
to be issued and sold in accordance herewith and upon application of the net
proceeds from such sale as described in the Prospectuses under the caption "Use
of Proceeds" will not be an "investment company" within the meaning of the 1940
Act;

                 [(xx)    The Company and the Subsidiaries own or possess all
patents, trademarks, trademark registrations, service marks, service mark
registrations, trade names, copyrights, licenses, inventions, trade secrets and
rights described in the Prospectuses as being owned by them or any of them or,
to the best knowledge of such counsel after reasonable inquiry, necessary for
the conduct of their respective businesses, except where the failure to so own
or possess would not, singularly or in the aggregate, have a Material Adverse
Effect, and such counsel is not aware of any claim to the contrary or any
challenge by any other person to the rights of the Company and the Subsidiaries
with respect to the foregoing;]

                 (xxi)    Each Selling Shareholder has full legal right, power
and authorization, and any approval required by law (except such as may be
required under state or foreign securities or Blue Sky laws), to sell, assign,
transfer and deliver good and valid title to the Shares which such Selling
Shareholder has agreed to sell pursuant to the U.S. Agreement and the
International Underwriting Agreement;

                 (xxii)   The execution and delivery of this Agreement and the
sale of the Shares by each Selling Shareholder to the Underwriters, and
compliance by such Selling Shareholder with the terms of this Agreement,
including the delivery to the Underwriters of certificates evidencing such
shares and the execution and delivery to the Underwriters of a stock power in
blank, have been duly authorized by all necessary action on the part of such
Selling Shareholder and to the knowledge of such counsel, do not, and will not,
conflict with, or result in a breach

                                       35
<PAGE>
 
of any of the terms and provisions of, or constitute a default under (I) any
statute, rule or regulation (assuming compliance with all applicable state
securities and Blue Sky laws) relating to such Selling Shareholder or its legal
or regulatory status in each case, that in the experience of such counsel are
normally applicable to transactions of the type provided for in this Agreement,
(II) any material judgment, order, rule, injunction or regulation of any court
or governmental agency or body, domestic or foreign, known to such counsel as
having jurisdiction over such Selling Shareholder or any of its respective
properties or (III) any material contract, agreement or other instrument known
to such counsel to which such Selling Shareholder is a party or by which it or
any of its properties are subject;

                 (xxiii)  Upon consummation of the sale of the Shares pursuant
to this Agreement, assuming the Underwriters purchased the Shares for value, in
good faith and without notice of adverse claim, the Underwriters will have
acquired all rights of the Selling Shareholder in the Shares free and clear of
any security interest, mortgage, lien, pledge, encumbrance, claim or equity,
[and the owner of the Shares, if other than such Selling Shareholder, is
precluded from asserting against the Underwriters the ineffectiveness of any
unauthorized endorsement].

           In addition, such counsel shall state that although counsel has not
undertaken, [except as otherwise indicated in their opinion,] to determine
independently, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements in the Registration Statement
[(except to the extent set forth in paragraphs (iii) and (xvii) above),] such
counsel has participated in the preparation of the Registration Statement and
the Prospectuses, including general review and discussion of the contents
thereof and nothing has come to the attention of such counsel that would lead
them to believe that the Registration Statement at the time the Registration
Statement became effective, or the Prospectuses, as of their respective dates
and as of the Closing Date or the Option Closing Date, as the case may be,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated or, necessary to make the statements therein, in the
case of the Prospectuses, in the light of the circumstances under which they
were made, not misleading or that any amendment or supplement to the
Prospectuses, as of its respective date, and as of the Closing Date or the
Option Closing Date, as the case may be, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated in the
Prospectuses or necessary in order to make the statements therein, in the case
of the Prospectuses, in the light

                                       36
<PAGE>
 
of the circumstances under which they were made, not misleading (it being
understood that such counsel need express no statement with respect to the
financial statements, financial schedules, pro forma financial statements and
the notes thereto and other financial and statistical data included in the
Registration Statement or the Prospectuses).

           In rendering their opinion as aforesaid, counsel may, as to factual
matters, rely, to the extent such counsel deems proper, upon written
certificates or statements of officers of the Company and the Selling
Shareholders and, as to matters of law, may rely upon an opinion or opinions,
each dated the Closing Date, of other counsel retained by them or the Company as
to laws of any jurisdiction other than the United States or the Commonwealth of
Pennsylvania.  The foregoing opinion may be limited to the federal laws of the
United States of America and the Commonwealth of Pennsylvania, and counsel
rendering the foregoing opinion may rely as to questions of fact upon the
representations of the Selling Shareholders as set forth in this Agreement and
in the Custody Agreement.

           (d)     You shall have received on the Closing Date an opinion of
Skadden, Arps, Slate, Meagher & Flom, LLP, counsel for the U.S. Underwriters,
dated the Closing Date, with respect to the matters referred to in clauses (v)
(other than subclause (B) thereof), (vii), (viii), (x) and the paragraph
immediately following clause (xxiii) of the foregoing paragraph (c) and such
other related matters as you may request.

           (e)     You shall have received letters addressed to you, as
Representatives of the several U.S. Underwriters, and dated the date hereof and
the Closing Date from Arthur Andersen LLP and Deloitte & Touche LLP independent
certified public accountants, substantially in the forms heretofore approved by
you.

           (f)(i)  No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there shall
not have been any material change in the capital stock of the Company nor any
material increase in the short-term or long-term debt of the Company (other than
in the ordinary course of business) from that set forth or contemplated in the
Registration Statement or the Prospectuses (or any amendment or Supplement
thereto); (iii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement and the Prospectuses
(or any amendment or

                                       37
<PAGE>
 
supplement thereto), except as may otherwise be stated or contemplated in the
Registration Statement and Prospectuses (or any amendment or supplement
thereto), any material adverse change in the condition (financial or other),
business, prospects, properties, net worth or results of operations of the
Company and the Significant Subsidiaries taken as a whole; (iv) the Company and
the Subsidiaries shall not have any liabilities or obligations, direct or
contingent (whether or not in the ordinary course of business), that are
material to the Company and the Subsidiaries taken as a whole, other than those
reflected in the Registration Statement or the Prospectuses (or any amendment or
supplement thereto); and (v) all the representations and warranties of the
Company contained in this Agreement shall be true and correct [in all material
respects] on and as of the date hereof and on and as of the Closing Date as if
made on and as of the Closing Date, and you shall have received a certificate,
dated the Closing Date and signed by the chief executive officer and the chief
financial officer of the Company (or such other officers as are acceptable to
you), to the effect set forth in this Section 10(f) and in Section 10(g) hereof.

           (g)     The Company shall not have failed at or prior to the Closing
Date to have performed or complied with any of its agreements herein contained
and required to be performed or complied with by it hereunder at or prior to the
Closing Date.

           (h)     All the representations and warranties of the Selling
Shareholders contained in this Agreement and in the International Underwriting
Agreement shall be true and correct, on and as of the date hereof and on and as
of the Closing Date as if made on and as of the Closing Date, and you shall have
received a certificate, dated the Closing Date and signed by or on behalf of
each of the Selling Shareholders to the effect set forth in this Section 10(h)
and in Section 10(i) hereof.

           (i)     The Selling Shareholders shall not have failed at or prior to
the Closing Date to have performed or complied in all material respects with any
of their agreements contained in this Agreement or the International
Underwriting Agreement and required to be performed or complied with by them at
or prior to the Closing Date.

           (j)     The Sellers shall have furnished or caused to be furnished to
you such further certificates and documents as you shall have reasonably
requested.

                                       38
<PAGE>
 
           (k)     The Common Stock shall have been listed or approved for
listing, subject to notice of issuance, on the New York Stock Exchange.

           (l)     The closing under the International Underwriting Agreement
shall have occurred concurrently with the closing hereunder on the Closing Date.

           All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and your counsel.

           Any certificate or document signed by any officer of the Company or
any Attorney-in-Fact or any Selling Shareholder and delivered to you, as
Representatives of the U.S. Underwriters, or to counsel for the U.S.
Underwriters, shall be deemed a representation and warranty by the Company, the
Selling Shareholders or the particular Selling Shareholder, as the case may be,
to each U.S. Underwriter as to the statements made therein.

           The several obligations of the U.S. Underwriters to purchase
Additional Shares hereunder are subject to the satisfaction on and as of any
Option Closing Date of the conditions set forth in this Section 10, except that,
if any Option Closing Date is other than the Closing Date, the certificates,
opinions and letters referred to in this Section 10 shall be dated the Option
Closing Date in question and the opinions or letters called for by paragraphs
(c), (d), (e) and (f) shall be revised to reflect the sale of Additional Shares.

     11.   Expenses.  The Company agrees to pay the following costs and expenses
and all other costs and expenses incident to the performance by the Company of
its obligations hereunder:  (i) the printing (or reproduction) and filing with
the Commission and delivery (including postage, air freight (or reproduction)
for counting and packaging) of such copies of the Registration Statement, each
Prepricing Prospectus, the Prospectus, and all amendments or supplements to any
of them as may be reasonably requested for use in connection with the offering
and sale of the Shares; (iii) the preparation, printing, authentication,
issuance and delivery of certificates for the Shares, including any stamp taxes
in connection with the original issuance and sale of the Shares by the Company;
(iv) the printing (or reproduction) and delivery of this Agreement, the
preliminary and supplemental Blue Sky Memoranda and all other agreements or
documents printed (or reproduced) and delivered in connection with the original
issuance

                                       39
<PAGE>
 
and sale of the Shares; (v) the registration of the Common Stock under the
Exchange Act and the listing of the Shares on the New York Stock Exchange; (vi)
the registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the several states as provided in Section 5(g)
hereof (including the reasonable fees, expenses and disbursements of counsel for
the Underwriters relating to the preparation, printing or reproduction, and
delivery of the preliminary and supplemental Blue Sky Memoranda and such
registration and qualification); (vii) the filing fees in connection with any
filings required to be made with the National Association of Securities Dealers,
Inc.; (viii) the transportation and other expenses incurred by or on behalf of
representatives of the Company in connection with presentations to prospective
purchasers of the Shares; and (ix) the fees and expenses of the Company's
accountants and the fees and expenses of counsel (including local and special
counsel) for the Company. Each Selling Shareholder agrees to pay for any
transfer taxes on the sale by such Selling Shareholder of such Selling
Shareholder's Shares to the U.S. Underwriters.

     12.   Effective Date of Agreement. This Agreement shall become effective:
(i) upon the execution and delivery hereof by the parties hereto; or (ii) if, at
the time this Agreement is executed and delivered, it is necessary for the
registration statement or a post-effective amendment thereto to be declared
effective before the offering of the Shares may commence, when notification of
the effectiveness of the registration statement or such post-effective amendment
has been released by the Commission. Until such time as this Agreement shall
have become effective, it may be terminated by the Company, by notifying you, or
by you, as Representatives of the several U.S. Underwriters, by notifying the
Company and the Selling Shareholders.

           If any one or more of the U.S. Underwriters shall fail or refuse to
purchase Shares which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate number of Shares which such defaulting U.S.
Underwriter or Underwriters are obligated but fail or refuse to purchase is not
more than one-tenth of the aggregate number of Shares which the U.S.
Underwriters are obligated to purchase on the Closing Date, each non-defaulting
U.S. Underwriter shall be obligated, severally, in the proportion which the
number of Firm Shares set forth opposite its name in Schedule II hereto bears to
the aggregate number of Firm Shares set forth opposite the names of all non-
defaulting U.S. Underwriters or in such other proportion as you may specify in
accordance with Section 20 of the Master Agreement Among Underwriters of Smith
Barney Inc., to purchase the Shares which such defaulting U.S. Underwriter or

                                       40
<PAGE>
 
Underwriters are obligated, but fail or refuse, to purchase. If any one or more
of the U.S. Underwriters shall fail or refuse to purchase Shares which it or
they are obligated to purchase on the Closing Date and the aggregate number of
Shares with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares which the U.S. Underwriters are obligated to purchase
on the Closing Date and arrangements satisfactory to you and the Company for the
purchase of such Shares by one or more non-defaulting U.S. Underwriters or other
party or parties approved by you and the Company are not made within 36 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting U.S. Underwriter or the Company. In any such case which
does not result in termination of this Agreement, either you or the Company
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any defaulting
U.S. Underwriter from liability in respect of any such default of any such
Underwriter under this Agreement. The term "U.S. Underwriter" as used in this
Agreement includes, for all purposes of this Agreement, any party not listed in
Schedule II hereto which, with your approval and the approval of the Company,
purchases Shares which a defaulting U.S. Underwriter is obligated, but fails or
refuses, to purchase.

           Any notice under this Section 12 may be given by telegram, telecopy
or telephone but shall be subsequently confirmed by letter.

     13.   Termination of Agreement.  This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
U.S. Underwriter to the Company or any Selling Shareholder, by notice to the
Company, if prior to the Closing Date or any Option Closing Date (if different
from the Closing Date and then only as to the Additional Shares), as the case
may be, (i) trading in securities generally on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market shall have been suspended
or materially limited, (ii) a general moratorium on commercial banking
activities in New York shall have been declared by either federal or state
authorities, or (iii) there shall have occurred any outbreak or escalation of
hostilities or other international or domestic calamity, crisis or change in
political, financial or economic conditions, the effect of which on the
financial markets of the United States is such as to make it, in your judgment,
impracticable or inadvisable to commence or continue the offering of the Shares
at the offering

                                       41
<PAGE>
 
price to the public set forth on the cover page of the U.S. Prospectus or to
enforce contracts for the resale of the Shares by the U.S. Underwriters.

           Notice of such termination may be given by telegram, telecopy or
telephone and shall be subsequently confirmed by letter.

     14.   Information Furnished by the U.S. Underwriters. The statements set
forth in the last paragraph on the cover page, the stabilization legend on the
inside front cover page, and the statements in the [ through ] paragraphs under
the caption "Underwriting" in any U.S. Prepricing Prospectus and in the U.S.
Prospectus constitute the only information furnished by or on behalf of the U.S.
Underwriters through you as such information is referred to in Sections 7(b) and
9 hereof.

     15.   Miscellaneous.  Except as otherwise provided in Sections 5, 12 and 13
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company or the Selling Shareholders
at the office of the Company at, 631 Park Avenue, King of Prussia, PA, 19406,
Attention:           , [     ]; or (ii) if to you, as Representatives of the
several U.S. Underwriters, care of Smith Barney Inc., 388 Greenwich Street, New
York, New York 10013, Attention: Manager, Investment Banking Division.

           This Agreement has been and is made solely for the benefit of the
several U.S. Underwriters, the Company, its directors and officers, the other
controlling persons referred to in Section 9 hereof and the Selling Shareholders
and their respective successors and assigns, to the extent provided herein, and
no other person shall acquire or have any right under or by virtue of this
Agreement.  Neither the term "successor" nor the term "successors and assigns"
as used in this Agreement shall include a purchaser from any U.S. Underwriter of
any of the Shares in his status as such purchaser.

     16.   Applicable Law; Counterparts. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.

           This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless

                                       42
<PAGE>
 
at least one counterpart hereof shall have been executed and delivered on behalf
of each party hereto.

                                       43
<PAGE>
 
           Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Selling Shareholders and the several U.S. Underwriters.


                                  Very truly yours,

                                  PIERCE LEAHY CORP.


                                  By .......................
                                       President and Chief   
                                        Executive Officer


                                  Each of the Selling Shareholders
                                       named in Schedule I hereto


                                       By ..........................
                                            Attorney-in-Fact


                                       By .......................
                                            Attorney-in-Fact


Confirmed as of the date first
above mentioned on behalf of
themselves and the other several U.S.
Underwriters named in Schedule II
hereto.

SMITH BARNEY INC.
MERRILL LYNCH & CO.
PAINEWEBBER INCORPORATED

     As Representatives of the Several U.S. Underwriters

By SMITH BARNEY INC.


By ............................
        Managing Director

                                      44
<PAGE>
 
                                  SCHEDULE I

                              PIERCE, LEAHY CORP.


Part A - Firm Shares
- --------------------

                                                    Number of
           Selling Shareholders                     Firm Shares
           --------------------                     -----------



                                                   --------------
                                   Total........   
                                                   --------------


                                      45
<PAGE>
 
                                 SCHEDULE II

                              PIERCE LEAHY CORP.


<TABLE> 
<CAPTION> 
                                     Number of                     Number of
    Underwriter                     Firm Shares    Underwriter    Firm Shares
    -----------                     -----------    -----------    -----------
<S>                                 <C>            <C>            <C> 
Smith Barney Inc. ..........

Merrill Lynch & Co.

PaineWebber Incorporated...


                                                                 -----------
                                                    Total.....   
                                                                 -----------
</TABLE> 


                                      46

<PAGE>
 
                                [_____________]

                               PIERCE LEAHY CORP.

                                  Common Stock


                  FORM OF INTERNATIONAL UNDERWRITING AGREEMENT
                  --------------------------------------------


                                                                _______ __, 1997


SMITH BARNEY INC.
MERRILL LYNCH INTERNATIONAL
PAINEWEBBER INTERNATIONAL 

     As Lead Managers for the Several Managers

c/o SMITH BARNEY INC.
     388 Greenwich Street
     New York, New York 10013

Dear Sirs:

           Pierce Leahy Corp., a New York corporation (together with its
successor by merger to Pierce Leahy Inc., a Pennsylvania corporation that upon
effectiveness of the merger will change its name to Pierce Leahy Corp., the
"Company"), proposes to issue and sell an aggregate of _______ shares of its
common stock, par value $0.01 per share, and the persons named in Part A of
Schedule I hereto (the "Selling Shareholders") propose to sell an aggregate of
_______ shares of common stock of the Company (together with the _______ shares
of common stock to be issued and sold by the Company, the "Shares") to the
several Underwriters named in Schedule II hereto (the "Managers") for whom Smith
Barney Inc., Merrill Lynch International and PaineWebber International are
acting as representatives (the "Lead Managers"). The Company and the Selling
Shareholders are hereinafter sometimes referred to as the "Sellers." The
Company's common stock, par value $0.01 per share, including the Shares and the
U.S. Shares (as defined herein), is hereinafter referred to as the "Common
Stock."

           It is understood that the Company and the Selling Shareholders are
concurrently entering into a U.S. Underwriting Agreement, dated the date hereof
(the "U.S. Underwriting Agreement"), providing for the sale of _________ shares
of the Common Stock (the "U.S. Firm Shares"), of which _________ shares will be
sold by the Company and _________ will be sold by the Selling Shareholders (plus
an option granted by the Company to purchase up to an additional _______ shares
of Common Stock (the
<PAGE>
 
"Additional U.S. Shares") solely for the purpose of covering over-allotments)
through arrangements with certain underwriters in the United States and Canada
(the "U.S. Underwriters"), for whom Smith Barney Inc., Merrill, Lynch & Co. and
PaineWebber Incorporated are acting as representatives (the "Representatives").
All shares of Common Stock proposed to be offered to U.S. Underwriters pursuant
to the U.S. Underwriting Agreement, including the U.S. Firm Shares and the
Additional U.S. Shares, are herein called the "U.S. Shares"; the U.S. Shares and
the Shares, collectively, are herein called the "Underwritten Shares."

           The Company and the Selling Shareholders also understand that the
Lead Managers and the Representatives have entered into an agreement (the
"Agreement Between U.S. Underwriters and Managers") contemplating the
coordination of certain transactions between the Managers and the U.S.
Underwriters and that, pursuant thereto and subject to the conditions set forth
therein, the Managers may purchase from U.S. Underwriters a portion of the U.S.
Shares or sell to the Managers a portion of the Shares. The Company and the
Selling Shareholders understand that any such purchases and sales between the
Managers and the U.S. Underwriters shall be governed by the Agreement Between
U.S. Underwriters and Managers and shall not be governed by the terms of this
Agreement or the U.S. Underwriting Agreement.

           The Company and the Selling Shareholders wish to confirm as follows
their respective agreements with you and the other several Managers on whose
behalf you are acting, in connection with the several purchases of the Shares by
the Underwriters.

     1.    Registration Statement and Prospectus.  The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-1, including prospectuses subject to
completion, relating to the Underwritten Shares.  The term "Registration
Statement" as used in this Agreement means the registration statement (including
all financial schedules and exhibits), as amended at the time it becomes
effective or, if the registration statement became effective prior to the
execution of this Agreement, as supplemented or amended prior to the execution
of this Agreement.  If it is contemplated, at the time this Agreement is
executed, that a post-effective amendment to the registration statement will be
filed and must be declared effective before the offering of the Shares may
commence, the term "Registration Statement" as used in this Agreement means the
registration statement as amended by said post-effective amendment.  If an
abbreviated registration statement is prepared and filed with the Commission in
accordance with Rule 462(b) under the Act ("an Abbreviated Registration
Statement"), the term "Registration Statement" as used in this Agreement
includes the Abbreviated 

                                       2
<PAGE>
 
Registration Statement. The term "Prospectuses" as used in this Agreement means
the prospectuses in the forms included in the Registration Statement, or, if the
prospectuses included in the Registration Statement omit information in reliance
on Rule 430A under the Act and such information is included in prospectuses
filed with the Commission pursuant to Rule 424(b) under the Act, the term
"Prospectuses" as used in this Agreement means the prospectuses in the forms
included in the Registration Statement as supplemented by the addition of the
Rule 430A information contained in the prospectuses filed with the Commission
pursuant to Rule 424(b). The term "Prepricing Prospectuses" as used in this
Agreement means the prospectuses subject to completion in the forms included in
the Registration Statement at the time of the initial filing of the Registration
Statement with the Commission, and as such prospectuses shall have been amended
from time to time prior to the date of the Prospectuses.

           It is understood that two forms of Prepricing Prospectus and two
forms of Prospectus are to be used in connection with the offering and sale of
the Underwritten Shares: a Prepricing Prospectus and a Prospectus relating to
the U.S. Shares that are to be offered and sold in the United States (as defined
herein) or Canada (as defined herein) or to U.S. or Canadian Persons (the "U.S.
Prepricing Prospectus" and the "U.S. Prospectus," respectively), and a
Prepricing Prospectus and a Prospectus relating to the International Shares
which are to be offered and sold outside the United States or Canada to persons
other than U.S. or Canadian Persons (the "International Prepricing Prospectus"
and the "International Prospectus," respectively). The U.S. Prospectus and the
International Prospectus are herein collectively called the "Prospectuses," and
the U.S. Prepricing Prospectus and the International Prepricing Prospectus are
herein called the "Prepricing Prospectuses." For purposes of this Agreement:
"Rules and Regulations" means the rules and regulations adopted by the
Commission under either the Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act") as applicable; "U.S. or Canadian Person" means any
resident or national of the United States or Canada, any corporation,
partnership or other entity created or organized in or under the laws of the
United States or Canada or any estate or trust the income of which is subject to
United States or Canadian income taxation regardless of the source of its income
(other than the foreign branch of any U.S. or Canadian Person), and includes any
United States or Canadian branch of a person other than a U.S. or Canadian
Person; "United States" means the United States of America (including the states
thereof and the District of Columbia) and its territories, its possessions and
other areas subject to its jurisdiction; and "Canada" means Canada and its
territories, its possessions and other areas subject to its jurisdiction.

     2.    Agreements to Sell and Purchase.  Subject to such adjustments as you
may determine to avoid fractional shares, the Company hereby agrees, subject to
all the terms and conditions set 

                                       3
<PAGE>
 
forth herein, to issue and sell to each Manager and, upon the basis of this
representations, warranties and agreements of the Company and the Selling
Shareholders herein contained and subject to all the terms and conditions set
forth herein, each Manager agrees, severally and not jointly, to purchase from
the Company, at a purchase price of $______ per share (the "purchase price per
share"), the number of Shares that bears the same proportion to the
aggregate number of Shares to be issued and sold by the Company as the
number of Shares set forth opposite the name of such Manager in Schedule II
hereto (or such number of Shares increased as set forth in Section 12
hereof) bears to the aggregate number of Shares to be sold by the Company
and the Selling Shareholders.

     Subject to such adjustments as you may determine to avoid fractional
shares, each Selling Shareholder agrees, subject to all the terms and conditions
set forth herein, to sell to each Manager and, upon the basis of the
representations, warranties and agreements of the Company and the Selling
Shareholders herein contained and subject to all the terms and conditions set
forth herein, each Manager agrees, severally and not jointly, to purchase from
each Selling Shareholder, at the purchase price per share, the number of Firm
Shares that bears the same proportion to the number of Shares set forth
opposite the name of such Selling Shareholder in Schedule I hereto as the number
of Shares set forth opposite the name of such Manager in Schedule II hereto
(or such number of Shares increased as set forth in Section 12 hereof)
bears to the aggregate number of Shares to be sold by the Company and the
Selling Shareholders.


                                       4
<PAGE>
 
     Certificates in transferable form for the Shares that each of the Selling
Shareholders agrees to sell pursuant to this Agreement have been placed in
custody with [        ] (the "Custodian") for delivery under this Agreement
pursuant to a Custody Agreement and Power of Attorney (the "Custody Agreement")
executed by each of the Selling Shareholders appointing  ______________________
and ____________________________, as agents and attorneys-in-fact (the
"Attorneys-in-Fact").  Each Selling Shareholder agrees that (i) the Shares
represented by the certificates held in custody pursuant to the Custody
Agreement are subject to the interests of the Managers, the Company and each
other Selling Shareholder, (ii) the arrangements made by the Selling
Shareholders for such custody are, except as specifically provided in the
Custody Agreement, irrevocable, and (iii) the obligations of the Selling
Shareholders hereunder and under the Custody Agreement shall not be terminated
by any act of such Selling Shareholder or by operation of law, whether by the
death or incapacity of any Selling Shareholder or the occurrence of any other
event or, if the Selling Shareholder is not a natural person, upon any
dissolution, winding up, distribution of assets or other event affecting the
legal existence of such Selling Shareholder.  If any Selling Shareholder shall
die or be incapacitated or if any other event shall occur before the delivery of
the Shares hereunder, or if the Selling Shareholder is not a natural person,
shall dissolve, wind up, distribute assets or if any other event affecting the
legal existence of such Selling Shareholder shall occur before the delivery of
the Shares hereunder, certificates for the Shares of such Selling Shareholder
shall be delivered to the Underwriters by the Attorneys-in-Fact in accordance
with the terms and conditions of this Agreement and the Custody Agreement as if
such death or incapacity, dissolution, winding up or distribution of assets or
other event had not occurred, regardless of whether or not the Attorneys-in-Fact
or any Manager shall have received notice of such death, incapacity,
dissolution, winding up or distribution of assets or other event.  Each
Attorney-in-Fact is authorized, on behalf of each of the Selling Shareholders,
to execute this Agreement and any other documents necessary or desirable in
connection with the sale of the Shares to be sold hereunder by such Selling
Shareholder, to make delivery of the certificates for such Shares, to receive
the proceeds of the sale of such Shares, to give receipts for such proceeds, to
pay therefrom any expenses to be borne by such Selling Shareholder in connection
with the sale and public offering of such Shares, to distribute the balance
thereof to such Selling Shareholder, and to take such other action as may be
necessary or desirable in connection with the transactions contemplated by this
Agreement.  Each Attorney-in-Fact agrees to perform his duties under the Custody
Agreement.

     3.    Terms of Public Offering.  The Sellers have been advised by you that
the Managers propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your

                                       5
<PAGE>
 
judgment is advisable and initially to offer the Shares upon the terms set forth
in the International Prospectus.

     4.    Delivery of the Shares and Payment Therefor. Delivery to the Managers
of and payment for the Shares shall be made at the office of Smith Barney
Inc., 388 Greenwich Street, New York, N.Y. 10013, at 10:00 A.M., New York City
time, on ___________, 1997 (the "Closing Date"). The place of closing for the
Shares and the Closing Date may be varied by agreement among you, the
Company and the Attorneys-in-Fact.

     Certificates for the Shares to be purchased hereunder shall be
registered in such names and in such denominations as you shall request by
written notice, it being understood that a facsimile transmission shall be
deemed written notice, prior to 9:30 A.M., New York City time, on the second
business day preceding the Closing Date. Such certificates shall be made
available to you in New York City for inspection and packaging not later than
9:30 A.M., New York City time, on the business day next preceding the Closing
Date. The certificates and stock powers evidencing the Shares to be
purchased hereunder shall be delivered to you on the Closing Date against
payment of the purchase price therefor in immediately available funds.

     5.    Agreements of the Company.  The Company agrees with the several
Managers as follows:

           (a)  If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
Company will endeavor to cause the Registration Statement or such post-effective
amendment to become effective as soon as possible and will advise you promptly
and, if requested by you, will confirm such advice in writing, when the
Registration Statement or such post-effective amendment has become effective.

                                       6
<PAGE>
 
           (b)  The Company will advise you promptly and, if requested by you,
will confirm such advice in writing: (i) of any request by the Commission for
amendment of or a supplement to the Registration Statement, any Prepricing
Prospectuses or the Prospectuses or for additional information; (ii) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction or the initiation of any proceeding for
such purpose; and (iii) within the period of time referred to in paragraph (f)
below, of any change in the Company's condition (financial or other), business,
prospects, properties, net worth or results of operations, or of the happening
of any event, including the filing of any information, documents or reports
pursuant to the Exchange Act, that makes any statement of a material fact made
in the Registration Statement or the Prospectuses (as then amended or
supplemented) untrue or which requires the making of any additions to or changes
in the Registration Statement or the Prospectuses (as then amended or
supplemented) in order to state a material fact required by the Act or the
regulations thereunder to be stated therein or necessary in order to make the
statements therein not misleading, or of the necessity to amend or supplement
the Prospectuses (as then amended or supplemented) to comply with the Act or any
other law. If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible time.

           (c)  The Company will furnish to you, without charge three signed
copies of the Registration Statement as originally filed with the Commission and
of each amendment thereto, including financial statements and all exhibits to
the Registration Statement and will also furnish to you, without charge, such
number of conformed copies of the Registration Statement as originally filed and
of each amendment thereto, but without exhibits, as you may reasonably request.

           (d)  The Company will not (i) file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectuses of which you
shall not previously have been advised or to which you shall reasonably object
in writing after being so advised or (ii) so long as, in the written opinion of
counsel for the Managers (a copy of which shall be delivered to the Company), a
prospectus is required to be delivered in connection with sales by any Manager
or dealer, file any information, documents or reports pursuant to the Exchange
Act, without delivering a copy of such information, documents or reports, to
you, as Lead Managers for the Managers, prior to or concurrently with such
filing.

           (e)  Prior to the execution and delivery of this Agreement, the
Company has delivered or will deliver to you, without charge, in such quantities
as you have reasonably requested or may hereafter reasonably request, copies of
each form of the

                                       7
<PAGE>
 
International Prepricing Prospectus.  The Company consents to the use, in
accordance with the provisions of the Act and with the securities laws of the
jurisdictions in which the Shares are offered by the several Managers and by
dealers, prior to the date of the International Prospectus, of each
International Prepricing Prospectus so furnished by the Company.

           (f)  As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the written
opinion of counsel for the Managers an International Prospectus is required by
the Act to be delivered in connection with sales by any Manager or dealer, the
Company will expeditiously deliver to each Manager and each dealer, without
charge, as many copies of the International Prospectus (and of any amendment or
supplement thereto) as you may reasonably request. The Company consents to the
use of the International Prospectus (and of any amendment or supplement thereto)
in accordance with the provisions of the Act and with the securities laws of the
jurisdictions in which the Shares are offered by the several Managers and by all
dealers to whom Shares may be sold, both in connection with the offering and
sale of the Shares and for such period of time thereafter as the International
Prospectus is required by the Act to be delivered in connection with sales by
any Manager or dealer. If during such period of time any event shall occur that
in the judgment of the Company or in the written opinion of counsel for the
Managers is required to be set forth in the International Prospectus (as then
amended or supplemented) or should be set forth therein in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary to supplement or amend the
International Prospectus in order to comply with the Act or any other law, the
Company will make every reasonable effort to prepare and, subject to the
provisions of paragraph (d) above, file with the Commission an appropriate
supplement or amendment thereto, and will expeditiously furnish to the Managers
and dealers a reasonable number of copies thereof. In the event that the Company
and you, as Lead Managers for the several Managers, agree that the International
Prospectus should be amended or supplemented, the Company, if requested by you,
will promptly issue a press release announcing or disclosing the matters to be
covered by the proposed amendment or supplement.

           (g)  The Company will cooperate with you and with counsel for the
Managers in connection with the registration or qualification of the Shares for
offering and sale by the several Managers and by dealers under the securities
laws of such jurisdictions as you may reasonably designate and will file such
consents to service of process or other documents necessary or appropriate in
order to effect such registration or qualification; provided that in no event
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action that would subject it to
taxation or service of process in suits, other than those arising out of the
offering

                                       8
<PAGE>
 
or sale of the Shares, in any jurisdiction where it is not now so subject.

           (h)  The Company will make generally available to its security
holders a consolidated earnings statement, which need not be audited, covering a
twelve-month period commencing after the effective date of the Registration
Statement and ending not later than 15 months thereafter, as soon as reasonably
practicable after the end of such period, which consolidated earnings statement
shall satisfy the provisions of Section 11(a) of the Act.

           (i)  During the period of five years hereafter, the Company will
furnish to you (i) as soon as available, a copy of each report of the Company
mailed to stockholders or filed with the Commission or the New York Stock
Exchange, and (ii) from time to time such other information concerning the
Company as you may reasonably request.

           (j)  If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 12 hereof or by notice given by you terminating this
Agreement pursuant to Section 12 or Section 13 hereof) or if this Agreement
shall be terminated by the Managers because of any failure or refusal on the
part of the Company or any of the Selling Shareholders to comply, in any
material respect, with the terms or fulfill, in any material respect of  any of
the conditions of this Agreement, the Company agrees to reimburse the Lead
Managers for all reasonable out-of-pocket expenses (including reasonable fees
and expenses of counsel for the Managers) incurred by you in connection
herewith.

           (k)  The Company will apply the net proceeds from the sale of the
Shares to be sold by it hereunder substantially in accordance with the
description set forth in the Prospectuses.

           (l)  If Rule 430A of the Act is employed, the Company will make every
reasonable effort to timely file the Prospectuses pursuant to Rule 424(b) under
the Act and will advise you of the time and manner of such filing.

           (m)  For a period of 180 days after the date hereof (the "Lock-up
Period"), the Company will not, without the prior written consent of Smith
Barney Inc., offer, sell, contract to sell or otherwise dispose of any Common
Stock (or any securities convertible into or exercisable or exchangeable for
Common Stock) or grant any options or warrants to purchase Common Stock that are
exercisable during the Lock-up Period, except for (i) sales to the Managers
pursuant to this Agreement and the U.S. Underwriters pursuant to the U.S.
Underwriting Agreement, (ii) the issuance of shares upon exercise of outstanding
options and [(iii) the issuance of shares in connection with acquisitions,
provided that the

                                       9
<PAGE>
 
recipients of such shares agree not to sell the shares during the Lock-up
Period.

           (n)  The Company has furnished or will furnish to you "lock-up"
letters, in form and substance satisfactory to you, signed by each of its
current executive officers and directors and each of its stockholders designated
by you.

           (o)  Except as stated in this Agreement and in the U.S. Underwriting
Agreement and in the Prepricing Prospectuses and Prospectuses, the Company has
not taken, nor will it take, directly or indirectly, any action designed to or
that might reasonably be expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Shares.

           (p)  The Company will use its best efforts to have the Common Stock
listed, subject to notice of issuance, on the New York Stock Exchange
concurrently with the effectiveness of the Registration Statement.

           (q)  The Company will use its best efforts to satisfy on or before
the Closing Date all conditions to the Managers' obligations to purchase the
Shares.

     6.    Agreements of the Selling Shareholders.  Each of the Selling
Shareholders agrees with the several Managers as follows:

           (a)  Such Selling Shareholder will cooperate to the extent reasonably
necessary to cause the Registration Statement or any post-effective amendment
thereto to become effective at the earliest possible time.

           (b)  Such Selling Shareholder will pay all Federal and other taxes,
if any on the transfer or sale of such Shares that are sold by the Selling
Shareholder to the Managers.

           (c)  Such Selling Shareholder will do or perform all things required
to be done or performed by the Selling Shareholder prior to the Closing Date to
satisfy all conditions precedent to the delivery of the Shares pursuant to this
Agreement.

           (d)  Such Selling Shareholder has executed or will execute a "lock-
up" letter as provided in Section 5(n) above and will not sell, contract to sell
or otherwise dispose of any Common Stock, except as provided therein or for the
sale of Shares to the Underwriters pursuant to this Agreement, prior to the
expiration of 180 days after the date of the Prospectus, without the prior
written consent of Smith Barney Inc.

           (e)  Except as stated in this Agreement and the U.S. Underwriting
Agreement and in the Prepricing Prospectuses and the

                                      10
<PAGE>
 
Prospectuses, such Selling Shareholder has not taken, nor will it take, directly
or indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.

          (f) To the extent that any statements or omissions made in the
Registration Statement or the Prospectuses (as amended or supplemented, if
amended or supplemented) specifically refer to the information regarding a
Selling Shareholder under the caption "Principal and Selling Shareholders," such
Selling Shareholder will advise you promptly, upon becoming aware, and if
requested by you, will confirm such advice in writing, within the period of time
referred to in Section 5(f) hereof, of any change in such information that comes
to the attention of such Selling Shareholder that makes any statement made in
the Registration Statement or the Prospectuses (as then amended or supplemented)
untrue or which requires the making of any additions to or changes in the
Registration Statement or the Prospectuses (as then amended or supplemented) in
order to state a material fact required by the Act or the regulations thereunder
to be stated therein or necessary in order to make the statements therein not
misleading, or of the necessity to amend or supplement the Prospectuses (as then
amended or supplemented) to comply with the Act or any other law.

     7.   Representations and Warranties of the Company.  The Company represents
and warrants to each Manager that:

          (a)  Each International Prepricing Prospectus included as part of the
registration statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Act, complied when
so filed in all material respects with the provisions of the Act; except that
this representation and warranty does not apply to statements in or omissions
from such International Prepricing Prospectus (or any amendment or supplement
thereto) made in reliance upon and in conformity with information relating to
any Selling Shareholder or to any U.S. Underwriter or Manager furnished to the
Company in writing by a Manager through the Lead Managers or by a Manager
through the Lead Managers expressly for use therein.  The Commission has not
issued any order preventing or suspending the use of any Prepricing Prospectus.

          (b)  The Registration Statement in the form in which it became or
becomes effective, including the information deemed to be part of the
Registration Statement at the time of effectiveness pursuant to Rule 430A(b),
and also in such form as it may be when any post-effective amendment thereto
shall become effective and the Prospectuses and any supplement or amendment
thereto when filed with the Commission under Rule 424(b) under the Act, complied
or will comply in all material respects with the provisions of the Act and will
not at any such times contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; except that this representation and warranty
does not apply to statements in or omissions from the Registration Statement or
the Prospectuses made in reliance upon and in conformity with

                                       11
<PAGE>
 
information relating to any Selling Shareholder or to any U.S. Underwriter or
Manager furnished to the Company in writing by or on behalf of a Manager through
the Lead Managers or by a U.S. Underwriter through the Representatives expressly
for use therein.

           (c)  All the outstanding shares of Common Stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable and
are free of any preemptive or similar rights; the Shares to be issued and sold
by the Company have been duly authorized and, when issued and delivered to the
Managers against payment therefor in accordance with the terms hereof, will be
validly issued, fully paid and nonassessable and free of any preemptive or
similar rights; and the capital stock of the Company conforms to the description
thereof in the Registration Statement and the Prospectuses.

           (d)  The Company is a corporation duly organized and validly existing
in good standing under the laws of the State of New York, and within fourteen
days of the Closing Date will be a corporation duly organized and validly
subsisting under the Commonwealth of Pennsylvania with full corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Registration Statement and the Prospectuses, and is duly
registered and qualified to conduct its business and is in good standing in each
jurisdiction where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify does not and will not (1) have a material adverse effect on
the condition (financial or other), business affairs, prospects, properties,
shareholders' equity or results of operations of the Company and the
Subsidiaries (as hereinafter defined) taken as a whole, (2) adversely affect the
issuance, validity or enforceability of the Shares or (3) adversely affect the
consummation of any of the transactions contemplated by this Agreement (each of
(1), (2) and (3) above, a "Material Adverse Effect").

           (e)  All the Company's subsidiaries (as defined in Rule 1-02(x) of
Regulation S-X and as required to be identified by Item 601(b)(21) of Regulation
S-K are listed in an exhibit to the Registration Statement (collectively, the
"Subsidiaries"). Each Subsidiary is either (i) a corporation duly organized,
validly existing and in good standing in the jurisdiction of its incorporation
or (ii) a partnership duly organized and validly existing under the applicable
laws of the Commonwealth of Pennsylvania. Each Subsidiary has the requisite
corporate or partnership, as the case may be, and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectuses, and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to

                                       12
<PAGE>
 
register or qualify does not and will not individually or in the aggregate  have
a Material Adverse Effect.  All the outstanding shares of capital stock of each
of the corporate Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable, and are owned by the Company directly, or
indirectly through one or more of the other Subsidiaries, free and clear of any
lien, adverse claim, security interest, equity or other encumbrance, except that
Pierce Leahy Command Company is only 99% owned (indirectly) by the Company.

           (f)  There are no legal or governmental proceedings pending or, to
the knowledge of the Company, threatened, against the Company or any of its
Subsidiaries which are materially adverse to the Company and its Subsidiaries,
taken as a whole, or to which the Company or any of the Subsidiaries, or to
which any of their respective properties is subject, which are material to the
Company and its Subsidiaries, taken as a whole, that are required to be
described in the Registration Statement or the Prospectuses but are not
described as required, and there are no agreements, contracts, indentures,
leases or other instruments relating to the Company that are required to be
described in the Registration Statement or the Prospectuses or to be filed as an
exhibit to the Registration Statement that are not described or filed as
required by the Act or the Exchange Act. The descriptions of the terms of any
such agreements, contracts, indentures, leases or other instruments contained in
the Registration Statement or the Prospectuses are correct in all material
respects.

           (g)  Neither the Company nor any of the Subsidiaries is in (i)
violation of its certificate or articles of incorporation or by-laws, or other
organizational documents, (ii) in violation of any statute, law, ordinance,
administrative or governmental rule or regulation applicable to the Company or
any of the Subsidiaries of any ruling, judgment, injunction, order or decree of
any court or governmental agency or body having jurisdiction over the Company or
any of the Subsidiaries (except where any such violation or violations in the
aggregate would not have a Material Adverse Effect), or (iii) in default in any
material respect in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
in any material agreement, indenture, lease or other instrument to which the
Company or any of the Subsidiaries is a party or by which any of them or any of
their respective properties may be bound, and no condition or state of facts
exists, which with the passage of time or the giving of notice or both, would
constitute such a default (except where any such default or defaults in the
aggregate would not have a Material Adverse Effect).

           (h)  Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement or the U.S. Underwriting Agreement by
the Company nor the consummation by the Company of the transactions contemplated
hereby and thereby (i) requires any consent, approval, authorization or other
order of or

                                       13
<PAGE>
 
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency or official (except as may be required for
the registration of the Shares under the Act and the Exchange Act (which has
been effected) and such as may be required under state or foreign securities
laws) or conflicts or will conflict with or constitutes or will constitute a
breach of, or a default under, the certificate or articles of incorporation or
bylaws, or other organizational documents, of the Company or any of the
Subsidiaries or (ii) conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, any agreement, indenture, lease or
other instrument to which the Company or any of the Subsidiaries is a party or
by which any of them or any of their respective properties may be bound, or
violates or will violate any statute, law, regulation or filing (except as may
be required for the registration of the Shares under the Act and the Exchange
Act (which has been effected) and such as may be required under state or foreign
securities laws) or judgment, injunction, order or decree applicable to the
Company or any of the Subsidiaries or any of their respective properties, or
will result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of the Subsidiaries pursuant
to the terms of any agreement or instrument to which any of them is a party or
by which any of them may be bound or to which any of the property or assets of
any of them is subject other than security interests granted pursuant to the
Credit Agreement.

           (i)  The accountants, Arthur Andersen LLP and Deloitte & Touche LLP,
who have certified or shall certify the financial statements filed or to be
filed as part of the Registration Statement or the Prospectuses (or any
amendment or supplement thereto) are independent public accountants as required
by the Act.

           (j)  The historical consolidated financial statements of the Company,
together with related schedules and notes forming part of the Registration
Statement and the Prospectuses (and any amendment or supplement thereto), and,
to the knowledge of the Company, the historical financial statements of Security
Archives, Inc. and Records Management Services, Inc., together with related
schedules and notes forming part of the Registration Statement and the
Prospectuses (and any amendment or supplement thereto), comply with the
requirements of the Act and present fairly the consolidated financial position,
results of operations, cash flows and changes in financial position of the
Company and the Subsidiaries and Security Archives, Inc. and Records Management
Services, Inc., as the case may be, on the basis stated in the Registration
Statement at the respective dates or for the respective periods to which they
apply; the statements and related schedules and notes of the Company and, to the
knowledge of the Company, the statements and related schedules and notes of
Security Archives, Inc. and Records Management Services, Inc., have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved,

                                       14
<PAGE>
 
except as disclosed therein; the pro forma financial information, and the
related notes thereto, included in the Registration Statement and the
Prospectuses (and any amendment or supplement thereto) have been prepared in
accordance with the applicable requirements of the Act and the assumptions used
in preparing such information are reasonable; and the other historical and pro
forma financial and statistical information and data set forth in the
Registration Statement and the Prospectuses (and any amendment or supplement
thereto) are accurately presented and prepared on a basis consistent with the
books and records of the Company and its Subsidiaries.

           (k)  The execution and delivery of, and the performance by the
Company of its obligations under, each of this Agreement and the U.S.
Underwriting Agreement have been duly and validly authorized by the Company, and
each of this Agreement and the U.S. Underwriting Agreement has been duly
executed and delivered by the Company and constitutes the valid and legally
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except (i) the enforceability hereof or thereof may be limited
by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, (ii) the remedy of specific performance and other forms of equitable
relief may be subject to certain equitable defenses and to the discretion of the
court before which the proceedings may be brought and (iii) rights to indemnity
and contribution hereunder or thereunder may be limited by federal or state
securities laws or the public policy underlying such laws.

           (l)  Except as disclosed in the Registration Statement and the
Prospectuses (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectuses (or any amendment or supplement thereto), neither
the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any change in the capital
stock of the Company, or material increase in the short-term debt or long-term
debt, of the Company or any of the Subsidiaries, or any development having or
which may reasonably be expected to involve, a prospective Material Adverse
Effect.

           (m)  Each of the Company and the Subsidiaries has good and valid
title to all property (real and personal) described in the Prospectuses as being
owned by it which is material to the business of the Company and its
Subsidiaries taken as a whole, free and clear of all liens, claims, security
interests or other encumbrances except such as are described in the Registration
Statement and the Prospectuses or in a document filed as an exhibit to the
Registration Statement and all the property described in the Prospectuses as
being held under lease by each of the Company and

                                       15
<PAGE>
 
the Subsidiaries which is material to the business of the Company and its
Subsidiaries taken as a whole, is held by it under valid, subsisting and
enforceable leases with only such exceptions as in the aggregate do not
interfere in any material respect with the conduct of the business of the
Company and the Subsidiaries, taken as a whole or the use made or proposed to be
made of such property by the Company or its Subsidiaries.

           (n)  The Company has not distributed and, prior to the later to occur
of (i) the Closing Date or the Option Closing Date, if any, and (ii) completion
of the distribution of the Shares, will not distribute any offering material in
connection with the offering and sale of the Shares other than the Registration
Statement, the Prepricing Prospectuses, the Prospectuses or other materials, if
any, permitted by the Act.

           (o)  Except as described in clause (d) above, the Company and each of
the Subsidiaries has such permits, licenses, franchises and authorizations of
governmental or regulatory authorities ("Permits") as are necessary to own its
respective properties and to conduct its business in the manner described in the
Prospectuses, except where the failure to so possess would not, individually or
in the aggregate, have a Material Adverse Effect and subject to such
qualifications as may be set forth in the Prospectuses; the Company and each of
the Subsidiaries has fulfilled and performed all its material obligations with
respect to such Permits and no event has occurred that allows, or after notice
or lapse of time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the holder of any such Permit,
subject in each case to such qualification as may be set forth in the
Prospectuses, except where any such revocation, termination or impairment would
not have a Material Adverse Effect; and, except as described in the
Prospectuses, none of such Permits contains any restriction that is materially
burdensome to the Company or any of the Subsidiaries.

           (p)  The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

           (q)  To the Company's knowledge, neither the Company nor any of its
Subsidiaries nor any employee or agent of the Company or any Subsidiary has made
any payment of funds of the Company or any Subsidiary or received or retained
any funds in violation of any law, rule or regulation, which payment, receipt or
retention of

                                       16
<PAGE>
 
funds is of a character required to be disclosed in the Prospectuses.

           (r)  The Company, and to the Company's knowledge, each of the
Subsidiaries have filed all tax returns required to be filed, which returns are
true and correct in all material respects or extensions therefor, and neither
the Company nor any Subsidiary is in default in the payment of any taxes which
were payable pursuant to said returns or any assessments with respect thereto,
except where the failure to file such returns or to pay such taxes is not
reasonably likely to have a Material Adverse Effect.

           (s)  Except as described in the Prospectuses, no holder of any
security of the Company has any right to require registration of shares of
Common Stock or any other security of the Company because of the filing of the
Registration Statement or consummation of the transactions contemplated by this
Agreement or the U.S. Underwriting Agreement, or otherwise. Except as described
in or contemplated by the Prospectuses, there are no outstanding options,
warrants or other rights calling for the issuance of, and there are no
commitments, plans or arrangements to issue, any shares of Common Stock of the
Company or any security convertible into or exchangeable or exercisable for
Common Stock of the Company.

           (t)  The Company and the Subsidiaries own or possess all patents,
trademarks, trademark registration, service marks, service mark registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
described in the Prospectuses as being owned by them or any of them or necessary
for the conduct of their respective businesses, except where the lack of such
ownership or possession would not, individually or in the aggregate, have a
Material Adverse Effect, and the Company is not aware of any claim to the
contrary or any challenge by any other person to the rights of the Company and
the Subsidiaries with respect to the foregoing.

           (u)  The Company is not and, upon sale of the Shares to be issued and
sold in accordance herewith and upon application of the net proceeds to the
Company from such sale as described in the Prospectuses under the caption "Use
of Proceeds," will not be an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.

           (v)  The Company and the Subsidiaries have complied with all
provisions of Florida Statutes, (S)517.075, relating to issuers doing business
with Cuba.

           (w)  The businesses of the Company and the Subsidiaries as presently
conducted and as described in the Prospectuses comply with all statutes, laws,
ordinances, administrative or governmental rules or regulations applicable to
the Company or any of the Subsidiaries (collectively, "Laws") and with all
orders, rulings, judgments, injunctions or decrees of any court or governmental

                                       17
<PAGE>
 
agency or body having jurisdiction over the Company or any of the Subsidiaries,
except for any failure to comply which would not, individually or in the
aggregate, have a Material Adverse Effect.

           (x) The Company and each of its Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for; and neither the Company nor any such
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect, except as
described in or contemplated by the Prospectuses.

           (y) No Subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such Subsidiary's capital stock, from repaying to the Company
any loans or advances to such Subsidiary from the Company or from transferring
any of such Subsidiary's property or assets to the Company or any other
Subsidiary of the Company, except as described in or contemplated by the
Prospectuses.

           (z) Except for the shares of capital stock or partnership interests
of each of the Subsidiaries owned by the Company and such Subsidiaries, neither
the Company nor any such Subsidiary owns any shares of stock or any other equity
securities of any corporation or has any equity interest in any firm,
partnership, association or other entity, except as described in or contemplated
by the Prospectuses.

           (aa)  There are no labor disputes with the Company's employees or
with employees of the Subsidiaries that exist or, to the Company's knowledge,
are imminent that could materially adversely affect the Company and the
Subsidiaries taken as a whole, and the Company is not aware of any existing or
imminent labor disturbance by any of its or the Subsidiaries' principal
suppliers, contractors or customers that could be expected to have a Material
Adverse Effect.

           (ab)  With respect to each employee benefit plan, program and
arrangement (including, without limitation, any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), maintained or contributed to by the Company or the
Subsidiaries, or with respect to which the Company or the Subsidiaries could
incur any liability under ERISA (collectively, the "Benefit Plans"), no event
has occurred and there exists no condition or set of circumstances in connection
with which the Company or the Subsidiaries could be subject to any liability
under the terms of such Benefit Plan or

                                       18
<PAGE>
 
applicable law (including, without limitation, ERISA and the Internal Revenue
Code of 1986, as amended (the "Code")) that could have a Material Adverse
Effect.

           (ac)  The Company and the Subsidiaries are (i) (A) in full compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (B) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses, and (C) and are in full compliance with all terms
and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, singly or in the aggregate,
have a Material Adverse Effect; (ii) except as disclosed in the Registration
Statement and the Prospectuses, there are no past or present actions,
activities, circumstances, conditions, events or incidents, including, without
limitation, the release, threatened release, or disposal of any material
(including radiation and noise), that could form the basis of any claim (whether
by a governmental authority or other person or entity) under Environmental Laws
for cleanup costs, damages, penalties, fines, or otherwise, against any of the
Company or the Subsidiaries, or against any person or entity whose liability for
such claim may have been retained by any of the Company or the Subsidiaries,
whether by contract or law; and (iii) the Company and the Subsidiaries have
fully disclosed to the Underwriters and their counsel all studies, reports,
assessments, audits and other information in their possession or control
relating to any pollution or release, threatened release or disposal of
materials regulated under Environmental Laws on, at, under, from or transported
from any of their currently or formerly owned, leased or operated properties,
including, without limitation, all information relating to underground storage
tanks and asbestos containing materials. Neither the Company nor any of the
Subsidiaries has been named as a "potentially responsible party" under the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended ("CERCLA").

     8.   Representations and Warranties of the Selling Shareholders.  Each
Selling Shareholder represents and warrants to each Manager that:

          (a)  Such Selling Shareholder now has, and on the Closing Date will
have, valid and marketable title to the Shares to be sold by such Selling
Shareholder, free and clear of any lien, claim, security interest or other
encumbrance, including, without limitation, any restriction on transfer, except
as otherwise described in the Prospectuses.

                                       19
<PAGE>
 
           (b)  Such Selling Shareholder now has, and on the Closing Date will
have, full legal right, power and authorization, and any approval required by
law, to sell, assign, transfer and deliver such Shares in the manner provided in
this Agreement and the International Underwriting Agreement, and upon delivery
of and payment for such Shares hereunder, the several Managers will acquire
valid and marketable title to such Shares free and clear of any lien, claim,
security interest, or other encumbrance.

           (c)  This Agreement, the U.S. Underwriting Agreement and the Custody
Agreement have been duly authorized, executed and delivered by or on behalf of
such Selling Shareholder and are the valid and binding agreements of such
Selling Shareholder enforceable against such Selling Shareholder in accordance
with their terms, except that (i) the enforceability hereof or thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally, (ii)
the remedy of specific performance and other forms of equitable relief may be
subject to certain equitable defenses and to the discretion of the court before
which the proceedings may be brought and (iii) rights to indemnity and
contribution hereunder or thereunder may be limited by federal or state
securities laws or the public policy underlying such laws.

           (d)  Neither the sale of the Shares, the execution, delivery or
performance of this Agreement, the U.S. Underwriting Agreement or the Custody
Agreement by or on behalf of such Selling Shareholder nor the consummation by or
on behalf of such Selling Shareholder of the transactions contemplated hereby
and thereby (i) requires any consent, approval, authorization or other order of,
or registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency or official (except as may be required
for the registration of the Shares under the Act and the Exchange Act (which has
been effected) and such as may be required under state or foreign securities
laws) or (ii) conflicts or will conflict with or constitutes or will constitute
a breach of, or a default under, any agreement, indenture, lease or other
instrument to which such Selling Shareholder is a party or by which such Selling
Shareholder is or may be bound, or violates or will violate any statute, law,
regulation or filing or judgment, injunction, order or decree applicable to such
Selling Shareholder, or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of such Selling Shareholder
pursuant to the terms of any agreement or instrument to which such Selling
Shareholder is a party or by which such Selling Shareholder may be bound or to
which any of the property or assets of such Selling Shareholder is subject.

           (e)  The information pertaining to such Selling Shareholder provided
to the Company for inclusion under the caption "Principal and Selling
Shareholders" in the Prospectuses, does not

                                       20
<PAGE>
 
and will not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.

           (f)  The representations and warranties of such Selling Shareholder
in the Custody Agreement are, and on the Closing Date and any Option Closing
Date will be, true and correct.

           (g)  Such Selling Shareholder has not taken directly or indirectly,
any action designed to or that might reasonably be expected to cause or result
in stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of the Shares, except for the lock-up arrangements referred
to in the Prospectuses.

           (h)  Such Selling Shareholder has not distributed and, prior to the
later to occur of (i) the Closing Date and (ii) completion of the distribution
of the Shares, will not distribute any offering material in connection with the
offering and sale of the Shares.

     9.  Indemnification and Contribution.  (a) The Company agrees to indemnify
and hold harmless you and each other Manager and each person, if any, who
controls any Manager within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation) arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in any International Prepricing Prospectus or in the
Registration Statement or the International Prospectus or in any amendment or
supplement thereto, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of or are based upon
any untrue statement or omission or alleged untrue statement or omission which
has been made therein or omitted therefrom in reliance upon and in conformity
with the information relating to such U.S. Underwriter or Manager furnished in
writing to the Company by or on behalf of any Manager through you or by or on
behalf of any U.S. Underwriter through a Representative expressly for use in
connection therewith; provided, however, that the indemnification contained in
this paragraph (a) with respect to any International Prepricing Prospectus shall
not inure to the benefit of any Manager (or to the benefit of any person
controlling such Manager) on account of any such loss, claim, damage, liability

                                       21
<PAGE>
 
or expense arising from the sale of the Shares by such Manager to any person if
a copy of the International Prospectus shall not have been delivered or sent to
such person within the time required by the Act and the regulations thereunder,
and the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in such International Prepricing
Prospectus was corrected in the International Prospectus, provided that the
Company has delivered the International Prospectus to the several Managers in
requisite quantity on a timely basis to permit such delivery or sending.

     (b)  If any action, suit or proceeding shall be brought against any Manager
or any person controlling any Manager in respect of which indemnity may be
sought against the Company or any Selling Shareholder, such Manager or such
controlling person shall promptly notify the parties against whom
indemnification is being sought (the "indemnifying parties"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses; provided, however, that the
failure so to notify the indemnifying parties shall not relieve the indemnifying
parties from any obligation or liability except to the extent that the
indemnifying parties have been prejudiced materially by such failure.  Such
Manager or any such controlling person shall have the right to employ separate
counsel in any such action, suit or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Manager or such controlling person unless (i) the indemnifying parties have
agreed in writing to pay such fees and expenses, (ii) the indemnifying parties
have failed to assume the defense and employ counsel, or (iii) the named parties
to any such action, suit or proceeding (including any impleaded parties) include
both such Manager or such controlling person and the indemnifying parties and
such Manager or such controlling person shall have been advised by its counsel
in writing that representation of such indemnified party and any indemnifying
party by the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to actual or potential differing interests between them (in
which case the indemnifying party shall not have the right to assume the defense
of such action, suit or proceeding on behalf of such Manager or such controlling
person).  It is understood, however, that the indemnifying parties shall, in
connection with any one such action, suit or proceeding or separate but
substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for all such Managers
and controlling persons not having actual or potential differing interests with
you or among themselves, which firm shall be designated in writing by Smith
Barney Inc., and that all such fees and expenses as required to be paid by the
indemnifying parties hereunder shall be reimbursed as they are incurred.  The

                                       22
<PAGE>
 
indemnifying parties shall not be liable for any settlement of any such action,
suit or proceeding effected without their written consent, but if settled with
such written consent, or if there be a final judgment for the plaintiff in any
such action, suit or proceeding, the indemnifying parties agree to indemnify and
hold harmless any Manager, to the extent provided in the preceding paragraph,
and any such controlling person from and against any loss, claim, damage,
liability or expense by reason of such settlement or judgment.

     (c)  Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless each of you and each other Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, the Company, its directors, its
officers who sign the Registration Statement, and any person who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
each Underwriter, but only with respect to the information furnished in writing
by or on behalf of such Selling Shareholder expressly for use in the
Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto; provided, however, the liability of a Selling
Shareholder under this paragraph (c) shall not exceed the proceeds received by
such Selling Shareholder from the sale of such Selling Shareholder's shares
hereunder. If any action, suit or proceeding shall be brought against any
Underwriter, any such controlling person of any Underwriter, the Company, any of
its directors any such officer or any such controlling person of the Company,
based on the Registration Statement, the Prospectus or any Prepricing Prospectus
or any amendment or supplement thereto, and in respect of which indemnity may be
sought against any Selling Shareholder pursuant to this paragraph (c), such
Selling Shareholder shall have the rights and duties given to the Company by
paragraph (b) above (except that if the Company shall have assumed the defense
thereof such Selling Shareholder shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof, but the fees
and expenses of such counsel shall be at such Selling Shareholder's expense) and
each Underwriter, each such controlling person of any Underwriter, the Company,
its directors, and such officer, and any such controlling person of the Company
shall have the rights and duties given to the Underwriters by paragraph (b)
above. The foregoing indemnity agreement shall be in addition to any liability
which any Selling Shareholder may otherwise have.

     (d)  Each Manager agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement, any person who controls the Company within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act and the Selling Shareholders, to
the same extent as the foregoing indemnity from the Company and the Selling
Shareholders to each Manager, insofar as such losses, claims, damages,
liabilities and expenses arise out of or are based upon the untrue statement or
alleged untrue statement of a material fact contained in any International
Prepricing Prospectus or in the Registration Statement or the International
Prospectus or in any

                                       23
<PAGE>
 
amendment or supplement thereto, or arise out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Manager through you specifically
for use therein. If any action, suit or proceeding shall be brought against the
Company, any of its directors, any such officer, any such controlling person or
any Selling Shareholder based on the Registration Statement, the International
Prospectus or any International Prepricing Prospectus, or any amendment or
supplement thereto, and in respect of which indemnity may be sought against any
Manager pursuant to this paragraph (d), such Manager shall have the rights and
duties given to the Company by paragraph (b) above (except that if the Company
or the Selling Shareholders shall have assumed the defense thereof such Manager
shall not be required to do so, but may employ separate counsel therein and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at such Manager's expense), and the Company, its directors, any such
officer, any such controlling person and the Selling Shareholders shall have the
rights and duties given to the Managers by paragraph (b) above.

