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REGISTRATION NO. 333-58569
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
AMENDMENT NO. 1
to
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
_______________
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EXACT I.R.S. EMPLOYER
NAME OF JURISDICTIONS OF IDENTIFICATION
REGISTRANT INCORPORATION NUMBERS
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Pierce Leahy Command Company Nova Scotia N/A
Pierce Leahy Corp. Pennsylvania 23-2588479
Advanced Box, Inc. Delaware 52-2045727
Monarch Box, Inc. Delaware 52-2045728
Archivex Limited Nova Scotia N/A
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631 Park Avenue
King of Prussia, Pennsylvania 19406
(610) 992-8200
(Address, including zip code, and telephone number, including area code,
of the registrants' principal executive offices)
Douglas B. Huntley
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)
Copy to:
Richard J. Busis, Esquire
Cozen and O'Connor
1900 Market Street
Philadelphia, Pennsylvania 19103
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box.[_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, 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(d)
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.[_]
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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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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.
Subject to completion, dated September ___, 1998
[LOGO] PIERCE LEAHY COMMAND COMPANY
OFFER TO EXCHANGE ITS 8 1/8% SENIOR NOTES DUE 2008,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT, FOR ANY AND ALL OF ITS
OUTSTANDING 8 1/8% SENIOR NOTES DUE 2008
GUARANTEED ON A SENIOR SUBORDINATED BASIS BY PIERCE LEAHY CORP.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON __________,
1998, UNLESS EXTENDED
_________________
Pierce Leahy Command Company, a Nova Scotia unlimited liability company (the
"Issuer"), hereby offers to substitute (the "Exchange Offer"), upon the terms
and subject to the conditions set forth in this Prospectus and the accompanying
Letter of Transmittal (the "Letter of Transmittal"), up to $135,000,000 in
aggregate principal amount of the Issuer's new 8 1/8% Senior Notes due 2008 (the
"Exchange Notes"), for $135,000,000 in aggregate principal amount of the
Issuer's outstanding 8 1\8% Senior Notes due 2008 (the "Original Notes"). The
Original Notes and the Exchange Notes are sometimes referred to herein
collectively as the "Notes."
The terms of the Exchange Notes are substantially identical in all respects
(including principal amount, interest rate and maturity) to the terms of the
Original Notes which they replace pursuant to this Exchange Offer, except that
(i) the Exchange Notes will be freely transferable by holders thereof (other
than as provided in the next paragraph) and issued free of any covenant
restricting transfer absent registration and (ii) holders of the Exchange Notes
will not be entitled to certain rights of holders of the Original Notes under
the Registration Agreement (as defined herein), which rights will terminate upon
the consummation of the Exchange Offer. The Exchange Notes will evidence the
same debt as the Original Notes (which they replace) and will be entitled to the
benefits of an Indenture dated as of April 7, 1998 governing the Original Notes
and the Exchange Notes (the "Indenture"). For a complete description of the
terms of the Exchange Notes, see "Description of the Notes." There will be no
cash proceeds to the Issuer from the Exchange Offer.
The Notes are redeemable at the option of the Issuer, in whole or in part, at
any time on or after May 15, 2003, at the redemption prices set forth herein,
plus accrued and unpaid interest to the date of redemption. In addition, the
Issuer, at its option, may redeem in the aggregate up to 35% of the original
principal amount of the Notes at any time and from time to time prior to May 15,
2001 at 108 1/8% of the aggregate principal amount so redeemed, plus accrued and
unpaid interest thereon to the redemption date, with the Net Proceeds (as
defined herein) of one or more Public Equity Offerings (as defined herein),
provided that at least 65% of the aggregate principal amount of the Notes
originally issued remain outstanding immediately after the occurrence of each
such redemption. See "Description of the Notes-Optional Redemption."
The Notes will be senior unsecured obligations of the Issuer ranking pari
passu in right of payment with all existing and future senior unsecured
indebtedness of the Issuer and senior in right of payment to all existing and
future subordinated indebtedness of the Issuer. The Notes will be effectively
subordinated to all secured indebtedness of the Issuer to the extent of the
value of the assets securing such indebtedness. As of June 30, 1998, on a pro
forma basis after giving effect to the Recent Acquisitions (as defined herein),
there would have been approximately $2.4 million of secured indebtedness
outstanding of the Issuer to which holders of the Notes would be effectively
subordinated in right of payment. The Issuer is an indirect subsidiary of Pierce
Leahy Corp., a Pennsylvania corporation ("Pierce Leahy").
The Notes will be guaranteed (the "Domestic Guarantees") on an unsecured
senior subordinated basis by Pierce Leahy, its two U.S. subsidiaries (Advanced
Box, Inc. and Monarch Box, Inc.) and by each future U.S. Restricted Subsidiary
(as defined herein) of Pierce Leahy (each, a "Domestic Guarantor"). Accordingly,
the Domestic Guarantees will be subordinated in right of payment to all existing
and future Senior Indebtedness (as defined herein) of the Domestic Guarantors
and will rank pari passu in right of payment to all existing and future senior
subordinated indebtedness of the Domestic Guarantors. As of June 30, 1998, on a
pro forma basis after giving effect to the Recent Acquisitions, the Domestic
Guarantors would have had approximately $116.9 million of Senior Indebtedness
which would be senior in right of payment to the Domestic Guarantees and $250
million of senior subordinated indebtedness which would rank pari passu with the
Domestic Guarantees.
In addition, the Notes will be guaranteed (the "Canadian Guarantees") on a
senior unsecured basis by Archivex Limited, a Nova Scotia company ("Archivex")
which is a wholly-owned subsidiary of Pierce Leahy and which borrowed from the
Company a portion of the proceeds of the Offering, and by any future Canadian
subsidiaries of Pierce Leahy which are not prohibited by the laws of Canada or
any province
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thereof from acting as a guarantor of the Notes and which have either assets or
shareholders' equity in excess of $5,000 (each, a "Canadian Guarantor"). As of
June 30, 1998, on a pro forma basis after giving effect to the Recent
Acquisitions, the only indebtedness outstanding of Archivex would be the amounts
borrowed from the Issuer.
Each current and future Domestic Guarantor and Canadian Guarantor will
guarantee the Notes on a full and unconditional basis, as described in detail
herein.
Upon a Change of Control (as defined herein), each holder of the Notes will be
entitled to require the Issuer to purchase such holder's Notes at 101% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the
purchase date. See "Description of the Notes-Change of Control Offer." There can
be no assurance that the Issuer will have sufficient funds or will be
contractually permitted by outstanding Senior Indebtedness of the Issuer or
Pierce Leahy to pay the required purchase price for all Notes tendered by
holders upon a Change of Control. If certain changes affecting Canadian
withholding taxes occur, the Notes may be redeemed by the Issuer at a redemption
price equal to 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the redemption date. See "Description of the Notes-
Redemption for Changes in Canadian Withholding Taxes."
The Exchange Notes will bear interest from the most recent date to which
interest has been paid on the Original Notes, or if no interest has been paid on
the Original Notes, from April 7, 1998. Holders whose Original Notes are
accepted for exchange will not receive any payment in respect of interest on
such Original Notes otherwise payable on any interest payment date the record
date for which occurs on or after consummation of the Exchange Offer. See "The
Exchange Offer-Terms of the Exchange Offer."
_________________
SEE "RISK FACTORS" COMMENCING ON PAGE 16 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS OF THE NOTES.
_________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
_________________
The date of this Prospectus is ______________, 1998
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The Original Notes were sold (the "Offering") on April 7, 1998, in a
transaction not registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon an exemption provided in the Securities Act.
Accordingly, the Original Notes may not be offered, resold or otherwise pledged,
hypothecated or transferred in the United States unless registered under the
Securities Act or unless an exemption from the registration requirements of the
Securities Act is available. The Exchange Notes are being offered to satisfy the
obligations of the Issuer under the Registration Agreement (as defined herein)
relating to the Original Notes. See "The Exchange Offer-Purposes and Effects of
the Exchange Offer." Each holder receiving Exchange Notes, other than a
broker-dealer, will represent that the holder is not engaging in or intending to
engage in a distribution of such Exchange Notes. Exchange Notes issued pursuant
to the Exchange Offer in substitution for the Original Notes may be offered for
resale, resold or otherwise transferred by the holders thereof (other than any
holder that is an affiliate of the Issuer within the meaning of Rule 405 under
the Securities Act), without compliance with the registration and prospectus
delivery requirements of the Securities Act, provided that such Exchange Notes
are acquired in the ordinary course of such holders' business and such holders
have no arrangement or understanding with any person to participate in the
distribution of such Exchange Notes. Each broker-dealer that receives Exchange
Notes for its own account pursuant to the Exchange Offer must acknowledge that
it will deliver a prospectus in connection with any resale of such Exchange
Notes. The Letter of Transmittal states that by acknowledging and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. See "The Exchange
Offer-Purposes and Effects of the Exchange Offer" and "Plan of Distribution."
Broker-dealers may use this Prospectus, as amended or supplemented, in
connection with resales of the Exchange Notes received in exchange for the
Original Notes which such Notes were acquired by such broker-dealer as a result
of market making activities or other such trading.
The Exchange Offer is not conditioned on any minimum aggregate principal
amount of Original Notes being tendered for substitution. The Issuer will accept
for substitution any and all validly tendered Original Notes not withdrawn prior
to 5:00 p.m., New York City time, on _____________, 1998 unless extended by the
Issuer, in its sole discretion (the "Expiration Date"). Tenders of Original
Notes may be withdrawn at any time prior to the Expiration Date. The Exchange
Offer is subject to certain customary conditions. See "The Exchange
Offer-Conditions." Original Notes may be tendered only in integral multiples of
$1,000. The Issuer will pay all expenses incident to the Exchange Offer.
The Notes constitute securities for which there is no established trading
market. Any Original Notes not tendered and accepted in the Exchange Offer will
remain outstanding. The Issuer does not currently intend to list the Exchange
Notes on any securities exchange. To the extent that any Original Notes are
tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Original Notes could be adversely affected. No assurance can be given
as to the liquidity of the trading market for either the Original Notes or the
Exchange Notes.
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AVAILABLE INFORMATION
Pierce Leahy Command Company (the "Issuer"), Pierce Leahy Corp. ("Pierce
Leahy"), Advanced Box, Inc. ("Advanced"), Monarch Box, Inc. ("Monarch") and
Archivex Limited ("Archivex", together with the Issuer, Pierce Leahy, Advanced
and Monarch, the "Registrants") have filed with the Commission a Registration
Statement on Form S-4 under the Securities Act with respect to the Exchange
Notes offered hereby (including all amendments and supplements thereto, 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 document filed
as an exhibit to the Registration Statement, each such statement being qualified
by such reference.
Pierce Leahy is subject to the periodic reporting and other 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. As permitted by the rules and regulations of the Commission,
this Prospectus omits certain information, exhibits and undertakings contained
in the Registration Statement. For further information with respect to the
Registrants and the Exchange Notes offered hereby, reference is made to the
Registration Statement, including the exhibits thereto and the financial
statements, notes and schedules filed as part hereof or incorporated by
reference herein. The Registration Statement (and the exhibits and schedules
thereto), as well as the periodic reports and other information filed by Pierce
Leahy 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
7 World Trade Center, Suite 1300, New York, New York 10048 and 500 West Madison
Street, Suite 1400, 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 are 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). Pierce
Leahy has agreed that, whether or not it is subject to filing requirements under
Section 13 or 15(d) of the Exchange Act, and so long as any Notes remain
outstanding, it will file with the Commission (but only if the Commission at
such time is accepting such voluntary filings) and will send the Trustee copies
of the financial information, documents and reports that would have been
required to be filed with the Commission pursuant to the Exchange Act.
The principal address of the Registrants is c/o Pierce Leahy Corp., 631 Park
Avenue, King of Prussia, Pennsylvania 19406, telephone number 610-992-8200.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by Pierce Leahy with the
Commission pursuant to the Exchange Act, are incorporated by reference in this
Prospectus:
1. Pierce Leahy's Annual Report on Form 10-K for the fiscal year ended
December 31,1997.
2. Pierce Leahy's Quarterly Report on Form 10-Q for the quarter ended June
30, 1998.
3. Pierce Leahy's Current Report on Form 8-K dated July 2, 1998.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded, except as so modified or superseded,
shall be deemed to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. Such documents (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference) are
available to any person, including any beneficial owner of the Notes, to which
this Prospectus is delivered, on written or oral request, without change,
directed to the Secretary of Pierce Leahy Corp., 631 Park Avenue, King of
Prussia, Pennsylvania, 19406, telephone number 610-992-8200.
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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, OR INCORPORATED BY REFERENCE IN, THIS
PROSPECTUS. EXCEPT AS OTHERWISE INDICATED BY THE CONTEXT, REFERENCES TO THE
"COMPANY" INCLUDE PIERCE LEAHY CORP. ("PIERCE LEAHY") AND ITS CONSOLIDATED
SUBSIDIARIES, INCLUDING WITHOUT LIMITATION, THE ISSUER, ADVANCED BOX, INC.,
MONARCH BOX, INC. AND ARCHIVEX LIMITED ("ARCHIVEX"). 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. ALL DOLLAR AMOUNTS HEREIN ARE EXPRESSED IN U.S. DOLLARS, EXCEPT WHERE
OTHERWISE INDICATED.
THE ISSUER AND THE COMPANY
Pierce Leahy Command Company, a Nova Scotia unlimited liability company
("Command" or the "Issuer"), is the issuer of the Notes and is an indirect
subsidiary of Pierce Leahy, which is a guarantor of the Notes on an unsecured
senior subordinated basis. The Issuer operates 26 records management facilities
in the eight largest markets in Canada. In 1997, certain members of the Pierce
family entered into a voting trust agreement pursuant to which Leo W. Pierce,
Sr. and J. Peter Pierce, as voting trustees, are eligible to direct the voting
with respect to the shares subject to the voting trust agreement. Currently,
approximately 51% of the outstanding shares of the Company's Common Stock are
subject to the voting trust agreement. Consequently, the voting trustees are
able to determine the outcome of corporate actions requiring shareholder
approval and otherwise control the business affairs of the Company. See
"Principal Shareholders of Pierce Leahy-Voting Trust Agreement."
The Company is the largest hard copy records management company in North
America, as measured by its 78 million cubic feet of records currently under
management. The Company operates a total of 222 records management facilities of
which 192 are in the United States, serving 69 markets, including 23 of the 25
largest U.S. markets. In addition, the Company operates 30 records management
facilities in Canada's nine largest markets, including 26 facilities operated by
the Issuer and four facilities operated by Archivex.
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 40,000 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.
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From 1993 to 1997, the Company's revenues grew at an average annual rate of
25.8%. 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
successfully acquired and integrated 39 companies from 1993 to 1997. In
addition, the Company has acquired 16 companies since the beginning of
1998.
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 approximately 70 persons at the end of 1996 to
approximately 130 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 1993 to 1997, the average annual
growth rate of cubic feet of storage from new customers was approximately
9%.
. 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 1993 to 1997, 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 1993 to 1997, the Company successfully completed
and integrated 39 acquisitions, totalling approximately 22.3 million
cubic feet of records at the time of acquisition. Since the beginning of
1998, the Company has acquired 16 records management companies, adding an
aggregate of 13.2 million cubic feet of records (an increase of
approximately 22% from December 31, 1997) at the time of acquisition,
including the acquisition of Archivex Inc. (the "Archivex Acquisition")
and the acquisition of Kestrel Holdings, Inc. (the "Kestrel
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 1993 to 1997,
the average annual growth rate of cubic feet of storage from acquisitions
was approximately 15%. See "Business--Acquisition and Growth Strategy."
The Company has traditionally financed its acquisitions with debt. See
"Risk Factors -- Potential Inability to Repay Debt."
The Company's growth strategy is supported by an operating strategy which
emphasizes providing premium standardized services while maintaining a low-cost
operating structure. Both strategies apply to the entire North American market
(United States and Canada). 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
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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 also 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 2,600
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.
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. 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.
THE ARCHIVEX ACQUISITION
Concurrently with the Offering, the Company acquired substantially all of the
assets of Archivex Inc., a Canadian corporation, with a portion of the proceeds
of the Offering. Archivex Inc. had operations in six Canadian cities, including
three markets in which the Issuer previously operated (Calgary, Montreal and
Toronto) and three new markets in which Command did not previously have a
presence (Edmonton, Quebec City and Winnipeg). A newly formed wholly-owned
subsidiary of Pierce Leahy, Archivex, purchased and operates the assets of
Archivex Inc. in Montreal. The Issuer purchased the remaining assets of Archivex
Inc. The aggregate cash consideration for the Archivex Acquisition, which
represented a significant expansion in the Canadian market for the Company, was
approximately $63.0 million. Included in the Archivex Acquisition are six owned
records storage facilities with in excess of an aggregate of 600,000 square feet
of space and five leased records storage facilities with approximately 100,000
square feet of space. The Archivex Acquisition added approximately 4.0 million
cubic feet of records under management.
THE KESTREL ACQUISITION
On July 2, 1998, the Company purchased all of the capital stock of Kestrel
Holdings, Inc., a records storage company which, through its subsidiaries,
operates records storage facilities in Dallas and Houston. Included as part of
the Kestrel Acquisition are four owned records storage facilities with an
aggregate of approximately 264,000 square feet of space and four leased records
storage facilities with an aggregate of approximately 350,000 square feet of
space. The Kestrel Acquisition added approximately 2.5 million cubic feet of
records under management. The consideration for the Kestrel Acquisition was
approximately $52 million and was financed through borrowings under the Credit
Facility (as hereinafter defined). The Company did not use any of the proceeds
of the Offering to finance the Kestrel Acquisition.
-5-
<PAGE>
THE EXCHANGE OFFER
Purpose of the Exchange Offer........ The Original Notes were sold in a
transaction exempt from the registration
requirements of the Securities Act by the
Issuer on April 7, 1998 to Salomon
Brothers Inc, CIBC Oppenheimer Corp. and
PaineWebber Incorporated (the "Initial
Purchasers"). In connection therewith, the
Issuer executed and delivered, for the
benefit of the holders of the Original
Notes, a Registration Agreement dated
April 2, 1998 (the "Registration
Agreement"), which is filed as an exhibit
to the Registration Statement of which
this Prospectus is a part, providing for,
among other things, the Exchange Offer so
that the Exchange Notes will be freely
transferable by the holders thereof
without registration or any prospectus
delivery requirements under the Securities
Act, except that a "dealer" or any of its
"affiliates" as such terms are defined
under the Securities Act, who replaces
Original Notes held for its own account
will be required to deliver copies of this
Prospectus in connection with any resale
of the Exchange Notes issued in
substitution for such Original Notes. See
"The Exchange Offer-Purposes and Effects
of the Exchange Offer" and "Plan of
Distribution."
The Exchange Offer................... The Issuer is offering to substitute
$1,000 principal amount of Exchange Notes
for each $1,000 principal amount of
Original Notes that are properly tendered
and accepted. The Issuer will issue
Exchange Notes on or promptly after the
Expiration Date. There is $135,000,000
aggregate principal amount of Original
Notes outstanding. The Original Notes and
the Exchange Notes are collectively
referred to herein as the "Notes." The
terms of the Exchange Notes are
substantially identical in all respects
(including principal amount, interest rate
and maturity) to the terms of the Original
Notes for which they may be substituted
pursuant to the Exchange Offer, except
that (i) the Exchange Notes are freely
transferable by holders thereof (other
than as provided herein), and are not
subject to any covenant restricting
transfer absent registration under the
Securities Act and (ii) holders of the
Exchange Notes will not be entitled to
certain rights of holders of the Original
Notes under the Registration Agreement,
which rights will terminate upon the
consummation of the Exchange Offer. See
"The Exchange Offer."
Based on an interpretation by the staff of
the Securities and Exchange Commission
(the "Commission") set forth in no-action
letters issued to third parties, the
Issuer believes that the Exchange Notes
issued pursuant to the Exchange Offer in
substitution for Original Notes may be
offered for resale, resold and otherwise
transferred by a holder thereof (other
than (i) a broker-dealer who purchases
such Exchange Notes directly from the
Issuer to resell pursuant to Rule 144A
under the Securities Act or any other
available exemption under the Securities
Act or (ii) a person that is an affiliate
(as defined in Rule 405 under the
Securities Act) of the Issuer), without
compliance with the registration and
prospectus delivery provisions of the
Securities Act, provided that the holder
is acquiring the Exchange Notes in the
ordinary course of its business and is not
participating, and had no
-6-
<PAGE>
arrangement or understanding with any
person to participate, in the distribution
of the Exchange Notes. Each broker-dealer
that receives Exchange Notes for its own
account in substitution for Original
Notes, where such Notes were acquired by
such broker-dealer as a result of market-
making activities or other trading
activities, must acknowledge that it will
deliver a prospectus in connection with
any resale of such Exchange Notes.
Registration Agreement.............. The Original Notes were sold by the Issuer
on April 7, 1998 to the Initial Purchasers
pursuant to a Purchase Agreement dated as
of April 2, 1998 by and among the Issuer,
Pierce Leahy and the Initial Purchasers
(the "Purchase Agreement"). Pursuant to
the Purchase Agreement, the Issuer, Pierce
Leahy and the Initial Purchaser entered
into the Registration Agreement which
grants the holders of the Original Notes
certain rights to substitute Exchange
Notes for Original Notes and certain
registration rights. See "The Exchange
Offer-Termination of Certain Rights." The
Exchange Offer is intended to satisfy such
rights, which terminate upon the
consummation of the Exchange Offer. The
holders of the Exchange Notes are not
entitled to any substitution or
registration rights with respect to the
Exchange Notes.
Expiration Date..................... The Exchange Offer will expire at 5:00
p.m., New York City time, on
______________, 1998, unless the Exchange
Offer is extended by the Issuer in its
reasonable discretion, in which case the
term "Expiration Date" shall mean the
latest date and time to which the Exchange
Offer is extended.
Accrued Interest on the Exchange
Notes and Original Notes............ Interest on the Exchange Notes will accrue
from (A) the later of (i) the last
interest payment date on which interest
was paid on the Notes surrendered and
replaced by Exchange Notes or (ii) if the
Notes are surrendered for replacement on a
date in a period which includes the record
date for an interest payment date to occur
on or after the date of such exchange and
as to which interest will be paid, the
date of such interest payment date, or (B)
if no interest has been paid on the Notes,
from April 7, 1998. Holders whose Original
Notes are accepted for replacement will be
deemed to have waived the right to receive
any interest accrued on the Original
Notes.
Conditions to the Exchange Offer.... The Exchange Offer is subject to certain
customary conditions, which may be waived
by the Issuer. See "The Exchange Offer-
Conditions." The Exchange Offer is not
conditioned upon any minimum aggregate
principal amount of Original Notes being
tendered for replacement. The Issuer
reserves the right to terminate or amend
the Exchange Offer at any time prior to
the Expiration Date upon the occurrence of
any such conditions.
Procedures for Tendering
Original Notes...................... Each holder of Original Notes wishing to
accept the Exchange Offer must complete,
sign and date the Letter of Transmittal,
or a facsimile thereof, in accordance with
the instructions contained herein and
-7-
<PAGE>
therein, and mail or otherwise deliver
such Letter of Transmittal, or such
facsimile, together with the Original
Notes and any other required documentation
to the exchange agent (the "Exchange
Agent") at the address set forth herein.
Original Notes may be physically
delivered, but physical delivery is not
required if a confirmation of a book-entry
transfer of such Original Notes to the
Exchange Agent's account at The Depository
Trust Company ("DTC" or the "Depository")
is delivered in a timely fashion. By
executing the Letter of Transmittal, each
holder will represent to the Issuer that,
among other things, the Exchange Notes
acquired pursuant to the Exchange Offer
are being obtained in the ordinary course
of business of the person receiving such
Exchange Notes, whether or not such person
is the holder, that neither the holder nor
any such other person is engaged in, or
intends to engage in, or has an
arrangement or understanding with any
person to participate in, the distribution
of such Exchange Notes and that neither
the holder nor any such other person is an
"affiliate," as defined under Rule 405 of
the Securities Act, of the Issuer. Each
broker or dealer that receives Exchange
Notes for its own account in substitution
for Original Notes, where such Original
Notes were acquired by such broker or
dealer as a result of market-making
activities or other trading activities,
must acknowledge that it will deliver a
prospectus in connection with any resale
of such Exchange Notes. See "The Exchange
Offer-Procedures for Tendering" and "Plan
of Distribution."
Special Procedures for
Beneficial Owners................... Any beneficial owner whose Original Notes
are registered in the name of a broker,
dealer, commercial bank, trust company or
other nominee and who wishes to tender
should contact such registered holder
promptly and instruct such registered
holder to tender on such beneficial
owner's behalf. If such beneficial owner
wishes to tender on such owner's own
behalf, such owner must, prior to
completing and executing the Letter of
Transmittal and delivering his Original
Notes, either make appropriate
arrangements to register ownership of the
Original Notes in such owner's name or
obtain a properly completed bond power
from the registered holder. The transfer
of registered ownership may take
considerable time. See "The Exchange
Offer-Procedures for Tendering."
Guaranteed Delivery Procedures...... Holders of Original Notes who wish to
tender their Original Notes and whose
Original Notes are not immediately
available or who cannot deliver their
Original Notes, the Letter of Transmittal
or any other documents required by the
Letter of Transmittal to the Exchange
Agent prior to the Expiration Date, must
tender their Original Notes according to
the guaranteed delivery procedures set
forth in the section titled "Exchange
Offer-Guaranteed Delivery Procedures."
Acceptance of the Original Notes
and Delivery of the Exchange
Notes............................... Subject to the satisfaction or waiver of
the conditions to the Exchange Offer, the
Issuer will accept for replacement any and
all Original Notes which are properly
tendered in the Exchange Offer prior to
the
-8-
<PAGE>
Expiration Date. The Exchange Notes issued
pursuant to the Exchange Offer will be
delivered on the earliest practicable date
following the Expiration Date. See "The
Exchange Offer-Terms of the Exchange
Offer."
Withdrawal Rights................... Tenders of Original Notes may be withdrawn
at any time prior to the Expiration Date.
See "The Exchange Offer-Withdrawal of
Tenders."
Certain Federal Income Tax
Considerations...................... For a discussion of certain federal income
tax considerations relating to the
exchange of the Exchange Notes for the
Original Notes, see "Certain Federal
Income Tax Considerations."
Exchange Agent...................... The Bank of New York is serving as the
Exchange Agent in connection with the
Exchange Offer. See "The Exchange Offer-
Exchange Agent."
Effect on Holders of the
Original Notes...................... As a result of the making of, and upon
acceptance for replacement of all validly
tendered Original Notes pursuant to the
terms of the Exchange Offer, the Issuer
will have fulfilled one of the covenants
contained in the Registration Agreement
and, accordingly, there will be no
increase in the interest rate on the
Original Notes pursuant to the applicable
terms of the Registration Agreement due to
the Exchange Offer. Holders of the
Original Notes who do not tender their
Original Notes will be entitled to all the
rights and limitations applicable thereto
under the Indenture dated as of April 7,
1998, among the Issuer and The Bank of New
York, as trustee (the "Trustee"), relating
to the Original Notes and the Exchange
Notes (the "Indenture"), except for any
rights under the Indenture or the
Registration Agreement, which by their
terms terminate or cease to have further
effectiveness as a result of the making
of, and the acceptance for exchange of all
validly tendered Original Notes pursuant
to, the Exchange Offer. All untendered
Original Notes will continue to be subject
to the restrictions on transfer provided
for in the Original Notes and in the
Indenture. To the extent that Original
Notes are tendered and accepted in the
Exchange Offer, the trading market for
untendered Original Notes could be
adversely affected.