     (e)  If the indemnification provided for in this Section 9 is unavailable
to an indemnified party under paragraphs (a), (c), or (d) hereof in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then
an indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Selling Shareholders on the one hand and the Managers on the other hand from
the offering of the Shares, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and the Selling Shareholders on the one
hand and the Managers on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations.  The relative
benefits received by the Company and the Selling Shareholders on the one hand
and the Managers on the other hand shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company and the Selling Shareholders bear to the total underwriting
discounts and commissions received by the Managers, in each case as set forth in
the table on the cover page of the International Prospectus; provided that, in
the event that the Managers shall have purchased any Additional Shares
hereunder, any determination of the relative

                                       24
<PAGE>
 
benefits received by the Company, the Selling Shareholders or the Managers from
the offering of the Shares shall include the net proceeds (before deducting
expenses) received by the Company, and the underwriting discounts and
commissions received by the Managers, from the sale of such Additional Shares,
in each case computed on the basis of the respective amounts set forth in the
notes to the table on the cover page of the International Prospectus.  The
relative fault of the Company and the Selling Shareholders on the one hand and
the Managers on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Selling Shareholders on the one hand or by the
Managers on the other hand and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.

     (f)  The Company, the Selling Shareholders and the Managers agree that it
would not be just and equitable if contribution pursuant to this Section 9 were
determined by a pro rata allocation (even if the Managers were treated as one
entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (e) above.  The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (e) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding.  Notwithstanding the provisions of this Section 9, no Managers shall
be required to contribute any amount in excess of the amount by which the total
price of the Shares underwritten by it and distributed to the public exceeds the
amount of any damages which such Managers has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission.  Notwithstanding the provisions of this Section 9, no Selling
Shareholder shall be required to contribute any amount in excess of the total
net proceeds of the Shares sold by such Selling Shareholder.  No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.  The Managers' obligations to contribute pursuant
to this Section 9 are several in proportion to the respective numbers of Firm
Shares set forth opposite their names in Schedule II hereto (or such numbers of
Firm Shares increased as set forth in Section 12 hereof) and not joint.

     (g)  No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action,
suit or proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of

                                       25
<PAGE>
 
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.

          (h)  Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 9 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 9 and the
representations and warranties of the Company and the Selling Shareholders set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Managers or any
person controlling any Manager, the Company, its directors or officers or the
Selling Shareholders, any director, officer or partner of a Selling Shareholder
or any person controlling the Company or any Selling Shareholder, (ii)
acceptance of any Shares and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to any Manager or any person
controlling any Manager, or to the Company, its directors or officers, or to a
Selling Shareholder, any director, officer or partner of a Selling Shareholder,
or any person controlling the Company or any Selling Shareholder, shall be
entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 9.

     10.  Conditions of Managers' Obligations. The several obligations of the
Managers to purchase the Firm Shares hereunder are subject to the following
conditions:

          (a)  If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
Registration Statement or such post-effective amendment shall have become
effective not later than 5:30 P.M. New York City time, on the date hereof, or at
such later date and time as shall be consented to in writing by you, and all
filings, if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the knowledge of the Company or any Manager, threatened
by the Commission, and any request of the Commission for additional information
(to be included in the Registration Statement or the Prospectuses or otherwise)
shall have been complied with to your reasonable satisfaction.

          (b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change, or any development involving a prospective
change, in or affecting the condition (financial or other), business,
properties, net worth or results of operations of the Company or the
Subsidiaries not contemplated by the Prospectuses, which in your opinion, as
Lead Managers of the

                                       26
<PAGE>
 
several Managers, would materially, adversely affect the market for the Shares,
or (ii) any event or development relating to or involving the Company or any
officer or director of the Company or any Selling Shareholder which makes any
statement made in the Prospectuses untrue or which, in the opinion of the
Company and its counsel or the Managers and their counsel, requires the making
of any addition to or change in the Prospectuses in order to state a material
fact required by the Act or any other law to be stated therein or necessary in
order to make the statements therein not misleading, if amending or
supplementing the Prospectuses to reflect such event or development would, in
your opinion, as Lead Managers for the several Managers, materially adversely
affect the market for the Shares.

     (c)  You shall have received on the Closing Date an opinion of Cozen and
O'Connor, counsel for the Company and the Selling Shareholders, dated the
Closing Date and addressed to you, as Lead Managers for the several Managers, to
the effect that:

     (i)  The Company is a corporation duly incorporated and validly subsisting
under the laws of the Commonwealth of Pennsylvania with full corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Registration Statement and the Prospectuses; [and is duly
registered and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature or the conduct of the business transacted
or property owned or leased by it makes such registration or qualification
necessary, except where the failure so to register or qualify or be in good
standing would not have a Material Adverse Effect];

     (ii)  Each of the Subsidiaries is either (A) a corporation duly organized
and validly existing in good standing under the laws of the jurisdiction of its
organization, or (B) a limited partnership duly organized under the laws of the
Commonwealth of Pennsylvania; [with full corporate power and authority to own,
lease, and operate its properties and to conduct its business as described in
the Registration Statement and the Prospectuses (and any amendment or supplement
thereto), and all the outstanding shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully paid and
nonassessable, and are owned by the Company directly, free and clear of any
perfected security interest, or, to the best knowledge of such counsel after
reasonable inquiry, any other security interest, lien, adverse claim, equity or
other encumbrance];

     (iii)  The authorized and outstanding capital stock of the Company is as
set forth under the caption "Capitalization" in the Prospectuses; and the
authorized capital stock of the Company conforms in all material respects as to
legal matters to the description thereof contained in the Prospectuses under the
caption "Description of Capital Stock";

                                       27
<PAGE>
 
     (iv)  All the shares of capital stock of the Company outstanding prior to
the issuance of the Shares to be issued and sold by the Company pursuant to the
Underwriting Agreements have been duly authorized and validly issued, are fully
paid and nonassessable;

     (v)  The Underwritten Shares to be issued and sold to the U.S. Underwriters
and Managers by the Company under the U.S. Underwriting Agreement and the
International Underwriting Agreement have been duly authorized and, when issued
and delivered to the U.S. Underwriters and Managers against payment therefor in
accordance with the terms of the U.S. Underwriting Agreement and the
International Underwriting Agreement, will be validly issued, fully paid and
nonassessable and free of any (A) preemptive rights or (B) to the best knowledge
of such counsel after reasonable inquiry, similar rights that entitle or will
entitle any person to acquire any Shares upon the issuance thereof by the
Company;

     (vi)  The form of certificates for the Shares conforms to the requirements
of the Pennsylvania Business Law of 1988, as amended;

     (vii)  The Registration Statement and all post-effective amendments, if
any, have become effective under the Act and, to the knowledge of such counsel,
no stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose are pending before or
contemplated by the Commission; and any required filing of the Prospectuses
pursuant to Rule 424(b) has been made in accordance with Rule 424(b);

     (viii)  The Company has the requisite corporate power and authority to
enter into this Agreement and the U.S. Underwriting Agreement and to issue, sell
and deliver the Underwritten Shares to be sold by it to the U.S. Underwriters
and Managers as provided herein and therein, and each of this Agreement and the
U.S. Underwriting Agreement have been duly authorized, executed and delivered by
the Company and is a legal, valid and binding agreement of the Company;

     (ix)  Neither the Company nor any of the Subsidiaries is (A) in violation
of its respective certificate of incorporation or bylaws or other organizational
documents, or (B) to the knowledge of such counsel in default in the performance
of any material obligation, agreement or condition contained in any bond,
debenture, note or other evidence of indebtedness, except as may be disclosed in
the Prospectuses or where any such default or defaults in the aggregate would
not, singularly or in the aggregate, have a Material Adverse Effect;

     (x)  Neither the offer, issuance, sale or delivery of the Underwritten
Shares, nor the execution, delivery or performance of this Agreement or the U.S.
Underwriting Agreement or compliance by

                                       28
<PAGE>
 
the Company with all provisions of this Agreement and the U.S. Underwriting
Agreement, nor consummation by the Company of the transactions contemplated
hereby or by the U.S. Underwriting Agreement conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, the certificate
of incorporation or bylaws, or other organizational document, of the Company or
any of the Subsidiaries or any material agreement, indenture, lease or other
instrument known to such counsel to which the Company or any of the Subsidiaries
is a party or by which any of them or any of their respective properties is
bound that is made an exhibit to the Registration Statement, or except as
disclosed in the Registration Statement, will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of the Subsidiaries under any such agreement, indenture, lease or
other instrument, nor, to such counsel's knowledge, will any such action result
in any violation of any existing law, regulation, ruling (assuming compliance
with all applicable state securities and Blue Sky laws), or any ruling,
judgment, injunction, order or decree of any court or governmental entity or
instrumentality known to such counsel, and applicable to the Company, the
Subsidiaries or any of their respective properties;

     (xi)  No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency, or official is required on the part of the
Company (except as have been obtained under the Act or such as may be required
under the securities laws of the jurisdictions governing the purchase and
distribution of the Shares) for the valid issuance and sale of the Shares to the
Managers as contemplated by this Agreement;

     (xii)  The Registration Statement and the Prospectuses and any supplements
or amendments thereto (except for the financial statements, schedules and notes
thereto and other financial and statistical data included therein, as to which
such counsel need not express any opinion) comply as to form in all material
respects with the requirements of the Act;

     (xiii)  To the knowledge of such counsel, (A) other than as described or
contemplated in the Prospectuses, there are no legal or governmental proceedings
pending or threatened against the Company or any of the Subsidiaries or to which
the Company, the Subsidiaries or any of their respective properties is subject,
which are required to be described in the Registration Statement or Prospectuses
(or any amendment or supplement thereto) and (B) there are no agreements,
contracts, indentures, leases or other instruments, relating to the Company or
any of the Subsidiaries of a character that are required to be described in the
Registration Statement or the Prospectuses (or any amendment or supplement
thereto) or to be filed as an exhibit to the Registration Statement that are not
described or filed as required, as the case may be;

                                       29
<PAGE>
 
     (xiv)  To the knowledge of such counsel, the U.S. Underwriting Agreement,
the International Underwriting Agreement and the Custody Agreement have each
been duly authorized, executed and delivered by or on behalf of each of the
Selling Shareholders [and are valid and binding agreements of each Selling
Shareholder enforceable against each Selling Shareholder in accordance with
their respective terms except that (i) enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, (ii) the remedy of
specific performance and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before which the
proceedings may be brought and (iii) rights to indemnity and contribution
thereunder may be limited by Federal or state securities laws or the public
policy underlying such laws];

     [(xv)  To the best knowledge of such counsel after reasonable inquiry and
except as set forth in the Prospectuses, neither the Company nor any of the
Subsidiaries is in violation of any Laws or of any ruling, judgment, injunction,
order or decree of any court or governmental agency or body having jurisdiction
over the Company or any of the Subsidiaries which violation or violations would
not, singularly or in the aggregate, have a Material Adverse Effect;]

     [(xvi)  The Company and each of the Subsidiaries has all necessary orders,
consents, approvals, permits, licenses, franchises and authorizations of and
from all regulatory authorities to conduct their respective businesses as
described in the Registration Statement and Prospectuses, except, in any case,
where the failure to so possess would not, singularly or in the aggregate, have
a Material Adverse Effect, and to the best of such counsel's knowledge after due
inquiry, neither the Company nor the Subsidiaries has received any actual
notification from any regulatory authority to the effect that any additional
approval is required to be obtained by the Company or the Subsidiaries;]

     (xvii)  The statements in the Registration Statement and Prospectuses,
insofar as they are descriptions of contracts, agreements or other legal
documents or refer to statements of law or legal conclusions, are accurate in
all material respects and present fairly the information required to be shown;

     (xviii)  Except as described in the Prospectuses, such counsel does not
know of any outstanding option, warrant or other right calling for the issuance
of, and such counsel does not know of any commitment, plan or arrangement to
issue, any share of capital stock of the Company or any security convertible
into or exchangeable or exercisable for capital stock of the Company; and such
counsel does not know of any holder of any security of the Company or any other
person who has the right, contractual or otherwise, to cause the Company to sell
or otherwise issue to them, or permit them to underwrite the sale of, any of the
Shares or the

                                       30
<PAGE>
 
right to have any Common Stock or other securities of the Company included in
the Registration Statement or the right, as a result of the filing of the
Registration Statement, to require registration under the Act of Common Stock or
other securities of the Company;

     (xix)  The Company is not now and upon the sale of the Shares to be issued
and sold in accordance herewith and upon application of the net proceeds from
such sale as described in the Prospectuses under the caption "Use of Proceeds"
will not be an "investment company" within the meaning of the 1940 Act;

     [(xx)  The Company and the Subsidiaries own or possess all patents,
trademarks, trademark registrations, service marks, service mark registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
described in the Prospectuses as being owned by them or any of them or, to the
best knowledge of such counsel after reasonable inquiry, necessary for the
conduct of their respective businesses, except where the failure to so own or
possess would not, singularly or in the aggregate, have a Material Adverse
Effect, and such counsel is not aware of any claim to the contrary or any
challenge by any other person to the rights of the Company and the Subsidiaries
with respect to the foregoing;]

     (xxi)  Each Selling Shareholder has full legal right, power and
authorization, and any approval required by law (except such as may be required
under state or foreign securities of Blue Sky laws), to sell, assign, transfer
and deliver good and valid title to the Shares which such Selling Shareholder
has agreed to sell pursuant to this Agreement and the U.S. Underwriting
Agreement;

     (xxii)  The execution and delivery of this Agreement and the sale of the
Shares by each Selling Shareholder to the Underwriters, and compliance by such
Selling Shareholder with the terms of this Agreement, including the delivery to
the Underwriters of certificates evidencing such shares and the execution and
delivery to the Underwriters of a stock power in blank, have been duly
authorized by all necessary action on the part of such Selling Shareholder, and
to the knowledge of such counsel do not, and will not, conflict with, or result
in a breach of any of the terms and provisions of, or constitute a default under
(I) any statute, rule or regulation (assuming compliance with all applicable
state securities and Blue Sky laws) relating to such Selling Shareholder or its
legal or regulatory status in each case, that in the experience of such counsel
are normally applicable to transactions of the type provided for in this
Agreement, (II) any material judgment, order, rule, injunction or regulation of
any court or governmental agency or body, domestic or foreign, known to such
counsel as having jurisdiction over such Selling Shareholder or any of its
respective properties or (III) any material contract, agreement or other
instrument known to such counsel to which such Selling Shareholder is a party or
by which it or any of its properties are subject;

                                       31
<PAGE>
 
     (xxiii)  Upon consummation of the sale of the Shares pursuant to this
Agreement, assuming the Underwriters purchased the Shares for value, in good
faith and without notice of adverse claim, the Underwriters will have acquired
all rights of the Selling Shareholder in the Shares free and clear of any
security interest, mortgage, lien, pledge, encumbrance, claim or equity, [and
the owner of the Shares, if other than such Selling Shareholder, is precluded
from asserting against the Underwriters the ineffectiveness of any unauthorized
endorsement].

     In addition, such counsel shall state that although counsel has not
undertaken, [except as otherwise indicated in their opinion], to determine
independently, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements in the Registration Statement,
(except to the extent set forth in paragraphs (iii) and (xvii) above)] such
counsel has participated in the preparation of the Registration Statement and
the Prospectuses, including general review and discussion of the contents
thereof, and nothing has come to the attention of such counsel that would lead
them to believe that the Registration Statement at the time the Registration
Statement became effective, or the Prospectuses, as of their respective dates
and as of the Closing Date or the Option Closing Date, as the case may be,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated or necessary to make the statements therein, in the
case of the Prospectuses, in the light of the circumstances under which they
were made, not misleading or that any amendment or supplement to the
Prospectuses, as of its respective date, and as of the Closing Date or the
Option Closing Date, as the case may be, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated in the
Prospectuses or necessary in order to make the statements therein, in the case
of the Prospectuses, in the light of the circumstances under which they were
made, not misleading (it being understood that such counsel need express no
statement with respect to the financial statements, financial schedules, pro
forma financial statements and the notes thereto and other financial and
statistical data included in the Registration Statement or the Prospectuses).

     In rendering their opinion as aforesaid, counsel may, as to factual
matters, rely, to the extent such counsel deems proper, upon written
certificates or statements of officers of the Company and the Selling
Shareholders and, as to matters of law, may rely upon an opinion or opinions,
each dated the Closing Date, of other counsel retained by them or the Company as
to laws of any jurisdiction other than the United States or the Commonwealth of
Pennsylvania.  The foregoing opinion may be limited to the federal laws of the
United States of America and the Commonwealth of Pennsylvania, and counsel
rendering the foregoing opinion may rely as to questions of fact upon the
representations of the Selling Shareholders as set forth in this Agreement and
in the Custody Agreement.

                                       32
<PAGE>
 
     (d)  You shall have received on the Closing Date an opinion of Skadden,
Arps, Slate, Meagher & Flom LLP, counsel for the Managers, dated the Closing
Date and addressed to you as Lead Managers for the several Managers, with
respect to the matters referred to in clauses (v), (other than subclause (B)
thereof), (vii), (viii), (x) and the paragraph immediately following clause
(xxiii) of the foregoing paragraph (c) and such other related matters as you may
request.

     (e)  You shall have received letters addressed to you, as Lead Managers for
the several Managers, and dated the date hereof and the Closing Date from Arthur
Andersen LLP and Deloitte & Touche LLP, independent certified public
accountants, substantially in the forms heretofore approved by you.

     (f)  (i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been taken or, to the knowledge of the Company, shall be contemplated by the
Commission at or prior to the Closing Date; (ii) there shall not have been any
material change in the capital stock of the Company nor any material increase in
the short-term or long-term debt of the Company (other than in the ordinary
course of business) from that set forth or contemplated in the Registration
Statement or the Prospectuses (or any amendment or Supplement thereto); (iii)
there shall not have been, since the respective dates as of which information is
given in the Registration Statement and the Prospectuses (or any amendment or
supplement thereto), except as may otherwise be stated or contemplated in the
Registration Statement and Prospectuses (or any amendment or supplement
thereto), any material adverse change in the condition (financial or other),
business, prospects, properties, net worth or results of operations of the
Company and the Subsidiaries taken as a whole; (iv) the Company and the
Subsidiaries shall not have any liabilities or obligations, direct or contingent
(whether or not in the ordinary course of business), that are material to the
Company and the Subsidiaries, taken as a whole, other than those reflected in
the Registration Statement or the Prospectuses (or any amendment or supplement
thereto); and (v) all the representations and warranties of the Company
contained in this Agreement shall be true and correct [in all material respects]
on and as of the date hereof and on and as of the Closing Date as if made on and
as of the Closing Date, and you shall have received a certificate, dated the
Closing Date and signed by the chief executive officer and the chief financial
officer of the Company (or such other officers as are acceptable to you), to the
effect set forth in this Section 10(f) and in Section 10(g) hereof.

     (g)  The Company shall not have failed at or prior to the Closing Date to
have performed or complied with any of its agreements herein contained and
required to be performed or complied with by it hereunder at or prior to the
Closing Date.

                                       33
<PAGE>
 
          (h)  All the representations and warranties of the Selling
Shareholders contained in this Agreement and in the U.S. Underwriting Agreement
shall be true and correct on and as of the date hereof and on and as of the
Closing Date as if made on and as of the Closing Date, and you shall have
received a certificate, dated the Closing Date and signed by or on behalf of
each of the Selling Shareholders to the effect set forth in this Section 10(h)
and in Section 10(i) hereof.

          (i)  The Selling Shareholders shall not have failed at or prior to the
Closing Date to have performed or complied in all material respects with any of
their agreements contained in this Agreement or in the U.S. Underwriting
Agreement and required to be performed or complied with by them at or prior to
the Closing Date.

          (j)  The Shares shall have been listed or approved for listing subject
to notice of issuance on the New York Stock Exchange.

          (k)  The closing under the U.S. Underwriting Agreement shall have
occurred on the Closing Date concurrently with the closing hereunder.

          (l)  The Sellers shall have furnished or caused to be furnished to you
such further certificates and documents as you shall have reasonably requested.

     All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to you and your counsel.

     Any certificate or document signed by any officer of the Company or any
Attorney-in-Fact or any Selling Shareholder and delivered to you, as Lead
Managers for the several Managers, or to counsel for the Managers, shall be
deemed a representation and warranty by the Company, the Selling Shareholders or
the particular Selling Shareholder, as the case may be, to each Manager as to
the statements made therein.

     The several obligations of the Managers to purchase Additional Shares
hereunder are subject to the satisfaction on and as of any Option Closing Date
of the conditions set forth in this Section 10, except that, if any Option
Closing Date is other than the Closing Date, the certificates, opinions and
letters referred to in this Section 10 shall be dated the Option Closing Date in
question and the opinions or letters called for by paragraphs (c), (d), (e) and
(f) shall be revised to reflect the sale of Additional Shares.

     11.  Expenses.  The Company agrees to pay the following costs and expenses
and all other costs and expenses incident to the performance by the Company of
its obligations hereunder: (i) the printing (or reproduction) and filing with
the Commission and

                                       34
<PAGE>
 
delivery charges and charges for counting and packaging of such copies of the
Registration Statement, each International Prepricing Prospectus, the
International Prospectus and all amendments or supplements to any of them, as
may be reasonably requested for use in connection with the offering and sale of
the Shares; (ii) the preparation, printing, authentication, issuance and
delivery of certificates for the Shares, including any stamp taxes in connection
with the original issuance and sale of the Shares by the Company; (iii) the
printing (or reproduction) and delivery of this Agreement, the U.S. Underwriting
Agreement, the Supplemental Agreement Among U.S. Underwriters, the Agreement
Among Managers, the Agreement Between U.S. Underwriters and Managers, the
International Selling Agreement, the Managers' Questionnaire, the preliminary
and supplemental Blue Sky Memoranda and all other agreements or documents
printed (or reproduced) and delivered in connection with the original issuance
and sale of the Shares; (iv) the registration of the Common Stock under the
Exchange Act and the listing of the Shares on the New York Stock Exchange; (v)
the registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the several jurisdictions as provided in Section
5(g) hereof (including the reasonable fees, expenses and disbursements of
counsel for the Underwriters relating to the preparation, printing or
reproduction, and delivery of the preliminary and supplemental Blue Sky
Memoranda and such registration and qualification); (vi) the filing fees in
connection with any filings required to be made with the National Association of
Securities Dealers, Inc.; (vii) the transportation and other expenses incurred
by or on behalf of representatives of the Company in connection with
presentations to prospective purchasers of the Shares; and (viii) the fees and
expenses of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company.  Each Selling Shareholder
agrees to pay for any transfer taxes on the sale by such Selling Shareholder of
such Selling Shareholder's Shares to the U.S. Underwriters.

     12.  Effective Date of Agreement.  This Agreement shall become effective:
(i) upon the execution and delivery hereof by the parties hereto; or (ii) if, at
the time this Agreement is executed and delivered, it is necessary for the
registration statement or a post-effective amendment thereto to be declared
effective before the offering of the Shares may commence, when notification of
the effectiveness of the registration statement or such post-effective amendment
has been released by the Commission.  Until such time as this Agreement shall
have become effective, it may be terminated by the Company, by notifying you, or
by you, as Lead Managers for the several Managers, by notifying the Company and
the Selling Shareholders.

          If any one or more of the Managers shall fail or refuse to purchase
Shares which it or they are obligated to purchase hereunder on the Closing Date,
and the aggregate number of Shares which such defaulting Manager or Managers are
obligated but fail or

                                       35
<PAGE>
 
refuse to purchase is not more than one-tenth of the aggregate number of Shares
which the Managers are obligated to purchase on the Closing Date, each non-
defaulting Manager shall be obligated, severally, in the proportion which the
number of Firm Shares set forth opposite its name in Schedule II hereto bears to
the aggregate number of Firm Shares set forth opposite the names of all non-
defaulting Managers or in such other proportion as you may specify in accordance
with Section 20 of the Master Agreement Among Underwriters of Smith Barney Inc.,
to purchase the Shares which such defaulting Manager or Managers are obligated,
but fail or refuse, to purchase.  If any one or more of the Managers shall fail
or refuse to purchase Shares which it or they are obligated to purchase on the
Closing Date and the aggregate number of Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Shares which
the Managers are obligated to purchase on the Closing Date and arrangements
satisfactory to you and the Company for the purchase of such Shares by one or
more non-defaulting Managers or other party or parties approved by you and the
Company are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Manager or the
Company.  In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected.  Any action taken under
this paragraph shall not relieve any defaulting Manager from liability in
respect of any such default of any such Manager under this Agreement.  The term
"Manager" as used in this Agreement includes, for all purposes of this
Agreement, any party not listed in Schedule II hereto which, with your approval
and the approval of the Company, purchases Shares which a defaulting Manager is
obligated, but fails or refuses, to purchase.

     Any notice under this Section 12 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.

     13.  Termination of Agreement.  This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Manager to the Company or any Selling Shareholder, by notice to the Company, if
prior to the Closing Date or any Option Closing Date (if different from the
Closing Date and then only as to the Additional Shares), as the case may be, (i)
trading in securities generally on the New York Stock Exchange, American Stock
Exchange or the Nasdaq National Market shall have been suspended or materially
limited, (ii) a general moratorium on commercial banking activities in New York
or Pennsylvania shall have been declared by either federal or state authorities,
or (iii) there shall have occurred any outbreak or escalation of hostilities or
other international or domestic calamity, crisis or change in political,
financial or economic conditions, the effect of which on the financial markets
of the United States is such as to make it,

                                       36
<PAGE>
 
in your judgment, impracticable or inadvisable to commence or continue the
offering of the Shares at the offering price to the public set forth on the
cover page of the International Prospectus or to enforce contracts for the
resale of the Shares by the Managers.

     Notice of such termination may be given by telegram, telecopy or telephone
and shall be subsequently confirmed by letter.

     14.  Information Furnished by the Managers.  The statements set forth in
the last paragraph on the cover page, the stabilization legend on the inside
front cover page, and the statements in the [   ] paragraphs under the caption
"Underwriting" in any International Prepricing Prospectus and in the
International Prospectus, constitute the only information furnished by or on
behalf of the Managers through you as such information is referred to in
Sections 7(b) and 9 hereof.

     15.  Miscellaneous.  Except as otherwise provided in Sections 5, 12 and 13
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, or the Selling
Shareholders at the office of the Company at 631 Park Avenue, King of Prussia,
PA  19406 Attention: _______________ or (iii) if to you, as Lead Managers for
the several Managers, care of Smith Barney Inc., 388 Greenwich Street, New York,
New York 10013, Attention: Manager, Investment Banking Division.

     This Agreement has been and is made solely for the benefit of the several
Managers, the Company, its directors and officers, and the other controlling
persons referred to in Section 9 hereof and the Selling Shareholders and their
respective successors and assigns, to the extent provided herein, and no other
person shall acquire or have any right under or by virtue of this Agreement.
Neither the term "successor" nor the term "successors and assigns" as used in
this Agreement shall include a purchaser from any Manager of any of the Shares
in his status as such purchaser.

     16.  Applicable Law; Counterparts.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.

     This Agreement may be signed in various counterparts which together
constitute one and the same instrument.  If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.

                                       37
<PAGE>
 
     Please confirm that the foregoing correctly sets forth the agreement among
the Company, the Selling Shareholders and the several Managers.


                                           Very truly yours,


                                           PIERCE LEAHY CORP.


                                           By ........................
                                           President and Chief
                                           Executive Officer
    
    
                                           Each of the Selling Shareholders
                                              named in Schedule I hereto
    
    
                                           By ............................
                                                    Attorney-in-Fact
    
    
                                           By ...........................
                                                    Attorney-in-Fact


Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Managers named in Schedule II
hereto.


SMITH BARNEY INC.
MERRILL LYNCH INTERNATIONAL
PAINEWEBBER INTERNATIONAL 

     As Lead Managers for the Several Managers


By SMITH BARNEY INC.


By ...................................
       Managing Director
 

                                       38
<PAGE>
 
                                   SCHEDULE I


                               PIERCE LEAHY CORP.


Part A - Firm Shares
- --------------------

                                                    Number of
            Selling Shareholders                   Firm Shares
            --------------------                   -----------



                                                   --------------
                                   Total........   
                                                   --------------
                                       39
<PAGE>
 
                                  SCHEDULE II


                               PIERCE LEAHY CORP.



                              Number of                             Number of
     Underwriter                Shares          Underwriter           Shares
     -----------                ------          -----------           ------   


Smith Barney Inc.   .......

Merrill Lynch International

PaineWebber International .















                                                                      ----------
                                                            Total.... ==========
                                                                      

                                       40

<PAGE>
 
Microfilm Number
                ----------------------------

Filed with the Department of State on
                                     -----------------------

Entity Number
             ------------------------------

- --------------------------------------------------------------------------------


Secretary of the Commonwealth


                           ARTICLES OF INCORPORATION
                              DSCB:15-1306(Rev 91)

Indicate type of domestic corporation (check one):

   X Business-stock                     Professional
  ---   (15 Pa. C.S. (S) 1306)       ---    (15 Pa. C.S. (S) 2903)

     Business-nonstock                  Management
  ---   (15 Pa. C.S. (S) 2102)       ---    (15 Pa. C.S. (S) 2701)

     Business-statutory close           Cooperative
  ---   (15 Pa. C.S. (S) 2304a)      ---    (15 Pa. C.S. (S) 7701)

      In compliance with the requirements of the applicable provisions of 15
Pa.CS.(relating to corporations and unincorporated associations) the
undersigned, desiring to incorporate a corporation for profit hereby, state(s)
that:

1.    The name of the corporation is:  Pierce Leahy Inc.
                                                        ------------------------

2.    The address of this corporation's initial registered office in this
      Commonwealth and the county of venue is:


(a)   631 Park Avenue
      --------------------------------------------------------------------------
      Number and Street

      King of Prussia     PA              19406            Montgomery
      --------------------------------------------------------------------------
      City                State            Zip             County

(b)   
      --------------------------------------------------------------------------
      Name of Commercial Registered Office Provider

      --------------------------------------------------------------------------
      County

      
      For a corporation represented by a commercial registered office provider,
      the county in (b) shall be deemed the county in which the corporation is
      located for venue and official publication purposes.

3.    The corporation is incorporated under the provisions of the Business
      Corporation Law of 1988.
<PAGE>
 
 4.   The aggregate number of shares, authorized is:  1,000 shares of
                                                      -------------------------
      Common Stock, $.01 par value                 
      -------------------------------------------------------------------------

      (other provisions, if any, attach 8 1/2 X 11 sheet)

5.    The name and address, including street and number, if any, of the
      incorporator is:

      Name:     Loriann Lea
                ---------------------------------------------------------------
      Address:  Cozen and O'Connor
                ---------------------------------------------------------------
                1900 Market Street
                ---------------------------------------------------------------
                Philadelphia, PA 19103
                ---------------------------------------------------------------

6.    The specified effective date, if any, is:

               upon filing
      -------------------------------------------------------------------------
      month,  day,  year,  hour,  if any

7.    Any additional provisions of the articles, if any, attach 8 1/2 X 11
      sheet.

      SEE 7(a)

8.    Statutory close corporation only:  Neither the corporation nor any
      shareholder shall make an offering of any of its shares of any class that
      would constitute a "Public Offering" within the meaning of the Securities
      Act of 1933 (15U.S.C. (S) 77A et seq).

9.    Business Cooperative Corporations only:  (Complete and strike out
      inapplicable term) The common bond of membership among its
      members/shareholders is: 
                              -------------------------------------------------
      
      -------------------------------------------------------------------------


7.    (a) The shareholders shall not have the right to cumulate their shares
          in voting for the election of Directors.

IN TESTIMONY WHEREOF, the incorporator has signed these Articles of
Incorporation this 24th day of April, 1997.
                   ----        -----       



                                        /s/ Loriann Lea
                                        ---------------------------------------
                                        Loriann Lea, Incorporator
<PAGE>
 
Microfilm Number
                --------------------------------------------

Filed with the Department of State on
                                     -----------------------

Entity Number
             -----------------------------------------------


- ------------------------------------------------------------
Secretary of the Commonwealth



              ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
                            DSCB:  15-1915 (Rev 91)

In compliance with the requirements of 15 Pa.C.S. (S)1915 (relating to articles
of amendment), the undersigned business corporation, desiring to amend its
Articles, hereby states that:

1.  The name of the corporation is:  Pierce Leahy Inc.
                                    --------------------------------------------

2.   The (a) address of this corporation's current registered office in this
     Commonwealth or (b) commercial registered office provider and the county of
     venue is (the Department is hereby authorized to correct the following
     address to conform to the records of the Department):

(a)  631 Park Avenue             King of Prussia      PA    19406    Montgomery
     ---------------------------------------------------------------------------
     Number and Street                     City    State     Zip       County

(b)
     ---------------------------------------------------------------------------
     Name of Commercial Registered Office Provider County

     For a corporation represented by a commercial registered office provider,
the county in (b) shall be deemed the county in which the corporation is located
for venue and official publication purposes.

3.   The statute by or under which it was incorporated is:

     Business Corporation Law of 1988, as amended
     ---------------------------------------------------------------------------

4.   The date of its incorporation is:  March 5, 1997
                                      ------------------------------------------

5.   (Check, and if appropriate complete, one of the following):

      X The amendment shall be effective upon filing these Articles of Amendment
     ---
     in the Department of State. 
                                    
        The amendment shall be effective on:                   
     ---                                    -----------------  
<PAGE>
 
6.   (Check one of the following):

      X The amendment was adopted by the shareholders pursuant to 15 Pa.C.S.
     ---                                                                      
     (S)1914 (a) and (b). 

        The amendment was adopted by the board of directors pursuant to 15
     ---     
     Pa. C.S. (S)1914 (c).

7.   (Check, and if appropriate complete, one of the following):

        The amendment adopted by the corporation, set forth in full,
     ---                                                              
     is as follows:

      X The amendment adopted by the corporation is as set forth in full in
     ---                                                                     
     Exhibit A, attached hereto and made a part hereof.

8.   (Check if the amendment restates the Articles):

        The restated Articles of Incorporation supersede the original
     ---                                                             
     Articles and all amendments thereto.


          IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer thereof this
_____ day of _______________, 1997.


                                    PIERCE LEAHY INC.
 

                                    BY:
                                       -----------------------------------------
                                       Name:
                                       Title:
<PAGE>
 
                       EXHIBIT A TO ARTICLES OF AMENDMENT


     Article 4 is hereby amended in its entirety to read in full as follows:

          "4(a)  The aggregate number of shares which the corporation shall have
     the authority to issue is Ninety Million (90,000,000) shares, to be divided
     into Eighty Million (80,000,000) shares of Common Stock, par value $.01 per
     share, and Ten Million (10,000,000) shares of Preferred Stock, par value
     $.01 per share.

          (b)  The Board of Directors is authorized to provide for the issuance
     of the shares of Preferred Stock as a class without series or in one or
     more series, and, by filing a statement pursuant to applicable law of the
     Commonwealth of Pennsylvania, to establish from time to time the number of
     shares to be included in each such class or series, and to fix the
     designations, powers, preferences and rights of the shares of each such
     class or series."

          (c)  Any or all classes and series of shares, or any part thereof, may
     be represented by uncertificated shares to the extent determined by the
     Board of Directors, except that shares represented by a certificate that is
     issued and outstanding shall continue to be represented thereby until the
     certificate is surrendered to the Corporation.

     Article 7 is hereby amended to add the following:

          "(b)  Subchapter E (Sections 2541-2548), Subchapter G (Sections 2561-
     2568) and Subchapter H (Section 2571-2578) of the Pennsylvania Business
     Corporation Law of 1988, as amended, shall not be applicable to this
     corporation."

<PAGE>
 
                                     BYLAWS

                                       OF

                               PIERCE LEAHY CORP.


                               ARTICLE I - OFFICE
                               ------------------

          Section 1-1.  Registered Office.  The registered office of the
          -----------   -----------------                               
Corporation shall be located within the Commonwealth of Pennsylvania at such
place as the Board of Directors (hereinafter referred to as the "Board of
Directors" or the "Board") shall determine from time to time.


                     ARTICLE II - MEETINGS OF SHAREHOLDERS
                     -------------------------------------

          Section 2-1.  Place of Meetings of Shareholders.  Meetings of
          -----------   ---------------------------------              
shareholders shall be held at such places, within or without the Commonwealth of
Pennsylvania, as may be fixed from time to time by the Board of Directors. If no
such place is fixed by the Board of Directors, meetings of the shareholders
shall be held at the registered office of the Corporation.

          Section 2-2.  Annual Meeting of Shareholders.
          -----------   ------------------------------ 

                  (a)   Time.  A meeting of the shareholders of the Corporation
                        ----            
shall be held in each calendar year, commencing with the year 1998, at such time
as the Board of Directors may determine.

                  (b)   Election of Directors.  At such annual meeting, there 
                        ---------------------    
shall be held an election of Directors.

          Section 2-3.  Special Meetings of Shareholders.  Except as expressly
          -----------   --------------------------------                      
required by law, special meetings of the shareholders may be called at any time
only by:

                  (a)   the Chairman of the Board, if any, if such officer is
serving as the chief executive officer of the Corporation, and otherwise the
President of the Corporation; or

                  (b)   the Board of Directors.

          Upon the written request of any person who has called a special
meeting, under these Bylaws or applicable law, which request specifies the
general nature of the business to be transacted at such meeting, it shall be the
duty of the Secretary to fix the time and place of such meeting, which shall be
held not less than five nor more than 60 days after the receipt of such request,
and to give due notice thereof as required by Section 2-4 hereof. If the
Secretary neglects or refuses to fix the time and place of such meeting, the
person or persons calling the meeting may do so.

          Section 2-4.  Notices of Meetings of Shareholders.  Written notice,
          -----------   -----------------------------------                  
complying with Article VI of these Bylaws, stating the place and time and, in
the case of special meetings, the general nature of the business to be
transacted at any meeting of the shareholders, shall be given to each
<PAGE>
 
shareholder of record entitled to vote at the meeting, except as provided in
Section 1707 of the Pennsylvania Business Corporation Law of 1988, as amended
(the "Pennsylvania BCL"), at least five days prior to the day named for the
meeting, provided that notice shall be given at least ten days prior to the day
named for a meeting to consider a fundamental change under Chapter 19 of the
Pennsylvania BCL. Such notices may be given by, or at the direction of, the
Secretary or other authorized person. If the Secretary or other authorized
person neglects or refuses to give notice of a meeting, the person or persons
calling the meeting may do so.

          Section 2-5.  Quorum of and Action by Shareholders.
          -----------   ------------------------------------ 

                  (a)   General Rule.  Except as provided in subsections (c), 
                        ------------   
(d) and (e) of this Section 2-5, the presence, in person or by proxy, of
shareholders entitled to cast at least a majority of the votes that all
shareholders are entitled to cast on a particular matter to be acted upon at the
meeting shall constitute a quorum for the purpose of consideration and action on
the matter. To the extent that a quorum is present with respect to consideration
of any action or particular matter or matters but a quorum is not present as to
any other matter or matters, consideration of an action on the matter or matters
for which a quorum is present may occur and, after such consideration and
action, the meeting may be adjourned for purposes of the consideration of and
action on a matter or matters for which a quorum is not present. Unless the
Pennsylvania BCL permits otherwise, this Section 2-5(a) may be modified only by
a Bylaw amendment adopted by the shareholders.

                  (b)   Action by Shareholders.  Except as otherwise provided 
                        ----------------------                                
by law, whenever any corporate action is to be taken by vote of the shareholders
of the Corporation at a duly organized meeting of shareholders, it shall be
authorized upon receiving the affirmative vote of a majority of the votes
properly cast at the meeting with respect to such matter and, if any
shareholders are entitled to vote thereon as a class, upon receiving the
affirmative vote of a majority of the votes properly cast by the shareholders
entitled to vote as a class. Unless the Pennsylvania BCL permits otherwise, this
Section 2-5(b) may be modified only by a Bylaw amendment adopted by the
shareholders.

                  (c)   Withdrawal.  The shareholders present at a duly 
                        ----------        
organized meeting can continue to do business until adjournment, notwithstanding
the withdrawal of enough shareholders to leave less than a quorum.

                  (d)   Election of Directors at Adjourned Meetings.  In the 
                        -------------------------------------------          
case of any meeting called for the election of Directors, those shareholders who
attend a meeting called for the election of Directors that has been previously
adjourned for lack of a quorum (whether with respect to a particular matter or
all matters to be considered and acted upon at such meeting), although less than
a quorum as fixed in subsection (a), shall nevertheless constitute a quorum for
the purpose of electing Directors.

                  (e)   Conduct of Other Business at Adjourned Meetings.  Those
                        -----------------------------------------------        
shareholders entitled to vote who attend a meeting of shareholders that has been
previously adjourned for one or more periods aggregating at least 15 days
because of an absence of a quorum (whether with respect to a particular matter
or all matters to be considered and acted upon at such meeting), although less
than a quorum as fixed in subsection (a), shall nevertheless constitute a quorum
for the purpose of acting upon any matter set forth in the notice of meeting if
the notice states that those shareholders who attend the adjourned meeting shall
nevertheless constitute a quorum for the purpose of acting upon the matter.

                                      -2-
<PAGE>
 
          Section 2-6.  Adjournments.
          -----------   ------------ 

                  (a)   General Rule.  Any regular or special meeting of the 
                        ------------                               
shareholders, including one at which directors are to be elected, may be
adjourned for such period as the shareholders present and entitled to vote shall
direct.

                  (b)   Lack of Quorum.  If a meeting cannot be organized 
                        --------------              
because a quorum has not attended, those present may, except as otherwise
provided in this Section 2-6, adjourn the meeting to such time and place as they
may determine.

                  (c)   Notice of an Adjourned Meeting.  When a meeting of 
                        ------------------------------        
shareholders is adjourned, it shall not be necessary to give any notice of the
adjourned meeting or of the business to be transacted at an adjourned meeting,
other than by announcement at the meeting at which the adjournment is taken,
unless the Board fixes a new record date for the adjourned meeting.

          Section 2-7.  Voting List, Voting and Proxies.
          -----------   ------------------------------- 

                  (a)   Voting List. The officer or agent having charge of the 
                        ----------- 
transfer books for shares of the Corporation shall make a complete list of the
shareholders entitled to vote at any meeting of shareholders, arranged in
alphabetical order, with the address of and the number of shares held by each.
The list shall be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any shareholder during the whole time
of the meeting for the purposes thereof, except that, if the Corporation has
5,000 or more shareholders, in lieu of making the list, the Corporation may make
the information therein available at the meeting by any other means.

                  (b)   Voting.  Except as otherwise specifically provided by 
                        ------            
law, all matters coming before the meeting shall be determined by a vote of
shares. Such vote shall be taken by voice unless the presiding officer
determines, or a shareholder demands, before the vote begins, that it be taken
by ballot.

                  (c)   Proxies.  At all meetings of shareholders, shareholders
                        -------                                         
entitled to vote may attend and vote either in person or by proxy. Every proxy
shall be executed in writing by the shareholder or by such shareholder's duly
authorized attorney-in-fact and filed with the Secretary of the Corporation. A
proxy, unless coupled with an interest (as defined in Section 1759(d) of the
Pennsylvania BCL), shall be revocable at will, notwithstanding any other
agreement or any provision in the proxy to the contrary, but the revocation of a
proxy shall not be effective until written notice thereof has been given to the
Secretary of the Corporation. An unrevoked proxy shall not be valid after three
years from the date of its execution unless a longer time is expressly provided
therein. A proxy shall not be revoked by the death or incapacity of the maker
unless, before the vote is counted or the authority is exercised, written notice
of the death or incapacity is given to the Secretary of the Corporation.

                  (d)   Judges of Election.  In advance of any meeting of 
                        ------------------      
shareholders of the Corporation, the Board of Directors may appoint one or three
Judges of Election, who need not be shareholders and who will have such duties
as provided in Section 1765(a)(3) of the Pennsylvania BCL, to act at the meeting
or any adjournment thereof. If one or three Judges of Election are not so
appointed, the presiding officer of the meeting may, and on the request of any
shareholder shall, appoint one or three Judges of Election at the meeting. In
case any person appointed as a Judge of Election fails to appear or refuses to
act, the vacancy may be filled by appointment made by the Board of Directors in
advance of

                                      -3-
<PAGE>
 
the convening of the meeting or at the meeting by the presiding officer. A
person who is a candidate for office to be filled at the meeting shall not act
as a Judge of Election. Unless the Pennsylvania BCL permits otherwise, this
Section 2-7(d) may be modified only by a Bylaw amendment adopted by the
shareholders.

          Section 2-8.  Participation in Meetings by Conference Telephone.  The
          -----------   -------------------------------------------------      
Board may provide by resolution, or the presiding officer may permit, with
respect to a particular meeting of shareholders that one or more persons may
participate in that meeting of the shareholders, be counted for the purposes of
determining a quorum and exercise all rights and privileges to which such person
might be entitled were such person personally in attendance, including the right
to vote, by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other.
Unless the Board so provides, or the presiding officer so permits, no person may
participate in a meeting of the shareholders by means of conference telephone or
similar communications equipment.

          Section 2-9.  No Consents in Lieu of Meeting.  No action of the
          -----------   ------------------------------                   
shareholders shall be taken by either unanimous or partial written consent or
other consent in lieu of a meeting.

          Section 2-10. Business at Meetings of Shareholders.  Except as
          ------------  ------------------------------------            
otherwise provided by law (including but not limited to Rule 14a-8 of the
Securities Exchange Act of 1934, as amended, or any successor provision thereto)
or in these Bylaws, the business which shall be conducted at any meeting of the
shareholders shall (a) have been specified in the written notice of the meeting
(or any supplement thereto) given by the Corporation, (b) be brought before the
meeting at the direction of the Board of Directors, (c) be brought before the
meeting by the presiding officer of the meeting unless a majority of the
Directors then in office object to such business being conducted at the meeting,
or (d) in the case of an annual meeting of shareholders, have been specified in
a written notice given to the Secretary of the Corporation, by or on behalf of
any shareholder who shall have been a shareholder of record on the record date
for such meeting and who shall continue to be entitled to vote thereat (the
"Shareholder Notice"), in accordance with all of the following requirements:

                  (a)   Each Shareholder Notice must be delivered to, or mailed
and received at, the principal executive offices of the Corporation (i) in the
case of an annual meeting that is called for a date that is within 30 days
before or after the anniversary date of the immediately preceding annual meeting
of shareholders, not less than 120 days nor more than 150 days prior to the date
of the Corporation's proxy statement was released to shareholders in connection
with the previous year's annual meeting of shareholders, and (ii) in the case of
an annual meeting that is called for a date that is not within 30 days before or
after the anniversary date of the immediately preceding annual meeting, not
later than the close of business on the tenth day following the day on which
notice of the date of the meeting was mailed or public disclosure of the date of
the meeting was made, whichever occurs first; and

                  (b)   Each such Shareholder Notice must set forth: (i) the
name and address of the shareholder who intends to bring the business before the
meeting; (ii) the general nature of the business which such shareholder seeks to
bring before the meeting and, if a specific action is to be proposed, the text
of the resolution or resolutions which the proposing shareholder proposes that
the shareholders adopt; and (iii) a representation that the shareholder is a
holder of record of the stock of the Corporation entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to bring the
business specified in the notice before the meeting. The presiding officer of
the meeting

                                      -4-
<PAGE>
 
may, in such officer's sole discretion, refuse to acknowledge any business
proposed by a shareholder not made in compliance with the foregoing procedure.

                  (c)   Notwithstanding anything in these Bylaws to the
contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section 2-10. The chairman of
the meeting shall, if the facts warrant, determine and declare to the meeting
that business was not properly brought before the meeting and in accordance with
the procedures prescribed by this Section 2-10, and if he should so determine,
he shall so declare to the meeting and any such business not properly brought
before the meeting shall not be transacted. Notwithstanding the foregoing
provisions of this Section 2-10, a shareholder shall also comply with all
applicable requirements of the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder with respect to the matters set forth in
this Section 2-10 and any shareholder proposal not required to be considered by
such rules need not be considered.


                        ARTICLE III - BOARD OF DIRECTORS
                        --------------------------------

          Section 3-1.
          ----------- 

                  (a)   General Powers.  Except as otherwise provided by law 
                        --------------           
and these Bylaws, all powers of the Corporation shall be exercised by or under
the authority of, and the business and affairs of the Corporation shall be
managed under the direction of the Board of Directors. Unless the Pennsylvania
BCL permits otherwise, this Section 3-l(a) may be modified only by a Bylaw
amendment adopted by the shareholders.

                  (b)   Number.  The number of members of the Board of 
                        ------        
Directors shall be the number of Directors serving at the time of adoption of
this Section 3-1, or such other number as may thereafter from time to time (i)
be determined by the Board of Directors, or (ii) be set forth in a notice of a
meeting of shareholders called for the election of a full Board of Directors;
provided, that if such notice contemplates a change in the size of the Board of
Directors, such change shall take effect as of the time the election called for
by the notice is held.

                  (c)   Classified Board of Directors.  The Directors shall be 
                        -----------------------------     
classified, with respect to the duration of the term for which they severally
hold office, into three classes (denominated Class I, Class II and Class III) as
nearly equal in number as reasonably possible. The Board of Directors shall
increase or decrease the number of Directors in one or more classes as may be
appropriate whenever it increases or decreases the number of Directors in order
to ensure that the three classes shall be as nearly equal in number as
reasonably as possible. The term of office of the initial Class I Directors
shall expire at the annual meeting of shareholders in 1998, the term of office
of the initial Class II Directors shall expire at the annual meeting of
shareholders in 1999 and the term of office of the initial Class III directors
shall expire at the annual meeting of shareholders in 2000. At the annual
meeting of shareholders, beginning in 1998, the successors of the class of
Directors whose term expires at the meeting shall be elected to hold office for
a term expiring at the annual meeting of shareholders held in the third year
following the year of their election. When a Director is elected, such
director's class shall be identified.

                  (d)   Term; Vacancies.  Each Director shall hold office until
                        ---------------                                    
the expiration of the term for which he was selected and until his successor has
been selected and qualified or until his

                                      -5-
<PAGE>
 
earlier death, resignation or removal. Any vacancies on the Board of Directors,
including vacancies resulting from an increase in the number of Directors, may
be filled by a majority vote of the remaining members of the Board (though less
than a quorum) or by a sole remaining Director or by the shareholders and each
person so selected shall be a Director to serve for the balance of the unexpired
term.  A director elected to fill a vacancy on the Board shall be elected for a
term expiring at the annual meeting when the term of a Director in such class
would naturally expire.

                  (e)   Qualification.  A Director must be a natural person at 
                        -------------                      
least 18 years of age.

          Section 3-2.  Place of Meetings.  Meetings of the Board of Directors
          -----------   -----------------                                     
may be held at such place within or without the Commonwealth of Pennsylvania as
a majority of the Directors may determine from time to time or as may be
designated in the notice of the meeting.

          Section 3-3.  Regular Meetings.  A regular meeting of the Board of
          -----------   ----------------                                    
Directors shall be held annually, immediately following the annual meeting of
the shareholders, at the place where such meeting of the shareholders is held or
at such other place and time as a majority of the Directors in office after the
annual meeting of shareholders may designate. At such meeting, the Board of
Directors shall elect officers of the Corporation. In addition to such regular
meeting, the Board of Directors shall have the power to fix by resolution the
place and time of other regular meetings of the Board.

          Section 3-4.  Special Meetings.  Special meetings of the Board of
          -----------   ----------------                                   
Directors shall be held whenever ordered by the Chairman of the Board, if any,
by the President, by a majority of the executive committee of the Board, if any,
or by a majority of the Directors in office.

          Section 3-5.  Participation in Meetings by Conference Telephone.  Any
          -----------   -------------------------------------------------      
Director may participate in any meeting of the Board of Directors or of any
committee (provided such Director is otherwise entitled to participate), be
counted for the purpose of determining a quorum thereof and exercise all rights
and privileges to which such Director might be entitled were he or she
personally in attendance, including the right to vote, or any other rights
attendant to presence in person at such meeting, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other.

          Section 3-6.  Notices of Meetings of Board of Directors.
          -----------   ----------------------------------------- 

                  (a)   Regular Meetings.  No notice shall be required to be 
                        ----------------       
given of any regular meeting, unless the same is held at other than the place or
time for holding such meeting as fixed in accordance with Section 3-3 of these
Bylaws, in which event five days' notice shall be given of the place and time of
such meeting complying with Article VI of these Bylaws.

                  (b)   Special Meetings.  Written notice stating the place and
                        ----------------                        
time of any special meeting of the Board of Directors shall be sufficient if
given at least one day, as provided in Article VI, in advance of the time fixed
for the meeting.

          Section 3-7.  Quorum; Action by the Board of Directors.  A majority of
          -----------   ----------------------------------------                
the Directors in office shall be necessary to constitute a quorum for the
transaction of business and the acts of a majority of the Directors present and
voting at a meeting at which a quorum is present shall be the acts

                                      -6-
<PAGE>
 
of the Board of Directors. If there is no quorum present at a duly convened
meeting of the Board of Directors, the majority of those present may adjourn the
meeting from time to time and place to place.

          Section 3-8.  Action by Unanimous Consent of the Board of Directors.
          -----------   -----------------------------------------------------  
Any action required or permitted to be taken at a meeting of the Directors, or
of the members of any committee of the Board of Directors, may be taken without
a meeting if, prior or subsequent to the action, a written consent or consents
thereto by all of the Directors in office (or all of the members of the
committee with respect to committee action) is filed with the Secretary of the
Corporation. In addition to other means of filing with the Secretary, insertion
of such consent in the minute book of the Corporation shall be deemed filing
with the Secretary regardless of whether the Secretary or some other authorized
person has actual possession of the minute book.  Written consents by all of the
directors or committee members, as the case may be, executed pursuant to this
Section 3-8 may be executed in any number of counterparts and shall be deemed
effective as of the date set forth therein.

          Section 3-9.  Committees.
          -----------   ---------- 

                  (a)   Establishment and Powers.  The Board of Directors of the
                        ------------------------                                
Corporation may, by resolution adopted by a majority of the Directors in office,
establish one or more committees to consist of one or more Directors of the
Corporation. Any committee, to the extent provided in the resolution of the
Board of Directors or in the Bylaws, shall have and may exercise all of the
powers and authority of the Board of Directors, except that a committee shall
not have any power or authority as to the following:

                      (i)    The submission to shareholders of any action
requiring approval of shareholders under the Pennsylvania BCL.

                     (ii)    The creation or filling of vacancies in the Board
of Directors.

                    (iii)    The adoption, amendment or repeal of the Bylaws.

                     (iv)    The amendment or repeal of any resolution of the
Board of Directors that by its terms is amendable or repealable only by the
Board of Directors.

                      (v)    Action on matters committed by the Bylaws or
resolution of the Board of Directors to another committee of the Board of
Directors.

                  (b)   Alternate Members.  The Board of Directors may 
                        -----------------                   
designate one or more Directors as alternate members of any committee who may
replace any absent or disqualified member at any meeting of the committee or for
the purpose of any written action by the committee. In the absence or
disqualification of a member and alternate member or members of a committee, the
member or members thereof present at a meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
Director to act at the meeting in the place of the absent or disqualified
member.

                  (c)   Term.  Each committee of the Board of Directors shall 
                        ----    
serve at the pleasure of the Board of Directors.

                                      -7-
<PAGE>
 
                  (d)   Status of Committee Action.  The term "Board of 
                        --------------------------       
Directors" or "Board," when used in any provision of these Bylaws relating to
the organization or procedures of or the manner of taking action by the Board of
Directors, shall be construed to include and refer to any executive or other
committee of the Board of Directors. Any provision of these Bylaws relating or
referring to action to be taken by the Board of Directors or the procedure
required therefor shall be satisfied by the taking of corresponding action by a
committee of the Board of Directors to the extent authority to take the action
has been delegated to the committee pursuant to this Section.

          Section 3-10.  Nominations.  Notwithstanding the provisions of Section
          ------------   -----------                                            
2-10 of these Bylaws (dealing with business at meetings of shareholders),
nominations for the election of Directors may be made by only the Board of
Directors, a committee appointed by the Board of Directors or by any shareholder
of record entitled to vote in the election of Directors who is a shareholder at
the record date of the meeting and also on the date of the meeting at which
Directors are to be elected; provided, however, that with respect to a
nomination made by a shareholder, such shareholder must provide timely written
notice to the President of the Corporation in accordance with the following
requirements, except as otherwise provided by law:

                  (a)   To be timely, a shareholder's notice must be delivered
to, or mailed and received at, the principal executive offices of the
Corporation addressed to the attention of the President (i) in the case of an
annual meeting that is called for a date that is within 30 days before or after
the anniversary date of the immediately preceding annual meeting of
shareholders, not less than 120 days nor more than 150 days prior to the date
the Corporation's proxy statement was released to shareholders in connection
with the previous year's annual meeting of shareholders, and (ii) in the case of
an annual meeting that is called for a date that is not within 30 days before or
after the anniversary date of the immediately preceding annual meeting, or in
the case of a special meeting of shareholders called for the purpose of electing
Directors, not later than the close of business on the tenth day following the
day on which notice of the date of the meeting was mailed or public disclosure
of the date of the meeting was made, whichever occurs first; and

                  (b)   Each such written notice must set forth: (i) the name
and address of the shareholder who intends to make the nomination; (ii) the name
and address of the person or persons to be nominated; (iii) a representation
that the shareholder is a holder of record of shares of the Corporation entitled
to vote at such meeting and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice; (iv) a
description of all arrangements or understandings between the shareholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder; (v) such other information regarding each nominee proposed by such
shareholder as would have been required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission had
the nominee been nominated, or intended to be nominated, by the Board of
Directors; and (vi) the written consent of each nominee to serve as a Director
of the Corporation if so elected. The presiding officer of the meeting may
refuse, in such officer's sole discretion, to acknowledge the nomination of any
person as not made in compliance with the foregoing procedure.

                  (c)   No person shall be eligible to serve as a Director of
the Corporation unless nominated in accordance with the procedures set forth in
this Section 3-10. The Chairman of the meeting shall, as the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by this Section 3-10, and if he should
do determine, he shall so declare to the meeting and the defective nomination
shall be disregarded. Notwithstanding the

                                      -8-
<PAGE>
 
foregoing provisions of this Section 3-10, a shareholder shall also comply with
all applicable requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder with respect to the matters set forth
in this Section 3-10 and any shareholder proposal not required to be considered
by such rules need not be considered.

          Section 3-11.  Payments to Directors.  Directors may be reimbursed for
          ------------   ---------------------                                  
the expenses of attending Board meetings and committee meetings and may be paid
a fixed sum for attendance at each meeting or such other compensation for their
services as may, from time to time, be fixed by the Board of Directors.  No such
payment shall preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor.

          Section 3-12.  Distributions.  The Directors may, to the extent
          ------------   -------------                                   
permitted by law, authorize and the Corporation may make distributions from time
to time.


                             ARTICLE IV - OFFICERS
                             ---------------------

          Section 4-1.  Election and Office.  The Corporation shall have a
          -----------   -------------------                               
President, a Secretary and a Treasurer who shall be elected by the Board of
Directors. The Board of Directors may elect as additional officers a Chairman of
the Board, one or more Vice Chairmen of the Board, one or more Vice Presidents,
a Chief Financial Officer, and one or more other officers or assistant officers.
Any number of offices may be held by the same person. The President and the
Secretary shall be natural persons of the age of 18 years or older. The
Treasurer may be a corporation, but if a natural person shall be of the age of
18 years or older.

          Section 4-2.  Term.  The officers and assistant officers shall each
          -----------   ----                                                 
serve at the pleasure of the Board of Directors until the first meeting of the
Board of Directors following the next annual meeting of shareholders, unless
removed from office by the Board of Directors during their respective tenures.
Officers may, but need not, be Directors.

          Section 4-3.  Powers and Duties of the President.  Unless otherwise
          -----------   ----------------------------------                   
determined by the Board of Directors, the President shall have the usual duties
of an executive officer with general supervision over and direction of the
affairs of the Corporation. The President shall be the chief executive officer
of the Corporation unless the Chairman of the Board is serving as chief
executive officer, in which event the President shall be chief operating officer
of the Corporation. In the exercise of these duties and subject to the actions
and directions of the Board of Directors, the President may appoint, suspend,
and discharge employees, agents and assistant officers, fix the compensation of
all officers and assistant officers, shall preside at all meetings of the
shareholders at which the President shall be present and, unless there is a
Chairman of the Board, shall preside at all meetings of the Board of Directors.
The President shall also do and perform such other duties as from time to time
may be assigned to the President by the Board of Directors.

          Unless otherwise determined by the Board of Directors, the President
shall have full power and authority on behalf of the Corporation to attend and
to act and to vote at any meeting of the shareholders of any corporation in
which this Corporation may hold stock and, at any such meeting, shall possess
and may exercise any and all the rights and powers incident to the ownership of
such stock and which, as the owner thereof, the Corporation might have possessed
and exercised. The President shall also have the right to delegate such power.

                                      -9-
<PAGE>
 
          Section 4-4.  Powers and Duties of the Secretary.  Unless otherwise
          -----------   ----------------------------------                   
determined by the Board of Directors, the Secretary shall be responsible for the
keeping of the minutes of all meetings of the Board of Directors and the
shareholders, in books provided for that purpose, and for the giving and serving
of all notices for the Corporation. The Secretary shall perform all other duties
ordinarily incident to the office of Secretary and shall have such other powers
and perform such other duties as may be assigned to the Secretary by the Board
of Directors. The minute books of the Corporation may be held by a person other
than the Secretary.

          Section 4-5.  Powers and Duties of the Treasurer.  Unless otherwise
          -----------   ----------------------------------                   
determined by the Board of Directors, the Treasurer shall have charge of all the
funds and securities of the Corporation which may come into such officer's
hands. When necessary or proper, unless otherwise determined by the Board of
Directors, the Treasurer shall endorse for collection on behalf of the
Corporation checks, notes and other obligations, and shall deposit the same to
the credit of the Corporation to such banks or depositories as the Board of
Directors may designate and may sign all receipts and vouchers for payments made
to the Corporation. The Treasurer shall sign all checks made by the Corporation,
except when the Board of Directors shall otherwise direct. The Treasurer shall
be responsible for the regular entry in books of the Corporation to be kept for
such purpose of a full and accurate account of all funds and securities received
and paid by the Treasurer on account of the Corporation. Whenever required by
the Board of Directors, the Treasurer shall render a statement of the financial
condition of the Corporation. The Treasurer shall have such other powers and
shall perform the duties as may be assigned to such officer from time to time by
the Board of Directors. The Treasurer shall give such bond, if any, for the
faithful performance of the duties of such office as shall be required by the
Board of Directors.  If the Corporation has a Chief Financial Officer, the Chief
Financial Officer shall have such power and authority as determined by the Board
of Directors, including without limitation, the powers provided herein of the
Treasurer.

          Section 4-6.  Powers and Duties of the Chairman of the Board.  Unless
          -----------   ----------------------------------------------         
otherwise determined by the Board of Directors, the Chairman of the Board, if
any, shall preside at all meetings of Directors. The Chairman of the Board shall
have such other powers and perform such further duties as may be assigned to
such officer by the Board of Directors, including, without limitation, acting as
chief executive officer of the Corporation. To be eligible to serve, the
Chairman of the Board must be a Director of the Corporation.

          Section 4-7.  Powers and Duties of Vice Chairmen of the Board, Vice
          -----------   -----------------------------------------------------
Presidents and Assistant Officers.  Unless otherwise determined by the Board of
- ---------------------------------                                              
Directors, each Vice Chairman, Vice President and each assistant officer shall
have the powers and perform the duties of his or her respective superior
officer. Vice Presidents and assistant officers shall have such rank as may be
designated by the Board of Directors. Vice Presidents may be designated as
having responsibility for a specific area of the Corporation's affairs, in which
event such Vice President shall be superior to the other Vice Presidents in
relation to matters within his or her area. The President shall be the superior
officer of the Vice Presidents. The Chairman of the Board shall be the superior
officer of the Vice Chairmen. The Treasurer and Secretary shall be the superior
officers of the Assistant Treasurers and Assistant Secretaries, respectively.

          Section 4-8.  Delegation of Office.  The Board of Directors may
          -----------   --------------------                             
delegate the powers or duties of any officer of the Corporation to any other
person from time to time.

                                      -10-
<PAGE>
 
          Section 4-9.  Vacancies.  The Board of Directors shall have the power
          -----------   ---------                                              
to fill any vacancies in any office occurring for any reason.


                           ARTICLE V - CAPITAL STOCK
                           -------------------------

          Section 5-1.  Share Certificates.
          -----------   ------------------ 

                  (a)   Execution.  Except as otherwise provided in Section 5-5,
                        ---------    
the shares of the Corporation shall be represented by certificates. Unless
otherwise provided by the Board of Directors, every share certificate shall be
signed by two officers and sealed with the corporate seal, which may be a
facsimile, engraved or printed, but where such certificate is signed by a
transfer agent or a registrar, the signature of any corporate officer upon such
certificate may be a facsimile, engraved or printed. In case any officer who has
signed, or whose facsimile signature has been placed upon, any share certificate
shall have ceased to be such officer because of death, resignation or otherwise,
before the certificate is issued, it may be issued with the same effect as if
the officer had not ceased to be such at the date of its issue. The provisions
of this Section 5-1 shall be subject to any inconsistent or contrary agreement
at the time between the Corporation and any transfer agent or registrar.

                  (b)   Designations, etc.  To the extent the Corporation is 
                        -----------------                       
authorized to issue shares of more than one class or series, every certificate
shall set forth upon the face or back of the certificate (or shall state on the
face or back of the certificate that the Corporation will furnish to any
shareholder upon request and without charge) a full or summary statement of the
designations, voting rights, preferences, limitations and special rights of the
shares of each class or series authorized to be issued so far as they have been
fixed and determined and the authority of the Board of Directors to fix and
determine the designations, voting rights, preferences, limitations and special
rights of the classes and series of shares of the Corporation.

                  (c)   Fractional Shares.  Except as otherwise determined by  
                        -----------------                                     
the Board of Directors, shares or certificates therefor may be issued as
fractional shares for shares held by any dividend reinvestment plan or employee
benefit plan created or approved by the Corporation's Board of Directors, but
not by any other person.

          Section 5-2.  Transfer of Shares.  Transfer of certificated shares
          -----------   ------------------                                  
shall be made on the books of the Corporation only upon surrender of the share
certificate, duly endorsed or with duly executed stock powers attached and
otherwise in proper form for transfer, which certificate shall be cancelled at
the time of the transfer.  In the event the Board authorizes uncertificated
shares, as permitted by the Corporation's Articles of Incorporation, the Board
shall adopt alternative procedures for registration of transfers of such
uncertificated shares.

          Section 5-3.  Determination of Shareholders of Record.
          -----------   --------------------------------------- 

                  (a)   Fixing Record Date.  The Board of Directors of the 
                        ------------------  
Corporation may fix a time prior to the date of any meeting of shareholders as a
record date for the determination of the shareholders entitled to notice of, or
to vote at, the meeting, which time, except in the case of an adjourned meeting,
shall be not more than 90 days prior to the date of the meeting of shareholders.
Only shareholders of record on the date fixed shall be so entitled
notwithstanding any transfer of shares on the books of the Corporation after any
record date fixed as provided in this subsection. The Board of

                                      -11-
<PAGE>
 
Directors may similarly fix a record date for the determination of shareholders
of record for any other purpose. When a determination of shareholders of record
has been made as provided in this section for purposes of a meeting, the
determination shall apply to any adjournment thereof unless the Board of
Directors fixes a new record date for the adjourned meeting.

                  (b)   Determination when No Record Date Fixed.  If a record 
                        ---------------------------------------     
date is not fixed:

                     (i)     The record date for determining shareholders
entitled to notice of or to vote at a meeting of shareholders shall be at the
close of business on the day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the day immediately preceding
the day on which the meeting is held.

                     (ii)    The record date for determining shareholders for
any other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.

                  (c)   Certification by Nominee.  The Board of Directors may 
                        ------------------------                            
adopt a procedure whereby a shareholder of the Corporation may certify in
writing to the Corporation that all or a portion of the shares registered in the
name of the shareholder are held for the account of a specified person or
persons. The resolution of the Board of Directors may set forth:

                     (i)     the classification of shareholder who may certify;

                     (ii)    the purpose or purposes for which the certification
may be made;

                     (iii)   the form of certification and information to be
contained therein;

                     (iv)    if the certification is with respect to a record
date, the time after the record date within which the certification must be
received by the Corporation; and

                     (v)     such other provisions with respect to the procedure
as are deemed necessary or desirable.

                  Upon receipt by the Corporation of a certification complying
with the procedure, the persons specified in the certification shall be deemed,
for the purposes set forth in the certification, to be the holders of record of
the number of shares specified in place of the shareholder making the
certification.

          Section 5-4.  Lost Share Certificates.  Unless waived in whole or in
          -----------   -----------------------                               
part by the Board of Directors, any person requesting the issuance of a new
certificate in lieu of an alleged lost, destroyed, mislaid or wrongfully taken
certificate shall (a) give to the Corporation his or her bond of indemnity with
an acceptable surety, and (b) satisfy such other requirements as may be imposed
by the Corporation. Thereupon, a new share certificate shall be issued to the
registered owner or his or her assigns in lieu of the alleged lost, destroyed,
mislaid or wrongfully taken certificate, provided that the request therefor and
issuance thereof have been made before the Corporation has notice that such
shares have been acquired by a bona fide purchaser.

                                      -12-
<PAGE>
 
                 ARTICLE VI - NOTICES - COMPUTING TIME PERIODS
                 ---------------------------------------------

          Section 6-1.  Contents of Notice.  Whenever any notice of a meeting is
          -----------   ------------------                                      
required to be given pursuant to these Bylaws, the Corporation's Articles of
Incorporation (the "Articles") or otherwise, the notice shall specify:  (a) the
place, date and time of the meeting; (b) in the case of a special meeting of
shareholders or where otherwise required by law or the Bylaws, the general
nature of the business to be transacted at such meeting; and (c) any other
information required by law.

          Section 6-2.  Method of Notice.  Whenever written notice is required
          -----------   ----------------                                      
to be given to any person under the provisions of the Articles or these Bylaws,
it may be given to the person either personally or by sending a copy thereof by
first class or express mail, postage prepaid, or by telegram (with messenger
service specified), telex or TWX (with answerback received) or courier service,
charges prepaid, or by facsimile transmission, to such person's address (or to
such person's telex, TWX, telecopier or telephone number) appearing on the books
of the Corporation or, in the case of Directors, supplied by such Director to
the Corporation for the purpose of notice. If the notice is sent by mail,
telegraph or courier service, it shall be deemed to have been given to the
person entitled thereto when deposited in the United States mail or with a
telegraph office or courier service for delivery to that person or, in the case
of telex or TWX, when dispatched. Except as otherwise provided herein, or as
otherwise directed by the Board of Directors, notices of meetings may be given
by, or at the direction of, the Secretary.

          Section 6-3.  Computing Time Periods.
          -----------   ---------------------- 

                  (a)   Days to be Counted.  In computing the number of days 
                        ------------------      
for purposes of these Bylaws, all days shall be counted, including Saturdays,
Sundays or a holiday on which national banks are or may elect to be closed
("Holiday"); provided, however, that if the final day of any time period falls
on a Saturday, Sunday or Holiday, then the final day shall be deemed to be the
next day which is not a Saturday, Sunday or Holiday. In computing the number of
days for the purpose of giving notice of any meeting, the date upon which the
notice is given shall be counted but the day set for the meeting shall not be
counted.

                  (b)   One Day Notice.  In any case where only one day's 
                        --------------      
notice is being given, notice must be given at least 24 hours in advance of the
date and time specified for the meeting in question, by delivery in person,
telephone, telex, TWX, facsimile or similar means of communication.

          Section 6-4.  Waiver of Notice.  Whenever any notice is required to be
          -----------   ----------------                                        
given by law or the Articles or these Bylaws, a waiver thereof in writing,
signed by the person or persons entitled to the notice, whether before or after
the time stated therein, shall be deemed equivalent to the giving of the notice.
Except as otherwise required by law or the next sentence, neither the business
to be transacted at, nor the purpose of, a meeting need be specified in the
waiver of notice of the meeting. In the case of a special meeting of
shareholders, the waiver of notice shall specify the general nature of the
business to be transacted. Attendance of a person at any meeting shall
constitute a waiver of notice of the meeting except where a person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting was not lawfully called
or convened.

          Section 6-5.  Modification of Proposal Contained in Notice.  Whenever
          -----------   --------------------------------------------           
the language of a proposed resolution is included in a written notice of a
meeting required to be given under the provisions of the Pennsylvania BCL or the
Articles or these Bylaws, the meeting considering the

                                      -13-
<PAGE>
 
resolution may, without further notice, adopt it with such clarifying or other
amendments as do not enlarge its original purpose.

          Section 6-6.  Bulk Mail.  If the Corporation has more than 30
          -----------   ---------                                      
shareholders, notice of any regular or special meeting of the shareholders, or
any other notice required by the Pennsylvania BCL or by the Articles of these
Bylaws to be given to all shareholders or to all holders of a class or a series
of shares, may be given by any class of post-paid mail if the notice is
deposited in the United States mail at least 20 days prior to the day named for
the meeting or any corporate or shareholder action specified in the notice.

          Section 6-7.  Shareholder without Forwarding Addresses.  Notice or
          -----------   ----------------------------------------            
other communications need not be sent to any shareholder with whom the
Corporation has been unable to communicate for more than 24 consecutive months
because communications to the shareholder are returned unclaimed or the
shareholder has otherwise failed to provide the Corporation with a current
address.  Whenever the shareholder provides the Corporation with a current
address, the Corporation shall commence sending notices and other communications
to the shareholder in the same manner as to other shareholders.


              ARTICLE VII - LIMITATION OF DIRECTORS' LIABILITY AND
            INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER PERSONS
            --------------------------------------------------------

          Section 7-1.  Limitation of Directors' Liability.  No Director of the
          -----------   ----------------------------------                     
Corporation shall be personally liable for monetary damages as such for any
action taken or any failure to take any action unless: (a) the Director has
breached or failed to perform the duties of his or her office under the
Pennsylvania BCL, and (b) the breach or failure to perform constitutes self-
dealing, wilful misconduct or recklessness; provided, however, that the
provisions of this Section shall not apply to the responsibility or liability of
a Director pursuant to any criminal statute, or to the liability of a Director
for the payment of taxes pursuant to local, Pennsylvania or federal law.

          Section 7-2.  Indemnification and Insurance.
          -----------   ----------------------------- 

                  (a)   Indemnification of Directors and Officers.
                        ----------------------------------------- 

                     (i)     Each Indemnitee (as defined below) shall be
indemnified and held harmless by the Corporation for all actions taken by him or
her and for all failures to take action (regardless of the date of any such
action or failure to take action) to the fullest extent permitted by
Pennsylvania law against all expense, liability and loss (including without
limitation attorneys fees, judgments, fines, taxes, penalties, and amounts paid
or to be paid in settlement) reasonably incurred by or imposed upon the
Indemnitee in connection with any Proceeding (as defined below). No
indemnification pursuant to this Section shall be made, however, in any case
where the act or failure to act giving rise to the claim for indemnification is
determined by a court to have constituted wilful misconduct or recklessness.

                     (ii)    The right to indemnification provided in this
Section shall include the right to have the expenses incurred by the Indemnitee
in defending any Proceeding paid by the Corporation in advance of the final
disposition of the Proceeding to the fullest extent permitted by Pennsylvania
law; provided that, if Pennsylvania law continues so to require, the payment of
such

                                      -14-
<PAGE>
 
expenses incurred by the Indemnitee in advance of the final disposition of a
Proceeding shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of the Indemnitee, to repay all amounts so advanced
without interest if it shall ultimately be determined that the Indemnitee is not
entitled to be indemnified under this Section or otherwise.

                     (iii)   Indemnification pursuant to this Section shall
continue as to an Indemnitee who has ceased to be a Director or officer and
shall inure to the benefit of his or her heirs, executors and administrators.

                     (iv)    For purposes of this Article, (A) "Indemnitee"
shall mean each Director or officer of the Corporation who was or is a party to,
or is threatened to be made a party to, or is otherwise involved in, any
Proceeding, by reason of the fact that he or she is or was a Director or officer
of the Corporation or is or was serving in any capacity at the request or for
the benefit of the Corporation as a director, officer, employee, agent, partner,
or fiduciary of, or in any other capacity for, another corporation or any
partnership, joint venture, trust, employee benefit plan, or other enterprise;
and (B) "Proceeding" shall mean any threatened, pending or completed action,
suit or proceeding (including without limitation an action, suit or proceeding
by or in the right of the Corporation), whether civil, criminal, administrative,
investigative or through arbitration.

                  (b)   Indemnification of Employees and Other Persons.  The 
                        ----------------------------------------------     
Corporation may, by action of its Board of Directors and to the extent provided
in such action, indemnify employees and other persons as though they were
Indemnitees. To the extent that an employee or agent of the Corporation has been
successful on the merits or otherwise in defense of any Proceeding or in defense
of any claim, issue or matter therein, the Corporation shall indemnify such
person against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection therewith.

                  (c)   Non-Exclusivity of Rights.  The rights to 
                        -------------------------  
the advancement of expenses provided in this Article shall not be exclusive of
any other rights that any person may have or hereafter acquire under any
statute, provision of the Articles or Bylaws, agreement, vote of shareholders or
Directors, or otherwise.

                  (d)   Insurance.  The Corporation may purchase and maintain 
                        ---------   
insurance, at its expense, for the benefit of any person on behalf of whom
insurance is permitted to be purchased by Pennsylvania law against any expense,
liability or loss, whether or not the Corporation would have the power to
indemnify such person under Pennsylvania or other law. The Corporation may also
purchase and maintain insurance to insure its indemnification obligations
whether arising hereunder or otherwise.

                  (e)   Fund For Payment of Expenses.  The Corporation may 
                        ---------------------------- 
create a fund of any nature, which may, but need not be, under the control of a
trustee, or otherwise may secure in any manner its indemnification obligations,
whether arising hereunder, under the Articles, by agreement, vote of
shareholders or Directors, or otherwise.

          Section 7-3.  Amendment.  The provisions of this Article VII relating
          -----------   ---------                                              
to the limitation of Directors' liability, to indemnification and to the
advancement of expenses shall constitute a contract between the Corporation and
each of its Directors and officers which may be modified as to any Director or
officer only with that person's consent or as specifically provided in this
Section. Notwithstanding any other provision of these Bylaws relating to their
amendment generally, any repeal or amendment of this Article VII which is
adverse to any Director or officer shall apply to such Director or officer only
on a

                                      -15-
<PAGE>
 
prospective basis, and shall not reduce any limitation on the personal liability
of a Director of the Corporation, or limit the rights of an Indemnitee to
indemnification or to the advancement of expenses with respect to any action or
failure to act occurring prior to the time of such repeal or amendment.
Notwithstanding any other provision of these Bylaws, no repeal or amendment of
these Bylaws shall affect any or all of this Article so as either to reduce the
limitation of Directors' liability or limit indemnification or the advancement
of expenses in any manner unless adopted by (a) the unanimous vote of the
Directors of the Corporation then serving, or (b) the affirmative vote of
shareholders entitled to cast not less than a majority of the votes that all
shareholders are entitled to cast in the election of Directors; provided that no
such amendment shall have retroactive effect inconsistent with the preceding
sentence.

          Section 7-4.  Changes in Pennsylvania Law.  References in this Article
          -----------   ---------------------------                             
VII to Pennsylvania law or to any provision thereof shall be to such law as it
existed on the date this Article VII was adopted or as such law thereafter may
be changed; provided that (a) in the case of any change which expands the
liability of Directors or limits the indemnification rights or the rights to
advancement of expenses which the Corporation may provide, the rights to limited
liability, to indemnification and to the advancement of expenses provided in
this Article shall continue as theretofore to the extent permitted by law; and
(b) if such change permits the Corporation without the requirement of any
further action by shareholders or Directors to limit further the liability of
Directors (or limit the liability of officers) or to provide broader
indemnification rights or rights to the advancement of expenses than the
Corporation was permitted to provide prior to such change, then liability
thereupon shall be so limited and the rights to indemnification and the
advancement of expenses shall be so broadened to the extent permitted by law.


                           ARTICLE VIII - FISCAL YEAR
                           --------------------------

          Section 8-1.  Determination of Fiscal Year.  The Board of Directors
          -----------   ----------------------------                         
shall have the power by resolution to fix the fiscal year of the Corporation. If
the Board of Directors shall fail to do so, the President shall fix the fiscal
year.


                            ARTICLE IX - AMENDMENTS
                            -----------------------

          Section 9-1.  Except as otherwise expressly provided in Section 7-3:
          -----------                                                         

                  (a)   Shareholders.  The shareholders entitled to vote 
                        ------------
thereon shall have the power to alter, amend, or repeal these Bylaws, by the
vote of shareholders entitled to cast at least a majority of the votes which all
shareholders are entitled to cast thereon, at any regular or special meeting,
duly convened after notice to the shareholders of such purpose. In the case of a
meeting of shareholders to amend or repeal these Bylaws, written notice shall be
given to each shareholder that the purpose, or one of the purposes, of the
meeting is to consider the adoption, amendment or repeal of the Bylaws.

                  (b)   Board of Directors.  The Board of Directors (but not a
                        ------------------   
committee thereof), by a vote of the majority of Directors then in office, shall
have the power to alter, amend, and repeal these Bylaws, regardless of whether
the shareholders have previously adopted the Bylaw being amended or repealed,
subject to the power of the shareholders to change such action, provided that
the Board of Directors shall not have the power to amend these Bylaws on any
subject that is expressly

                                      -16-
<PAGE>
 
committed to the shareholders by the express terms hereof, by Section 1504 of
the Pennsylvania BCL or otherwise.


              ARTICLE X - INTERPRETATION OF BYLAWS - SEPARABILITY
              ---------------------------------------------------

          Section 10-1.  Interpretation.  All words, terms and provisions of
          ------------   --------------                                     
these Bylaws shall be interpreted and defined by and in accordance with the
Pennsylvania BCL.  If any provision of these Bylaws shall be inconsistent with
any provision of the Articles, the provision of the Articles shall prevail.
Where any provision of these Bylaws refers to a rule or process as set forth in
these Bylaws, the reference shall be construed to include and be satisfied by
any rule or process on the same subject set forth in the Articles.

          Section 10-2.  Separability.  The provisions of these Bylaws are
          ------------   ------------                                     
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.


                    ARTICLE XI - DETERMINATIONS BY THE BOARD
                    ----------------------------------------

          Section 11-1.  Effect of Board Determinations.  Any determination
          ------------   ------------------------------                    
involving interpretation or application of these Bylaws made in good faith by
the Board of Directors shall be final, binding and conclusive on all parties in
interest.

                                      -17-

<PAGE>
 
                            VOTING TRUST AGREEMENT
                            ----------------------


          VOTING TRUST AGREEMENT made this __ day of ___________, 1997, among
PIERCE LEAHY INC., a Pennsylvania corporation (hereinafter called  the
"Company"), the shareholders of Pierce Leahy Corp., a New York corporation
("PLC"), set forth on the signature page hereto who upon consummation of the
Merger (as hereinafter defined) shall become shareholders of the Company and any
other present or future shareholders of the Company who hereafter become parties
hereto (collectively, the "Shareholders"), and LEO W. PIERCE, SR. and J. PETER
PIERCE, in such persons' capacities as voting trustee hereunder (the
"Trustees").

                             W I T N E S S E T H:
                             - - - - - - - - - - 

          A.   The Shareholders are currently shareholders of PLC, which
pursuant to a Plan of Merger approved by the shareholders of PLC (the "Merger")
will merge into the Company with the Company being the surviving corporation.
Pursuant to the Merger, each share of capital stock of PLC outstanding
immediately preceding the Merger will become one share of the Company's Common
Stock, $.01 par value (the "Common Stock").

          B.   Pursuant to the Merger, the Company will change its name to
Pierce Leahy Corp.

          C.   The Shareholders, the Trustees and the Company believe it is
desirable to enter into this Agreement and to have the shares which the
Shareholders are entitled to receive pursuant to the Merger issued to the
Trustees; and

          D.   The Trustees have consented to act under this Agreement for the
purposes herein provided.

          NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants and agreements contained in this Agreement, the parties hereto,
intending to be legally bound, agree as follows:

          1.   Voting Trust Agreement.  Copies of this Agreement, and of every
               ----------------------                                         
amendment or supplement to this Agreement shall be filed in the principal office
of the Company and shall be open to the inspection of any Shareholder during
business hours.  All voting trust certificates issued as hereinafter provided
shall be issued, received, and held subject to all the terms of this Agreement.
Every person, firm, corporation or other entity entitled to receive voting trust
certificates representing shares of Common Stock (the "shares"), and their
transferees and assigns who are also parties to this Agreement, upon accepting
the voting trust certificates issued hereunder, shall be bound by the provisions
of this Agreement.

          2.   Transfer of Shares to Trustees.
               ------------------------------ 

               (a) Each Shareholder, upon execution of this Agreement, hereby
<PAGE>
 
assigns and transfers to the Trustees such Shareholder's right to receive the
number of shares of Common Stock pursuant to the Merger as is set forth after
such Shareholder's name on Exhibit A attached hereto for the purpose of vesting
in the Trustees, as Trustees of an active trust, the right to vote and act and
to exercise other rights pertaining to such shares, as and to the extent, and
upon the terms and conditions and for the period set forth in this Agreement.
On receipt by the Trustees of the certificates for such shares, the Trustees
shall hold the same subject to the terms of this Agreement, and shall thereupon
issue and deliver to the Shareholders voting trust certificates for the shares.

               (b) All certificates for shares of the Company issued and
delivered to the Trustees pursuant to this Agreement shall be issued to and held
by the Trustees in the name of "Leo W. Pierce, Sr. and J. Peter Pierce as Voting
Trustees".

          3.   Voting Trust Certificates.  The Trustees shall maintain a voting
               -------------------------                                       
trust certificate register in which each holder of a voting trust certificate
issued under this Agreement, and the number of shares represented by each voting
trust certificate will be identified.  The voting trust certificates shall be in
substantially the following form (and shall include any appropriate legends
required by Section 14 of this Agreement):

                           "No. VT__________________
                            _________________ Shares
                                        
                              PIERCE LEAHY CORP.
                          A Pennsylvania Corporation
                   Voting Trust Certificate for Common Stock
                                        
          This certifies that __________________ or registered assigns is
entitled to all the benefits arising from the transfer to the Trustees under the
Voting Trust Agreement hereinafter mentioned, of ____ shares of common stock of
Pierce Leahy Corp., a Pennsylvania corporation (hereinafter called the
"Company"), as provided in such Voting Trust Agreement and subject to the terms
thereof.   The registered holder hereof, or assigns, is entitled to receive
payment, in the manner set forth in the Voting Trust Agreement, equal to the
amount of dividends, if any, received by the Trustees upon the number of shares
of capital stock of the Company in respect of which this certificate is issued;
provided, however, that any dividends received by the Trustees in common or
- --------  -------                                                          
other stock of the Company having general voting powers shall be held by the
Trustees under the Voting Trust Agreement and shall be represented by voting
trust certificates issued in form similar hereto. Until the Trustees shall have
delivered the shares of stock held under such Voting Trust Agreement to the
holders of the trust certificates, or to the Company, as specified in such
Voting Trust Agreement, the Trustees shall possess and shall be entitled to
exercise all rights and powers of an absolute owner of such shares of stock,
including the right to vote thereon for every purpose, and to execute consents
in respect thereof for every purpose, it being expressly stipulated that no
voting right passes to the owner hereof, or such owner's assigns, under this
certificate or any agreement, expressed or implied.

          This certificate is issued, received, and held under, and the rights
of the owner hereof are subject to, the terms of a Voting Trust Agreement dated
as of ___________________,

                                      -2-
<PAGE>
 
1997, between the Company and Leo W. Pierce, Sr. and J. Peter Pierce in trust
(the "Voting Trust Agreement"), and certain shareholders of the Company (copies
of which Voting Trust Agreement, and of every agreement amending or
supplementing the same, are on file in the principal office of the Company, and
shall be open to the inspection of any shareholder of the Company, during
business hours); to all the provisions of which Voting Trust Agreement the
holder of this certificate, and such holder's heirs, personal representatives,
successors and assigns, by acceptance hereof, assents and is bound as if such
Voting Trust Agreement had been signed by such person.

          Subject to Sections 8, 9 and 12 of the Voting Trust Agreement, in the
event of the dissolution or total or partial liquidation of the Company, the
moneys, securities or property received by the Trustees in respect of the shares
of stock deposited under such Voting Trust Agreement shall be distributed among
the registered holders of trust certificates in proportion to their interests as
shown on the books of the Trustees.

          Except as otherwise provided in Sections 9 and 12 of the Voting Trust
Agreement, in the event that any dividend or distribution other than in cash or
shares of common or other stock of the Company having general voting powers is
received by the Trustees, the Trustees shall distribute the same to the
registered holders of voting trust certificates, on the date of such
distribution, or to the registered certificate holders at the close of business
on the date fixed by the Trustees for taking a record to determine the
certificate holders entitled to such distribution, pursuant to the provisions of
Paragraph 6 of the Voting Trust Agreement.  Such distribution shall be made to
the certificate holders ratably in accordance with the number of shares
represented by their respective voting trust certificates.  Cash dividends shall
be treated as set forth in Section 6 of the Voting Trust Agreement.

          Share certificates for the number of shares of common stock then
represented by this certificate, or the net proceeds in cash or property
representing such shares, shall be due and deliverable hereunder upon the
termination of such Voting Trust Agreement as provided therein.  The Voting
Trust Agreement shall continue in full force and effect until _________________,
2007 (subject to extension as hereinafter set forth), unless terminated prior
thereto, as provided in the Voting Trust Agreement.  The Voting Trust Agreement
may be extended as the parties may agree, as provided in the Voting Trust
Agreement.

          This certificate is transferable on the books of the Trustees at the
office of the Trustees (or elsewhere as designated by the Trustees) by the
holder hereof, either in person or by attorney duly authorized, in accordance
with the rules established for that purpose by the Trustees and on surrender of
this certificate properly endorsed, subject to compliance with all applicable
state and federal securities laws.  Title to this certificate when duly endorsed
shall, to the extent permitted by law, be transferable with the same effect as
in the case of a negotiable instrument.  Each holder hereof agrees that delivery
of this certificate, duly endorsed by any holder hereof, shall vest title hereto
and all rights hereunder in the transferee; provided, however, that the Trustees
                                            --------  -------                   
may treat the registered holder hereof, or when presented duly endorsed in blank
the bearer hereof, as the absolute owner hereof, and of all rights and interests
represented hereby, for all purposes whatsoever, and the Trustees shall not be
bound or affected by any notice to the contrary, or by any notice of any trust,
whether express or implied, or

                                      -3-
<PAGE>
 
constructive, or of any charge or equity respecting the title or ownership of
this certificate, or the shares of stock represented hereby; provided, however,
that no delivery of stock certificates hereunder, or the proceeds thereof, shall
be made without surrender hereof properly endorsed.

          This certificate shall not be valid for any purpose until duly signed
by the Trustees.

          The word "Trustees" as used in this certificate means the Trustees or,
if only one Trustee is remaining, as provided in the Voting Trust Agreement,
such Trustee, acting under the Voting Trust Agreement.

          IN WITNESS WHEREOF, the Trustees have signed this certificate on
______________________, 19__.
                                 ________________________________
                                             Trustee


                                 ________________________________
                                             Trustee


(Form of Assignment):

     For value received ____________________________ hereby assigns the within
certificate, and all rights and interests represented thereby, to and appoints
_____________________________ attorney to transfer this certificate on the books
of the Trustees mentioned therein, with full power of substitution.

Dated:____________________________          ______________________________(Seal)

In presence of:
____________________________________
____________________________________

Note: The signature to this assignment must correspond with the name as written
upon the face of this certificate in every particular, without alteration,
enlargement, or any change whatever.  All endorsements, in the discretion of the
Trustees, shall be guaranteed by a bank or trust company satisfactory to the
Trustees."

          4.   Transfer of Certificates.
               ------------------------ 


               (a) The voting trust certificates, if and to the extent
transferable under applicable securities law or under any agreement restricting
transferability, shall be transferable at the principal office of the Trustees
(and at such other office as the Trustees may designate by an instrument in
writing signed by the Trustees and sent by mail to the registered holders of

                                      -4-
<PAGE>
 
voting trust certificates), on the books of the Trustees, by the registered
owner thereof, either in person or by attorney thereto duly authorized, upon
surrender thereof, according to the rules established for that purpose by the
Trustees, subject to the provisions set forth in this Section.  If a transfer of
voting trust certificates is so permitted, the holder shall notify the Trustees
of the details of such transfer, including the name, address and social security
number of the transferee and number of shares as to which the beneficial
interest is being transferred, and shall surrender to the Trustees the voting
trust certificate or certificate representing such shares, properly endorsed for
transfer, and the Trustees shall, upon receipt of such notice and voting trust
certificate(s), transfer the voting trust certificates on the voting trust
certificate registry and issue a new voting trust certificate to the transferee.
Until so transferred, the Trustees may treat the record holders of voting trust
certificates as the owners of said voting trust certificates for all purposes
whatsoever.  As a condition to making any transfer or delivery of voting trust
certificates, the Trustees may require compliance by the transferee with any
applicable federal or state statute and the payment of a sum sufficient to pay
for any stamp tax or other governmental charge in connection therewith.  No
transfer of voting trust certificates shall in any way remove the shares
represented by such certificate or certificates from being held by the Trustees
under this Agreement and any transferee, by accepting such transfer, does hereby
consent to be bound by the terms of this Agreement, and upon becoming a holder
of voting trust certificates shall be deemed to be a party hereto as though an
original signatory hereto.

               (b) If a voting trust certificate is lost, stolen, mutilated, or
destroyed, the holder thereof shall promptly notify the Trustees and the
Trustees, in the Trustees' discretion, may issue to such holder a duplicate of
such certificate upon receipt of: (i) evidence of such fact satisfactory to the
Trustees; (ii) indemnity satisfactory to the Trustees (whether by bond or
otherwise in such form or amount and with such surety as the Trustees may
require to indemnify the Trustees against loss or liability that might arise due
to the issuance of such new voting trust certificate); (iii) the existing
certificate, if mutilated; and (iv) the reasonable fees and expenses of the
Trustees in connection with the issuance of a new trust certificate.  The
Trustees shall not be required to recognize any transfer of a voting trust
certificate not made in accordance with the provisions hereof, unless the person
claiming such ownership shall have produced indicia of title satisfactory to the
Trustees, and shall in addition deposit with the Trustees indemnity satisfactory
to the Trustees.

          5.   Termination Procedure.
               ----------------------

               (a) Any Shareholder may from time to time give Trustees written
notice that such Shareholder desires to withdraw all or part of such
Shareholder's shares from the voting trust created hereby in order to sell such
shares to someone other than another Shareholder within fifteen (15) days of the
delivery of the notice. Voting trust certificates representing shares to be
withdrawn shall accompany the notice. Within five (5) days after receipt of such
notice and certificates, Trustees shall deliver to the Company stock
certificates and instructions to deliver the requisite number of shares to the
Shareholder who delivered the notice of withdrawal to the Trustees. In the event
the Shareholder does not sell all or part of the shares withdrawn from the
voting trust, (i) the Shareholder shall deliver the stock certificate
representing the shares not sold to the Trustees who shall deliver it to the
Company for reissue to the Trustees, (ii) the reissued stock certificate shall
be held by the Trustees pursuant to this

                                      -5-
<PAGE>
 
Agreement and (iii) the Trustees shall issue to the Shareholder a voting trust
certificate representing such shares.

               (b) Subject to the provisions of Section 12, upon the termination
of this Agreement at any time, as hereinafter provided, the Trustees, at such
time as the Trustees may choose during the period commencing 20 days before and
ending 20 days after such termination, shall mail written notice of such
termination to the registered owners of the voting trust certificates, at the
addresses appearing on the transfer books of the Trustees. After the date
specified in any such notice (which date shall be fixed by the Trustees), the
voting trust certificates shall cease to have any effect, and the holders of
such voting trust certificates shall have no further rights under this Agreement
other than to receive certificates for shares of the Company or other property
distributable under the terms hereof and upon the surrender of such voting trust
certificates.

               (c) Within 30 days after the termination of this Agreement, the
Trustees shall deliver, to the registered holders of all voting trust
certificates, certificates for the number of shares of the capital stock of the
Company represented thereby, upon the surrender thereof properly endorsed, such
delivery to be made in each case at the office of the Trustees.

               (d) At any time subsequent to 30 days after the termination of
this Agreement, the Trustees may deposit with the Company share certificates
representing the number of shares of capital stock represented by the voting
trust certificates then outstanding, with authority in writing to the Company to
deliver such share certificates in exchange for voting trust certificates
representing a like number of shares of the capital stock of the Company and for
the Company to call upon and require all holders of voting trust certificates to
so surrender them; and upon such deposit all further liability of the Trustees
for the delivery of such share certificates and the delivery or payment of
dividends upon surrender of the voting trust certificates shall cease, and the
Trustees shall not be required to take any further action hereunder.

          6.   Dividends.
               --------- 

               (a) Until the termination of this Agreement pursuant to the terms
of Section 12, the holder of each voting trust certificate shall be entitled to
receive from the Trustees payments equal to the cash dividends, if any, received
by the Trustees upon a like number and class of shares of capital stock of the
Company as is called for by each such voting trust certificate standing in the
name of such holder in the voting trust certificate register. If any dividend in
respect of the stock deposited with the Trustees are paid, in whole or in part,
in shares of common or other stock of the Company having general voting powers,
the Trustees shall likewise hold, subject to the terms of this Agreement, the
certificates for shares of stock which are received by the Trustees on account
of such dividend, and the holder of each voting trust certificate representing
shares of stock on which such stock dividend has been paid shall be entitled to
receive a voting trust certificate issued under this Agreement for the number of
shares and class of stock received as such dividend with respect to the shares
represented by such voting trust certificate. Holders entitled to receive the
dividends described above shall be those registered as such on the transfer
books of the Trustees at the close of business on the day

                                      -6-
<PAGE>
 
fixed by the Company for the taking of a record to determine those holders of
its shares of stock entitled to receive such dividends, or if the Trustees have
fixed a date, as hereinafter in this paragraph provided, for the purpose of
determining the holders of voting trust certificates entitled to receive such
payment or distribution, then registered as such at the close of business on the
date so fixed by the Trustees.

               (b) Except as otherwise provided in Section 12, if any dividend
in respect of the stock deposited with the Trustees are paid other than in cash
or in capital stock having general voting powers, then the Trustees shall
distribute the same among the holders of voting trust certificates registered as
such at the close of business on the day fixed by the Trustees for taking a
record to determine the holders of voting trust certificates entitled to receive
such distribution. Such distribution shall be made to such holders of voting
trust certificates ratably, in accordance with the number of shares represented
by their respective voting trust certificates.

               (c) The transfer books of the Trustees may be closed temporarily
by the Trustees for a period not exceeding 20 days preceding the date fixed for
the payment or distribution of dividends or the distribution of assets or
rights, or at any other time in the discretion of the Trustees. In lieu of
providing for the closing of the books against the transfer of voting trust
certificates, the Trustees may fix a date not exceeding 20 days preceding any
date fixed by the Company for the payment or distribution of dividends, or for
the distribution of assets or rights, as a record date for the determination of
the holders of voting trust certificates entitled to receive such payment or
distribution or to receive such assets or exercise such rights, or for the
purpose of determining the holders of voting trust certificates entitled to vote
at any meeting of the holders or to determine any other thing, act or rights to
be exercised, done or performed by the holders, and the holders of voting trust
certificates of record at the close of business on such date shall exclusively
be entitled to participate in such payments or distribution or exercise of
rights.

               (d) In lieu of receiving cash dividends upon the capital stock of
the Company and paying the same to the holders of voting trust certificates
pursuant to the provisions of this Agreement, the Trustees may instruct the
Company in writing to pay such dividends to the holders of the voting trust
certificates. Upon receipt of such written instructions, the Company shall pay
such dividends directly to the holders of the voting trust certificates. Upon
such instructions being given by the Trustees to the Company, and until revoked
by the Trustees, all liability of the Trustees with respect to such dividends
shall cease. The Trustees may at any time revoke such instructions and by
written notice to the Company direct it to make dividend payments to the
Trustees.

          7.   Subscription Rights.  In case any stock or other securities of
               -------------------                                           
the Company are offered for subscription to the holders of capital stock of the
Company deposited hereunder, the Trustees, promptly upon receipt of notice of
such offer, shall mail a copy thereof to each of the holders of the voting trust
certificates.  Upon receipt by the Trustees, at least five days prior to the
last day fixed by the Company for subscription and payment, of a request from
any such registered holder of voting trust certificates to subscribe in such
holder's behalf, accompanied with the sum of money required to pay for such
stock or securities (not in excess

                                      -7-
<PAGE>
 
of the amount subject to subscription in respect to the shares represented by
the voting trust certificate held by such certificate holder), the Trustees
shall make such subscription and payment, and upon receiving from the Company
the certificates for shares or securities so subscribed for, shall issue to such
holder a voting trust certificate in respect thereof if the same be stock having
general voting powers, but if the same be securities other than stock having
general voting powers, the Trustees shall mail or deliver such securities to the
certificate holder in whose behalf the subscription was made, or may instruct
the Company to make delivery directly to the certificate holder entitled
thereto.  In case any reduction of the shares of the Company shall have been
duly authorized, the Trustees are hereby authorized to make such surrender of
shares of the Company held by the Trustees hereunder, pro-rata on behalf of all
holders of voting trust certificates, as may be required under the terms
pursuant to which such reduction is to be effected, and to receive and hold any
and all shares of the Company issued in exchange for such surrendered shares.
Following any such action, the voting trust certificates issued and outstanding
pursuant hereto shall be deemed to represent a proportionately reduced number of
shares.

          8.   Dissolution of Company.  Except as otherwise provided in Section
               ----------------------                                          
12, in the event of the dissolution or total or partial liquidation of the
Company, whether voluntary or involuntary, the Trustees shall receive the
moneys, securities, rights, or property to which the holders of the capital
stock of the Company deposited hereunder are entitled, and shall timely
distribute the same among the registered holders of voting trust certificates in
proportion to their interests, as shown by the books of the Trustees, or the
Trustees may in the Trustees' discretion deposit such moneys, securities,
rights, or property with any bank as the Trustees may select, with authority and
instructions to distribute the same as above provided, and upon such deposit,
this Agreement shall terminate and all further obligations or liabilities of the
Trustees in respect of such moneys, securities, rights, or property so deposited
shall cease and terminate.

          9.   Reorganization of Company.  Except as otherwise provided in
               -------------------------                                  
Section 12, in the event the Company is merged into or consolidated with another
corporation, or all or substantially all of the assets of the Company are
transferred to another corporation pursuant to a plan requiring the Company's
assets to be distributed in liquidation, or all the shares of the Company are to
be exchanged in connection with a reorganization of the Company, then in
connection with such transaction or series of transactions the term "Company"
for all purposes of this Agreement shall be taken to include such successor
corporation, and the Trustees shall receive and hold under this Agreement any
stock of such successor corporation received on account of the ownership, as
Trustees hereunder, of the shares of stock held hereunder prior to such merger,
consolidation or transfer.  Voting trust certificates issued and outstanding
under this Agreement at the time of such merger, consolidation, or transfer may
remain outstanding, or the Trustees may, in their discretion, substitute for
such voting trust certificates new voting trust certificates in appropriate
form, and the terms "stock," "shares" and "capital stock" as used herein shall
be taken to include any stock which may be received by the Trustees in lieu of
all or any part of the capital stock of the Company.

          10.  Rights of Trustees.
               ------------------ 

               (a) Until the actual delivery to the holders of voting trust
certificates

                                      -8-
<PAGE>
 
issued hereunder of stock certificates in exchange therefor, and until the
surrender of the voting trust certificates for cancellation, the Trustees shall
possess and have the exclusive right, except as otherwise expressly limited in
this Agreement, to exercise, in person or by nominees or proxies of the
Trustees, all shareholders' voting rights and powers in respect to all shares
deposited hereunder, for any and every purpose, and to take part in or consent
to any corporate or stockholders' action of any kind whatsoever, as absolute
owner of such shares.  The Shareholders have hereby assigned to Trustees all
voting rights that they otherwise might have had arising out of any ownership of
the shares, whether by operation of law or agreement.  The right to vote shall
include the right to vote for or against or to abstain with respect to the
election of directors, and in favor of or against or to abstain with respect to
any resolution or proposed action of any character whatsoever, which may be
presented at any meeting or require the consent of shareholders of the Company.
Without limiting such general right, it is understood that such action or
proceeding may include, upon terms satisfactory to the Trustees or to their
nominees or proxies thereto appointed by the Trustees, mortgaging, creating a
security interest in, and pledging of all or any part of the property of the
Company, the lease or sale of all or any part of the property of the Company,
for cash, securities, or other property, and the dissolution of the Company, or
the consolidation, merger, reorganization, or recapitalization of the Company.
It is further understood that action by the Trustees in voting or not voting
stock deposited hereunder in instances where there are shareholders' statutory
rights of appraisal may effectively waive or terminate any such rights as to the
shares represented thereby.

          (b) In voting the shares held by the Trustees hereunder either in
person or by nominees or proxies, the Trustees shall exercise their best
judgment in voting with respect to suitable directors and officers of the
Company (which may include the Trustees), or on such other matters as may be
voted on or consented to by the shareholders, including without limitation the
adequacy of any consideration to be received by the Company and its
shareholders, and shall otherwise, insofar as the Trustees may be shareholders
of the Company, take such part or action in respect to the management of the
Company's affairs as the Trustees may deem necessary; and in voting upon any
matters that may come before the Trustees at any shareholders' meeting or
otherwise, the Trustees shall exercise like judgment, but the Trustees shall not
be personally responsible with respect to any action taken pursuant to the vote
of the Trustees so cast in any matter or act committed or omitted to be done
under this Agreement, provided such commission or omission does not amount to
willful misconduct on the part of the Trustees, and provided further that the
Trustees at all times exercise good faith in such matters.  In addition, the
Shareholders, jointly and severally, agree to indemnify and hold the Trustees
harmless from any and all liabilities resulting from actions taken pursuant to
this Agreement, except only for acts which constitute gross negligence or
willful misconduct on the part of the Trustees.  In the exercise of any and all
of the rights of the Trustees under this Agreement, the Trustees may choose at
any time to waive any such exercise, without the consent of any other party.

          (c) Meetings of the Trustees shall be held whenever either Trustee
desires.  Notice stating the place and time of any meeting of the Trustees shall
be sufficient if given at least one day in advance of the time fixed for the
meeting, and notice may be given to the recipient either personally, by
telephone or by sending a copy thereof by first class or

                                      -9-
<PAGE>
 
express mail, postage prepaid, or by telex or TWX (with answerback received), or
next day courier service, charges prepaid, or by telecopier (with answerback
received), to such recipient's address (or to such recipient's telex, TWX,
telecopier or telephone number) appearing on the books of the Company or
supplied by such recipient to the Company for the purpose of notice.  Any
Trustee may participate in any meeting of the Trustees, be counted for the
purpose of determining a quorum thereof and exercise all rights and privileges
to which such Trustees might be entitled were he personally in attendance,
including the right to vote, or any other rights attendant to presence in person
at such meeting, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other.  So long as there are two Trustees, both Trustees shall be necessary
to constitute a quorum for the transaction of business, and, subject to the next
sentence, the acts of both Trustees shall be the acts of the Trustees under this
Voting Trust Agreement.  If the Trustees disagree as to how the shares held by
them hereunder should be voted, each Trustee shall vote one-half of the shares
as he shall determine.

          11.  Trustees.
               -------- 

               (a) Any Trustee may at any time resign by mailing to the
registered holders of voting trust certificates a written resignation, to take
effect ten days thereafter or upon the prior acceptance thereof. Upon the death
of any Trustee or upon any Trustee's adjudication of incompetence giving rise to
the appointment of a custodian or other representative, or upon a resignation of
a Trustee, the remaining Trustee shall act as sole Trustee during the remainder
of the term of this Agreement, and any act, decision, or vote by such Trustee
shall be deemed the act, decision, or vote of such Trustee. Upon the death,
incompetence or resignation of both Trustees, this Agreement shall terminate.

               (b) Upon one of the Trustees ceasing to serve as a Trustee as set
forth in subsection 11(a) above, the rights, powers, and privileges of the
Trustees named hereunder shall be possessed by the remaining Trustee, with the
same effect as though such remaining Trustee had originally been the sole
Trustee under this Agreement.  The word "Trustees," as used in this Agreement,
means the Trustees or at any time when there is only one remaining Trustee, such
Trustee acting hereunder, and shall include both the single and the plural
number.

          12.  Term.
               ---- 

               (a) Except as otherwise provided in subsection 10(a), this
Agreement shall continue in effect until ____________ __ 2007, (subject to
extension as hereinafter set forth) but shall terminate at any time upon the
happening of either of the following events: (1) the execution and
acknowledgment by the Trustees hereunder of a deed of termination, duly filed in
the office of the Company; or (2) such time as both Trustees have ceased serving
as Trustees pursuant to subsection 11(a).

               (b) At any time within one year prior to the expiration of this
Agreement as theretofore extended, the holders of all of the voting trust
certificates hereunder may, by agreement in writing and with the written consent
of the Trustees, extend the duration of this Agreement for an additional period.
In the event of such extension, the Trustees shall,

                                      -10-
<PAGE>
 
prior to the time of expiration as hereinabove provided, as originally fixed, or
as theretofore extended, as the case may be, file in the principal office of the
Company, a copy of such extension agreement, and of the consent thereto, and
thereupon the duration of this Agreement shall be extended for the period fixed
by such extension agreement; provided, however, that no such extension agreement
shall extend the term of this Agreement beyond the maximum period then permitted
by applicable law or affect the rights, or obligations of persons not parties
thereto.

          13.  Compensation and Reimbursement of Trustees.  The Trustees shall
               ------------------------------------------                     
serve without compensation, unless such compensation is authorized by a majority
vote of the persons then holding voting trust certificates hereunder
representing at least seventy-five percent (75%) of the shares represented
thereby, but it is expressly agreed that the Trustees shall have the right to
incur and pay such reasonable expenses and charges, to employ and pay such
agents, attorneys, and counsel as the Trustees may deem necessary and proper
with respect to the Trustees carrying out any of the Trustees' duties under this
Agreement or interpreting or exercising any of the Trustees' powers under this
Agreement.  Any such expenses or charges incurred by and due to the Trustees
paid by the Company, where the Company deems it appropriate to its interests,
may be deducted pro rata from the dividends or other moneys or property received
by the Trustees on the stock deposited hereunder.  Nothing herein contained
shall disqualify the Trustees, or incapacitate either of them from serving the
Company or any of its subsidiaries as officer or director, or in any other
capacity, and in any such capacity receiving compensation.

          14.  Legend.  All voting trust certificates issued pursuant to this
               ------                                                        
Agreement shall be marked with the following legend:

               "This certificate and the shares represented hereby are held
               subject to the terms, covenants and conditions of a Voting Trust
               Agreement dated as of ________________, 1997 by and among the
               Company, certain of its shareholders and Leo W. Pierce, Sr. and
               J. Peter Pierce in trust, as Voting Trustees."

          15.  Meetings of Holders.  The Trustees shall have no duty to hold
               -------------------                                          
meetings of holders of voting trust certificates, but the Trustees shall be
entitled to do so.  Two days written notice of every meeting of holders shall be
given and such notice shall state the place, day, hour and purposes of such
meeting, but any holder may waive such notice in writing, either before, during
or after the meeting.  No notice of any adjourned meeting need be given.  Every
such meeting shall be held within or without the Commonwealth of Pennsylvania at
a place designated by the Trustees.  The failure to hold meetings shall not in
any manner or degree impair or reduce the authority of the Trustees hereunder.

          16.  Miscellaneous.
               ------------- 

               (a) Indulgences, Etc. Neither the failure nor any delay on the
                   -----------
part of any party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or

                                      -11-
<PAGE>
 
privilege preclude any other or further exercise of the same or of any other
right, remedy, power or privilege, nor shall any waiver of any right, remedy,
power or privilege with respect to any occurrence be construed as a waiver of
such right, remedy, power or privilege with respect to any other occurrence.  No
waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver.

          (b) Controlling Law.  This Agreement and all questions relating to its
              ---------------                                                   
validity, interpretation, performance and enforcement (including, without
limitation, provisions concerning limitations of actions), shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania,
notwithstanding any conflict-of-laws doctrines of such state or other
jurisdiction to the contrary, and without the aid of any canon, custom or rule
of law requiring construction against the draftsman.

          (c)  Notice.
               ------ 

               (i)    Unless otherwise in this Agreement specifically provided,
any notice to or communication with the holders of the voting trust certificates
hereunder shall be deemed to be sufficiently given or made if addressed to such
holders at their respective addresses appearing on the transfer books of the
Trustees, postage prepaid and deposited in any post office or post office box,
personally delivered with evidence of receipt or submitted to an overnight
delivery service such as Federal Express or similarly recognized service and so
addressed. The addresses of the holders of voting trust certificates, as shown
on the transfer books of the Trustees, shall in all cases be deemed to be the
addresses of voting trust certificate holders for all purposes under this
Agreement, without regard to what other or different addresses the Trustees may
have for any voting trust certificate holder on any other books or records of
the Trustees. Every notice so given shall be effective, whether or not received;
and the date of mailing shall be the date such notice is deemed given for all
purposes.

               (ii)   Any notice of the Company hereunder shall be sufficient if
mailed with the U.S. Postal Service, postage prepaid, personally delivered with
evidence of receipt, or submitted to Federal Express or similarly recognized
overnight delivery service, to the Company addressed as follows:

                      Pierce Leahy Corp.
                      631 Park Avenue
                      King of Prussia, PA 19406
                      Attention:  President

               (iii)  Any notice to the Trustees hereunder shall be
sufficient if mailed with the U.S. Postal Service, postage prepaid, personally
delivered with evidence of receipt, or submitted to Federal Express or similarly
recognized overnight delivery service, to the Trustees, addressed to them at
such addresses as may from time to time be furnished in writing to the Company
by the Trustees, and if no such address has been so furnished by the Trustees,
then to the Trustees in care of the Company.
 
               (iv)   All distributions of cash, securities, or other property

                                      -12-
<PAGE>
 
hereunder by the Trustees to the holders of voting trust certificates may be
made, in the discretion of the Trustees, by mail, in the same manner as
hereinabove provided for the giving of notices to the holders of voting trust
certificates.

          (d) Binding Nature of Agreement; No Assignment. This Agreement shall
              ------------------------------------------                      
be binding upon and inure to the benefit of the parties hereto, including future
holders of voting trust certificates, and their respective heirs, personal
representatives, successors and assigns.  No party may sell, assign, transfer or
encumber such party's rights or obligations under this Agreement, the voting
trust certificates or the shares represented thereby, without the prior written
consent of the other parties hereto, except to the extent expressly permitted in
this Agreement.  Neither the death, disability nor incapacity of a holder of
voting trust certificates shall in any way remove the shares from being held by
the Trustees under this Agreement.

          (e) Provisions Separable.  The provisions of this Agreement are
              --------------------                                       
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.

          (f) Entire Agreement.  This Agreement contains the entire
              ----------------                                     
understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained.  The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with any of the
terms hereof.  This Agreement may not be modified or amended other than by an
agreement in writing.

          (g) Paragraph Headings.  The paragraph headings in this Agreement are
              ------------------                                               
for convenience only; they form no part of this Agreement and shall not affect
its interpretation.

          (h) Gender, Etc.  Words used herein, regardless of the number and
              -----------                                                  
gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context indicates is appropriate.

          (i) Number of Days.  In computing the number of days for purposes of
              --------------                                                  
this Agreement, all days shall be counted, including Saturdays, Sundays and
holidays; provided, however, that if the final day of any time period (including
the effective date of a notice or other communication given hereunder) falls on
a Saturday, Sunday or holiday on which federal banks are or may elect to be
closed, then the final day shall be deemed to be the next day which is not a
Saturday, Sunday or such holiday.

                                      -13-
<PAGE>
 
          IN WITNESS WHEREOF the Company, the Trustees and the Shareholders have
signed this Agreement as of the date written above.

                              PIERCE LEAHY INC.



                              By:
                                 ------------------------------------
                                    Name:
                                    Title:


                              ---------------------------------------
                              Leo W. Pierce, Sr., Trustee


                              ---------------------------------------
                              J. Peter Pierce, Trustee


- ---------------------------------     -------------------------------    
Leo W. Pierce, Jr., individually      Eve Bullitt Pierce, individually
and for the benefit of Kate Pierce,   and for the benefit of Kate Pierce,
Alexandra Pierce and Julia Pierce     Alexandra Pierce and Julia Pierce


- ---------------------------------     -------------------------------    
J. Peter Pierce, individually         John P. Pierce, Jr.
and for the benefit of 
Matthew Pierce



- ---------------------------------     -------------------------------    
Michael J. Pierce, individually       Mary E. Pierce
and for the benefit of 
Michael M. Pierce



- ---------------------------------     -------------------------------    
Barbara Quinn, individually and       Constance P. Buckley, individually and
for the benefit of Sarah Quinn,       for the benefit of Hilary Buckley and
Daniel J. Quinn, Jr., Conor Quinn,    Hannah Buckley
Dylan Quinn and Terrance Quinn



                       Signatures Continued on Next Page

                                      -14-
<PAGE>
 
                    Signatures Continued from Previous Page



- ---------------------------------------   --------------------------------
Kathryn Cox, individually and             Maurice Cox, Jr.
for the benefit of Christopher Cox,
Gregory Cox, Adrian Cox, Brendan Cox,
Deirdre Cox, Timothy Cox, Conor Cox and
Bronwyn Cox


- ---------------------------------------   --------------------------------
Monica Cox Durfee                         Constance Cox



- ---------------------------------------   --------------------------------
Andrea Cox Fidurko                        Suzanne Cox



- ---------------------------------------   --------------------------------
Maurice Cox, III                          Gregory Cox




- ---------------------------------------   --------------------------------
Leo W. Pierce, Sr., Trustee under         Daniel J. Quinn, for the benefit of
Karen Pierce 1996 Irrevocable Trust       Sarah Quinn, Conor F. Quinn, Daniel J.
                                          Quinn, Jr., Dylan P. Quinn and 
                                          Terrance P. Quinn



- ---------------------------------------   --------------------------------
J. Peter Pierce, Trustee under            Constance P. Buckley, Trustee under
Leo W. Pierce Trust for the Family        Irrevocable Agreement of Trust dated
of J. Peter Pierce                        September 19, 1996 F/B/O Julia 
                                          Stockton Pierce



- ---------------------------------------   --------------------------------
Constance P. Buckley, Trustee under       Constance P. Buckley, Trustee under
Irrevocable Agreement of Trust dated      Irrevocable Agreement of Trust dated
September 19, 1996 F/B/O Kate             September 19, 1996 F/B/O Alexandra
Bullitt Pierce                            Roberts Pierce



                       Signatures Continued on Next Page

                                      -15-
<PAGE>
 
                    Signatures Continued from Previous Page




- --------------------------------------  ----------------------------------------
Constance P. Buckley, Trustee under     Constance P. Buckley, Trustee under
Irrevocable Agreement of Trust dated    Irrevocable Agreement of Trust dated
December 23, 1996, Leo W.               October 23, 1996 F/B/O Michael M. Pierce
Pierce, Settlor                         



- --------------------------------------
Barbara P. Quinn, Trustee under
Irrevocable Agreement of Trust dated
12/30/96 F/B/O Michael M. Pierce

                                      -16-

<PAGE>
 
                                                                    Exhibit 10.2

                              PIERCE LEAHY CORP.

                            1997 STOCK OPTION PLAN



     Pierce Leahy Corp. (the "Company") hereby establishes and adopts the Pierce
Leahy Corp. 1997 Stock Option Plan, as set forth in this document.

     1.   Purpose.  The Plan is intended to recognize the contributions made to
the Company or an Affiliate by employees of the Company or any Affiliate (as
hereinafter defined), members of the Board of Directors of the Company or any
Affiliate, and certain consultants and advisors to the Company or any Affiliate,
to provide such persons with additional incentive to devote themselves to the
future success of the Company or any Affiliate, and to improve the ability of
the Company or an Affiliate to attract, retain, and motivate individuals upon
whom the Company's sustained growth and financial success depend, by providing
such persons with an opportunity to acquire or increase their proprietary
interest in the Company through receipt of rights to acquire the Company's
Common Stock, $.01 par value (the "Common Stock").

     2.   Definitions. Unless the context clearly indicates otherwise, the
following terms shall have the following meanings:

          (a)  "Act" means the Securities Act of 1933, as amended.

          (b)  "Affiliate" means a corporation which is a parent corporation or
a subsidiary corporation with respect to the Company within the meaning of
Section 424(e) or (f) of the Code.

          (c)  "Board of Directors" means the Board of Directors of the Company.

          (d)  "Change of Control" shall have the meaning set forth in Section 9
of the Plan.

          (e)  "Code" means the Internal Revenue Code of 1986, as amended.

          (f)  "Committee" means the Board of Directors or, if applicable, the
committee designated by the Board of Directors in accordance with the provisions
of Section 3 of the Plan.

          (g)  "Company" means Pierce Leahy Corp., a Pennsylvania corporation.


          (h)  "Disability" shall mean, in the case of an Optionee who is
covered by
<PAGE>
 
a disability policy or plan paid for or provided by the Company, a condition
which entitles the Optionee to benefits under the policy or plan or, if there is
no such policy or plan covering the Optionee, "Disability" shall have the
meaning set forth in Section 22(e)(3) of the Code.

          (i)  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

          (j)  "Fair Market Value" shall have the meaning set forth in Section
8(b) of the Plan.

          (k)  "ISO" means an Option granted under the Plan which is an
"incentive stock option" within the meaning of Section 422(b) of the Code.

          (l)  "Non-qualified Stock Option" means an Option granted under the
Plan which is not intended to qualify, or otherwise does not qualify, as an ISO.

          (m)  "Option" means either an ISO or a Non-qualified Stock Option
granted by the Company under the Plan.

          (n)  "Optionee" means a person to whom an Option has been granted
under the Plan.

          (o)  "Option Document" means the written document described in Section
8 of the Plan evidencing the Option and setting forth the terms and conditions
upon which the Option is granted and upon which it may be exercised.

          (p)  "Option Price" means the price at which Shares may be purchased
upon exercise of an Option, as determined pursuant to Section 8(b) of the Plan.

          (q)  "Permitted Holder" means any of Leo W. Pierce, Sr., his children
or other lineal descendants (whether adoptive or biological), the spouses of any
of the foregoing and any probate estate of any such individual and any trust, so
long as one or more of the foregoing individuals is the principal beneficiary of
such trust, and any other partnership, corporation or other entity all of the
partners, shareholders, members or owners of which are any one or more of the
foregoing.

          (r)  "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government (including any agency or political subdivision thereof).

          (s)  "Plan" means the Pierce Leahy Corp. 1997 Stock Option Plan.

          (t)  "Shares" means the shares of Common Stock of the Company which
are 

                                      -2-
<PAGE>
 
the subject of Options, except as the same may be modified pursuant to the terms
of Section 10 of the Plan.

     3.   Administration of the Plan.

          (a)  Committee. The Plan shall be administered by the Board of
Directors or a committee appointed by the Board of Directors, which is intended,
but not required, to be composed of two or more "outside directors" within the
meaning of Section 162(m) of the Code.  Members of the Committee shall serve at
the pleasure of the Board of Directors which shall also fill any vacancies in
the membership of the Committee.

          (b)  Meetings. The Committee shall hold meetings at such times and
places as it may determine and shall keep minutes of its meetings.  A majority
of the Committee shall constitute a quorum thereof, and acts approved at a
meeting or acts approved in writing by a majority of the members of the
Committee shall be the valid acts of the Committee.

          (c)  Grants. The Committee shall from time to time, in its discretion,
direct the Company to grant Options pursuant to the terms of the Plan.  The
Committee shall have plenary authority to (i) determine the Optionees to whom,
the times at which, and the price at which Options shall be granted, (ii)
determine the type of Option to be granted and the number of Shares subject
thereto, and (iii) approve the form and terms and conditions of the Option
Documents; all subject, however, to the express provisions of the Plan. In
making such determinations, the Committee shall take into account the nature of
the Optionee's services and responsibilities, the Optionee's present and
potential contribution to the Company's success and such other factors as the
Committee may deem relevant. The interpretation and construction by the
Committee of any provisions of the Plan or of any Option granted under the Plan,
and of any Option Document, shall be final, binding and conclusive.

          (d)  Exculpation.  No member of the Committee or of the Board of
Directors shall be personally liable in such capacity for monetary damages for
any action taken or any failure to take any action in connection with the
administration of the Plan or the granting of Options under the Plan, unless
such member breaches or fails to perform the duties of his office under the
Pennsylvania Business Corporation Law of 1988, as amended, and the breach or
failure to perform constitutes self-dealing, willful misconduct or recklessness.
This provision, however, does not apply to the responsibility or liability of a
member pursuant to any criminal statute, or to the liability of a member for the
payment of the Company's taxes pursuant to local, Pennsylvania or federal law.