Use of Proceeds..................... There will be no cash proceeds to the
Issuer from the Exchange Offer.
-9-
<PAGE>
THE NOTES
The Exchange Notes.................. The Exchange Offer applies to $135,000,000
aggregate principal amount of the Original
Notes. The form and terms of the Exchange
Notes are the same as the form and terms
of the Original Notes except that (i) the
Exchange Offer will have been registered
under the Securities Act and, therefore,
the Exchange Notes will not bear legends
restricting their transfer pursuant to the
Securities Act, and (ii) holders of the
Exchange Notes will not be entitled to
certain rights of holders of the Original
Notes under the Registration Agreement,
which rights will terminate upon
consummation of the Exchange Offer. The
Exchange Notes will evidence the same debt
as the Notes (which they replace) and will
be issued under, and be entitled to the
benefits of, the Indenture. See
"Description of the Notes" for further
information and for definitions of certain
capitalized terms used below.
Issuer.............................. Pierce Leahy Command Company.
Maturity Date....................... May 15, 2008.
Interest Payment Dates.............. May 15 and November 15, commencing
November 15, 1998.
Ranking............................. The Notes will be general senior unsecured
obligations of the Issuer, ranking pari
passu in right of payment with all
existing and future senior indebtedness of
the Issuer and senior in right of payment
to all existing and future subordinated
indebtedness of the Issuer. The Notes will
be effectively subordinated to all secured
indebtedness of the Issuer to the extent
of the value of the assets securing such
indebtedness. As of June 30, 1998, on a
pro forma basis after giving effect to the
Recent Acquisitions (which, as defined
herein, includes the Kestrel Acquisition),
the Issuer would have approximately $.7
million of senior indebtedness ranking
pari passu which consists of trade
payables. In addition as of such date, on
a pro forma basis the Issuer would have
had approximately $2.4 million of secured
indebtedness outstanding to which holders
of the Notes would have been effectively
subordinated in right of payment. The
Indenture permits the Issuer to incur
additional indebtedness, including secured
senior indebtedness, subject to certain
limitations, to which the Notes will be
effectively subordinated to the extent of
the value of the assets securing such
indebtedness.
Guarantees.......................... The Notes will be guaranteed (the
"Domestic Guarantees"), on an unsecured
senior subordinated basis, by Pierce Leahy
and by each current and future U.S.
Restricted Subsidiary of Pierce Leahy
(together with Pierce Leahy, the "Domestic
Guarantors"). The Domestic Guarantees will
be subordinated in right of payment to all
existing and future Senior Indebtedness
(as defined herein) of the respective
Domestic Guarantors, including without
limitation, indebtedness under the Credit
Facility (as hereinafter defined), and
will rank pari passu in right of payment
to all existing and future senior
subordinated indebtedness of the Domestic
Guarantors. As of
-10-
<PAGE>
June 30, 1998, on a pro forma basis, after
giving effect to the Recent Acquisitions,
the Domestic Guarantors would have had
approximately $116.9 million of Senior
Indebtedness which would be senior in
right of payment to the Domestic
Guarantees and $250 million of senior
subordinated indebtedness which would rank
pari passu with the Domestic Guarantees.
The Notes will also be guaranteed (the
"Canadian Guarantees"), on an unsecured
senior basis, by Archivex and by future
Canadian subsidiaries of Pierce Leahy
which are not prohibited by the laws of
Canada or of any province thereof from
acting as a guarantor of the Notes and
which have either assets or shareholders'
equity in excess of $5,000 (each, a
"Canadian Guarantor"). The Canadian
Guarantees will be effectively
subordinated to all secured obligations of
the respective Canadian Guarantor to the
extent of the assets securing such
obligations, including the Credit
Facility. As of June 30, 1998, on a pro
forma basis, after giving effect to the
Recent Acquisitions, the only outstanding
indebtedness of Archivex, the only current
Canadian Guarantor, would have been the
amounts borrowed by it from the Issuer.
Each current and future Domestic Guarantor
and the Canadian Guarantor will guarantee
the Notes on a full and unconditional
basis as described in detail herein. The
Indenture permits the Domestic Guarantors
and the Canadian Guarantors (collectively,
the "Guarantors") to incur additional
indebtedness, including senior
indebtedness, subject to certain
limitations, to which the Domestic
Guarantees will be subordinated and,
effectively subordinated to the extent of
the value of assets securing any such
indebtedness in the case of the Canadian
Guarantees.
Sinking Fund........................ None.
Optional Redemption................. The Notes will be redeemable at the option
of the Issuer, in whole or in part, at any
time on or after May 15, 2003, at the
redemption prices set forth herein, plus
accrued and unpaid interest to the date of
redemption. In addition, the Issuer, at
its option, may redeem in the aggregate up
to 35% of the original principal amount of
the Notes at any time and from time to
time prior to May 15, 2001 at a redemption
price equal to 108-1/8% of the principal
amount thereof plus accrued interest to
the redemption date with the Net Proceeds
of one or more Public Equity Offerings by
Pierce Leahy, provided that at least 65%
of the original aggregate principal amount
of Notes remain outstanding immediately
after the occurrence of each such
redemption. In the event of certain
changes affecting Canadian withholding
taxes, the Notes will be subject to
redemption as a whole, but not in part, at
the option of the Issuer at any time, at
100% of the principal amount thereof, plus
accrued and unpaid interest thereon (if
any) to but excluding the redemption date.
See "Description of the Notes--Redemption
for Changes in Canadian Withholding
Taxes."
Additional Amounts.................. All payments made by the Issuer with
respect to the Notes will be made without
withholding or deduction for Canadian
taxes unless required by law or by the
interpretation or administration thereof
by the relevant government authority or
agency, in which case the Issuer
-11-
<PAGE>
will pay such additional amounts as may be
necessary so that the net amount received
by holders of the Notes (other than
certain excluded holders of the Notes)
after such withholding or deduction will
not be less than the amount that would
have been received in the absence of such
withholding or deduction. See "Description
of the Notes--Additional Amounts."
Change of Control................... Upon the occurrence of a Change of Control
of Pierce Leahy, the Issuer will be
required to make an offer to purchase all
outstanding Notes at a purchase price
equal to 101% of the principal amount
thereof plus accrued and unpaid interest,
if any, to the date of purchase. See
"Description of the Notes--Change of
Control Offer." There can be no assurance
that the Issuer will have sufficient funds
or will be contractually permitted by
outstanding Senior Indebtedness of the
Issuer or Pierce Leahy to pay the required
purchase price for all Notes tendered by
holders upon a Change of Control.
Certain Covenants................... The Indenture pursuant to which the Notes
will be issued contains certain covenants
that, among other things, restrict the
ability of Pierce Leahy and any of its
Restricted Subsidiaries (as defined
herein), including without limitation, the
Issuer, to: (i) incur additional
indebtedness; (ii) make Restricted
Payments (as hereinafter defined); (iii)
issue stock of subsidiaries; (iv) make
certain investments; (v) repurchase stock;
(vi) create liens; (vii) enter into
transactions with affiliates; (viii) enter
into sale and leaseback transactions; (ix)
enter into mergers or consolidations; and
(x) transfer and sell assets. These
covenants are subject to a number of
important exceptions and qualifications.
See "Description of the Notes--Certain
Covenants."
RISK FACTORS
Prospective purchasers of the Exchange Notes should consider carefully the
information set forth under the caption "Risk Factors," and all other
information set forth in this Prospectus, in evaluating the Notes, the Issuer
and the Company.
-12-
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA OF PIERCE LEAHY CORP.
The following summary historical and pro forma financial data of Pierce Leahy
Corp., insofar as it relates to each of the five years in the period ended
December 31, 1997, has been derived from the Company's audited consolidated
financial statements, including the consolidated balance sheets at December 31,
1996 and 1997, and the related consolidated statements of operations for each of
the three years in the period ended December 31, 1997 and the notes thereto
incorporated by reference into this Prospectus. The summary historical and pro
forma consolidated statements of operations and balance sheet data as of and for
the six months ended June 30, 1998 and summary historical statement of
operations data for the six months ended June 30, 1997 have been derived from
unaudited consolidated financial statements incorporated by reference into this
Prospectus which, in the opinion of management, include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the results for the unaudited interim periods. Results for the
six months ended June 30, 1998 are not necessarily indicative of results that
may be expected for the entire year.
The following summary pro forma statement of operations and other data give
effect to, among other things, acquisitions completed in 1997, the 1998
Acquisitions (all such 1997 acquisitions and the 1998 Acquisitions, the "1997
and 1998 Acquisitions") and the impact of the Offering, as if each of these
items had occurred on January 1, 1997. The pro forma balance sheet gives effect
to the 1998 acquisitions which closed after June 30, 1998 (the "Recent
Acquisitions") as if the Recent Acquisitions had occurred on June 30, 1998. In
1997, the Company recorded a deferred income tax provision of $6,600 (in
thousands) in connection with the termination of the Company's status as a
Subchapter S corporation for the tax effect of differences in the basis of
assets and liabilities for financial reporting and income tax purposes. This
one-time deferred income tax provision has been eliminated 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
of $6,036 (in thousands) for the early extinguishment of a portion of the 1996
Notes that occurred in August 1997.
The pro forma items and certain management assumptions and adjustments are
described in the accompanying notes hereto. This pro forma information is not
necessarily indicative of the results that would have occurred had the 1997 and
1998 Acquisitions and the Offering been completed on the dates indicated or of
the Company's actual or future results or financial position. The summary
historical and pro forma consolidated statements of operations, other data and
balance sheets should be read in conjunction with the information contained in
the Company's Consolidated Financial Statements and the notes thereto
incorporated by reference into this Prospectus and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Selected Historical
and Pro Forma Consolidated Statements of Operations, Other Data and Balance
Sheets of Pierce Leahy Corp." and "Pro Forma Financial Data of Pierce Leahy
Corp." included elsewhere in this Prospectus.
-13-
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA DATA OF PIERCE LEAHY CORP.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------------
Pro Forma
1993 1994 1995 1996 1997 1997 (a)
------------ ------------ ------------ ------------ ------------ ------------
(unaudited)
(dollars in thousands, except share and per share data)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues:
Storage.........................................$ 42,122 $ 47,123 $ 55,501 $ 75,900 $ 107,879 $ 160,963
Service and storage material sales.............. 31,266 35,513 39,895 53,848 75,638 113,745
----------- ----------- ----------- ----------- ----------- -----------
Total revenues................................. 73,388 82,636 95,396 129,748 183,517 274,708
Cost of sales, excluding depreciation and
amortization.................................... 45,391 49,402 55,616 73,870 101,940 154,211
Selling, general and administrative.............. 11,977 15,882 16,148 20,007 30,070 53,497
Depreciation and amortization.................... 6,888 8,436 8,163 12,869 21,528 34,327
Special compensation charge (b).................. -- -- -- -- 1,752 1,752
Foreign currency exchange........................ -- -- -- -- 702 702
Consulting payments to related parties (c)....... -- 500 500 -- -- --
Non-recurring charges with related parties(d).... -- -- -- 3,254 -- --
----------- ----------- ----------- ----------- ----------- -----------
Operating income................................ 9,132 8,416 14,969 19,748 27,525 30,219
Interest expense................................. 6,160 7,216 9,622 17,225 29,262 42,587
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes and
extraordinary charge........................... 2,972 1,200 5,347 2,523 (1,737) (12,368)
Income taxes (e)................................. -- -- -- -- 7,424 (1,928)
Extraordinary charge (f)......................... 9,174 5,991 3,279 2,015 6,036 --
----------- ----------- ----------- ----------- ----------- -----------
Net income (loss)................................ (6,202) (4,791) 2,068 508 (15,197) (10,440)
Accretion (cancellation) of redeemable warrants.. (746) 16 889 1,561 -- --
----------- ----------- ----------- ----------- ----------- -----------
Net income (loss) applicable to Common
shareholders....................................$ (5,456) $ (4,807) $ 1,179 $ (1,053) $ (15,197) $ (10,440)
=========== =========== =========== =========== =========== ===========
Basic and diluted earnings per Common share--
Income (loss) before extraordinary charge.......$ 0.34 $ 0.18 $ 0.19 $ 0.09 $ (0.69)
Extraordinary charge............................ (0.85) (0.56) (0.30) (0.19) (0.45)
----------- ----------- ----------- ----------- -----------
Basic and diluted income (loss) per Common share$ (0.51) $ (0.38) $ 0.11 $ (0.10) $ (1.14)
=========== =========== =========== =========== ===========
Shares used in computing basic net income
(loss) per Common Share........................ 10,591,090 10,591,090 10,591,090 10,546,871 13,385,243
Shares used in computing diluted net income
(loss) per Common share....................... 10,782,025 10,888,441 10,890,188 10,630,922 13,385,243
Pro forma data (unaudited):
Historical net loss before income taxes and
extraordinary charge.......................... $ (1,737)
Pro forma adjustment for income taxes (e)...... 1,452
Extraordinary charge, net of tax............... 6,036
-----------
Historical net loss applicable to Common
shareholders, as adjusted for pro forma
income taxes.................................. $ (9,225)
===========
Historical basic and diluted net loss per
Common share, as adjusted for pro forma
income taxes--
Loss before extraordinary charge............... $ (0.24)
Extraordinary charge........................... (0.45)
-----------
$ (0.69)
===========
Pro forma basic and diluted net loss
applicable to Common shareholders per Common
share......................................... $ (0.61) (g)
Shares used in computing per share amounts..... 13,385,243 17,025,990
Other Data:
Ratio of earnings to fixed charges (h)........... 1.30x 1.11x 1.37x 1.11x -- --
Cash flows provided by operations................$ 8,019 $ 11,000 $ 17,522 $ 26,438 $ 20,964 --
Cash flows used in investing activities..........$ (13,784) $ (13,933) $ (51,315) $ (108,842) $ (156,549) --
Cash flows provided by financing activities......$ 5,832 $ 2,763 $ 34,157 $ 82,936 $ 136,113 --
EBITDA (i).......................................$ 16,020 $ 17,352 $ 23,632 $ 35,871 $ 51,507 $ 67,000
EBITDA margin.................................... 21.8% 21.0% 24.8% 27.6% 28.1% 24.4%
EBITDA, as adjusted (j).......................... -- -- -- -- -- $ 82,381
Capital expenditures (k).........................$ 5,827 $ 6,352 $ 16,288 $ 23,493 $ 35,397 --
Cubic feet of storage under management at end of
period (000s) (l)............................... 19,025 22,160 29,523 40,410 58,865 72,098
As of December 31,
-------------------------------------------------------------------
1993 1994 1995 1996 1997
BALANCE SHEET DATA: ----------- ----------- ----------- ----------- -----------
Working capital deficit..........................$ (9,143) $ (5,202) $ (8,139) $ (23,933) $ (12,906)
Total assets..................................... 74,621 79,746 131,328 234,820 394,713
Total debt....................................... 69,736 77,683 120,071 29,023 279,197
Shareholders' equity (deficit)................... (14,508) (19,341) (18,201) (25,438) 59,323
Six Months Ended June 30,
--------------------------------------------------
Pro Forma
1997 1998 1998 (a)
--------------- --------------- ----------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
Statement of Operations Data:
Revenues:
Storage.............................................$ 50,013 $ 70,397 $ 81,313
Service and storage material sales.................. 36,427 50,039 57,857
----------- ----------- -----------
Total revenues..................................... 86,440 120,436 139,170
Cost of sales, excluding depreciation and
amortization........................................ 47,909 69,194 78,457
Selling, general and administrative.................. 14,171 17,630 22,634
Depreciation and amortization........................ 9,424 15,796 19,245
Special compensation charge (b)...................... -- -- --
Foreign currency exchange............................ 120 3,662 3,662
Consulting payments to related parties (c)........... -- -- --
Non-recurring charges with related parties(d)........ -- -- --
----------- ----------- -----------
Operating income.................................... 14,816 14,154 15,172
Interest expense..................................... 14,855 18,683 21,293
----------- ----------- -----------
Income (loss) before income taxes and
extraordinary charge............................... (39) (4,529) (6,121)
Income taxes (e)..................................... -- 965 352
Extraordinary charge (f)............................. -- -- --
----------- ----------- -----------
Net income (loss).................................... (39) (5,494) (6,473)
Accretion (cancellation) of redeemable warrants...... -- -- --
----------- ----------- -----------
Net income (loss) applicable to Common shareholders..$ (39) $ (5,494) $ (6,473)
=========== =========== ===========
Basic and diluted earnings per Common share--
Income (loss) before extraordinary charge...........$ 0.00 $ (0.33)
Extraordinary charge................................ -- --
----------- -----------
Basic and diluted income (loss) per Common share....$ 0.00 $ (0.33)
=========== ===========
Shares used in computing basic net income
(loss) per Common Share............................ 10,485,090 16,578,243
Shares used in computing diluted net income
(loss) per Common share........................... 10,485,090 16,578,243
Pro forma data (unaudited):
Historical net loss before income taxes and
extraordinary charge..............................$ (39)
Pro forma adjustment for income taxes (e).......... 628
Extraordinary charge, net of tax................... --
-----------
Historical net loss applicable to Common
shareholders, as adjusted for pro forma
income taxes......................................$ (667)
===========
Historical basic and diluted net loss per
Common share, as adjusted for pro forma
income taxes--
Loss before extraordinary charge...................$ (0.06)
Extraordinary charge............................... --
-----------
$ (0.06)
===========
Pro forma basic and diluted net loss
applicable to Common shareholders per Common
share............................................. $ (0.38) (g)
Shares used in computing per share amounts......... 10,485,090 16,578,243 17,025,990
OTHER DATA:
Ratio of earnings to fixed charges (h)............... -- -- --
Cash flows provided by operations....................$ 3,995 $ 15,208 --
Cash flows used in investing activities..............$ (105,595) $ (167,735) --
Cash flows provided by financing activities..........$ 101,582 $ 153,277 --
EBITDA (i)...........................................$ 24,360 $ 33,612 $ 38,079
EBITDA margin ...................................... 28.2% 27.9% 27.4%
EBITDA, as adjusted (j).............................. -- -- $ 40,707
Capital expenditures (k) ..........................$ 16,350 $ 19,215 --
Cubic feet of storage under management at end of
period (000s) (l)................................... 51,100 72,995 76,426
As of June 30, 1998
--------------------------------
Pro
BALANCE SHEET DATA: Actual Forma (m)
-------------- ---------------
Working capital deficit.............................. $ (14,983) $ (14,332)
Total assets......................................... 582,518 646,947
Total debt........................................... 442,743 503,825
Shareholders' equity (deficit)....................... 68,530 68,530
</TABLE>
The accompanying notes are an integral part of this statement.
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NOTES TO SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA OF PIERCE LEAHY CORP.
(a) Gives effect to (i) the 1997 and the 1998 Acquisitions and (ii) the impact
of the Offering, as if each of these items had occurred on January 1, 1997.
See "Pro Forma Financial Data of Pierce Leahy Corp." and Note 2 of the
Notes to Consolidated Financial Statements incorporated by reference
herein. In 1997, the Company recorded a deferred income tax provision of
$6,600 in connection with the termination of the Company's status as a
Subchapter S corporation for the tax effect of differences in the basis of
assets and liabilities for financial reporting and income tax purposes.
This one-time deferred income tax provision has been eliminated in the
December 31, 1997 Pro Forma Condensed Consolidated Statement of Operations.
Also not reflected in the December 31, 1997 Pro Forma Condensed
Consolidated Statement of Operations is the extraordinary charge of $6,036
for the early extinguishment of a portion of the 1996 Notes that occurred
in August 1997. See Note (f) below.
(b) Upon consummation of Pierce Leahy's 1997 initial public offering, options
granted during 1997 became fully vested and exercisable as provided for
under the stock option plan. The Company recorded a non-recurring, non-
cash compensation charge of $1,752 relating to those options, representing
the difference between the exercise price and the deemed value for
accounting purposes.
(c) Represents aggregate payments made to eight Pierce family members.
(d) Represents non-recurring charge 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.
(e) Until July 1, 1997, the Company was taxed as a Subchapter S corporation.
Such status was terminated in connection with Pierce Leahy's 1997 initial
public offering. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Note 2 of Notes to Consolidated
Financial Statements incorporated by reference herein.
(f) Represents loss on early extinguishment of debt due to refinancings in
1993, 1994, 1995, 1996 and 1997. Amounts include the write-off of
unamortized deferred financing costs and discount, along with prepayment
penalties and other costs. A charge for the early extinguishment of a
portion of the 1996 Notes of $6,036 occurred in August 1997. Such charge
has been eliminated in the Pro Forma Condensed Consolidated Statement of
Operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
(g) Excluding $15,381 and $2,628 of operating expenses included in the pro
forma statements of operations for 1997 and for the six months ended June
30, 1998, respectively, specifically identified by management that would
not have been incurred had the 1997 and 1998 Acquisitions occurred as of
January 1, 1997 and had such cost savings been fully implemented as of such
date, and excluding the special compensation charge incurred in 1997, pro
forma net income (loss) and basic and diluted net income (loss) per share
would have been $161 and $0.01, respectively, in 1997 and ($4,847) and
($0.28) for the six months ended June 30, 1998, respectively.
(h) The earnings for the year ended December 31, 1997 and for the six months
ended June 30, 1997 and 1998 were inadequate to cover fixed charges by
$1,737, $39 and $4,529, respectively.
(i) "EBITDA" is defined as net income (loss) before interest expense, taxes,
depreciation and amortization, consulting payments to related parties, non-
recurring charges with related parties, foreign currency exchange, special
compensation charge and extraordinary charge. EBITDA is not a measure of
performance under Generally Accepted Accounting Principles ("GAAP").
Moreover, the use of EBITDA by the Company may not be comparable to
similarly titled measures as reported by other companies. 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 with GAAP, or as a measure of
profitability or liquidity, management understands that EBITDA is
customarily used as a criteria in evaluating records management companies.
However, substantially all of the Company's financing agreements, including
the Notes and the 1996 Notes and the 1997 Notes (each 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.
(j) EBITDA, as adjusted is defined as EBITDA plus $15,381 and $2,628 of
operating expenses included in the pro forma statements of operations for
1997 and for the six months ended June 30, 1998, respectively, specifically
identified by management that would not have been incurred had the 1997 and
1998 Acquisitions occurred as of January 1, 1997 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 $15,381 and $2,628 specifically
identified.
(k) Capital expenditures for 1997 are comprised of $14.9 million for new
shelving, $3.5 million for leasehold and building improvements, $10.6
million for new facility purchases and related improvements, $3.7 million
for data processing and $2.7 million for the purchase of transportation,
warehouse and office equipment.
(l) The pro forma cubic feet of storage as of June 30, 1998 includes cubic feet
of storage from the Recent Acquisitions at the time of their respective
acquisitions.
(m) Gives effect to the Recent Acquisitions as if such acquisitions had
occurred on June 30, 1998.
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RISK FACTORS
Prospective purchasers of the Exchange Notes should consider carefully the
following risk factors, in addition to the other information set forth in this
Prospectus, before making an investment in the Notes.
HIGH LEVEL OF INDEBTEDNESS AND LEVERAGE
As of June 30, 1998, on a pro forma basis after giving effect to the Recent
Acquisitions, the Issuer's and the Company's indebtedness would have been
approximately $136.9 million (excluding trade payables) and $503.8 million
(excluding trade payables), respectively. In addition, on a pro forma basis
after giving effect to the Offering, the application of the net proceeds
therefrom, and the 1998 Acquisitions, the Issuer's 1997 EBITDA would have been
$7.4 million. The pro forma 1997 EBITDA of the Issuer, exclusive of any
Guarantors, would not have been sufficient to cover the interest payments on the
Notes. This level of indebtedness will have important consequences to holders of
the Notes, including: (i) the Issuer would have had to, and may in the future
have to, borrow under the Credit Facility or from another source, including
possibly from Pierce Leahy, in order to make interest payments on the Notes;
(ii) a substantial part of the Company's anticipated cash flow from operations
will be required for the payment of principal and interest; (iii) the Issuer's
and the Company's ability to obtain additional financing in the future may be
limited; (iv) the Issuer's and the Company's leveraged position and covenants
contained in the Notes, the 1996 Notes, the 1997 Notes (each as defined herein)
and the Credit Facility (or any replacement thereof) could limit its ability to
expand and make capital improvements and acquisitions; and (v) the Company's and
the Issuer'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."
POTENTIAL INABILITY TO REPAY DEBT
The Issuer's and the Company's ability to meet their respective debt service
obligations will be dependent upon their 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 Issuer and the
Company, many of which are beyond their control. For the year ended December 31,
1997 and the six months ended June 30, 1998, on a pro forma basis after giving
effect to the Offering, the application of the net proceeds therefrom and the
1998 Acquisitions, the Company's cash interest expense would have been $41.2
million and $20.6 million, respectively. Although management believes that the
Issuer's and the Company's cash flow from operations and available borrowings
under the Credit Facility will be sufficient to meet their anticipated
requirements for capital expenditures, working capital and future debt service
requirements, there can be no assurance that the Issuer or the Company will
generate cash flows at levels sufficient to meet these requirements. To the
extent that the Issuer's or the Company's existing resources and future earnings
are insufficient to fund their respective activities or to repay indebtedness,
the Company may need to raise additional funds through public or private
financings. There can be no assurance that such additional financing would be
available on acceptable terms or at all.
UNSECURED OBLIGATIONS; EFFECTIVE SUBORDINATION OF NOTES; GUARANTEES SUBORDINATED
The Notes will be senior unsecured obligations of the Issuer ranking pari
passu in right of payment with all existing and future senior unsecured
indebtedness of the Issuer and senior in right of payment to all existing and
future subordinated indebtedness of the Issuer. The Notes are not secured by any
of the assets of the Issuer. Accordingly, holders of any secured indebtedness of
the Issuer will have claims that are prior to the claims of holders of the Notes
with respect to the assets securing such secured indebtedness. As of June 30,
1998, on a pro forma basis after giving effect to the Recent Acquisitions, the
Issuer would have had $.7 million of indebtedness ranked pari passu with the
Notes, which consists of trade payables. In addition, as of such date, on a pro
forma basis after giving effect to the Recent Acquisitions, the Issuer would
have had $2.4 million of secured indebtedness to which holders of the Notes
would be effectively subordinated in right of payment. The
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Credit Facility is secured by substantially all of the assets of the Company.
Accordingly, the Notes will be effectively subordinated to any amounts borrowed
by the Issuer under the Credit Facility to the extent of the assets securing the
Credit Facility.
The Notes will be guaranteed on an unsecured senior subordinated basis by each
Domestic Guarantor and on a senior unsecured basis by each Canadian Guarantor.
As of June 30, 1998, on a pro forma basis after giving effect to the Recent
Acquisitions, the Domestic Guarantors would have had $116.9 million outstanding
of senior indebtedness which would be senior in right of payment to the Domestic
Guarantees and $250 million of senior subordinated indebtedness which would rank
pari passu with the Domestic Guarantees. As of June 30, 1998, Archivex,
currently the only Canadian Guarantor, had no outstanding indebtedness except
for amounts borrowed from the Issuer. The Indenture permits the Issuer and the
Guarantors to incur additional indebtedness, including secured senior
indebtedness.
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."
In this regard, the Company's success will be dependent, in part, upon its
ability to effectively integrate the Archivex Acquisition and the Kestrel
Acquisition, which represent two of the Company's largest acquisitions to date,
with the Company's operations. The integration and consolidation of the Archivex
Acquisition and the Kestrel Acquisition entail certain risks and will require
substantial management time and other resources. While the Company believes that
it has sufficient management and other resources to accomplish the integration
of the Archivex Acquisition and the Kestrel Acquisition, there can be no
assurance in this regard or that the Company will not experience difficulties
with customers, suppliers, employees or others. In addition, there can be no
assurance that the Company will be able to achieve expected cost savings from
any such acquisitions.
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 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."
RESTRICTIVE DEBT COVENANTS
The Credit Facility contains a number of covenants that, among other things,
limit the Company's ability to incur additional indebtedness, pay dividends,
prepay subordinated indebtedness, dispose of certain assets, create liens, make
capital expenditures, make certain investments or acquisitions and otherwise
restrict corporate activities. The Credit Facility also requires the Company to
comply with certain financial ratios and tests, under which the Company will be
required to achieve certain financial and operating results. The ability of the
Company to comply with such provisions may be affected by events beyond its
control. A breach of any of these
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<PAGE>
covenants would result in a default under the Credit Facility. In the event of
any such default, depending on the actions taken by the lenders under the Credit
Facility, the Domestic Guarantors could be prohibited from making any payments
on the Domestic Guarantees. In addition, such lenders could elect to declare all
amounts borrowed under the Credit Facility, together with accrued interest, to
be due and payable. As a result of the security afforded the Credit Facility and
its priority with respect to the Domestic Guarantees, there can be no assurance
that the Issuer or the Guarantors would have sufficient assets to pay
indebtedness then outstanding under the Credit Facility, the Notes and other
indebtedness ranking pari passu with the Notes or the Domestic Guarantees. Any
refinancing of the Credit Facility is likely to contain similar restrictive
covenants. See "Description of Certain Indebtedness--The Credit Facility."
COMPETITION
The Company faces competition from numerous competitors in all geographic
areas in which 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 business type records. 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.
RISKS RELATING TO INTERNATIONAL OPERATIONS
A portion of the Company's operations, and all of the Issuer's operations, are
conducted in Canada. As a result of their international operations, the Company
and the Issuer are subject to risks associated with operating in foreign
countries, including, among others, devaluations and fluctuations in currency
exchange rates, imposition of limitations on conversions of foreign currencies
into dollars or remittance of dividends and other payments by foreign
subsidiaries, and imposition or increase of withholding and other taxes on
remittances and other payments by foreign subsidiaries. There can be no
assurance that such risks will not have a material adverse effect on the
Company's or the Issuer's business and results of operations.
CHANGE OF CONTROL
In the event of a Change of Control of Pierce Leahy, the Issuer will be
required to offer to repurchase all of the outstanding Notes at 101% of the
principal amount thereof plus any accrued and unpaid interest thereon to
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<PAGE>
the date of the purchase. The 1996 Notes and the 1997 Notes have a similar
provision requiring Pierce Leahy to offer to repurchase such Notes. A Change of
Control under the Indenture will also result in a default under the Credit
Facility. The exercise by the holders of the Notes, the 1996 Notes or the 1997
Notes of their right to require the Issuer or Pierce Leahy to repurchase the
Notes, the 1996 Notes or the 1997 Notes, as applicable, upon a Change of Control
could also cause a default under other indebtedness of the Company and the
Issuer, even if the Change of Control itself does not, because of the financial
effect of such repurchase on the Company or the Issuer. The Issuer's ability to
pay cash to the holders of the Notes upon a repurchase may be limited by the
Issuer's and the Company's then existing financial resources. There can be no
assurance that in the event of a Change of Control, the Issuer and the Company
will have, or will have access to, sufficient funds or will be contractually
permitted under the terms of outstanding indebtedness to pay the required
purchase price for all the Notes, the 1996 Notes and the 1997 Notes tendered by
their respective holders upon a Change of Control. See "Description of the
Notes" and "Description of Certain Indebtedness--The 1996 Notes and the 1997
Notes" and "--The Credit Facility."
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, Pierce Leahy'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 and the Issuer. See "Management."
U.S. FRAUDULENT CONVEYANCE AND PREFERENTIAL TRANSFER LAWS
Various fraudulent conveyance laws have been enacted for the protection of
creditors and may be utilized by a court to subordinate or avoid the Notes or
any Guarantee in favor of other existing or future creditors of the Issuer or a
Guarantor.
In the United States, if the court in a lawsuit brought by an unpaid creditor
or representative of creditors, such as a trustee in bankruptcy of the Issuer or
of a Domestic Guarantor, as the case may be, were to find under relevant U.S.
federal or state fraudulent conveyance statutes that the Issuer or such Domestic
Guarantor, as the case may be, (x) intended to hinder, delay or defraud any
existing or future creditor or contemplated insolvency with a design to prefer
one or more creditors to the exclusion in whole or in part of others or (y) did
not receive fair consideration or reasonably equivalent value for incurring the
indebtedness represented by the Notes or the Domestic Guarantees and that, at
the time of such incurrence, the Issuer or such Domestic Guarantor (i) was
insolvent, (ii) was rendered insolvent by reason of such incurrence, (iii) was
engaged or was about to engage in a business or transaction for which the assets
remaining with the Issuer or such Domestic Guarantor constituted unreasonably
small capital to carry on its business or (iv) intended to incur, or believed
that it would incur, debts beyond its ability to pay such debts as they matured,
such court, subject to applicable statutes of limitation, could avoid the
Issuer's obligations under the Notes or such Domestic Guarantor's obligations
under the Domestic Guarantee, subordinate the Notes or such Domestic Guarantee
to other indebtedness of the Issuer or such Domestic Guarantor or take other
action detrimental to the holders of the Notes.
To the extent that any Domestic Guarantees are voided as a fraudulent
conveyance or held unenforceable for any other reason, holders of the Notes
would cease to have any claim in respect of such Domestic Guarantor and would be
creditors solely of the Issuer and any Domestic Guarantor whose Domestic
Guarantee was not voided or held unenforceable. In such event, the claims of the
holders of the Notes against the issuer of an invalid Domestic Guarantee would
be subject to the prior payment of all liabilities and preferred equity
interests, if any, of such Domestic Guarantor. Particularly given the fact that
the Issuer's 1997 pro forma EBITDA is not adequate to cover interest payments on
the Notes, there can be no assurance that, after providing for all prior claims
and preferred equity interests, if any, there would be sufficient assets to
satisfy the claims of the holders of the Notes relating to any voided portions
of any of the Domestic Guarantees.
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<PAGE>
The measure of insolvency for these purposes will vary depending upon the law
of the jurisdiction being applied. Generally, however, a company will be
considered insolvent for these purposes if the sum of that company's debts is
greater than all that company's property at a fair valuation, or if the present
fair salable value of that company's assets is less than the amount that would
be required to pay its probable liability on its existing debts as they become
absolute and matured. Moreover, regardless of solvency, a court could avoid an
incurrence of indebtedness, including the Notes or a Domestic Guarantee, if it
determined that such transaction was made with intent to hinder, delay or
defraud creditors, or a court could subordinate the indebtedness, including the
Notes or a Domestic Guarantee, to the claims of all existing and future
creditors on similar grounds.
Additionally, under U.S. federal bankruptcy or applicable state insolvency
law, if certain bankruptcy or insolvency proceedings were initiated by or
against the Issuer or a Domestic Guarantor within 90 days after any payment by
the Issuer with respect to the Notes or any payment by a Domestic Guarantor with
respect to the Domestic Guarantee or if the Issuer or a Domestic Guarantor
anticipated becoming insolvent at the time of such payment, all or a portion of
such payment could be avoided as a preferential transfer and the recipient of
such payment could be required to return such payment.
CANADIAN BANKRUPTCY AND RESTRUCTURING LAWS
In Canada, the rights of the Trustee to enforce remedies are likely to be
significantly impaired by the restructuring provisions of applicable Canadian
federal bankruptcy, insolvency and other restructuring legislation if the
benefit of such legislation is sought with respect to the Issuer or a Canadian
Guarantor. For example, both the Bankruptcy and Insolvency Act (Canada) and the
Companies' Creditors Arrangements Act (Canada) contain provisions enabling "an
insolvent person" to obtain a stay of proceedings against its creditors and
others and to prepare and file a proposal for consideration by all or some of
its creditors to be voted on by the various classes of its creditors. Such a
restructuring proposal, if accepted by the requisite majorities of creditors and
if approved by the court, would be binding on persons who might not otherwise be
willing to accept it. Moreover, such legislation permits, in certain
circumstances, the insolvent debtor to retain possession and administration of
its property, even though it may be in default under the applicable debt
instrument.
The powers of a court under the Bankruptcy and Insolvency Act (Canada) and
particularly under the Companies' Creditor Arrangement Act (Canada) have been
exercised broadly to protect a restructuring entity from actions taken by
creditors and other parties. Accordingly, it is impossible to predict if
payments under the Notes or any Canadian Guarantees would be made following
commencement of or during such a proceeding, whether or when the Trustee could
exercise its rights under the Indenture or whether and to what extent holders of
the Notes would be compensated for any delay in payments, if any, of principal
and interest.
Additionally, under federal Canadian bankruptcy law, if certain bankruptcy or
insolvency proceedings were initiated by or against a Canadian Guarantor within
90 days after any payment by such Canadian Guarantor with respect to its
Guarantee or if such Canadian Guarantor anticipated becoming insolvent at the
time of such payment, all or a portion of such payment could be avoided as a
fraudulent preference and the recipient of such payment could be required to
return such payment.
YEAR 2000 SOFTWARE ISSUE
The Company uses a number of computer software programs and operating systems
in its operations, including the PLUS/(R)/ system. To the extent that the
software applications used in such functions are unable to recognize the year
2000, the Company may incur expenses in connection with the need to remedy such
problem in the software and the associated risk and expense of any disruptions
that may be caused by the software's impaired functioning as the year 2000
approaches. The Company believes that the PLUS/(R)/ system will be year 2000
compliant by the end of 1998. The Company also believes that the manufacturers
of the software applications it uses most frequently, including its systems
software and its word processing and spreadsheet software, are in the process of
preparing or have already completed year 2000 remediations for their products.
In addition, the
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Company communicates electronically with a number of its customers and vendors
with respect to a variety of functions. Any failure of the software of the
Company's vendors or customers to address the year 2000 issue could impair the
Company's ability to perform such functions. The Company is analyzing the
potential impact of the year 2000 issue on the Company's software and on the
Company's interactions with its vendors and customers. Although the Company
believes that the expenses and capital expenditures associated with achieving
year 2000 compliance will not have a material adverse effect on the Company's
business and financial condition or results of operations, there can be no
assurance that the remediation costs and potential disruptions to the Company's
operations would not have a material adverse affect on the Company's or the
Issuer's business and financial condition or results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
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 and
the Issuer. See "Business--Insurance."
ENVIRONMENTAL MATTERS
The Company owns or leases approximately 16 million square feet of facilities.
Under various U.S. federal, state, local and foreign environmental laws,
regulations and ordinances ("environmental laws"), the Company's properties and
operations or former properties or locations 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."
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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 OF PIERCE LEAHY
Members of the Pierce family who collectively own approximately 51% of the
shares of the Common Stock of Pierce Leahy have entered into a ten-year voting
trust agreement (the "Voting Trust Agreement") pursuant to which all of the
shares subject to the Voting Trust Agreement or related proxies are voted at the
direction of Leo W. Pierce, Sr. and J. Peter Pierce (the "Voting Trustees").
Consequently, the Voting Trustees are 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
Shareholders of Pierce Leahy Corp.--Voting Trust Agreement."
ABSENCE OF PUBLIC MARKET
There is no existing trading market for the Notes, and the Company does not
intend to list any Notes on any securities exchange. Although the Company has
been advised that the Initial Purchaser currently intends to make a market in
the Notes, the Initial Purchaser is not obligated to do so and may discontinue
any such market making at any time without notice. In addition, any market
making activities in the Original Notes may be limited during the pendency of
the Exchange Offer. There can be no assurance that an active trading market for
the Notes will develop, or, if it develops, that it will continue. Future
trading prices for the Notes will depend on many factors, including, among other
things, the Company's operating results, the market for similar securities and
changes in prevailing interest rates.
PROCEDURES FOR TENDER OF ORIGINAL NOTES
The Exchange Notes will be issued in substitution for Original Notes only
after timely receipt by the Exchange Agent of such Original Notes, a properly
completed and duly executed Letter of Transmittal and all other required
documents. Therefore, holders of Original Notes desiring to tender such Original
Notes to be replaced by Exchange Notes should allow sufficient time to ensure
timely delivery. Neither the Exchange Agent nor the Issuer is under any duty to
give notification of defects or irregularities with respect to tenders of
Original Notes for substitution. Any holder of Original Notes who tenders in the
Exchange Offer for the purpose of participating in a distribution of the
Exchange Notes will be required to comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. Each broker-dealer that receives Exchange Notes for its own account
in exchange for Notes, where such Original Notes were acquired by such broker-
dealer as a result of market-making activities or any other trading activities,
must acknowledge that it will deliver a prospectus in connection with any resale
of such Exchange Notes. See "Plan of Distribution."
CONSEQUENCES OF FAILURE TO REPLACE ORIGINAL NOTES
The Original Notes have not been registered under the Securities Act and are
subject to substantial restrictions on transfer. Original Notes that are not
tendered to be replaced by Exchange Notes or are tendered but not accepted will,
following consummation of the Exchange Offer, continue to be subject to the
existing restrictions upon transfer thereof. The Issuer does not currently
anticipate that it will register the Original Notes under the
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Securities Act. To the extent that Original Notes are tendered and accepted in
the Exchange Offer, the trading market for untendered and tendered but
unaccepted Original Notes could be adversely affected. See "The Exchange-
Consequences of Failure to Exchange."
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 Exchange Act, and is
subject to the safe-harbor created by such sections. This safe-harbor does not
apply to initial public offerings. Such forward-looking statements concern the
Company's operations, economic performance and financial condition, including,
without limitation, the Archivex Acquisition, the Kestrel Acquisition and their
integration into the 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 and the Issuer; quality of management,
business abilities and judgment of the Company's and the Issuer's personnel; the
availability, terms and deployment of capital; and various other factors
referenced in this Prospectus. See "Prospectus 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 Issuer and the Guarantors assume 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.
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THE EXCHANGE OFFER
PURPOSES AND EFFECTS OF THE EXCHANGE OFFER
The Original Notes were sold by the Issuer on April 7, 1998 (the "Issue Date")
to the Initial Purchasers pursuant to a Purchase Agreement dated as of April 2,
1998 (the "Purchase Agreement"). As a condition to the sale of the Original
Notes, the Issuer, Pierce Leahy and the Initial Purchaser entered into the
Registration Agreement on the Issue Date. Pursuant to the Registration
Agreement, the Issuer agreed that, unless the Exchange Offer is not permitted by
applicable law or Commission policy, it would (i) file with the Commission a
Registration Statement under the Securities Act with respect to the Exchange
Notes within 90 days after the Issue Date, (ii) use its best efforts to cause
such Registration Statement to become effective under the Securities Act within
180 days after the Issue Date and (iii) upon effectiveness of the Registration
Statement, commence the Exchange Offer, keep the Exchange Offer open for at
least 30 days and not more than 45 days (or a longer period if required by law)
and deliver to the Exchange Agent Exchange Notes in the same aggregate principal
amount at maturity as the Original Notes that were tendered by holders thereof
pursuant to the Exchange Offer. Under existing Commission interpretations, the
Exchange Notes would in general be freely transferable after the Exchange Offer
without further registration under the Securities Act; provided, that in the
case of broker-dealers, a prospectus meeting the requirements of the Securities
Act will be delivered as required. The Issuer has agreed to make available a
prospectus meeting the requirements of the Securities Act to any broker-dealer
for use in connection with any resale of any such Exchange Notes acquired as
described below for such period of 180 days after the Expiration Date. A broker-
dealer that delivers such a prospectus to purchasers in connection with such
resales will be subject to certain of the civil liability provisions under the
Securities Act, and will be bound by the Registration Agreement (including
certain indemnification rights and obligations). A copy of the Registration
Agreement has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part. The Registration Statement of which this Prospectus
is a part is intended to satisfy certain of the Issuer's obligations under the
Registration Agreement and the Purchase Agreement.
The Issuer is generally not required to file any registration statement to
register any outstanding Original Notes. Holders of Original Notes who do not
tender their Original Notes or whose Original Notes are tendered but not
accepted will have to rely on exemptions to registration requirements under the
securities laws, including the Securities Act, if they wish to sell their
Original Notes.
With respect to the Exchange Notes, based upon an interpretation by the staff
of the Commission set forth in certain no-action letters issued to third
parties, the Issuer believes that a holder (other than (i) a broker-dealer who
purchases such Exchange Notes directly from the Issuer to resell pursuant to
Rule 144A or any other available exemption under the Securities Act or (ii) any
such holder which is an "affiliate" of the Issuer within the meaning of Rule 405
under the Securities Act) who replaces Original Notes with Exchange Notes in the
ordinary course of business and who is not participating, does not intend to
participate, and has no arrangement with any person to participate, in the
distribution of the Exchange Notes, will be allowed to resell the Exchange Notes
to the public without further registration under the Securities Act and without
delivering to the purchasers of the Exchange Notes a prospectus that satisfies
the requirements of Section 10 of the Securities Act. However, if any holder
acquires the Exchange Notes in the Exchange Offer for the purpose of
distributing or participating in the distribution of the Exchange Notes or is a
broker-dealer, such holder cannot rely on the position of the staff of the
Commission enumerated in certain no-action letters issued to third parties and
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction, unless an exemption
from registration is otherwise available. Each broker-dealer that receives
Exchange Notes for its own account in substitution for Original Notes, where
such Original Notes were acquired by such broker-dealer as a result of market-
making activities or other trading activities, must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Notes received in
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substitution for Original Notes where such Original Notes were acquired by such
broker-dealer as a result of market-making or other trading activities. Pursuant
to the Registration Agreement, the Issuer has agreed to make this Prospectus, as
it may be amended or supplemented from time to time, available to broker-dealers
for use in connection with any resale for a period of 180 days after the
Expiration Date. See "Plan of Distribution."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus and
in the accompanying Letter of Transmittal, the Issuer will accept any and all
Original Notes validly tendered and not withdrawn prior to the Expiration Date.
The Issuer will issue $1,000 principal amount of Exchange Notes in substitution
for each $1,000 principal amount of outstanding Original Notes surrendered
pursuant to the Exchange Offer. Holders may tender some or all of their Original
Notes pursuant to the Exchange Offer; provided, however, that Original Notes may
be tendered only in integral multiples of $1,000. The Exchange Offer is not
conditioned upon any minimum aggregate principal amount of Original Notes being
tendered for substitution.
The form and terms of the Exchange Notes are the same as the form and terms of
the Original Notes except that (i) the Exchange Notes will be registered under
the Securities Act and, therefore, will not bear legends restricting their
transfer and (ii) holders of the Exchange Notes will not be entitled to the
certain rights of holders of Original Notes under the Registration Agreement,
which rights will terminate upon the consummation of the Exchange Offer. The
Exchange Notes will evidence the same debt as the Original Notes (which they
replace) and will be issued under, and be entitled to the benefits of, the
Indenture, which also authorized the issuance of the Original Notes, such that
all outstanding Notes will be treated as a single class of debt securities under
the Indenture.
Interest on the Exchange Notes will accrue from the most recent date to which
interest has been paid on the Original Notes or, if no interest has been paid,
from April 7, 1998. Accordingly, registered holders of Exchange Notes on the
relevant record date for the first interest payment date following the
consummation of the Exchange Offer will receive interest accruing from the most
recent date to which interest has been paid or, if no interest has been paid,
from April 7, 1998. Original Notes accepted for substitution will cease to
accrue interest from and after the date of the consummation of the Exchange
Offer. Holders whose Original Notes are accepted for substitution will not
receive any payment in respect of interest on such Original Notes otherwise
payable on any interest payment date, the record date for which occurs on or
after consummation of the Exchange Offer.
As of the date of this Prospectus, $135,000,000 aggregate principal amount of
the Original Notes are outstanding and registered in the name of Cede & Co., as
nominee for the Depository Trust Company (the "Depository" or "DTC"). Only a
registered holder of the Original Notes (or such holder's legal representative
or attorney-in-fact) as reflected on the records of the Trustee under the
Indenture may participate in the Exchange Offer. There will be no fixed record
date for determining registered holders of the Original Notes entitled to
participate in the Exchange Offer.
Holders of the Original Notes do not have any appraisal or dissenters' rights
under the Indenture in connection with the Exchange Offer. The Issuer intends to
conduct the Exchange Offer in accordance with the provisions of the Registration
Agreement and the applicable requirements of the Securities Act, the Exchange
Act and the rules and regulations of the Commission thereunder.
The Issuer shall be deemed to have accepted validly tendered Original Notes
when, as and if the Issuer has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Original Notes for the purposes of receiving the Exchange Notes from the
Issuer.
If any tendered Original Notes are not accepted for substitution because of an
invalid tender, or due to the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Original Notes will be
returned without expense to the tendering holders thereof (or in the case of
Original Notes tendered
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by book-entry transfer, such Original Notes will be credited to the account of
such holder maintained at the Depository), as promptly as practicable after the
expiration or termination of the Exchange Offer.
Holders who tender Original Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the replacement of Notes
pursuant to the Exchange Offer. The Issuer will pay all charges and expenses,
other than certain applicable taxes described below, in connection with the
Exchange Offer. See "The Exchange Offer-Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; TERMINATION
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
_______________, 1998 unless the Issuer, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer the Issuer will notify the Exchange
Agent of any extension by oral (promptly confirmed in writing) or written notice
and will make a public announcement thereof, each prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled expiration
date of the Exchange Offer. Without limiting the manner in which the Issuer may
choose to make a public announcement of any delay, extension, amendment or
termination of the Exchange Offer, the Issuer shall have no obligation to
publish, advertise or otherwise communicate any such public announcement, other
than by making a timely release to an appropriate news agency.
The Issuer reserves the right, in its sole discretion, (i) to delay accepting
any Original Notes, (ii) to extend the Exchange Offer, (iii) if any conditions
set forth below under "-Certain Conditions to the Exchange Offer" shall not have
been satisfied, to terminate the Exchange Offer by giving oral or written notice
of such delay, extension or termination to the Exchange Agent or (iv) to amend
the terms of the Exchange Offer in any manner. Any such delay in acceptance,
extension, termination or amendment will be followed as promptly as practicable
by oral or written notice thereof to the registered holders. If the Exchange
Offer is amended in a manner determined by the Issuer to constitute a material
change, the Issuer will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the registered holders of
Original Notes, and the Issuer will extend the Exchange Offer for a period of
five to ten business days, depending upon the significance of the amendment and
the manner of disclosure to such registered holders, if the Exchange Offer would
otherwise expire during such five to ten business day period. The rights
reserved by the Issuer in this paragraph are in addition to the Issuer's rights
set forth below under the caption "--Certain Conditions of the Exchange
Offer."
If the Issuer extends the period of time during which the Exchange Offer is
open, or if it is delayed in accepting for replacement of, or in issuing and
substituting the Exchange Notes for, any Original Notes, or is unable to accept
for substitution, or issue Exchange Notes for, any Original Notes pursuant to
the Exchange Offer for any reason, then, without prejudice to the Issuer's
rights under the Exchange Offer, the Exchange Agent may, on behalf of the
Issuer, retain all Original Notes tendered, and such Original Notes may not be
withdrawn except as otherwise provided below in "--Withdrawal of Tenders." The
adoption by the Issuer of the right to delay acceptance for replacement of, or
the issuance and the replacement of the Exchange Notes, for any Original Notes
is subject to applicable law, including Rule 14e-1(c) under the Exchange Act,
which requires that the Issuer pay the consideration offered or return the
Original Notes deposited by or on behalf of the holders thereof promptly after
the termination or withdrawal of the Exchange Offer.
PROCEDURES FOR TENDERING
Only a registered holder of Original Notes may tender such Original Notes in
the Exchange Offer. To tender in the Exchange Offer, a holder must complete,
sign and date the Letter of Transmittal, or facsimile thereof, have the
signature thereon guaranteed if required by the Letter of Transmittal and mail
or otherwise deliver such Letter
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of Transmittal or such facsimile to the Exchange Agent at the address set forth
below under "The Exchange Offer-Exchange Agent" for receipt prior to the
Expiration Date. In addition, either (i) certificates for such Notes must be
received by the Exchange Agent along with the Letter of Transmittal, or (ii) a
timely confirmation of a book-entry transfer of such Notes, if such procedure is
available, into the Exchange Agent's account at DTC pursuant to the procedure
for book-entry transfer described below, must be received by the Exchange Agent
prior to the Expiration Date, or (iii) the holder must comply with the
guaranteed delivery procedures described below.
Any financial institution that is a participant in the Depository's Book-Entry
Transfer Facility system may make book-entry delivery of the Original Notes by
causing the Depository to transfer such Original Notes into the Exchange Agent's
account in accordance with the Depository's procedure for such transfer.
Although delivery of Original Notes may be effected through book-entry transfer
into the Exchange Agent's account at the Depository, the Letter of Transmittal
(or facsimile thereof), with any required signature guarantees and any other
required documents, must, in any case, be transmitted to and received or
confirmed by the Exchange Agent at its addresses set forth under "-Exchange
Agent" below prior to 5:00 p.m., New York City time, on the Expiration Date.
DELIVERY OF DOCUMENTS TO THE DEPOSITORY IN ACCORDANCE WITH ITS PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The tender by a holder which is not withdrawn prior to the Expiration Date
will constitute a binding agreement between such holder and the Issuer in
accordance with the terms and subject to the conditions set forth herein and in
the Letter of Transmittal.
THE METHOD OF DELIVERY OF NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE
EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR NOTES
SHOULD BE SENT TO THE ISSUER. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS,
DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE
TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner of the Original Notes whose Original Notes are registered
in the name of a broker, dealer, commercial bank, trust company or other nominee
and who wishes to tender should contact the registered holder promptly and
instruct such registered holder to tender on such beneficial owner's behalf. If
such beneficial owner wishes to tender on such owner's own behalf, such owner
must, prior to completing and executing the Letter of Transmittal and delivering
such owner's Original Notes, either make appropriate arrangements to register
ownership of the Notes in such owner's name (to the extent permitted by the
Indenture) or obtain a properly completed assignment from the registered holder.
The transfer of registered ownership may take considerable time.
If the Letter of Transmittal is signed by a person other than the registered
holder of any Original Notes (which term includes any participants in DTC whose
name appears on a security position listing as the owner of the Original Notes)
or if delivery of the Exchange Notes is to be made to a person other than the
registered holder, such Original Notes must be endorsed or accompanied by a
properly completed bond power, in either case signed by such registered holder
as such registered holder's name appears on such Original Notes with the
signature on the Original Notes or the bond power guaranteed by an Eligible
Institution (as defined below).