          (e)  Indemnification. Service on the Committee shall constitute
service as a member of the Board of Directors. Each member of the Committee
shall be entitled without further act on his part to indemnity from the Company
to the fullest extent provided by applicable law and the Company's Certificate
of Incorporation and/or By-laws in 

                                      -3-
<PAGE>
 
connection with or arising out of any action, suit or proceeding with respect to
the administration of the Plan or the granting of Options thereunder in which he
or she may be involved by reason of his or her being or having been a member of
the Committee, whether or not he or she continues to be a member of the
Committee at the time of the action, suit or proceeding.

          (f)  Limitations on Grants of Options to Consultants and Advisors.
With respect to the grant of Options to consultants and advisors, bona fide
services must be rendered by consultants and advisors, and such services must
not be in connection with a capital raising transaction.

     4.   Grants under the Plan. Grants under the Plan may be in the form of a
Non-qualified Stock Option, an ISO or a combination thereof, at the discretion
of the Committee.  More than one Option may be granted to any individual, and
each such grant may include Options which are intended to be ISOs and Options
which are not intended to be ISOs, but only on the terms and subject to the
conditions and restrictions of the Plan.

     5.   Eligibility. All employees and members of the Board of Directors of,
and consultants and advisors to, the Company or an Affiliate shall be eligible
to receive Options hereunder.

     6.   Shares Subject to Plan. The aggregate maximum number of Shares for
which Options may be granted pursuant to the Plan is 1,500,000, subject to
adjustment as provided in Section 10 of the Plan. The Shares shall be issued
from either authorized and unissued Common Stock or Common Stock held in or
hereafter acquired for the treasury of the Company. If an Option terminates or
expires without having been fully exercised for any reason, the Shares for which
the Option was not exercised may again be the subject of further Option grants
under the Plan.

     7.   Effectiveness; Term of the Plan.  The Plan shall become effective (the
"Effective Date") on the consummation of the Company's initial public offering
of Common Stock (provided such offering occurs prior to March 25, 1998).  No
Option may be granted under the Plan after March 25, 2007 or the earlier
termination of the Plan.

     8.   Option Documents and Terms. Each Option granted under the Plan shall
be a Non-qualified Stock Option unless the Option shall specifically be
designated an ISO at the time of grant. If any Option designated as an ISO is
determined for any reason not to qualify as an incentive stock option within the
meaning of Section 422 of the Code, such Option shall be treated as a Non-
qualified Stock Option for all purposes under the provisions of the Plan. The
grant of each Option under the Plan shall be evidenced by one or more Option
Documents in such form as the Committee shall from time to time approve, which
Option Documents shall be executed by the Company as promptly as possible
following such grant.  Each Option Document shall comply with and be subject to
the following terms and conditions and such other terms and conditions as the
Committee shall

                                      -4-
<PAGE>
 
from time to time require which are not inconsistent with the terms of the Plan,
and the Option Document shall expressly state the provisions of the Plan or
incorporate them by reference.

          (a)  Number of Option Shares. Each Option Document shall state the
number of Shares to which it pertains.  The maximum number of Shares for which
Options may be granted to any single Optionee in any calendar year, subject to
adjustment as provided in Section 10, shall be 5000,000 Shares, subject to
adjustment as set forth in Section 10.

          (b)  Option Price. Each Option Document shall, subject to adjustment
as provided in Section 10 of the Plan, state the Option Price which, for a Non-
qualified Stock Option, may be less than, equal to, or greater than the Fair
Market Value of the Shares on the date the Option is granted and, for an ISO,
shall be at least 100% of the Fair Market Value of the Shares on the date the
Option is granted as determined by the Committee in accordance with this Section
8(b); provided, however, that if an ISO is granted to an Optionee who then owns,
directly or by attribution under Section 424(d) of the Code, stock possessing
more than ten percent of the total combined voting power of all classes of stock
of the Company or an Affiliate, then the Option Price shall be at least 110% of
the Fair Market Value of the Shares on the date the Option is granted. If the
Common Stock is traded in a public market, the Fair Market Value per share shall
be, if the Common Stock is listed on a national securities exchange or included
in the Nasdaq National Market, the last reported sale price thereof on the
relevant date, or, if the Common Stock is not so listed or included, the mean
between the last reported "bid" and "asked" prices thereof on the relevant date,
as reported on Nasdaq or, if not so reported, as reported by the National Daily
Quotation Bureau, Inc. or as reported in a customary financial reporting
service, as applicable and as the Committee determines. If the Common Stock is
not traded in a public market on the relevant date, the Fair Market Value shall
be as determined in good faith by the Committee.

          (c) Exercise.  An Option granted under the Plan may be exercised in
whole or in part to the extent then exercisable under the terms of the Option
Document and this Plan, provided that no Option shall be deemed to have been
exercised prior to the receipt by the Company of written notice of such exercise
(on such form or forms as the Committee may prescribe for this purpose) and of
payment in full (except as otherwise provided in Section 8(d) of the Plan) of
the Option Price for the Shares to be purchased.  Moreover, except as an Option
Document may otherwise provide, no Option may be exercised within six months of
the date of grant.  Each such notice of exercise shall specify the number of
Shares to be purchased and shall (unless the Shares are covered by a then
current and effective registration statement or qualified Offering Statement
under Regulation A under the Securities Act) contain the Optionee's
acknowledgment in form and substance satisfactory to the Company that (i) such
Shares are being purchased for investment and not for distribution or resale
(other than a distribution or resale which, in the opinion of counsel
satisfactory to the Company, may be made without violating the registration
provisions of

                                      -5-
<PAGE>
 
the Act), (ii) the Optionee has been advised and understands that (A) the Shares
have not been registered under the Act, are "restricted securities" within the
meaning of Rule 144 under the Act and are subject to restrictions on transfer
and (B) the Company is under no obligation to register the Shares under the Act
or to take any action which would make available to the Optionee any exemption
from such registration, (iii) such Shares may not be transferred without
compliance with all applicable federal and state securities laws, and (iv) an
appropriate legend referring to the foregoing restrictions on transfer and any
other restrictions imposed under the Option Documents may be endorsed on the
certificates. Notwithstanding  the foregoing, if the Company in its sole
discretion determines that issuance of Shares should be delayed pending (I)
registration under federal or state securities laws, (II) the receipt of an
opinion of counsel satisfactory to the Company that an appropriate exemption
from such registration is available, (III) the listing, registration,
qualification or inclusion of the Shares on any securities exchange or an
automated quotation system or under any state or federal law or (IV) the consent
or approval of any governmental regulatory body whose consent or approval is
necessary or desirable in connection with the issuance of such Shares, the
Company may defer exercise of any Option granted hereunder until any of the
events described in this sentence has occurred.

          (d)  Medium of Payment. Upon exercise of an Option, the aggregate
Option Price for the Shares as to which the Option is being exercised shall, in
the discretion of the Committee, be (i) paid in U.S. funds by cash (including a
check, draft or wire transfer made payable to the order of the Company), or
delivery of stock certificates for Shares of the Company's Common Stock, free of
all liens, claims and encumbrances of every kind, and endorsed in blank or
accompanied by executed stock powers with signatures guaranteed by a national
bank or trust company or a member of a national securities exchange evidencing
Shares which have been held for more than six months (in which case the value of
such Shares shall be deemed to be their Fair Market Value on the date of
exercise of the Option), (ii) paid on a deferred basis upon such terms and
conditions as the Committee in its discretion shall provide, (iii) deemed to be
paid provided the notice of exercise of the Option is accompanied to the
Committee's satisfaction by a copy of irrevocable instructions to a broker to
promptly deliver to the Company an amount of sales or loan proceeds sufficient
to pay the Option Price in full, or (iv) a combination of the foregoing.  If any
part of the Option Price is to be paid on a deferred basis, the Shares with
respect to which payment is deferred shall be registered in the name of the
Optionee, but the certificate representing such Shares shall serve as security
to the Company for the payment of the Option Price and shall not be delivered to
the Optionee until the Option Price for said Shares has been paid in full.

          (e)  Termination of Options.

               (i)  No Option or any unexercised installment thereof shall be
exercisable after the first to occur of the following:

                    (A)  Expiration of the Option term specified in the Option

                                      -6-
<PAGE>
 
Document which, subject to earlier termination as hereinafter provided, shall
not exceed (1) ten years from the date of grant, or (2) five years from the date
of grant of an ISO if the Optionee on the date of grant owns, directly and/or by
attribution under Section 424(d) of the Code, stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
Company or of an Affiliate;
   
                    (B)  Expiration of three months from the date the Optionee's
employment or service with the Company or its Affiliates terminates for any
reason other than Disability or death or as otherwise specified in Subsection
8(e)(i)(D) or 8(e)(i)(E) below; provided, however, that such Option was
exercisable on the date of termination of employment or service under the
provisions of the Option Document or the Committee specifically waives the
restrictions relating to exercisability, if any, contained in the Option
Document;       

                    (C)  Expiration of one year from the date such employment or
service with the Company or its Affiliates terminates due to the Optionee's
Disability or death; provided, however, that such Option was exercisable on the
date of termination of employment or service under the provisions of the Option
Document or the Committee specifically waives the restrictions relating to
exercisability, if any, contained in the Option Document. The determination of
whether the termination of the Optionee's employment or service with the Company
is due to Disability shall be made by the Committee, and such determination
shall be final and binding on the Company and the Optionee;

                    (D)  A finding by the Committee, after full consideration of
the facts presented on behalf of both the Company and the Optionee, that the
Optionee has breached his employment or service contract with the Company or an
Affiliate, or has been engaged in disloyalty to the Company or an Affiliate,
including, without limitation, fraud, embezzlement, theft, commission of a
felony or proven dishonesty in the course of his or her employment or service,
or has committed an intentional or grossly negligent act detrimental to the
interests of the Company or an Affiliate. In such event, in addition to
immediate termination of the Option, the Optionee shall automatically forfeit
all Shares for which the Company has not yet delivered the share certificates
upon refund by the Company of the Option Price of such Shares. Notwithstanding
anything herein to the contrary, the Company may withhold delivery of share
certificates pending the resolution of any inquiry that could lead to a finding
resulting in a forfeiture; or

                    (E)  The date, if any, set by the Board of Directors as an
accelerated expiration date in the event of a Change of Control.

               (ii) Notwithstanding the Option termination provisions of Section
8(e)(i), the Committee, in it sole discretion, may extend the period during
which all or any portion of an Option may be exercised to a date no later than
the Option term specified in the Option Document pursuant to Section 8(e)(i)(A),
provided that any change pursuant to this Section 8(e)(ii) which would cause an
ISO to become a Non-qualified Stock Option may

                                      -7-
<PAGE>
 
be made only with the consent of the Optionee.

          (f)  Transfers. Except as otherwise provided by law, no Option granted
under the Plan may be transferred, except by will or by the laws of descent and
distribution. During the lifetime of the person to whom an Option is granted,
such Option may be exercised only by him or his guardian or legal
representative.  Notwithstanding the foregoing, the Committee in its sole
discretion may amend an outstanding Option to permit the transfer of such
Option, without payment of consideration, to immediate family members of the
Optionee or to trusts or partnerships for such family members.

          (g)  Limitation on ISO Grants. In no event shall the aggregate fair
market value of the Shares of Common Stock (determined at the time an ISO is
granted) with respect to which incentive stock options under all incentive stock
option plans of the Company or its Affiliates are exercisable for the first time
by the Optionee during any calendar year exceed $100,000 or such greater sum as
may here after be permitted under Section 422 of the Code.

          (h)  Other Provisions. Subject to the provisions of the Plan, each
Option Document shall contain such other provisions including, without
limitation, provisions authorizing the Committee to accelerate the
exercisability of all or any portion of an Option granted pursuant to the Plan,
additional restrictions upon the exercise of the Option or additional
limitations upon the term of the Option, as the Committee shall deem advisable.

          (i)  Amendment. The Committee shall have the right to amend any Option
Document issued to an Optionee to the extent the terms to be amended are within
the Committee's discretion as provided in the Plan but subject to the Optionee's
consent if such amendment is not favorable to the Optionee, except that the
consent of the Optionee shall not be required for any amendment made pursuant to
Section 8(e)(i)(E) or Section 9 of the Plan, as applicable.

     9.   Change of Control. In the event of a Change of Control, all Options
then outstanding under the Plan immediately shall become vested and exercisable
in full; provided that any acceleration of exercisability of options under this
Section 9 which would cause an ISO to become a Non-Qualified Stock Option may be
made only with the consent of the Optionee.  In addition, in the event of a
Change of Control, the Committee may take whatever other action with respect to
Options outstanding as it deems necessary or desirable, including without
limitation, accelerating the expiration date of any Options.  Any amendment to
this Section 9 which diminishes the rights of Optionees shall not be effective
with respect to Options outstanding at the time of adoption of such amendment,
whether or not such outstanding Options are then exercisable.

          A "Change of Control" shall be deemed to have occurred at such time as
(i) any Person (including a Person's "affiliates" (as defined below) and
associates), other than a Permitted Holder, becomes the beneficial owner (as
defined under Rule 13d-3 or any

                                      -8-
<PAGE>
 
successor rule or regulation promulgated under the Exchange Act) of more than
50% of the total voting power of the Company's Common Stock, (ii) any Person
(including a Person's Affiliates and associates), other than a Permitted Holder,
becomes the beneficial owner of more than 33 1/3% of the total voting power of
the Company's Common Stock, and the Permitted Holders beneficially own, in the
aggregate, a lesser percentage of the total voting power of the Common Stock of
the Company than such other Person and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority of the Board of Directors of the Company, (iii) there shall be
consummated any consolidation or merger of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which the Common
Stock of the Company would be converted into cash, securities or other property,
other than a merger or consolidation of the Company in which the holders of the
Common Stock of the Company outstanding immediately prior to the consolidation
or merger hold, directly or indirectly, at least a majority of the Common Stock
of the surviving corporation immediately after such consolidation or merger, or
(iv) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the shareholders of the Company has been
approved by a majority of the directors then still in office who either were
directors at the beginning of such period or whose election or recommendation
for election was previously so approved) cease to constitute a majority of the
Board of Directors of the Company.  For purposes of this definition of Change of
Control, an "affiliate" of any specified Person shall mean any other Person
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person.  For the
purpose of this definition, "control," as used with respect to any Person, means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.

     10.  Adjustments. In the event that a dividend shall be declared upon the
Common Stock payable in Shares of Common Stock or if a stock split is declared
with respect to the Common Stock, the number of Shares of Common Stock then
subject to any Option outstanding under the Plan and the number of Shares
reserved for the grant of Options pursuant to the Plan but not yet subject to an
Option shall be adjusted by adding to each such Share the number of shares which
would be distributable in respect thereof if such Shares had been outstanding on
the date fixed for determining the shareholders of the Company entitled to
receive such stock dividend or stock split.  In the event that the outstanding
shares of Common Stock shall be changed into or exchanged for a different number
or kind of shares of stock or other securities of the Company or of another
corporation, whether through reorganization, recapitalization, stock split
combination of shares, merger, consolidation or otherwise, there shall be
substituted for each Share of Common Stock subject to any such Option and for
each Share of Common Stock reserved for the grant of Options pursuant to the
Plan but not yet subject to an Option, the number and kind of shares of stock or
other securities into which each outstanding share of

                                      -9-
<PAGE>
 
Common Stock shall have been so changed or for which each such share shall have
been exchanged.  In the event there shall be any change, other than as specified
above in this Section 10, in the number or kind of outstanding shares of Common
Stock or of any stock or other securities into which such Common Stock shall
have been changed or for which it shall have been exchanged, then if the Board
of Directors shall in its sole discretion determine that such change equitably
requires an adjustment in the number or kind of Shares theretofore reserved for
the grant of Options pursuant to the Plan but not yet subject to an Option and
of the Shares then subject to Options, such adjustment shall be made by the
Board of Directors and shall be effective and binding for all purposes of the
Plan and of each Option outstanding thereunder.  In the case of any such
substitution or adjustment as provided for in this Section 10, the Option Price
for each Share of stock or other security which shall have been substituted for
each Share of Common Stock covered by an outstanding Option shall be adjusted
appropriately to reflect such substitution or adjustment.  No adjustment or
substitution provided for in this Section 10 shall require the Company to sell a
fractional share of Common Stock, and the total substitution or adjustment with
respect to each outstanding Option shall be limited accordingly.  Upon any
adjustment made pursuant to this Section 10, the Company will, upon request,
deliver to the Optionee a certificate of its Secretary setting forth the Option
Price thereafter in effect and the number and kind of shares or other securities
thereafter purchasable on the exercise of such Option.

     11.  Amendment or Termination of the Plan. The Board of Directors may
terminate the Plan in whole or in part at any time or amend the Plan from time
to time in such manner as it may deem advisable. Nevertheless, the Board of
Directors of the Company shall not (a) change the class of individuals eligible
to receive an ISO, (b) increase the maximum number of Shares as to which Options
may be granted or (c) make any other change or amendment to which stockholder
approval is required in order to satisfy the conditions set forth in Rule 16b-3
promulgated under the Exchange Act, in each case without obtaining approval,
within twelve months before or after such action, by vote of a majority of the
votes cast at a duly called meeting of the stockholders at which a quorum
representing a majority of all outstanding voting stock of the Company is,
either in person or by proxy, present and voting on the matter.  No amendment to
the Plan, however, shall adversely affect any outstanding Option in any material
respect without the consent of the Optionee.

     12.  No Commitment to Retain. The grant of an Option pursuant to the Plan
shall not be construed to imply or to constitute evidence of any agreement,
express or implied, on the part of the Company or any Affiliate to retain the
Optionee in the employ or service of the Company or an Affiliate and/or as a
member of the Company's Board of Directors or in any other capacity, and nothing
in the Plan shall interfere with or limit in any way the right of the Company or
an Affiliate to terminate the employment or service of an Optionee.

     13.  Withholding of Taxes. The Company shall deduct or withhold an amount
sufficient to satisfy all Federal, state and local taxes required by law to be
withheld with

                                      -10-
<PAGE>
 
respect to any grant or exercise of an Option or other transaction under the
Plan which gives rise to a withholding obligation and, in so doing, the Company
shall by agreement with the Optionee or unilaterally take such action as it
deems necessary or prudent to protect the Company's interest with respect to
such withholding obligations.  In the sole discretion of the Committee, and
subject to such conditions or limitations as the Committee shall prescribe, an
Optionee may satisfy the withholding obligation, in whole or in part, by
electing to have the number of Shares to be issued upon exercise of an Option
reduced by a number of Shares having a Fair Market Value equal to the desired
withholding amount or by surrendering to the Company Shares which the Optionee
has held for more than six months having an equivalent Fair Market Value.  If
the method of payment for the Shares is from a loan or sale by a broker of the
Shares acquired on exercise of the Option, the withholding obligation shall be
satisfied from the proceeds of such loan or sale.

     14.  Interpretation. It is the intent of the Company that transactions
under the Plan with respect to directors and officers (within the meaning of
Section 16(a) of the Exchange Act) satisfy the conditions of Rule 16b-3
promulgated under the Exchange Act. To the extent that any provision of the Plan
or action by the Committee would result in a conflict with or fail to comply
with any such condition, such provision or action shall be deemed null and void
as applied to such transactions to the extent permitted by applicable law and
deemed advisable by the Company.  This Section 14 shall not be applicable if no
class of the Company's equity securities is then registered pursuant to Section
12 of the Exchange Act.  In addition, with respect to employees subject to
Section 162(m) of the Code, transactions under the Plan are intended to avoid
the loss of a deduction under that Code section.  Accordingly, to the extent any
provision of the Plan or action by the Committee fails to comply with Section
162(m) of the Code to avoid the loss of a deduction, it shall be deemed null and
void to the extent permitted by law and deemed advisable by the Company.

     15.  Governing Law.  The granting of Options and the issuance of Shares
under the Plan shall be subject to all applicable laws and regulations and to
such approvals by any governmental agency or national securities exchanges as
may be  required.  To the extent not pre-empted by Federal law, the Plan and all
Option Documents hereunder shall be construed in accordance with and governed by
the laws of Pennsylvania.

                                      -11-

<PAGE>
 
================================================================================


                         PIERCE LEAHY CORP., as Issuer,

                                      and

                       [                    ], as Trustee

                     ---------------------------------------      

                                   INDENTURE

                           Dated as of _______, 1997


                     ---------------------------------------      

                                  $100,000,000

                    _____ Senior Subordinated Notes due 2007


================================================================================
<PAGE>
 
     INDENTURE, dated as of ________, 1997, between  PIERCE LEAHY CORP., a 
Pennsylvania corporation, as Issuer (the "Company"), and
__________________________________, a New York corporation, as Trustee (the
"Trustee").

     Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of the Company's ______% Senior
Subordinated Notes due 2007 (the "Notes").


                                   ARTICLE 1.

                   DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.1.  Definitions.
              ----------- 

     "Acquired Indebtedness" means Indebtedness of a Person (including an
Unrestricted Subsidiary) existing at the time such Person becomes a Restricted
Subsidiary or assumed in connection with the acquisition of assets from a
Person.
    
     "Acquisition EBITDA" means, without duplication, (i) EBITDA for the last
four fiscal quarters for which financial statements are available at the date of
determination (the "Acquisition EBITDA Period") with respect to a business or
Person which has been acquired by the Company or one of its Restricted
Subsidiaries or which is the subject of a binding acquisition agreement
requiring the calculation of EBITDA for purposes of Section 4.6 and, in each
case, with respect to which financial results on a consolidated basis with the
Company have not been made available for an entire fiscal quarter; plus (ii) in
connection with any such acquisition, projected quantifiable improvements in
operating results due to an established program of cost reductions (consistent
with the cost reductions actually achieved by the Company in connection with
prior acquisitions) adopted, in good faith, by the Company or one of its
Restricted Subsidiaries through a Board Resolution certified by an Officers'
Certificate filed with the Trustee (calculated on a pro forma basis for the
Acquisition EBITDA Period as if the program had been implemented at the
beginning of the Acquisition EBITDA Period), without giving effect to any
operating losses of the acquired Person.       
<PAGE>
 
    
Each such Officers' Certificate shall be signed by the Chief Financial Officer
and another officer of the Company. The Trustee may rely on such Officers'
Certificate (subject to the provisions of Section 7.1 of this Indenture).
Acquisition EBITDA of a business shall be a fixed number determined as of the
date the calculation of EBITDA for purposes of Section 4.6 is first required
with respect to the acquisition of such business (the "Determination Date") and
shall be utilized from the Determination Date through the date financial results
are available for the first full fiscal quarter following the acquisition
(following which the actual EBITDA of such business or Person shall be included
in the EBITDA of the Company). For purposes of determining Acquisition EBITDA
with respect to the acquisition of a particular business or Person, Acquisition
EBITDA shall include not only the Acquisition EBITDA of such business or Person,
but also the Acquisition EBITDA of any business previously acquired by the
Company or the subject of a pending acquisition agreement to the extent that, as
of the Determination Date, the financial results for such business or Person on
a consolidated basis with the Company for a full fiscal quarter subsequent to
its acquisition by the Company are not yet available.     

     "Adjusted EBITDA" means for any Person, without duplication, the sum of (a)
EBITDA of such Person and its Restricted Subsidiaries for the most recent fiscal
quarter for which internal financial statements are available, multiplied by
four and (b) Acquisition EBITDA.

     "Adjusted Net Assets" of a Guarantor at any date shall mean the lesser of
the amount by which (x) the fair value of the property of such Guarantor exceeds
the total amount of liabilities, including, without limitation, contingent
liabilities (after giving effect to all other fixed and contingent liabilities
(including, without limitation, any guarantees of Senior Indebtedness)), but
excluding liabilities under the Guarantee, of such Guarantor at such date and
(y) the present fair salable value of the assets of such Guarantor at such date
ex-

                                       2
<PAGE>
 
ceeds the amount that will be required to pay the probable liability of such
Guarantor on its debts (after giving effect to all other fixed and contingent
liabilities (including, without limitation, any guarantees of Senior
Indebtedness) and after giving effect to any collection from any Subsidiary of
such Guarantor in respect of the obligations of such Subsidiary under the
Guarantee), excluding Indebtedness in respect of the Guarantee, as they become
absolute and matured.

     "Affiliate" of any specified Person means any other Person which directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, such specified Person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling" "controlled by," and "under common control with"), as used with
respect to any Person, means the possession,  directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise.

     "Agent" means any Registrar, Paying Agent, co-registrar or agent for
service of notices and demands.

     "Asset Sale" means the sale, transfer or other disposition (other than to
the Company or any of its Restricted Subsidiaries) in any single transaction or
series of related transactions involving assets with a fair market value in
excess of $500,000 of (a) any Capital Stock of or other equity interest in any
Restricted Subsidiary of the Company, (b) all or substantially all of the assets
of the Company or of any Restricted Subsidiary thereof, (c) real property of the
Company or a Restricted Subsidiary or (d) all or substantially all of the assets
of any business property, or part thereof, owned by the Company or any
Restricted Subsidiary thereof, or a division, line of business or comparable
business segment of the Company or any Restricted Subsidiary thereof; provided
                                                                      --------
that Asset Sales shall not include (i) sales, leases, conveyances, transfers or
other dispositions to the Company or to a Restricted Subsidiary or to any other
Person if after giving effect to such sale, lease, conveyance, transfer or other
disposition such other Person becomes a Restricted Subsidiary, (ii) transactions
complying with Section 5.1 and (iii) transfers or

                                       3
<PAGE>
 
other distributions of assets which constitute (1) Permitted Investments or (2)
Restricted Payments made in compliance with Section 4.9.

     "Asset Sale Proceeds" means, with respect to any Asset Sale, (i) cash
received by the Company or any Restricted Subsidiary from such Asset Sale
(including cash received as consideration for the assumption of liabilities
incurred in connection with or in anticipation of such Asset Sale), after (a)
provision for all income or other taxes measured by or resulting from such Asset
Sale; (b) payment of all brokerage commissions, underwriting and other fees and
expenses related to such Asset Sale, (c) provision for minority interest holders
in any Restricted Subsidiary as a result of such Asset Sale, (d) payments made
to retire Indebtedness secured by the assets subject to such Asset Sale and (e)
deduction of appropriate amounts to be provided by the Company or a Restricted
Subsidiary as a reserve, in accordance with GAAP, against any liabilities
associated with the assets sold or disposed of in such Asset Sale and retained
by the Company or a Restricted Subsidiary after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities and
liabilities related to environmental matters or against any indemnification
obligations associated with the assets sold or disposed of in such Asset Sale,
and (ii) promissory notes and other non-cash consideration received by the
Company or any Restricted Subsidiary from such Asset Sale or other disposition
upon the liquidation or conversion of such notes or non-cash consideration into
cash.

     "Attributable Indebtedness" in respect of a Sale and Lease-Back Transaction
means, as of the time of determination, the greater of (i) the fair value of the
property subject to such arrangement (as determined by the Board of Directors)
and (ii) the present value (discounted at a rate of interest implicit in such
transaction) of the total obligations of the lessee for rental payments during
the remaining term of the lease included in such Sale and Lease-Back Transaction
(including any period for which such lease has been extended).

     "Available Asset Sale Proceeds" means, with respect to any Asset Sale, the
aggregate Asset Sale Proceeds from such Asset Sale that have not been applied in
accordance with clause (iii)(a) or (iii)(b) of Section

                                       4
<PAGE>
 
4.10(a) and which have not been the basis for an Excess Proceeds Offer in
accordance with clause (iii)(c) of Section 4.10(a).

     "Board of Directors" means the board of directors of the Company or a
Guarantor, as appropriate, or any committee authorized to act therefor.

     "Board Resolution" means a copy of a resolution certified pursuant to an
Officers' Certificate to have been duly adopted by the Board of Directors of the
Company or a Guarantor, as appropriate, and to be in full force and effect, and
delivered to the Trustee.

     "Capital Stock" means, with respect to any Person, any and all shares or
other equivalents (however designated) of capital stock, partnership interests
or any other participation, right or other interest in the nature of an equity
interest in such Person or any option, warrant or other security convertible
into any of the foregoing.

     "Capitalized Lease Obligations" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.

     "Change of Control" of the Company will be deemed to have occurred at such
time as (i) any Person (including a Person's  Affiliates and associates), other
than a Permitted Holder, becomes the beneficial owner (as defined under Rule
13d-3 or any successor rule or regulation promulgated under the Exchange Act) of
more than 50% of the total voting power of the Company's Common Stock, (ii) any
Person (including a Person's Affiliates and associates), other than a Permitted
Holder, becomes the beneficial owner of more than 33 1/3% of the total voting
power of the Company's Common Stock, and the Permitted Holders beneficially own,
in the aggregate, a lesser percentage of the total voting power of the Common
Stock of the Company than such other Person and do not have the right or ability
by voting power, contract or otherwise to elect or designate for election a
majority of the Board of Directors of the Company, (iii) there shall be
consummated any consolidation or merger of the Company in

                                       5
<PAGE>
 
which the Company is not the continuing or surviving corporation or pursuant to
which the Common Stock of the Company would be converted into cash, securities
or other property, other than a merger or consolidation of the Company in which
the holders of the Common Stock of the Company outstanding immediately prior to
the consolidation or merger hold, directly or indirectly, at least a majority of
the Common Stock of the surviving corporation immediately after such
consolidation or merger, or (iv) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the shareholders of the
Company has been approved by a majority of the directors then still in office
who either were directors at the beginning of such period or whose election or
recommendation for election was previously so approved) cease to constitute a
majority of the Board of Directors of the Company.

     "Collateral" shall have the meaning assigned thereto in the Pledge
Agreement.

     "Collateral Agent" shall have the meaning assigned thereto in the Pledge
Agreement.

     "Common Stock" of any Person means all Capital Stock of such Person that is
generally entitled to (i) vote in the election of directors of such Person or
(ii) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will control
the management and policies of such Person.

     "Company" means the party named as such in the first paragraph of this
Indenture until a successor replaces such party pursuant to Article 5 of this
Indenture and thereafter means the successor.

     "Company Request" means any written request signed in the name of the
Company by any two of the following:  the Chief Executive Officer; the
President; any Vice President; the Chief Financial Officer; the Treasurer; or
the Secretary or any Assistant Secretary (but not both the Secretary and any
Assistant Secretary) of the Company.

                                       6
<PAGE>
 
     "Consolidated Interest Expense" means, with respect to any Person, for any
period, the aggregate amount of interest which, in conformity with GAAP, would
be set forth opposite the caption "interest expense" or any like caption on an
income statement for such Person and its Subsidiaries on a consolidated basis
for such period (including, but not limited to, Redeemable Dividends, whether
paid or accrued, on Preferred Stock of a Subsidiary, imputed interest included
in Capitalized Lease Obligations, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, the net costs associated with hedging obligations, the interest
portion of any deferred payment obligation, amortization of discount or premium,
if any, and all other non-cash interest expense (other than interest amortized
to cost of sales)) plus, without duplication, all net capitalized interest for
such period and all interest paid under any guarantee of Indebtedness (including
a guarantee of principal, interest or any combination thereof) of any Person,
plus the amount of all dividends or distributions paid on Disqualified Capital
Stock (other than dividends paid or payable in shares of Capital Stock of the
Company).

     "Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided, however, that (a) the Net Income of any Person (the "other Person") in
- --------  -------                                                               
which the Person in question or any of its Subsidiaries has less than a 99%
interest (which interest does not cause the net income of such other Person to
be consolidated into the net income of the Person in question in accordance with
GAAP) shall be included only to the extent of the amount of dividends or
distributions paid to the Person in question or the Subsidiary, (b) the Net
Income of any Subsidiary of the Person in question, which Subsidiary is subject
to any restriction or limitation on the payment of dividends or the making of
other distributions (other than pursuant to the Notes or this Indenture) shall
be excluded to the extent of such restriction or limitation (provided that if
any such restriction or limitation by its terms takes effect upon the occurrence
of a default or event of default, such exclusion shall become effective only
upon the occurrence of such default or event of default which is continuing),
(c)(i) the Net Income of any Person

                                       7
<PAGE>
 
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition and (ii) any net gain (but not loss) resulting from an Asset
Sale by the Person in question or any of its Subsidiaries other than in the
ordinary course of business shall be excluded and (d) extraordinary, unusual and
non-recurring gains and losses shall be excluded.

     "Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of execution of this Indenture is located at ________
___________, New York, New York _______.

     "Credit Facility" means the credit agreement or credit agreements to be
entered into by and among the Company, the Restricted Subsidiaries and any one
or more lenders from time to time parties thereto, as the same may be amended,
extended, increased, renewed, restated, supplemented or otherwise modified (in
whole or in part, and without limitation as to amount, terms, conditions,
covenants and other provisions) from time to time, and any agreement or
agreements governing Indebtedness incurred to refinance, replace, restructure or
refund in whole or in part the borrowings and then maximum commitments under the
Credit Facility or such agreement (whether with the original administrative
agent and lenders or other agents and lenders or otherwise, and whether provided
under the original Credit Facility or other credit agreements or otherwise). The
Company shall promptly notify in writing by means of an Officers' Certificate
the Trustee of any such refunding, replacement, restructuring or refinancing of
the Credit Facility.

     "Default" means any event that is, or with the passing of time or giving of
notice or both would be, an Event of Default.

     "Depository" means, with respect to the Notes issued in the form of one or
more Global Notes, The Depository Trust Company or another Person designated as
Depository by the Company, which Person must be a clearing agency registered
under the Exchange Act.

     "Designated Senior Indebtedness," as to the Company or any Guarantor, as
the case may be, means any

                                       8
<PAGE>
 
Senior Indebtedness (a) under the Credit Facility, or (b) which at the time of
determination exceeds $15,000,000 in aggregate principal amount (or accreted
value in the case of Indebtedness issued at a discount) outstanding or available
under a committed facility and (x) unless such designation is prohibited by the
Credit Facility, which is specifically designated in the instrument evidencing
such Senior Indebtedness as "Designated Senior Indebtedness" by such Person and
(y) as to which the Trustee has been given written notice by means of an
Officers' Certificate of such designation.

     "Disqualified Capital Stock" means any Capital Stock of the Company or a
Restricted Subsidiary thereof which, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable at the
option of the holder), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the maturity date of the Notes, for cash or securities constituting
Indebtedness. Without limitation of the foregoing, Disqualified Capital Stock
shall be deemed to include (i) any Preferred Stock of a Restricted Subsidiary of
the Company and (ii) any Preferred Stock of the Company, with respect to either
of which, under the terms of such Preferred Stock, by agreement or otherwise,
such Restricted Subsidiary or the Company is obligated to pay current dividends
or distributions in cash during the period prior to the maturity date of the
Notes; provided, however, that Preferred Stock of the Company or any Restricted
       --------  -------                                                       
Subsidiary thereof that is issued with the benefit of provisions requiring a
change of control offer to be made for such Preferred Stock in the event of a
Change of Control of the Company or Restricted Subsidiary, which provisions have
substantially the same effect as the provisions described in Section 4.19, shall
not be deemed to be Disqualified Capital Stock solely by virtue of such
provisions; and provided, further, that Capital Stock owned by the Company or a
                --------  -------                                              
Wholly-Owned Restricted Subsidiary shall not constitute Disqualified Capital
Stock.

     "EBITDA" means, for any Person, for any period, an amount equal to (a) the
sum of (i) Consolidated Net Income for such period, plus (ii) the provision for
taxes for such period based on income or profits to the extent

                                       9
<PAGE>
 
such income or profits were included in computing Consolidated Net Income and
any provision for taxes utilized in computing net loss under clause (i) hereof,
plus (iii) Consolidated Interest Expense for such period (but only including
Redeemable Dividends in the calculation of such Consolidated Interest Expense to
the extent that such Redeemable Dividends have not been excluded in the
calculation of Consolidated Net Income), plus (iv) depreciation for such period
on a consolidated basis, plus (v) amortization of intangibles and other deferred
financing fees for such period on a consolidated basis, plus (vi) any other non-
cash items reducing Consolidated Net Income for such period, plus (vii)
Permitted Tax Distributions, except that with respect to the Company each of the
foregoing items shall be determined on a consolidated basis with respect to the
Company and its Restricted Subsidiaries only.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     "GAAP" means generally accepted accounting principles consistently applied
as in effect in the United States from time to time.

     "Guarantee" means, as the context may require, individually, a guarantee,
or collectively, any and all guarantees, of the Obligations of the Company with
respect to the Notes by each Guarantor, if any, pursuant to the terms of Article
10 hereof, substantially in the form set forth in Exhibit C.

     "Guarantor" means each Restricted Subsidiary of the Company that hereafter
becomes a Guarantor pursuant to Section 4.14, and "Guarantors" means such
entities, collectively.

     "Guarantor Senior Indebtedness," as to any Guarantor, means the principal
of and premium, if any, and interest (including, without limitation, interest
accruing or that would have accrued but for the filing of a bankruptcy,
reorganization or other insolvency proceeding whether or not such interest
constitutes an allowable claim in such proceeding) on, and any and all other
fees, expense reimbursement obligations, indemnities and other amounts due
pursuant to the terms of all agreements, documents and instruments providing
for, creating, secur-

                                       10
<PAGE>
 
ing or evidencing or otherwise entered into in connection with, (a) such
Guarantor's direct incurrence of any Indebtedness or its guarantee of all
Indebtedness of the Company or any Restricted Subsidiaries, in each case, owed
to lenders under or in respect of the Credit Facility, (b) all obligations of
such Guarantor with respect to any Interest Rate Agreement or any guarantee
thereof, (c) all obligations of such Guarantor to reimburse any bank or other
person in respect of amounts paid under letters of credit, acceptances or other
similar instruments and all obligations of such Guarantor with respect to
guarantees of such reimbursement obligations, (d) all other Indebtedness of such
Guarantor which does not provide that it is to rank pari passu with or
                                                    ---- -----        
subordinate to the Guarantees and (e) all deferrals, renewals, extensions,
replacements, refundings, refinancings and restructurings of, and amendments,
modifications and supplements to, any of the Guarantor Senior Indebtedness
described above. Notwithstanding anything to the contrary in the foregoing,
Guarantor Senior Indebtedness will not include (i) Indebtedness of such
Guarantor to any of its Subsidiaries, (ii) Indebtedness represented by the
Guarantees, (iii) any Indebtedness which by the express terms of the agreement
or instrument creating, evidencing or governing the same is junior or
subordinate in right of payment to any item of Guarantor Senior Indebtedness,
(iv) any trade payable arising from the purchase of goods or materials or for
services obtained in the ordinary course of business or (v) Indebtedness (other
than that described in clause (a) above) incurred in violation of this
Indenture.

     "Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.

     "incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
guarantee or otherwise become liable in respect of such Indebtedness or other
obligation or the recording (other than previously recorded), as required
pursuant to GAAP or otherwise, of any such Indebtedness or other obligation on
the balance sheet of such Person (and "incurrence," "incurred," "incurrable,"
and "incurring" shall have meanings correlative to the foregoing); provided that
                                                                   --------     
a change in GAAP that results in an obligation of such Person that exists at
such time becoming Indebt-

                                       11
<PAGE>
 
edness shall not be deemed an incurrence of such Indebtedness.

     "Indebtedness" means (without duplication), with respect to any Person, any
indebtedness at any time outstanding, secured or unsecured, contingent or
otherwise, which is for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute accounts
payable or trade payables, and other accrued liabilities arising in the ordinary
course of business) if and to the extent any of the foregoing indebtedness would
appear as a liability upon a balance sheet of such Person prepared in accordance
with GAAP, and shall also include, to the extent not otherwise included (i) any
Capitalized Lease Obligations, (ii) obligations secured by a Lien to which the
property or assets owned or held by such Person is subject, whether or not the
obligation or obligations secured thereby shall have been assumed (provided,
                                                                   -------- 
however, that if such obligation or obligations shall not have been assumed, the
- -------                                                                         
amount of such Indebtedness shall be deemed to be the lesser of the principal
amount of the obligation or the fair market value of the pledged property or
assets), (iii) guarantees of items of other Persons which would be included
within this definition for such other Persons (whether or not such items would
appear upon the balance sheet of the guarantor, (iv) all obligations for the
reimbursement of any obligor on any  letter of credit, banker's acceptance or
similar credit transaction (provided that, in the case of any such letters of
                            --------                                         
credit, the items for which such letters of credit provide credit support are
those of other Persons which would be included within this definition for such
other Persons), (v) in the case of the Company, Disqualified Capital Stock of
the Company or any Restricted Subsidiary thereof, and (vi) obligations of any
such Persons under any Interest Rate Agreement applicable to any of the
foregoing if and to the extent such Interest Rate Agreement obligations would
appear as a liability upon a balance sheet of such Person prepared in accordance
with GAAP). The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described

                                       12
<PAGE>
 
above and, with respect to contingent obligations, the maximum liability upon
the occurrence of the contingency giving rise to the obligation, provided (i)
that the amount outstanding at any time of any Indebtedness issued with original
issue discount is the principal amount of such Indebtedness less the remaining
unamortized portion of the original issue discount of such Indebtedness at such
time as determined in conformity with GAAP and (ii) that Indebtedness shall not
include any liability for Federal, state, local or other taxes.  Notwithstanding
any other provision of the foregoing definition, any trade payable arising from
the purchase of goods or materials or for services obtained in the ordinary
course of business or contingent obligations arising out of customary
indemnification agreements with respect to the sale of assets or securities
shall not be deemed to be "Indebtedness" of the Company or any Restricted
Subsidiaries for purposes of this definition.  Furthermore,  guarantees of (or
obligations with respect to letters of credit supporting) Indebtedness and Liens
securing Indebtedness otherwise included in the determination of such amount
shall not also be included.

     "Indenture" means this Indenture as amended, restated or supplemented from
time to time.

     "Interest Payment Date" means the stated maturity of an installment of
interest on the Notes.

     "Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement designed to protect the party indicated therein against
fluctuations in interest rates.

     "Investments" means, directly or indirectly, any advance, account
receivable (other than an account receivable arising in the ordinary course of
business or acquired as part of the assets acquired by the Company in connection
with the acquisition of assets which is otherwise permitted by the terms of this
Indenture), loan or capital contribution to (by means of transfers of proper-

                                       13
<PAGE>
 
ty to others, payments for property or services for the account or use of others
or otherwise), the purchase of any stock, bonds, notes, debentures, partnership
or joint venture interests or other securities of, the acquisition, by purchase
or otherwise, of all or substantially all of the business or assets or stock or
other evidence of beneficial ownership of, any Person or the making of any
investment in any Person. Investments shall exclude (i) extensions of trade
credit on commercially reasonable terms in accordance with normal trade
practices and (ii) the repurchases or redemptions of securities of any Person by
such Person.

     "Issue Date" means the date the Notes are first issued by the Company and
authenticated by the Trustee under this Indenture.

     "Lien" means, with respect to any property or assets of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance, preference,
priority, or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including,
without limitation, any Capitalized Lease Obligation, conditional sales, or
other title retention agreement having substantially the same economic effect as
any of the foregoing).

     "Maturity Date" means _________, 2007.

     "Moody's" means Moody's Investors Service, Inc. and its successors.

     "Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person determined in accordance with GAAP minus Permitted
Tax Distributions with respect to such period, and excluding any foreign
currency translation gains or losses added or deducted, as applicable, in the
computation of Net Income.

     "Net Proceeds" means (a) in the case of any sale of Capital Stock by the
Company, the aggregate net proceeds received by the Company, after payment of
expenses, commissions and the like incurred in connection therewith, whether
such proceeds are in cash or in prop-

                                       14
<PAGE>
 
erty (valued at the fair market value thereof, as  determined in good faith by
the Board of Directors, at the time of receipt), (b) in the case of any
exchange, exercise, conversion or surrender of outstanding securities of any
kind for or into shares of Capital Stock of the Company which is not
Disqualified Capital Stock, the net book value of such outstanding securities on
the date of such exchange, exercise, conversion or surrender (plus any
additional amount required to be paid by the holder to the Company upon such
exchange, exercise, conversion or surrender, less any and all payments made to
the holders, e.g., on account of fractional shares and less all expenses
             ----                                                       
incurred by the Company in connection therewith) and (c) in the case of any
issuance of any Indebtedness by the Company or any Restricted Subsidiary, the
aggregate net cash proceeds received by such Person after payment of expenses,
commissions, underwriting discounts and the like incurred in connection
therewith.

     "1996 Notes" means the 11 1/8% Senior Subordinated Notes of the Company due
2006.

     "Non-Payment Event of Default" means any event (other than a Payment
Default) the occurrence of which entitles one or more Persons to accelerate the
maturity of any Designated Senior Indebtedness.

     "Non-U.S. Person" means a person who is not a U.S. person, as defined in
Regulation S.

     "Notes" means the securities that are issued under this Indenture, as
amended or supplemented from time to time pursuant to this Indenture.

     "Obligations" means, with respect to any Indebtedness, any principal,
premium, interest, penalties, fees, indemnifications, reimbursements, damages
and other expenses payable under the documentation governing such Indebtedness.

     "Officer" means the Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer, the Treasurer, the Controller or the
Secretary

                                       15
<PAGE>
 
of the Company or a Guarantor, or any other officer designated by the Board of
Directors, as the case may be.

          "Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chief Executive Officer, the President or any Vice
President and the Chief Financial Officer, the Controller or any Treasurer of
such Person that shall comply with applicable provisions of this Indenture.

          "Opinion of Counsel" means a written opinion from legal counsel which
counsel is reasonably acceptable to the Trustee.

          "Payment Default" means any default, whether or not any requirement
for the giving of notice, the lapse of time or both, or any other condition to
such default becoming an Event of Default has occurred, in the payment of
principal of (or premium, if any) or interest on or any other amount payable in
connection with Designated Senior Indebtedness.

          "Permitted Holders" means, collectively, Leo W. Pierce, Sr., his
children or other lineal descendants (whether adoptive or biological), the
spouses of any of the foregoing and any probate estate of any such individual
and any trust, so long as one or more of the foregoing individuals is the
principal beneficiary of such trust, and any other partnership, corporation or
other entity all of the partners, shareholders, members or owners of which are
any one or more of the foregoing.

          "Permitted Indebtedness" means:
    
          (i)  Indebtedness of the Company or any Restricted Subsidiary arising
     under or in connection with the Credit Facility in an amount not to exceed
     $20 million above the amount that could be borrowed at the time of
     determination under the first paragraph of Section 4.6;     

          (ii)  Indebtedness of the Company's Canadian subsidiary (and related
     guarantees) under the Credit Facility in an aggregate amount at any one
     time outstanding not to exceed Cdn $30.3 million;
                                                      

                                       16
<PAGE>
 

          (iii) Indebtedness under the 1996 Notes and the guarantees thereof;

          (iv)  Indebtedness under the Notes and the Guarantees;

          (v)   Indebtedness not covered by any other clause of this definition
     which is outstanding on the date of this Indenture;

          (vi)  Indebtedness of the Company to any Restricted Subsidiary and
     Indebtedness of any Restricted Subsidiary to the Company or another
     Restricted Subsidiary;

          (vii)  Purchase Money Indebtedness and Capitalized Lease Obligations
     incurred to acquire property in the ordinary course of business which
     Indebtedness and Capitalized Lease Obligations do not in the aggregate
     exceed 5% of the Company's consolidated total assets;

          (viii) Interest Rate Agreements;

          (ix)  additional Indebtedness of the Company not to exceed
     $3,000,000 in principal amount outstanding at any time; and

          (x)   Refinancing Indebtedness.

          "Permitted Investments" means, for any Person, Investments made on or
after the date of this Indenture consisting of:

                                       17
<PAGE>
 
          (i)  Investments by the Company, or by a Restricted Subsidiary
     thereof, in the Company or a Restricted Subsidiary;

          (ii)  Temporary Cash Investments;

          (iii) Investments by the Company, or by a Restricted Subsidiary
     thereof, in a Person (or in all or substantially all of the business or
     assets of a business or a Person), if as a result of such Investment (a)
     such Person becomes a Restricted Subsidiary of the Company, (b) such Person
     is merged, consolidated or amalgamated with or into, or transfers or
     conveys substantially all of its assets to, or is liquidated into, the
     Company or a Restricted Subsidiary thereof or (c) such business or assets
     are owned by the Company or a Restricted Subsidiary;

          (iv) reasonable and customary loans made to employees not to exceed
     $500,000 in the aggregate at any one time outstanding, plus any loans which
     may be required to be made under the Company's Nonqualified Stock Option
     Plan in an amount not to exceed $2,000,000;

          (v) an Investment that is made by the Company or a Restricted
     Subsidiary thereof in the form of any stock, bonds, notes, debentures,
     partnership or joint venture interests or other securities that are issued
     by a third party to the Company or Restricted Subsidiary solely as partial
     consideration for the consummation of an Asset Sale that is otherwise
     permitted by Section 4.10;

          (vi) accounts receivable of the Company and its Restricted
     Subsidiaries generated in the ordinary course of business;

          (vii) Investments existing on the Issue Date; and

          (viii) Investments for any purpose not to exceed $2,000,000.

                                       18
<PAGE>
 
          "Permitted Liens" means (i) Liens on property or assets of, or any
shares of stock of or secured debt of, any Person or business existing at the
time such Person becomes a Restricted Subsidiary of the Company or at the time
such Person is merged into or consolidated with the Company or any of its
Restricted Subsidiaries or at the time such business is acquired by the Company
or a Restricted Subsidiary, provided that such Liens are not incurred in
                            --------                                    
anticipation of such Person becoming a Restricted Subsidiary of the Company or
merging into or consolidating with the Company or any of its Restricted
Subsidiaries or such business being acquired by the Company or a Restricted
Subsidiary, (ii) Liens securing Refinancing Indebtedness, provided that any such
                                                          --------              
Lien does not extend to or cover any Property, shares or debt other than the
Property, shares or debt securing the Indebtedness so refunded, refinanced or
extended, (iii) Liens in favor of the Company or any of its Restricted
Subsidiaries, (iv) Liens securing industrial revenue bonds, (v) Liens to secure
Purchase Money Indebtedness that is otherwise permitted under this Indenture,
provided that (a) any such Lien is created solely for the purpose of securing
- --------                                                                     
Indebtedness representing, or incurred to finance, refinance or refund, the cost
(including sales and excise taxes, installation and delivery charges and other
direct costs of, and other direct expenses paid or charged in connection with,
such purchase or construction) of such Property, (b) the principal amount of the
Indebtedness secured by such Lien does not exceed 100% of such costs, and (c)
such Lien does not extend to or cover any Property other than such item of
Property and any improvements on such item, (vi) statutory liens or landlords',
carriers', warehousemen's, mechanics', suppliers', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business and with respect to
amounts not yet delinquent or being contested in good faith by appropriate
proceedings, (vii) other Liens securing obligations incurred in the ordinary
course of business which obligations do not exceed $1,000,000 in the aggregate
at any one time outstanding, (viii) Liens for taxes, assessments or governmental
charges that are being contested in good faith by appropriate proceedings, (ix)
Liens securing Capitalized Lease Obligations permitted to be incurred under
clause (v) of the definition of "Permitted Indebtedness," provided that such
                                                          --------          
Lien does not extend to any property other than that subject to the underlying
lease, (x)

                                       19
<PAGE>
 
Liens securing Designated Senior Indebtedness, (xi) easements or minor defects
or irregularities in title and other similar charges or encumbrances on Property
not interfering in any material respect with the Company's or any Restricted
Subsidiary's use of such Property, (xii) Liens existing on the date of this
Indenture, (xiii) pledges or deposits made in the ordinary course of business
(a) in connection with (1) leases, performance bonds and similar bonds or (2)
workers' compensation, unemployment insurance and other social security
legislation or (b) securing the performance of surety bonds and appeal bonds
required in the ordinary course of business or in connection with the
enforcement of rights or claims of the Company or a Subsidiary thereof or (2) in
connection with judgments that do not give rise an Event of Default and which do
not exceed $3,000,000 in the aggregate, (xiv) Liens securing Interest Rate
Agreements entered into with any lender under the Credit Facility or any
Affiliate thereof and any guarantees thereof and (xv) any extensions,
substitutions, replacements or renewals of the foregoing.

          "Permitted Tax Distributions" means with respect to any period for
which the Company is taxed as an S corporation or other pass-through entity for
Federal income tax purposes distributions to the holders of Capital Stock of
the Company based on estimates of the highest amount of federal, state and local
income tax per share of Capital Stock that any holder of Capital Stock of the
Company would be required to pay as a result of the Company's being treated as a
pass-through entity for income tax purposes.

          "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government (including any agency or political subdivision thereof).

          "Pledge Agreement" means the Pledge and Intercreditor Agreement in the
form attached as Exhibit D, as the same may be amended, supplemented, restated
or modified from time to time.

          "Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
dividends, distributions or liquidation proceeds of such Person over the holders
of other Capital Stock issued by such Person.

                                       20
<PAGE>
 
          "Property" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent consolidated balance sheet of such Person and its Subsidiaries under
GAAP.

          "Public Equity Offering" means a public offering by the Company of
shares of its Capital Stock and any and all rights, warrants or options to
acquire such Capital Stock.

          "Purchase Money Indebtedness" means any Indebtedness incurred in the
ordinary course of business by a Person to finance the cost (including the cost
of construction) of an item of Property, the principal amount of which
Indebtedness does not exceed the sum of (i) 100% of such cost and (ii)
reasonable fees and expenses of such Person incurred in connection therewith.

          "Redeemable Dividend" means, for any dividend or distribution with
regard to Disqualified Capital Stock, the quotient of the dividend or
distribution divided by the difference between one and the maximum statutory
federal income tax rate (expressed as a decimal number between 1 and 0) then
applicable to the issuer of such Disqualified Capital Stock.

          "Redemption Date" when used with respect to any Note to be redeemed
means the date fixed for such redemption pursuant to this Indenture.

          "Refinancing Indebtedness" means Indebtedness that refunds,
refinances, renews, replaces or extends any Indebtedness of the Company
outstanding on the Issue Date or other Indebtedness permitted to be incurred by
the Company or its Restricted Subsidiaries pursuant to the terms of this
Indenture, whether involving the same or any other lender or creditor or group
of lenders or creditors, but only to the extent that (i) the Refinancing
Indebtedness is subordinated to the Notes to at least the same extent as the
Indebtedness being refunded, refinanced or extended, if at all, (ii) the
Refinancing Indebtedness is scheduled to mature either (a) no earlier than the
Indebtedness being refunded, refinanced or extended, or (b) after the maturity
date of the Notes, (iii) the portion, if any, of the Refinancing Indebtedness
that is scheduled to mature on or prior to the

                                       21
<PAGE>
 
maturity date of the Notes has a weighted average life to maturity at the time
such Refinancing Indebtedness is incurred that is equal to or greater than the
weighted average life to maturity of the portion of the Indebtedness being
refunded, refinanced or extended that is scheduled to mature on or prior to the
maturity date of the Notes, (iv) such Refinancing Indebtedness is in an
aggregate principal amount that is equal to or less than the sum of (a) the
aggregate principal amount then outstanding under the Indebtedness being
refunded, refinanced or extended, (b) the amount of accrued and unpaid interest,
if any, and premiums owed, if any, not in excess of preexisting prepayment
provisions on such Indebtedness being refunded, refinanced or extended and (c)
the amount of customary fees, expenses and costs related to the incurrence of
such Refinancing Indebtedness, and (v) such Refinancing Indebtedness is incurred
by the same Person that initially incurred the Indebtedness being refunded,
refinanced or extended, except that the Company may incur Refinancing
Indebtedness to refund, refinance or extend Indebtedness of any Wholly-Owned
Subsidiary of the Company.

          "Restricted Payment" means any of the following: (i) the declaration
or payment of any dividend or any other distribution or payment on Capital Stock
of the Company or any Restricted Subsidiary of the Company or any payment made
to the direct or indirect holders (in their capacities as such) of Capital Stock
of the Company or any Restricted Subsidiary of the Company (other than (x)
dividends or distributions payable solely in Capital Stock (other than
Disqualified Capital Stock) or in options, warrants or other rights to purchase
Capital Stock (other than Disqualified Capital Stock), and (y) in the case of
Restricted Subsidiaries of the Company, dividends or distributions payable to
the Company or to a Wholly-Owned Subsidiary of the Company), (ii) the purchase,
redemption or other acquisition or retirement for value of any Capital Stock of
the Company or any of its Restricted Subsidiaries (other than Capital Stock
owned by the Company or a Wholly-Owned Subsidiary of the Company, excluding
Disqualified Capital Stock), (iii) the purchase, defeasance, repurchase,
redemption or other

                                       22
<PAGE>
 
acquisition or retirement for value, prior to any scheduled maturity, scheduled
repayment or scheduled sinking fund payment of, or the making of any principal
payment on any Indebtedness which is subordinated in right of payment to the
Notes other than subordinated Indebtedness acquired in anticipation of
satisfying a scheduled sinking fund obligation, principal installment or final
maturity (in each case due within one year of the date of acquisition), (iv) the
making of any Investment or guarantee of any Investment in any Person other than
a Permitted Investment, (v) any designation of a Restricted Subsidiary as an
Unrestricted Subsidiary on the basis of the Investment by the Company therein
and (vi) forgiveness of any Indebtedness of an Affiliate of the Company (other
than a Restricted Subsidiary) to the Company or a Restricted Subsidiary. For
purposes of determining the amount expended for Restricted Payments, cash
distributed or invested shall be valued at the face amount thereof and property
other than cash shall be valued at its fair market value in the good faith
determination of the Board of Directors. It is agreed that any payments made to
Leo W. Pierce, Sr. or his spouse pursuant to a pension obligation of the Company
in the annual amount of $96,000 shall not constitute a Restricted Payment.

          "Restricted Subsidiary" means a Subsidiary of the Company other than
an Unrestricted Subsidiary and includes all of the Subsidiaries of the Company
existing as of the Issue Date. The Board of Directors of the Company may
designate any Unrestricted Subsidiary or any Person that is to become a
Subsidiary as a Restricted Subsidiary if immediately after giving effect to such
action (and treating any Acquired Indebtedness as having been incurred at the
time of such action), the Company could have incurred at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to 
Section 4.6.

          "Sale and Lease-Back Transaction" means any arrangement with any
Person providing for the leasing by the Company or any Restricted Subsidiary of
the Company of any real or tangible personal Property, which Property (i) has
been or is to be sold or transferred by the Company or such Restricted
Subsidiary to such Person in contemplation of such leasing and (ii) would
constitute an Asset Sale if such property had been sold in an outright sale
thereof.

                                       23
<PAGE>
 
          "S&P" means Standard & Poor's Ratings Group and its successors.

          "SEC" means the United States Securities and Exchange Commission as
constituted from time to time or any successor performing substantially the same
functions.

          "Securities Act" means the Securities Act of 1933, as amended.

          "Senior Indebtedness" means the principal of and premium, if any, and
interest (including, without limitation, interest accruing or that would have
accrued but for the filing of a bankruptcy, reorganization or other insolvency
proceeding whether or not such interest constitutes an allowable claim in such
proceeding) on, and any and all other fees, expense reimbursement obligations
and other amounts due pursuant to the terms of all agreements, documents and
instruments providing for, creating, securing or evidencing or otherwise entered
into in connection with (a) all Indebtedness of the Company owed to lenders
under or in respect of the Credit Facility, (b) all obligations of the Company
with respect to any Interest Rate Agreement, (c) all obligations of the Company
to reimburse any bank or other person in respect of amounts paid under letters
of credit, acceptances or other similar instruments, (d) all other Indebtedness
of the Company which does not provide that it is to rank pari passu with or
                                                         ---- -----        
subordinate to the Notes and (e) all deferrals, renewals, extensions,
replacements, refundings, refinancings and restructurings of, and amendments,
modifications and supplements to, any of the Senior Indebtedness described
above.  Notwithstanding anything to the contrary in the foregoing, Senior
Indebtedness will not include (i) Indebtedness of the Company to any of its
Subsidiaries, (ii) Indebtedness represented by the Notes and the Guarantees,
(iii) Indebtedness represented by the 1996 Notes and the guarantees; (iv) any
Indebtedness which by the express terms of the agreement or instrument creating,
evidencing or governing the same is junior or subordinate in right of payment to
any item of Senior Indebtedness, (v) any trade payable arising from the purchase
of goods or materials or for services obtained in the ordinary course of
business, or (vi) Indebtedness (other than that described in clause (a) above)
incurred in violation of this Indenture.

                                       24
<PAGE>
 
          "Subsidiary" of any specified Person means any corporation,
partnership, joint venture, association or other business entity, whether now
existing or hereafter organized or acquired, (i) in the case of a corporation,
of which more than 50% of the total voting power of the Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, officers or trustees thereof is held by such first-named Person or
any of its Subsidiaries; or (ii) in the case of a partnership, joint venture,
association or other business entity, with respect to which such first-named
Person or any of its Subsidiaries has the power to direct or cause the direction
of the management and policies of such entity by contract or otherwise or if in
accordance with GAAP such entity is consolidated with the first-named Person for
financial statement purposes.

          "Temporary Cash Investments" means (i) Investments in marketable
direct obligations issued or guaranteed by the United States of America, or of
any governmental agency or political subdivision thereof, maturing within 365
days of the date of purchase; (ii) Investments in demand deposits or
certificates of deposit issued by a bank organized under the laws of the United
States of America or any state thereof or the District of Columbia, in each case
having capital, surplus and undivided profits totaling more than $500,000,000
and rated at least A by S&P and A-2 by Moody's, maturing within 365 days of
purchase; (iii) Investments not exceeding 365 days in duration in money market
funds that invest substantially all of such funds' assets in the Investments
described in clauses (i) and (ii) above; (iv) any security maturing not more
than 180 days after the date of acquisition, backed by a stand-by or direct pay
letter of credit issued by a bank meeting the qualifications described in clause
(ii) above; or (v) commercial paper, maturing not more than one year after the
date of acquisition, issued by a corporation (other than an Affiliate or
Subsidiary of the Company) organized and existing under the laws of the United
States of America or any state thereof or the District of Columbia with a
rating, at the time as of which any investment therein is made, of "P-1" by
Moody's or "A-1" by S&P.

          "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code (S)(S)
77aaa-77bbbb) as in effect on the date of

                                       25
<PAGE>
 
this Indenture (except as provided in Section 8.3 hereof).

          "Trust Officer" when used with respect to the Trustee, means any
officer or assistant officer of the Trustee assigned to the Corporate Trust
Administration department or similar department performing corporate trust work
of the Trustee or any successor to such department or, in the case of a
successor-Trustee, any officer of such successor Trustee performing corporate
trust functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.