Signatures on a Letter of Transmittal or a notice of withdrawal described
below (see "-Withdrawal of Tenders"), as the case may be, must be guaranteed by
an Eligible Institution unless the Original Notes tendered pursuant thereto are
tendered (i) by a registered holder who has not completed the box entitled
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. In the event that
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signatures on a Letter of Transmittal or a notice of withdrawal, as the case may
be, are required to be guaranteed, such guarantee must be made by a member firm
of a registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States, or another "Eligible Guarantor Institution"
within the meaning of Rule 17Ad-15 under the Exchange Act (any of the foregoing,
an "Eligible Institution").
If the Letter of Transmittal or any Original Notes or assignments are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Issuer,
evidence satisfactory to the Issuer of their authority to so act must be
submitted with the Letter of Transmittal.
The Exchange Agent and the Depository have confirmed that any financial
institution that is a participant in the Depository's system may utilize the
Depository's Automated Tender Offer Program to tender Original Notes.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Original Notes will be
determined by the Issuer in its sole discretion, which determination will be
final and binding. The Issuer reserves the absolute right to reject any and all
Original Notes not properly tendered or any Original Notes, the Issuer's
acceptance of which would, in the opinion of counsel for the Issuer, be
unlawful. The Issuer also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Notes. The Issuer's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions in the Letter of Transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Original Notes must be cured within such time as the Issuer shall determine.
Although the Issuer intends to request the Exchange Agent to notify holders of
defects or irregularities with respect to tenders of Original Notes, neither the
Issuer, the Exchange Agent nor any other person shall incur any liability for
failure to give such notification. Tenders of Original Notes will not be deemed
to have been made until such defects or irregularities have been cured or
waived.
While the Issuer has no present plan to acquire any Original Notes which are
not tendered in the Exchange Offer or to file a registration statement to permit
resales of any Original Notes which are not tendered pursuant to the Exchange
Offer, the Issuer reserves the right in its sole discretion to purchase or make
offers for any Original Notes that remain outstanding subsequent to the
Expiration Date or, as set forth below under "-Certain Conditions to the
Exchange Offer," to terminate the Exchange Offer and, to the extent permitted by
applicable law, purchase Original Notes in the open market, in privately
negotiated transactions or otherwise. The terms of any such purchases or offers
could differ from the terms of the Exchange Offer.
By tendering, each holder will represent to the Issuer that, among other
things, (i) the Exchange Notes to be acquired by the holder of the Original
Notes in connection with the Exchange Offer are being acquired by the holder in
the ordinary course of business of the holder, (ii) the holder has no
arrangement or understanding with any person to participate in the distribution
of Exchange Notes, (iii) the holder acknowledges and agrees that any person who
is a broker-dealer registered under the Exchange Act or is participating in the
Exchange Offer for the purpose of distributing the Exchange Notes must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction of the Exchange Notes acquired
by such person and cannot rely on the position of the staff of the Commission
set forth in certain no-action letters, (iv) the holder understands that a
secondary resale transaction described in clause (iii) above and any resales of
Exchange Notes obtained by such holder in exchange for Original Notes acquired
by such holder directly from the Issuer should be covered by an effective
registration statement containing the selling securityholder information
required by Item 507 or Item 508, as applicable, of Regulation S-K of the
Commission, and (v) the holder is not an "affiliate," as defined in Rule 405 of
the Securities Act, of the Issuer. If the holder is a broker-dealer that will
receive Exchange Notes for its own account in substitution for Original Notes
that were acquired as a result of market-making activities or other trading
activities, the holder is required to acknowledge in the Letter of Transmittal
that it will deliver a prospectus in connection with any resale of such
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Exchange Notes; however, by so acknowledging and by delivering a prospectus, the
holder will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
RETURN OF NOTES
If any tendered Original Notes are not accepted for any reason set forth in
the terms and conditions of the Exchange Offer or if Original Notes are
withdrawn or are submitted for a greater principal amount than the holders
desire to replace, such unaccepted, withdrawn or non-substituted Original Notes
will be returned without expense to the tendering holder thereof (or, in the
case of Original Notes tendered by book-entry transfer into the Exchange Agent's
account at the Depository pursuant to the book-entry transfer procedures
described below, such Original Notes will be credited to an account maintained
with the Depository) as promptly as practicable.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect to
the Original Notes at the Depository for purposes of the Exchange Offer within
two business days after the date of this Prospectus, and any financial
institution that is a participant in the Depository's system may make book-entry
delivery of Original Notes by causing the Depository to transfer such Original
Notes into the Exchange Agent's account at the Depository in accordance with the
Depository's procedures for transfer. However, although delivery of Original
Notes may be effected through book-entry transfer at the Depository, the Letter
of Transmittal or facsimile thereof, with any required signature guarantees and
any other required documents, must, in any case, be transmitted to and received
by the Exchange Agent at the address set forth below under "-Exchange Agent" on
or prior to the Expiration Date or pursuant to the guaranteed delivery
procedures described below.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Original Notes and (i) whose Original Notes
are not immediately available or (ii) who cannot deliver their Original Notes
(or complete the procedures for book-entry transfer), the Letter of Transmittal
or any other required documents to the Exchange Agent prior to the Expiration
Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by the Issuer (by
facsimile transmission, mail or hand delivery) setting forth the name and
address of the holder, the certificate number(s) of such Original Notes (if
available) and the principal amount of Original Notes tendered, stating that
the tender is being made thereby and guaranteeing that, within five New York
Stock Exchange trading days after the Expiration Date, the Letter of
Transmittal (or a facsimile thereof) together with the certificate(s)
representing the Original Notes in proper form for transfer (or a
confirmation of a book-entry transfer into the Exchange Agent's account at
the Depository of Original Notes delivered electronically), and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent; and
(c) such properly executed Letter of Transmittal (or facsimile thereof),
as well as the certificate(s) representing all tendered Original Notes in
proper form for transfer (or a confirmation of a book-entry transfer into
the Exchange Agent's account at the Depository of Original Notes delivered
electronically), and all other documents required by the Letter of
Transmittal are received by the Exchange Agent within five New York Stock
Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Original Notes according to the
guaranteed delivery procedures set forth above.
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WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Original Notes may be
withdrawn at any time prior to the Expiration Date.
To withdraw a tender of Original Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to the Expiration Date. Any such
notice of withdrawal must (i) specify the name of the person having deposited
the Original Notes to be withdrawn, (ii) identify the Original Notes to be
withdrawn (including the certificate number or numbers (if applicable) and
principal amount of such Original Notes), and (iii) be signed by the holder in
the same manner as the original signature on the Letter of Transmittal by which
such Original Notes were tendered (including any required signature guarantees).
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by the Issuer in its sole
discretion, whose determination shall be final and binding on all parties. Any
Original Notes so withdrawn will be deemed not to have been validly tendered for
purposes of the Exchange Offer and no Exchange Notes will be issued with respect
thereto unless the Original Notes so withdrawn are validly retendered. Properly
withdrawn Notes may be retendered by following one of the procedures described
above under "-Procedures for Tendering" at any time prior to the Expiration
Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, the Issuer shall not be
required to accept for replacement, or substitute the Exchange Notes for, any
Original Notes not theretofore accepted for replacement, and may terminate or
amend the Exchange Offer as provided herein before the acceptance of such
Original Notes, if any of the following conditions exist:
(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offer
which, in the reasonable judgment of the Issuer, might impair the ability of
the Issuer to proceed with the Exchange Offer or have a material adverse
effect on the contemplated benefits of the Exchange Offer to the Issuer or
there shall have occurred any material adverse development in any existing
action or proceeding with respect to the Issuer or any of its subsidiaries;
or
(b) there shall have been any material change, or development involving a
prospective change, in the business or financial affairs of the Issuer or
any of its subsidiaries which, in the reasonable judgment of the Issuer,
could reasonably be expected to materially impair the ability of the Issuer
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Issuer; or
(c) there shall have been proposed, adopted or enacted any law, statute,
rule or regulation which, in the judgment of the Issuer, could reasonably be
expected to materially impair the ability of the Issuer to proceed with the
Exchange Offer or materially impair the contemplated benefits of the
Exchange Offer to the Issuer; or
(d) any governmental approval which the Issuer shall, in its reasonable
discretion, deem necessary for the consummation of the Exchange Offer as
contemplated hereby shall have not been obtained.
If the Issuer determines in its reasonable discretion that any of these
conditions are not satisfied, the Issuer may (i) refuse to accept any Original
Notes and return all tendered Original Notes to the tendering holders, (ii)
extend the Exchange Offer and retain all Original Notes tendered prior to the
expiration of the Exchange Offer, subject, however, to the rights of holders to
withdraw such Original Notes (see "The Exchange Offer-Withdrawal of Tenders") or
(iii) waive such unsatisfied conditions with respect to the Exchange Offer and
accept all properly tendered Original Notes which have not been withdrawn. If
such waiver constitutes a material change to the Exchange Offer, the Issuer will
promptly disclose such waiver by means of a prospectus supplement that will be
distributed to the registered holders of the Original Notes, and the Issuer will
extend the Exchange Offer for a
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<PAGE>
period of five to ten business days, depending upon the significance of the
waiver and the manner of disclosure to the registered holders, if the Exchange
Offer would otherwise expire during such five to ten business day period.
Holders may have certain rights and remedies against the Issuer under the
Registration Agreement should the Issuer fail to consummate the Exchange Offer,
notwithstanding a failure of the conditions stated above. Such conditions are
not intended to modify those rights or remedies in any respect.
The foregoing conditions are for the sole benefit of the Issuer and may be
asserted by the Issuer regardless of the circumstances giving rise to such
condition or may be waived by the Issuer in whole or in part at any time and
from time to time in the Issuer's reasonable discretion. The failure by the
Issuer at any time to exercise the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time.
TERMINATION OF CERTAIN RIGHTS
All rights under Registration Agreement (including registration rights) of
holders of the Original Notes eligible to participate in this Exchange Offer
will terminate upon consummation of the Exchange Offer except with respect to
the Issuer's continuing obligations (i) to indemnify the holders (including any
broker-dealers) and certain parties related to the holders against certain
liabilities (including liabilities under the Securities Act), (ii) to provide,
upon the request of any holder of a transfer-restricted Original Note, the
information required by Rule 144A(d)(4) under the Securities Act in order to
permit resales of such Original Notes pursuant to Rule 144A, (iii) to use its
best efforts to keep the Registration Statement effective to the extent
necessary to ensure that it is available for resales of transfer-restricted
Notes by broker-dealers for a period of 180 days from the Expiration Date and
(iv) to provide copies of the latest version of the Prospectus to broker-dealers
upon their request for a period of 180 days from the Expiration Date. Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted pursuant to the foregoing provisions, the Issuer has been informed
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.
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. All questions and requests for assistance as well as all correspondence
in connection with the Exchange Offer and the Letter of Transmittal should be
addressed to the Exchange Agent, as follows:
By Facsimile: By Hand/Overnight Courier:
The Bank of New York The Bank of New York
(212) 815-6339 101 Barclay Street
(For Eligible Institutions Only) Corporate Trust Services Window,
Ground Level
New York, NY 10286
Attention: Reorganization Section, 7E;
Santino Ginocchietti
To Confirm Facsimile or for Information:
The Bank of New York
(212) 815-2963
(For Eligible Institutions Only)
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<PAGE>
By Registered or Certified Mail:
The Bank of New York
101 Barclay Street, 7E
New York, NY 10286
Attention: Reorganization Section, 7E;
Santino Ginocchietti
Requests for additional copies of this Prospectus, the Letter of Transmittal
or the Notice of Guaranteed Delivery should be directed to the Exchange Agent.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Issuer. The principal
solicitation is being made by mail; however, additional solicitation may be made
by telegraph, telephone or in person by officers and regular employees of the
Issuer and its affiliates.
The Issuer has not retained any dealer-manager or other soliciting agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others soliciting acceptance of the Exchange Offer. The Issuer will,
however, pay the Exchange Agent reasonable and customary fees for its services
and will reimburse it for its reasonable out-of-pocket expenses in connection
therewith.
The cash expenses to be incurred in connection with the Exchange Offer will be
paid by the Issuer and are estimated in the aggregate to be approximately
$150,000. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
The Issuer will pay all transfer taxes, if any, applicable to the replacement
of Original Notes pursuant to the Exchange Offer. If, however, certificates
representing Exchange Notes, or Original Notes for principal amounts not
tendered or acceptable for replacement, are to be delivered to, or are to be
issued in the name of, any person other than the registered holders of the
Original Notes tendered, or if tendered Original Notes are registered in the
name of any person other than the person signing the Letter of Transmittal, or
if a transfer tax is imposed for any reason other than the replacement of
Original Notes pursuant to the Exchange Offer, then the amount of any such
transfer taxes (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder of Original Notes.
ACCOUNTING TREATMENT
The Exchange Notes evidence the same debt as the Original Notes and will be
recorded at the same carrying value as the Original Notes as reflected in the
Issuer's accounting records on the date of the replacement. Accordingly, no gain
or loss for accounting purposes will be recognized. The expenses of the Exchange
Offer will be amortized over the term of the Exchange Notes.
CONSEQUENCE OF FAILURE TO TENDER
Participation in the Exchange Offer is voluntary. Holders of the Original
Notes are urged to consult their financial and tax advisors in making their own
decisions on what action to take.
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<PAGE>
The Original Notes which are not replaced by the Exchange Notes pursuant to
the Exchange Offer will remain restricted securities. Accordingly, such Original
Notes may be resold only (i) to a person whom the seller reasonably believes is
a qualified institutional buyer (as defined in Rule 144A under the Securities
Act) in a transaction meeting the requirements of Rule 144A, (ii) in a
transaction meeting the requirements of Rule 144 under the Securities Act, (iii)
outside the United States to a foreign person in a transaction meeting the
requirements of Rule 904 under the Securities Act, (iv) in accordance with
another exemption from the registration requirements of the Securities Act (and
based upon an opinion of counsel if the Issuer so requests), (v) to the Issuer
or (vi) pursuant to an effective registration statement and, in each case, in
accordance with any applicable securities laws of any state of the United States
or any other applicable jurisdiction.
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<PAGE>
THE COMPANY
Pierce Leahy is a Pennsylvania corporation. It was originally incorporated in
New York in 1990 and, pursuant to a merger, was redomesticated into Pennsylvania
in 1997 in connection with Pierce Leahy's initial public offering of shares of
its Common Stock.
Pierce Leahy'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. Pierce Leahy was formed at that time from the
consolidation of the predecessor company with Leahy Business Archives.
The principal executive offices of Pierce Leahy are located at 631 Park
Avenue, King of Prussia, Pennsylvania 19406, and its telephone number is (610)
992-8200.
THE ISSUER
Pierce Leahy entered the Canadian records storage market through the purchase
of Command Records Services Limited in 1995. Pierce Leahy formed the Issuer,
Pierce Leahy Command Company, a Nova Scotia unlimited liability company, in 1995
to acquire such business. As a result of Pierce Leahy's status as a Subchapter S
corporation for federal income tax purposes at the time of the formation of the
Issuer, all of the capital stock of the Issuer is owned by two Pennsylvania
limited partnerships. Two separate corporations owned by J. Peter Pierce, the
Company's President and Chief Executive Officer, are the general partner of each
partnership, respectively, and Pierce Leahy has a 99% limited partnership
interest in each partnership. Accordingly, Pierce Leahy has an indirect 99%
equity interest in the Issuer.
Prior to the Archivex Acquisition, the Issuer operated a total of 17 records
management facilities in five of the six largest markets in Canada (Calgary,
Montreal, Ottawa, Toronto and Vancouver). Concurrently with the Offering, the
Company acquired substantially all of the assets of Archivex Inc., a Canadian
corporation, with a portion of the proceeds of the Offering. Archivex Inc. has
operations in six Canadian cities, including three markets in which the Issuer
previously operated (Calgary, Montreal and Toronto) and three markets in which
the Issuer did not previously have a presence (Edmonton, Quebec City and
Winnipeg). A newly formed wholly-owned subsidiary of Pierce Leahy, Archivex
Limited, purchased and operates the assets of Archivex Inc. in Montreal,
including four records management facilities. Command purchased the remaining
assets of Archivex Inc. Since the consummation of the Archivex Acquisition, the
Issuer operates 30 records management facilities in the nine largest markets in
Canada. The aggregate cash consideration for the Archivex Acquisition, which
represented a significant expansion in the Canadian market for the Company, was
approximately $63.0 million. Included in the Archivex Acquisition were six owned
records storage facilities with in excess of an aggregate of 600,000 square feet
of space and five leased records storage facilities with approximately 100,000
square feet of space. The Archivex Acquisition added approximately 4.0 million
cubic feet of records under management.
The principal executive offices of Command are located at 1303 Greene Avenue,
Suite 303, Montreal, Quebec H3Z 2A4, Canada, and its telephone number is (514)
934-0273.
USE OF PROCEEDS
The Issuer will not receive any cash proceeds from the issuance of the
Exchange Notes offered hereby. In consideration for issuing the Exchange Notes
as contemplated in this Prospectus, the Issuer will receive in substitution
Original Notes in like principal amount, the terms of which are substantially
identical to the Exchange Notes and which evidence the same debt as the Exchange
Notes. The Original Notes surrendered in substitution for Exchange Notes will be
retired and cancelled and cannot be reissued. Accordingly, issuance of the
Exchange Notes will not result in any increase in the indebtedness of the Issuer
or the Company.
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<PAGE>
The net proceeds to the Issuer from the sale of the Original Notes were
estimated to be approximately $131.8 million, after deducting underwriting fees
and estimated offering expenses. The Issuer has used or expects to use the net
proceeds of the Offering as follows: (i) approximately $66 million to fund the
Archivex Acquisition (including approximately $20 million of such total amount
loaned to Archivex to fund its portion of the Archivex Acquisition), which
amount includes approximately $3 million of related integration costs; (ii)
approximately $25 million to repay the Issuer's outstanding borrowings under the
Credit Facility; (iii) approximately $11 million to repay outstanding loans from
Pierce Leahy; (iv) approximately $4 million to return capital invested by Pierce
Leahy in the Issuer; and (v) the balance of the net proceeds was lent to Pierce
Leahy, which amount Pierce Leahy used to repay a portion of its borrowings under
the Credit Facility. As of July 31, 1998, the effective interest rate on the
U.S. dollar portion of the Credit Facility was approximately 7.77%. The
borrowings by the Issuer under the Credit Facility which were repaid by a
portion of the net proceeds of the Offering were primarily used to fund certain
of the Company's acquisitions and for working capital. The borrowings by Pierce
Leahy under the Credit Facility which it repaid with a portion of the proceeds
of the Offering were primarily used to fund acquisitions.
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<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June 30,
1998 (i) on an actual basis and (ii) on a pro forma basis to give effect to the
Recent Acquisitions as if they had occurred as of June 30, 1998. The Offering
was completed in April 1998 and the effects of the Offering and the application
of the net proceeds therefrom as described in the "Use of Proceeds" are
reflected in the June 30, 1998 actual amounts. 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 June 30, 1998
----------------------------
Actual Pro Forma
------------- -------------
<S> <C> <C>
Cash.................................................................................... $ 2,532 $ 2,703
======== ========
Credit Facility (a)..................................................................... $ 44,000 $105,082
11 1/8% Senior subordinated notes due 2006.............................................. 130,000 130,000
9 1/8% Senior subordinated notes due 2007............................................... 120,000 120,000
8 1/8% Senior subordinated notes due 2008 of Pierce Leahy Command Company............... 134,515 134,515
Seller notes............................................................................ 4,141 4,141
Other indebtedness...................................................................... 10,087 10,087
Less--Current portion................................................................... (3,578) (3,578)
-------- --------
Total long-term debt (b)............................................................. 439,165 500,247
-------- --------
Preferred stock......................................................................... -- --
Common stock............................................................................ 170 170
Additional paid-in capital.............................................................. 82,278 82,278
Accumulated deficit..................................................................... (13,918) (13,918)
-------- --------
Total shareholders' equity........................................................... 68,530 68,530
-------- --------
Total capitalization................................................................ $507,695 $568,777
======== ========
</TABLE>
(a) See Note 6 of the Notes to Consolidated Financial Statements incorporated
by reference herein for information concerning the Company's debt
obligations.
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<PAGE>
PRO FORMA FINANCIAL DATA OF PIERCE LEAHY CORP.
The unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30,
1998 gives effect to the Recent Acquisitions as if they occurred on June 30,
1998. The Unaudited Pro Forma Condensed Consolidated Statements of Operations
for the year ended December 31, 1997 and for the six months ended June 30, 1998
give effect to, among other things, the 1997 and 1998 Acquisitions for periods
prior to their acquisition by the Company and the Offering, as if they occurred
on January 1, 1997. The Company recorded a deferred income tax provision of
$6,600 in 1997 in connection with the termination of the Company's status as a
Subchapter S corporation for the tax effect of differences in the basis of
assets and liabilities for financial reporting and income tax purposes. This
one-time deferred income tax provision has been eliminated in the Pro Forma
Condensed Consolidated Statement of Operations.
The 1997 and 1998 Acquisitions, the Offering 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 1997 and 1998 Acquisitions and the Offering 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, 1997 and
for each of the three years in the period ended December 31, 1997, incorporated
by reference into this Prospectus.
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<PAGE>
PIERCE LEAHY CORP.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma for the
Acquisition of Kestrel (b)
---------------------------
Recent Acquisitions Kestrel Pro Forma
ASSETS Actual Except Kestrel (a) Actual Adjustments Pro Forma
- ---------------------------------------------------- --------- -------------------- ---------- --------------- ---------
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash $ 2,532 $ -- $ 171 $ -- $ 2,703
Accounts receivable, net 37,713 -- 1,695 -- 39,408
Inventories 1,354 -- -- -- 1,354
Prepaid expenses and other 1,408 -- 551 -- 1,959
Deferred income taxes 2,570 -- -- -- 2,570
-------- ------------------- ------- -------------- --------
Total current assets 45,577 -- 2,417 -- 47,994
PROPERTY AND EQUIPMENT, net 191,223 2,347 15,790 -- 209,360
OTHER ASSETS, primarily goodwill, net 345,718 6,735 1,504 35,636(c) 389,593
-------- ------------------- ------- -------------- --------
$582,518 $ 9,082 $19,711 $ 35,636 $646,947
======== =================== ======= ============== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ----------------------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt and noncompete
obligations $ 3,578 $ -- $ 1,710 $ (1,710)(e) $ 3,578
Accounts payable 5,676 -- 643 -- 6,319
Accrued expenses 37,591 -- 159 -- 37,750
Deferred revenues 13,715 -- 964 -- 14,679
-------- ------------------- ------- -------------- --------
Total current liabilities 60,560 -- 3,476 (1,710) 62,326
LONG-TERM DEBT AND NONCOMPETE OBLIGATIONS 439,165 9,082 8,724 (8,724)(e) 500,247
52,000 (d)
DEFERRED RENT 4,909 -- 660 (660)(f) 4,909
DEFERRED INCOME TAXES 9,354 -- 1,581 -- 10,935
SHAREHOLDERS' EQUITY 68,530 -- 5,270 (5,270)(g) 68,530
-------- ------------------- ------- -------------- --------
$582,518 $ 9,082 $19,711 $ 35,636 $646,947
======== =================== ======= ============== ========
</TABLE>
The accompanying notes are an integral part of this statement.
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<PAGE>
PIERCE LEAHY CORP.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(DOLLARS IN THOUSANDS)
(a) Represents the balance sheets for the Recent Acquisitions other than the
Kestrel Acquisition (see "Business-The 1998 Acquisitions") after the
application of the purchase method of accounting. The cash purchase price of
the 1998 Acquisitions (excluding the Kestrel Acquisition) was approximately
$9,082.
(b) The Company completed the Kestrel Acquisition after June 30, 1998 (see
"Business - The Kestrel Acquisition") for approximately $52,000 including
transaction costs. The pro forma adjustments reflect the application of the
purchase method of accounting to the actual balance sheet of Kestrel.
(c) Intangible assets include goodwill ($30,636) and a noncompete agreement
($5,000) which resulted from the preliminary allocation of the purchase
price. These intangibles are subject to adjustment based on the final
allocation of the purchase price to the net assets acquired. Management
believes that the final allocation of the purchase price will not differ
materially from the preliminary estimated amounts.
(d) Reflects the Company's assumed additional borrowing of $52,000 under the
Credit Facility to fund the Kestrel Acquisition.
(e) Reflects elimination of long-term debt and noncompete obligations not
assumed as part of the Kestrel Acquisition.
(f) Reflects the resetting of deferred rent upon application of the purchase
method of accounting.
(g) Reflects the adjustment to eliminate historical equity accounts of
Kestrel.
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<PAGE>
PIERCE LEAHY CORP.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 and 1998 Acquisitions
Excluding Archivex Archivex Kestrel
Actual and Kestrel (a) Actual Actual
---------- --------------------------- -------- --------
<S> <C> <C> <C> <C>
REVENUES $183,517 $63,796 $14,522 $12,873
-------- ------- ------- -------
OPERATING EXPENSES:
Cost of sales, excluding depreciation and amortization......... 101,940 40,939 7,600 5,330
Selling, general and administrative............................ 30,070 16,051 3,031 4,727
Depreciation and amortization.................................. 21,528 2,466 1,627 883
Special compensation charge.................................... 1,752 -- -- --
Foreign currency exchange...................................... 702 -- -- --
-------- ------- ------- -------
Total operating expenses....................................... 155,992 59,456 12,258 10,940
-------- ------- ------- -------
Operating income............................................... 27,525 4,340 2,264 1,933
INTEREST EXPENSE................................................ 29,262 670 542 841
-------- ------- ------- -------
Income (loss) before income taxes, extraordinary charge and
discontinued operations....................................... (1,737) 3,670 1,722 1,092
INCOME TAXES.................................................... 7,424 16 868 359
-------- ------- ------- -------
INCOME (LOSS) BEFORE EXTRAORDINARY CHARGE AND DISCONTINUED
OPERATIONS..................................................... $ (9,161) $ 3,654 $ 854 $ 733
======== ======= ======= =======
Pro Forma Pro Forma For Adjustment for
Adjustments (b) Acquisitions Offering Pro Forma
--------------- -------------- --------------- -----------
<S> <C> <C> <C> <C>
REVENUES $ -- $274,708 $ -- $274,708
--------- -------- ------------- --------
OPERATING EXPENSES:
Cost of sales, excluding depreciation and amortization........... (1,598)(c) 154,211 -- 154,211
Selling, general and administrative.............................. (382)(d) 53,497 -- 53,497
Depreciation and amortization.................................... 7,823 (e) 34,327 -- 34,327
Special compensation charge...................................... -- 1,752 -- 1,752
Foreign currency exchange........................................ -- 702 -- 702
--------- -------- ------------- --------
Total operating expenses......................................... 5,843 244,489 -- 244,489
--------- -------- ------------- --------
Operating income................................................. (5,843) 30,219 -- 30,219
INTEREST EXPENSE................................................. 14,743 (f) 46,058 (3,471) 42,587 (g)
--------- -------- ------------- ----------
Income (loss) before income taxes, extraordinary charge and
discontinued operations.......................................... (20,586) (15,839) 3,471 (12,368)
INCOME TAXES..................................................... (10,266)(h) (1,599) (329) (1,928)(i)
--------- -------- ------------- ----------
INCOME (LOSS) BEFORE EXTRAORDINARY CHARGE AND DISCONTINUED
OPERATIONS....................................................... $ (10,320) $(14,240) $ 3,800 $(10,440)
========= ======== ============= ==========
</TABLE>
The accompany notes are an integral part of this statement.
PIERCE LEAHY CORP.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 and 1998 Acquisitions
Excluding Archivex Archivex Kestrel
Actual and Kestrel (a) Actual Actual
---------- --------------------------- -------- -------
<S> <C> <C> <C> <C>
REVENUES $120,436 $8,861 $3,816 $6,057
-------- ------ ------ ------
OPERATING EXPENSES:
Cost of sales, excluding depreciation and amortization........ 69,194 4,787 2,150 2,720
Selling, general and administrative........................... 17,630 2,233 936 1,929
Depreciation and amortization................................. 15,796 375 242 510
Foreign currency exchange..................................... 3,662 -- -- --
-------- ------ ------ ------
Total operating expenses...................................... 106,282 7,395 3,328 5,159
-------- ------ ------ ------
Operating income.............................................. 14,154 1,466 488 898
INTEREST EXPENSE............................................... 18,683 96 111 428
-------- ------ ------ ------
Income (loss) before income taxes............................. (4,529) 1,370 377 470
INCOME TAXES................................................... 965 20 113 171
-------- ------ ------ ------
NET INCOME (LOSS).............................................. $ (5,494) $1,350 $ 264 $ 299
======== ====== ====== ======
Pro Forma Pro Forma For Adjustment for
Adjustments (b) Acquisitions Offering Pro Forma
--------------- -------------- --------------- ----------
<S> <C> <C> <C> <C>
REVENUES $ -- $139,170 $ -- $139,170
------------ -------- -------------- --------
OPERATING EXPENSES:
Cost of sales, excluding depreciation and amortization.......... (394)(c) 78,457 -- 78,457
Selling, general and administrative............................. (94)(d) 22,634 -- 22,634
Depreciation and amortization................................... 2,322 (e) 19,245 -- 19,245
Foreign currency exchange....................................... -- 3,662 -- 3,662
------------ -------- -------------- --------
Total operating expenses........................................ 1,834 123,998 -- 123,998
------------ -------- -------------- --------
Operating income................................................ (1,834) 15,172 -- 15,172
INTEREST EXPENSE................................................. 4,172 (f) 23,490 (2,197) 21,293 (g)
------------ -------- -------------- --------
Income (loss) before income taxes............................... (6,006) (8,318) 2,197 (6,121)
INCOME TAXES..................................................... (1,605) (336) 688 352 (i)
------------ -------- -------------- --------
NET INCOME (LOSS)................................................ $ (4,401) $ (7,982) $ 1,509 $ (6,473)
============ ======== ============== ========
</TABLE>
The accompanying notes are an integral part of this statement.
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<PAGE>
PIERCE LEAHY CORP.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
(a) Represents the historical results of operations of the 1997 and 1998
Acquisitions for the periods from January 1, 1997 to the earlier of their
dates of acquisition by the Company or June 30, 1998. See "Business--
Acquisition and Growth Strategy," "Business--The 1998 Acquisitions" and
"Business--The Kestrel Acquisition."
(b) Management expects to achieve cost savings from the 1997 and 1998
Acquisitions as a result of the factors described below. The Pro Forma
Condensed Consolidated Statements of Operations for the year ended December
31, 1997 and the six months ended June 30, 1998 reflect only the cost
savings actually achieved in 1997 and in the six months ended June 30, 1998
from the acquisitions completed in 1997 and in the six months ended June 30,
1998 and none of the additional expected savings from the 1997 and 1998
Acquisitions. There is typically a lag after an acquisition is completed to
fully realize such savings and the Company expects to achieve additional
savings from the 1997 and 1998 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 $15,381 and $2,628 of estimated operating expenses
included in the pro forma statements of operations for the year ended
December 31, 1997 and for the six months ended June 30, 1998 that would not
have been incurred had the 1997 and 1998 Acquisitions occurred as of January
1, 1997 and had such cost savings been fully implemented as of such date.
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 $15,381 and $2,628 specifically identified.
(c) Represents the elimination of rent expense on facilities leased to Archivex
Inc. from its affiliates. These facilities were purchased as part of the
Archivex Acquisition.
(d) Represents the elimination of management fees paid to an affiliate of
Archivex Inc. which fees were discontinued upon completion of the Archivex
Acquisition.
(e) A pro forma adjustment has been made to reflect additional depreciation and
amortization expense based on the estimated fair value of the assets
acquired, as if the 1997 and 1998 Acquisitions had occurred as of January 1,
1997. Such depreciation and amortization has been recorded in accordance
with the Company's accounting policies as stated in Notes 3 and 4 of Notes
to Consolidated Financial Statements incorporated by reference herein. 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.
(f) Represents interest expense for the year ended December 31, 1997 and for the
six months ended June 30, 1998, respectively, on debt incurred to finance
the 1997 and 1998 Acquisitions, using an annual interest rate of 7%.
(g) Reflects interest expense on $130,000 of the 1996 Notes at 11 1/8%, $120,000
of the 1997 Notes at 9 1/8%, $135,000 of the Notes at 8 1/8%, and, with
respect to the year ended December 31, 1997 and the six months ended June
30, 1998, interest expense of $3,919 and $1,960 on existing and assumed
Senior Indebtedness, interest expense of $394 and $197 on other pro forma
indebtedness, commitment fees on existing Senior Indebtedness of $433 and
$217 and amortization of deferred financing costs of $1,426 and $713,
respectively.
(h) The Company recorded a deferred income tax provision of $6,600 in 1997 in
connection with the termination of the Company's status as a Subchapter S
corporation. This one-time deferred income tax provision has been
eliminated along with recording an income tax benefit of $3,874 resulting
from the pro forma adjustments for acquisitions.
(i) The Company operated as a Subchapter S corporation for income tax purposes
until July 1, 1997. 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.
-41-
<PAGE>
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS, OTHER
DATA AND BALANCE SHEETS OF PIERCE LEAHY CORP.
The following selected historical and pro forma financial data of Pierce Leahy
Corp., insofar as it relates to each of the five years in the period ended
December 31, 1997, has been derived from the Company's audited consolidated
financial statements, including the consolidated balance sheets at December 31,
1996 and 1997, and the related consolidated statements of operations for each of
the three years in the period ended December 31, 1997 and the notes thereto
incorporated by reference into this Prospectus. The selected historical and pro
forma consolidated statements of operations and balance sheet data as of and for
the six months ended June 30, 1998 and selected historical statement of
operations data for the six months ended June 30, 1997 have been derived from
unaudited consolidated financial statements incorporated by reference into this
Prospectus which, in the opinion of management, include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the results for the unaudited interim periods. Results for the
six months ended June 30, 1998 are not necessarily indicative of results that
may be expected for the entire year.
The following selected pro forma statements of operations and other data give
effect to, among other things, the 1997 and 1998 Acquisitions and the impact of
the Offering, as if each of these items had occurred on January 1, 1997. The pro
forma balance sheet gives effect to the Recent Acquisitions" as if they had
occurred on June 30, 1998. In 1997, the Company recorded a deferred income tax
provision of $6,600 in connection with the termination of the Company's status
as a Subchapter S corporation for the tax effect of differences in the basis of
assets and liabilities for financial reporting and income tax purposes. This
one-time deferred income tax provision has been eliminated in the December 31,
1997 Pro Forma Condensed Consolidated Statement of Operations. Also not
reflected in the December 31, 1997 Pro Forma Condensed Consolidated Statement of
Operations is the extraordinary charge of $6,036 for the early extinguishment of
a portion of the 1996 Notes that occurred in August 1997.
The pro forma items and certain management assumptions and adjustments are
described in the accompanying notes hereto. This pro forma information is not
necessarily indicative of the results that would have occurred had the 1997 and
1998 Acquisitions and the Offering been completed on the dates indicated or of
the Company's actual or future results or financial position. The selected
historical and pro forma consolidated statements of operations, other data and
balance sheets should be read in conjunction with the information contained in
the Company's Consolidated Financial Statements and the notes thereto
incorporated by reference into this Prospectus and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Selected Historical
and Pro Forma Consolidated Statements of Operations, Other Data and Balance
Sheets of Pierce Leahy Corp." and "Pro Forma Financial Data of Pierce Leahy
Corp." included elsewhere in this Prospectus.
-42-
<PAGE>
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS, OTHER
DATA AND BALANCE SHEETS OF PIERCE LEAHY CORP.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------------
Pro Forma
1993 1994 1995 1996 1997 1997 (a)
------------ ------------ ------------ ------------ ------------ ------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
(dollars in thousands, except share and per share data)
Statement of Operations Data:
Revenues:
Storage.........................................$ 42,122 $ 47,123 $ 55,501 $ 75,900 $ 107,879 $ 160,963
Service and storage material sales.............. 31,266 35,513 39,895 53,848 75,638 113,745
----------- ----------- ----------- ----------- ----------- -----------
Total revenues................................. 73,388 82,636 95,396 129,748 183,517 274,708
Cost of sales, excluding depreciation and 45,391 49,402 55,616 73,870 101,940 154,211
amortization....................................
Selling, general and administrative.............. 11,977 15,882 16,148 20,007 30,070 53,497
Depreciation and amortization.................... 6,888 8,436 8,163 12,869 21,528 34,327
Special compensation charge (b).................. -- -- -- -- 1,752 1,752
Foreign currency exchange........................ -- -- -- -- 702 702
Consulting payments to related parties (c)....... -- 500 500 -- -- --
Non-recurring charges with related parties(d).... -- -- -- 3,254 -- --
----------- ----------- ----------- ----------- ----------- -----------
Operating income................................ 9,132 8,416 14,969 19,748 27,525 30,219
Interest expense................................. 6,160 7,216 9,622 17,225 29,262 42,587
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes and
extraordinary charge........................... 2,972 1,200 5,347 2,523 (1,737) (12,368)
Income taxes (e)................................. -- -- -- -- 7,424 (1,928)
Extraordinary charge (f)......................... 9,174 5,991 3,279 2,015 6,036 --
----------- ----------- ----------- ----------- ----------- -----------
Net income (loss)................................ (6,202) (4,791) 2,068 508 (15,197) (10,440)
Accretion (cancellation) of redeemable warrants.. (746) 16 889 1,561 -- --
----------- ----------- ----------- ----------- ----------- -----------
Net income (loss) applicable to Common
shareholders....................................$ (5,456) $ (4,807) $ 1,179 $ (1,053) $ (15,197) $ (10,440)
=========== =========== =========== =========== =========== ===========
Basic and diluted earnings per Common share
Income (loss) before extraordinary charge.......$ 0.34 $ 0.18 $ 0.19 $ 0.09 $ (0.69)
Extraordinary charge............................ (0.85) (0.56) (0.30) (0.19) (0.45)
----------- ----------- ----------- ----------- -----------
Basic and diluted income (loss) per Common share.$ (0.51) $ (0.38) $ 0.11 $ (0.10) $ (1.14)
=========== =========== =========== =========== ===========
Shares used in computing basic net income
(loss) per Common Share.........................10,591,090 10,591,090 10,591,090 10,546,871 13,385,243
Shares used in computing diluted net income
(loss) per Common share........................10,782,025 10,888,441 10,890,188 10,630,922 13,385,243
Pro forma data (unaudited):
Historical net loss before income taxes and
extraordinary charge........................... $ (1,737)
Pro forma adjustment for income taxes (e)....... 1,452
Extraordinary charge, net of tax................ 6,036
-----------
Historical net loss applicable to Common
shareholders, as adjusted for pro forma
income taxes................................... $ (9,225)
===========
Historical basic and diluted net loss per
Common share, as adjusted for pro forma
income taxes--
Loss before extraordinary charge................ $ (0.24)
Extraordinary charge............................ (0.45)
-----------
$ (0.69)
===========
Pro forma basic and diluted net loss
applicable to Common shareholders per Common
share.......................................... $ (0.61)(g)
Shares used in computing per share amounts...... 13,385,243 17,025,990
Other Data:
Ratio of earnings to fixed charges (h)........... 1.30x 1.11x 1.37x 1.11x -- --
Cash flows provided by operations................$ 8,019 $ 11,000 $ 17,522 $ 26,438 $ 20,964 --
Cash flows used in investing activities..........$ (13,784) $ (13,933) $ (51,315) $ (108,842) $ (156,549) --
Cash flows provided by financing activities......$ 5,832 $ 2,763 $ 34,157 $ 82,936 $ 136,113 --
EBITDA (i).......................................$ 16,020 $ 17,352 $ 23,632 $ 35,871 $ 51,507 $ 67,000
EBITDA margin.................................... 21.8% 21.0% 24.8% 27.6% 28.1% 24.4%
EBITDA, as adjusted (j).......................... -- -- -- -- -- $ 82,381
Capital expenditures (k).........................$ 5,827 $ 6,352 $ 16,288 $ 23,493 $ 35,397 --
Cubic feet of storage under management at end of
period (000s) (l)............................... 19,025 22,160 29,523 40,410 58,865 72,098
As of December 31,
-------------------------------------------------------------------
Balance Sheet Data: 1993 1994 1995 1996 1997
----------- ----------- ----------- ----------- -----------
Working capital deficit........................ $ (9,143) $ (5,202) $ (8,139) $ (23,933) $ (12,906)
Total assets................................... 74,621 79,746 131,328 234,820 394,713
Total debt..................................... 69,736 77,683 120,071 29,023 279,197
Shareholders' equity (deficit)................. (14,508) (19,341) (18,201) (25,438) 59,323
Six Months Ended June 30,
--------------------------------------------------
Pro Forma
1997 1998 1998 (a)
--------------- --------------- ----------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
Statement of Operations Data:
Revenues:
Storage.......................................... $ 50,013 $ 70,397 $ 81,313
Service and storage material sales............... 36,427 50,039 57,857
----------- ----------- -----------
Total revenues.................................. 86,440 120,436 139,170
Cost of sales, excluding depreciation and
amortization..................................... 47,909 69,194 78,457
Selling, general and administrative............... 14,171 17,630 22,634
Depreciation and amortization..................... 9,424 15,796 19,245
Special compensation charge (b)................... -- -- --
Foreign currency exchange......................... 120 3,662 3,662
Consulting payments to related parties (c)........ -- -- --
Non-recurring charges with related parties(d)..... -- -- --
----------- ----------- -----------
Operating income................................. 14,816 14,154 15,172
Interest expense.................................. 14,855 18,683 21,293
----------- ----------- -----------
Income (loss) before income taxes and
extraordinary charge............................ (39) (4,529) (6,121)
Income taxes (e).................................. -- 965 352
Extraordinary charge (f).......................... -- -- --
----------- ----------- -----------
Net income (loss)................................. (39) (5,494) (6,473)
Accretion (cancellation) of redeemable warrants... -- -- --
----------- ----------- -----------
Net income (loss) applicable to Common
shareholders .................................... $ (39) $ (5,494) $ (6,473)
=========== =========== ===========
Basic and diluted earnings per Common share--
Income (loss) before extraordinary charge........ $ 0.00 $(0.33)
Extraordinary charge............................. -- --
----------- -----------
Basic and diluted income (loss) per Common share. $ 0.00 $(0.33)
=========== ===========
Shares used in computing basic net income
(loss) per...................................... 10,485,090 16,578,243
Common share
Shares used in computing diluted net income
(loss) per Common share........................ 10,485,090 16,578,243
Pro forma data (unaudited):
Historical net loss before income taxes and
extraordinary charge........................... $ (39)
Pro forma adjustment for income taxes (e)....... 628
Extraordinary charge, net of tax................ --
-----------
Historical net loss applicable to Common
shareholders, as adjusted for pro forma
income taxes................................... $ (667)
===========
Historical basic and diluted net loss per
Common share, as adjusted for pro forma
income taxes--
Loss before extraordinary charge................ $ (0.06)
Extraordinary charge............................ --
-----------
$ (0.06)
===========
Pro forma basic and diluted net loss
applicable to Common shareholders per Common
share.......................................... $ (0.38) (g)
Shares used in computing per share amounts...... 10,485,090 16,578,243 17,025,990
Other Data:
Ratio of earnings to fixed charges (h)............ -- -- --
Cash flows provided by operations................. $ 3,995 $ 15,208 --
Cash flows used in investing activities........... $ (105,595) $ (167,735) --
Cash flows provided by financing activities....... $ 101,582 $ 153,277 --
EBITDA (i)........................................ $ 24,360 $ 33,612 $ 38,079
EBITDA margin ................................... 28.2% 27.9% 27.4%
EBITDA, as adjusted (j)........................... -- -- $ 40,707
Capital expenditures (k) ....................... $ 16,350 $ 19,215 --
Cubic feet of storage under management at end of
period (000s) (l)................................ 51,100 72,995 76,426
As of June 30, 1998
--------------------------------
Pro
BALANCE SHEET DATA: Actual Forma (m)
-------------- ---------------
Working capital deficit........................... $ (14,983) $ (14,332)
Total assets...................................... 582,518 646,947
Total debt........................................ 442,743 503,825
Shareholders' equity (deficit).................... 68,530 68,530<>
</TABLE>
The accompanying notes are an integral part of this statement.
-43-
<PAGE>
NOTES TO SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
(a) Gives effect to (i) the 1997 and the 1998 Acquisitions and (ii) the impact
of the Offering, as if each of these items had occurred on January 1, 1997.
See "Pro Forma Financial Data of Pierce Leahy Corp." and Note 2 of the
Notes to Consolidated Financial Statements incorporated by reference
herein. In 1997, the Company recorded a deferred income tax provision of
$6,600 in connection with the termination of the Company's status as a
Subchapter S corporation for the tax effect of differences in the basis of
assets and liabilities for financial reporting and income tax purposes.
This one-time deferred income tax provision has been eliminated in the
December 31, 1997 Pro Forma Condensed Consolidated Statement of Operations.
Also not reflected in the December 31, 1997 Pro Forma Condensed
Consolidated Statement of Operations is the extraordinary charge of $6,036
for the early extinguishment of a portion of the 1996 Notes that occurred
in August 1997. See Note (f) below.
(b) Upon consummation of Pierce Leahy's 1997 initial public offering, options
granted during 1997 became fully vested and exercisable as provided for
under the stock option plan. The Company recorded a non-recurring, non-
cash compensation charge of $1,752 relating to those options, representing
the difference between the exercise price and the deemed value for
accounting purposes.
(c) Represents aggregate payments made to eight Pierce family members.
(d) Represents non-recurring charge 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.
(e) Until July 1, 1997, the Company was taxed as a Subchapter S corporation.
Such status was terminated in connection with Pierce Leahy's 1997 initial
public offering. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Note 2 of Notes to Consolidated
Financial Statements incorporated by reference herein.
(f) Represents loss on early extinguishment of debt due to refinancings in
1993, 1994, 1995, 1996 and 1997. Amounts include the write-off of
unamortized deferred financing costs and discount, along with prepayment
penalties and other costs. A charge for the early extinguishment of a
portion of the 1996 Notes of $6,036 occurred in August 1997. Such charge
has been eliminated in the Pro Forma Condensed Consolidated Statement of
Operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
(g) Excluding $15,381 and $2,628 of operating expenses included in the pro
forma statements of operations for 1997 and for the six months ended June
30, 1998, respectively, specifically identified by management that would
not have been incurred had the 1997 and 1998 Acquisitions occurred as of
January 1, 1997 and had such cost savings been fully implemented as of such
date, and excluding the special compensation charge incurred in 1997, pro
forma net income (loss) and basic and diluted net income (loss) per share
would have been $161 and $0.01, respectively, in 1997 and ($4,847) and
($0.28) for the six months ended June 30, 1998, respectively.
(h) The earnings for the year ended December 31, 1997 and for the six months
ended June 30, 1997 and 1998 were inadequate to cover fixed charges by
$1,737, $39 and $4,529, respectively.
(i) "EBITDA" is defined as net income (loss) before interest expense, taxes,
depreciation and amortization, consulting payments to related parties, non-
recurring charges with related parties, foreign currency exchange, special
compensation charge and extraordinary charge. EBITDA is not a measure of
performance under Generally Accepted Accounting Principles ("GAAP").
Moreover, the use of EBITDA by the Company may not be comparable to
similarly titled measures as reported by other companies. 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 with GAAP, or as a measure of
profitability or liquidity, management understands that EBITDA is
customarily used as a criteria in evaluating records management companies.
However, substantially all of the Company's financing agreements, including
the Notes and the 1996 Notes and the 1997 Notes (each 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.
(j) EBITDA, as adjusted is defined as EBITDA plus $15,381 and $2,628 of
operating expenses included in the pro forma statements of operations for
1997 and for the six months ended June 30, 1998, respectively, specifically
identified by management that would not have been incurred had the 1997 and
1998 Acquisitions occurred as of January 1, 1997 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 $15,381 and $2,628 specifically
identified.
(k) Capital expenditures for 1997 are comprised of $14.9 million for new
shelving, $3.5 million for leasehold and building improvements, $10.6
million for new facility purchases and related improvements, $3.7 million
for data processing and $2.7 million for the purchase of transportation,
warehouse and office equipment.
(l) The pro forma cubic feet of storage as of June 30, 1998 includes cubic feet
of storage from the Recent Acquisitions at the time of their respective
acquisitions.
(m) Gives effect to the Recent Acquisitions as if such acquisitions had
occurred on June 30, 1998.
-44-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The Company is the largest hard copy records management company in North
America, as measured by its 78 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 43 acquisitions through 1997 and the
completion of 16 acquisitions to date in 1998.
The Company's net income (loss) was $(15.2) million, $0.5 million, $2.1
million, $(5.5) million and $(0.04) million in 1997, 1996, and 1995 and the
six months ended June 30, 1998 and 1997, respectively. Although the Company's
operating income has increased over the three years, net income (loss) has
fluctuated as a result of increases in foreign currency exchange, interest
expense, income taxes related to the termination of the Company's status as a
Subchapter S corporation, and extraordinary charges related to the early
extinguishment of debt due to refinancings in 1997, 1996 and 1995.
Another tool for measuring the performance of records management companies is
"EBITDA" (net income (loss) before interest expense, taxes, depreciation and
amortization, consulting payments to related parties, non-recurring charges with
related parties, foreign currency exchange, special compensation charge and
extraordinary charge). Substantially all of the Company's financing agreements,
including the Notes, the 1997 Notes and the 1996 Notes contain covenants in
which EBITDA is used as a measure of financial performance. Moreover, the use
of EBITDA by the Company may not be comparable to similarly titled measures as
reported by other companies. 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.
-45-
<PAGE>
The following table illustrates the growth in stored cubic feet from new and
existing customers and acquisitions from 1997 through 1993 and for the six
months ended June 30, 1998:
NET ADDITIONS OF CUBIC FEET OF STORAGE BY CATEGORY
(CUBIC FEET IN THOUSANDS)
<TABLE>
<CAPTION>
Six
Months Year Ended December 31,
Ended ---------------------------------------------
June 30,
1998 1997 1996 1995 1994 1993
------------- ------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Additions of Cubic Feet
New and Existing
Customer Accounts(a).... 4,288 8,170 3,956 2,740 2,695 2,660
Acquisitions............ 9,842 10,285 6,931 4,623 440 117
Total............... 14,130 18,455 10,887 7,363 3,135 2,777
% Increase From
New and Existing
Customer Accounts(a)..... * 20% 13% 12% 14% 16%
Acquisitions............. * 26% 24% 21% 21% 1%
Total............... * 46% 37% 33% 35% 17%
Cubic Feet Under
Management
Beginning of Period..... 58,865 40,410 29,523 22,160 19,025 16,248
End of Period........... 72,995 58,865 40,410 29,523 22,160 19,025
</TABLE>
* Not applicable.
(a) Net of permanent removals. Includes effect of records destruction program
of 475 and 372 cubic feet of records in 1996 and 1995, respectively, for a
major customer, as recommended by the Company pursuant to a consulting
agreement with the Company.
-46-
<PAGE>
Revenues
The Company's revenues consist of storage revenues (58.8% of total revenues in
1997), and related service and storage material sales revenues (41.2% of total
revenues in 1997). 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 based on activity with
respect to such records.
While the Company's total revenues have increased from 1995 to 1997, total
revenue per annual average cubic foot during such period has declined. 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.
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.
The Company's depreciation and amortization charges result primarily from the
capital-intensive nature of its business and completed acquisitions. 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 the amortization of client
acquisition costs. The Company has accounted for all of its acquisitions under
the purchase method except for two small acquisitions, which were accounted for
under the pooling of interests 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 impact reported net income (loss).
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. Shelving has a relatively long life and
rarely needs to be replaced. 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.
The Company often incurs client acquisition costs, primarily sales commissions
and move-in costs. Client acquisition costs are capitalized and amortized over
six years, which is the average initial contract term of new customer accounts.
In 1997, the Company incurred $10.6 million of client acquisition costs or
approximately $2.04 per cubic foot of client records moved in from new clients.
Amortization of client acquisition costs amounted to $3.2 million in 1997.
-47-
<PAGE>
Extraordinary Charge
To provide capital to fund its growth oriented business strategy, the Company
has incurred substantial indebtedness. The Company has completed several
refinancings and expansions of its credit facilities, primarily utilizing bank
debt and note issuances, which have resulted in one-time charges, including the
repurchase of warrants and the write-off of deferred financing costs, of $6.0
million, $2.0 million and $3.3 million in 1997, 1996 and 1995, respectively.
Year 2000 Compliance
The Company uses a number of computer software programs and systems in its
operations, including the PLUS/R/ system and embedded systems contained in the
Company's buildings, plant, equipment and other infrastructure. The Company has
developed a plan designed to make its systems compliant with the requirements to
process transactions in the year 2000. Review of the Company's core PLUS/(R)/
system databases and programs has been completed and code modifications and
testing are scheduled to be completed by December 31, 1998. The present version
of the Company's internal financial accounting system is not year 2000 compliant
and is scheduled to be upgraded by December 31, 1998. The Company is also
working with its other internal information systems and network providers to
ensure all systems are year 2000 compliant. The Company estimates that the
expenses and capital expenditures associated with achieving year 2000 compliance
will approximate $350,000 of which approximately $250,000 had been expended as
of June 30, 1998. The Company estimates that its remediation costs incurred to
date in connection with the Year 2000 issue, including the replacement of
non-compliant systems, software modifications and validation, have been
approximately $250,000. In addition, the Company estimates the cost to complete
its Year 2000 evaluation, remediation and validation of all systems will
approximate an additional $100,000. Funding for costs incurred to date has come
from cash flows from operations, and future costs are expected to be funded in a
similar manner. The Company has not deferred any significant system projects due
to its Year 2000 efforts.
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 total revenues. There can be no assurance that the trends in
revenue growth or operating results shown below will continue in the
future.