          "Trustee" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.

          "Unrestricted Subsidiary" means (i) any Subsidiary of an Unrestricted
Subsidiary and (ii) any Subsidiary of the Company which is classified after the
Issue Date as an Unrestricted Subsidiary by a resolution adopted by the Board of
Directors of the Company; provided that a Subsidiary organized or acquired after
                          ---------                                             
the Issue Date may be so classified as an Unrestricted Subsidiary only if such
classification is in compliance with the covenant set forth in Section 4.9
hereof.  The Trustee shall be given prompt written notice by the Company of each
resolution adopted by the Board of Directors of the Company under this
provision, together with a copy of each such resolution adopted.

          "U.S. Government Obligations" means (i) securities that are direct
obligations of the United States of America for the payment of which its full
faith and credit are pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such U.S. Government Obli-

                                       26
<PAGE>
 
gation or a specific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository receipt; provided that (except as required by law) such
                         --------                                      
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or a specific payment of principal or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt.

          "Wholly-Owned Subsidiary" means any Restricted Subsidiary 99% or more
of the outstanding Capital Stock (other than directors' qualifying shares) of
which are owned, directly or indirectly, by the Company.

Section 1.2.   Other Definitions.
               ----------------- 

          The definitions of the following terms may be found in the sections
indicated as follows:
<TABLE>
<CAPTION>
 
Term                                   Defined in Section
- ----                                   ------------------
<S>                                    <C>
"Affiliate Transaction"............................. 4.11
"Agent Members"..................................... 2.14
"Bankruptcy Law"..................................... 6.1
"Business Day"...................................... 13.8
"Change of Control Offer"........................... 4.19
"Change of Control Payment Date".................... 4.19
"Covenant Defeasance"................................ 9.3
"Custodian".......................................... 6.1
"Event of Default"................................... 6.1
"Excess Proceeds Offer"............................. 4.10
"Global Notes"....................................... 2.1
"Guarantee Payment Blockage Date"................... 10.7
"Guarantor Representative".......................... 10.7
"Initial Blockage Period"........................... 11.3
"Initial Guarantee Blockage Period"................. 10.7
"Legal Defeasance"................................... 9.2
"Legal Holiday"..................................... 13.8
"Offer Period"...................................... 4.10
"Paying Agent"....................................... 2.3
"Payment Blockage Period"........................... 11.3
"Physical Notes"..................................... 2.1
"Purchase Date"..................................... 4.10
"Registrar".......................................... 2.3
</TABLE>

                                       27
<PAGE>
 
<TABLE>
<S>                                                  <C>
"Reinvestment Date"................................. 4.10
"Representative".................................... 11.3
</TABLE>

Section 1.3.   Incorporation by Reference of Trust
               Indenture Act.
               -----------------------------------

          Whenever this Indenture refers to a provision of the TIA, the portion
of such provision required to be incorporated herein in order for this Indenture
to be qualified under the TIA is incorporated by reference in and made a part of
this Indenture.  The following TIA terms used in this Indenture have the
following meanings:

          "Commission" means the SEC.

          "indenture securities" means the Notes.

          "indenture securityholder" means a Noteholder.

          "indenture to be qualified" means this Indenture.

          "indenture trustee" or "institutional trustee" means the Trustee.

          "obligor on the indenture securities" means the Company, the
Guarantors or any other obligor on the Notes.

          All other terms used in this Indenture that are defined by the TIA,
defined in the TIA by reference to another statute or defined by SEC rule have
the meanings therein assigned to them.

Section 1.4.                      Rules of Construction.
                                  --------------------- 

          Unless the context otherwise requires:

          (1)  a term has the meaning assigned to it herein, whether defined
               expressly or by reference;

          (2)  an accounting term not otherwise defined has the meaning assigned
               to it in accordance with GAAP;

          (3)  "or" is not exclusive;

                                       28
<PAGE>
 
          (4) words in the singular include the plural, and in the plural
              include the singular;

          (5)  words used herein implying any gender shall apply to every
               gender; and

          (6)  "herein," "hereof" and other words of similar import refer to
               this Indenture as a whole and not to any particular Article,
               Section or Subdivision, unless expressly stated otherwise.


                                   ARTICLE 2.

                                   THE NOTES

Section 2.1.   Dating; Incorporation of Form in Indenture.
               ------------------------------------------ 

          The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A which is incorporated in and made part of
this Indenture.  The Notes may have notations, legends or endorsements required
by law, stock exchange rule or usage.  The Company may use "CUSIP" numbers in
issuing the Notes.  The Company shall approve the form of the Notes.  Each Note
shall be dated the date of its authentication.

          The Notes shall be issued in the form of one or more permanent Global
Notes in registered form, substantially in the form set forth in Exhibit A
("Global Notes"), deposited with the Trustee, as custodian for the Depository,
duly executed by the Company and authenticated by the Trustee as hereinafter
provided and shall bear the legend set forth on Exhibit B.  The aggregate
principal amount of any Global Note may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
the Depository, as hereinafter provided.

Section 2.2.   Execution and Authentication.
               ---------------------------- 

          The Notes shall be executed on behalf of the Company by two Officers
of the Company or an Officer and an Assistant Secretary of the Company.  Such
signatures

                                       29
<PAGE>
 
may be either manual or facsimile.  The Company's seal shall be impressed,
affixed, imprinted or reproduced on the Notes and may be in facsimile form.

          If an Officer whose signature is on a Note no longer holds that office
at the time the Trustee authenticates the Note or at anytime thereafter, the
Note shall be valid nevertheless.

          A Note shall not be valid until the Trustee manually signs the
certificate of authentication on the Note.  Such signature shall be conclusive
evidence that the Note has been authenticated under this Indenture.

          The Trustee or an authenticating agent shall authenticate Notes for
original issue in the aggregate principal amount of up to $100,000,000 upon a
Company Request.  The aggregate principal amount of Notes outstanding at any
time may not exceed such amount except as provided in Section 2.7 hereof.  The
Notes shall be issuable only in registered form without coupons and only in
denominations of $1,000 and integral multiples thereof.

          The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes.  Unless limited by the terms of such appointment,
an authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent.  Such authenticating agent shall have the same
right as the Trustee in dealing with the Company or an Affiliate.

Section 2.3.   Registrar and Paying Agent.
               -------------------------- 

          The Company shall appoint a registrar, which shall maintain an office
or agency where Notes may be presented for registration of transfer or for
exchange ("Registrar", and a paying agent, which shall maintain an office or
agency located in the Borough of Manhattan, City of New York, State of New York
where Notes may be presented for payment ("Paying Agent") and shall maintain an
office or agency where notices and demands to or upon the Company in respect of
the Notes and this Indenture may be served.  The Registrar shall keep a register
of the Notes and of their transfer and exchange.  The

                                       30
<PAGE>
 
Company may appoint one or more co-registrars and one or more additional paying
agents. Neither the Company nor any Affiliate may act as Paying Agent. The
Company may change any Paying Agent, Registrar or co-registrar without notice to
any Noteholder.

          The Company shall enter into an appropriate agency agreement with any
Registrar or Paying Agent not a party to this Indenture.  The agreement shall
implement the provisions of this Indenture that relate to such Agent.  The
Company shall notify the Trustee of the name and address of any such Agent.  If
the Company fails to maintain a Registrar or Paying Agent, or agent for service
of notices and demands, or fails to give the foregoing notice, the Trustee shall
act as such and shall be entitled to appropriate compensation pursuant to
Section 7.7.  The Company initially appoints the Trustee as Registrar, Paying
Agent and agent for service of notices and demands in connection with the Notes.

Section 2.4.   Paying Agent to Hold Money in Trust.
               ----------------------------------- 

          On or before each due date of the principal and interest on any Notes,
the Company shall deposit with the Paying Agent a sum sufficient to pay such
principal and interest so becoming due.  Each Paying Agent shall hold in trust
for the benefit of the Noteholders or the Trustee all money held by the Paying
Agent for the payment of principal of or interest on the Notes (whether such
money has been paid to it by the Company or any other obligor on the Notes), and
the Company and the Paying Agent shall notify the Trustee of any default by the
Company (or any other obligor on the Notes) in making any such payment. Money
held in trust by the Paying Agent need not be segregated except as required by
law and in no event shall the Paying Agent be liable for any interest on any
money received by it hereunder.  The Company at any time may require a Paying
Agent to pay all money held by it to the Trustee and the Trustee, may at any
time during the continuance of any Payment Default, upon written request to a
Paying Agent, require such Paying Agent to forthwith pay to the Trustee all sums
so held in trust by such Paying Agent together with a complete accounting of
such sums.  Upon doing so, the Paying Agent shall have no further liability for
the money delivered to the Trustee.

                                       31
<PAGE>
 
Section 2.5.   Noteholder Lists.
               ---------------- 

          The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Noteholders.  If the Trustee is not the Registrar, the Company shall furnish to
the Trustee on or before each January 1 and July 1 in each year, and at such
other times as the Trustee may request in writing, a list in such form and as of
such date as the Trustee may reasonably require of the names and addresses of
Noteholders, including the aggregate principal amount of Notes held by each such
Noteholder.

Section 2.6.   Transfer and Exchange.
               --------------------- 

          Subject to Section 2.15, when a Note is presented to the Registrar
with a request to register the transfer thereof, the Registrar shall register
the transfer as requested if the requirements of applicable law are met and,
when Notes are presented to the Registrar with a request to exchange them for an
equal principal amount of Notes of other authorized denominations, the Registrar
shall make the exchange as requested provided that every Note presented or
surrendered for registration of transfer or exchange shall be duly endorsed or
be accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar duly executed by the Holder thereof or his attorney,
duly authorized in writing.  To permit registration of transfers and exchanges,
upon surrender of any Note for registration of transfer at the office or agency
maintained pursuant to Section 2.3 hereof, the Company shall issue and execute
and the Trustee shall authenticate Notes at the Registrar's request.  Any
exchange or transfer shall be without any service charge to the Noteholder,
except that the Company may require payment by the Holder of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation to a
transfer or exchange, but this provision shall not apply to any exchange
pursuant to Section 2.9, 3.6 or 8.5 hereof.  The Trustee shall not be required
to register transfers of Notes or to exchange Notes for a period of 15 days
before selection of any Notes to be redeemed.  The Trustee shall not be required
to exchange or register transfers of any Notes called or being called for
redemption in whole or

                                       32
<PAGE>
 
in part, except the unredeemed portion of any Note being redeemed in part.

          Any Holder of the Global Note shall, by acceptance of such Global
Note, agree that transfers of the beneficial interests in such Global Note may
be effected only through a book entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial interest in the
Global Note shall be required to be reflected in a book entry.

          Except as expressly provided herein, neither the Trustee nor the
Registrar shall have any duty to monitor the Company's compliance with or have
any responsibility with respect to the Company's compliance with any Federal or
state securities laws.

Section 2.7.  Replacement Notes.
              ----------------- 

          If a mutilated Note is surrendered to the Registrar or Trustee or if
the Holder of a Note presents evidence to the satisfaction of the Company and
the Trustee that the Note has been lost, destroyed or wrongfully taken and of
the ownership thereof, the Company shall issue and the Trustee shall
authenticate a replacement Note if the requirements of Section 8-405 of the New
York Uniform Commercial Code as in effect on the date of this Indenture are met.
An indemnity bond may be required by the Company or the Trustee that is
sufficient in the judgment of the Company and the Trustee to protect the
Company, the Trustee or any Agent from any loss which any of them may suffer if
a Note is replaced.  The Company and the Trustee each may charge for its
expenses (including reasonable attorneys' fees and expenses) in replacing a
Note.  Every replacement Note is an additional obligation of the Company.

Section 2.8.  Outstanding Notes.
              ----------------- 

          Notes outstanding at any time are all Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, and those described in this Section 2.8 as not outstanding.

          If a Note is replaced pursuant to Section 2.7, it ceases to be
outstanding until the Company and the

                                       33
<PAGE>
 
Trustee receive proof satisfactory to each of them that the replaced Note is
held by a bona fide purchaser.

          If a Paying Agent holds on a Redemption Date or Maturity Date money
sufficient to pay the principal of, premium, if any, and all accrued interest on
Notes payable on that date and is not prohibited from paying such money to the
Holders thereof pursuant to the terms of this Indenture, then on and after that
date such Notes cease to be outstanding and interest on them ceases to accrue.

          Subject to Section 13.6, a Note does not cease to be outstanding
solely because the Company or an Affiliate holds the Note.

Section 2.9.  Temporary Notes.
              --------------- 

          Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes.  Temporary Notes shall be
substantially in the form, and shall carry all rights, benefits and privileges,
of definitive Notes but may have variations that the Company considers
appropriate for temporary Notes.  Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate definitive Notes in exchange for
temporary Notes presented to it.

Section 2.10.  Cancellation.
               ------------ 

          The Company at any time may deliver Notes to the Trustee for
cancellation.  The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment.  The Trustee
shall cancel and retain or, upon written request of the Company, may destroy
(subject to the record retention requirements of the Exchange Act) or return to
the Company in accordance with its normal practice, all Notes surrendered for
transfer, exchange, payment or cancellation and if such Notes are destroyed,
deliver a certificate of destruction to the Company unless the Company instructs
the Trustee in writing to deliver the Notes to the Company.  Subject to Section
2.7 hereof, the Company may not issue new Notes to replace Notes in respect of
which it has previously paid all principal, premium and

                                       34
<PAGE>
 
interest accrued thereon, or delivered to the Trustee for cancellation.

Section 2.11.  Defaulted Interest.
               ------------------ 

          If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted amounts, plus (to the extent permitted by law) any
interest payable on defaulted amounts pursuant to Section 4.1 hereof, to the
persons who are Noteholders on a subsequent special record date.  The Company
shall fix the special record date and payment date in a manner satisfactory to
the Trustee and provide the Trustee at least 20 days notice of the proposed
amount of default interest to be paid and the special payment date.  At least 15
days before the special record date, the Company shall mail or cause to be
mailed to each Noteholder at his address as it appears on the Notes register
maintained by the Registrar a notice that states the special record date, the
payment date (which shall be not less than five nor more than ten days after the
special record date), and the amount to be paid.  In lieu of the foregoing
procedures, the Company may pay defaulted interest in any other lawful manner
satisfactory to the Trustee.

Section 2.12.  Deposit of Moneys.
               ----------------- 

          Prior to 10:00 a.m., New York City time, on each Interest Payment Date
and Maturity Date, the Company shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date or Maturity Date, as the case may be, in a timely
manner which permits the Trustee to remit payment to the Holders on such
Interest Payment Date or Maturity Date, as the case may be.  The principal and
interest on Global Notes shall be payable to the Depository or its nominee, as
the case may be, as the sole registered owner and the sole holder of the Global
Notes represented thereby.  The principal and interest on Physical Notes shall
be payable at the office of the Paying Agent.

Section 2.13.  CUSIP Number.
               ------------ 

          The Company in issuing the Notes may use a "CUSIP" number(s), and if
so, the Trustee shall use the CUSIP number(s) in notices of redemption or
exchange as a

                                       35
<PAGE>
 
convenience to Holders, provided that any such notice may state that no
                        --------                                       
representation is made as to the correctness or accuracy of the CUSIP number(s)
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers printed on the Notes.  The Company will
promptly notify in writing the Trustee of any such CUSIP number used by the
Company in connection with the Notes and any change in such CUSIP number.

Section 2.14.  Book-Entry Provisions for Global Notes.
               -------------------------------------- 

          (a)  The Global Notes shall (i) be registered in the name of the
Depository or the nominee of such Depository, (ii) be delivered to the Trustee
as custodian for such Depository and (iii) bear legends as set forth in Exhibit
B.

          Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Note, and the Depository may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of the Global Note
for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Note.

          (b)  Transfers of Global Notes shall be limited to transfer in whole,
but not in part, to the Depository, its successors or their respective nominees.
Certified Notes (the "Physical Notes") shall be transferred to all beneficial
owners in exchange for their beneficial interests in Global Notes if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for any Global Note and a successor depositary is not appointed by
the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a written request from
the Depository to issue Physical Notes.

                                       36
<PAGE>
 
          (c)  In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the Company
shall execute, and the Trustee shall upon receipt of a written order from the
Company authenticate and make available for delivery, one or more Physical Notes
of like tenor and amount.

          (d)  In connection with the transfer of Global Notes as an entirety to
beneficial owners pursuant to paragraph (b), the Global Notes shall be deemed to
be surrendered to the Trustee for cancellation, and the Company shall execute,
and the Trustee shall authenticate and deliver, to each beneficial owner
identified by the Depository in writing in exchange for its beneficial interest
in the Global Notes, an equal aggregate principal amount of Physical Notes of
authorized denominations.

          (e)  The Holder of any Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture, the Notes or the Guarantees.


                                   ARTICLE 3.

                                   REDEMPTION

Section 3.1.  Notices to Trustee.
              ------------------ 

          If the Company elects to redeem Notes pursuant to Section 3.7 hereof,
(i) at least 60 days prior to the Redemption Date in the case of a partial
redemption, (ii) at least 45 days prior to the Redemption Date in the case of a
total redemption or (iii) during such other period as the Trustee may agree to
in writing, the Company shall notify the Trustee in writing of the Redemption
Date, the principal amount of Notes to be redeemed and the redemption price, and
deliver to the Trustee an Officers' Certificate stating that such redemption
will comply with

                                       37
<PAGE>
 
the conditions contained in Section 3.7 hereof, as appropriate.

Section 3.2.  Selection by Trustee of Notes to Be Redeemed.
              -------------------------------------------- 

          In the event that fewer than all of the Notes are to be redeemed, the
Trustee shall select the Notes to be redeemed, if the Notes are listed on a
national securities exchange, in accordance with the rules of such exchange or,
if the Notes are not so listed, on either a pro rata basis or by lot, or such
other method as it shall deem fair and appropriate; provided, however, that if a
                                                    --------  -------           
partial redemption is made with the proceeds of a Public Equity Offering,
selection of the Notes or portion thereof for redemption shall be made by the
Trustee on a pro rata basis, unless such a method is prohibited by law or by the
             --- ----                                                           
rules of such national securities exchange.  The Trustee shall promptly notify
the Company of the Notes selected for redemption and, in the case of any Notes
selected for partial redemption, the principal amount thereof to be redeemed.
The Trustee may select for redemption portions of the principal of the Notes
that have denominations larger than $1,000.  Notes and portions thereof the
Trustee selects shall be redeemed in amounts of $1,000 or whole multiples of
$1,000.  For all purposes of this Indenture unless the context otherwise
requires, provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption.

Section 3.3.  Notice of Redemption.
              -------------------- 

          At least 30 days, but no more than 60 days, before a Redemption Date,
the Company shall mail, or cause to be mailed, a notice of redemption by first-
class mail to each Holder of Notes to be redeemed at his or her last address as
the same appears on the registry books maintained by the Registrar pursuant to
Section 2.3 hereof.

          The notice shall identify the Notes to be redeemed (including the
CUSIP numbers thereof) and shall state:

     (1) the Redemption Date;

                                       38
<PAGE>
 
     (2) the redemption price;

     (3) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the Redemption Date and upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion will be issued;

     (4) the name and address of the Paying Agent;

     (5) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;

     (6) that unless the Company defaults in making the redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
Redemption Date;

     (7) the paragraph of Section 3.7 hereof pursuant to which the Notes called
for redemption are being redeemed; and

     (8) the aggregate principal amount of Notes that are being redeemed.

          At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's sole expense.

Section 3.4.  Effect of Notice of Redemption.
              ------------------------------ 

          Once the notice of redemption described in Section 3.3 is mailed,
Notes called for redemption become due and payable on the Redemption Date and at
the redemption price, including any premium, plus interest accrued to the
Redemption Date.  Upon surrender to the Paying Agent, such Notes shall be paid
at the redemption price, including any premium, plus interest accrued to the
Redemption Date, provided that if the Redemption Date is after a regular
                 --------                                               
interest payment record date and on or prior to the Interest Payment Date, the
accrued interest shall be payable to the Holder of the redeemed Notes registered
on the relevant record date, and provided, further, that if a Redemption Date is
                                 --------  -------                              
a Legal Holiday, payment shall be made on the next succeeding Business Day and
no interest shall accrue for the period from such Redemption Date to such
succeeding Business Day.

                                       39
<PAGE>
 
 Section 3.5.  Deposit of Redemption Price.
               --------------------------- 

          On or prior to 10:00 A.M., New York City time, on each Redemption
Date, the Company shall deposit with the Paying Agent in immediately available
funds money sufficient to pay the redemption price of and accrued interest on
all Notes to be redeemed on that date other than Notes or portions thereof
called for redemption on that date which have been delivered by the Company to
the Trustee for cancellation.

          On and after any Redemption Date, if money sufficient to pay the
redemption price of and accrued interest on Notes called for redemption shall
have been made available in accordance with the preceding paragraph and payment
thereof is not prohibited pursuant to the terms of this Indenture, the Notes
called for redemption will cease to accrue interest and the only right of the
Holders of such Notes will be to receive payment of the redemption price of and,
subject to the first proviso in Section 3.4, accrued and unpaid interest on such
Notes to the Redemption Date.  If any Note called for redemption shall not be so
paid, interest will be paid, from the Redemption Date until such redemption
payment is made, on the unpaid principal of the Note and any interest not paid
on such unpaid principal, in each case, at the rate and in the manner provided
in the Notes.

Section 3.6.  Notes Redeemed in Part.
              ---------------------- 

          Upon surrender of a Note that is redeemed in part, the Trustee shall
authenticate for a Holder a new Note equal in principal amount to the unredeemed
portion of the Note surrendered.

Section 3.7.  Optional Redemption.
              ------------------- 

          (a)  The Company may redeem the Notes, in whole or in part, at any
time on or after _______, 2002 at the following redemption prices (expressed as
a percentage of principal amount), together, in each case, with accrued and
unpaid interest to the Redemption Date, if redeemed during the twelve-month
period beginning on ________ of each year listed below:

                                       40
<PAGE>
 
<TABLE> 
<CAPTION> 

          Year                           Percentage
          ----                           ----------
          <S>                            <C>  
          2002..........................          %
          2003..........................          %
          2004..........................          %
          2005 and thereafter...........   100.000%
</TABLE> 

          (b)  Notwithstanding the foregoing, the Company may redeem in the
aggregate up to ___% of the original principal amount of Notes at any time and
from time to time prior to ______, 2000 at a redemption price equal to ___% of
the aggregate principal amount so redeemed, plus accrued interest to the
Redemption Date, with the Net Proceeds of one or more Public Equity Offerings;
provided that at least $__________ aggregate principal amount of Notes
- --------                                                              
originally issued remains outstanding immediately after the occurrence of any
such redemption pursuant to a Public Equity Offering and that any such
redemption occurs within 90 days following the closing of any such Public Equity
Offering.


                                  ARTICLE 4.

                                   COVENANTS

Section 4.1.  Payment of Notes.
              ---------------- 

          The Company shall pay the principal of and interest on the Notes on
the dates and in the manner provided in the Notes and this Indenture.  An
installment of principal or interest shall be considered paid on the date it is
due if the Trustee or Paying Agent holds on that date money designated for and
sufficient to pay such installment.

          The Company shall pay interest on overdue principal (including post-
petition interest in a proceeding under any Bankruptcy Law) and overdue
interest, to the extent lawful, at the rate specified in the Notes.


Section 4.2.  SEC Reports.
              ----------- 

          (a)  The Company will file with the SEC all information, documents and
reports to be filed with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act,

                                       41
<PAGE>
 
whether or not the Company is subject to such filing requirements, so long as
the SEC will accept such filings.  The Company (at its own expense) will file
with the Trustee within 15 days after it files them with the SEC, copies of the
annual reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Company files with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act. The Company shall also comply with the provisions of TIA
(S) 314(a). Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).

          (b)  At the Company's expense, regardless of whether the Company is
required to furnish such reports and other information referred to in paragraph
(a) above to its shareholders pursuant to the Exchange Act, the Company shall
cause such reports and other information to be mailed to the Holders at their
addresses appearing in the register of Notes maintained by the Registrar within
15 days after it files them with the SEC.

Section 4.3.  Waiver of Stay, Extension or Usury Laws.
              --------------------------------------- 

           The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead (as a defense or otherwise) or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law which would prohibit or forgive the
Company from paying all or any portion of the principal of, premium, if any,
and/or interest on the Notes as contemplated herein, wherever enacted, now or at
any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may lawfully do so)
the Company hereby expressly waives all benefit or advantage of any such law,
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and

                                       42
<PAGE>
 
permit the execution of every such power as though no such law had been enacted.

Section 4.4.  Compliance Certificate.
              ---------------------- 

           (a)   The Company shall deliver to the Trustee, within 100 days after
the end of each fiscal year and on or before 50 days after the end of the first,
second and third quarters of each fiscal year, an Officers' Certificate (one of
the signers of which shall be the principal executive officer, principal
financial officer or principal accounting officer of the Company) stating that a
review of the activities of the Company and its Subsidiaries during such fiscal
year or fiscal quarter, as the case may be, has been made under the supervision
of the signing Officers with a view to determining whether the Company has kept,
observed, performed and fulfilled its obligations under this Indenture, and
further stating, as to each such Officer signing such certificate, that to the
best of his or her knowledge the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions hereof (or, if a Default or Event of Default shall have occurred,
describing all or such Defaults or Events of Default of which he or she may have
knowledge and what action the Company is taking or proposes to take with respect
thereto) and that to the best of his or her knowledge no event has occurred and
remains in existence by reason of which payments on account of the principal of
or interest, if any, on the Notes are prohibited or, if such event has occurred,
a description of the event and what action the Company is taking or proposes to
take with respect thereto.

           (b)   So long as (and to the extent) not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.2 above shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements
nothing has come to their attention which would lead them to believe that the
Company has violated any provisions of this Article 4 or Article 5 of this
Indenture or, if any such violation has occurred,

                                       43
<PAGE>
 
specifying the nature and period of existence thereof, it being understood that
such accountants shall not be liable directly or indirectly for any failure to
obtain knowledge of any such violation.

           (c)   The Company will, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.

Section 4.5.  Taxes.
              ----- 

           The Company shall, and shall cause each of its Subsidiaries to, pay
prior to delinquency all material taxes, assessments, and governmental levies
except as contested in good faith and by appropriate proceedings.

Section 4.6.  Limitation on Additional Indebtedness.
              ------------------------------------- 
    
           The Company will not, and will not permit any Restricted Subsidiary 
of the Company to, directly or indirectly, incur any Indebtedness (including
Acquired Indebtedness) unless (a) after giving effect to the incurrence of such
Indebtedness and the receipt and application of the proceeds thereof, the ratio
of total Indebtedness of the Company and its Restricted Subsidiaries to the
Company's Adjusted EBITDA is less than 6.0 to 1; provided, however, that if
                                                 --------  -------         
the Indebtedness which is the subject of a determination under this provision is
Acquired Indebtedness, or Indebtedness incurred in connection with the
simultaneous acquisition of any Person, business, property or assets, then such
ratio shall be determined by giving effect (on a pro forma basis, as if the
                                                 --- -----                 
transaction had occurred at the beginning of the four quarter period ending at
the end of the last fiscal quarter of such Person or business for which
financial statements are available) to the incurrence or assumption of such
Acquired Indebtedness or such other Indebtedness by the Company; and (b) no
Default or Event of Default shall have occurred and be continuing at the time or
as a consequence of the incurrence of such Indebtedness.     

           Notwithstanding the foregoing, the Company and its Restricted
Subsidiaries may incur Permitted Indebtedness; provided, that the Company will
                                               --------                       
not incur any

                                       44
<PAGE>
 
Permitted Indebtedness, without meeting the Indebtedness incurrence provisions
of the preceding paragraph, that ranks pari passu or junior in right of payment
                                       ---- -----                              
to the Notes and that has a maturity or mandatory sinking fund payment prior to
the maturity of the Notes.

           Notwithstanding the two preceding paragraphs, the Company will not
permit any of its foreign Subsidiaries to incur any subordinated Indebtedness.

Section 4.7.   Limitation on Preferred Stock of Restricted Subsidiaries.
               -------------------------------------------------------- 

           The Company will not permit any Restricted Subsidiary to issue any
Preferred Stock (except Preferred Stock to the Company or a Restricted
Subsidiary) or permit any Person (other than the Company or a Subsidiary) to
hold any such Preferred Stock unless the Company or such Restricted Subsidiary
would be entitled to incur or assume Indebtedness under Section 4.6 hereof in
the aggregate principal amount equal to the aggregate liquidation value of the
Preferred Stock to be issued; provided, however, that any Restricted Subsidiary
                              --------  -------                                
that guarantees the Notes pursuant to Section 4.14 shall be permitted to issue
Preferred Stock that is not Disqualified Capital Stock.

Section 4.8.   Limitation on Capital Stock of Restricted Subsidiaries.
               ------------------------------------------------------ 

           The Company will not (i) sell, pledge, hypothecate or otherwise 
convey or dispose of any Capital Stock of a Restricted Subsidiary (other than
under the terms of the Credit Facility or under the terms of any Designated
Senior Indebtedness) or (ii) permit any of its Restricted Subsidiaries to issue
any Capital Stock, other than to the Company or a Wholly-Owned Subsidiary of the
Company. The foregoing restrictions shall not apply to an Asset Sale made in
compliance with Section 4.10 hereof or the issuance of Preferred Stock in
compliance with Section 4.7 hereof.

Section 4.9.  Limitation on Restricted Payments.
              --------------------------------- 

           The Company will not make, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, make, any Restricted Payment, unless:

                                       45
<PAGE>
 
          (a)  no Default or Event of Default shall have occurred and be
     continuing at the time of or immediately after giving effect to such
     Restricted Payment;

          (b)  immediately after giving pro forma effect to such Restricted
                                    --- -----                          
     Payment, the Company could incur $1.00 of additional Indebtedness (other
     than Permitted Indebtedness) under Section 4.6 hereof; and

          (c)  immediately after giving effect to such Restricted Payment, the
     aggregate of all Restricted Payments declared (except to the extent not
     made on the payment date) or made after the Issue Date does not exceed the
     sum of (1) 50% of the cumulative Consolidated Net Income of the Company
     subsequent to the Issue Date (or minus 100% of any cumulative deficit in
     Consolidated Net Income during such period) and (2) 100% of the aggregate
     Net Proceeds and the fair market value of securities or other property
     received by the Company from the issue or sale, after the Issue Date, of
     Capital Stock (other than Disqualified Capital Stock or Capital Stock of
     the Company issued to any Subsidiary of the Company) of the Company or any
     Indebtedness or other securities of the Company convertible into or
     exercisable or exchangeable for Capital Stock (other than Disqualified
     Capital Stock) of the Company which has been so converted or exercised or
     exchanged, as the case may be, and (3) $3,000,000.  For purposes of
     determining under this clause (c) the amount expended for Restricted
     Payments, cash distributed shall be valued at the face amount thereof and
     property other than cash shall be valued at its fair market value.

          Notwithstanding the foregoing, the provisions of this Section 4.9
shall not prohibit (i) the payment of any distribution within 60 days after the
date of declaration thereof, if at such date of declaration such payment would
comply with the provisions of this Indenture, (ii) the retirement of any shares
of Capital Stock of the Company or subordinated Indebtedness by conversion into,
or by or in exchange for, shares of Capital Stock (other than Disqualified
Capital Stock), or out of, the Net Proceeds of the substantially concurrent sale
(other than to a Subsidiary of the Company) of other shares of

                                       46
<PAGE>
 
Capital Stock of the Company (other than Disqualified Capital Stock), (iii) the
redemption or retirement of Indebtedness of the Company subordinated to the
Notes in exchange for, by conversion into, or out of the Net Proceeds of, a
substantially concurrent sale or incurrence of Indebtedness (other than any
Indebtedness owed to a Subsidiary) of the Company that is contractually
subordinated in right of payment to the Notes to at least the same extent as the
subordinated Indebtedness being redeemed or retired, (iv) the retirement of any
shares of Disqualified Capital Stock by conversion into, or by exchange for,
shares of Disqualified Capital Stock, or out of the Net Proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company) of
other shares of Disqualified Capital Stock, (v) Permitted Tax Distributions,
(vi) additional payments to employees of the Company for repurchases of, stock
or repurchases pursuant to the Company's Nonqualified Stock Option Plan;
provided, however, that the aggregate amount of all such payments under this
- --------  -------                                                           
clause (vi) does not exceed $2,000,000 in the aggregate, exclusive of amounts
funded by insurance proceeds; and provided, further, that with respect to clause
                                  --------  -------                             
(vi) (other than with respect to payments funded by insurance proceeds) no
Default or Event of Default shall have occurred and be continuing at the time of
any such distribution or payment or will occur immediately after giving effect
to any such distribution or payment; and provided, further, that, in determining
                                         --------  -------                      
the aggregate amount of all Restricted Payments made subsequent to the Issue
Date, all distributions or payments made pursuant to clause (vi) (exclusive of
insurance proceeds) shall be included.

           Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.9 were computed, which calculations may
be based upon the Company's latest available financial statements, and that no
Default or Event of Default exists and is continuing and no Default or Event of
Default will occur immediately after giving effect to any Restricted Payments.

                                       47
<PAGE>
 
Section 4.10.  Limitation on Certain Asset Sales.
               --------------------------------- 

          (a)  The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company or its
Restricted Subsidiaries, as the case may be, receives consideration at the time
of such sale or other disposition at least equal to the fair market value
thereof (as determined for Asset Sales other than eminent domain, condemnation
or similar government proceedings in good faith by the Company's board of
directors, and evidenced by a board resolution); (ii) not less than 85% of the
consideration received by the Company or its Subsidiaries, as the case may be,
is in the form of cash or Temporary Cash Investments; and (iii) the Asset Sale
Proceeds received by the Company or such Restricted Subsidiary are applied (a)
first, to the extent the Company elects, or is required, to prepay, repay or
purchase debt under any then existing Senior Indebtedness of the Company or any
Restricted Subsidiary within 180 days following the receipt of the Asset Sale
Proceeds from any Asset Sale; (b) second, to the extent of the balance of Asset
Sale Proceeds after application as described above, to the extent the Company
elects, to an investment in assets (including Capital Stock or other securities
purchased in connection with the acquisition of Capital Stock or property of
another Person) used or useful in businesses similar or ancillary to the
business of the Company or Restricted Subsidiary as conducted at the time of
such Asset Sale, provided that such investment occurs or the Company or a
Restricted Subsidiary enters into contractual commitments to make such
investment, subject only to customary conditions (other than the obtaining of
financing), on or prior to the 181st day following receipt of such Asset Sale
Proceeds (the "Reinvestment Date") and Asset Sale Proceeds contractually
committed are so applied  within 270 days following the receipt of such Asset
Sale Proceeds; and (c) third, if on the Reinvestment Date with respect to any
Asset Sale, the Available Asset Sale Proceeds exceed $10 million, the Company
shall apply an amount equal to such Available Asset Sale Proceeds to an offer to
repurchase the Notes, or any future Indebtedness ranking pari passu with the
Notes, which Indebtedness contains similar provisions requiring the Company to
repurchase such Indebtedness at a purchase price in cash equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of repurchase (an "Excess

                                       48
<PAGE>
 
Proceeds Offer"); provided, however, that prior to making any such Excess
Proceeds Offer, the Company may, to the extent required pursuant to the terms of
Indebtedness outstanding as of the Issue Date offer to use such Available Asset
Sale Proceeds not required to repurchase Notes for general corporate purposes.
If the aggregate principal amount of Notes tendered pursuant to such Excess
Proceeds Offer is more than the amount of the Available Asset Sale Proceeds, the
Notes tendered will be repurchased on a pro rata basis or by such other method
as the Trustee shall deem fair and appropriate.

           (b)   If the Company is required to make an Excess Proceeds Offer, 
the Company shall mail, within 30 days following the Reinvestment Date (or
within 120 days following the Reinvestment Date if the Company is required to
make an offer to purchase Indebtedness (other than the Notes) outstanding as of
the Issue Date), a notice to the Holders stating, among other things: (1) that
such Holders have the right to require the Company to apply the Available Asset
Sale Proceeds to repurchase such Notes at a purchase price in cash equal to 100%
of the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase; (2) the purchase date (the "Purchase Date"), which shall be no
earlier than 30 days and not later than 60 days from the date such notice is
mailed; (3) the instructions, determined by the Company, that each Holder must
follow in order to have such Notes repurchased; and (4) the calculations used in
determining the amount of Available Asset Sale Proceeds to be applied to the
repurchase of such Notes. The Excess Proceeds Offer shall remain open for a
period of 20 Business Days following its commencement (the "Offer Period"). The
notice, which shall govern the terms of the Excess Proceeds Offer, shall state:

           (1)   that the Excess Proceeds Offer is being made pursuant to this
     Section 4.10 and the length of time the Excess Proceeds Offer will remain
     open;

           (2)   the purchase price and the Purchase Date;

           (3)   that any Note not tendered or accepted for payment will 
     continue to accrue interest;

           (4)   that any Note accepted for payment pursuant to the Excess
     Proceeds Offer shall cease to accrue interest on and after the Purchase
     Date so long as payment thereof is not prohibited pursuant to the terms of
     the Indenture;

                                       49
<PAGE>
 
           (5)   that Holders electing to have a Note purchased pursuant to any
     Excess Proceeds Offer will be required to surrender the Note, with the form
     entitled "Option of Holder to Elect Purchase" on the reverse of the Note
     completed, to the Company, a depositary, if appointed by the Company, or a
     Paying Agent at the address specified in the notice at least three Business
     Days before the Purchase Date;

           (6)   that Holders will be entitled to withdraw their election if the
     Company, depositary or Paying Agent, as the case may be, receives, not
     later than the expiration of the Offer Period, a facsimile transmission or
     letter setting forth the name of the Holder, the principal amount of the
     Note the Holder delivered for purchase and a statement that such Holder is
     withdrawing his election to have the Note purchased;

           (7)   that, if the aggregate principal amount of Notes surrendered by
     Holders exceeds the Available Asset Sale Proceeds, the Trustee shall select
     the Notes to be purchased on a pro rata basis (with such adjustments as may
     be deemed appropriate by the Company so that only Notes in denominations of
     $l,000, or integral multiples thereof, shall be purchased) or by such other
     method as the Trustee shall deem fair and appropriate; and

           (8)   that Holders whose Notes were purchased only in part will be
     issued new Notes equal in principal amount to the unpurchased portion of
     the Notes surrendered.

           On or before the Purchase Date, the Trustee shall, to the extent
lawful, accept for payment, on a pro rata basis or by such other method as the
Trustee shall deem fair and appropriate to the extent necessary, Notes or
portions thereof tendered pursuant to the Excess Proceeds Offer, deposit with
the Paying Agent U.S. legal tender sufficient to pay the purchase price plus
accrued interest, if any, on the Notes to be purchased and deliver to the
Trustee an Officers' Certificate stating that such Notes or portions thereof
were accepted for payment by the Company in accordance with the terms of this
Section 4.10.  The Paying Agent shall promptly (but in any case not later than 5
days after the Purchase Date)

                                       50
<PAGE>
 
mail or deliver to each tendering Holder an amount equal to the purchase price
of the Note tendered by such Holder and accepted by the Company for purchase,
and the Company shall promptly issue a new Note, and the Trustee shall
authenticate and mail or make available for delivery such new Note to such
Holder equal in principal amount to any unpurchased portion of the Note
surrendered.  Any Note not so accepted shall be promptly mailed or delivered by
the Company to the Holder thereof.  The Company will publicly announce the
results of the Excess Proceeds Offer on the Purchase Date; provided, however, 
that prior to making any such Excess Proceeds Offer, the Company may, to the 
extent required pursuant to the terms of Indebtedness outstanding as of the 
Issue Date offer to use such Available Asset Sale Proceeds not required to 
repurchase Notes for general corporate purposes.

Section 4.11.  Limitation on Transactions with Affiliates.
               ------------------------------------------ 

          (a)  The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into any transaction or series of
related transactions (including, without limitation, the sale, purchase,
exchange or lease of assets, property or services) with any Affiliate (including
entities in which the Company or any of its Restricted Subsidiaries own a
minority interest) or holder of 10% or more of the Company's Common Stock (an
"Affiliate Transaction") or extend, renew, waive or otherwise modify the terms
of any Affiliate Transaction entered into prior to the Issue Date unless (i)
such Affiliate Transaction is between or among the Company and its Wholly-Owned
Subsidiaries; (ii) such Affiliate Transaction is solely between or among Wholly-
Owned Subsidiaries of the Company; or (iii) the terms of such Affiliate
Transaction are fair and reasonable to the Company or such Restricted
Subsidiary, as the case may be, and the terms of such Affiliate Transaction are
at least as favorable as the terms which could be obtained by the Company or
such Restricted Subsidiary, as the case may be, in a comparable transaction made
on an arm's-length basis between unaffiliated parties; provided, however, that
                                                       --------  -------      
the Company and its Restricted Subsidiaries may renew any then existing
Affiliate Transaction through either a renewal option or upon expiration of an
arrangement on substantially similar terms to those in effect immediately
preceding such expiration.  In any Affiliate Transaction involving an amount or
having a value in excess of $1 million which is not permitted

                                       51
<PAGE>
 
under clause (i) or (ii) above, the Company must obtain a resolution of the
Board of Directors certifying that such Affiliate Transaction complies with
clause (iii) above and that such Affiliate Transaction has been approved by a
majority of the disinterested members of the Board of Directors.  In
transactions with a value in excess of $3 million which are not permitted under
clause (i) or (ii) above, the Company must obtain a written opinion as to the
fairness from a financial point of view of such a transaction from an
independent investment banking firm of national standing or real estate firm of
national standing (as the case may be).

           (b)   The limitations set forth in Section 4.11(a) will not apply to
(i) any Restricted Payment that is not prohibited by Section 4.9 hereof, (ii)
any transaction, approved by the Board of Directors of the Company in good
faith, with an officer, director, employee or consultant of the Company or of
any Subsidiary in his or her capacity as an officer, director, employee or
consultant entered into in the ordinary course of business, including
compensation, indemnity and employee benefit arrangements with any officer,
director, employee or consultant of the Company or of any Subsidiary, or (iii)
customary investment banking, underwriting, placement agent or financial advisor
fees paid in connection with services rendered to the Company or any Subsidiary.

Section 4.12.  Limitations on Liens.
               -------------------- 

           The Company will not, and will not permit any of its Restricted
Subsidiaries to, create, incur or otherwise cause or suffer to exist or become
effective any Liens of any kind (other than Permitted Liens) upon any property
or asset of the Company or any Restricted Subsidiary or any shares of stock or
debt of any Restricted Subsidiary which owns property or assets, now owned or
hereafter acquired, in any case which secures Indebtedness pari passu with or
                                                           ---- -----        
subordinated to the Notes unless (i) if such Lien secures Indebtedness which is
pari passu with the Notes, then the Notes are secured on an equal and ratable
- ---- -----                                                                   
basis with the obligations so secured until such time as such obligation is no
longer secured by a Lien or (ii) if such Lien secures Indebtedness which is
subordinated to the Notes, any such Lien shall be subordinated to the Lien
granted to the Holders of the Notes in the same collateral to the same extent as

                                       52
<PAGE>
 
such subordinated Indebtedness is subordinated to the Notes.

Section 4.13.  Limitations on Investments.
               -------------------------- 

           The Company will not, and will not permit any of its Restricted
Subsidiaries to, make any Investment other than (i) a Permitted Investment or
(ii) an Investment that is made as a Restricted Payment in compliance with
Section 4.9 hereof, after the Issue Date.

Section 4.14.  Limitation on Creation of Subsidiaries.
               -------------------------------------- 

           The Company shall not create or acquire, nor permit any of its
Restricted Subsidiaries to create or acquire, any Subsidiary other than (i) a
Restricted Subsidiary existing as of the date of this Indenture, (ii) a
Restricted Subsidiary that is acquired or created after the date of this
Indenture, or (iii) an Unrestricted Subsidiary; provided, however, that each
                                                --------  -------           
Restricted Subsidiary organized under the laws of the United States or any State
thereof or the District of Columbia acquired or created pursuant to clause (ii)
shall, at the time it has either assets or shareholder's equity in excess of
$5,000, execute a guarantee, in the form attached as Exhibit C to this Indenture
and reasonably satisfactory in form and substance to the Trustee (and with such
documentation relating thereto as the Trustee shall require, including, without
limitation, a supplement or amendment to this Indenture and an Opinion of
Counsel as to the enforceability of such Guarantee).

Section 4.15.  Limitation on Other Senior Subordinated Debt.
               -------------------------------------------- 

           The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, incur, contingently or otherwise, any
Indebtedness (other than the Notes and the Guarantees, as the case may be) that
is both (i) subordinate in right of payment to any Senior Indebtedness of the
Company or its Restricted Subsidiaries, as the case may be, and (ii) senior in
right of payment to the Notes and the Guarantees, as the case may be.  For
purposes of this Section 4.15, Indebtedness is deemed to be senior in right of
payment to the Notes and the Guarantees, as the case may be, if it is not
explicitly subordinate in right of payment to Senior

                                       53
<PAGE>
 
Indebtedness at least to the same extent as the Notes and the Guarantees, as the
case may be, are subordinate to Senior Indebtedness.

Section 4.16.  Limitation on Sale and Lease-Back Transactions.
               ---------------------------------------------- 

           The Company will not, and will not permit any Restricted Subsidiary
to, enter into any Sale and Lease-Back Transaction unless (i) the consideration
received in such Sale and Lease-Back Transaction is at least equal to the fair
market value of the property sold, as determined by a Board Resolution, and (ii)
the Company could incur the Attributable Indebtedness in respect of such Sale
and Lease-Back Transaction in compliance with Section 4.6.

Section 4.17.  Payments for Consent.
               -------------------- 

           Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or agreed
to be paid to all Holders of the Notes which so consent, waive or agree to amend
in the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.

Section 4.18.  Corporate Existence.
               ------------------- 

           Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence, and the corporate, partnership or other existence of each Restricted
Subsidiary, in accordance with the respective organizational documents (as the
same may be amended from time to time) of each Restricted Subsidiary and the
rights (charter and statutory), licenses and franchises of the Company and its
Restricted Subsidiaries; provided, however, that the Company shall not be
                         --------  -------                               
required to preserve any such right, license or franchise, or the corporate,
partnership or other existence of any of its Restricted Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of

                                       54
<PAGE>
 
the Company and its Restricted Subsidiaries, taken as a whole, and that the loss
thereof is not adverse in any material respect to the Holders.

Section 4.19.  Change of Control.
               ----------------- 

          (a)  Within 30 days of the occurrence of a Change of Control, the
Company shall notify the Trustee in writing of such occurrence and shall make an
offer to purchase (the "Change of Control Offer") the outstanding Notes at a
purchase price equal to 101% of the principal amount thereof plus any accrued
and unpaid interest thereon to the Change of Control Payment Date (as
hereinafter defined) (such applicable purchase price being hereinafter referred
to as the "Change of Control Purchase Price") in accordance with the procedures
set forth in this Section 4.19.

          If the Credit Facility is in effect, or any amounts are owing
thereunder or in respect thereof, at the time of the occurrence of a Change of
Control, prior to the mailing of the notice to Holders described in paragraph
(b) below, but in any event within 30 days following any Change of Control, the
Company covenants to (i) repay in full all obligations under or in respect of
the Credit Facility or offer to repay in full all obligations under or in
respect of the Credit Facility and repay the obligations under or in respect of
the Credit Facility of each lender who has accepted such offer or (ii) obtain
the requisite consent under Credit Facility to permit the repurchase of the
Notes pursuant to this Section 4.19.  The Company must first comply with the
covenant described in the preceding sentence before it shall be required to
purchase Notes in the event of a Change of Control; provided that the Company's
                                                    ---------                  
failure to comply with the covenant described in the preceding sentence
constitutes an Event of Default described in clause (3) under Section 6.1 hereof
if not cured within 60 days after the notice required by such clause.

          (b)  Within 30 days of the occurrence of a Change of Control, the
Company also shall (i) cause a notice of the Change of Control Offer to be sent
at least once to the Dow Jones News Service or similar business news service in
the United States and (ii) send by first-class mail, postage prepaid, to the
Trustee and to each Holder of the Notes, at the address appearing in the

                                       55
<PAGE>
 
register maintained by the Registrar of the Notes, a notice stating:

           (i)   that the Change of Control Offer is being made pursuant to this
     Section 4.19 and that all Notes tendered will be accepted for payment, and
     otherwise subject to the terms and conditions set forth herein;

           (ii)  the Change of Control Purchase Price and the purchase date
     (which shall be a Business Day no earlier than 20 Business Days and no
     later than 60 Business Days from the date such notice is mailed (the
     "Change of Control Payment Date"));

           (iii) that any Note not tendered will continue to accrue interest;

           (iv)  that, unless the Company defaults in the payment of the Change
     of Control Purchase Price, any Notes accepted for payment pursuant to the
     Change of Control Offer shall cease to accrue interest after the Change of
     Control Payment Date;

           (v)   that Holders accepting the offer to have their Notes purchased
     pursuant to a Change of Control Offer will be required to surrender the
     Notes, with the form entitled "Option of Holder to Elect Purchase" on the
     reverse of the Note completed, to the Paying Agent at the address specified
     in the notice prior to the close of business on the Business Day preceding
     the Change of Control Payment Date;

           (vi)  that Holders will be entitled to withdraw their acceptance if
     the Paying Agent receives, not later than the close of business on the
     third Business Day preceding the Change of Control Payment Date, a
     telegram, telex, facsimile transmission or letter setting forth the name of
     the Holder, the principal amount of the Notes delivered for purchase, and a
     statement that such Holder is withdrawing his election to have such Notes
     purchased;

           (vii) that Holders whose Notes are being purchased only in part will
     be issued new Notes equal in principal amount to the unpurchased portion of

                                       56
<PAGE>
 
     the Notes surrendered, provided that each Note purchased and each such new
                            --------                                           
     Note issued shall be in an original principal amount in denominations of
     $1,000 and integral multiples thereof;

           (viii) any other procedures that a Holder must follow to accept a
     Change of Control Offer or effect withdrawal of such acceptance; and

           (ix)  the name and address of the Paying Agent.

           On the Change of Control Payment Date, the Company shall, to the
extent lawful, (i) accept for payment Notes or portions thereof or beneficial
interests under a Global Note properly tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent money sufficient to pay the
purchase price of all Notes or portions thereof or beneficial interests so
tendered and (iii) deliver or cause to be delivered to the Trustee Notes so
accepted together with an Officers' Certificate stating the Notes or portions
thereof tendered to the Company.  The Paying Agent shall promptly (1) mail to
each holder of Notes so accepted and (2) cause to be credited to the respective
accounts of the Holders under a Global Note of beneficial interest so accepted
payment in an amount equal to the purchase price for such Notes, and the Company
shall execute and issue, and the Trustee shall promptly authenticate and mail to
such holder, a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered and shall issue a Global Note equal in principal amount to
any unpurchased portion of beneficial interest so surrendered; provided that
                                                               --------     
each such new Note shall be issued in an original principal amount in
denominations of $1,000 and integral multiples thereof.

           (c) (i)   If the Company or any Subsidiary thereof has issued any
outstanding (A) Indebtedness that is subordinated in right of payment to the
Notes or (B) Preferred Stock, and the Company or such Subsidiary is required to
make a Change of Control Offer or to make a distribution with respect to such
subordinated Indebtedness or Preferred Stock in the event of a Change of
Control, the Company shall not consummate any such offer or distribution with
respect to such subordinated Indebtedness or Preferred Stock until such time as
the Company shall have paid the Change of Control Purchase Price in

                                       57
<PAGE>
 
full to the holders of Notes that have accepted the Company's Change of Control
Offer and shall otherwise have consummated the Change of Control Offer made to
holders of the Notes and (ii) the Company will not issue Indebtedness that is
subordinated in right of payment to the Notes or Preferred Stock with change of
control provisions requiring the payment of such Indebtedness or Preferred Stock
prior to the payment of the Notes in the event of a Change of Control under this
Indenture.

           In the event that a Change of Control occurs and the Holders of Notes
exercise their right to require the Company to purchase Notes, if such purchase
constitutes a "tender offer" for purposes of Rule 14e-1 under the Exchange Act
at that time, the Company will comply with the requirements of Rule 14e-1 as
then in effect with respect to such repurchase.

Section 4.20.  Maintenance of Office or Agency.
               ------------------------------- 

           The Company shall maintain an office or agency where Notes may be
surrendered for registration or transfer or exchange or for presentation for
payment and where notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served.  The Company shall give prompt written
notice to the Trustee of the location, and any change in the location, of such
office or agency.  If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the address of the Trustee as set forth in Section 13.2.

           The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations.  The
Company shall give prompt written notice to the Trustee of such designation or
rescission and of any change in the location of any such other office or agency.

           The Company hereby initially designates the Corporate Trust Office of
the Trustee set forth in Section 13.2 as such office of the Company.

                                       58
<PAGE>
 
Section 4.21.  Maintenance of Properties and Insurance.
               --------------------------------------- 

           (a)   The Company shall cause all material properties used or useful
to the conduct of its business or the business of any of its Subsidiaries to be
maintained and kept in good condition, repair and working order (reasonable wear
and tear excepted) and supplied with all equipment deemed necessary in the good
faith judgment of the Officers of the Company and shall cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in its judgment may be necessary, so that the business carried on in
connection therewith may be properly and advantageously conducted at all times
unless the failure to so maintain such properties (together with all other such
failures) would not have a material adverse effect on the financial condition or
results of operations of the Company and its Subsidiaries, taken as a whole;
provided, however, that nothing in this Section 4.21 shall prevent the Company
- --------  -------                                                             
or any Subsidiary from discontinuing the operation or maintenance of any of such
properties, or disposing of any of them, if such discontinuance or disposal is
in the good faith judgment of the Board of Directors of the Company or the
Subsidiary concerned, as the case may be, desirable in the conduct of the
business of the Company or such Subsidiary, as the case may be, and is not
adverse in any material respect to the Holders.

           (b)   The Company shall provide or cause to be provided, for itself
and each of its Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the reasonable, good faith opinion
of the Company are adequate and appropriate for the conduct of the business of
the Company and such Subsidiaries in a prudent manner, with reputable insurers
or with the government of the United States of America or an agency or
instrumentality thereof, in such amounts, with such deductibles, and by such
methods as shall be customary, in the good faith judgment of the Company, for
corporations similarly situated in the industry, unless the failure to provide
such insurance (together with all other such failures) would not have a material
adverse effect on the financial condition or results of operations of the
Company and its Subsidiaries, taken as a whole.

                                       59
<PAGE>
 
                                  ARTICLE 5.

                             SUCCESSOR CORPORATION

Section 5.1.   Limitation on Consolidation,
               Merger and Sale of Assets.
               ----------------------------

           (a)   The Company will not and will not permit any Guarantor to
consolidate with, merge with or into, or transfer all or substantially all of
its assets (as an entirety or substantially as an entirety in one transaction or
a series of related transactions), to any Person unless:  (i) the Company or the
Guarantor, as the case may be, shall be the continuing Person, or the Person (if
other than the Company or the Guarantor) formed by such consolidation or into
which the Company or the Guarantor, as the case may be, is merged or to which
the properties and assets of the Company or the Guarantor, as the case may be,
are transferred shall be a corporation organized and existing under the laws of
the United States or any State thereof or the District of Columbia and shall
expressly assume, by a supplemental indenture, executed and delivered to the
Trustee, in form satisfactory to the Trustee, all of the obligations of the
Company or the Guarantor, as the case may be, under the Notes and this
Indenture, and the obligations under this Indenture shall remain in full force
and effect; (ii) immediately before and immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing; and (iii) immediately after giving effect to such transaction on a
pro forma basis the Company or such Person could incur at least $1.00 additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.6 hereof,
provided, however, that a Guarantor may merge into the Company or another
- --------  -------                                                        
Guarantor without complying with this clause (iii).

           (b)   In connection with any consolidation, merger or transfer of
assets contemplated by this Section 5.1, the Company shall deliver or cause to
be delivered, to the Trustee, in form and substance reasonably satisfactory to
the Trustee, an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger or transfer and the supplemental indenture in
respect thereto comply with this Section 5.1 and that all conditions precedent
herein provided for relating to such transaction or transactions have been
complied with.

                                       60
<PAGE>
 
 Section 5.2.  Successor Person Substituted.
               ---------------------------- 

           Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company or any Guarantor in accordance
with Section 5.1 above, the successor corporation formed by such consolidation
or into which the Company is merged or to which such transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company or such Guarantor under this Indenture with the same effect as if
such successor corporation had been named as the Company or such Guarantor
herein, and thereafter the predecessor corporation shall be relieved of all
obligations and covenants under this Indenture and the Notes.


                                   ARTICLE 6.

                             DEFAULTS AND REMEDIES

Section 6.1.   Events of Default.
               ----------------- 

           An "Event of Default" occurs if

           (1)  there is a default in the payment of any principal of, or
     premium, if any, on the Notes when the same becomes due and payable at
     maturity, upon acceleration, redemption or otherwise, whether or not such
     payment is prohibited by the provisions of Article 11 hereof;

           (2)  there is a default in the payment of any interest on any Note
     when the same becomes due and payable and the Default continues for a
     period of 30 days, whether or not such payment is prohibited by the
     provisions of Article 11 hereof;

           (3)  the Company or any Guarantor defaults in the observance or
     performance of any other covenant in the Notes or this Indenture for 60
     days after written notice from the Trustee to the Company or written notice
     from the Holders of not less than 25% in aggregate principal amount of the
     Notes then outstanding to the Company and the Trustee;

                                       61
<PAGE>
 
           (4)  there is a default in the payment at final maturity of principal
     in an aggregate amount of $3,000,000 or more with respect to any
     Indebtedness of the Company or any Restricted Subsidiary thereof which
     default shall not be cured, waived or postponed pursuant to an agreement
     with the holders of such Indebtedness within 60 days after written notice,
     or the acceleration of any such Indebtedness aggregating $3,000,000 or more
     which acceleration shall not be rescinded or annulled within 20 days after
     written notice to the Company of such Default by the Trustee or to the
     Company and the Trustee by any Holder;

           (5)  a court of competent jurisdiction enters a final judgment or
     judgments which can no longer be appealed for the payment of money in
     excess of $3,000,000 (which are not paid or covered by third party
     insurance by financially sound insurers that have not disclaimed coverage)
     against the Company or any Restricted Subsidiary thereof and such judgment
     remains undischarged, for a period of 60 consecutive days during which a
     stay of enforcement of such judgment shall not be in effect;

           (6)   the Company or any Restricted Subsidiary pursuant to or within
     the meaning of any Bankruptcy Law:

                 (A)  commences a voluntary case,

                 (B)  consents to the entry of an order for relief against it in
          an involuntary case,

                 (C)  consents to the appointment of a Custodian of it or for 
          all or substantially all of its property,

                 (D)  makes a general assignment for the benefit of its 
          creditors, or

                 (E)  generally is not paying its debts as they become due; or

           (7)   a court of competent jurisdiction enters an order or decree 
           under any Bankruptcy Law that:

                                       62
<PAGE>
 
                 (A)  is for relief against the Company or any Restricted
           Subsidiary in an involuntary case,

                 (B)  appoints a Custodian of the Company or any Restricted
           Subsidiary or for all or substantially all of the property of the
           Company or any Restricted Subsidiary, or

                 (C)  orders the liquidation of the Company or any Restricted
           Subsidiary,

           and, in each case, the order or decree remains unstayed and in effect
           for 60 consecutive days.

           The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or state law for the relief of debtors.  The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.

          Subject to the provisions of Sections 7.1 and 7.2, the Trustee shall
not be charged with knowledge of any Default or Event of Default unless written
notice thereof shall have been given to a Trust Officer at the Corporate Trust
Office by the Company or any other Person.

Section 6.2.   Acceleration.
               ------------ 

           If an Event of Default (other than an Event of Default arising under
Section 6.1(6) or (7) with respect to the Company) occurs and is continuing, the
Trustee by notice to the Company, or the Holders of not less than 25% in
aggregate principal amount of the Notes then outstanding by written notice to
the Company and the Trustee, may declare to be immediately due and payable the
entire principal amount of all the Notes then outstanding plus premium, if any,
and accrued but unpaid interest to the date of acceleration and (i) such amounts
shall become immediately due and payable or (ii) if there are any amounts
outstanding under or in respect of the Credit Facility, such amounts shall
become due and payable upon the first to occur of an acceleration of amounts
outstanding under or in respect of the Credit Facility or five Business Days
after receipt by the Company and the Representative of notice of the accelera-

                                       63
<PAGE>
 
tion of the Notes; provided, however, that after such acceleration but before a
                   --------  -------                                           
judgement or decree based on such acceleration is obtained by the Trustee, the
Holders of a majority in aggregate principal amount of the outstanding Notes may
rescind and annul such acceleration and its consequences if all existing Events
of Default, other than the nonpayment of accelerated principal, premium, if any,
or interest that has become due solely because of the acceleration, have been
cured or waived and if the rescission would not conflict with any judgment or
decree.  No such rescission shall affect any subsequent Default or impair any
right consequent thereto.  In case an Event of Default specified in Section 6.1
(6) or (7) with respect to the Company occurs, the principal, premium, if any,
and interest amount with respect to all of the Notes shall be due and payable
immediately without any declaration or other act on the part of the Trustee or
the Holders of the Notes.

Section 6.3.   Other Remedies.
               -------------- 

           If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of, or premium, if any, and interest on the Notes or to
enforce the performance of any provision of the Notes or this Indenture and may
take any necessary action requested of it as Trustee to settle, compromise,
adjust or otherwise conclude any proceedings to which it is a party.

           The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding.  A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default.  No remedy is
exclusive of any other remedy.  All available remedies are cumulative to the
extent permitted by law.

Section 6.4.   Waiver of Past Defaults and
               Events of Default.
               ---------------------------

           Subject to Sections 6.2, 6.7 and 8.2 hereof, the Holders of a
majority in principal amount of the Notes then outstanding have the right to
waive any exist-

                                       64
<PAGE>
 
ing Default or Event of Default or compliance with any provision of this
Indenture or the Notes.  Upon any such waiver, such Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Default or Event of Default or impair any right
consequent thereto.

Section 6.5.   Control by Majority.
               ------------------- 

           The Holders of a majority in principal amount of the Notes then
outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee by this Indenture.  The Trustee, however, may refuse to
follow any direction that conflicts with law or this Indenture or that the
Trustee determines may be unduly prejudicial to the rights of another Noteholder
not taking part in such direction, and the Trustee shall have the right to
decline to follow any such direction if the Trustee, being advised by counsel,
determines that the action so directed may not lawfully be taken or if the
Trustee in good faith shall, by a Trust Officer, determine that the proceedings
so directed may involve it in personal liability; provided that the Trustee may
                                                  --------                     
take any other action deemed proper by the Trustee which is not inconsistent
with such direction.