<TABLE>
<CAPTION>
Six Months Ended June 30, Year Ended December 31,
-------------------------------- ---------------------------------
1998 1997 1997 1996 1995
--------------- -------------- --------- ----------- ---------
REVENUES:
<S> <C> <C> <C> <C> <C>
Storage 58.5% 57.9% 58.8% 58.5% 58.2%
Service and storage material
sales 41.5 42.1 41.2 41.5 41.8
----- ----- ----- ----- -----
Total revenues 100.0 100.0 100.0 100.0 100.0
OPERATING EXPENSES:
Costs of sales, excluding
depreciation and amortization 57.5 55.5 55.5 57.0 58.3
Selling, general and
administrative 14.6 16.4 16.4 15.4 16.9
Depreciation and amortization 13.1 10.9 11.7 9.9 8.6
Special compensation charge 0.0 0.0 1.0 0.0 0.0
Foreign currency exchange 3.0 0.1 0.4 0.0 0.0
Non-recurring charge with related
parties 0.0 0.0 0.0 2.5 0.0
</TABLE>
-48-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Consulting payments to related
parties 0.0 0.0 0.0 0.0 0.5
----- ----- ----- ----- -----
Total operating expenses 88.2 82.9 85.0 84.8 84.3
----- ----- ----- ----- -----
Operating income 11.8 17.1 15.0 15.2 15.7
INTEREST EXPENSE 15.6 17.1 15.9 13.3 10.1
----- ----- ----- ----- -----
Income (loss) before income
taxes and extraordinary item (3.8) 0.0 (0.9) 1.9 5.6
INCOME TAXES 0.8 0.0 4.1 0.0 0.0
----- ----- ----- ----- -----
Income (loss) before
extraordinary charge (4.6) 0.0 (5.0) 1.9 5.6
EXTRAORDINARY CHARGE 0.0 0.0 3.3 1.5 3.4
----- ----- ----- ----- -----
NET INCOME (LOSS) (4.6%) 0.0 (8.3%) 0.4% 2.2%
===== ===== ===== ===== =====
EBITDA 27.9% 28.2% 28.1% 27.6% 24.8%
===== ===== ===== ===== =====
</TABLE>
Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997
Total revenues increased from $86.4 million for the six months ended
June 30, 1997 to $120.4 million for the six months ended June 30, 1998, an
increase of $34.0 million, or 39.3%. Twenty-eight acquisitions were completed
from January 1997 to June 1998, which accounted for $24.4 million, or 71.8%, 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
and acquired customers.
Storage revenues increased from $50.0 million for the six months ended
June 30, 1997 to $70.4 million for the six months ended June 30, 1998, an
increase of $20.4 million, or 40.8%. Service and storage material sales
revenues increased from $36.4 million for the six months ended June 30,
1997 to $50.0 million for the six months ended June 30, 1998, an increase
of $13.6 million, or 37.4%.
Cost of sales (excluding depreciation and amortization) increased from $47.9
million in the six months ended June 30, 1997 to $69.2 million in the
six months ended June 30, 1998, an increase of $21.3 million, or 44.4%,
and increased as a percentage of total revenues from 55.5% in the 1997 period
to 57.5% in the 1998 period. The increase in dollars and as a percentage of
total revenues resulted primarily from an increase in wages and benefits
resulting from an increased number of employees and an increase in facility
occupancy costs resulting from an increase in cubic feet stored from growth and
acquisitions.
Selling, general and administrative expenses increased from $14.2 million
for the six months ended June 30, 1997 to $17.6 million for the six
months ended June 30, 1998, an increase of $3.4 million, or 24.4%, but
decreased as a percentage of total revenues from 16.4% in the 1997 period to
14.6% in the 1998 period. The dollar increase was primarily attributable to
increases in staffing, including increases in sales force and administrative
staff. The decrease as a percentage of total revenues was attributable to
economies realized from the administrative efficiencies of operating in a
centralized manner including the use of the Company's proprietary PLUS(R)
computer software system.
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<PAGE>
Depreciation and amortization expense increased from $9.4 million for the
six months ended June 30, 1997 to $15.8 million for the six months ended
June 30, 1998, an increase of $6.4 million, or 67.6%, and increased as a
percentage of revenues from 10.9% for the six months ended June 30, 1997
to 13.1% for the six months ended June 30, 1998. The increase in both
dollars and percentage of total revenues was primarily attributable to the
additional depreciation and amortization expense related to the 28
acquisitions completed from January 1997 to June 1998 and to capital
expenditures for buildings, shelving, improvements to records management
facilities and information systems, and client acquisition costs.
The Company had a foreign currency exchange loss for the six months ended
June 30, 1997 of $0.1 million (0.1% of total revenues) and a loss of $3.7
million (3% of total revenues) for the six months ended June 30, 1998. The
change in the foreign currency exchange is primarily due to a decrease in
the value of the Canadian dollar compared to the U.S. dollar. This movement
affects liabilities denominated in U.S. dollars, primarily the $135.0 million
principal amount of the 8 1/8% Senior Notes issued by Command.
Interest expense increased from $14.9 million for the six months ended
June 30, 1997 to $18.7 million for the six months ended June 30, 1998, an
increase of $3.8 million, or 25.8%. The increase was primarily attributable
to increased indebtedness incurred to finance acquisitions and capital
expenditures.
As a result of the foregoing factors, the Company had a loss before income
taxes of $.04 million for the six months ended June 30, 1997 compared
to a loss before income taxes of $4.5 million for the six months ended
June 30, 1998.
The Company recorded a provision for income taxes of $1.0 million (0.8% of
total revenues) for the six months ended June 30, 1998. There were no
income taxes in the six months ended June 30, 1997 since the Company
operated as a Subchapter S corporation during such period.
As a result of the foregoing items, net loss for the six months ended
June 30, 1997 was $0.04 million and the net loss was $5.5 million (4.6%
of total revenues) for the six months ended June 30, 1998.
EBITDA increased from $24.4 million for the six months ended June 30,
1997 to $33.6 million for the six months ended June 30, 1998, an increase
of $9.2 million, or 38.0%. As a percentage of total revenues, EBITDA was
28.1% for the six months ended June 30, 1997 and 27.9% for the six
months ended June 30, 1998.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
Total revenues increased from $129.7 million in 1996 to $183.5 million in
1997, an increase of $53.8 million or 41.4%. Revenues from acquisitions
represented $34.9 million of this increase. Approximately $18.9 million of the
total revenue growth resulted from sales to new customers and increases in cubic
feet stored from existing customers, a base business revenue growth of
approximately 16% year over year.
Storage revenues increased from $75.9 million in 1996 to $107.9 million in
1997, an increase of $32.0 million or 42.1%. Service and storage material sales
revenues increased from $53.8 million in 1996 to $75.6 million in 1997, an
increase of $21.8 million or 40.5%.
Cost of sales (excluding depreciation and amortization) increased from $73.9
million in 1996 to $101.9 million in 1997, an increase of $28.1 million or
38.0%, but decreased slightly as a percentage of total revenues from 57.0% in
1996 to 55.5% in 1997. The $28.1 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 resulting from an increase in cubic
feet associated with the growth in business and entry into 14 new markets during
1997. Capacity utilization is generally lower in new markets than in existing
markets. The decrease as a percentage of total revenue was due primarily to
increased labor operating efficiencies.
Selling, general and administrative expenses increased from $20.0 million in
1996 to $30.1 million in 1997, an increase of $10.1 million or 50.3%, and
increased as a percentage of total revenues from 15.4% in 1996 to 16.4% in 1997.
The increase as a percentage of total revenues was due to increases in sales
personnel and training costs associated with the increased staff, enhancements
to the PLUS(R) system, and temporarily carrying duplicate administrative costs
from recent acquisitions.
A special compensation charge of $1.8 million was incurred during 1997. This
charge relates to the write-off of the unamortized compensation expense due to
the acceleration of the vesting of the stock options granted on January 1, 1997
in conjunction with the Company's initial public offering of Common stock.
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<PAGE>
Depreciation and amortization expenses increased from $12.9 million in 1996 to
$21.5 million in 1997, an increase of $8.7 million or 67.3%, and increased as a
percentage of total revenues from 9.9% in 1996 to 11.7% in 1997. This increase
was the result of increased capital expenditures for shelving, building, and
improvements to records management facilities and information systems and the
amortization of goodwill from the Company's acquisitions and client acquisition
costs.
The Company incurred a foreign currency exchange adjustment in 1997 of $0.7
million during which time the Company had an intercompany loan with the Issuer.
This exchange adjustment was directly related to the decrease in the Canadian
dollar to U.S. dollar exchange rate during the last quarter of 1997.
The Company incurred non-recurring charges of $3.3 million, or 2.5% of total
revenues, in 1996 in connection with the assumption of leasehold interests in
certain facilities from affiliated parties completed in connection with the sale
of the 1996 Notes and with the establishment of a pension for Leo W. Pierce, Sr.
Interest expense increased from $17.2 million in 1996 to $29.3 million in
1997, an increase of $12.0 million or 69.9%. The increase was primarily
attributable to increased indebtedness related to financing acquisitions and
capital expenditures, as well as the higher interest rate on the 1997 Notes
issued in July 1997 and a full year of interest expense on the 1996 Notes
compared to the bank debt repaid upon the issuance of the 1997 Notes and 1996
Notes. Interest expense was also affected by the proceeds of the Company's
initial public stock offering.
As a result of the foregoing factors, the Company had a loss before income
taxes and extraordinary charge of $1.7 million (0.9% of revenues) for 1997
compared to income of $2.5 million (1.9% of revenues) in 1996.
The Company recorded a provision for income taxes of $7.4 million (or 4.1% of
revenues) for 1997. These taxes were comprised of the tax effect from the
termination of the Company's Subchapter S status ($6.6 million) and the
provision for the results of operations after the termination of its status as
an S Corporation on July 1, 1997 ($0.8 million). There was no provision for
income taxes in the year ended 1996 since the Company operated as a Subchapter S
corporation during the period.
The Company recorded extraordinary charges of $6.0 million in 1997 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 1997 and 1996.
As a result of the foregoing items, the Company had a net loss of $15.2
million and net income of $0.5 million for 1997 and 1996, respectively.
EBITDA increased from $35.9 million in 1996 to $51.5 million in 1997, an
increase of $15.6 million or 43.6%, and increased as a percentage of total
revenues from 27.6% in 1996 to 28.1% in 1997. 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, 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 $34.4 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 $14.0 million or 35.0%.
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 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
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<PAGE>
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 total 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.
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.
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 $2.0 million in
1996 and $3.3 million in 1995 related to the early extinguishment of debt as a
result of refinancing and expanding its existing credit agreement in 1996 and
1995.
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.
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 for
acquisitions, capital expenditures and client acquisition costs.
Capital Investments
For 1997, 1996 and 1995, and the six months ended June 30, 1998, capital
expenditures were $35.4 million, $23.5 million, $16.3 million and $19.2
million, respectively, and client acquisition costs were $10.6 million, $6.5
million, $2.2 million and $4.4 million, respectively. In 1998, the Company
expects its aggregate capital expenditures will approximate $35.0 million. Over
85% of 1998 capital expenditures are anticipated to be growth related, primarily
shelving for new client records.
Acquisitions
In order to take advantage of the operating efficiencies of the PLUS(R) system
and the opportunities presented by the consolidation undergoing in the record
management industry, the Company has actively pursued acquisitions since the
beginning of 1994, which has significantly impacted liquidity and capital
resources. In 1997, the Company completed 17 acquisitions for an aggregate
purchase price of $109.1 million, consisting of $102.1 million in cash, 328,621
shares of Common Stock with a deemed value of $4.5 million and $1.7 million in
Sellers notes. Since the beginning of 1998, the Company has completed 16
acquisitions, for an aggregate cash purchase price of approximately $203.7
million and 548,262 shares of Common Stock with a deemed value of approximately
$14.4 million. The Company has historically financed its acquisitions with
borrowings under its credit agreements and notes and with cash flows from
existing operating activities.
To the extent that future acquisitions are financed by additional borrowings
under the Company's 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.
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<PAGE>
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<PAGE>
Sources of Funds
Net cash flows provided by operating activities were $21.0 million, $26.4
million, $17.5 million and $15.2 million for 1997, 1996, 1995 and the six months
ended June 30, 1998, respectively. The $5.5 million decrease from 1996 to
1997 was primarily comprised of a reduction in net income of $15.7 million and a
$14.1 million increase in working capital, offset by a $9.2 million increase in
depreciation and amortization, an increase in deferred income taxes of $7.4
million, a $4.0 million increase in extraordinary charge and a special
compensation charge of $1.8 million in 1997.
Net cash flows used in investing activities were $156.5 million, $108.8
million, $51.3 million and $167.7 million for 1997, 1996, 1995 and the six
months ended June 30, 1998, 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 $136.1 million, $82.9
million, $34.2 million and $153.3 million for 1997, 1996, 1995 and the six
months ended June 30, 1998, respectively. In 1997, the $136.1 million in
financing activities consisted primarily of $120 million of gross proceeds from
the issuance of the 1997 Notes, $93.6 million in net proceeds from Pierce
Leahy's initial public offering of Common Stock, and $17.2 million of borrowings
on the revolving line of credit, offset by the repayment of long-term debt of
$82.5 million, the $7.0 million prepayment premium on the redemption of a
portion of the 1996 Notes and the payment of $5.2 million of financing costs
related to the issuance of the 1997 Notes and the Company's credit facility. In
August 1997, the Company entered into its current Credit Facility, which, as
amended, provides $150 million in U.S. dollar borrowings, and Cdn. $40 million
in Canadian dollar borrowings. In July 1996, the Company issued $200 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 April 1998, the Company issued $135.0 million principal amount of
Original Notes pursuant to the Purchase Agreement. Pursuant to the Exchange
Offer, the Exchange Notes will be substituted for those Original Notes which are
validly tendered and not withdrawn as provided herein.
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 indentures governing the Notes,
the 1997 Notes and the 1996 Notes, also restrict borrowings under the Credit
Facility. As of June 30, 1998, $44.0 million was outstanding under the
Credit Facility and the Company could have borrowed an additional $37.2
million in accordance with the debt incurrence limitations. The effective
interest rate on the Credit Facility, as of June 30, 1998, was approximately
7.71%. As of June 30, 1998, on a pro forma basis, after giving effect to the
Recent Acquisitions, the Company could have borrowed an additional $30.2
million in accordance with debt incurrence limitations. Additionally, to the
extent the Company makes acquisitions, it would have additional availability
under the Credit Facility based upon the pro forma EBITDA of such acquisitions.
Future Capital Needs
Management believes that cash flow from operations in conjunction with
borrowings under the Credit Facility and possible other sources of financing
will be sufficient for the foreseeable future to meet working capital
requirements, debt service 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.
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<PAGE>
BUSINESS
GENERAL
Pierce Leahy Command Company is the issuer of the Notes and is an indirect
subsidiary of Pierce Leahy Corp., which is a guarantor of the Notes on an
unsecured senior subordinated basis. After consummation of the Archivex
Acquisition, the Issuer operates 26 records management facilities in the nine
largest markets in Canada.
The Company is the largest hard copy records management company in North
America, as measured by its 76 million cubic feet of records currently under
management. The Company operates a total of 222 records management facilities
of which 192 are in the United States, serving 69 markets, including 23
of the 25 largest U.S. markets. In addition, the Company operates 30
records management facilities in Canada's nine largest markets, including 26
facilities operated by the Issuer and four facilities operated by Archivex.
The Company's strategies and operations are intended to be standardized
throughout North America (United States and Canada). Accordingly, unless
otherwise noted or the context otherwise suggests, the description of the
Company's strategies and operations are intended to cover all of its operations
in the United States and Canada.
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 94% 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 40,000 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 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 approximately 70 persons at the end of 1996 to approximately
130 persons currently.
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.
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 1993
to 1997, the Company completed and integrated 39 acquisitions, totalling
approximately 22.3 million cubic feet of records at the time of acquisition.
Since the beginning of 1998, the Company has completed 16 acquisitions
totaling approximately 13.2 million cubic feet of records.
The Company's growth strategy is supported by an operating strategy which
emphasizes providing premium standardized services while maintaining a low-cost
operating structure. Both strategies apply to the entire North American market
(United
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<PAGE>
States and Canada). 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 also 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 2,600
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 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.
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<PAGE>
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 1993 to 1997, the Company successfully completed and integrated 39
acquisitions, totaling approximately 22.3 million cubic feet of records at the
time of acquisition. Since January 1, 1998, the Company has completed 16
acquisitions, including the Archivex Acquisition and the Kestrel Acquisition,
totalling approximately 13.2 million cubic feet of records at the time of
acquisition. As a result of its 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.
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The following table summarizes certain information for each acquisition
completed since 1993:
<TABLE>
<CAPTION>
EXISTING/-
ACQUISITIONS LOCATION NEW LOCATION
- ------------------------------------- ------------------------------- ------------
<S> <C> <C>
1993 Acquisition
Data Management of Tennessee Nashville New
1994 Acquisitions
Command Records Chicago Existing
Fidelity Archives Philadelphia Existing
ProFilers Jacksonville New
Fileminders Jacksonville New
1995 Acquisitions
Vital Archives New York Existing
Bestway Archival Services Miami Existing
Curtis Archives Seattle New
Command Records Service Canada* New
AMK Documents Phoenix New
1996 Acquisitions
Brambles (Ottawa Division) Ottawa Existing
The File Cabinet Atlanta Existing
File Box Austin New
Security Archives Dallas Existing
Archives America of San Diego San Diego New
Security Archives of Denver Denver New
Data Protection Services Birmingham New
Info-Stor Calgary Existing
Archives Denver Existing
InTrust Denver, Albuquerque,
Colorado Springs,
Ft. Wayne Existing/New
Security Archives of Las Vegas Las Vegas New
Records Management Birmingham Existing
1997 Acquisitions
Security Archives & Storage Company Wilmington Existing
The Records Center Tampa Existing
Data Archives Trenton Existing
Professional Records Storage
& Delivery West Palm Beach Existing
Advanced File Storage Systems Jacksonville Existing
Records Management Services Multiple** Existing/New
Austin File Room Austin Existing
Corporate Storage Chicago Existing
Smithfield Archives El Paso New
FilExpress Pittsburgh New
National Records Management Louisville New
Records Management
& Projection New Orleans New
Davidson Archives Kansas City Existing
Datafilms, Inc. Denver Existing
dataLOK Partners San Fernando Existing
Binyon O'Keefe Ft. Worth Existing
Records Depository Buffalo New
1998 Acquisitions
Records Archives Corp. Houston Existing
Automated Records Centre Toronto Existing
DataStor St. Louis Existing
Offsite Records Management Dallas Existing
Deliverex of Denver Denver Existing
Archivex Inc. Canada*** Existing/New
Amodio Archives New Britain, CT Existing
All Safe Records Boston Existing
The Record Centre Detroit Existing
Comac Services San Francisco, Chicago, Atlanta Existing
Data Protection Services Birmingham Existing
Bender Records Management Reno New
Keystone Records Management Harrisburg New
Kestrel Records Management Dallas, Houston Existing
Data Management Systems Halifax, Nova Scotia New
Dallas Secured Records Dallas Existing
- ---------------------------
</TABLE>
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<PAGE>
* Toronto, Montreal, Vancouver, Ottawa and Calgary.
** Chicago, Indianapolis, Cincinnati, Los Angeles, Phoenix, Houston, New York
and St. Louis.
*** Montreal, Quebec City, Toronto, Winnipeg, Edmonton and Calgary.
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."
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.
THE 1998 ACQUISITIONS
Since January 1998, the Company has completed 16 acquisitions (the "1998
Acquisitions"), including the Archivex Acquisition and the Kestrel Acquisition.
Five of the 1998 Acquisitions, including the Kestrel Acquisition, were completed
after June 30, 1998 (the "Recent Acquisitions"). The aggregate consideration
for the 1998 Acquisitions was approximately $203.7 million in cash and shares
of Common Stock with a deemed value of approximately $14.4 million. The
locations of the facilities acquired in the 1998 Acquisitions are set forth
above under the section "Acquisition History and Growth Strategy." One of such
1998 Acquisitions, Comac, is a marketing literature storage and fulfillment
company.
THE ARCHIVEX ACQUISITION
In April 1998, the Company purchased substantially all of the assets of
Archivex Inc., a Canadian records storage company with operations in six
Canadian cities, including three markets in which the Issuer previously had
operations (Montreal, Toronto and Calgary) and three markets in which the Issuer
did not have a presence (Quebec City, Winnipeg and Edmonton). The aggregate
cash consideration for the Archivex Acquisition, which represented a significant
expansion in the Canadian market, was approximately $63.0 million. Included in
the Archivex Acquisition were six owned records storage facilities with in
excess of an aggregate of 600,000 square feet of space and five leased records
storage facilities with approximately 100,000 square feet of space. The
Archivex Acquisition added 4.0 million cubic feet of records under management.
The Issuer loaned approximately $20 million to Archivex, which purchased the
assets of Archivex Inc. located in Montreal. The Issuer purchased the remaining
assets of Archivex Inc. After the Archivex Acquisition, the Issuer operates
26 records management facilities in nine markets and Archivex operates four
records management facilities in Montreal.
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THE KESTREL ACQUISITION
On July 2, 1998, the Company purchased all of the capital stock of Kestrel
Holdings, Inc., a records storage company which, through its subsidiaries,
operates records storage facilities in Dallas and Houston. Included as part of
the acquisition are four owned records storage facilities with an aggregate of
approximately 264,000 square feet of space and four leased records storage
facilities with an aggregate of approximately 350,000 square feet of space. The
Kestrel Acquisition added approximately 2.5 million cubic feet of records under
management. The consideration for the Kestrel Acquisition was approximately $52
million and was 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 1997, 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 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 550 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
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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 86 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.
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.
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
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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 PLUS(R) 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.
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
approximately 130 employees in the United States and Canada. 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 1993 to 1997,
the Company's sales representatives secured over 4,000 new customer accounts
comprising over 12.8 million cubic feet of records from new accounts.
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 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 40,000 customer accounts in a
variety of industries, including financial services, manufacturing,
transportation, healthcare and law. The Company tracks customer accounts,
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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 over 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 1997, 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 222 records management facilities of which
192 are in the United States, serving 67 markets, including 23 out of 25 of
the largest U.S. markets, and 30 facilities in Canada serving Canada's nine
largest markets. Of the 15.9 million square feet of floor space (representing
approximately 107.9 million cubic feet of storage capacity) in the Company's
records storage facilities, approximately 36% and 64% (40% and 60% on a cubic
footage basis) are in owned and leased facilities, respectively. The Company's
facilities are located as follows:
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<TABLE>
<CAPTION>
RECORDS MANAGEMENT CUBIC FEET
REGION FACILITIES OF CAPACITY
- --------------------------------------------------- ------------------ --------------
<S> <C> <C>
United States
Southern Region.................................. 28 10.5 million
(includes Alabama, Florida,
Georgia, Kentucky, Louisiana, North Carolina
and Tennessee)
Northern Region.................................. 57 45.0 million
(includes Connecticut, Delaware,
Maryland, Massachusetts, New Jersey,
New York, Ohio, Pennsylvania and
Virginia)
Midwest Region................................... 82 28.2 million
(includes Colorado, Illinois,
Indiana, Michigan, Minnesota, Missouri,
New Mexico, Oklahoma and Texas)
Western Region................................... 25 8.6 million
(includes Arizona, California,
Nevada, Utah and Washington)
Total U.S.......................................... 192 92.3 million
Canada
(includes Calgary, Edmonton, Halifax, Montreal,
Ottawa, Quebec City, Toronto, Vancouver and
Winnipeg) 30 15.6 million
Total.............................................. 222 107.9 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
70% from historical levels 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
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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 July 31, 1998, the Company had 3,163 employees (296 part-time
employees and 2,867 full-time employees), including 617 employees in Canada.
Approximately 50 of the employees of Archivex in Canada are 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 associated with
business interruption and damage or loss from fire, flood or earthquakes (in
certain geographic areas), and losses at the Company's facilities for
approximately $500 million.
ENVIRONMENTAL MATTERS
The Company's properties and operations, past or present, 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 past or present 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.
Some of the properties acquired in the Archivex Acquisition may contain USTs
which are required to be removed. It is expected that removal costs to the
Issuer will not be material. 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
$500,000 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 11, 1998 through August 11, 2003.
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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.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS OF PIERCE LEAHY
Set forth below is certain information regarding Pierce Leahy's directors,
executive officers and other significant management personnel:
<TABLE>
<CAPTION>
NAME AGE/(1)/ POSITION
- ------------------------- -------- ----------------------------------------------------
<S> <C> <C>
Leo W. Pierce, Sr........ 79 Chairman of the Board
J. Peter Pierce.......... 52 President, Chief Executive Officer and Director
Douglas B. Huntley...... 38 Vice President, Chief Financial Officer and Director
Joseph A. Nezi........... 51 Vice President, Sales and Marketing
David Marsh.............. 50 Vice President, Chief Information Officer
Ross M. Engelman......... 34 Vice President, Operations-South
J. Michael Gold.......... 39 Vice President, Operations-Northeast
Christopher J. Williams.. 39 Vice President, Operations-West
Raul A. Fernandez........ 48 Vice President, Information Services
Joseph P. Linaugh........ 48 Vice President, Treasurer and Secretary
Thomas Grogan............ 43 Vice President and Controller
Ronald P. Muhlenhaupt.... 43 Vice President, Assistant to the President
Lisa G. Goldschmidt...... 30 General Counsel
Alan B. Campell.......... 47 Director
Delbert S. Conner........ 68 Director
Thomas A. Decker......... 52 Director
J. Anthony Hayden........ 54 Director
____________________
</TABLE>
/(1)/ Age as of June 1, 1998.
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. Leo W. Pierce, Sr. is the father of J. Peter Pierce.
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.
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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, an office supply company, following 17 years in various
sales positions of increasing responsibility with Xerox. Mr. Nezi holds a B.A.
degree from Villanova University.
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 United States 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.
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 and Secretary of the Company since December 1997. 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 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.
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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.
Since 1997, Mr. Campell has been a consultant. From 1986 until 1997, Mr.
Campell was a Managing Director of Campell Vanderslice Furman, an investment
banking firm. 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.
Thomas A. Decker has served as a director of the Company since 1997. Since
January 1997, Mr. Decker has served as Senior Vice President, General Counsel
and Secretary, of Unisource Worldwide, Inc., a marketer and distributor of paper
and paper products and equipment. From 1994 until January 1997, Mr. Decker was
Executive Vice President, Chief Operating Officer and General Counsel of Saint-
Gobain Corporation, a manufacturer and distributor of glass, ceramics, plastics
and cast iron products, and from 1994 until 1996, Mr. Decker was Executive Vice
President and General Counsel of Saint-Gobain Corporation. During the period
1994 through 1997, he was responsible for all corporate staff activities
including Law, Human Resources, Finance and Information Systems at Saint-Gobain
Corporation and its three principal subsidiaries. Mr. Decker was Vice
President, General Counsel and Secretary of Saint-Gobain Corporation from 1991
through 1994. From 1974 to 1991, Mr. Decker was Vice President, General Counsel
and Secretary of Certainteed Corporation. Mr. Decker holds a B.A. degree from
the University of Pennsylvania and a J.D. degree from the University of Virginia
School of Law.
J. Anthony Hayden has served as director of the Company since 1997. Since
March 1996, Mr. Hayden has served as President and Chief Executive Officer of
Hayden Real Estate, Inc. From 1975 until March 1996, Mr. Hayden served in
various capacities with Cushman and Wakefield Commercial Real Estate Company,
including Executive Vice President of the Mid-Atlantic/Mid-West Region. Mr.
Hayden holds B.S. degree from LaSalle University. Mr. Hayden also serves as a
director of Liberty Property Trust.
PIERCE LEAHY BOARD OF DIRECTORS
Pierce Leahy's Board of Directors (the "Board of Directors") is 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. The term of
the Class II Directors (Delbert S. Conner and Douglas B. Huntley) expires at the
1999 annual shareholders meeting; the term of the Class III Directors (Leo W.