Section 6.6.   Limitation on Suits.
               ------------------- 

           Subject to Section 6.7 below, a Noteholder may not institute any
proceeding or pursue any remedy with respect to this Indenture or the Notes
unless:

           (1)  the Holder gives to the Trustee written notice of a continuing
     Event of Default;

           (2)  the Holders of at least 25% in aggregate principal amount of the
     Notes then outstanding make a written request to the Trustee to pursue the
     remedy;

           (3)  such Holder or Holders offer, and if requested, provide to the
     Trustee indemnity reasonably satisfactory to the Trustee against any loss,
     liability or expense;

                                       65
<PAGE>
 
           (4)  the Trustee does not comply with the request within 60 days
     after receipt of the request and the offer and, if requested, the provision
     of indemnity; and

           (5)  no direction inconsistent with such written request has been
     given to the Trustee during such 60 day period by the Holders of a majority
     in aggregate principal amount of the Notes then outstanding.

           A Noteholder may not use this Indenture to prejudice the rights of
another Noteholder or to obtain a preference or priority over another
Noteholder.

Section 6.7.   Rights of Holders to Receive Payment.
               ------------------------------------ 

           Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal of, or premium, if any, and
interest of the Note on or after the respective due dates expressed in the Note,
or to bring suit for the enforcement of any such payment on or after such
respective dates, is absolute and unconditional and shall not be impaired or
affected without the consent of the Holder.

Section 6.8.   Collection Suit by Trustee.
               -------------------------- 

           If an Event of Default in payment of principal, premium or interest
specified in Section 6.1(1) or (2) hereof occurs and is continuing, the Trustee
may recover judgment in its own name and as trustee of an express trust against
the Company or the Guarantors (or any other obligor on the Notes) for the whole
amount of unpaid principal and accrued interest remaining unpaid, together with
interest on overdue principal and, to the extent that payment of such interest
is lawful, interest on overdue installments of interest, in each case at the
rate then borne by the Notes, and such further amounts as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, including all sums due and owing to the Trustee pursuant to Section
7.7.

                                       66
<PAGE>
 
Section 6.9.   Trustee May File Proofs of Claim.
               -------------------------------- 

           The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Noteholders allowed in any judicial proceedings relative to the Company or the
Guarantors (or any other obligor upon the Notes), its creditors or its property
and shall be entitled and empowered to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same
after deduction of its reasonable charges and expenses to the extent that any
such charges and expenses are not paid out of the estate in any such proceedings
and any custodian in any such judicial proceeding is hereby authorized by each
Noteholder to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the
Noteholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7 hereof.

           Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Noteholder any plan
or reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Noteholder in any such proceedings.

Section 6.10.  Priorities.
               ---------- 

           If the Trustee collects any money pursuant to this Article 6, it
shall pay out the money in the following order:

     FIRST:  to the Trustee for amounts due under Section 7.7 hereof;

     SECOND:  to Noteholders for amounts due and unpaid on the Notes for
principal, premium, if any, and interest as to each, ratably, without preference
or priority of

                                       67
<PAGE>
 
any kind, according to the amounts due and payable on the Notes; and

     THIRD:  to the Company or, to the extent the Trustee collects any amount
from any Guarantor, to such Guarantor.

     The Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section 6.10.  The Trustee shall give the Company
prior notice of any such record date and payment date; provided, however, that
                                                       --------  -------      
the failure to give any such notice shall not affect the establishment of such
record date or payment date or any payment to Noteholders pursuant to this
Section 6.10.

Section 6.11.  Undertaking for Costs.
               --------------------- 

           In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.7 hereof or a suit by Holders of more than 10% in
principal amount of the Notes then outstanding.

Section 6.12.  Restoration of Rights and Remedies.
               ---------------------------------- 

           If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.

                                       68
<PAGE>
 
                                  ARTICLE 7.

                                    TRUSTEE

Section 7.1.   Duties of Trustee.
               ----------------- 

           (a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent man would exercise or use under the same circumstances in the conduct of
his own affairs.

           (b) Except during the continuance of an Event of Default:

           (1) The Trustee need perform only those duties that are specifically
     set forth in this Indenture and no others and no implied covenants or
     obligations shall be read into this Indenture against the Trustee.

           (2) In the absence of bad faith on its part, the Trustee may
     conclusively rely, as to the truth of the statements and the correctness of
     the opinions expressed therein, upon certificates or opinions furnished to
     the Trustee and conforming to the requirements of this Indenture but, in
     the case of any such certificates or opinions which by any provision hereof
     are specifically required to be furnished to the Trustee, the Trustee shall
     be under a duty to examine the same to determine whether or not they
     conform to the requirements of this Indenture (but need not confirm or
     investigate the accuracy of mathematical calculations or other facts stated
     therein).

           (c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

           (1) This paragraph does not limit the effect of paragraph (b) of this
     Section 7.1.

           (2) The Trustee shall not be liable for any error of judgment made in
     good faith by a Trust

                                       69
<PAGE>
 
     Officer, unless it is proved that the Trustee was negligent in ascertaining
     the pertinent facts.

           (3) The Trustee shall not be liable with respect to any action it
     takes or omits to take in good faith in accordance with a direction
     received by it pursuant to Sections 6.2 and 6.5 hereof.

           (4) No provision of this Indenture shall require the Trustee to
     expend or risk its own funds or otherwise incur any financial liability in
     the performance of any of its rights or powers if it shall have reasonable
     grounds for believing that repayment of such funds or adequate indemnity
     satisfactory to it against such risk or liability is not reasonably assured
     to it.

           (d) Whether or not therein expressly so provided, paragraphs (a),
(b), (c), (e) and (f) of this Section 7.1 shall govern every provision of this
Indenture that in any way relates to the Trustee.

           (e) The Trustee may refuse to perform any duty or exercise any right
or power unless it receives indemnity reasonably satisfactory to it against any
loss, liability, expense or fee.

           (f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company or
any Guarantor.  Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by the law.

Section 7.2.   Rights of Trustee.
               ----------------- 

          Subject to Section 7.1 hereof:

          (1)  The Trustee may rely on and shall be protected in acting or
     refraining from acting upon any document reasonably believed by it to be
     genuine and to have been signed or presented by the proper person.  The
     Trustee need not investigate any fact or matter stated in the document.


                                       70
<PAGE>
 

           (2) Before the Trustee acts or refrains from acting, it may require
     an Officers' Certificate or an Opinion of Counsel, or both, which shall
     conform to the provisions of Section 13.5 hereof.  The Trustee shall be
     protected and shall not be liable for any action it takes or omits to take
     in good faith in reliance on such certificate or opinion.

           (3) The Trustee may act through agents and shall not be responsible
     for the misconduct or negligence of any agent (other than the negligence or
     willful misconduct of an agent who is an employee of the Trustee) appointed
     by it with due care.

           (4) The Trustee shall not be liable for any action it takes or omits
     to take in good faith which it reasonably believes to be authorized or
     within its rights or powers; provided that the Trustee's conduct does not
                                  --------                                    
     constitute negligence or bad faith.

           (5) The Trustee may consult with counsel of its selection, and the
     advice or opinion of such counsel as to matters of law shall be full and
     complete authorization and protection from liability in respect of any
     action taken, omitted or suffered by it hereunder in good faith and in
     accordance with the advice or opinion of such counsel.

Section 7.3.   Individual Rights of Trustee.
               ---------------------------- 

           The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may make loans to, accept deposits from, perform
services for or otherwise deal with the Company or any Guarantor, or any
Affiliates thereof, with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights. The Trustee, however, shall be
subject to Sections 7.10 and 7.11 hereof.

                                       71
<PAGE>
 
Section 7.4.  Trustee's Disclaimer.
              -------------------- 

           The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Notes, it shall not be accountable for the Company's use
of the proceeds from the sale of Notes or any money paid to the Company pursuant
to the terms of this Indenture and it shall not be responsible for any statement
in the Notes or any document used in connection with the sale of the Notes other
than its certificate of authentication.

Section 7.5.  Notice of Defaults.
              ------------------ 

           If a Default occurs and is continuing and if it is known to the
Trustee, the Trustee shall mail to each Noteholder notice of the Default within
90 days after it occurs. Except in the case of a Default in payment of the
principal of, or premium, if any, or interest on any Note, the Trustee may
withhold the notice if and so long as the board of directors of the Trustee, the
executive committee or any trust committee of such board and/or its Trust
Officers in good faith determine(s) that withholding the notice is in the
interests of the Noteholders.

Section 7.6.  Reports by Trustee to Holders.
              ----------------------------- 

           If required by TIA (S) 313(a), within 60 days after May 15 of any
year, commencing the May 15 following the date of this Indenture, the Trustee
shall mail to each Noteholder a brief report dated as of such May 15 that
complies with TIA (S) 313(a); provided that no such report need be transmitted
                              --------
if no such events listed in TIA (S) 313(a) have occurred within such period. The
Trustee also shall comply with TIA (S) 313(b)(2). The Trustee shall also
transmit by mail all reports as required by TIA (S) 313(c) and TIA (S) 313(d).

           A copy of each report at the time of its mailing to Noteholders shall
be filed with the SEC and each stock exchange on which the Notes are listed. The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange.

Section 7.7.  Compensation and Indemnity.
              -------------------------- 

           The Company and the Guarantors shall pay to the Trustee from time
to time such reasonable compensation as

                                       72
<PAGE>
 
shall be agreed in writing between the Company and the Trustee for its services
hereunder (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust). The Company and
the Guarantors shall reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances incurred or made by it in connection with
its duties under this Indenture, including the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.

     The Company and the Guarantors shall indemnify each of the Trustee and any
predecessor Trustee for, and hold it harmless against, any and all loss, damage,
claim, liability, reasonable expense (including but not limited to reasonable
attorneys' fees and expenses) or taxes (other than taxes based on the income of
the Trustee) incurred by it in connection with the acceptance or performance of
its duties under this Indenture including the reasonable costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder (including, without
limitation, settlement costs). The Trustee shall notify the Company and the
Guarantors in writing promptly of any claim asserted against the Trustee for
which it may seek indemnity. However, the failure by the Trustee to so notify
the Company and the Guarantors shall not relieve the Company or the Guarantors
of their obligations hereunder.

     Notwithstanding the foregoing, the Company and the Guarantors need not
reimburse the Trustee for any expense or indemnify it against any loss or
liability incurred by the Trustee through its negligence or bad faith. To secure
the payment obligations of the Company and the Guarantors in this Section 7.7,
the Trustee shall have a lien prior to the Notes on all money or property held
or collected by the Trustee in its capacity as such, except such money or
property held in trust to pay principal of and interest on particular Notes. The
obligations of the Company and the Guarantors under this Section 7.7 to
compensate and indemnify the Trustee and each predecessor Trustee and to pay or
reimburse the Trustee and each predecessor Trustee for expenses, disbursements
and advances shall be joint and several liabilities of the Company and each of
the Guarantors and shall survive the satisfaction and discharge of this
Indenture, includ-

                                       73
<PAGE>
 
ing the termination or rejection hereof in any bankruptcy proceeding to the
extent permitted by law.

     When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(6) or (7) hereof occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.

     For purposes of this Section 7.7, the term "Trustee" shall include any
trustee appointed pursuant to Article 9.

Section 7.8.  Replacement of Trustee.
              ---------------------- 

     The Trustee may resign by so notifying the Company and the Guarantors in
writing, such resignation to become effective upon the appointment of a
successor Trustee. The Holders of a majority in principal amount of the
outstanding Notes may remove the Trustee by notifying the removed Trustee in
writing and may appoint a successor Trustee with the Company's written consent
which consent shall not be unreasonably withheld. The Company may remove the
Trustee at its election if:

           (1)  the Trustee fails to comply with Section 7.10 hereof;

           (2)  the Trustee is adjudged a bankrupt or an insolvent;

           (3)  a receiver or other public officer takes charge of the Trustee
     or its property; or

           (4)  the Trustee otherwise becomes incapable of acting.

           If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee.

           If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in principal amount of the outstanding Notes may petition
any court of competent jurisdiction for the appointment of a successor Trustee.

                                       74
<PAGE>
 
           If the Trustee fails to comply with Section 7.10 hereof, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.

           A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company.  Immediately following
such delivery, the retiring Trustee shall, subject to its rights under Section
7.7 hereof, transfer all property held by it as Trustee to the successor
Trustee, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture.  A successor Trustee shall mail
notice of its succession to each Noteholder.  Notwithstanding replacement of the
Trustee pursuant to this Section 7.8, the Company's obligations under Section
7.7 hereof shall continue for the benefit of the retiring Trustee.

Section 7.9.   Successor Trustee by Consolidation,
               Merger or Conversion.
               -------------------- 

           If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation or national banking association, subject to Section 7.10 hereof, the
successor corporation or national banking association without any further act
shall be the successor Trustee.

Section 7.10.  Eligibility; Disqualification.
               ----------------------------- 

           This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S) 310(a)(1) and (2) in every respect.  The Trustee shall
have a combined capital and surplus of at least $100,000,000 as set forth in its
most recent published annual report of condition.  The Trustee shall comply with
(S) TIA (S) 310(b), including the provision in (S) 310(b)(1); provided that
                                                              --------     
there shall be excluded from the operation of TIA (S) 310(b)(1) any indenture or
indentures under which other securities, or conflicts of interest or
participation in other securities, of the Company or the Guarantors are
outstanding if the requirements for exclusion set forth in TIA (S) 310(b)(1) are
met.

                                       75
<PAGE>
 
Section 7.11.  Preferential Collection of
               Claims Against Company.
               ---------------------- 

          The Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b).  A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.

Section 7.12.  Paying Agents.
               ------------- 

          The Company shall cause each Paying Agent other than the Trustee to
execute and deliver to it and the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provisions of this Section 7.12:

          (A)  that it will hold all sums held by it as agent for the payment of
     principal of, or premium, if any, or interest on, the Notes (whether such
     sums have been paid to it by the Company or by any obligor on the Notes) in
     trust for the benefit of Holders of the Notes or the Trustee;

          (B)  that it will at any time during the continuance of any Event of
     Default, upon written request from the Trustee, deliver to the Trustee all
     sums so held in trust by it together with a full accounting thereof; and

          (C)  that it will give the Trustee written notice within three (3)
     Business Days of any failure of the Company (or by any obligor on the
     Notes) in the payment of any installment of the principal of, premium, if
     any, or interest on, the Notes when the same shall be due and payable.

                                  ARTICLE 8.

                      AMENDMENTS, SUPPLEMENTS AND WAIVERS

Section 8.1.   Without Consent of Holders.
               -------------------------- 

          The Company and the Guarantors, if any, when authorized by a Board
Resolution of each of them, and the Trustee may modify, waive, amend or
supplement this

                                       76
<PAGE>
 
Indenture, the Pledge Agreement or the Notes without notice to or consent of any
Noteholder:

          (1)  to comply with Section 5.1 hereof;

          (2) to provide for uncertificated Notes in addition to or in place of
     certificated Notes;

          (3)  to comply with any requirements of the SEC under the TIA;

          (4)  to cure any ambiguity, defect or inconsistency, or to make any
     other change that does not materially and adversely affect the rights of
     any Noteholder;

          (5)  to make any other change that does not adversely affect in any
     material respect the rights of any Noteholders hereunder; or

          (6)  to evidence and provide for the acceptance of appointment
     hereunder by a successor Trustee with respect to the Notes.

          The Trustee is hereby authorized to join with the Company and the
Guarantors, if any, in the execution of any supplemental indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be therein contained, but the Trustee
shall not be obligated to enter into any such supplemental indenture which
adversely affects its own rights, duties or immunities under this Indenture.

Section 8.2.   With Consent of Holders.
               ----------------------- 

          The Company, the Guarantors, if any, and the Trustee may modify,
amend, waive or supplement this Indenture, the Pledge Agreement or the Notes
with the written consent of the Holders of not less than a majority in aggregate
principal amount of the outstanding Notes without notice to any Noteholder.  The
Holders of not less than a majority in aggregate principal amount of the
outstanding Notes may waive compliance in a particular instance by the Company
with any provision of this Indenture or the Notes without notice to any
Noteholder.  Subject to Section 8.4, without the consent of each

                                       77
<PAGE>
 
Noteholder affected, however, an amendment, supplement or waiver, including a
waiver pursuant to Section 6.4, may not:

           (1)  reduce the amount of Notes whose Holders must consent to an
     amendment, modification, supplement or waiver to this Indenture, the Pledge
     Agreement or the Notes;

           (2)  reduce the rate of or change the time for payment of interest on
     any Note;

           (3)  reduce the principal of or premium on or change the stated
     maturity of any Note;

           (4)  make any Note payable in money other than that stated in the
     Note or change the place of payment from New York, New York;

           (5)  change the amount or time of any payment required by the Notes
     or reduce the premium payable upon any redemption of the Notes in
     accordance with Section 3.7 hereof, or change the time before which no such
     redemption may be made;

           (6)  waive a default in the payment of the principal of, or interest
     on, or redemption payment with respect to, any Note (including any
     obligation to make a Change of Control Offer or, after the Company's
     obligation to purchase Notes arises thereunder, an Excess Proceeds Offer or
     modify any of the provisions or definitions with respect to such offers);

           (7)  make any changes in Sections 6.4 or 6.7 hereof or this sentence
     of Section 8.2; or

           (8)  affect the ranking of the Notes in a manner adverse to the
     Holders.

           After a modification, amendment, supplement or waiver under this
Section 8.2 becomes effective, the Company shall mail to the Holders a notice
briefly describing the modification, amendment, supplement or waiver.  Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way

                                       78
<PAGE>
 
impair or affect the validity of any such modification, amendment, supplement or
waiver.

          It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, modification,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.

Section 8.3.   Compliance with Trust Indenture Act.
               ----------------------------------- 

          Every amendment to or supplement of this Indenture or the Notes shall
comply with the TIA as then in effect.

Section 8.4.   Revocation and Effect of Consents.
               --------------------------------- 

          Until a modification, amendment, supplement, waiver or other action
becomes effective, a consent to it by a Holder of a Note is a continuing consent
conclusive and binding upon such Holder and every subsequent Holder of the same
Note or portion thereof, and of any Note issued upon the transfer thereof or in
exchange therefor or in place thereof, even if notation of the consent is not
made on any such Note.  Any such Holder or subsequent Holder, however, may
revoke the consent as to his Note or portion of a Note, if the Trustee receives
the notice of revocation before the date the modification, amendment,
supplement, waiver or other action becomes effective.

          The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any modification,
amendment, supplement, or waiver.  If a record date is fixed, then,
notwithstanding the preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only such Persons, shall be
entitled to consent to such modification, amendment, supplement, or waiver or to
revoke any consent previously given, whether or not such Persons continue to be
Holders after such record date.  No such consent shall be valid or effective for
more than 90 days after such record date unless the consent of the requisite
number of Holders has been obtained.

          After a modification, amendment, supplement, waiver or other action
becomes effective, it shall bind

                                       79
<PAGE>
 
every Noteholder, unless it makes a change described in any of clauses (1)
through (8) of Section 8.2 hereof.  In that case, the modification, amendment,
supplement, waiver or other action shall bind each Holder of a Note who has
consented to it and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the consenting Holder's Note.

Section 8.5.   Notation on or Exchange of Notes.
               -------------------------------- 

          If a modification, amendment, supplement or waiver changes the terms
of a Note, the Trustee may request the Holder of the Note to deliver it to the
Trustee.  In such case, the Trustee shall place an appropriate notation on the
Note about the changed terms and return it to the Holder.  Alternatively, if the
Company or the Trustee so determines, the Company in exchange for the Note shall
issue and the Trustee shall authenticate a new security that reflects the
changed terms.  Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such modification, amendment,
supplement or waiver.

Section 8.6.   Trustee to Sign Amendments, etc.
               --------------------------------

          The Trustee shall sign any modification, amendment, supplement or
waiver authorized pursuant to this Article 8 if the modification, amendment,
supplement or waiver does not adversely affect the rights, duties, liabilities
or immunities of the Trustee.  If it does, the Trustee may, but need not, sign
it.  In signing or refusing to sign such modification, amendment, supplement or
waiver, the Trustee shall be entitled to receive and, subject to Section 7.1
hereof, shall be fully protected in relying upon an Officers' Certificate and an
Opinion of Counsel stating that such modification, amendment, supplement or
waiver is authorized or permitted by this Indenture and such supplemental
indenture constitutes the legal, valid and binding obligation of the Company and
the Guarantors enforceable against each of them in accordance with its terms
(subject to customary exceptions).  The Company or any Guarantor may not sign a
modification, amendment or supplement until the Board of Directors of the
Company or such Guarantor, as appropriate, approves it.

                                       80
<PAGE>
 
                                  ARTICLE 9.

                      DISCHARGE OF INDENTURE; DEFEASANCE


Section 9.1.   Discharge of Indenture.
               ---------------------- 

          The Company and the Guarantors, if any, may terminate their
obligations under the Notes, the Guarantees, if any, and this Indenture, except
the obligations referred to in the last paragraph of this Section 9.1, if there
shall have been cancelled by the Trustee or delivered to the Trustee for
cancellation all Notes theretofore authenticated and delivered (other than any
Notes that are asserted to have been destroyed, lost or stolen and that shall
have been replaced as provided in Section 2.7 hereof) and the Company has paid
all sums payable by it hereunder or deposited all required sums with the
Trustee.

          After such delivery the Trustee upon request shall acknowledge in
writing the discharge of the Company's and the Guarantors' obligations under the
Notes, the Guarantees and this Indenture except for those surviving obligations
specified below.

          Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company in Sections 2.7, 7.7, 9.5, 9.6 and 9.8 hereof shall
survive.

Section 9.2.   Legal Defeasance.
               ---------------- 

          The Company may at its option, by Board Resolution, be discharged
from its obligations with respect to the Notes and the Guarantors, if any,
discharged from their obligations under the Guarantees, if any, on the date the
conditions set forth in Section 9.4 below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, such Legal Defeasance means that the Company
shall be deemed to have paid and discharged the entire indebtedness represented
by the Notes and to have satisfied all its other obligations under such Notes
and this Indenture insofar as such Notes are concerned (and the Trustee, at the
expense of the Company, shall, subject to Section 9.6 hereof, execute proper
instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereun-

                                       81
<PAGE>
 
der: (A) the rights of Holders of outstanding Notes to receive solely from the
trust funds described in Section 9.4 hereof and as more fully set forth in such
Section, payments in respect of the principal of, premium, if any, and interest
on such Notes when such payments are due, (B) the Company's obligations with
respect to such Notes under Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.8 and 4.20
hereof, (C) the rights, powers, trusts, duties, and immunities of the Trustee
hereunder (including claims of, or payments to, the Trustee under or pursuant to
Section 7.7 hereof) and (D) this Article 9. Subject to compliance with this
Article 9, the Company may exercise its option under this Section 9.2 with
respect to the Notes notwithstanding the prior exercise of its option under
Section 9.3 below with respect to the Notes.

Section 9.3.   Covenant Defeasance.
               ------------------- 

          At the option of the Company, pursuant to a Board Resolution, the
Company and the Guarantors, if any, shall be released from their respective
obligations under Sections 4.2 through 4.19 hereof, inclusive, and clause (a)
(iii) of Section 5.1 hereof with respect to the outstanding Notes on and after
the date the conditions set forth in Section 9.4 hereof are satisfied
(hereinafter, "Covenant Defeasance") and the Notes shall thereafter be deemed to
not be outstanding for purposes of any direction, waiver, consent, declaration
or act of the Holders (and the consequences thereof) in connection with such
covenants but shall continue to be outstanding for all other purposes hereunder.
For this purpose, such Covenant Defeasance means that the Company and the
Guarantors, if any, may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such specified
Section or portion thereof, whether directly or indirectly by reason of any
reference elsewhere herein to any such specified Section or portion thereof or
by reason of any reference in any such specified Section or portion thereof to
any other provision herein or in any other document, but the remainder of this
Indenture and the Notes shall be unaffected thereby.

                                       82
<PAGE>
 
Section 9.4.   Conditions to Defeasance or Covenant
               Defeasance.
               ------------------------------------

          The following shall be the conditions to application of Section 9.2
or Section 9.3 hereof to the outstanding Notes:

     (1) the Company shall irrevocably have deposited or caused to be deposited
with the Trustee (or another trustee satisfying the requirements of Section 7.10
hereof who shall agree to comply with the provisions of this Article 9
applicable to it) as funds in trust for the purpose of making the following
payments, specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of the Notes, (A) money in an amount, or (B) U.S.
Government Obligations which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will provide, not
later than the due date of any payment, money in an amount, or (C) a combination
thereof, sufficient, in the opinion of a nationally-recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge, and which shall be applied by
the Trustee (or other qualifying trustee) to pay and discharge, the principal
of, premium, if any, and accrued interest on the outstanding Notes at the
maturity date of such principal, premium, if any, or interest, or on dates for
payment and redemption of such principal, premium, if any, and interest selected
in accordance with the terms of this Indenture and of the Notes;

     (2) no Event of Default or Default with respect to the Notes shall have
occurred and be continuing on the date of such deposit, or shall have occurred
and be continuing at any time during the period ending on the 91st day after the
date of such deposit or, if longer, ending on the day following the expiration
of the longest preference period under any Bankruptcy Law applicable to the
Company in respect of such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such period);

     (3) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute default under any other agreement or
instrument to which the Company is a party or by which it is bound;

                                       83
<PAGE>
 
     (4) the Company shall have delivered to the Trustee an Opinion of Counsel
stating that, as a result of such Legal Defeasance or Covenant Defeasance,
neither the trust nor the Trustee will be required to register as an investment
company under the Investment Company Act of 1940, as amended;

     (5) in the case of an election under Section 9.2 above, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the Company
has received from, or there has been published by, the Internal Revenue Service
a ruling to the effect that or (ii) there has been a change in any applicable
Federal income tax law with the effect that, and such opinion shall confirm
that, the Holders of the outstanding Notes or persons in their positions will
not recognize income, gain or loss for Federal income tax purposes solely as a
result of such Legal Defeasance and will be subject to Federal income tax on the
same amounts, in the same manner, including as a result of prepayment, and at
the same times as would have been the case if such Legal Defeasance had not
occurred;

     (6) in the case of an election under Section 9.3 hereof, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the outstanding Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such Covenant Defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Covenant Defeasance had not
occurred;

     (7) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the Legal Defeasance under Section 9.2
above or the Covenant Defeasance under Section 9.3 hereof (as the case may be)
have been complied with; and

     (8) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit under clause (1) was not made by the
Company with the intent of defeating, hindering, delaying or defrauding any
creditors of the Company or others.

                                       84
<PAGE>
 
Section 9.5.   Deposited Money and U.S. Government Obli-
               gations to Be Held in Trust; Other
               Miscellaneous Provisions.
               -----------------------------------------

          All money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee pursuant to Section 9.4 hereof in respect of
the outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent as the Trustee may determine, to the
Holders of such Notes, of all sums due and to become due thereon in respect of
principal, premium, if any, and accrued interest, but such money need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no duty to invest such money or U.S. Government Obligations.

          The Company and the Guarantors shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against the U.S.
Government Obligations deposited pursuant to Section 9.4 hereof or the
principal, premium, if any, and interest received in respect thereof other than
any such tax, fee or other charge which by law is for the account of the Holders
of the outstanding Notes.

          Anything in this Article 9 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 9.4 hereof which, in the opinion of a nationally-recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.

Section 9.6. Reinstatement.
             ------------- 

          If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 9.1, 9.2 or 9.3 hereof by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the obligations of the Company and any Guarantor under

                                       85
<PAGE>
 
this Indenture, the Notes and the Guarantees, if any, shall be revived and
reinstated as though no deposit had occurred pursuant to this Article 9 until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with Section 9.1 hereof; provided,
                                                                   --------
however, that if the Company or any Guarantors have made any payment of, 
- -------                                                     
principal of, premium, if any, or accrued interest on any Notes because of the
reinstatement of their obligations, the Company or such Guarantors, as the case
may be, shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.

Section 9.7. Moneys Held by Paying Agent.
             --------------------------- 

          In connection with the satisfaction and discharge of this Indenture,
all moneys then held by any Paying Agent under the provisions of this Indenture
shall, upon demand of the Company, be paid to the Trustee, or if sufficient
moneys have been deposited pursuant to Section 9.4 hereof, to the Company (or,
if such moneys had been deposited by any Guarantors, to such Guarantors), and
thereupon such Paying Agent shall be released from all further liability with
respect to such moneys.

Section 9.8. Moneys Held by Trustee.
             ---------------------- 

          Any moneys deposited with the Trustee or any Paying Agent or then held
by the Company or any Guarantors in trust for the payment of the principal of,
or premium, if any, or interest on any Note that are not applied but remain
unclaimed by the Holder of such Note for two years after the date upon which the
principal of, or premium, if any, or interest on such Note shall have
respectively become due and payable shall be repaid to the Company (or, if
appropriate, the Guarantors) upon Company Request, or if such moneys are then
held by the Company or any Guarantors in trust, such moneys shall be released
from such trust; and the Holder of such Note entitled to receive such payment
shall thereafter, as an unsecured general creditor, look only to the Company and
the Guarantors, if any, for the payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money shall thereupon
cease; provided, however, that the Trustee or any such Paying Agent, before 
       --------  -------                         
being required to make any such repayment,

                                       86
<PAGE>
 
may, at the expense of the Company and the Guarantors, if any, either mail to
each Noteholder affected, at the address shown in the register of the Notes
maintained by the Registrar pursuant to Section 2.3 hereof, or cause to be
published once a week for two successive weeks, in a newspaper published in the
English language, customarily published each Business Day and of general
circulation in The City of New York, New York, a notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such mailing or publication, any unclaimed balance of
such moneys then remaining will be repaid to the Company. After payment to the
Company or the Guarantors, if any, or the release of any money held in trust by
the Company or any Guarantors, as the case may be, Noteholders entitled to the
money must look only to the Company and any Guarantors for payment as general
creditors unless applicable abandoned property law designates another person.


                                  ARTICLE 10.

                               GUARANTEE OF NOTES

Section 10.1.  Guarantee.
               --------- 

          Subject to the provisions of this Article 10, each Guarantor, by
execution of the Guarantee, will jointly and severally unconditionally guarantee
to each Holder and to the Trustee, on behalf of the Holders, (i) the due and
punctual payment of the principal of, and premium, if any, and interest on each
Note, when and as the same shall become due and payable, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal of, and premium, if any, and interest on the Notes, to the
extent lawful, and the due and punctual performance of all other Obligations of
the Company to the Holders or the Trustee all in accordance with the terms of
such Note and this Indenture, and (ii) in the case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, that the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, at stated maturity, by acceleration or otherwise.
Each Guarantor, by execution of the Guarantee, will agree that its obligations
thereunder and hereunder shall be absolute and unconditional, irrespec-

                                       87
<PAGE>
 
tive of, and shall be unaffected by, any invalidity, irregularity or
unenforceability of any such Note or this Indenture, any failure to enforce the
provisions of any such Note or this Indenture, any waiver, modification or
indulgence granted to the Company with respect thereto by the Holder of such
Note or the Trustee, or any other circumstances which may otherwise constitute a
legal or equitable discharge of a surety or such Guarantor.

          Each Guarantor, by execution of the Guarantee, will waive diligence,
presentment, filing of claims with a court in the event of merger or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest or notice with respect to any such Note or the Indebtedness evidenced
thereby and all demands whatsoever, and will covenant that the Guarantee will
not be discharged as to any such Note except by payment in full of the principal
thereof, premium if any, and interest thereon and as provided in Section 9.1
hereof.  Each Guarantor, by execution of the Guarantee, will further agree that,
as between such Guarantor, on the one hand, and the Holders and the Trustee, on
the other hand, (i) the maturity of the Obligations guaranteed by the Guarantee
may be accelerated as provided in Article 6 hereof for the purposes of the
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the Obligations guaranteed thereby, and (ii) in
the event of any declaration of acceleration of such Obligations as provided in
Article 6 hereof, such Obligations (whether or not due and payable) shall
forthwith become due and payable by each Guarantor for the purpose of the
Guarantee.  In addition, without limiting the foregoing provisions, upon the
effectiveness of an acceleration under Article 6 hereof, the Trustee shall
promptly make a demand for payment on the Notes under the Guarantee provided for
in this Article 10 and not discharged.  Failure to make such demand shall not
affect the validity or enforceability of the Guarantee upon any Guarantor.

          A Guarantee shall not be valid or become obligatory for any purpose
with respect to a Note unless the certificate of authentication on such Note
shall have been signed by or on behalf of the Trustee.

                                       88
<PAGE>
 
Section 10.2.  Execution and Delivery of Guarantees.
               ------------------------------------ 

          A Guarantee shall be executed on behalf of a Guarantor by the manual
or facsimile signature of an Officer of such Guarantor.

          If an Officer of a Guarantor whose signature is on the Guarantee no
longer holds that office, such Guarantee shall be valid nevertheless.

Section 10.3.  Limitation of Guarantee.
               ----------------------- 

          The obligations of each Guarantor will be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Guarantor (including, without limitation, any guarantees of
Senior Indebtedness) and after giving effect to any collections from or payments
made by or on behalf of any other Guarantor in respect of the obligations of
such other Guarantor under its Guarantee or pursuant to its contribution
obligations under this Indenture, result in the obligations of such Guarantor
under the Guarantee not constituting a fraudulent conveyance or fraudulent
transfer under Federal or state law.  Each Guarantor that makes a payment or
distribution under a Guarantee shall be entitled to a contribution from each
other Guarantor in a pro rata amount based on the Adjusted Net Assets of each
Subsidiary Guarantor.

Section 10.4.  Release of Guarantor.
               -------------------- 

          A Guarantor shall be released from all of its obligations under its
Guarantee if:

          (i)   the Guarantor has sold all or substantially all of its assets or
     the Company and its Restricted Subsidiaries have sold all of the Capital
     Stock of the Guarantor owned by them, in each case in a transaction in
     compliance with Sections 4.10 and 5.1 hereof to the extent applicable; or

          (ii)  the Guarantor merges with or into or consolidates with, or
     transfers all or substantially all of its assets to, the Company or another
     Guarantor in a transaction in compliance with Section 5.1 hereof;

                                       89
<PAGE>
 
and in each such case, the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to such transactions have been complied
with.

Section 10.5.  Guarantee Obligations Subordinated 
               ----------------------------------
               to Guarantor Senior Indebtedness.
               --------------------------------

          Each Guarantor, by execution of the Guarantee, will covenant and
agree, and each Holder of Notes, by its acceptance thereof, likewise covenants
and agrees, that to the extent and in the manner hereinafter set forth in this
Article 10, the Indebtedness represented by the Guarantee and the payment of any
obligations pursuant to the Guarantee by such Guarantor are hereby expressly
made subordinate and subject in right of payment as provided in this Article 10
to the prior indefeasible payment and satisfaction in full in cash or, as
acceptable to the holders of Guarantor Senior Indebtedness of such Guarantor, in
any other manner, of all existing and future Guarantor Senior Indebtedness of
such Guarantor.

          This Section 10.5 and the following Sections 10.6 through 10.10 shall
constitute a continuing offer to all Persons who, in reliance upon such
provisions, become holders of or continue to hold Guarantor Senior Indebtedness
of any Guarantor; and such provisions are made for the benefit of the holders of
Guarantor Senior Indebtedness of each Guarantor; and such holders are made
obligees hereunder and they or each of them may enforce such provisions.

Section 10.6.  Payment Over of Proceeds upon Dissolu- 
               --------------------------------------
               tion, of a Guarantor.
               --------------------

          In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to any Guarantor or to its
creditors, as such, or to its assets, whether voluntary or involuntary, or (b)
any liquidation, dissolution or other winding-up of any Guarantor, whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy
or (c) any general assignment for the benefit of creditors or any other
marshaling of assets or liabilities of any Guarantor, then and in any such
event:

                                       90
<PAGE>
 
          (1) the holders of all Guarantor Senior Indebtedness of such Guarantor
     shall be entitled to receive payment and satisfaction in full in cash or,
     as acceptable to the holders of such Guarantor Senior Indebtedness, in any
     other manner, of all amounts due on or in respect of all such Guarantor
     Senior Indebtedness, before the Holders of the Notes are entitled to
     receive or retain, pursuant to the Guarantee of such Guarantor, any payment
     or distribution of any kind or character by such Guarantor on account of
     any of its Obligations on its Guarantee; and

          (2) any payment or distribution of assets of such Guarantor of any
     kind or character, whether in cash, property or securities, by set-off or
     otherwise, to which the Holders or the Trustee would be entitled but for
     the subordination provisions of this Article 10 shall be paid by the
     liquidating trustee or agent or other Person making such payment or
     distribution, whether a trustee in bankruptcy, a receiver or liquidating
     trustee or otherwise, directly to the holders of Guarantor Senior
     Indebtedness of such Guarantor or their representative or representatives
     or to the trustee or trustees under any indenture under which any
     instruments evidencing any of such Guarantor Senior Indebtedness may have
     been issued, ratably according to the aggregate amounts remaining unpaid on
     account of such Guarantor Senior Indebtedness held or represented by each,
     to the extent necessary to make payment in full in cash or, as acceptable
     to the Holders of such Guarantor Senior Indebtedness of such Guarantor, in
     any other manner, of all such Guarantor Senior Indebtedness remaining
     unpaid, after giving effect to any concurrent payment or distribution to
     the holders of such Guarantor Senior Indebtedness; and

          (3) in the event that, notwithstanding the foregoing provisions of
     this Section 10.6, the Trustee or the Holder of any Note shall have
     received any payment or distribution of assets of such Guarantor of any
     kind or character, whether in cash, property or securities, including,
     without limitation, by way of set-off or otherwise, in respect of any of
     its Obligations on its Guarantee before all Guarantor Senior Indebtedness
     of such Guarantor is

                                       91
<PAGE>
 
     paid and satisfied in full in cash or such payment and satisfaction thereof
     in cash is provided for, then and in such event such payment or
     distribution upon written notice to the Trustee or the Holder of such Note,
     as the case may be, shall be held by the Trustee or the Holder of such
     Note, as the case may be, in trust for the benefit of the holders of such
     Guarantor or Senior Indebtedness and shall be immediately paid over or
     delivered forthwith to the liquidating trustee or agent or other Person
     making payment or distribution of assets of such Guarantor for application
     to the payment of all such Guarantor Senior Indebtedness remaining unpaid,
     to the extent necessary to pay all of such Guarantor Senior Indebtedness in
     full in cash or, as acceptable to the holders of such Guarantor Senior
     Indebtedness, any other manner, after giving effect to any concurrent
     payment or distribution to or for the holders of such Guarantor Senior
     Indebtedness.

          The consolidation of a Guarantor with, or the merger of a Guarantor
with or into, another Person or the liquidation or dissolution of a Guarantor
following the transfer of all of its assets (as an entirety or substantially as
an entirety) to another Person upon the terms and conditions set forth in
Article 5 hereof shall not be deemed a dissolution, winding-up, liquidation,
reorganization, assignment for the benefit of creditors or marshaling of assets
and liabilities of such Guarantor for the purposes of this Article 10 if the
Person formed by such consolidation or the surviving entity of such merger or
the Person which acquires by transfer such assets (as an entirety or
substantially as an entirety) shall, as a part of such consolidation, merger or
transfer comply with the conditions set forth in such Article 5 hereof.

Section 10.7.  Suspension of Guarantee Obligations 
               When Guarantor Senior Indebtedness 
               in Default.
               -----------------------------------

          (a) Unless Section 10.6 hereof shall be applicable, after the
occurrence of a Payment Default, no payment or distribution of any assets or
securities of a Guarantor (or any Restricted Subsidiary or Subsidiary of such
Guarantor) of any kind or character (including, without limitation, cash,
property and any payment or distribution which may be payable or deliverable by

                                       92
<PAGE>
 
reason of the payment of any other Indebtedness of such Guarantor being
subordinated to its Obligations on its Guarantee) may be made by or on behalf of
such Guarantor (or any Restricted Subsidiary or Subsidiary of such Guarantor),
including, without limitation, by way of set-off or otherwise, for or on account
of its Obligations on its Guarantee, and neither the Trustee nor any holder or
owner of any Notes shall take or receive from any Guarantor (or any Restricted
Subsidiary or Subsidiary of such Guarantor), directly or indirectly in any
manner, payment in respect of all or any portion of its Obligations on its
Guarantee following the delivery by the representative of the holders of
Guarantor Senior Indebtedness (the "Guarantor Representative") to the Trustee of
written notice of (i) the occurrence of a Payment Default on Designated Senior
Indebtedness which constitutes Guarantor Senior Indebtedness or (ii) the
occurrence of a Non-Payment Event of Default on Designated Senior Indebtedness
which constitutes Guarantor Senior Indebtedness and the acceleration of the
maturity of such Designated Senior Indebtedness in accordance with its terms,
and in any such event, such prohibition shall continue until such Payment
Default is cured, waived in writing or ceases to exist or such acceleration has
been rescinded or otherwise cured.  At such time as the prohibition set forth in
the preceding sentence shall no longer be in effect, subject to the provisions
of the following paragraph (b), such Guarantor shall resume making any and all
required payments in respect of its Obligations under its Guarantee.

          (b) Unless Section 10.6 hereof shall be applicable, upon the
occurrence of a Non-Payment Event of Default on Designated Senior Indebtedness
which constitutes Guarantor Senior Indebtedness of any Guarantor, no payment or
distribution of any assets or securities of such Guarantor of any kind or
character (including, without limitation, cash, property and any payment or
distribution which may be payable or deliverable by reason of the payment of any
other Indebtedness of such Guarantor being subordinated to its Obligations on
its Guarantee) shall be made by such Guarantor, including, without limitation,
by way of set-off or otherwise, for or on account of any of its Obligations on
its Guarantee, and neither the Trustee nor any holder or owner of any Notes
shall take or receive from any Guarantor (or any Restricted Subsidiary or
Subsidiary of such Guarantor),

                                       93
<PAGE>
 
directly or indirectly in any manner, payment in respect of all or any portion
of its Obligations on its Guarantee for a period (a "Guarantee Payment Blockage
Period") commencing on the date of receipt by the Trustee of written notice from
the Guarantor Representative of such Non-Payment Event of Default, unless and
until (subject to any blockage of payments that may then be in effect under the
preceding paragraph (a)) the earliest to occur of the following events:  (x)
more than 179 days shall have elapsed since the date of receipt of such written
notice by the Trustee, (y) such Non-Payment Event of Default shall have been
cured or waived in writing or shall have ceased to exist or such Designated
Senior Indebtedness shall have been paid in full in cash and the Trustee has
been so notified either the Guarantor Representative or such Guarantor or (z)
such Guarantee Payment Blockage Period shall have been terminated by written
notice to such Guarantor or the Trustee from the Guarantor Representative, after
which, in the case of clause (x), (y) or (z), such Guarantor shall resume making
any and all required payments in respect of its Obligations on its Guarantee,
including any missed payments.  Notwithstanding any other provisions of this
Indenture, no event of default with respect to Designated Senior Indebtedness
which constitutes Guarantor Senior Indebtedness (other than a Payment Default)
which existed or was continuing on the date of the commencement of any Guarantee
Payment Blockage Period initiated by the Guarantor Representative shall be, or
be made, the basis for the commencement of a second Guarantee Payment Blockage
Period initiated by the Guarantor Representative unless such event of default
shall have been cured or waived for a period of not less than 90 consecutive
days.  In no event shall a Guarantee Payment Blockage Period extend beyond 179
days from the date of the receipt by the Trustee of the notice referred to in
this Section 10.7(b) or, in the event of a Non-Payment Event of Default which
formed the basis for a Payment Blockage Period under Section 11.3(b) hereof, 179
days from the date of the receipt by the Trustee of the notice referred to
Section 11.3(b) (the "Initial Guarantee Blockage Period").  Any number of
additional Guarantee Payment Blockage Periods may be commenced during the
Initial Guarantee Blockage Period; provided, however, that no such additional
                                   --------  -------                         
Guarantee Payment Blockage Period shall extend beyond the Initial Guarantee
Blockage Period.  After the expiration of the Initial Guarantee Blockage Period,
no Guarantee

                                       94
<PAGE>
 
Payment Blockage Period may be commenced under this Section 10.7(b) and no
Payment Blockage Period may be commenced under Section 11.3(b) hereof until at
least 180 consecutive days have elapsed from the last day of the Initial
Guarantee Blockage Period.

          (c) In the event that, notwithstanding the foregoing, the Trustee or
the Holder of any Note shall have received any payment from a Guarantor
prohibited by the foregoing provisions of this Section 10.7, then and in such
event such payment shall be paid over and delivered forthwith to the Guarantor
Representative initiating the Guarantee Payment Blockage Period, in trust for
distribution to the holders of Guarantor Senior Indebtedness or, if no amounts
are then due in respect of Guarantor Senior Indebtedness, promptly returned to
the Guarantor, or as a court of competent jurisdiction shall direct.

Section 10.8.  Subrogation to Rights of Holders 
               of Guarantor Senior Indebtedness.
               --------------------------------

          Upon the payment in full of all amounts payable under or in respect of
all Guarantor Senior Indebtedness of a Guarantor, the Holders shall be
subrogated to the rights of the holders of such Guarantor Senior Indebtedness to
receive payments and distributions of cash, property and securities of such
Guarantor made on such Guarantor Senior Indebtedness until all amounts due to be
paid under the Guarantee shall be paid in full.  For the purposes of such
subrogation, no payments or distributions to holders of Guarantor Senior
Indebtedness of any cash, property or securities to which Holders of the Notes
or the Trustee would be entitled except for the provisions of this Article 10,
and no payments over pursuant to the provisions of this Article 10 to holders of
Guarantor Senior Indebtedness by Holders of the Notes or the Trustee, shall, as
among each Guarantor, its creditors other than holders of Guarantor Senior
Indebtedness and the Holders of the Notes, be deemed to be a payment or
distribution by such Guarantor to or on account of such Guarantor Senior
Indebtedness.

          If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article 10 shall have been
applied, pursuant to the provisions of this Article 10, to the

                                       95
<PAGE>
 
payment of all amounts payable under Guarantor Senior Indebtedness, then and in
such case, the Holders shall be entitled to receive from the holders of such
Guarantor Senior Indebtedness at the time outstanding any payments or
distributions received by such holders of Guarantor Senior Indebtedness in
excess of the amount sufficient to indefeasibly pay all amounts payable under or
in respect of such Guarantor Senior Indebtedness in full in cash.

Section 10.9.  Guarantee Subordination Provisions
               Solely to Define Relative Rights.
               ----------------------------------

          The subordination provisions of this Article 10 are and are intended
solely for the purpose of defining the relative rights of the Holders of the
Notes on the one hand and the holders of Guarantor Senior Indebtedness on the
other hand.  Nothing contained in this Article 10 or elsewhere in this Indenture
or in the Notes is intended to or shall (a) impair, as among each Guarantor, its
creditors other than holders of its Guarantor Senior Indebtedness and the
Holders of the Notes, the obligation of such Guarantor, which is absolute and
unconditional, to make payments to the Holders in respect of its Obligations on
its Guarantee in accordance with its terms; or (b) affect the relative rights
against such Guarantor of the Holders of the Notes and creditors of such
Guarantor other than the holders of the Guarantor Senior Indebtedness; or (c)
prevent the Trustee or the Holder of any Note from exercising all remedies
otherwise permitted by applicable law upon a Default or an Event of Default
under this Indenture, subject to the rights, if any, under this Article 10 of
the holders of Guarantor Senior Indebtedness (1) in any insolvency or bankruptcy
case or proceeding, or any receivership, liquidation, arrangement,
reorganization or other similar case or proceeding in connection therewith or
any liquidation, dissolution or other winding-up, or any assignment for the
benefit of creditors or other marshaling of assets and liabilities referred to
in Section 10.6 hereof, to receive, pursuant to and in accordance with such
Section, cash, property and securities otherwise payable or deliverable to the
Trustee or such Holder, or (2) under the conditions specified in Section 10.7
hereof, to prevent any payment prohibited by such Section or enforce their
rights pursuant to Section 10.7(c) hereof.

                                       96
<PAGE>
 
          The failure by any Guarantor to make a payment in respect of its
obligations on its Guarantee by reason of any provision of this Article 10 shall
not be construed as preventing the occurrence of a Default or an Event of
Default hereunder.

Section 10.10. Application of Certain
               Article 11 Provisions.
               ----------------------

          The provisions of Sections 11.4, 11.7, 11.8, 11.9, 11.10, 11.12 and
11.13 hereof shall apply, mutatis mutandis, to each Guarantor and their
                          ------- --------                             
respective holders of Guarantor Senior Indebtedness and the rights, duties and
obligations set forth therein shall govern the rights, duties and obligations of
each Guarantor, the holders of Guarantor Senior Indebtedness, the Holders and
the Trustee with respect to the Guarantee and all references therein to Article
11 hereof shall mean this Article 10.


                                  ARTICLE 11.

                             SUBORDINATION OF NOTES


Section 11.1.  Notes Subordinate to Senior Indebtedness.
               ---------------------------------------- 

          The Company covenants and agrees, and each Holder of Notes, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article 11, the Indebtedness
represented by the Notes and the payment of the principal of, premium, if any,
and interest on the Notes are hereby expressly made subordinate and subject in
right of payment as provided in this Article 11 to the prior indefeasible
payment and satisfaction in full in cash or, as acceptable to the holders of
Senior Indebtedness, in any other manner, of all existing and future Senior
Indebtedness.

          This Article 11 shall constitute a continuing offer to all Persons
who, in reliance upon such provisions, become holders of or continue to hold
Senior Indebtedness; and such provisions are made for the benefit of the holders
of Senior Indebtedness; and such

                                       97
<PAGE>
 
holders are made obligees hereunder and they or each of them may enforce such
provisions.

Section 11.2.  Payment Over of Proceeds upon
               Dissolution, etc.
               -----------------------------

          In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, whether voluntary or involuntary or (b) any
liquidation, dissolution or other winding-up of the Company, whether voluntary
or involuntary and whether or not involving insolvency or bankruptcy, or (c) any
general assignment for the benefit of creditors or any other marshalling of
assets or liabilities of the Company, then and in any such event:

          (1) the holders of Senior Indebtedness shall be entitled to receive
     payment and satisfaction in full in cash or, as acceptable to the holders
     of Senior Indebtedness, in any other manner, of all amounts due on or in
     respect of all Senior Indebtedness, before the Holders of the Notes are
     entitled to receive or retain any payment or distribution of any kind or
     character on account of principal of, premium, if any, or interest on the
     Notes; and

          (2) any payment or distribution of assets of the Company of any kind
     or character, whether in cash, property or securities, by set-off or
     otherwise, to which the Holders or the Trustee would be entitled but for
     the provisions of this Article 11 shall be paid by the liquidating trustee
     or agent or other Person making such payment or distribution, whether a
     trustee in bankruptcy, a receiver or liquidating trustee or otherwise,
     directly to the holders of Senior Indebtedness or their representative or
     representatives or to the trustee or trustees under any indenture under
     which any instruments evidencing any of such Senior Indebtedness may have
     been issued, ratably according to the aggregate amounts remaining unpaid on
     account of the Senior Indebtedness held or represented by each, to the
     extent necessary to make payment in full in cash or,  as acceptable to the
     holders of Senior Indebtedness, in any other manner, of all Senior
     Indebtedness

                                       98
<PAGE>
 
     remaining unpaid, after giving effect to any concurrent payment or
     distribution, or provision therefor, to the holders of such Senior
     Indebtedness; and

          (3) in the event that, notwithstanding the foregoing provisions of
     this Section 11.2, the Trustee or the Holder of any Note shall have
     received any payment or distribution of assets of the Company of any kind
     or character, whether in cash, property or securities, including, without
     limitation, by way of set-off or otherwise, in respect of principal of,
     premium, if any, and interest on the Notes before all Senior Indebtedness
     is paid and satisfied in full in cash or such payment and satisfaction
     thereof in cash is provided for, then and in such event such payment or
     distribution upon written notice to the Trustee or the Holder of such Note,
     as the case may be, shall be held by the Trustee or the Holder of such
     Note, as the case may be, in trust for the benefit of the holders of such
     Senior Indebtedness and shall be immediately paid over or delivered
     forthwith to the liquidating trustee or agent or other Person making
     payment or distribution of assets of the Company for application to the
     payment of all Senior Indebtedness remaining unpaid, to the extent
     necessary to pay all Senior Indebtedness in full in cash or, as acceptable
     to the holders of Senior Indebtedness, any other manner, after giving
     effect to any concurrent payment or distribution, or provision therefor, to
     or for the holders of Senior Indebtedness.

          The consolidation of the Company with, or the merger of the Company
with or into, another Person or the liquidation or dissolution of the Company
following the transfer of all its assets (as an entirety or substantially as an
entirety) to another Person upon the terms and conditions set forth in Article 5
hereof shall not be deemed a dissolution, winding-up, liquidation,
reorganization, assignment for the benefit of creditors or marshaling of assets
and liabilities of the Company for the purposes of this Article 11 if the Person
formed by such consolidation or the surviving entity of such merger or the
Person which acquires by transfer such assets (as an entirety or substantially
as an entirety) shall, as a part of such consolidation, merger or transfer,
comply with the conditions set forth in such Article 5 hereof.

                                       99
<PAGE>
 
Section 11.3.  Suspension of Payment When Senior
               Indebtedness in Default.
               ---------------------------------

          (a) Unless Section 11.2 hereof shall be applicable, after the
occurrence of a Payment Default no payment or distribution of any assets or
securities of the Company or any Restricted Subsidiary of any kind or character
(including, without limitation, cash, property and any payment or distribution
which may be payable or deliverable by reason of the payment of any other
Indebtedness of the Company being subordinated to the payment of the Notes by
the Company) may be made by or on behalf of the Company or any Restricted
Subsidiary, including, without limitation, by way of set-off or otherwise, for
or on account of principal of, premium, if any, or interest on the Notes, or for
or on account of the purchase, redemption, defeasance or other acquisition of
the Notes, and neither the Trustee nor any holder or owner of any Notes shall
take or receive from the Company or any Restricted Subsidiary, directly or
indirectly in any manner, payment in respect of all or any portion of Notes
following the delivery by the representative of the holders of Designated Senior
Indebtedness (the "Representative") to the Trustee of written notice of (i) the
occurrence of a Payment Default on Designated Senior Indebtedness or (ii) the
occurrence of a Non-Payment Event of Default on Designated Senior Indebtedness
and the acceleration of the maturity of Designated Senior Indebtedness in
accordance with its terms, and in any such event, such prohibition shall
continue until such Payment Default is cured, waived in writing or ceases to
exist or such acceleration has been rescinded or otherwise cured; provided that
                                                                  --------     
nothing in this sentence shall be deemed to affect the right of the Holders to
receive solely from the funds deposited in trust pursuant to clause (1) of
Section 9.4 hereof prior to the date of such Payment Default and as more fully
set forth in such Section payments or distributions in respect of the principal
of, premium, if any, and interest on the Notes in connection with any Legal
Defeasance or Covenant Defeasance.  At such time as the prohibition set forth in
the preceding sentence shall no longer be in effect, subject to the provisions
of the following paragraph (b), the Company shall resume making any and all
required payments in respect of the Notes, including any missed payments.

                                      100
<PAGE>
 
          (b) Unless Section ll.2 hereof shall be applicable, upon the
occurrence of a Non-Payment Event of Default on Designated Senior Indebtedness,
no payment or distribution of any assets or securities of the Company of any
kind or character (including, without limitation, cash, property and any payment
or distribution which may be payable or deliverable by reason of the payment of
any other Indebtedness of the Company being subordinated to the payment of the
Notes by the Company) shall be made by or on behalf of the Company, including,
without limitation, by way of set-off or otherwise, for or on account of any
principal of, premium, if any, or interest on the Notes or for or on account of
the purchase, redemption, defeasance or other acquisition of Notes, and neither
the Trustee nor any holder or owner of any Notes shall take or receive from  the
Company, directly or indirectly in any manner, payment in respect of all or any
portion of the Notes, for a period (a "Payment Blockage Period") commencing on
the date of receipt by the Trustee of written notice from the Representative of
such Non-Payment Event of Default unless and until (subject to any blockage of
payments that may then be in effect under the preceding paragraph (a)) the
earliest to occur of the following events: (x) more than 179 days shall have
elapsed since the date of receipt of such written notice by the Trustee, (y)
such Non-Payment Event of Default shall have been cured or waived in writing or
shall have ceased to exist or such Designated Senior Indebtedness shall have
been paid in full in cash and the Trustee has been so notified by either the
Representative or the Company or (z) such Payment Blockage Period shall have
been terminated by written notice to the Company or the Trustee from the
Representative, after which, in the case of clause (x), (y) or (z), the Company
shall resume making any and all required payments in respect of the Notes,
including any missed payments.  Notwithstanding any other provisions of this
Indenture, no event of default with respect to Designated Senior Indebtedness
(other than a Payment Default) which existed or was continuing on the date of
the commencement of any Payment Blockage Period initiated by the Representative
shall be, or be made, the basis for the commencement of a second Payment
Blockage Period initiated by the Representative unless such event of default
shall have been cured or waived for a period of not less than 90 consecutive
days.  In no event shall a Payment Blockage Period extend beyond 179 days from
the date of the receipt by the Trustee of

                                      101
<PAGE>
 
the notice referred to in this Section 11.3(b) (the "Initial Blockage Period").
Any number of additional Payment Blockage Periods may be commenced during the
Initial Blockage Period; provided, however, that no such additional Payment
                         --------  -------                                 
Blockage Period shall extend beyond the Initial Blockage Period.  After the
expiration of the Initial Blockage Period, no Payment Blockage Period may be
commenced under this Section 11.3(b) and no Guarantee Payment Blockage Period
may be commenced under Section 10.7(b) hereof until at least 180 consecutive
days have elapsed from the last day of the Initial Blockage Period.

          (c) In the event that, notwithstanding the foregoing, the Trustee or
the Holder of any Note shall have received any payment prohibited by the
foregoing provisions of this Section 11.3, then and in such event such payment
shall be paid over and delivered forthwith to the Representative initiating the
Payment Blockage Period, in trust for distribution to the holders of Senior
Indebtedness or, if no amounts are then due in respect of Senior Indebtedness,
promptly returned to the Company, or otherwise as a court of competent
jurisdiction shall direct.

Section 11.4.  Trustee's Relation to Senior
               Indebtedness.
               -------------

          With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article 11, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee.  The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and the Trustee shall
not be liable to any holder    of Senior Indebtedness if it shall mistakenly pay
over or deliver to Holders, the Company or any other Person moneys or assets to
which any holder of Senior Indebtedness shall be entitled by virtue of this
Article 11 or otherwise.

Section 11.5.  Subrogation to Rights of Holders
               of Senior Indebtedness.
               --------------------------------

          Upon the payment in full of all Senior Indebtedness, the Holders of
the Notes shall be subrogated to

                                      102
<PAGE>
 
the rights of the holders of such Senior Indebtedness to receive payments and
distributions of cash, property and securities applicable to the Senior
Indebtedness until the principal of, premium, if any, and interest on the Notes
shall be paid in full.  For purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness of any cash, property or
securities to which the Holders of the Notes or the Trustee would be entitled
except for the provisions of this Article 11, and no payments pursuant to the
provisions of this Article 11 to the holders of Senior Indebtedness by Holders
of the Notes or the Trustee, shall, as among the Company, its creditors other
than holders of Senior Indebtedness and the Holders of the Notes, be deemed to
be a payment or distribution by the Company to or on account of the Senior
Indebtedness.

          If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article 11 shall have been
applied, pursuant to the provisions of this Article 11, to the payment of all
amounts payable under the Senior Indebtedness of the Company, then and in such
case the Holders shall be entitled to receive from the holders of such Senior
Indebtedness at the time outstanding any payments or distributions received by
such holders of such Senior Indebtedness in excess of the amount sufficient to
indefeasibly pay all amounts payable under or in respect of such Senior
Indebtedness in full in cash.

Section 11.6.  Provisions Solely to Define Relative 
               Rights.
               ------------------------------------

          The provisions of this Article 11 are and are intended solely for the
purpose of defining the relative rights of the Holders of the Notes on the one
hand and the holders of Senior Indebtedness on the other hand.  Nothing
contained in this Article or elsewhere in this Indenture or in the Notes is
intended to or shall (a) impair, as among the Company, its creditors other than
holders of Senior Indebtedness and the Holders of the Notes, the obligation of
the Company, which is absolute and unconditional, to pay to the Holders of the
Notes the principal of, premium, if any, and interest on the Notes as and when
the same shall become due and payable in accordance with their terms, or (b)
affect the relative rights against the Company of the Holders of the Notes

                                      103
<PAGE>
 
and creditors of the Company other than the holders of Senior Indebtedness or
(c) prevent the Trustee or the Holder of any Note from exercising all remedies
otherwise permitted by applicable law upon a Default or an Event of Default
under this Indenture, subject to the rights, if any, under this Article 11 of
the holders of Senior Indebtedness (1) in any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, arrangement, reorganization or
other similar case or proceeding in connection therewith, or any liquidation,
dissolution or other winding-up, or any assignment for the benefit of creditors
or other marshaling of assets and liabilities referred to in Section 11.2
hereof, to receive, pursuant to and in accordance with such Section, cash,
property and securities otherwise payable or deliverable to the Trustee or such
Holder, or (2) under the conditions specified in Section 11.3, to prevent any
payment prohibited by such Section or enforce their rights pursuant to Section
11.3(c) hereof.

          The failure to make a payment on account of principal of, premium, if
any, or interest on the Notes by reason of any provision of this Article 11
shall not be construed as preventing the occurrence of a Default or an Event of
Default hereunder.

Section 11.7.  Trustee to Effectuate Subordination.
               ----------------------------------- 

          Each Holder of a Note by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to effectuate the subordination provided in this Article and appoints the
Trustee his attorney-in-fact for any and all such purposes, including, in the
event of any dissolution, winding-up, liquidation or reorganization of the
Company whether in bankruptcy, insolvency, receivership proceedings, or
otherwise, the timely filing of a claim for the unpaid balance of the
indebtedness of the Company owing to such Holder in the form required in such
proceedings and the causing of such claim to be approved.   If the Trustee does
not file such a claim prior to 30 days before the expiration of the time to file
such a claim, the holders  of Senior Indebtedness, or any Representative, may
file such a claim on behalf of Holders of the Notes.

                                      104
<PAGE>
 
Section 11.8.  No Waiver of Subordination Provisions.
               ------------------------------------- 

          (a) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any non-compliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof any such holder may have
or be otherwise charged with.