Pierce. Sr. and J. Anthony Hayden) expires at the annual shareholders meeting in
2000; and the term of the Class I Directors (J. Peter Pierce, Alan B. Campell
and Theodore A. Decker) expires at the 2001 annual shareholder meeting of Pierce
Leahy.
Pierce Leahy's Board of Directors has an Executive Committee, a Compensation
Committee and an Audit Committee. The Executive Committee, comprised of Messrs.
Leo W. Pierce, Sr., J. Peter Pierce, Campell and Huntley, is empowered to
approve acquisitions and other transactions up to a specified amount. The
Compensation
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Committee, comprised of Messrs. Conner and Decker, recommends to the Board both
salary levels and bonuses for the executive officers of the Company. The
Compensation Committee also administers Pierce Leahy's stock option plans. The
Audit Committee, comprised of Messrs. Campell, Conner and Hayden, recommends the
appointment of the Company's independent public accountants and reviews 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. All nonemployee
directors receive $3,500 for each meeting of the Board of Directors attended.
In addition, each nonemployee director was granted in January 1998 an option to
purchase 2,500 shares of Common Stock at the fair market value on the date of
grant. The options vest in five equal annual installments beginning on the
first anniversary of the date of grant.
MANAGEMENT OF THE ISSUER
Richard S. Ingram has been Chief Executive Officer of the Issuer since the
consummation of the Archivex Acquisition. Mr. Ingram worked in various
capacities for Archivex Inc. from 1973 until the Archivex Acquisition, most
recently as Chairman of the Board and Chief Executive Officer of Archivex Inc.
from 1989 until the Archivex Acquisition. Mr. Ingram holds a B.A. degree from
the University of Toronto and an M.B.A. from Harvard University.
John Richardson has been the President of the Issuer since the consummation of
the Archivex Acquisition. Mr. Richardson worked in various capacities for
Archivex Inc. from 1984 until the Archivex Acquisition, most recently as
President from 1989 until the Archivex Acquisition. Prior to joining Archivex
Inc., Mr. Richardson served in various positions at Bell Rinfret Ltee, a
restaurant equipment supply company. Mr. Richardson attended H.E.C. in
Montreal, Canada and College Mount St. Louis in Canada.
EXECUTIVE COMPENSATION OF PIERCE LEAHY
The following table sets forth the cash compensation paid by the Company as
well as certain other compensation paid or accrued during fiscal 1995, 1996 and
1997 to the Company's Chief Executive Officer and the Company's five other
highest paid executive officers (together with the Chief Executive Officer, the
"Named Executives") for services to the Company in 1995, 1996 and 1997:
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<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------------------
LONG TERM
OTHER ANNUAL COMPENSATION ALL OTHER
NAME AND PRINCIPAL FISCAL COMPENSATION AWARDS COMPENSATION
POSITION YEAR SALARY ($) BONUS ($) ($) OPTIONS (#) ($)
- -------------------------- ------ ---------- ----------- ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
J. Peter Pierce, 1997 250,000 87,760 __ __ 7,122(1)
President and Chief 1996 251,485 93,400 __ __ 6,967(1)
Executive Officer 1995 186,800 93,400 __ __ 6,681(1)
Ross M. Engelman, 1997 130,000 45,635 __ 31,773 5,403(2)
Vice President, 1996 130,000 65,000 __ 54,014 5,216(2)
Operations - South 1995 130,422 65,000 __ 90,024 4,813(2)
J. Michael Gold, 1997 130,000 45,635 __ 31,773 4,092(3)
Vice President, 1996 130,000 65,000 __ 54,014 3,739(3)
Operations - Northeast 1995 129,905 65,000 __ 90,024 3,417(3)
Douglas B. Huntley, 1997 130,000 45,635 __ 31,773 5,442(4)
Vice President, Chief 1996 130,000 65,000 __ 54,014 5,231(4)
Financial Officer 1995 129,520 65,000 __ 90,024 4,802(4)
Joseph A. Nezi, 1997 130,000 97,635(5) __ __ 6,335(6)
Vice President, Sales 1996 130,000 92,370(5) __ 37,068 6,256(6)
and Marketing 1995 133,020 97,841(5) __ 90,024 5,748(6)
Christopher J. Williams, 1997 130,000 45,635 __ 31,773 5,442(7)
Vice President, 1996 130,000 65,000 __ 54,014 5,339(7)
Operations - West 1995 129,905 65,000 __ 90,024 5,089(7)
</TABLE>
- -------------------------------
(1) Included in such amounts for 1997, 1996 and 1995, respectively, are $2,250,
$2,268 and $2,310 representing an employer match under the Company's 401(k)
Plan, $1,872, $1,699 and $1,371 in net premiums for a guaranteed term life
insurance policy on behalf of Mr. Pierce and $3,000, $3,000 and $3,000
representing contributions made by the Company under its Profit Sharing
Plan.
(2) Included in such amounts for 1997, 1996 and 1995, respectively, are $2,245,
$2,249 and $2,107 representing an employer match under the 401(k) Plan,
$158, $158 and $98 in net premiums for a guaranteed term life insurance
policy on behalf of Mr. Engelman and $3,000, $2,809 and $2,608 representing
contributions made by the Company under the Profit Sharing Plan.
(3) Included in such amounts for 1997, 1996 and 1995, respectively, are $900,
$750 and $700 representing an employer match under the 401(k) Plan, $192,
$191 and $119 in net premiums for a guaranteed term life insurance policy on
behalf of Mr. Gold and $3,000, $2,798 and $2,598 representing contributions
made by the Company under the Profit Sharing Plan.
(4) Included in such amounts for 1997, 1996 and 1995, respectively, are $2,250,
$2,250 and $2,093 representing an employer match under the 401(k) Plan,
$192, $191 and $119 in net premiums for a guaranteed term life insurance
policy on behalf of Mr. Huntley and $3,000, $2,790 and $2,590 representing
contributions made by the Company under the Profit Sharing Plan.
(5) Includes $52,000, $27,370 and $32,842 paid as commissions in 1997, 1996 and
1995, respectively.
(6) Included in such amounts for 1997, 1996 and 1995, respectively, are $2,250,
$2,260 and $2,310 representing an employer match under the 401(k) Plan,
$1,135, $996 and $438 in net premiums for a guaranteed term life
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insurance policy on behalf of Mr. Nezi and $3,000, $3,000 and $3,000
representing contributions made by the Company under the Profit Sharing
Plan.
(7) Included in such amounts for 1997, 1996 and 1995, respectively, are $2,250,
$2,250 and $2,066 representing an employer match under the 401(k) Plan,
$192, $191 and $125 in net premiums for a guaranteed term life insurance
policy on behalf of Mr. Williams and $3,000, $2,898 and $2,898 representing
contributions made by the Company under the Profit Sharing Plan.
STOCK OPTION GRANTS OF PIERCE LEAHY
The following table contains information concerning grants of stock options to
the Chief Executive Officer and to each of the other Named Executives during
1997:
OPTION GRANTS IN 1997
---------------------
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION FOR
OPTIONS EMPLOYEES IN PRICE EXPIRATION OPTION TERM (2)
NAME GRANTED(#)(1) 1997 ($/SH) DATE ---------------
- ------------------------- ----------- ------------ -------- ---------- 5% 10%
---- ----
J. Peter Pierce.......... -- -- -- -- -- --
Ross M. Engelman......... 31,773 20.7 5.09 * 101,708 257,748
J. Michael Gold.......... 31,773 20.7 5.09 * 101,708 257,748
Douglas B. Huntley....... 31,773 20.7 5.09 * 101,708 257,748
Joseph A. Nezi........... -- -- -- -- -- --
Christopher J. Williams.. 31,773 20.7 5.09 * 101,708 257,748
</TABLE>
* The options have no specified expiration date.
(1) All options were granted under Pierce Leahy's Nonqualified Stock Option Plan
(the "Plan"). The options were originally scheduled to vest in five equal
annual installments commencing on the first anniversary of the date of
grant. However, upon the completion of the initial public offering of
Pierce Leahy's Common Stock on July 1, 1997, these options became fully
vested and exercisable. Pierce Leahy may make loans with respect to vested
options.
(2) 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 Pierce
Leahy's Common Stock when the options were granted. There was no
established trading market for Pierce Leahy's Common Stock at the time the
options were issued, so the market price is based upon the formula set forth
in the Plan based upon a multiple of EBITDA, as well as the amount of cash,
cash equivalents, outstanding indebtedness and other obligations of Pierce
Leahy. Since the options granted to the Named Executives 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. Assumed rates of appreciation are not necessarily indicative of
future stock performance.
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STOCK OPTION EXERCISES AND HOLDINGS OF PIERCE LEAHY
The following table sets forth the value of options held by each of the Named
Executives at December 31, 1997. None of the Named Executives exercised any
options during 1997.
AGGREGATED OPTION EXERCISES IN 1997 AND OPTION VALUES AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
SHARES VALUE AT DECEMBER 31, 1997 (#) DECEMBER 31, 1997 ($)(1)
ACQUIRED ON REALIZED ------------------------------- ------------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ------------- ---------- ------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
J. Peter Pierce __ __ __ __ __ __
Ross M. Engelman......... __ __ 107,393 68,418 1,637,750 1,029,007
J. Michael Gold.......... __ __ 107,393 68,418 1,637,750 1,029,007
Douglas B. Huntley....... __ __ 107,393 68,418 1,637,750 1,029,007
Joseph A. Nezi........... __ __ 68,841 58,251 1,048,892 880,153
Christopher J. Williams.. __ __ 107,393 68,418 1,637,750 1,029,007
</TABLE>
(1) The value of unexercised in-the-money options is based on the difference
between the last sale price of a share of Common Stock as reported by the
New York Stock Exchange on December 31, 1997 ($20.50) and the exercise price
of the options, multiplied by the number of options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to Pierce Leahy's initial public offering of Common Stock in July 1997,
the Compensation Committee of its Board of Directors was 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.
The Company 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 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 1995, 1996
and 1997 were $773,000, $894,000 and $961,000, respectively.
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 $8,201,000 and $4,624,000 in 1995 and
the portion of 1996 prior to the purchase, respectively.
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<PAGE>
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 a 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 entered into a tax indemnification agreement with the shareholders
of the Company prior to its initial public offering of Common Stock 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 Company's initial public offering was 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 was a managing director of Campell Vanderslice Furman ("CVF"),
an investment banking firm that provided investment banking services to the
Company from 1992 until its termination in 1997. During 1995, 1996 and 1997,
the Company paid CVF $0.7 million, $0.8 million and $0.1 million, respectively,
with respect to investment banking services. In 1997, CVF received a fee of
approximately $1.8 million in connection with the Company's initial public
offering of Common Stock and its concurrent offering of the 1997 Notes. CVF is
expected to receive a fee of approximately $0.3 million in connection with the
Offering. The Company believes that the fees paid to CVF were customary in the
industry for such services.
CERTAIN TRANSACTIONS
In December 1994, the Company loaned $60,000 to J. Michael Gold, its Vice
President, Operations-Northeast. During 1996 and 1997 additional amounts were
loaned to Mr. Gold. The largest aggregate amount outstanding on the loan to
Mr. Gold was $215,657 and as of June 30, 1998, an aggregate of $15,773 was
outstanding. Interest accrues on the loan at an annual rate of 8.875%.
In 1997, the Company paid $88,000 to Hayden Real Estate, Inc., a company owned
by J. Anthony Hayden, a Pierce Leahy director, for commissions on various real
estate transactions.
See also "Management-Compensation Committee Interlocks and Insider
Participation."
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<PAGE>
PRINCIPAL SHAREHOLDERS OF PIERCE LEAHY
The following table sets forth certain information with respect to the
beneficial ownership as of August 1, 1998 of (i) each person who was known to
the Company to be the beneficial owner of more than 5% of the Common Stock, (ii)
each director and each Named Executive and (iii) all the directors and executive
officers as a group. Each of the shareholders named below has sole voting and
investment power with respect to such shares, unless otherwise indicated.
<TABLE>
<CAPTION>
Name of COMMON STOCK
---------------- ------------------------------
Beneficial Owner Number of Shares(1) Percent
---------------- -------------------- --------
<S> <C> <C>
Leo W. Pierce, Sr............................................ 8,616,795(2)(3) 50.6%
J. Peter Pierce.............................................. 8,529,295(2)(4) 50.1%
Leo W. Pierce, Jr............................................ 1,302,351(2)(5) 7.6%
Michael J. Pierce............................................ 1,208,708(2)(6) 7.1%
Mary E. Pierce............................................... 1,391,953(2)(7) 8.2%
Barbara P. Quinn............................................. 1,233,141(2)(8) 7.2%
Constance P. Buckley......................................... 1,096,167(2)(9) 6.4%
Thomas W. Smith.............................................. 1,134,900(10) 6.7%
Thomas N. Tryforos........................................... 1,034,900(10) 6.1%
Douglas B. Huntley........................................... 107,993(11) *
Alan B. Campell.............................................. 20,000 *
Delbert S. Conner............................................ 1,000 *
J. Anthony Hayden............................................ 72,000(12) *
Thomas A. Decker............................................. 500 *
Ross M. Engelman............................................. 107,743(11) *
J. Michael Gold.............................................. 107,393(13) *
Joseph A. Nezi............................................... 68,841(14) *
Christopher J. Williams...................................... 113,393(11) *
All executive officers and directors as a group (13 person).. 9,326,995(15) 54.8%
</TABLE>
* Less than 1 percent.
(1) With respect to each shareholder, includes any shares issuable upon exercise
of any options held by such shareholder that are or will become exercisable
within sixty days of the record date.
(2) A total of 8,529,295 shares of Common Stock are either held in a Voting
Trust pursuant to a Voting Trust Agreement dated June 24, 1997 (as amended
or restated from time to time, the "Voting Trust") or are subject to proxies
(the "Proxies"). Leo W. Pierce, Sr. and J. Peter Pierce are the Trustees of
the Voting Trust and the persons granted voting rights under the Proxies
and, as such, each has shared power to vote the shares held in the Voting
Trust or subject to the Proxies. In the event that Messrs. Leo W. Pierce,
Sr. and J. Peter Pierce disagree as to how to vote the shares held subject
to the Voting Trust or the Proxies, one-half of the shares subject to the
Voting Trust or the Proxies will be voted at the direction of each Trustee.
With the exception of 87,500 shares beneficially owned by Leo W. Pierce,
Sr. which are discussed in Note (3) below, all of the shares beneficially
owned by Leo W. Pierce, Sr., J. Peter Pierce, Leo W. Pierce, Jr., Michael J.
Pierce, Mary E. Pierce, Barbara P. Quinn, and Constance P. Buckley are held
in the Voting Trust or are subject to Proxies. The beneficial owners of
interests in the Voting Trust or the shares subject to the Proxies have the
right to dispose of the shares to which they have beneficial interests. The
address of each of the foregoing shareholders is c/o Pierce Leahy Corp., 631
Park Avenue, King of Prussia, PA 19406.
(3) Mr. Pierce has a direct beneficial interest in the 383,813 shares of Common
Stock held in the Voting Trust and, as such, has sole dispositive power with
respect to such shares. Mr. Pierce is also a co-trustee of the Pierce
Family Foundation (the "Foundation"), which owns 87,500 shares of Common
Stock. In such capacity, Mr. Pierce has shared voting and dispositive power
with respect to such shares. Mr. Pierce disclaims beneficial ownership of
the shares held by the Foundation.
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<PAGE>
(4) Mr. Pierce has a direct beneficial interest in the 741,668 shares of
Common Stock and, as such, has sole dispositive power with respect to such
shares. He also has a beneficial interest in 180,047 shares of Common Stock
as custodian for the benefit of his child. In addition, Mr. Pierce
beneficially owns 435,290 shares of Common Stock as co-trustee of a trust.
All of such shares are subject to Proxies. Mr. Pierce disclaims beneficial
ownership of the shares held by the trust.
(5) Mr. Pierce has a direct beneficial interest in 714,560 shares of Common
Stock. He also has a beneficial interest in an aggregate of 200,169 shares
as custodian for the benefit of his children and an aggregate of 30,186
shares in which his wife is custodian for the benefit of his children. In
addition, Mr. Pierce beneficially owns 357,436 shares as trustee of a trust.
All of such shares are held in the Voting Trust. Mr. Pierce disclaims
beneficial ownership of the shares held by the trust.
(6) Mr. Pierce has a direct beneficial interest in 1,102,798 shares of Common
Stock. He also has a beneficial interest in an aggregate of 105,910 shares
as custodian for the benefit of his child. All of such shares are held in
the Voting Trust or are subject to Proxies.
(7) Ms. Pierce has a direct beneficial interest in 1,391,953 shares of Common
Stock held in the Voting Trust.
(8) Ms. Quinn has a direct beneficial interest in 363,538 shares of Common
Stock. She also has a beneficial interest in an aggregate of 564,500 shares
as custodian for the benefit of her children and an aggregate of 21,183
shares in which her husband is custodian for the benefit of her children.
In addition, Ms. Quinn beneficially owns 148,356 shares as trustee of a
trust and an aggregate of 135,564 shares as co-trustee of three separate
trusts. All of such shares are held in the Voting Trust or are subject to
Proxies. Ms. Quinn disclaims beneficial ownership of all shares held by the
trusts.
(9) Ms. Buckley has a direct beneficial interest in 590,145 shares of Common
Stock. She also has a beneficial interest in an aggregate of 152,512 shares
as custodian for the benefit of her children and an aggregate of 8,472
shares in which her husband is custodian for the benefit of her children.
In addition, Ms. Buckley beneficially owns 222,535 shares as trustee of a
trust and an aggregate of 122,503 shares as co-trustee of four separate
trusts. All of such shares are held in the Voting Trust or are subject to
Proxies. Ms. Buckley disclaims beneficial ownership of all shares held by
the trusts.
(10) The information is based on a Schedule 13D, dated March 16, 1998, of Thomas
W. Smith and Thomas N. Tryforos filed with the Securities and Exchange
Commission. Based on their Schedule 13D, Messrs. Smith and Tryforos
beneficially own an aggregate of 1,034,900 shares of Common Stock in their
capacity as investment managers for certain managed accounts. Mr. Smith
beneficially owns an additional 100,000 shares. The address of Messrs.
Smith and Tryforos is 323 Railroad Avenue, Greenwich, CT 06830.
(11) Includes options to purchase 107,393 shares of Common Stock.
(12) Includes 55,000 shares of Common Stock beneficially owned through an IRA.
(13) Consists of options to purchase 107,393 shares of Common Stock.
(14) Consists of options to purchase 68,841 shares of Common Stock.
(15) Includes options to purchase an aggregate of 604,747 shares of Common
Stock.
VOTING TRUST AGREEMENT
In connection with Pierce Leahy's initial public offering in 1997, certain
members of the Pierce family, who own approximately 51% of the outstanding
shares of Common Stock, entered 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 are 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. Some of the shares of Common Stock held by members of the Pierce
family that would otherwise be subject to the Voting Trust, are held by such
individuals subject to a proxy granting Leo W. Pierce, Sr. and J. Peter
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Pierce the power to vote such shares (the "Proxies"). The Proxies, which are
intended to be the functional equivalent of the Voting Trust, are voted in the
same manner as shares held in the Voting Trust.
DESCRIPTION OF CERTAIN INDEBTEDNESS
THE 1996 NOTES
In July 1996, Pierce Leahy issued $200,000,000 principal amount of 11 1/8%
Senior Subordinated Notes due 2006 (the "1996 Original Notes")
pursuant to an indenture dated as of July 16, 1996 between Pierce Leahy and
United States Trust Company of New York, as Trustee (the "1996 Indenture"). In
November 1996, Pierce Leahy exchanged the 1996 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 1996 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. Pierce Leahy was entitled
to 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. Pierce Leahy utilized a portion of the net
proceeds of its initial public offering of Common Stock to redeem $70,000,000
principal amount of the 1996 Notes. Accordingly, $130,000,000 principal amount
of the 1996 Notes currently remains outstanding.
The 1996 Notes are general unsecured obligations of Pierce Leahy, subordinated
in right of payment to Senior Indebtedness (as defined in the 1996 Indenture) of
Pierce Leahy and senior in right of payment to any current or future
subordinated indebtedness of Pierce Leahy, except as otherwise provided in the
1996 Indenture. The Domestic Guarantors (other than Pierce Leahy) have
unconditionally guaranteed, on an unsecured senior subordinated basis, the
payment of principal, premium, if any, and interest, on the 1996 Notes jointly
and severally. Accordingly, the obligations of Pierce Leahy on the 1996 Notes
and the guarantees of the other Domestic Guarantors of the 1996 Notes rank pari
passu with their respective Domestic Guarantees. The 1996 Notes are secured by
a pledge of 65% of the capital stock of the Issuer. The pledge is on a second
priority basis, junior to the pledge of such shares in favor of the lenders and
the administrative agent under the Credit Facility and senior to the pledge in
favor of the holders of the 1997 Notes. The 1996 Notes will be guaranteed, pari
passu with the Notes, on an unsecured senior subordinated basis, by any future
Domestic Guarantors.
The 1996 Indenture contains, among other things, covenants restricting the
ability of Pierce Leahy and its subsidiaries to dispose of assets, pay stock and
indebtedness, create liens, make capital expenditures, make certain investments
or acquisitions, enter into transactions with affiliates and otherwise restrict
corporate activities.
THE 1997 NOTES
In June 1997, Pierce Leahy issued $120,000,000 principal amount of 9 1/8%
Senior Subordinated Notes due 2007 (the "1997 Notes") pursuant to an indenture
dated as of July 7, 1997 ("1997 Indenture") between Pierce Leahy and The Bank of
New York, as Trustee. The 1997 Notes mature on July 15, 2007 and bear interest
at 9 1/8% per annum, payable semi-annually in arrears on January 15 and July
15. The 1997 Notes are general unsecured obligations of Pierce Leahy,
subordinated in right of payment to Senior Indebtedness (as defined in the 1997
Indenture) of Pierce Leahy and senior in right of payment to any current or
future subordinated indebtedness of Pierce Leahy, except as otherwise provided
in the 1997 Indenture. The Domestic Guarantors (other than Pierce Leahy) have
unconditionally guaranteed, on an unsecured senior subordinated basis, the
payment of principal, premium, if any, and interest, on the 1997 Notes jointly
and severally. Accordingly, the obligations of Pierce Leahy on the 1997 Notes
and the guarantees of the other Domestic Guarantors of the 1997 Notes rank pari
passu with the respective Domestic Guarantees.
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The 1997 Notes are secured by a pledge of 65% of the capital stock of the
Issuer. The pledge is on a third priority basis, junior to the pledge of such
shares in favor of the lenders and the administrative agent under the Credit
Facility and to the pledge in favor of the holders of the 1996 Notes.
The 1997 Indenture 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.
DESCRIPTION OF CREDIT FACILITY
In August 1997, Pierce Leahy and the Issuer entered into the Credit Facility
with Canadian Imperial Bank of Commerce ("CIBC" or "Agent") as the Agent, and
certain other lenders, providing for a senior secured revolving line of credit
in an aggregate principal amount of $140 million in U.S. dollar borrowings by
Pierce Leahy and Cdn. $35 million in Canadian dollar borrowings by the Issuer.
The amount of U.S. dollar borrowings and Canadian dollar borrowings provided for
under the Credit Facility were subsequently increased to U.S. $150 million and
to Cdn. $40 million.
The Credit Facility will mature on June 30, 2004, unless previously
terminated, and the aggregate available commitments under the Credit Facility
will be reduced incrementally on a quarterly basis, beginning March 31, 2001.
Borrowings under the U.S. dollar portion of the Credit Facility bear interest
at a rate equal to, at the option of Pierce Leahy, either (i) the base rate
(which is based on 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 the Canadian dollar
portion of the Credit Facility also bear interest based on various methods plus
an applicable margin.
The obligations of Pierce Leahy under the Credit Facility are unconditionally
guaranteed, jointly and severally, by all U.S. 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 U.S.
subsidiaries of Pierce Leahy, a first priority pledge of 65% of the capital
stock of the Issuer and a first priority lien on all of the assets of Pierce
Leahy, the Issuer and such guarantors. Obligations under the Canadian facility
are guaranteed by Pierce Leahy.
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.
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DESCRIPTION OF THE NOTES
The Original Notes were, and the Exchange Notes will be, issued under an
Indenture dated as of April 7, 1998 (the "Indenture") by and among the Issuer,
Pierce Leahy and The Bank of New York, as trustee (the "Trustee"). The terms of
the Notes include those stated in the Indenture and those made a part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). The Notes are subject to all such terms, and holders of
the Notes are referred to the Indenture and the Trust Indenture Act for a
statement of such terms.
The following is a summary of the material terms and provisions of the Notes.
This summary does not purport to be a complete description of the Notes and is
subject to the detailed provisions of, and qualified by reference to, the Notes
and the Indenture (including the definitions contained therein). Definitions
relating to certain capitalized terms are set forth under "Certain Definitions"
and throughout this description. Capitalized terms that are used but not
otherwise defined herein have the meanings assigned to them in the Indenture,
and such definitions are incorporated herein by reference. The Indenture has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part. The form of the Exchange Notes and the Original Notes are identical
in all material respects except that the Exchange Notes will have been
registered under the Securities Act and, therefore, will not bear legends
restricting their transfer. The Exchange Notes will not represent new
indebtedness of the Issuer, will be entitled to the benefits of the same
Indenture which governs the Original Notes and will rank pari passu with the
Original Notes. Any provisions of the Indenture which require actions by or
approval of a specified percentage of Original Notes shall require the approval
of the holders of such percentage of principal amount of Original Notes and
Exchange Notes, in the aggregate.
GENERAL
The Notes are limited in aggregate principal amount to $135,000,000. The
Notes are general unsecured senior obligations of the Issuer, ranking pari passu
in right of payment to all existing and future senior indebtedness of the Issuer
and senior in right of payment to any current or future subordinated
indebtedness of the Issuer, except as otherwise provided herein. The Notes will
not be secured by any assets and are effectively subordinated to any existing
and future secured indebtedness of the Issuer, including the Credit Facility.
The Notes will be unconditionally guaranteed (the "Domestic Guarantees"), on a
senior subordinated basis, as to payment of principal, premium, if any, and
interest, jointly and severally, by Pierce Leahy, its two U.S. Subsidiaries,
Advanced Box, Inc. and Monarch Box, Inc., and by each future Restricted
Subsidiary of Pierce Leahy organized under the laws of the United States, any
state thereof or the District of Columbia (together with Pierce Leahy, the
"Domestic Guarantors").
The Notes will be unconditionally guaranteed (the "Canadian Guarantees"), on a
senior basis, as to payment of principal, premium, if any, and interest, jointly
and severally, by Archivex and by each future Subsidiary of Pierce Leahy
organized under the laws of Canada or any province thereof, which is not
prohibited by the laws of Canada or of any province thereof from acting as a
guarantor of the Notes and which has either assets or shareholders' equity in
excess of $5,000 (each, a "Canadian Guarantor," and together with the Domestic
Guarantors, the "Guarantors"). The Canadian Guarantees will be effectively
subordinated to any existing and future secured indebtedness of the Canadian
Subsidiaries, including the Credit Facility.
MATURITY, INTEREST AND PRINCIPAL
The Notes will mature on May 15, 2008. The Notes will bear interest at a rate
of 8 1/8% per annum from the date of original issuance until maturity.