          (b) Without limiting the generality of subsection (a) of this Section
11.8, the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the Notes,
without incurring responsibility to the Holders of the Notes and without
impairing or releasing the subordination provided in this Article 11 or the
obligations hereunder of the Holders of the Notes to the holders of Senior
Indebtedness, do any one or more of the following:  (1) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness or any instrument evidencing the same (or any agreement under which
Senior Indebtedness is outstanding; (2) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (3) release any Person liable in any manner for the collection or
payment of Senior Indebtedness; and (4) exercise or refrain from exercising any
rights against the Company and any other Person; provided, however, that in no
                                                 --------  -------            
event shall any such actions limit the right of the Holders of the Notes to take
any action to accelerate the maturity of the Notes pursuant to Article 6 hereof
or to pursue any rights or remedies hereunder or under applicable laws if the
taking of such action does not otherwise violate the terms of this Indenture.

Section 11.9.  Notice to Trustee.
               ----------------- 

          (a) The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee at its Corporate Trust Office in respect of the Notes.
Notwithstanding the provisions of this Article 11 or any other provision of this
Indenture, the

                                      105
<PAGE>
 
Trustee shall not be charged with knowledge of the existence of any facts which
would prohibit the making of any payment to or by the Trustee in respect of the
Notes, unless and until the Trustee shall have received written notice thereof
from the Company or a holder of Senior Indebtedness or from any trustee,
fiduciary or agent therefor; and, prior to the receipt of any such written
notice, the Trustee, subject to the provisions of this Section 11.9, shall be
entitled in all respects to assume that no such facts exist.

          (b) Subject to the provisions of Section 7.1 hereof, the Trustee shall
be entitled to rely on the delivery to it of a written notice to the Trustee and
the Company by a Person representing itself to be a holder of Senior
Indebtedness (or a trustee, fiduciary or agent therefor) to establish that such
notice has been given by a holder of Senior Indebtedness (or a trustee,
fiduciary or agent therefor); provided, however, that failure to give such
                              --------  -------                           
notice to the Company shall not affect in any way the ability of the Trustee to
rely on such notice.  In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article 11, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article 11, and if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.

Section 11.10. Reliance on Judicial Order or
               Certificate of Liquidating Agent.
               -------------------------------- 

          Upon any payment or distribution of assets of the Company referred to
in this Article 11, the Trustee, subject to the provisions of Section 7.1
hereof, and the Holders shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding-up
or similar case or proceeding is pending, or a certificate of the

                                      106
<PAGE>
 
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for
the benefit of creditors, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Holders, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 11.

Section 11.11.  Rights of Trustee as a Holder of
                Senior Indebtedness; Preservation
                of Trustee's Rights.
                ---------------------------------

          The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article 11 with respect to any Senior Indebtedness
which may at any time be held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder.  Nothing in this Article 11 shall apply to
claims of, or payments to, the Trustee under or pursuant to Section 7.7 hereof.

Section 11.12.  Article Applicable to Paying Agents.
                ----------------------------------- 

          In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article 11 shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article 11 in addition to or in place of the Trustee.

Section 11.13.  No Suspension of Remedies.
                ------------------------- 

          Nothing contained in this Article 11 shall limit the right of the
Trustee or the Holders of Notes to take any action to accelerate the maturity of
the Notes pursuant to Article 6 or to pursue any rights or remedies hereunder or
under applicable law, subject to the rights, if any, under this Article 11 of
the holders, from time to time, of Senior Indebtedness.

                                      107
<PAGE>
 
                                  ARTICLE 12.

                                   SECURITY

Section 12.1.  Pledge Agreement.
               ---------------- 

          Each Holder, by accepting any Notes, agrees to all of the terms and
provisions of the Pledge Agreement as the same may be in effect or may be
amended from time to time and authorizes and directs the Collateral Agent under
the Pledge Agreement to act as secured party with respect thereto.  The due and
punctual payment of the principal of and interest on the Notes when and as the
same shall be due and payable, whether on an Interest Payment Date, at maturity,
by acceleration, call for redemption or otherwise, and interest on the overdue
principal and interest, if any, of the Notes and payment and performance of all
other obligations of the Company to the Holders or the Trustee under this
Indenture and the Notes, according to the terms hereunder or thereunder, shall,
subject to the prior Lien described therein, be secured as provided in the
Pledge Agreement.  The security interest in the Collateral of the Holders of the
Notes shall be junior in priority to such security interest in the Collateral
securing indebtedness under the Credit Agreement (as defined in the Pledge
Agreement), [the pledge agreement for the 1996 Notes] and any renewals,
extensions, replacements, refundings, refinancings and restructurings thereof,
and amendments, modifications and supplements thereto and any other Senior
Indebtedness that may have a lien on the Collateral.

Section 12.2.  Certificates and Opinions.
               ------------------------- 

          The Company shall cause (a) TIA (S) 314(b), relating to an Opinion of
Counsel regarding the lien of the Pledge Agreement and (b), TIA (S) 314(d),
relating to an Officers' Certificate or other documents regarding the fair value
of the Collateral (as defined in the Pledge Agreement), to be complied with to
the extent applicable.  Any determinations regarding fair value shall be made by
an independent appraiser or other expert.

                                      108
<PAGE>
 
Section 12.3.  Authorization of Actions to Be
               Taken by the Collateral Agent Under
               the Pledge Agreement.
               -----------------------------------

          The Collateral Agent may (but shall not be obligated to), in its sole
discretion and without the consent of the Holders of the Notes, take all actions
it deems necessary or appropriate in order to (a) enforce or effect the Pledge
Agreement and (b) collect and receive any and all amounts payable in respect of
the obligations of the Company hereunder as provided therein. Such actions shall
include, but not be limited to, advising, instructing or otherwise directing any
agent appointed by it in connection with enforcing or effecting any term or
provision of the Pledge Agreement. Subject to the provisions of the Pledge
Agreement, the Collateral Agent shall have power to institute and to maintain
such suits and proceedings as it may deem expedient to prevent any impairment of
the Collateral by any acts which may be unlawful or in violation of the Pledge
Agreement, and such suits and proceedings as the Collateral Agent may deem
expedient to preserve or protect its interests and the interests of any parties
secured by the Collateral (including power to institute and maintain suits or
proceedings to restrain the enforcement of or compliance with any legislative or
other governmental enactment, rule or order that may be unconstitutional or
otherwise invalid if the enforcement of, or compliance with, such enactment,
rule or order would impair the security under the Pledge Agreement or be
prejudicial to the interests of any parties secured by the Collateral or of the
Collateral Agent).

Section 12.4.  Authorization of Receipt of Funds by
               the Trustee Under the Pledge Agreement.
               -------------------------------------- 

          The Trustee is authorized to receive any funds for the benefit of
Holders distributed under the Pledge Agreement, and to make further
distributions of such funds to the Holders according to the provisions of the
Indenture.

Section 12.5.  Termination of Security Interest.
               -------------------------------- 

          Upon the payment in full of all obligations of the Company under this
Indenture and the Notes, or in the event of an earlier termination of the Pledge
Agreement

                                      109
<PAGE>
 
pursuant to the terms thereof, the Trustee shall, at the request of the Company
together with an Officers' Certificate to such effect, deliver notification to
the Collateral Agent that such obligations have been paid in full or, if the
Collateral Agent is not the pledgee, send a certificate executed by a Trust
Officer to such pledgee, stating that such obligations have been paid in full.


                                  ARTICLE 13.

                                 MISCELLANEOUS


Section 13.1.  Trust Indenture Act Controls.
               ---------------------------- 

          If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control.

Section  13.2. Notices.
               ------- 

          Any notice or communication shall be given in writing and delivered in
person, sent by facsimile, delivered by commercial courier service or mailed by
first-class mail, postage prepaid, addressed as follows:

          If to the Company or any Guarantor:

          Pierce Leahy Corp.
          631 Park Avenue
          King of Prussia, Pennsylvania 19406
          Attention: Chief Financial Officer
          Fax Number: 610-992-8394

          Copy to:

          Cozen and O'Connor
          1900 Market Street
          Philadelphia, Pennsylvania 19103
          Attention: Richard J. Busis, Esq.
          Fax Number: 215-665-2013

                                      110
<PAGE>
 
          If to the Trustee:

          [



                                                   ]

          Such notices or communications shall be effective when received and
shall be sufficiently given if so given within the time prescribed in this
Indenture.

          The Company, any Guarantors or the Trustee by written notice to the
others may designate additional or different addresses for subsequent notices or
communications.

          Any notice or communication mailed to a Noteholder shall be mailed to
him by first-class mail, postage prepaid, at his address shown on the register
kept by the Registrar.  If a notice or communication to a Noteholder is mailed
in the manner provided above, it shall be deemed duly given on the date so
deposited in the mail, whether or not the addressee receives it.

          Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Noteholders.

          In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice as required
by this Indenture, then such method of notification as shall be made with the
approval of the Trustee shall constitute a sufficient mailing of such notice.

Section 13.3.  Communications by Holders with Other Holders.
               -------------------------------------------- 

          Noteholders may communicate pursuant to TIA (S) 312 (b) with other
Noteholders with respect to their rights under this Indenture or the Notes.  The
Company, the Guarantors, the Trustee, the Registrar and anyone else shall have
the protection of TIA (S) 312(c).

                                      111
<PAGE>
 
Section 13.4.  Certificate and Opinion as to Conditions
               Precedent.
               ----------------------------------------

          Upon any request or application by the Company or any Guarantor to the
Trustee to take any action under this Indenture, the Company shall furnish to
the Trustee at the request of the Trustee:

          (1) an Officers' Certificate (which shall include the statements set
     forth in Section 13.5 below) in form and substance reasonably satisfactory
     to the Trustee stating that, in the opinion of the signers, all conditions
     precedent, if any, provided for in this Indenture relating to the proposed
     action have been complied with; and

          (2) an Opinion of Counsel (which shall include the statements set
     forth in Section 13.5 below) in form and substance reasonably satisfactory
     to the Trustee stating that, in the opinion of such counsel, all such
     conditions precedent have been complied with.

Section 13.5.  Statements Required in Certificate 
               and Opinion.
               -----------------------------------

          Each certificate and opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

          (1) a statement that the Person making such certificate or opinion has
     read such covenant or condition;

          (2) a brief statement as to the nature and scope of the examination or
     investigation upon which the statements or opinions contained in such
     certificate or opinion are based;

          (3) a statement that, in the opinion of such Person, it or he has made
     such examination or investigation as is necessary to enable it or him to
     express an informed opinion as to whether or not such covenant or condition
     has been complied with; and

                                      112
<PAGE>
 
          (4) a statement as to whether or not, in the opinion of such Person,
     such covenant or condition has been complied with.

Section 13.6.  When Treasury Notes Disregarded.
               ------------------------------- 

          In determining whether the Holders of the required aggregate principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, any Guarantor or any other obligor on the Notes or by any
Affiliate of any of them shall be disregarded as though they were not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes which the Trustee actually knows are so owned shall be so disregarded.
Notes so owned which have been pledged in good faith shall not be disregarded if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to the Notes and that the pledgee is not the Company, a
Guarantor or any other obligor upon the Notes or any Affiliate of any of them.

Section 13.7.  Rules by Trustee and Agents.
               --------------------------- 

          The Trustee may make reasonable rules for action by or meetings of
Noteholders.  The Registrar and Paying Agent may make reasonable rules for their
functions.

Section 13.8.  Business Days; Legal Holidays.
               ----------------------------- 

          A "Business Day" is a day that is not a Legal Holiday.  A "Legal
Holiday" is a Saturday, a Sunday, a federally-recognized holiday or a day on
which banking institutions are not required to be open in the State of New York.
If a payment date is a Legal Holiday at a place of payment, payment may be made
at that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.

Section 13.9. Governing Law.
              ------------- 

          THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCI-

                                      113
<PAGE>
 
PLES OF CONFLICTS OF LAW.  EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES.

Section 13.10. No Adverse Interpretation of
               Other Agreements.
               ----------------------------

          This Indenture may not be used to interpret another indenture, loan,
security or debt agreement of the Company or any Subsidiary thereof.  No such
indenture, loan, security or debt agreement may be used to interpret this
Indenture.

Section 13.11.  No Recourse Against Others.
                -------------------------- 

          No recourse for the payment of the principal of or premium, if any, or
interest on any of the Notes, or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company or any Guarantor in this Indenture or in any
supplemental indenture, or in any of the Notes, or because of the creation of
any Indebtedness represented thereby, shall be had against any stockholder,
officer, director, partner, affiliate, beneficiary or employee, as such, past,
present or future, of the Company or of any successor corporation or against the
property or assets of any such stockholder, officer, employee, partner,
affiliate, beneficiary or director, either directly or through the Company or
any Guarantor, or any successor corporation thereof, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly understood that this Indenture and the
Notes are solely obligations of the Company and any Guarantors, and that no such
personal liability whatever shall attach to, or is or shall be incurred by, any
stockholder, officer, employee, partner, affiliate, beneficiary or director of
the Company or any Guarantor, or any successor corporation thereof, because of
the creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or the Notes or
implied therefrom, and that any and all such personal liability of, and any and
all claims against every stockholder, officer, employee, partner, affiliate,
beneficiary and director, are hereby expressly waived and released as a

                                      114
<PAGE>
 
condition of, and as a consideration for, the execution of this Indenture and
the issuance of the Notes.  It is understood that this limitation on recourse is
made expressly for the benefit of any such shareholder, employee, officer,
partner, affiliate, beneficiary or director and may be enforced by any one or
all of them.

Section 13.12.  Successors.
                ---------- 

          All agreements of the Company and the Guarantors in this Indenture and
the Notes shall bind their respective successors.  All agreements of the
Trustee, any additional trustee and any Paying Agents in this Indenture shall
bind its successor.

Section 13.13.  Multiple Counterparts.
                --------------------- 

          The parties may sign multiple counterparts of this Indenture.  Each
signed counterpart shall be deemed an original, but all of them together
represent one and the same agreement.

Section 13.14. Table of Contents, Headings, etc.
               -------------------------------- 

          The table of contents, cross-reference sheet and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.

Section 13.15.  Separability.
                ------------ 

          Each provision of this Indenture shall be considered separable and if
for any reason any provision which is not essential to the effectuation of the
basic purpose of this Indenture or the Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

                                      115
<PAGE>
 
          IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed, and the Company's corporate seal to be hereunto affixed and attested,
all as of the date and year first written above.

                                       PIERCE LEAHY CORP.              
                                                                       
                                                                       
                                                                       
                                       By:  __________________________ 
                                            Name:                      
                                            Title:                     
ATTEST:                                                                
                                                                       
- ------------------------                                               
Name:                                                                  
Title:                                                                 
                                                                       
                                       [                              ],
                                       as Trustee                      
                                                                       
                                                                       
                                       By:  __________________________ 
                                            Name:                      
                                            Title:                      


ATTEST:

- ------------------------
Name:
Title:

                                      116
<PAGE>
 
          IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed, and the Company's corporate seal to be hereunto affixed and attested,
all as of the date and year first written above.

                                       PIERCE LEAHY CORP.              
                                                                       
                                                                       
                                                                       
                                       By:  __________________________ 
                                            Name:                      
                                            Title:                     
ATTEST:                                                                
                                                                       
- ------------------------                                               
Name:                                                                  
Title:                                                                 
                                                                       
                                       [                              ],
                                       as Trustee                      
                                                                       
                                                                       
                                       By:  __________________________ 
                                            Name:                      
                                            Title:                      


ATTEST:

- ------------------------
Name:
Title:

                                      117
<PAGE>
 
                                                                       EXHIBIT A
                                                                       ---------
                                                                  (FACE OF NOTE)

                                 [FORM OF NOTE]




                                      A-1
<PAGE>
 
                                                                  CUSIP ________


Number

                               PIERCE LEAHY CORP.

                     ___% SENIOR SUBORDINATED NOTE DUE 2007

          Pierce Leahy Corp., a New York corporation (the "Company", which term
includes any successor corporation) for value received promises to pay to
_______________ or registered assigns the principal sum of ______________
Dollars, on _________, 2007.

     Interest Payment Dates:  _________ and __________, commencing __________,
199__

     Record Dates:  __________ and ___________

          Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.

                                      A-2
<PAGE>
 
          IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.

                                    PIERCE LEAHY CORP.             
                                                         
                                                         
                                    By:                            
                                       -----------------------------------------

                                    By:                            
                                       -----------------------------------------

                                    [SEAL]                          


Certificate of Authentication:
This is one of the ____% Senior
Subordinated Notes due 2007 referred
to in the within-mentioned Indenture

Dated:

[                        ],
as Trustee


By:
  Authorized Signatory

                                      A-3
<PAGE>
 
                                                                  (REVERSE SIDE)


                               PIERCE LEAHY CORP.

                    ____% SENIOR SUBORDINATED NOTE DUE 2007

1.  INTEREST.

          Pierce Leahy Corp., a New York corporation (the "Company"), promises
to pay interest on the principal amount of this Note semiannually on ________
and ________ of each year (each an "Interest Payment Date"), commencing on
________, 199__, at the rate of ____% per annum.  Interest will be computed on
the basis of a 360-day year of twelve 30-day months.  Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of the original issuance of the Notes.

          The Company shall pay interest on overdue principal, and on overdue
premium, if any, and overdue interest, to the extent lawful, at the rate equal
to 1% per annum in excess of the rate borne by the Notes.

2.  METHOD OF PAYMENT.

          The Company will pay interest on this Note provided for in Paragraph 1
above (except defaulted interest) to the person who is the registered Holder of
this Note at the close of business on the ______ or _______ preceding the
Interest Payment Date (whether or not such day is a Business Day).  The Holder
must surrender this Note to a Paying Agent to collect principal payments.  The
Company will pay principal, premium, if any, and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts; provided, however, that the Company may pay principal, premium,
               --------  -------                                              
if any, and interest by check payable in such money.  It may mail an interest
check to the Holder's registered address.

3.  PAYING AGENT AND REGISTRAR.

          Initially, _________________________, a New York corporation (the
"Trustee"), will act as Paying Agent and Registrar.  The Company may change any
Paying

                                      A-4
<PAGE>
 
Agent or Registrar without notice to the Holders of the Notes. Neither the
Company nor any of its Subsidiaries or Affiliates may act as Paying Agent but
may act as registrar or co-registrar.

4.  INDENTURE; RESTRICTIVE COVENANTS.

          The Company issued this Note under an Indenture dated as of _______,
1997 (the "Indenture") by and between the Company and the Trustee.  The terms of
this Note include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code (S)(S)
77aaa-77bbbb) as in effect on the date of the Indenture.  This Note is subject
to all such terms, and the Holder of this Note is referred to the Indenture and
said Trust Indenture Act for a statement of them.  All capitalized terms in this
Note, unless otherwise defined, have the meanings assigned to them by the
Indenture.

          The Notes are general unsecured obligations of the Company limited to
up to $100,000,000 aggregate principal amount.  The Indenture imposes certain
restrictions on, among other things, the incurrence of indebtedness, the
incurrence of liens and the issuance of preferred stock by the Company and its
subsidiaries, mergers and sale of assets, the payments of dividends on, or the
repurchase of, capital stock of the Company and its subsidiaries, certain other
restricted payments by the Company and it subsidiaries, certain transactions
with, and investments in, its affiliates, certain sale and lease-back
transactions and a provision regarding change-of-control transactions.  The
restrictions are subject to a number of important qualifications and exceptions.

5.  SUBORDINATION.

          The Indebtedness represented by the Notes is, to the extent and in the
manner provided in the Indenture, subordinated in right of payment to the prior
indefeasible payment and satisfaction in full in cash of all existing and future
Senior Indebtedness as defined in the Indenture, and this Note is issued subject
to such provisions.  Each Holder of this Note, by accepting the same, (a) agrees
to and shall be bound by such provisions, (b) authorizes and directs the
Trustee, on behalf of such Holder, to take such action as may be necessary

                                      A-5
<PAGE>
 
or appropriate to effectuate the subordination as provided in the Indenture and
(c) appoints the Trustee attorney-in-fact of such Holder for such purpose;
provided, however, that the Indebtedness evidenced by this Note shall cease to
- --------  -------                                                             
be so subordinate and subject in right of payment upon any defeasance of this
Note referred to in Paragraph 17 below.

6.  OPTIONAL REDEMPTION.

          The Company may redeem the Notes, in whole or in part, at any time on
or after ______, 2002 at the redemption prices set forth in Section 3.7 of the
Indenture, together, in each case, with accrued and unpaid interest to the
redemption date.

          In addition, the Company may redeem Notes out of the Net Proceeds of
one or more Public Equity Offerings at the redemption price, in the amount and
under the terms set forth in the Indenture.

7.  NOTICE OF REDEMPTION.

          Notice of redemption will be mailed via first class mail at least 30
days but not more than 60 days prior to the redemption date to each Holder of
Notes to be redeemed at its registered address as it shall appear on the
register of the Notes maintained by the Registrar.  On and after any Redemption
Date, interest will cease to accrue on the Notes or portions thereof called for
redemption unless the Company shall fail to redeem any such Note.

8.  OFFERS TO PURCHASE.

          The Indenture requires that certain proceeds from Asset Sales be used,
subject to further limitations contained therein, to make an offer to purchase
certain amounts of Notes in accordance with the procedures set forth in the
Indenture.  The Company is also required to make an offer to purchase Notes upon
occurrence of a Change of Control in accordance with procedures set forth in the
Indenture.

                                      A-6
<PAGE>
 
9.  DENOMINATIONS, TRANSFER, EXCHANGE.

          The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples thereof.  A Holder may register the transfer or
exchange of Notes in accordance with the Indenture.  The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture.  The Registrar need not register the transfer of or exchange any Note
selected for redemption or register the transfer of or exchange any Note for a
period of 15 days before a selection of Notes to be redeemed or any Note after
it is called for redemption in whole or in part, except the unredeemed portion
of any Note being redeemed in part.

10.  PERSONS DEEMED OWNERS.

          The registered Holder of this Note may be treated as the owner of it
for all purposes.

11.  UNCLAIMED MONEY.

          If money for the payment of principal, premium or interest on any Note
remains unclaimed for two years, the Trustee or Paying Agent will pay the money
back to the Company at its request.  After that, Holders entitled to money must
look to the Company for payment as general creditors unless an "abandoned
property" law designates another person.

12.  AMENDMENT, SUPPLEMENT AND WAIVER.

          Subject to certain exceptions, the Indenture or the Notes may be
modified, amended or supplemented by the Company, the Guarantors, if any, and
the Trustee with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding and any existing default or compliance with
any provision may be waived in a particular instance with the consent of the
Holders of a majority in principal amount of the Notes then outstanding.
Without the consent of Holders, the Company, the Guarantors, if any, and the
Trustee may amend the Indenture or the Notes or supplement the Indenture for
certain specified purposes including providing for uncertificated Notes in
addition to certificated Notes,

                                      A-7
<PAGE>
 
and curing any ambiguity, defect or inconsistency, or making any other change
that does not materially and adversely affect the rights of any Holder.

13.  SUCCESSOR ENTITY.

          When a successor corporation assumes all the obligations of its
predecessor under the Notes and the Indenture and immediately before and
thereafter no Default exists and certain other conditions are satisfied, the
predecessor corporation will be released from those obligations.

14.  DEFAULTS AND REMEDIES.

          Events of Default are set forth in the Indenture.  If an Event of
Default (other than an Event of Default pursuant to Section 6.1(6) or (7) of the
Indenture with respect to the Company) occurs and is continuing, the Trustee by
notice to the Company, or the Holders of not less than 25% in aggregate
principal amount of the Notes then outstanding by written notice to the Company
and the Trustee, may declare to be immediately due and payable the entire
principal amount of all the Notes then outstanding plus accrued but unpaid
interest to the date of acceleration and (i) such amounts shall become
immediately due and payable or (ii) if there are any amounts outstanding under
or in respect of the Credit Facility, such amounts shall become due and payable
upon the first to occur of an acceleration of amounts outstanding under or in
respect of the Credit Facility or five Business Days after receipt by the
Company and the Representative of notice of the acceleration of the Notes;
provided, however, that after such acceleration but before judgment or decree
- --------  -------                                                            
based on such acceleration is obtained by the Trustee, the Holders of a majority
in aggregate principal amount of the outstanding Notes may rescind and annul
such acceleration and its consequences if all existing Events of Default, other
than the nonpayment of principal, premium or interest that has become due solely
because of the acceleration, have been cured or waived and if the rescission
would not conflict with any judgment or decree.  No such rescission shall affect
any subsequent Default or impair any right consequent thereto.  In case an Event
of Default specified in Section 6.1(6) or (7) of the Indenture with respect to
the Company occurs, such, principal amount, together with premium,

                                      A-8
<PAGE>
 
if any, and interest with respect to all of the Notes, shall be due and payable
immediately without any declaration or other act on the part of the Trustee or
the Holders of the Notes.  The Trustee may withhold from Holders notice of any
continuing default (except a default in payment of principal, premium, if any,
or interest) if it determines that withholding notice is in their interests.

15.  TRUSTEE DEALINGS WITH THE COMPANY.

          The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company, any Guarantor or their Affiliates, and may otherwise deal with the
Company, any Guarantor or their Affiliates, as if it were not Trustee.

16.  NO RECOURSE AGAINST OTHERS.

          As more fully described in the Indenture, a director, officer,
employee, partner, affiliate, beneficiary or stockholder, as such, of the
Company or any Guarantor shall not have any liability for any obligations of the
Company or any Guarantor under the Notes or the Indenture or for any claim based
on, in respect or by reason of, such obligations or their creation.  The Holder
of this Note by accepting this Note waives and releases all such liability.  The
waiver and release are part of the consideration or the issuance of this Note.

17.  DEFEASANCE AND COVENANT DEFEASANCE.

          The Indenture contains provisions for defeasance of the entire
indebtedness on this Note and for defeasance of certain covenants in the
Indenture upon compliance by the Company with certain conditions set forth in
the Indenture.

18.  ABBREVIATIONS.

          Customary abbreviations may be used in the name of a Holder of a Note
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).

                                      A-9
<PAGE>
 
19.  CUSIP NUMBERS.

           Pursuant to a recommendation promulgated by the Committee on Uniform
Note Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders of the Notes. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.

20.  GOVERNING LAW.

           THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES.

           THE COMPANY WILL FURNISH TO ANY HOLDER OF A NOTE UPON WRITTEN REQUEST
AND WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO: PIERCE
LEAHY CORP., 631 Park Avenue, King of Prussia, Pennsylvania 19406, Attention:
Chief Financial Officer.

21.  AUTHENTICATION.

           This Note shall not be valid until the Trustee manually signs the
Certificate of Authentication on the other side of this Note.

                                     A-10
<PAGE>
 
                                  ASSIGNMENT


I or we assign and transfer this Note to:

             (Insert assignee's social security or tax I.D. number)

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
                                        
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)

and irrevocably appoint:

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.

                                  [Check One]
                                   --------- 

[  ](a)    this Note is being transferred in compliance with the exemption from
           registration under the Securities Act provided by Rule 144A
           thereunder.

                                      or
                                      --

[  ](b)    this Note is being transferred other than in accordance with (a)
           above and documents are being furnished which comply with the
           conditions of transfer set forth in this Note and the Indenture.

If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Section 2.15 of the Indenture shall have been satisfied.
<PAGE>
 
Date:                             Your Signature:
     -----------------------                     ------------------------
 
                                  ---------------------------------------
                                  (Sign exactly as your name appears on 
                                  the other side of this Note)

Signature Guarantee:
                                  ---------------------------------------
<PAGE>
 
                      OPTION OF HOLDER TO ELECT PURCHASE


           If you want to elect to have all or any part of this Note purchased
by the Company pursuant to Section 4.10 or Section 4.19 of the Indenture, check
the appropriate box:

     [_]   Section 4.10                 [_]    Section 4.19

           If you want to have only part of the Note purchased by the Company
pursuant to Section 4.10 or Section 4.19 of the Indenture, state the amount you
elect to have purchased:


$
 -------------------
(multiple of $1,000)

Date:
     ---------------

                             Your Signature:
                                            ----------------------------
                             (Sign exactly as your name appears on the 
                             face of this Note)



- --------------------
Signature Guaranteed
<PAGE>
 
                                                                       EXHIBIT B
                                                                       ---------


                        FORM OF LEGEND FOR GLOBAL NOTES


           Any Global Security authenticated and delivered hereunder shall bear
a legend (which would be in addition to any other legends required in the case
of a Restricted Security) in substantially the following form:

     THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A
DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER
THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE
DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION) ("DTC") TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.

                                      B-1
<PAGE>
 
                                                                       EXHIBIT C
                                                                       ---------


                               FORM OF GUARANTEE


           The undersigned (the "Guarantor") hereby unconditionally guarantees,
on a senior subordinated basis, jointly and severally with all other guarantors
under the Indenture dated as of _______, 1997 by and between Pierce Leahy Corp.,
a New York corporation, and [                                 ], as trustee (as
amended, restated or supplemented from time to time, the "Indenture"), to the
extent set forth in the Indenture and subject to the provisions of the
Indenture, (a) the due and punctual payment of the principal of and interest on
the Notes, whether at maturity, by acceleration or otherwise, the due and
punctual payment of interest on overdue principal, and, to the extent permitted
by law, interest, and the due and punctual performance of all other obligations
of the Company to the Noteholders or the Trustee all in accordance with the
terms set forth in Article 10 of the Indenture, and (b) in case of any extension
of time of payment or renewal of any Notes or any of such other obligations,
that the same will be promptly paid in full when due or performed in accordance
with the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.

           The obligations of the Guarantor to the Noteholders and to the
Trustee pursuant to this Guarantee and the Indenture are expressly set forth in
Article 10 of the Indenture and reference is hereby made to the Indenture for
the precise terms and limitations of this Guarantee.


                                       Guarantor:



                                       By:
                                          --------------------------------
                                          Name:
                                          Title:


                                      C-1
<PAGE>
 
                                                                       EXHIBIT D
                                                                       ---------


                  FORM OF PLEDGE AND INTERCREDITOR AGREEMENT


     PLEDGE AND INTERCREDITOR AGREEMENT, dated as of August __, 1996, by and
among (a) PLC COMMAND 1, LP., a Pennsylvania limited partnership ("PLC I"), PLC
                                                                   -----       
COMMAND II, L.P., a Pennsylvania limited partnership ("PLC II" and, together
                                                       ------               
with PLC I, the "Pledgors"), (b) CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK
                 --------                                                    
AGENCY, as collateral agent (together with its successors in such capacity, the
"Collateral Agent") for (i) the lenders (the "Lenders") from time to time
 ----------------                             -------                    
parties to the Credit Agreement (as hereinafter defined) and CANADIAN IMPERIAL
BANK OF COMMERCE, NEW YORK AGENCY, as administrative agent (in such capacity,
the "Administrative Agent") for the Lenders and (ii) the holders from time to
     --------------------                                                    
time (the "Holders") of the _____% Senior Subordinated Notes due 2007 (the
           -------                                                        
"Notes") of Pierce Leahy Corp. (the "Company") and [                        ], 
- ------                               -------
a New York corporation, as trustee (together with its successors in such
capacity, the "Trustee") for the Holders in accordance with the Indenture (as
               -------                                                       
defined below), (c) the Administrative Agent and (d) the Trustee.


                             W I T N E S S E T H:
                             - - - - - - - - - - 


     WHEREAS, pursuant to the Credit Agreement, dated as of August __, 1997 (as
amended, supplemented or otherwise modified from time to time, the "Credit
                                                                    ------
Agreement"), among the Company, Pierce Leahy Command Company (together with the
- ---------                                                                      
Company, the "Borrowers"), the Lenders and the administrative agents named
              ---------                                                   
therein, including, without limitation, the Administrative Agent (the
"Administrative Agents"), the Lenders have agreed to make loans (the "Loans") to
- ----------------------                                                -----     
the Borrowers upon the terms and subject to the conditions set forth therein;

     WHEREAS, pursuant to the Indenture, dated as of ______, 1997 (as amended,
supplemented or otherwise modified from time to time (or replaced, in connection
with the Exchange Offer or Private Exchange), the "Indenture"), between the
                                                   ---------               
Company and the Trustee, the Company

                                      D-1
<PAGE>
 
has issued the Notes to the Holders, upon the terms and subject to the
conditions set forth therein;

     WHEREAS, it is a condition precedent to the obligation of the Lenders to
make their respective Loans to the Borrowers under the Credit Agreement that
each Pledgor shall have executed and delivered this Pledge and Intercreditor
Agreement to the Collateral Agent for the benefit of the Lenders and the
Administrative Agents a first lien on the Pledged Stock (as hereinafter
defined);

     WHEREAS, pursuant to the Indenture, the Company has agreed to cause each
Pledgor to grant to the Collateral Agent for the benefit of Holders and the
Trustee a third lien on the Pledged Stock;

     WHEREAS, each Pledgor is a Subsidiary of the Company, and it is to the
advantage of such Pledgor that the Lenders make the Loans to, and the Holders
purchase the Notes from, the Company;

     WHEREAS, each Pledgor is the legal and beneficial owner of the shares of
the Pledged Stock pledged by it hereunder;

     WHEREAS, pursuant to the Credit Agreement, the Administrative Agent has
been granted the authority to act on behalf of all Lenders with respect to
matters specified herein, including the execution and delivery of this Pledge
and Intercreditor Agreement, and pursuant to the Indenture, the Trustee has been
granted the authority to act on behalf of all Holders with respect to matters
specified therein, including the execution and delivery of this Pledge and
Intercreditor Agreement.

     NOW, THEREFORE, in consideration of the premises, and for other good and
valuable consideration the receipt and adequacy of which is hereby acknowledged,
the parties hereby agree as follows:

     1.    Defined Terms. (a)  Unless otherwise defined herein, terms defined in
           -------------                                                        
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms shall have the following meanings:

                                      D-2
<PAGE>
 
           "Agreement": this Pledge and Intercreditor Agreement, as the same may
            ---------                                                           
     be amended, modified or otherwise supplemented from time to time.

           "Code": the Uniform Commercial Code from time to time in effect in 
            ----   
     the State of New York.

           "Collateral": the Pledged Stock and all Proceeds.
            ----------                                      

           "Collateral Account": any account established to hold money Proceeds,
            ------------------                                                  
     maintained under the sole dominion and control of the Collateral Agent,
     subject to withdrawal by the Collateral Agent for the account of the
     Secured Parties only as provided in paragraph 9(a).

           "Event of Default": until the Senior Secured Obligations shall have
            ----------------                                                  
     been paid in full and the Commitments shall have expired or terminated, as
     defined in the Credit Agreement and, thereafter, as defined in the
     Indenture.

           "Insolvency Event": (i)  Either Pledgor commencing any case,
            ----------------                                               
     proceeding or other action (x) under any existing or future law of any
     jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
     reorganization, conservatorship or relief of debtors, seeking to have an
     order for relief entered with respect to it, or seeking to adjudicate it a
     bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
     winding-up, liquidation, dissolution, composition or other relief with
     respect to it or its debts, or (y) seeking appointment of a receiver,
     trustee, custodian, conservator or other similar official for it or for all
     or any substantial part of its assets, or either Pledgor making a general
     assignment for the benefit of its creditors; or (ii) there being commenced
     against either Pledgor any case, proceeding or other action of a nature
     referred to in clause (i) above which (x) results in the entry of an order
     for relief or any such adjudication or appointment or (y) remains
     undismissed, undischarged or unbonded for a period of 60 days; or (iii)
     there being commenced against either Pledgor any case, proceeding or other
     action seeking issuance of a warrant of

                                      E-3
<PAGE>
 
     attachment, execution, distraint or similar process against all or any
     substantial part of its assets which results in the entry of an order for
     any such relief which shall not have been vacated, discharged, or stayed or
     bonded pending appeal within 60 days from the entry thereof, or (iv) either
     Pledgor taking any action in furtherance of, or indicating its consent to,
     approval of, or acquiescence in, any of the acts set forth in clause (i),
     (ii) or (iii) above.

           "Issuer": Pierce Leahy Command Company, a company incorporated under
            ------                                                             
     the laws of Nova Scotia.

           "Pledged Stock": the shares of capital stock listed on Schedule 1
            -------------                                                   
     hereto, together with all stock certificates, options or rights of any
     nature whatsoever with respect to the Issuer's Capital Stock that may be
     issued or granted by the Issuer to either Pledgor in respect of the Pledged
     Stock while this Agreement is in effect.

           "Proceeds": all "proceeds" as such term is defined in 
            --------       
     Section 9-306(l) of the Uniform Commercial Code in effect in the State of
     New York on the date hereof and, in any event, shall include, without
     limitation, all dividends or other income from the Pledged Stock,
     collections thereon or distributions with respect thereto.

           "Secured Obligations": the Senior Secured Obligations and the
            -------------------                                         
     Subordinated Secured Obligations.

           "Secured Parties": collectively, the Senior Secured Parties and the
            ---------------                                                   
     Subordinated Secured Parties.

           "Securities Act": the Securities Act of 1933, as amended.
            --------------                                          

           "Senior Secured Obligations": the collective reference to:
            --------------------------                               

           (a)   unpaid principal of and interest on the Loans and all other
     obligations and liabilities of the Borrowers to the Administrative Agents
     and the

                                      E-4
<PAGE>
 
     Lenders (including, without limitation, interest accruing at the then
     applicable rate provided in the Credit Agreement after the maturity of the
     Loans and interest accruing at the then applicable rate provided in the
     Credit Agreement after the filing of any petition in bankruptcy, or the
     commencement of any insolvency, reorganization or like proceeding, relating
     to either Borrower, whether or not a claim for post-filing or post-petition
     interest is allowed in such proceedings), whether direct or indirect
     absolute or contingent, due or to become due, or now existing or hereafter
     incurred, which may arise under, out of, or in connection with, the Credit
     Agreement, this Agreement, the other Loan Documents or any other document
     made, delivered or given in connection therewith;

           (b)   all obligations and liabilities of each Pledgor which may arise
     under or in connection with this Agreement or any other Loan Document to
     which such Pledgor is a party; and

           (c)   all obligations of the Borrowers with respect to any Interest
     Rate Protection Agreement entered into with any Lender.

           "Senior Secured Parties": the Administrative Agents and the Lenders.
            ----------------------                                             

           "Subordinated Secured Obligations": the unpaid principal of and
            --------------------------------                              
     interest on the Notes and all other obligations and liabilities of the
     Company to the Trustee and the Holders (including, without limitation,
     interest accruing at the then applicable rate provided in the Indenture
     after the maturity of the Notes and interest accruing at the then
     applicable rate provided in the Indenture after the filing of any petition
     in bankruptcy, or the commencement of any insolvency, reorganization or
     like proceeding, relating to either Borrower, whether or not a claim for
     post-filing or post-petition interest is allowed in such proceeding),
     whether direct or indirect, absolute or contingent, due or to become due,
     or now existing or hereafter incurred, which may arise under, out of, or in
     connection with, the Notes, the Indenture or this Agreement.

                                      E-5
<PAGE>
 
           "Subordinated Secured Parties": the Trustee and the Holders.
            ----------------------------                               

     (b)   The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section and paragraph
references are to this Agreement unless otherwise specified.

     (c)   The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

     2.    Pledge, Grant of Security Interests.  (a) Each Pledgor hereby
           -----------------------------------                          
mortgages, pledges and assigns the Collateral to the Collateral Agent, for the
benefit of the Senior Secured Parties, and grants to the Collateral Agent, for
the benefit of the Senior Secured Parties, a security interest in the
Collateral, in each case as collateral security on a first priority basis for
the prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Senior Secured Obligations.

     (b)   Each Pledgor hereby mortgages, pledges and assigns the Collateral to
the Collateral Agent, for the benefit of the Subordinated Secured Parties, and
grants to the Collateral Agent for the benefit of the Subordinated Secured
Parties, a security interest in the Collateral, in each case as collateral
security on a third priority basis for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Subordinated Secured Obligations.

     (c)   As set forth in the separate granting clauses contained in paragraphs
(a) and (b) above, it is the intent of the parties hereto that this Agreement
shall create two separate and distinct Liens in favor of the Collateral Agent,
the first for the benefit of the Senior Secured Parties and the second for the
benefit of the Subordinated Secured Parties.

     3.    Subordination of Lien of Subordinated Secured Parties: Bailment. (a)
           ---------------------------------------------------------------      
The Trustee acknowledges and agrees that (1) any interest that it or any Holder
has or

                                      E-6
<PAGE>
 
may have in the Collateral shall be junior and subordinate to the interest of
the Senior Secured Parties, (2) prior to the date on which the Senior Secured
Obligations have been paid in full and the Commitments shall have expired or
been terminated, it will not take any action to enforce any rights it may have
hereunder, without the prior written consent of the Administrative Agent; and
(3) prior to the date on which the Senior Secured Obligations have been paid in
full, any consent given in accordance with the terms of this Agreement by the
Collateral Agent at the direction of the Administrative Agent to any amendment,
waiver or other modification in respect of the obligations of each Pledgor
hereunder shall be binding upon the Subordinated Secured Parties with respect to
any similar obligations of each Pledgor hereunder as fully as if such consent
had been given by the Subordinated Secured Parties.

     (b)   The Trustee appoints and authorizes the Collateral Agent, and the
Collateral Agent accepts such appointment and authorization by the Trustee, to
act as the agent of, and bailee for, the Subordinated Secured Parties to hold
for the benefit of the Subordinated Secured Parties those shares of the Pledged
Stock evidenced by certificates, subject, however, to the prior security
interest therein and rights thereto and to the proceeds thereof of the Senior
Secured Parties.

     4.    Stock Powers.  Concurrently with the delivery to the Collateral Agent
           ------------                                                         
of each certificate representing one or more shares of Pledged Stock, each
Pledgor shall deliver an undated stock power, or such other instrument of
transfer as may be reasonably requested by the Collateral Agent, covering such
certificate, duly executed in blank by such Pledgor with, if the Collateral
Agent so requests, signature guaranteed.

     5.    Representations and Warranties.  Each Pledgor hereby represents and
           ------------------------------                                     
warrants that:

     (a)   Such Pledgor has the partnership power and authority and the legal
right to execute and deliver, to perform its obligations under, and to grant the
first and second security interests in the Collateral pursuant to, this
Agreement and has taken all necessary action to authorize its execution,
delivery and performance of, and

                                      E-7
<PAGE>
 
grant each of the security interests in the Collateral pursuant to, this
Agreement.

     (b)   This Agreement constitutes a legal, valid and binding obligation of
such Pledgor, enforceable in accordance with its terms, except as enforceability
may be affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.

     (c)   The execution, delivery and performance of this Agreement will not
violate any provision of any Requirement of Law or Contractual Obligation of
such Pledgor and will not result in the creation or imposition of any Lien on
any of the properties or revenues of such Pledgor pursuant to any Requirement of
Law or Contractual Obligation of such Pledgor, except the security interests
created by this Agreement.

     (d)   No consent or authorization of, filing with, or other act by or in
respect of, any arbitrator or Governmental Authority, and no consent of any
other Person (including, without limitation, any stockholder or creditor of such
Pledgor), is required in connection with the execution, delivery, performance,
validity or enforceability of this Agreement.

     (e)   No litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of such
Pledgor, threatened by or against such Pledgor or against any of its properties
or revenues with respect to this Agreement or any of the transactions
contemplated hereby.

     (f)   The shares of Pledged Stock constitute 65% of the issued and
outstanding shares of all classes of the Capital Stock of the Issuer.

     (g)   All the shares of the Pledged Stock have been duly and validly issued
and are fully paid and nonassessable.

     (h)   Such Pledgor is the record and beneficial owner of, and has good and
marketable title to, the shares of

                                      E-8
<PAGE>
 
Pledged Stock pledged by such Pledgor, free of any and all Liens or options in
favor of, or claims of, any other Person, except for the separate and distinct
security interests granted to the Senior Secured Parties, on the one hand, and
the Subordinated Secured Parties, on the other hand, pursuant to this Agreement.

     (i)   Upon delivery to the Collateral Agent of the stock certificates
evidencing the Pledged Stock and assuming continuous possession by the
Collateral Agent of such certificates, each of the security interests granted
pursuant to this Agreement will constitute a separate, distinct and valid
perfected security interest in the Pledged Stock in favor of the Collateral
Agent, for the benefit of the Senior Secured Parties, on the one hand, and the
Subordinated Secured Parties, on the other hand, enforceable in accordance with
its terms against all creditors of such Pledgor and any Persons purporting to
purchase any shares of Pledged Stock from such Pledgor.

     6.    Covenants.  Each Pledgor covenants and agrees with the Collateral 
           ---------   
Agent and the Secured Parties that, from and after the date of this Agreement
until this Agreement is terminated and the security interests created hereby are
released:

     (a)   If such Pledgor shall, as a result of its ownership of the Pledged
Stock, become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock dividend or
a distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights to Capital Stock, whether in addition to, in substitution of, as a
conversion of, or in exchange for any shares of the Pledged Stock, or otherwise
in respect thereof, such Pledgor shall accept the same as the agent of the
Collateral Agent and the Secured Parties, hold the same in trust for the
Collateral Agent and the Secured Parties and deliver the same forthwith to the
Collateral Agent in the exact form received, duly indorsed by such Pledgor to
the Collateral Agent, if required, together with an undated stock power, or such
other instrument of transfer as may be reasonably requested by the Collateral
Agent, covering such certificate duly executed in blank by such Pledgor and
with, if the Collateral Agent so requests, signature guaran-

                                      E-9
<PAGE>
 
teed, to be held by the Collateral Agent, subject to the terms hereof, as
additional collateral security for the Secured Obligations. Any sums paid upon
or in respect of the Pledged Stock upon the liquidation or dissolution of the
Issuer shall be paid over to the Collateral Agent to be held by it hereunder as
additional collateral security for the Secured Obligations, and in case any
distribution of capital shall be made on or in respect of the Pledged Stock or
any property shall be distributed upon or with respect to the Pledged Stock
pursuant to the recapitalization or reclassification of the capital of the
Issuer or pursuant to the reorganization thereof, the property so distributed
shall be delivered to the Collateral Agent to be held by it hereunder as
additional collateral security for the Secured Obligations, unless, in either
case, such sums or property are distributed or otherwise paid to the holders of
the equity interests of such Pledgor. Subject to the "unless" clause at the end
of the previous sentence, if any sums of money or property so paid or
distributed in respect of the Pledged Stock shall be received by such Pledgor,
such Pledgor shall, until such money or property is paid or delivered to the
Collateral Agent, hold such money or property in trust for the Secured Parties,
segregated from other funds of such Pledgor, as additional collateral security
for the Secured Obligations.

     (b)   Without the prior written consent of the Administrative Agent, such
Pledgor will not (1) vote to enable, or take any other action to permit, the
Issuer to issue any stock or other equity securities of any nature or to issue
any other securities convertible into or granting the right to purchase or
exchange for any stock or other equity securities of any nature of the Issuer
except as permitted in the Credit Agreement, (2) sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with respect to, the
Collateral except as permitted in the Credit Agreement, (3) create, incur or
permit to exist any Lien or option in favor of, or any claim of any Person with
respect to, any of the Collateral, or any interest therein, except for the
security interests created by this Agreement or (4) enter into any agreement or
undertaking restricting the right or ability of such Pledgor or the Collateral
Agent to sell, assign or transfer any of the Collateral except as provided for
in this Agreement, the Credit Agreement and the Indenture.

                                     E-10
<PAGE>
 
     (c)   Such Pledgor shall not take any action inconsistent with maintaining
(i) the security interest created by Paragraph 2(a) of this Agreement as a
first, perfected security interest and (ii) the security interest created by
Paragraph 2(b) of this Agreement as a second, perfected security interest and,
in each case of clauses (i) and (ii), shall defend such security interest
against claims and demands of all Persons whomsoever.

     (d)   At any time and from time to time, upon the written request of the
Collateral Agent, and at the sole expense of such Pledgor, such Pledgor will
promptly and duly execute and deliver such further instruments and documents and
take such further actions as the Collateral Agent may reasonably request for the
purposes of obtaining or preserving the full benefits of this Agreement and of
the rights and powers herein granted. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced by any
promissory note, other instrument or chattel paper, such note, instrument or
chattel paper shall be immediately delivered to the Collateral Agent, duly
endorsed in a manner satisfactory to the Collateral Agent, to be held as
Collateral pursuant to this Agreement.

     (e)   Such Pledgor shall pay, and save the Collateral Agent and the Secured
Parties harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all stamp, excise, sales or other similar
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Agreement.

     7.    Cash Dividends; Voting Rights.  Unless an Event of Default shall have
           -----------------------------                                        
occurred and be continuing and the Collateral Agent shall have given notice to
the Pledgors of the Collateral Agent's intent to exercise its corresponding
rights pursuant to Section 9 below, each Pledgor shall be permitted to receive
all cash dividends or other distributions paid in the normal course of business
of the Issuer, to the extent permitted in the Credit Agreement, in respect of
the Pledged Stock and to exercise all voting and corporate rights with respect
to the Pledged Stock; provided, however, that no vote shall be cast or corporate
                      --------  -------                                         
right exercised or other action taken which, in the Collateral Agent's
reasonable judgment, would impair

                                     E-11
<PAGE>
 
the Pledged Stock or which would be inconsistent with or result in any violation
of any provision of the Credit Agreement, any other Loan Document, any Notes,
the Indenture or this Agreement.

     8.    Rights of the Secured Parties and the Collateral Agent. (a)  All 
           ------------------------------------------------------       
money Proceeds received by the Collateral Agent hereunder shall be held by the
Collateral Agent for the benefit of the Secured Parties in a Collateral Account.
All Proceeds while held by the Collateral Agent in a Collateral Account (or by
each Pledgor in trust for the Collateral Agent and the Secured Parties) shall
continue to be held as collateral security for all the Secured Obligations and
shall not constitute payment thereof until applied as provided in Paragraph
10(c).

     (b)   If an Event of Default shall occur and be continuing and the
Collateral Agent shall give notice of its intent to exercise any of such rights
to each Pledgor (1) the Collateral Agent shall have the right to receive any and
all cash dividends paid in respect of the Pledged Stock and make application
thereof to the Secured Obligations in the order provided in Paragraph 10(c), and
(2) all shares of the Pledged Stock shall be registered in the name of the
Collateral Agent or its nominee, and the Collateral Agent or its nominee may
thereafter exercise (A) all voting, corporate and other rights pertaining to
such shares of the Pledged Stock at any meeting of shareholders of the Issuer or
otherwise and (B) any and all rights of conversion, exchange, subscription and
any other rights, privileges or options pertaining to such shares of the Pledged
Stock as if it were the absolute owner thereof (including, without limitation,
the right to exchange at its discretion any and all of the Pledged Stock upon
the merger, consolidation, reorganization, recapitalization or other fundamental
change in the corporate structure of the Issuer, or upon the exercise by either
Pledgor or the Collateral Agent of any right, privilege or option pertaining to
such shares of the Pledged Stock, and in connection therewith, the right to
deposit and deliver any and all of the Pledged Stock with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as the Collateral Agent may determine), all without liability
except to account for property actually received by it, but the Collateral Agent
shall have no duty to either Pledgee to exercise any such right, privilege or
option

                                     E-12
<PAGE>
 
and shall not be responsible for any failure to do so or delay in so doing.

     9.    Remedies. (a) If an Event of Default shall have occurred and be
           --------                                                       
continuing, at any time at the Collateral Agent's election, the Collateral Agent
may apply all or any part of Proceeds held in any Collateral Account in payment
of the Secured Obligations in such order as provided in Paragraph 10(a).

     (b)   If an Event of Default shall have occurred and be continuing, the
Collateral Agent, on behalf of the Secured Parties, may exercise, in addition to
all other rights and remedies granted in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the Secured
Obligations, all rights and remedies of a secured party with respect to the
Collateral under the Code. Without limiting the generality of the foregoing, the
Collateral Agent, without demand of performance or other demand, presentment,
protest, advertisement or notice of any kind (except any notice required by law
referred to below) to or upon either Pledgor or any other Person (all and each
of which demands, defenses, advertisements and notices are hereby waived), may
in such circumstances forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof, and/or may forthwith sell, assign, give
option or options to purchase or otherwise dispose of and deliver the Collateral
or any part thereof (or contract to do any of the foregoing), in one or more
parcels at public or private sale or sales, in the over-the-counter market, at
any exchange, broker's board or office of the Collateral Agent or any Lender or
Holder or elsewhere upon such terms and conditions as it may deem advisable and
at such prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. The Collateral Agent or any other Secured
Party shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in either Pledgor, which right or equity is hereby waived or
released. The Collateral Agent shall apply any Proceeds from time to time held
by it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred in

                                     E-13
<PAGE>
 
respect thereof or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the
Collateral Agent and the Secured Parties hereunder, including, without
limitation, reasonable attorneys' fees and disbursements of counsel to the
Collateral Agent, to the payment in whole or in part of the Secured Obligations,
in the order provided in Paragraph 10(c), and only after such application and
after the payment by the Collateral Agent of any other amount required by any
provision of law, including, without limitation, Section 9-504(l)(c) of the
Code, need the Collateral Agent account for the surplus, if any, to the
Pledgors. To the extent permitted by applicable law, each Pledgor waives all
claims, damages and demands it may acquire against the Collateral Agent or any
other Secured Party arising out of the exercise by them of any rights hereunder.
If any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition.

     10.   Rights in Collateral; Application of Payments and Proceeds.  (a)
           ----------------------------------------------------------       
Notwithstanding anything to the contrary contained in any agreement, document or
instrument in favor of the Subordinated Secured Parties and irrespective of:

           (1)   the time, order or method of attachment or perfection of the
     security interests created hereby,

           (2)   the time or order of filing or recording of financing
     statements or other documents filed or recorded to perfect security
     interests in any Collateral,

           (3)   anything contained in any filing or agreement to which the
     Senior Secured Parties or the Subordinated Secured Parties now or hereafter
     may be a party, and

           (4)   the rules for determining priority under the Code or any other
     law governing the relative priorities of secured creditors,

any security interest in the Collateral in favor of the Senior Secured Parties
has and shall have priority, to

                                     E-14
<PAGE>
 
the extent of any unpaid Senior Secured Obligations, over any security interest
in such Collateral in favor of the Subordinated Secured Parties.

     (b)   In exercising rights and remedies with respect to the Collateral, the
Collateral Agent may enforce the provisions hereof and exercise remedies
hereunder, all in such order and in such manner as the Senior Secured Parties
may determine in the exercise of their sole business judgment. Such exercise and
enforcement shall include, without limitation, the rights to collect, sell,
dispose of or otherwise realize upon all or any part of the Collateral, to incur
expenses in connection with such collection, sale, disposition or other
realization and to exercise all the rights and remedies of a secured lender
under the Code of any applicable jurisdiction. The Subordinated Secured Parties
hereby (1) waive any right that they may have (whether by contract, by law or
otherwise) to require the Collateral Agent to give notice of any collection,
sale, disposition or other realization of or upon any or all of the Collateral
contemplated by this Agreement or any such right the Subordinated Secured
Parties may have to object to or otherwise contest any such collection, sale,
disposition or other realization of or upon any or all of the Collateral by the
Senior Secured Parties (including, without limitation, any requirement that the
Collateral Agent foreclose upon such Collateral under applicable law) and (2)
agree not to contest or otherwise challenge any such collection, sale,
disposition or other realization of or upon all or any of the Collateral or to
assert any claim or defense that any such collection, sale, disposition or other
realization of or upon all or any part of the Collateral was not commercially
reasonable or otherwise failed to comply in any respect with applicable law.

     (c)   Any money, property or securities realized upon the sale, disposition
or other realization by the Collateral Agent or the Subordinated Secured
Parties, as the case may be, upon all or any part of the Collateral (including,
without limitation, any payment or distribution of assets of either Pledgor
consisting of, or in respect of, Collateral, whether in cash, property or
securities during the continuance of an Insolvency Event with respect to such
Pledgor) (collectively, "Realizations"), shall be applied in the following
                         ------------                                     
order:

                                     E-15
<PAGE>
 
           (1)   First, to the payment in full of all reasonable costs and
                 -----                                                    
     expenses (including, without limitation, attorneys' reasonable fees and
     disbursements) paid or incurred by the Collateral Agent in connection with
     the such Realization or the protection of its rights and interests in the
     Collateral;

           (2)   Second, to the Administrative Agent to be applied to the 
                 ------  
     payment in full of all Senior Secured Obligations then due and payable in
     such order as the Administrative Agent may elect in its sole discretion;

           (3)   Third, to the Trustee to be applied to the payment in full of 
                 -----  
     all Subordinated Secured Obligations then due and payable in such order as
     the Trustee may elect in its sole discretion; and

           (4)   Fourth, to pay to the applicable Pledgor, or its representative
                 ------                                                         
     or as a court of competent jurisdiction may direct, any surplus then
     remaining.

     (d)   Prior to the indefeasible payment in full of the Senior Secured
Obligations and the termination or expiration of the Commitments under the
Credit Agreement, the Subordinated Secured Parties shall not (1) enforce or
apply any security interest in all or any of the Collateral, (2) collect or
receive any proceeds of any of the Collateral or otherwise enforce or apply any
security interest in the proceeds of any of the Collateral, or (3) in any other
manner interfere with the security interest granted in favor of the Senior
Secured Parties in any of the Collateral (or the proceeds thereof). In addition,
the Subordinated Secured Parties hereby (x) agree not to assert any claim for
marshalling; (y) consent to the collection, sale, disposition or other
realization of or upon all or any of the Collateral by the Collateral Agent free
of any security interest therein in favor of the Subordinated Secured Parties;
and (z) at the sole cost and expense of the Pledgors, agree to execute all such
releases and other documents that the Administrative Agent may reasonably
request in writing to facilitate the collection, sale, disposition or other
realization of or upon any or all of the Collateral by the Collateral Agent
(including, without limitation, the termination of any security interests in any
of the Collateral in favor of

                                     E-16
<PAGE>
 
the Subordinated Secured Parties concurrently with such sale, disposition or
other realization).

     (e)   If any payment or distribution, whether consisting of money, property
or securities, from any Realizations is collected or received by the
Subordinated Secured Parties in respect of the Subordinated Secured Obligations
in violation of Paragraph 10(d), the Subordinated Secured Parties shall
forthwith deliver the same to the Collateral Agent, in the form received, duly
indorsed to the Collateral Agent, if required, to be applied to the payment or
prepayment of the Senior Secured Obligations until the Senior Secured
Obligations are paid in full. Until so delivered, such payment or distribution
shall be held in trust by the Subordinated Secured Parties as the property of
the Senior Secured Paries, segregated from other funds and property held by the
Subordinated Secured Parties.

     11.   Release of Pledged Stock.  The Collateral Agent agrees that it will
           ------------------------                                           
not release or otherwise dispose of any of the Pledged Stock except (a) to the
Trustee in accordance with the terms hereof, unless instructed by the Trustee to
the contrary, or (b) in the exercise of its remedies under the terms hereof or
(c) to the respective Pledgor upon satisfaction of all Secured Obligations.

     12.   Obligations of the Collateral Agent. (a) Unless the Collateral Agent
           -----------------------------------                                 
has theretofore received a written notice from the Trustee to the effect that
the Subordinated Secured Obligations have been paid in full, if the Collateral
Agent shall have resigned as collateral agent hereunder, not later than the
tenth business day following the day on which the Senior Secured Obligations
have been paid in full and the Commitments shall have expired or terminated, the
Collateral Agent will deliver at the cost and expense of the Pledgors, directly
to the successor collateral agent appointed in accordance with Section 15(h) or,
if prior to such tenth business day the Collateral Agent shall not have received
notification of the identity of such successor collateral agent, to the Trustee,
all the certificates representing the Pledged Stock then remaining in the
possession of the Collateral Agent, together with any necessary instruments of
assignment or transfer pertaining thereto. Each Pledgor agrees to give written
notice to the Trustee of the payment in

                                     E-17
<PAGE>
 
full of the Senior Secured Obligations and the termination or expiration of the
Commitments within three business days thereof, and, after receipt of such
notice, the Subordinated Secured Parties agree to promptly give written notice
to the Collateral Agent requesting delivery of the Pledged Stock. In no event
shall the Collateral Agent relinquish control over such certificates
representing the Pledged Stock after the Senior Secured Obligations have been
paid in full and the Commitments under the Credit Agreement shall have
terminated or expired, except as set forth in this Section or Section 11(c).

     (b)   In taking any action hereunder (including the giving of consents and
waivers hereunder) prior to the indefeasible payment in full of the Senior
Secured Obligations and the termination or expiration of the Commitments, the
Collateral Agent shall not be obligated to consider the interests of the
Subordinated Secured Parties except as set forth in Paragraph 12(a) or 
Paragraph 21.

     13.   Dispositions of Collateral.  Notwithstanding any provision to the
           --------------------------                                       
contrary contained in any agreement, document or instrument in favor of the
Subordinated Secured Parties or to which any of the Subordinated Secured Parties
is a party,

           (a)   upon the occurrence of any sale, lease, transfer or other
     disposition of any of the Collateral (a "Disposition"), as between the
                                              -----------                  
     Senior Secured Parties and the Subordinated Secured Parties, until the
     Senior Secured Obligations have been paid in full and the Commitment shall
     have expired or been terminated, all Collateral, including all proceeds
     thereof and all prepayments or distributions in respect thereof, shall be
     distributed or applied or paid to the Administrative Agent, acting on
     behalf of the Senior Secured Parties, for application to the Senior Secured
     Obligations without obtaining any further consent or agreement of the
     Subordinated Secured Parties and in any manner as the Administrative Agent
     may determine, and the Subordinated Secured Parties shall be deemed to have
     consented to such Disposition and no further consent thereto or notice or
     accounting in respect thereof on the part of any such Person shall be
     required,

                                     E-18
<PAGE>
 
     and until the Senior Secured Obligations are paid in full and the
     Commitments shall have expired or been terminated, none of such Collateral
     shall be distributed or paid to (or retained by) the Subordinated Secured
     Parties for application to the Subordinated Secured Obligations, and the
     Subordinated Secured Parties shall not have any right to restrict or
     permit, or approve or disapprove, any Disposition of all or any portion or
     item of the Collateral. If the Collateral Agent is in possession of any
     proceeds from any Disposition of any Collateral following payment in full
     of all Senior Secured Obligations and the termination or expiration of all
     Commitments, the Collateral Agent shall deliver such remaining proceeds to
     the Trustee if any Subordinated Secured Obligations shall be then
     outstanding (which each Pledgor hereby irrevocably consents to) or to each
     Pledgor or its successors or assigns if the Trustee shall agree in writing,
     or to whomever may be lawfully entrusted to receive the same as a court of
     competent jurisdiction shall so direct; and

           (b)   the Subordinated Secured Parties will, immediately upon the
     request of the Administrative Agent acting on behalf of the Lenders,
     release or otherwise terminate and discharge the subordinated lien in any
     Collateral to the extent such Collateral is the subject of a Disposition,
     and will deliver to the Collateral Agent all documents and instruments
     reasonably deemed by the Collateral Agent to be necessary or appropriate in
     connection therewith. In the event that the Collateral Agent acting on
     behalf of the Senior Secured Parties, settles, adjusts or compromises any
     claim in respect of all or any portion or item of Collateral, including,
     without limitation, any settlement, adjustment or compromise made in
     connection with any bankruptcy, reorganization, or insolvency proceeding by
     or against either Pledgor or Subsidiary of either of them, or accepts or is
     required to accept substitute or replacement collateral in exchange for or
     in lieu of or in full or partial settlement of any Collateral, the
     Subordinated Secured Parties shall be bound by any such settlement,
     adjustment or compromise, and shall, immediately upon the request of the
     Collateral Agent, confirm its consent to the same and release any claim
     that the Subordinated Secured

                                     E-19
<PAGE>
 
     Parties might otherwise have in respect of such Collateral; provided that
     the Subordinated Secured Parties shall be granted a lien and security
     interest in any such substitute or replacement Collateral, which lien and
     security interest shall constitute a subordinated lien.

     14.  Irrevocable Authorization and Instruction to Issuer.  Each Pledgor
          ---------------------------------------------------               
hereby authorizes and instructs the Issuer to comply with any instruction
received by it from the Collateral Agent in writing that (a) states that an
Event of Default has occurred and is continuing and (b) is otherwise in
accordance with the terms of this Agreement, without any other or further
instructions from either Pledgor, and such Pledgor agrees that the Issuer shall
be fully protected in so complying.

     15.  The Collateral Agent. (a)  Appointment.  Each Secured Party hereby
          --------------------       -----------                            
irrevocably designates and appoints the Collateral Agent as the agent of such
Secured Party under this Agreement, and each such Secured Party irrevocably
authorizes the Collateral Agent to take such action on its behalf under the
provisions of this Agreement and to exercise such powers and perform such duties
as are expressly delegated to the Collateral Agent by the terms of this
Agreement, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Collateral Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any other Secured
Party, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Collateral Agent.

     (b)  Delegation of Duties.  The Collateral Agent may execute any of its
          --------------------                                              
duties under this Agreement by or through agents or attorneys-in-fact and shall
be entitled to advice of counsel concerning all matters pertaining to such
duties.  The Collateral Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.

     (c)  Exculpatory Provisions.  None of the Collateral Agent or any of its
          ----------------------                                             
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(1)

                                     E-20
<PAGE>
 
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement (except for its or such Person's own
gross negligence or willful misconduct) or (2) responsible in any manner to any
of the Secured Parties for any recitals, statements, representations or
warranties made by either Pledgor or any officer thereof contained in this
Agreement or in any certificate, report, statement or other document referred to
or provided for in, or received by such Collateral Agent under or in connection
with, this Agreement or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or for any failure of either
Pledgor to perform its obligations hereunder.  The Collateral Agent shall not be
under any obligation to any other Secured Party to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement, or to inspect the properties, books or records of
either Pledgor.

     (d)  Reliance by Collateral Agent.  The Collateral Agent shall be entitled
          ----------------------------                                         
to rely, and shall be fully protected in relying, upon any Note, writing,
resolution, notice, consent certificate, affidavit, letter, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrowers), independent accountants and other
experts selected by the Collateral Agent.  The Collateral Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with such Collateral Agent.  The Collateral Agent shall be fully justified
in failing or refusing to take any action under this Agreement unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Senior
Secured Parties and/or the Subordinated Secured Parties against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take such action.  The Collateral Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement in
accordance with a request of the Required Lenders, and such request and any
action taken or

                                     E-21
<PAGE>
 
failure to act pursuant thereto shall be binding upon all the Secured Parties
and all future holders of the Loans.

     (e)  Notice of Default. The Collateral Agent shall not be deemed to have
          -----------------                                                  
knowledge or notice of the occurrence of any Default or Event of Default unless
the Collateral Agent has received notice from a Lender, the Trustee (if the
Senior Secured Obligations have been paid in full and the Commitments shall have
expired or been terminated) or the Company referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default".  In the event that the Collateral Agent receives such a
notice, the Collateral Agent shall give notice thereof to the Pledgors and the
Subordinated Secured Parties.  The Collateral Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders or by the Trustee (if the Senior Secured Obligations have
been paid in full and the Commitments shall have expired or been terminated);
provided that unless and until the Collateral Agent shall have received such
- --------                                                                    
directions, the Collateral Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as they shall deem advisable and in the best interests of the
Senior Secured Parties.

     (f)  Non-Reliance on Collateral Agent.  Each other Secured Party expressly
          --------------------------------                                     
acknowledges that none of the Collateral Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Collateral Agent
hereinafter taken shall be deemed to constitute any representation or warranty
by the Collateral Agent to any Secured Party.  Except for notices, reports and
other documents expressly required to be furnished to the Secured Parties by the
Collateral Agent hereunder, the Collateral Agent shall not have any duty or
responsibility to provide any other Secured Party with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of either Pledgor which may come
into the possession of the Collateral Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.

                                     E-22
<PAGE>
 
     (g)  Collateral Agent in Its Individual Capacity.  The Collateral Agent and
          -------------------------------------------                           
its Affiliates may make loans to, accept deposits from and generally engage in
any kind of business with either Pledgor as though the Collateral Agent were not
the Collateral Agent hereunder.

     (h)  Successor Collateral Agent.  The Collateral Agent may resign as
          --------------------------                                     
Collateral Agent upon 10 days' notice to the Lenders.  If the Collateral Agent
shall resign as Collateral Agent under this Agreement, then the Required Lenders
shall appoint from among the Lenders a successor Collateral Agent, which
successor agent shall succeed to the rights, powers and duties of such
Collateral Agent hereunder.  Upon the payment in full of the Senior Secured
Obligations and the termination or expiration of the Commitments, the Collateral
Agent shall automatically be deemed to have resigned as Collateral Agent under
this Agreement, and the Trustee shall appoint a successor collateral agent for
the Subordinated Secured Parties within 10 days after its receipt of notice from
the Collateral Agent of such resignation or, in the absence of such appointment,
the Trustee shall automatically be appointed as successor collateral agent on
the tenth day after its receipt of such notice, which successor collateral agent
(whether it shall be the Trustee or any other Person) shall succeed to the
rights, powers and duties of such Collateral Agent hereunder.  Effective upon
any such appointment the term "Collateral Agent" shall mean such successor
agent, and such former Collateral Agent's rights, powers and duties as
Collateral Agent shall be terminated, without any other or further act or deed
on the part of such former Collateral Agent or any of the parties to this
Agreement or any Secured Party.  After any retiring Collateral Agent's
resignation as Collateral Agent the provisions of this Section 15 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Collateral Agent under this Agreement.  Anything in this Agreement to the
contrary notwithstanding, in the event of an automatic resignation of the
Collateral Agent in the circumstances described in the third sentence of this
paragraph, such resignation shall become effective upon the appointment of a
successor collateral agent in accordance with the provisions of such sentence,
and, thereafter, the sole obligation of the Collateral Agent hereunder shall be
to make delivery of the certificates representing the Pledged Stock to such
successor collateral agent or, if the Collateral

                                     E-23
<PAGE>
 
Agent shall not have received from the Trustee a written notice of the
appointment of a successor collateral agent other than the Trustee, to the
Trustee.

     16.  Collateral Agent's Appointment as Attorney-in-Fact.  (a)  Each Pledgor
          --------------------------------------------------                    
hereby irrevocably constitutes and appoints the Collateral Agent and any officer
or agent of the Collateral Agent, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in the
place and stead of such Pledgor and in the name of such Pledgor or in the
Collateral Agent's own name, from time to time in the Collateral Agent's
discretion, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, including, without limitation, any financing statements,
endorsements, assignments or other instruments of transfer.

     (b)  Each Pledgor hereby ratifies all that said attorneys shall lawfully do
or cause to be done pursuant to the power of attorney granted in paragraph
16(a).  All powers, authorizations and agencies contained in this Agreement are
coupled with an interest and are irrevocable until this Agreement is terminated
and the security interests created hereby are released.

     17.  Duty of Collateral Agent.  The Collateral Agent's sole duty with
          ------------------------                                        
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the Code or otherwise, shall be to
deal with it in the same manner as the Collateral Agent deals with similar
securities and property for its own account, except that the Collateral Agent
shall have no obligation to invest funds held in any Collateral Account and may
hold the same as demand deposits.  Neither the Collateral Agent, any Lender, the
Trustee, any Holder nor any of their respective directors, officers, employees
or agents shall be liable for failure to demand, collect or realize upon any of
the Collateral or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of either Pledgor
or any other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof.

                                     E-24
<PAGE>
 
     18.  Execution of Financing Statements.  Pursuant to Section 9-402 of the
          ---------------------------------                                   
Code, each Pledgor authorizes the Collateral Agent to file financing statements
with respect to the Collateral without the signature of such Pledgor in such
form and in such filing offices as the Collateral Agent reasonably determines
appropriate to perfect the security interests of the Collateral Agent under this
Agreement.  A carbon, photographic or other reproduction of this Agreement shall
be sufficient as a financing statement for filing in any jurisdiction.

     19.  Notices.  All notices, requests and demands to or upon the Company,
          -------                                                            
either Pledgee or either Pledgor to be effective shall be in writing (or by
telex, fax or similar electronic transfer confirmed in writing) and shall be
deemed to have been duly given or made (1) when delivered by hand or (2) if
given by mail, two days after being deposited in the mails by certified mail,
return receipt requested, or (3) if by telex, fax or similar electronic
transfer, when sent and receipt has been confirmed, addressed to such party at
its address or transmission number for notices provided under its signature
below.  Any party hereto may change their addresses and transmission numbers for
notices by notice in the manner provided in this Section.

     20.  Severability.  Any provision of this Agreement 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.

     21.  Amendments in Writing; No Waiver; Cumulative Remedies.  (a)  None of
          -----------------------------------------------------               
the terms or provisions of this Agreement may be waived, amended, supplemented
or otherwise modified except by a written instrument executed by each Pledgor,
the Collateral Agent and, if any Senior Secured Obligations remain outstanding,
the Administrative Agent, provided that any provision of this Agreement may be
                          --------                                            
waived by the Collateral Agent and, if any Senior Secured Obligations remain
outstanding, the Administrative Agent in a letter or agreement executed by the
Collateral Agent or by telex or facsimile transmission from the Collateral Agent
and, if any Senior Secured

                                     E-25
<PAGE>
 
Obligations remain outstanding, the Administrative Agent and, provided, further,
                                                              --------  ------- 
that no such waiver, amendment, supplement or other modification which
materially and adversely affects any Subordinated Secured Party shall be
effective unless it shall have been consented to by the Trustee.

     (b)  Neither the Collateral Agent nor any Secured Party shall by any act
(except by a written instrument pursuant to Paragraph 21(a) hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof.  No failure to exercise, nor
any delay in exercising, on the part of the Collateral Agent or any Secured
Party, any right, power or privilege hereunder shall operate as a waiver
thereof.  No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.  A waiver by the Collateral Agent or any
Secured Party of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Collateral Agent or such
Secured Party would otherwise have on any future occasion.

     (c)  The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.

     22.  Section Headings.  The section headings used in this Agreement are for
          ----------------                                                      
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.

     23.  Successors and Assigns.  This Agreement shall be binding upon the
          ----------------------                                           
successors and assigns of the Company and shall inure to the benefit of the
Collateral Agent and the Secured Parties and their successors and assigns.

     24.  Governing Law.  This Agreement shall be governed by, and construed and
          -------------                                                         
interpreted in accordance with, the law of the State of New York.

                                     E-26
<PAGE>
 
     IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their respective officers, thereunto duly authorized as of the date
first above written.

                    PLC COMMAND I, L.P., as Pledgor

                    By PLC COMMAND I, INC., its general
                        partner


                    By:
                       ----------------------------------
                        Title:

                    Address for Notices:

                    -------------------------------------
                    -------------------------------------
                    Attention:
                    Fax:


                    PLC COMMAND II, L.P., as Pledgor

                    By PLC COMMAND II, INC., its general
                        partner


                    By:
                       ----------------------------------
                        Title:

                    Address for Notices:

                    -------------------------------------
                    -------------------------------------
                    Attention:
                    Fax:

                                     E-27
<PAGE>
 
                    CANADIAN IMPERIAL BANK OF
                    COMMERCE, NEW YORK AGENCY, as
                    Collateral Agent and Administrative Agent


                    By:
                       ----------------------------------
                        Title:

                    Address for Notices:

                    -------------------------------------
                    -------------------------------------
                    Attention:
                    Fax:


                    UNITED STATES TRUST COMPANY OF
                    NEW YORK, as Trustee


                    By:
                       ----------------------------------
                        Title:

                    Address for Notices:

                    -------------------------------------
                    -------------------------------------
                    Attention:
                    Fax:

                                     E-28
<PAGE>
 
                         ACKNOWLEDGMENT AND CONSENT/1/


     The undersigned hereby acknowledges receipt of a copy of the Pledge and
Intercreditor Agreement dated August __, 1996 (as amended, supplemented or
otherwise modified from time to time, the "Pledge Agreement") made by and among
                                           ----------------                    
(a) PLC COMMAND I L.P., PLC COMMAND II L.P., (b) CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY (together with its successors in such capacity, the
"Collateral Agent"), (c) CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY, as
 ----------------                                                               
administrative agent (in such capacity, the "Administrative Agent") and (d)
                                             --------------------          
UNITED STATES TRUST COMPANY OF NEW YORK, a New York banking corporation, as
trustee (together with its successors in its capacity, the "Trustee").  The
                                                            -------        
undersigned agrees for the benefit of the Collateral Agent and the Secured
Parties (as defined in the Pledge Agreement) as follows:

     1.  The undersigned will be bound by the terms of the Pledge Agreement and
will comply with such terms insofar as such terms are applicable to the
undersigned.

     2.  The undersigned will notify the Collateral Agent promptly in writing of
the occurrence of any of the events described in Paragraph 6(a) of the Pledge
Agreement.

     3.  The only evidence which will be required by the Company to prove the
Collateral Agent's right to a transfer of the Pledged Collateral will be the
certificates pertaining thereto and an instrument of transfer as contemplated in
Sections 14 and 15 of the Company's Memorandum of Association.

                         PIERCE LEAHY COMMAND COMPANY


                    By:
                       ----------------------------------
                        Title:

                    Address for Notices:

                    -------------------------------------
                    -------------------------------------
                    Attention:
                    Fax:

     1.  Execution and delivery of this Acknowledgement will be included among
the conditions to the initial borrowing specified in the Credit Agreement.

                                     E-29
<PAGE>
 
                                                        SCHEDULE 1 TO PLEDGE AND
                                                         INTERCREDITOR AGREEMENT
                                                         -----------------------



                          DESCRIPTION OF PLEDGED STOCK

<TABLE> 
<CAPTION> 

                       Class of     Stock Certificate
   Issuer               Stock*             No.            No. of Shares
- -------------          --------     -----------------     -------------
<S>                    <C>          <C>                   <C> 
Pierce Leahy
Command Company
</TABLE> 


*  Stock is assumed to be common stock unless otherwise indicated.

                                     E-30
<PAGE>
 
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                  PAGE

<S>                       <C>                                                     <C>
ARTICLE 1.                DEFINITIONS AND INCORPORATION BY
                          REFERENCE  ............................................    1

Section 1.1.                 Definitions.........................................    1
Section 1.2.                 Other Definitions...................................   27
Section 1.3.                 Incorporation by Reference of Trust
                             Indenture Act.......................................   28
Section 1.4.                 Rules of Construction...............................   28

ARTICLE 2.                THE NOTES  ............................................   29

Section 2.1.                 Dating; Incorporation of Form in Indenture..........   29
Section 2.2.                 Execution and Authentication........................   29
Section 2.3.                 Registrar and Paying Agent..........................   30
Section 2.4.                 Paying Agent to Hold Money in Trust.................   31
Section 2.5.                 Noteholder Lists....................................   32
Section 2.6.                 Transfer and Exchange...............................   32
Section 2.7.                 Replacement Notes...................................   33
Section 2.8.                 Outstanding Notes...................................   33
Section 2.9.                 Temporary Notes.....................................   34
Section 2.10.                Cancellation........................................   34
Section 2.11.                Defaulted Interest..................................   35
Section 2.12.                Deposit of Moneys...................................   35
Section 2.13.                CUSIP Number........................................   35
Section 2.14.                Book-Entry Provisions for Global Notes..............   36

ARTICLE 3.                REDEMPTION  ...........................................   37

Section 3.1.                 Notices to Trustee..................................   37
Section 3.2.                 Selection by Trustee of Notes to Be Redeemed........   38
Section 3.3.                 Notice of Redemption................................   38
Section 3.4.                 Effect of Notice of Redemption......................   39
Section 3.5.                 Deposit of Redemption Price.........................   40
Section 3.6.                 Notes Redeemed in Part..............................   40
Section 3.7.                 Optional Redemption.................................   40
</TABLE>

       
                                       i
<PAGE>
 
<TABLE>

<S>                          <C>                                                    <C>
ARTICLE 4.                COVENANTS..............................................   41

Section 4.1.                 Payment of Notes....................................   41
Section 4.2.                 SEC Reports.........................................   41
Section 4.3.                 Waiver of Stay, Extension or Usury Laws.............   42
Section 4.4.                 Compliance Certificate..............................   43
Section 4.5.                 Taxes...............................................   44
Section 4.6.                 Limitation on Additional Indebtedness...............   44
Section 4.7.                 Limitation on Preferred Stock of
                             Restricted Subsidiaries.............................   45
Section 4.8.                 Limitation on Capital Stock of
                             Restricted Subsidiaries.............................   45
Section 4.9.                 Limitation on Restricted Payments...................   45
Section 4.10.                Limitation on Certain Asset Sales...................   48
Section 4.11.                Limitation on Transactions with Affiliates..........   51
Section 4.12.                Limitations on Liens................................   52
Section 4.13.                Limitations on Investments..........................   53
Section 4.14.                Limitation on Creation of Subsidiaries..............   53
Section 4.15.                Limitation on Other Senior Subordinated Debt........   53
Section 4.16.                Limitation on Sale and Lease-Back Transactions......   54
Section 4.17.                Payments for Consent................................   54
Section 4.18.                Corporate Existence.................................   54
Section 4.19.                Change of Control...................................   55
Section 4.20.                Maintenance of Office or Agency.....................   58
Section 4.21.                Maintenance of Properties and Insurance.............   59

ARTICLE 5.                SUCCESSOR CORPORATION..................................   60

Section 5.1.                 Limitation on Consolidation, Merger and
                             Sale of Assets......................................   60
Section 5.2.                 Successor Person Substituted........................   61

ARTICLE 6.                DEFAULTS AND REMEDIES..................................   61

Section 6.1.                 Events of Default...................................   61
Section 6.2.                 Acceleration........................................   63
Section 6.3.                 Other Remedies......................................   64
Section 6.4.                 Waiver of Past Defaults and Events of Default.......   64
Section 6.5.                 Control by Majority.................................   65
Section 6.6.                 Limitation on Suits.................................   65
Section 6.7.                 Rights of Holders to Receive Payment................   66
Section 6.8.                 Collection Suit by Trustee..........................   66
Section 6.9.                 Trustee May File Proofs of Claim....................   67
</TABLE>

                                      ii
<PAGE>
 
<TABLE>

<S>                          <C>                                                    <C> 
Section 6.10.                Priorities..........................................   67
Section 6.11.                Undertaking for Costs...............................   68
Section 6.12.                Restoration of Rights and Remedies..................   68

ARTICLE 7.                TRUSTEE................................................   69

Section 7.1.                 Duties of Trustee...................................   69
Section 7.2.                 Rights of Trustee...................................   70
Section 7.3.                 Individual Rights of Trustee........................   71
Section 7.4.                 Trustee's Disclaimer................................   72
Section 7.5.                 Notice of Defaults..................................   72
Section 7.6.                 Reports by Trustee to Holders.......................   72
Section 7.7.                 Compensation and Indemnity..........................   72
Section 7.8.                 Replacement of Trustee..............................   74
Section 7.9.                 Successor Trustee by Consolidation,
                             Merger or Conversion................................   75
Section 7.10.                Eligibility; Disqualification.......................   75
Section 7.11.                Preferential Collection of Claims
                             Against Company.....................................   76
Section 7.12.                Paying Agents.......................................   76

ARTICLE 8.                AMENDMENTS, SUPPLEMENTS AND WAIVERS....................   76

Section 8.1.                 Without Consent of Holders..........................   76
Section 8.2.                 With Consent of Holders.............................   77
Section 8.3.                 Compliance with Trust Indenture Act.................   79
Section 8.4.                 Revocation and Effect of Consents...................   79
Section 8.5.                 Notation on or Exchange of Notes....................   80
Section 8.6.                 Trustee to Sign Amendments, etc.....................   80

ARTICLE 9.                DISCHARGE OF INDENTURE; DEFEASANCE.....................   81

Section 9.1.                 Discharge of Indenture..............................   81
Section 9.2.                 Legal Defeasance....................................   81
Section 9.3.                 Covenant Defeasance.................................   82
Section 9.4.                 Conditions to Defeasance or Covenant Defeasance.....   83
Section 9.5.                 Deposited Money and U.S. Government Obligations to 
                             Be Held in Trust; Other Miscellaneous Provisions....   85
Section 9.6.                 Reinstatement.......................................   85
Section 9.7.                 Moneys Held by Paying Agent.........................   86
Section 9.8.                 Moneys Held by Trustee..............................   86
</TABLE>

                                      iii
<PAGE>
 
<TABLE>

<S>                          <C>                                                   <C>
ARTICLE 10.               GUARANTEE OF NOTES.....................................  87

Section 10.1.                Guarantee...........................................  87
Section 10.2.                Execution and Delivery of Guarantees................  89
Section 10.3.                Limitation of Guarantee.............................  89
Section 10.4.                Release of Guarantor................................  89
Section 10.5.                Guarantee Obligations Subordinated
                             to Guarantor Senior Indebtedness....................  90
Section 10.6.                Payment Over of Proceeds upon Dissolution, etc., of 
                             a Guarantor.........................................  90
Section 10.7.                Suspension of Guarantee Obligations When Guarantor 
                             Senior Indebtedness in Default....................... 92
Section 10.8.                Subrogation to Rights of Holders of Guarantor Senior 
                             Indebtedness......................................... 95
Section 10.9.                Guarantee Subordination Provisions Solely to Define 
                             Relative Rights.....................................  96
Section 10.10.               Application of Certain Article 11 Provisions........  97

ARTICLE 11.               SUBORDINATION OF NOTES.................................  97

Section 11.1.                Notes Subordinate to Senior Indebtedness............  97
Section 11.2.                Payment Over of Proceeds upon Dissolution, etc......  98
Section 11.3.                Suspension of Payment When Senior Indebtedness in 
                             Default............................................. 100
Section 11.4.                Trustee's Relation to Senior Indebtedness........... 102
Section 11.5.                Subrogation to Rights of Holders of Senior 
                             Indebtedness........................................ 102
Section 11.6.                Provisions Solely to Define Relative Rights......... 103
Section 11.7.                Trustee to Effectuate Subordination................. 104
Section 11.8.                No Waiver of Subordination Provisions............... 105
Section 11.9.                Notice to Trustee................................... 105
Section 11.10.               Reliance on Judicial Order or Certificate of 
                             Liquidating Agent................................... 106
Section 11.11.               Rights of Trustee as a Holder of Senior
                             Indebtedness; Preservation of Trustee's Rights...... 107
Section 11.12.               Article Applicable to Paying Agents................. 107
Section 11.13.               No Suspension of Remedies........................... 107
</TABLE>

                                      iv
<PAGE>
 
<TABLE>
<S>                          <C>                                                  <C>
ARTICLE 12.               SECURITY............................................... 108

Section 12.1.                Pledge Agreement.................................... 108
Section 12.2.                Certificates and Opinions........................... 108
Section 12.3.                Authorization of Actions to Be Taken by the 
                             Collateral Agent Under the Pledge Agreement......... 109
Section 12.4.                Authorization of Receipt of Funds by the Trustee 
                             Under the Pledge Agreement.......................... 109
Section 12.5.                Termination of Security Interest.................... 109

ARTICLE 13.               MISCELLANEOUS.......................................... 110

Section 13.1.                Trust Indenture Act Controls........................ 110
Section 13.2.                Notices............................................. 110
Section 13.3.                Communications by Holders with Other Holders........ 111
Section 13.4.                Certificate and Opinion as to Conditions Precedent.. 112
Section 13.5.                Statements Required in Certificate and Opinion...... 112
Section 13.6.                When Treasury Notes Disregarded..................... 113
Section 13.7.                Rules by Trustee and Agents......................... 113
Section 13.8.                Business Days; Legal Holidays....................... 113
Section 13.9.                Governing Law....................................... 113
Section 13.10.               No Adverse Interpretation of Other Agreements....... 114
Section 13.11.               No Recourse Against Others.......................... 114
Section 13.12.               Successors.......................................... 115
Section 13.13.               Multiple Counterparts............................... 115
Section 13.14.               Table of Contents, Headings, etc.................... 115
Section 13.15.               Separability........................................ 115
</TABLE>

                                       v
<PAGE>
 
                             CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
 
         TIA                                      Indenture
        Section                                     Section
        ---------------------------------------------------         
        <S>                             <C>           
 
        310 (a)(1)....................                 7.10
            (a)(2)....................                 7.10
            (a)(3)....................                 N.A.
            (a)(4)....................                 N.A.
            (b).......................          7.08; 13.02
            (b)(1)....................                 7.10
            (b)(9)....................                 7.10
            (c).......................                 N.A.
        311 (a).......................                 7.11
            (b).......................                 7.11
            (c).......................                 N.A.
        312 (a).......................                 2.05
            (b).......................                13.03
            (c).......................                13.03
        313 (a).......................                 7.06
            (b)(1)....................                 7.06
            (b)(2)....................                 7.06
            (c).......................                13.02
            (d).......................                 7.06
        314 (a).......................    4.02; 4.04; 13.02
            (b).......................                12.02
            (c)(1)....................  12.02;.13.04; 13.05
            (c)(2)....................  12.02;.13.04; 13.05
            (c)(3)....................                 N.A.
            (d).......................                12.02
            (e).......................         12.03; 13.05
            (f).......................                 N.A.
        315 (a).......................           7.01; 7.02
            (b).......................          7.05; 13.02
            (c).......................                 7.01
            (d).......................     6.05; 7.01; 7.02
            (e).......................                 6.11
        316 (a) (last sentence).......                13.06
            (a)(1)(A).................                 6.05
            (a)(1)(B).................                 6.04
            (a)(2)....................                 8.02
            (b).......................                 6.07
            (c).......................                 8.04
        317 (a)(1)....................                 6.08
            (a)(2)....................                 6.09
            (b).......................                 7.12
        318 (a).......................                13.01
</TABLE>
                      N.A. means Not Applicable
        ------------------

        NOTE:  This Cross-Reference Table shall not, for any 
        purpose, be deemed to be a part of the Indenture.


                                      vi

<PAGE>
 
                         TAX INDEMNIFICATION AGREEMENT
                         -----------------------------


          AGREEMENT, made this ____ day of _______, 1997, by and among Pierce
Leahy Inc., a Pennsylvania corporation ("Pierce"), Pierce Leahy Corp., a New
York corporation ("PLC"), and each of the other signatories hereto
(collectively, the "Shareholders" and each individually a "Shareholder").

                             W I T N E S S E T H:
                             - - - - - - - - - - 

          WHEREAS, from its incorporation, PLC has been taxed as an "S"
corporation under Subchapter S of Chapter 1 of the Internal Revenue Code of
1986, as amended (the "Code"), and under similar provisions of certain state and
local tax laws and will continue to be taxed as an S corporation until such
status is terminated in connection with the anticipated public sale of stock by
Pierce and the expected merger (the "Merger") of PLC with and into Pierce, with
Pierce being the surviving corporation (the "S Corporation Period"); and

          WHEREAS, for Federal and certain state and local income tax purposes,
PLC did not incur any income tax liability during the S Corporation Period, and
PLC's items of income, gain, loss and deductions were passed through to and
reported on the individual tax returns of the Shareholders; and

          WHEREAS, during the S Corporation Period, PLC has distributed from
time to time to each Shareholder amounts to pay taxes attributable to such
Shareholder's share of PLC's items of income and gain; and

          WHEREAS, as a result of the public sale of Pierce's stock and the
Merger, Pierce, as the successor of PLC, will not be eligible to be taxed as an
S corporation for Federal, state and local income tax purposes; and

          WHEREAS, the parties to this Agreement desire to set forth their
agreement with
<PAGE>
 
respect to certain taxes (and related liabilities) which may be imposed upon the
Shareholders, as a result of their ownership of stock in PLC during the S
Corporation Period.

          NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises, covenants and conditions hereinafter contained, the parties hereto
agree as follows:

          1.   Prior to or within ninety days following Pierce's initial public
offering, Pierce will distribute to each Shareholder an amount of cash estimated
to be equal to the result of (a) the product of such Shareholder's pro rata
share of the Company's taxable income, for Federal and applicable state tax
purposes for each fiscal year of PLC through December 31, 1996, and for the
period beginning January 1, 1997 and ending on the termination of the Company's
(as hereinafter defined) status as an S Corporation (the "Termination Date"),
multiplied by the Effective Tax Rate, less (b) the amount of the distributions
previously made by PLC or Pierce (PLC and after the Merger, Pierce, as the
successor to PLC, is sometimes herein referred to as the "Company") to such
Shareholder to enable the Shareholder to make tax payments with respect to such
Shareholder's share of the Company's taxable income during the S Corporation
Period; provided, however, that no such payments need be made with respect to
Federal income taxes unless requested in writing by Shareholders who held at
least 85% of the outstanding shares of capital stock of PLC immediately
preceding the Merger.  For purposes of this Agreement, the "Effective Tax Rate"
shall be the sum of the highest effective Federal and state income tax rates
applicable to any Shareholder.

          2.   (a)  The Company agrees to indemnify, defend and hold harmless
each Shareholder, from and against any and all losses, liabilities, obligations,
damages, impositions, assessments, fines, deficiencies, costs and expenses,
including without limitation attorneys' and accountants' fees and expenses
(each, a "Loss") with respect to all Federal, state, city, or municipal taxes of
any kind whatsoever including taxes, interest, penalties, and additions to taxes
(collectively,

                                      -2-
<PAGE>
 
"Taxes") imposed upon a Shareholder as a result of (i) any adjustment or change,
including any increase in items of income or gain or any decrease in items of
loss, deduction or credit reported to such Shareholder by the Company, with
respect to the income or loss of the Company during the S Corporation Period,
and (ii) any payment made in connection with a Loss under (i) above.  Any
payment with respect to this indemnity shall be made by the Company, upon notice
from the Shareholder to the Company, at least ten days prior to the due date of
any payment required to be made by the Shareholder, in connection with Taxes.

          (b) In the event any amount paid to a Shareholder by the Company
pursuant to subparagraph 2(a) is subsequently refunded or repaid to such
Shareholder by any taxing authority, such Shareholder agrees to repay to the
Company such refund or repayment, less any net tax or other cost incurred by the
Shareholder with respect to such amounts.

          (c) Each Shareholder agrees to prepare his tax returns with respect to
the Company's "S Termination Year," within the meaning of (S)1362(e)(4) of the
Code, consistently with the manner in which each item of income, gain, loss,
deduction and credit of the Company for such year is reported to such
Shareholder.

     3.   The Company may, upon written notice from the Company to a
Shareholder, request that the Shareholder contest any adjustment proposed by a
taxing authority with respect to taxes for the S Corporation Period. If the
Company requests that any proposed adjustment be contested, then the Shareholder
shall, at the Company's expense, contest the proposed adjustment or permit the
Company and its representatives, at the Company's request, to contest the
proposed adjustment (including pursuing all administrative and judicial appeals
and processes) in the name of the Shareholder. The Company shall pay to the
Shareholder on demand all costs and expenses (including attorneys' fees) that
the Shareholder may incur in contesting such proposed adjustments.

                                      -3-
<PAGE>
 
The Shareholder shall not make, accept or enter into a settlement or other
compromise with respect to any Taxes indemnified hereunder, or forego or
terminate any proceeding undertaken hereunder without the consent of the
Company, which consent shall not be unreasonably withheld.  The cost of
contesting any challenge or adjustment to a tax return of the Company by the
Internal Revenue Service, or by any state or local administrative agency or
taxing authority, in any forum, judicial or administrative, shall be borne
solely by the Company.

          4.   In the case of a trust which is included within the terms
"Shareholder" and "Shareholders" under this Agreement, such terms shall also be
deemed to include for all purposes of this Agreement the beneficiary of such
trust, and this Agreement shall be applied taking into account that the
beneficiary of such trust is treated as the shareholder under Section 1361 of
the Code.

          5.   The covenants and agreements of the parties set forth in this
Agreement shall survive indefinitely.

          6.   All notices, requests, demands and other communications which are
required or which may be given under this Agreement shall be in writing.

          7.   This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral and written, between the parties
hereto with respect to the subject matter hereof.

          8.   This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns and in the case
of a trust which is a Shareholder, the beneficiary of such trust.

          9.   No provision of this Agreement may be amended, waived or
otherwise modified without the prior written consent of each of the parties
hereto affected thereby.

                                      -4-
<PAGE>
 
          10.  This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original as against any party whose
signature appears thereon, and all of which shall together constitute one and
the same instrument.  This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as the signatories.

          11.  This Agreement shall be effective upon the Termination Date.

          12.  This Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Pennsylvania, without reference to the
principles of conflicts of law.

          IN WITNESS WHEREOF, this Agreement has been duly executed as of the
day and year first above written.

                                           PIERCE LEAHY INC.,
                                           a Pennsylvania corporation


ATTEST:                                    By:
       --------------------------------       ---------------------------------
 [Corporate Seal]

                                           PIERCE LEAHY CORP.,
                                           a New York corporation


ATTEST:                                    By:
       --------------------------------       ----------------------------------
 [Corporate Seal]



- ---------------------------------------    ------------------------------------
Leo W. Pierce, Jr., individually           Eve Bullitt Pierce, individually
and for the benefit of Kate Pierce,        and for the benefit of Kate Pierce,
Alexandra Pierce and Julia Pierce          Alexandra Pierce and Julia Pierce



- ---------------------------------------    ------------------------------------
J. Peter Pierce, individually              John P. Pierce, Jr.
and for the benefit of Matthew Pierce


                       Signatures Continued on Next Page

                                      -5-
<PAGE>
 
                    Signatures Continued from Previous Page



- ---------------------------------------    ------------------------------------
Michael J. Pierce, individually            Mary E. Pierce
and for the benefit of Michael M. Pierce


- ---------------------------------------    ------------------------------------
Barbara Quinn, individually and            Constance P. Buckley, individually 
for the benefit of Sarah Quinn,            and for the benefit of Hilary Buckley
and Daniel J. Quinn, Jr.,                  Hannah Buckley
Conor Quinn, Dylan Quinn
and Terrance Quinn


- ---------------------------------------    ------------------------------------
Kathryn Cox, individually and              Maurice Cox, Jr.
for the benefit of Christopher Cox,
Gregory Cox, Adrian Cox, Brendan Cox,
Deirdre Cox, Timothy Cox, Conor Cox and
Bronwyn Cox


- ---------------------------------------    ------------------------------------
Monica Cox Durfee                          Constance Cox


- ---------------------------------------    ------------------------------------
Andrea Cox Fidurko                         Suzanne Cox


- ---------------------------------------    ------------------------------------
Maurice Cox, III                           Gregory Cox


- ---------------------------------------    ------------------------------------
Leo W. Pierce, Sr., Trustee under          Daniel J. Quinn, for the benefit of
Karen Pierce 1996 Irrevocable Trust        Sarah Quinn, Conor F. Quinn, Daniel 
                                           J. Quinn, Jr., Dylan P. Quinn and 
                                           Terrance P. Quinn



                       Signatures Continued on Next Page

                                      -6-
<PAGE>
 
                    Signatures Continued from Previous Page




- -------------------------------------       ------------------------------------
J. Peter Pierce, Trustee under              Constance P. Buckley, Trustee under
Leo W. Pierce Trust for the Family          Irrevocable Agreement of Trust dated
of J. Peter Pierce                          September 19, 1996 F/B/O
                                            Julia Stockton Pierce



- -------------------------------------       ------------------------------------
Constance P. Buckley, Trustee under         Constance P. Buckley, Trustee under
Irrevocable Agreement of Trust dated        Irrevocable Agreement of Trust dated
September 19, 1996 F/B/O Kate               September 19, 1996 F/B/O
Alexandra Bullitt Pierce                    Roberts Pierce



- -------------------------------------       ------------------------------------
Constance P. Buckley, Trustee under         Constance P. Buckley, Trustee under
Irrevocable Agreement of Trust dated        Irrevocable Agreement of Trust dated
December 23, 1996, Leo W.                   October 23, 1996 F/B/O
Pierce, Settlor                             Michael M. Pierce




- -------------------------------------      
Barbara P. Quinn, Trustee under
Irrevocable Agreement of Trust dated
12/30/96 F/B/O Michael M. Pierce

                                      -7-

<PAGE>
 
     FIRST AMENDMENT, dated as of October 23, 1996 (this "Amendment"), to the
                                                          ---------          
Credit Agreement, dated as of August 13, 1996 (as the same may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
                                                           ----------------   
among PIERCE LEAHY CORP., a New York corporation (the "Company"), PIERCE LEAHY
                                                       -------                
COMMAND COMPANY, a company organized and existing under the laws of the Province
of Nova Scotia (the "Canadian Borrower" and, together with the Company, the
                     -----------------                                     
"Borrowers"), the several banks and other financial institutions from time to
- ----------                                                                   
time parties to this Agreement (the "Lenders"), Canadian Imperial Bank of
                                     -------                             
Commerce, New York Agency, as US Administrative Agent for the US$ Lenders
thereunder and Canadian Imperial Bank of Commerce, as Canadian Administrative
Agent for the C$ Lenders thereunder.


                              W I T N E S S E T H:
                              ------------------- 


     WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make
certain loans and other extensions of credit to the Borrowers; and

     WHEREAS, the Borrowers have requested, and, upon this Amendment becoming
effective, the Required Lenders have agreed, that certain provisions of the
Credit Agreement be amended in the manner provided for in this Amendment.


     NOW, THEREFORE, the parties hereto hereby agree as follows:

     I.   Defined Terms.  Terms defined in the Credit Agreement and used herein
          -------------                                                        
shall have the meanings given to them in the Credit Agreement.

     II.  Amendments to Credit Agreement.
          ------------------------------ 

     1.   Amendment to Subsection 8.7.  Subsection 8.7 of the Credit Agreement
          ---------------------------                                         
is hereby amended by deleting the reference to "US$20,000,000" in clause (i) of
the proviso thereto and in lieu thereof substituting the reference to
"US$23,000,000".
 
     III. Conditions to Effectiveness.  This Amendment shall become effective
          ---------------------------                                        
on the date (the "Amendment Effective Date") the Borrowers, the Administrative
                  ------------------------                                    
Agents and the Required Lenders shall have executed and delivered to the US
Administrative Agent this Amendment.

     IV.  General.
          ------- 

     1.   Representation and Warranties.  To induce the Administrative Agents
          -----------------------------                                      
and the Lenders parties hereto to enter into this Amendment, the Company hereby
represents and
<PAGE>
 
                                                                               2



warrants to the Administrative Agent and all of the Lenders as of the Amendment
Effective Date that:

     (a) Corporate Power; Authorization; Enforceable Obligations.
         ------------------------------------------------------- 

     (1) Each Borrower has the corporate power and authority, and the legal
right, to make and deliver this Amendment and to perform the Loan Documents, as
amended by this Amendment, and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Amendment and the
performance of the Loan Documents, as so amended.

     (2) No consent or authorization of, approval by, notice to, filing with or
other act by or in respect of, any Governmental Authority or any other Person is
required in connection with the execution and delivery of this Amendment or with
the performance, validity or enforceability of the Loan Documents, as amended by
this Amendment.

     (3) This Amendment has been duly executed and delivered on behalf of each
Borrower.

     (4) Each of this Amendment and each Loan Document, as amended by this
Amendment, constitutes a legal, valid and binding obligation of each Borrower
enforceable against such Borrower in accordance with its terms, except as
affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting the enforcement of
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.

     (b) No Legal Bar.  The execution, delivery and performance of this
         ------------                                                  
Amendment and the performance of the Loan Documents, as amended by this
Amendment, will not violate any Requirement of Law or Contractual Obligation of
each Borrower or of any of its Subsidiaries and will not result in, or require,
the creation or imposition of any Lien on any of its or their respective
properties or revenues pursuant to any such Requirement of Law or Contractual
Obligation.

     (c) Representations and Warranties.  The representations and warranties
         ------------------------------                                     
made by the Company in the Loan Documents are true and correct in all material
respects on and as of the Amendment Effective Date, before and after giving
effect to the effectiveness of this Amendment, as if made on and as of the
Amendment Effective Date.

     2.  Payment of Expenses.  The Company agrees to pay or reimburse the US
         -------------------                                                
Administrative Agent for all of its reasonable out-of-pocket costs and expenses
incurred in connection with this Amendment, any other documents prepared in
connection herewith and the transactions contemplated hereby, including, without
limitation, the reasonable fees and disbursements of counsel to the US
Administrative Agent.
<PAGE>
 
                                                                               3

     3.   No Other Amendments; Confirmation.  Except as expressly amended,
          ---------------------------------                               
modified and supplemented hereby, the provisions of the Credit Agreement and the
other Loan Documents are and shall remain in full force and effect.

     4.   Governing Law; Counterparts.  (a) This Amendment and the rights and
          ---------------------------                                        
obligations of the parties hereto shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.

     (b)  This Amendment may be executed by one or more of the parties to this
Agreement on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. A set
of the copies of this Amendment signed by all the parties shall be lodged with
each of the Company and the US Administrative Agent.  This Amendment may be
delivered by facsimile transmission of the relevant signature pages hereof.
<PAGE>
 
          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.


                              PIERCE LEAHY CORP.

                              By:
                                 -------------------------------------
                                 Title:


                              PIERCE LEAHY COMMAND COMPANY

                              By:
                                 -------------------------------------
                                 Title:


                              CANADIAN IMPERIAL BANK OF 
                              COMMERCE, NEW YORK AGENCY,
                              as US Administrative Agent and US$ Lender

                              By:
                                 -------------------------------------
                                Title:  Director, CIBC Wood Gundy 
                                        Securities Corp., AS AGENT


                              BANK OF IRELAND GRAND CAYMAN
                              as a Lender

                              By:
                                 -------------------------------------
                                 Title:


                              CREDIT LYONNAIS NEW YORK BRANCH
                              as a Lender

                              By:
                                 ------------------------------------- 
                                 Title:


                              FLEET NATIONAL BANK
                              as a Lender

                              By:
                                 -------------------------------------
                                 Title:
<PAGE>
 
                              THE FIRST NATIONAL BANK OF 
                              MARYLAND
                              as a Lender

                              By:
                                 -------------------------------------
                                 Title:


                              HELLER FINANCIAL
                              as a Lender

                              By:
                                 -------------------------------------
                                 Title:


                              STATE STREET BANK AND TRUST COMPANY
                              as a Lender

                              By:
                                 -------------------------------------
                                 Title:


                              THE BANK OF NEW YORK
                              as a Lender

                              By:
                                 -------------------------------------
                                 Title:

<PAGE>
 
     SECOND AMENDMENT AND CONSENT, dated as of March 27, 1997 (this "Amendment
                                                                     ---------
and Consent"), to the Credit Agreement, dated as of August 13, 1996 (as the same
- -----------                                                                     
may be amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among PIERCE LEAHY CORP., a New York corporation (the
- -----------------                                                         
"Company"), PIERCE LEAHY COMMAND COMPANY, a company organized and existing under
- --------                                                                        
the laws of the Province of Nova Scotia (the "Canadian Borrower" and, together
                                              -----------------               
with the Company, the "Borrowers"), the several banks and other financial
                       ---------                                         
institutions from time to time parties thereto (the "Lenders"), Canadian
                                                     -------            
Imperial Bank of Commerce, New York Agency, as US Administrative Agent for the
US$ Lenders thereunder and Canadian Imperial Bank of Commerce, as Canadian
Administrative Agent for the C$ Lenders thereunder.


                             W I T N E S S E T H :
                             - - - - - - - - - -  


     WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make
certain loans and other extensions of credit to the Borrowers; and

     WHEREAS, the Borrowers have requested, and, upon this Amendment and Consent
becoming effective, the Lenders have agreed, that certain provisions of the
Credit Agreement be amended and consented to in the manner provided for in this
Amendment and Consent;

     NOW, THEREFORE, the parties hereto hereby agree as follows:

     I.   Defined Terms.  Terms defined in the Credit Agreement and used herein
          -------------                                                        
shall have the meanings given to them in the Credit Agreement.

     II.  Amendments to Credit Agreement.
          ------------------------------ 

     1.   Amendments to Subsection 1.1 of the Credit Agreement.  Subsection 1.1
          ----------------------------------------------------                 
of the Credit Agreement is hereby amended as follows:

     (a)  by deleting the table appearing in the definition of "Applicable
     Margin" and substituting in lieu thereof the following table:
<PAGE>
 
                                                                               2

<TABLE> 
<CAPTION> 
                                            Applicable Margin (% per annum)
                                            -------------------------------
         "Range of
       Leverage Ratio                       Base Rate Loans/   Eurodollar Loans/
       --------------                       C$ Prime           Bankers'  
                                            Loans              Acceptances
                                            --------------     ---------------
 
     <S>                                    <C>                <C>
     greater than 5.75 to 1.00                2.00%                 2.75%
 
     greater than 5.50 to 1.00
     but less than or equal to
     5.75 to 1.00                             1.75%                 2.50%
 
     greater than 5.00 to 1.00
     but less than or equal to
     5.50 to 1.00                             1.50%                 2.25%
 
     greater than 4.25 to 1.00
     but less than or equal to
     5.00 to 1.00                             1.25%                 2.00%
 
     greater than 3.75 to 1.00
     but less than or equal to
     4.25 to 1.00                             1.00%                 1.75%
 
     greater than 3.25 to 1.00
     but less than or equal to
     3.75 to 1.00                             0.75%                 1.50%
 
     less than or equal
     to 3.25 to 1.00                          0.50%                 1.25%;"
</TABLE>

     (b)  by deleting in its entirety the proviso appearing at the end of the
     definition of "EBITDA" and substituting in lieu thereof the following:
     "provided that, for any period during which the Company or any Subsidiary
      --------                                                                
     shall purchase or otherwise acquire any real property which the Company or
     such Subsidiary shall have been leasing as lessee during such period, the
     Company or such Subsidiary, as the case may be, shall be deemed to have
     acquired such real property on the first day of such period and any rental
     expense of the Company or such Subsidiary during such period in respect of
     such real property shall be disregarded."; and

     (c)  by deleting the amount "US$100,000,000" in the last sentence of the
     definition of "US Commitment" and substituting in lieu thereof the amount
     "US$110,000,000".

     2.   Amendments to Subsection 8.7 of the Credit Agreement.  Subsection 8.7
          ----------------------------------------------------                 
of the Credit Agreement is hereby amended as follows:
<PAGE>
 
                                                                               3

     (a)  by deleting the words "including Client Acquisition Costs" appearing
     in the definition of "Capital Expenditures" and substituting in lieu
     thereof the words "excluding Client Acquisition Costs"; and

     (b)  by deleting the percentage "15%" wherever it appears therein and
     substituting in lieu thereof the percentage "17%".

     3.   Amendment to Subsection 8.10(a) of the Credit Agreement.  Subsection
          -------------------------------------------------------             
8.10(a) of the Credit Agreement is hereby amended by deleting the table
appearing at the end of said paragraph and substituting in lieu thereof the
following table:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
               "Period                                              Ratio
               -------                                              -----
- --------------------------------------------------------------------------------
<S>                                                              <C>
From and including the Closing Date     
through December 30, 1997                                        6.25 to 1.00
- --------------------------------------------------------------------------------
From and including December 31, 1997    
through June 30, 1999                                            5.75 to 1.00
- --------------------------------------------------------------------------------
From and including July 1, 1999 and thereafter                   5.50 to 1.00"
- --------------------------------------------------------------------------------
</TABLE>

     4.   Amendment to Schedule 1.1 of the Credit Agreement.  Schedule 1.1 of 
          -------------------------------------------------   
the Credit Agreement is hereby amended by deleting said Schedule in its entirety
and substituting in lieu thereof a new Schedule 1.1 in the form of Schedule 1.1
to this Amendment and Consent.

     III. Consent.  The Lenders hereby consent, in accordance with paragraphs
          -------                                                            
(d) and (e) of the proviso contained in the definition of "Permitted
Acquisition" in Section 1.1 of the Credit Agreement, to the acquisitions of
Records Management Services, Inc. and Advanced Files Services, respectively, on
the terms and conditions set forth in Schedule III to this Amendment and
Consent, notwithstanding that the acquisition of Records Management Services,
Inc. shall exceed US$25,000,000 and that the aggregate amount of the proceeds of
Acquisition Loans made in the 1997 fiscal year of the Company that are used to
fund such Permitted Acquisitions shall exceed US$65,000,000.

     IV.  Conditions to Effectiveness.  This Amendment and Consent shall become
          ---------------------------                                          
effective on the date (the "Amendment and Consent Effective Date") upon which:
                            ------------------------------------              

     (a)  the Borrowers, each of the Guarantors, the US Administrative Agent and
     each of the Lenders shall have executed and delivered to the US
     Administrative Agent this Amendment and Consent;

     (b)  the US Administrative Agent shall have received any US$ Notes meeting
     the requirements of Subsection 2.2 of the Credit Agreement requested by the
     Lenders, each executed and delivered by a duly authorized officer of the
     relevant Borrower; and
<PAGE>
 
                                                                               4

     (c)  the US Administrative Agent shall have received, with a counterpart
     for each Lender, a copy of the resolutions, in form and substance
     reasonably satisfactory to the US Administrative Agent, of the Board of
     Directors of the Company authorizing the execution, delivery and
     performance of this Amendment and Consent and the Credit Agreement, as
     amended hereby.

     V.   General.
          ------- 

     1.   Representation and Warranties.  To induce the US Administrative Agent
          -----------------------------                                        
and the Lenders to enter into this Amendment and Consent, the Company hereby
represents and warrants to the US Administrative Agent and each of the Lenders
as of the Amendment and Consent Effective Date that:

     (a)  Corporate Power; Authorization; Enforceable Obligations.
          ------------------------------------------------------- 

          (i)   Each Borrower has the corporate power and authority, and the
          legal right, to make and deliver this Amendment and Consent and to
          perform the Loan Documents, as amended by this Amendment and Consent,
          and has taken all necessary corporate action to authorize the
          execution, delivery and performance of this Amendment and Consent and
          the performance of the Loan Documents, as so amended.

          (ii)  No consent or authorization of, approval by, notice to, filing
          with or other act by or in respect of, any Governmental Authority or
          any other Person is required in connection with the execution and
          delivery of this Amendment and Consent or with the performance,
          validity or enforceability of the Loan Documents, as amended by this
          Amendment and Consent.

          (iii) This Amendment and Consent has been duly executed and delivered
          on behalf of each Borrower.

          (iv)  Each of this Amendment and Consent and each Loan Document, as
          amended by this Amendment and Consent, constitutes a legal, valid and
          binding obligation of each Borrower enforceable against such Borrower
          in accordance with its terms, except as affected by bankruptcy,
          insolvency, fraudulent conveyance, reorganization, moratorium and
          other similar laws relating to or affecting the enforcement of
          creditors' rights generally, general equitable principles (whether
          considered in a proceeding in equity or at law) and an implied
          covenant of good faith and fair dealing.

     (b)  No Legal Bar.  The execution, delivery and performance of this
          ------------                                                  
     Amendment and Consent and the performance of the Loan Documents, as amended
     by this Amendment and Consent, will not violate any Requirement of Law or
     Contractual Obligation of each Borrower or of any of its Subsidiaries and
     will not result in, or require, the creation or imposition of any Lien on
     any of its or their respective
<PAGE>
 
                                                                               5

     properties or revenues pursuant to any such Requirement of Law or
     Contractual Obligation.

     (c)  Representations and Warranties.  The representations and warranties
          ------------------------------                                     
     made by the Company in the Loan Documents are true and correct in all
     material respects on and as of the Amendment and Consent Effective Date,
     before and after giving effect to the effectiveness of this Amendment and
     Consent, as if made on and as of the Amendment and Consent Effective Date.

     2.   Payment of Expenses.  The Company agrees to pay or reimburse the US
          -------------------                                                
Administrative Agent for all of its reasonable out-of-pocket costs and expenses
incurred in connection with this Amendment and Consent, any other documents
prepared in connection herewith and the transactions contemplated hereby,
including, without limitation, the reasonable fees and disbursements of counsel
to the US Administrative Agent.    

     3.   No Other Amendments and Consents; Confirmation.  Except as expressly
          ----------------------------------------------                      
amended, modified and supplemented hereby, the provisions of the Credit
Agreement and the other Loan Documents are and shall remain in full force and
effect.

     4.   Governing Law; Counterparts.
          --------------------------- 

     (a)  This Amendment and Consent and the rights and obligations of the
     parties hereto shall be governed by, and construed and interpreted in
     accordance with, the laws of the State of New York.

     (b)  This Amendment and Consent may be executed by one or more of the
     parties to this Agreement on any number of separate counterparts, and all
     of said counterparts taken together shall be deemed to constitute one and
     the same instrument. A set of the copies of this Amendment and Consent
     signed by all the parties shall be lodged with each of the Company and the
     US Administrative Agent.  This Amendment and Consent may be delivered by
     facsimile transmission of the relevant signature pages hereof.
<PAGE>
 
                                                                               6

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Consent to be duly executed and delivered by their respective proper and duly
authorized officers as of the day and year first above written.


                              PIERCE LEAHY CORP.

                              By:
                                 -----------------------------------------------
                                Title:


                              PIERCE LEAHY COMMAND COMPANY

                              By:
                                 -----------------------------------------------
                                Title:


                              CANADIAN IMPERIAL BANK OF COMMERCE, 
                              NEW YORK AGENCY,
                              as US Administrative Agent and US$ Lender

                              By:
                                 -----------------------------------------------
                                 Title:    Director, CIBC Wood Gundy Securities
                                           Corp., AS AGENT


                              BANK OF IRELAND GRAND CAYMAN
                              as a Lender

                              By:
                                 -----------------------------------------------
                                Title:


                              CREDIT LYONNAIS NEW YORK BRANCH
                              as a Lender

                              By:
                                 -----------------------------------------------
                                Title:


                              FLEET NATIONAL BANK
                              as a Lender

                              By:
                                 -----------------------------------------------
                                Title:
<PAGE>
 
                                                                               7

                                          THE FIRST NATIONAL BANK OF MARYLAND
                                          as a Lender                        
                                                                             
                                          By:                                
                                             ----------------------------------
                                            Title:                           
                                                                             
                                                                             
                                          HELLER FINANCIAL                   
                                          as a Lender                        
                                                                             
                                          By:                                
                                             ----------------------------------
                                            Title:                           
                                                                             
                                                                             
                                          STATE STREET BANK AND TRUST COMPANY
                                          as a Lender                        
                                                                             
                                          By:                                
                                             ----------------------------------
                                            Title:                           
                                                                             
                                                                             
                                          THE BANK OF NEW YORK               
                                          as a Lender                        
                                                                             
                                          By:                                
                                             ----------------------------------
                                            Title:
<PAGE>
 
                                                                               8

                          ACKNOWLEDGEMENT AND CONSENT

          Each of the undersigned, as a Guarantor under that certain US Global
Guarantee and Security Agreement, dated as of August 13, 1996, made by each of
such Guarantors in favor of the US Administrative Agent, hereby acknowledges and
consents to the execution and delivery of this Second Amendment and Consent to
which this Acknowledgment and Consent is attached and hereby reaffirms its
obligations as a Guarantor under said US Global Guarantee and Security
Agreement.


                                 PIERCE LEAHY CORP.


                                 By:
                                    --------------------------------------------
                                   Title:


                                 PLC COMMAND I, INC.


                                 By:
                                    --------------------------------------------
                                   Title:


                                 PLC COMMAND II, INC.


                                 By:
                                    --------------------------------------------
                                   Title:


                                 PLC COMMAND I, L.P.
                                 By PLC Command I, Inc., as its general partner


                                 By:
                                    --------------------------------------------
                                   Title:


                                 PLC COMMAND II, L.P.
                                 By PLC Command II, Inc., as its general partner


                                 By:
                                    --------------------------------------------
                                   Title:

<PAGE>
 
                              PIERCE LEAHY CORP.
                 
              EXHIBIT 11--COMPUTATION OF EARNINGS PER SHARE 
               (amounts in thousands except per share data)     
 
<TABLE>   
<CAPTION>
                                           FOR THE YEAR       FOR THE THREE MONTHS
                                      ENDED DECEMBER 31, 1996 ENDED MARCH 31, 1997
                                      ----------------------- --------------------
<S>                                   <C>                     <C>
PRO FORMA EARNINGS PER SHARE:
Pro Forma Net Loss Applicable to
 Common Shareholders................          $(1,958)              $  (227)
                                              =======               =======
Weighted Average Common Shares
 Outstanding(a).....................           10,547                10,485
Stock Option Grants--
  January 1, 1995(b)................              --                    --
  January 1, 1996(b)................              --                    --
  January 1, 1997(c)................              154                   154
  Repurchase of Shares Using
   Treasury Stock Method(d).........              (89)                  (89)
Warrants to Purchase Common
 Stock(b)...........................              --                    --
                                              -------               -------
Shares Used in Computing Pro Forma
 Net Loss Per Share.................           10,612                10,550
                                              =======               =======
Pro Forma Net Loss Per Share........          $  (.18)              $  (.02)
                                              =======               =======
SUPPLEMENTAL PRO FORMA EARNINGS PER
 SHARE:
Pro Forma Net Loss Applicable to
 Common Shareholders................          $(1,958)              $  (227)
Interest Savings on Retirement of
 Debt and Deferred Financing Costs..            8,110                 2,028
Income Tax Effect of Interest
 Savings............................           (3,163)                 (791)
                                              -------               -------
Supplemental Pro Forma Net Income...          $ 2,989               $ 1,010
                                              =======               =======
Weighted Average Common Shares
 Outstanding........................           10,547                10,485
Stock Option Grants--
  January 1, 1995...................              601                   601
  January 1, 1996...................              360                   360
  January 1, 1997...................              153                   153
Warrants to Purchase Common Stock...               47                   --
Repurchase of Shares Using Treasury
 Stock Method(d)....................             (664)                 (655)
Shares issued to Retire $70,000 of
 Subordinated Notes and $7,000 of
 Prepayment Penalties at an Assumed
 Offering Price of $16.50 per
 share..............................            4,667                 4,667
                                              -------               -------
Shares Used in Computing
 Supplemental Pro Forma Net Loss Per
 Share..............................           15,711                15,611
                                              =======               =======
Supplemental Pro Forma Net Income
 Per Share .........................          $   .19               $   .06
                                              =======               =======
</TABLE>    
- --------
Notes:
   
(a) Retroactively reflects the Recapitalization.     
   
(b) Stock option grants on January 1, 1995 and January 1, 1996 and the
    warrants to purchase common stock which were outstanding for two months in
    1996 have been excluded from the Pro Forma Earnings Per Share calculation
    as the effects would be anti-dilutive.     
   
(c) The exercise price of the stock options granted on January 1, 1997 is
    below the assumed initial public offering price of $16.50 per share.
    Pursuant to the requirements of the Securities and Exchange Commission,
    common stock equivalents issued by the Company during the 12 months
    immediately preceeding the equity offerings have been included in the
    calculation of shares used in computing pro forma earnings per share as if
    they were outstanding for all periods presented (using the treasury stock
    method and an assumed price of $16.50 per share).     
   
(d) Treasury stock repurchases assume proceeds from the exercise of options
    and warrants of $781 and from the tax benefit of the exercise of non-
    qualified stock options of $683, have been used to repurchase common stock
    at an assumed public offering price of $16.50 per share in the Pro Forma
    Earnings Per Share calculations for both periods presented. Proceeds from
    the exercise of options and warrants of $6,104 in 1996 and $5,954 in 1997
    and from the tax benefit of the exercise of non-qualified stock options of
    $4,848 in 1996 and 1997, have been used to repurchase common stock at an
    assumed initial public offering price of $16.50 per share in the
    Supplemental Pro Forma Earnings Per Share calculation.     

<PAGE>
 
                                                                      Exhibit 21


                         SUBSIDIARIES OF THE REGISTRANT
                         ------------------------------


         Pierce Leahy Command Company, a Nova Scotia unlimited liability company
         PLC Command I, L.P., a Pennsylvania limited partnership
         PLC Command II, L.P., a Pennsylvania limited partnership
         Records Management Services, Inc., an Illinois corporation

<PAGE>

                                                                    EXHIBIT 23.2
 
                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
  As independent public accountants, we hereby consent to the use of our
reports and to all references to our Firm included in or made a part of this
Registration Statement.
 
                                          Arthur Andersen LLP
 
Philadelphia, PA
   
May 23, 1997     

<PAGE>
 
                                                                   EXHIBIT 23.3
 
                         INDEPENDENT AUDITORS' CONSENT
   
  We consent to the use in this Amendment No. 2 to Registration Statement No.
333-23121 of Pierce Leahy Corp. of our report dated August 14, 1995, on the
financial statements of Securities Archives, Inc. appearing in the Prospectus,
which is a part of this Registration Statement, and to the reference to us
under the heading "Experts" in such Prospectus.     
 
Deloitte & Touche LLP
 
Dallas, Texas
   
May 23, 1997     

<PAGE>
 
                                                                   EXHIBIT 23.4
 
                         INDEPENDENT AUDITORS' CONSENT
   
  We consent to the use in this Amendment No. 2 to Registration Statement No.
333-23121 of Pierce Leahy Corp. of our report dated November 22, 1996 (January
10, 1997 as to Note 11) on the consolidated financial statements of Records
Management Services, Inc. and subsidiaries appearing in the Prospectus, which
is a part of this Registration Statement, and to the reference to us under the
heading "Experts" in such Prospectus.     
 
Deloitte & Touche LLP
 
Chicago, Illinois
   
May 26, 1997     


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