Interest is payable semi-annually in arrears on May 15 and November 15 of each
year, commencing November 15, 1998, to holders of record of the Notes at the
close of business on the immediately preceding May 1 and November 1,
respectively. The interest rate on the Notes is subject to increase, and such
Special Interest will be payable on the payment dates set forth above, in
certain circumstances, if the Notes
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(or other securities substantially similar to the Notes) are not registered with
the Commission within the prescribed time periods.
The interest rate on the Notes is subject to increase, and such Additional
Interest will be payable on the payment dates set forth above, in certain
circumstances, if the Notes (or other securities substantially similar to the
Notes) are not registered with the Commission within the prescribed time
periods. Upon consummation of the Exchange Offer, such registration
requirements will have been met and no Additional Interest will be payable with
respect to the Notes, except as set forth below. In the event that the Company
does not substitute Exchange Notes for all Original Notes validly tendered in
accordance with the terms of the Exchange Offer on or prior to 60 days after the
date of this Prospectus or the Registration Statement of which this Prospectus
forms a part ceases to be effective at any time prior to the consummation of the
Exchange Offer (either such event, a "Registration Default"), the sole remedy
available to holders of the Notes will be the immediate assessment of additional
interest ("Additional Interest") as follows: the per annum interest rate on the
Notes will increase by 50 basis points; and the per annum interest rate will
increase by an additional 25 basis points for each subsequent 90-day period
during which the Registration Default remains uncured, up to a maximum
additional interest rate of 200 basis points per annum in excess of the interest
rate on the cover of this Prospectus. All Additional Interest will be payable
to holders of the Notes in cash on the same original issue payment dates as the
Notes, commencing with the first such date occurring after any such Additional
Interest commences to accrue, until such Registration Default is cured. After
the date on which such Registration Default is cured, the interest rate on the
Notes will revert to the interest rate originally borne by the Notes (as shown
on the cover of this Prospectus).
The summary herein of certain provisions of the Registration Rights Agreement
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Registration Rights
Agreement, which has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part, a copy of which will be available upon
request to the Company.
OPTIONAL REDEMPTION
The Notes will be redeemable at the option of the Issuer, in whole or in part,
at any time on or after May 15, 2003 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 May 15, of each year listed below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- -----------
<S> <C>
2003.......................................... 104.063%
2004.......................................... 102.708%
2005.......................................... 101.354%
2006 and thereafter........................... 100.000%
</TABLE>
Notwithstanding the foregoing, the Issuer may redeem in the aggregate up to
35% of the original principal amount of Notes at any time and from time to time
prior to May 15, 2001 at a redemption price equal to 108 1/8% of the aggregate
principal amount so redeemed, plus accrued interest to the redemption date out
of the Net Proceeds of one or more Public Equity Offerings; provided, that at
least 65% of the aggregate principal amount of Notes originally issued remains
outstanding immediately after the occurrence of any such redemption and that any
such redemption occurs within 90 days following the closing of any such Public
Equity Offering.
In the event of redemption of fewer than all of the Notes, the Trustee shall
select either on a pro rata basis or by lot or in such other manner as it shall
deem fair and appropriate the Notes to be redeemed. The Notes will be
redeemable in whole or in part upon not less than 30 nor more than 60 days'
prior written notice, mailed by first class mail to a holder's last address as
it shall appear on the register maintained by the Registrar of the Notes. If
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any Note is to be redeemed in part only, the notice of redemption that relates
to such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note, in a principal amount equal to the unredeemed portion
thereof, will be issued in the name of the holder thereof upon cancellation of
the original Note. On and after any redemption date, interest will cease to
accrue on the Notes or portions thereof called for redemption unless the Issuer
shall fail to redeem any such Note.
REDEMPTION FOR CHANGES IN CANADIAN WITHHOLDING TAXES
The Notes will be subject to redemption as a whole, but not in part, at the
option of the Issuer at any time, on not less than 30 nor more than 60 days'
prior written notice, at 100% of the principal amount thereof, plus accrued and
unpaid interest thereon (if any) to but excluding the redemption date, in the
event the Issuer has become, or would become, obligated to pay, on the next date
on which any amount would be payable with respect to the Notes, any Additional
Amounts (as defined in "Additional Amounts") as a result of a change in the laws
(including any regulations thereunder) of Canada (or any political subdivision
or taxing authority thereof or therein), or any change in any official position
regarding the application or interpretation of such laws or regulations, which
change is announced or becomes effective on or after the Issue Date.
ADDITIONAL AMOUNTS
All payments made by the Issuer under or with respect to the Notes will be
made free and clear of, and without withholding or deduction for or on account
of, any present or future tax, duty, levy, impost, assessment or other
governmental charge imposed or levied by or on behalf of the government of
Canada or of any province or territory thereof or by any authority or agency
therein or thereof having power to tax ("Taxes"), unless the Issuer is required
to withhold or deduct Taxes by law or by the interpretation or administration
thereof by the relevant governmental authority or agency. If the Issuer is so
required to withhold or deduct any amount for or on account of Taxes from any
payment made under or with respect to the Notes, the Issuer will pay such
additional amounts ("Additional Amounts") as may be necessary so that the net
amount received by each holder (including Additional Amounts) after such
withholding or deduction will not be less than the amount the holder would have
received if such Taxes had not been withheld or deducted; provided, that no
Additional Amounts will be payable with respect to a payment made to a holder
(an "Excluded Holder") (i) with which the Issuer does not deal at arm's length
(within the meaning of the Income Tax Act (Canada)) at the time of making such
payment, or (ii) which is subject to such Taxes by reason of its being connected
with Canada or any province or territory thereof otherwise than by the mere
acquisition, holding or disposition of Notes or the receipt of payments
thereunder. The Issuer will also (i) make such withholding or deduction and
(ii) remit the full amount deducted or withheld to the relevant governmental
authority in accordance with applicable law, the Issuer will furnish to the
holders (other than an Excluded Holder), within 30 days after the date the
payment of any Taxes is due pursuant to applicable law, certified copies of tax
receipts evidencing such payment by the Issuer. The Issuer will indemnify and
hold harmless each holder (other than an Excluded Holder) and upon written
request reimburse each such holder for the amount of (i) any Taxes so levied or
imposed and paid by such holder as a result of payments made under or with
respect to the Notes, (ii) any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, and (iii) any Taxes imposed
with respect to any reimbursement under (i) or (ii), but excluding any such
Taxes on such holder's net income.
At least 30 days prior to each date on which any payment under or with respect
to the Notes is due and payable, if the Issuer will be obligated to pay
Additional Amounts with respect to such payment, the Issuer will deliver to the
Trustee an Officers' Certificate stating the fact that such Additional Amounts
will be payable, the amounts so payable and will set forth such other
information necessary to enable the Trustee to pay such Additional Amounts to
holders (other than an Excluded Holder) on the payment date. Whenever in the
Indenture there is mentioned in any context the payment of principal (and
premium, if any), redemption price, interest or any other amount payable under
or with respect to any Note, such mention shall be deemed to include mention of
the payment of Additional Amounts to the extent that, in such context,
Additional Amounts are, were or would be payable in respect thereof.
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For a discussion of the exemption from Canadian withholding taxes applicable
to payments under or with respect to the Notes, see "Canadian Federal Income Tax
Considerations."
SUBORDINATION OF DOMESTIC GUARANTEES
Each Domestic Guarantee 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
of such Domestic Guarantor. As of May 31, 1998, there was approximately $58.8
million of Senior Indebtedness outstanding which would be senior in right of
payment to the Domestic Guarantees and $250 million of senior subordinated
indebtedness which would rank pari passu with the Domestic Guarantees.
In the event of any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to a Domestic Guarantor or to its creditors, as
such, or to its assets, whether voluntary or involuntary, or any liquidation,
dissolution or other winding-up of a Domestic Guarantor, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy, or any
general assignment for the benefit of creditors or any other marshalling of
assets or liabilities of a Domestic Guarantor (except in connection with the
merger or consolidation of a Domestic Guarantor or its liquidation or
dissolution following the transfer of substantially all of its assets, upon the
terms and conditions permitted under the circumstances described under "Mergers,
Consolidations or Sale of Assets") (all of the foregoing referred to herein
individually as a "Bankruptcy Proceeding" and collectively as "Bankruptcy
Proceedings"), the holders of Senior Indebtedness of the Domestic Guarantors
will be entitled to receive payment and satisfaction in full in cash of all
amounts due on or in respect of all Senior Indebtedness of the Domestic
Guarantors before the holders of the Notes are entitled to receive or retain any
payment or distribution of any kind on account of the Notes pursuant to the
Domestic Guarantees. In the event that, notwithstanding the foregoing, the
Trustee or any holder of Notes receives any payment or distribution of assets of
the Domestic Guarantors of any kind, whether in cash, property or securities,
including, without limitation, by way of set-off or otherwise, in respect of the
Notes pursuant to the Domestic Guarantees before all Senior Indebtedness of the
Domestic Guarantors is paid and satisfied in full in cash, then such payment or
distribution will be held by the recipient in trust for the benefit of holders
of such Senior Indebtedness and will be immediately paid over or delivered to
the holders of such Senior Indebtedness or their representative or
representatives to the extent necessary to make payment in full in cash of all
such Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution, or provision therefor, to or for the holders of such
Senior Indebtedness. By reason of such subordination, in the event of
liquidation or insolvency, creditors of the Domestic Guarantors who are holders
of Senior Indebtedness of the Domestic Guarantors may recover more, ratably,
than other creditors of the Domestic Guarantors, and creditors of the Domestic
Guarantors who are not holders of Senior Indebtedness or of the Notes may
recover more, ratably, than the holders of the Notes.
No payment or distribution of any assets or securities of the Domestic
Guarantors 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 Domestic Guarantors being
subordinated to the payment of the Notes by the Domestic Guarantors) may be made
by or on behalf of the Domestic Guarantors, including, without limitation, by
way of set-off or otherwise, for or on account of the Notes pursuant to the
Domestic Guarantees, or for or on account of the purchase, redemption,
defeasance or other acquisition of the Notes pursuant to the Domestic
Guarantees, and neither the Trustee nor any holder or owner of any Notes shall
take or receive from any Domestic Guarantor, directly or indirectly in any
manner, payment in respect of all or any portion of Notes pursuant to the
Domestic Guarantees following the delivery by the representative of the holders
of Designated Senior Indebtedness ("Representative") to the Trustee of written
notice of (i) the occurrence of a Payment Default or (ii) the occurrence of a
Non-Payment Event of Default on Designated 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, the Domestic
Guarantors
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shall, if applicable, resume making any and all required payments on account of
the Notes pursuant to the Domestic Guarantees, including any missed payments.
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
Domestic Guarantors 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 Domestic
Guarantors being subordinated to the payment of the Domestic Guarantees by the
Domestic Guarantors) may be made by the Domestic Guarantors, including, without
limitation, by way of set-off or otherwise, on account of the Notes pursuant to
the Domestic Guarantees, or for or on account of the purchase, redemption,
defeasance or other acquisition of Notes pursuant to the Domestic Guarantees,
and neither the Trustee nor any holder or owner of any Notes shall take or
receive from any Domestic Guarantors (or any U.S. Restricted Subsidiary or U.S.
Subsidiary of such Domestic Guarantor), directly or indirectly in any manner,
payment in respect of all or any portion of the Notes pursuant to the Domestic
Guarantees, 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) the earliest of (x)
more than 179 days shall have elapsed since 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 or (z) such Payment Blockage Period
shall have been terminated by written notice to the Domestic Guarantors or the
Trustee from such Representative, after which, in the case of clause (x), (y) or
(z), the Domestic Guarantors shall resume making any and all required payments
in respect of the Domestic Guarantees, including, if applicable, any missed
payments. Notwithstanding any other provision of the Indenture, in no event
shall a Payment Blockage Period commenced in accordance with the provisions of
the Indenture described in this paragraph extend beyond 179 days from the date
of the receipt by the Trustee of the notice referred to above (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 until at least 180 consecutive days have
elapsed from the last day of the Initial Blockage Period. Notwithstanding any
other provision of the 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, whether or not within the Initial Blockage Period, unless such
event of default shall have been cured or waived for a period of not less than
90 consecutive days.
If any Domestic Guarantor fails to make any payment on any Domestic Guarantee,
when due or within any applicable grace period, whether or not on account of
payment blockage provisions, such failure constitutes an Event of Default under
the Indenture and would, subject to the above provision, enable the holders of
the Notes to accelerate the maturity thereof. See "Events of Default."
A holder of Notes by his acceptance of Notes agrees to be bound by such
provisions and authorizes and expressly directs the Trustee, on his behalf, to
take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee his
attorney-in-fact for such purpose.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Additional Indebtedness
Pierce Leahy will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, incur (as defined) 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 Pierce Leahy
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and its Restricted Subsidiaries to the Adjusted EBITDA of Pierce Leahy is less
than 6.5 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 Pierce Leahy or a Restricted Subsidiary; 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, Pierce Leahy and its Restricted Subsidiaries
may incur Permitted Indebtedness; provided, that no Domestic Guarantor may incur
any Permitted Indebtedness, without meeting the Indebtedness incurrence
provisions of the preceding paragraph, that ranks pari passu or junior in right
of payment to the Domestic Guarantees and that has a maturity or mandatory
sinking fund payment prior to the maturity of the Notes.
Limitation on Restricted Payments
Pierce Leahy will not make, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, make, any Restricted Payment, unless:
(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,
Pierce Leahy or a Restricted Subsidiary could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under the covenant set forth
under "Limitation on Additional Indebtedness"; 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 Pierce Leahy 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 Pierce Leahy or the
Issuer from the issue or sale, after the Issue Date, of Capital Stock (other
than Disqualified Capital Stock or Capital Stock of Pierce Leahy or the Issuer
issued to any Subsidiary of Pierce Leahy) of Pierce Leahy or the Issuer or any
Indebtedness or other securities of Pierce Leahy or the Issuer convertible into
or exercisable or exchangeable for Capital Stock (other than Disqualified
Capital Stock) of Pierce Leahy or the Issuer 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 covenant 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 the Indenture, (ii) the retirement of any shares of
Capital Stock of Pierce Leahy or the Issuer 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 Pierce Leahy) of other shares of
Capital Stock of Pierce Leahy (other than Disqualified Capital Stock), (iii) the
redemption or retirement of Indebtedness of the Issuer subordinated to the Notes
in the case of the Issuer or of a Guarantor subordinated to its respective
Guarantee 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 Issuer or a Guarantor that is
contractually subordinated in right of payment to the Notes in the case of
Issuer or such Guarantor's Guarantee, as the case may be, 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
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concurrent sale (other than to a Subsidiary of Pierce Leahy) of other shares of
Disqualified Capital Stock, (v) Permitted Tax Distributions, (vi) payments to
employees of Pierce Leahy for repurchases of stock or repurchases pursuant to
the Pierce Leahy 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, Pierce Leahy and the
Issuer 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 covenant were computed, which calculations may be
based upon Pierce Leahy'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 such Restricted Payment.
Limitation on Senior Subordinated Debt
Pierce Leahy 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 Pierce Leahy or
its Restricted Subsidiaries, as the case may be, and (ii) senior in right of
payment to the Notes, with respect to the Issuer, or a Guarantor's Guarantee,
with respect to such Guarantor, as the case may be. For purposes of this
covenant, Indebtedness is deemed to be senior in right of payment to a Domestic
Guarantee if it is not explicitly subordinate in right of payment to Senior
Indebtedness at least to the same extent as the Domestic Guarantees are
subordinate to Senior Indebtedness.
Limitations on Investments
Pierce Leahy 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 the
"Limitation on Restricted Payments" covenant, after the Issue Date.
Limitations on Liens
Pierce Leahy 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
Pierce Leahy 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 with respect to the Issuer or a Guarantor's Guarantee with respect
to the respective Guarantor unless (i) if such Lien secures Indebtedness which
is pari passu with the Notes in the case of the Issuer or a Guarantee with
respect to the respective Guarantor, then the Notes or such Guarantee, as
applicable, are secured on an equal and ratable or senior 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 in the case of the Issuer or a Guarantor's Guarantee in the case of a
Guarantor, 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 such
subordinated Indebtedness is subordinated to the Notes or such Guarantee, as
applicable.
Limitation on Transactions with Affiliates
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Pierce Leahy 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 Pierce Leahy or any of its Restricted Subsidiaries own a minority
interest) or holder of 10% or more of Pierce Leahy'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 Pierce Leahy and its Wholly-Owned
Subsidiaries; (ii) such Affiliate Transaction is solely between or among Wholly-
Owned Subsidiaries of Pierce Leahy; or (iii) the terms of such Affiliate
Transaction are fair and reasonable to Pierce Leahy 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 Pierce Leahy 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
Pierce Leahy 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 under clause (i)
or (ii) above, Pierce Leahy 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,
Pierce Leahy 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).
The foregoing provisions will not apply to (i) any Restricted Payment that is
not prohibited by the provisions described under "Limitations on Restricted
Payments" contained herein, (ii) any transaction, approved by the Board of
Directors of Pierce Leahy in good faith, with an officer, director, employee or
consultant of Pierce Leahy 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 Pierce Leahy or of any
Subsidiary, or (iii) customary investment banking, underwriting, placement agent
or financial advisor fees paid in connection with services rendered to Pierce
Leahy or any Subsidiary.
Limitation on Creation of Subsidiaries
Pierce Leahy will 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 the Indenture, (ii) a Restricted
Subsidiary that is acquired or created after the date of the Indenture, or (iii)
an Unrestricted Subsidiary; provided, however, that (a) 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) at the time
it has either assets or shareholder's equity in excess of $5,000 and (b) each
Restricted Subsidiary organized under the laws of Canada or any province thereof
acquired or created pursuant to clause (ii) which is not prohibited by the laws
of Canada or any province thereof from acting as a guarantor of the Notes, at
the time it has either assets or shareholders' equity in excess of $5,000, shall
execute a subordinated guarantee in the case of a Domestic Guarantor and a
senior guarantee in the case of a Canadian Guarantor, each in the form attached
to the 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 the
Indenture and opinions of counsel as to the enforceability of such guarantee).
See "Guarantees."
Limitation on Certain Asset Sales
Pierce Leahy will not, and will not permit any of its Restricted Subsidiaries
to, consummate an Asset Sale unless (i) Pierce Leahy 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 Pierce Leahy's Board of Directors, and
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evidenced by a board resolution); (ii) not less than 85% of the consideration
received by Pierce Leahy 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 Pierce Leahy or such Restricted Subsidiary are applied (a) first, to
the extent Pierce Leahy or such Restricted Subsidiary elects, or is required, to
prepay, repay or purchase debt under any then existing Senior Indebtedness of
Pierce Leahy 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 Pierce Leahy or such Restricted Subsidiary 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 Pierce Leahy or a
Restricted Subsidiary as conducted at the time of such Asset Sale, provided that
such investment occurs or Pierce Leahy 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, Pierce Leahy or such Restricted Subsidiary, as
applicable, shall apply an amount equal to such Available Asset Sale Proceeds to
an offer to repurchase the Notes, or any Indebtedness ranking pari passu with
the Notes with respect to Indebtedness of the Issuer or the relevant Guarantee
with respect to Indebtedness of a Guarantor, which Indebtedness contains similar
provisions requiring Pierce Leahy or a Restricted Subsidiary 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 Proceeds Offer"); provided, however, that prior to making any such
Excess Proceeds Offer, Pierce Leahy or such Restricted Subsidiary may, to the
extent required pursuant to the terms of Indebtedness outstanding as of the
Issue Date, such as the 1996 Notes and the 1997 Notes, offer to use such
Available Asset Sale Proceeds to repurchase and use all or a portion of such
Available Asset Sale Proceeds to repurchase such Indebtedness. If an Excess
Proceeds Offer is not fully subscribed, Pierce Leahy or such Restricted
Subsidiary may retain the portion of the 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.
If the Issuer is required to make an Excess Proceeds Offer, the Issuer shall
mail, within 30 days following the Reinvestment Date (or within 120 days
following the Reinvestment Date if Pierce Leahy or a Restricted Subsidiary is
required to make an offer to repurchase 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 Pierce Leahy to apply,
or to cause a Restricted Subsidiary 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, 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 Issuer, 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.
Limitation on Preferred Stock of Restricted Subsidiaries
Pierce Leahy will not permit any Restricted Subsidiary to issue any Preferred
Stock (except Preferred Stock to Pierce Leahy or a Restricted Subsidiary) or
permit any Person (other than Pierce Leahy or a Subsidiary) to hold any such
Preferred Stock unless Pierce Leahy or such Restricted Subsidiary would be
entitled to incur or assume Indebtedness under the covenant described under
"Limitation on Additional Indebtedness" in the aggregate principal amount equal
to the aggregate liquidation value of the Preferred Stock to be issued;
provided, however, that the Issuer and any Restricted Subsidiary that guarantees
the Notes shall be permitted to issue Preferred Stock that is not Disqualified
Capital Stock.
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Limitation on Capital Stock of Restricted Subsidiaries
Pierce Leahy 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 as permitted under "Limitations on Liens") or (ii) permit any of
its Restricted Subsidiaries to issue any Capital Stock, other than to Pierce
Leahy or a Wholly-Owned Subsidiary of Pierce Leahy. The foregoing restrictions
shall not apply to an Asset Sale made in compliance with "Limitation on Certain
Asset Sales" or the issuance of Preferred Stock in compliance with the covenants
described under "Limitation on Preferred Stock of Restricted Subsidiaries."
Limitation on Sale and Lease-Back Transactions
Pierce Leahy 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 of Pierce Leahy,
and (ii) Pierce Leahy or a Restricted Subsidiary could incur the Attributable
Indebtedness in respect of such Sale and Lease-Back Transaction in compliance
with the covenant described under "Limitation on Additional Indebtedness."
Payments for Consent
Neither Pierce Leahy 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 the
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.
CHANGE OF CONTROL OFFER
Within 30 days of the occurrence of a Change of Control of Pierce Leahy, the
Issuer 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 covenant. See "Certain Definitions-Change of Control" herein.
Within 30 days of the occurrence of a Change of Control, the Issuer 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 register maintained by the
Registrar of the Notes, a notice stating:
(1) that the Change of Control Offer is being made pursuant to this covenant
and that all Notes tendered will be accepted for payment, and otherwise subject
to the terms and conditions set forth herein;
(2) 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 days
from the date such notice is mailed (the "Change of Control Payment Date"));
(3) that any Note not tendered will not be purchased and will continue to
accrue interest;
(4) that, unless the Issuer 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;
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(5) that holders accepting the offer to have their Notes purchased pursuant
to a Change of Control Offer will be required to surrender the Notes 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;
(6) 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 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;
(7) that holders whose Notes are being purchased only in part will be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered, 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;
(8) any other procedures that a holder must follow to accept a Change of
Control Offer or effect withdrawal of such acceptance; and
(9) the name and address of the paying agent.
On the Change of Control Payment Date, the Issuer 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 Change of Control
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 Issuer. 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 Change of Control Purchase Price for such
Notes, and the Issuer shall execute and issue, and the Trustee shall promptly
authenticate and mail to each 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.
The Indenture requires that 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 the preceding paragraph, but in any event within 30 days following
any Change of Control, Pierce Leahy and the Issuer will covenant 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 the
Credit Facility to permit the repurchase of the Notes as described above Pierce
Leahy and the Issuer 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 Pierce Leahy's or the Issuer's failure to
comply with the covenant described in the preceding sentence constitutes an
Event of Default described in clause (iii) under "Events of Default" below if
not cured within 60 days after the notice required by such clause. As a result
of the foregoing, a holder of the Notes may not be able to compel the Issuer to
purchase the Notes unless the Issuer or Pierce Leahy is able at the time to
refinance all of the obligations under or in respect of the Credit Facility or
obtain requisite consents under the Credit Facility.
The Indenture provides that, (i) if Pierce Leahy or any Subsidiary thereof has
issued any outstanding (a) Indebtedness that is subordinated in right of payment
to the Notes in the case of the Issuer or a Guarantee in the case of a Guarantor
making such Guarantee or (b) Preferred Stock, and Pierce Leahy 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, Pierce Leahy or such Subsidiary, as the
case may be, shall not
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consummate any such offer or distribution with respect to such subordinated
Indebtedness or Preferred Stock until such time as the Issuer shall have paid
the Change of Control Purchase Price in full to the holders of Notes that have
accepted the Change of Control Offer and shall otherwise have consummated the
Change of Control Offer made to holders of the Notes and (ii) the Issuer and the
Guarantors will not issue Indebtedness that is subordinated in right of payment
to the Notes in the case of the Issuer or a Guarantee in the case of a Guarantor
making such Guarantee or Preferred Stock with change of control provisions
requiring the payment of such indebtedness or Preferred Stock prior to the
payment of the Notes or such Guarantee, as the case may be, in the event of a
Change of Control under the Indenture.
In the event that a Change of Control occurs and the holders of Notes exercise
their right to require the Issuer to purchase Notes, if such purchase
constitutes a "tender offer" for purposes of Rule 14e-1 under the Exchange Act
at that time, the Issuer will comply with the requirements of Rule 14e-1 as then
in effect with respect to such repurchase.
The Issuer's ability to purchase the Notes will be limited by Issuer's and
Pierce Leahy's then available financial resources and, if such financial
resources are insufficient, the Issuer's or Pierce Leahy's ability to arrange
financing to effect such purchases. There can be no assurance that the Issuer
or Pierce Leahy will have sufficient funds to repurchase the Notes upon a Change
of Control or that the Issuer or Pierce Leahy will be able to arrange financing
for such purpose. In addition, Pierce Leahy has a similar obligation with
respect to the 1996 Notes and the 1997 Notes upon a Change of Control. Such
obligations of Pierce Leahy rank pari passu with the obligation to make a Change
of Control Offer under the Notes pursuant to its Guarantee.
MERGER, CONSOLIDATION OR SALE OF ASSETS
Pierce Leahy and the Issuer 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) Pierce Leahy, the
Issuer or the Guarantor, as the case may be, shall be the continuing Person, or
the Person (if other than Pierce Leahy, the Issuer or a Guarantor) formed by
such consolidation or into which Pierce Leahy, the Issuer or the Guarantor, as
the case may be, is merged or to which the properties and assets of Pierce
Leahy, the Issuer 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 in the case of the Issuer or a
Canadian Guarantor, a corporation organized and existing under the laws of
Canada or any province thereof) 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 Pierce Leahy, the Issuer or the Guarantor, as
the case may be, under the Notes and the Indenture, and the obligations under
the 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 Pierce Leahy, a
Restricted Subsidiary or such Person could incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under the covenant set forth
under "Limitation on Additional Indebtedness"; provided, however, that (a) a
Guarantor other than Pierce Leahy may merge into the Issuer, Pierce Leahy or
another Guarantor, (b) the Issuer may merge into a Canadian Guarantor or another
corporation or limited liability company organized and existing under the laws
of Canada or any province thereof for the purpose of converting into a limited
liability company or to change the Issuer's jurisdiction of incorporation, and
(c) the Issuer or a Canadian Guarantor can transfer a portion of its assets to
the Issuer or another Canadian Guarantor, in the case of (a), (b) or (c),
without complying with this clause (iii).
In connection with any consolidation, merger or transfer of assets
contemplated by this provision, Pierce Leahy and the Issuer 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 provision and that all conditions
precedent herein provided for relating to such transaction or transactions have
been complied with.
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GUARANTEES
The Notes will be guaranteed on an unsecured senior subordinated basis by the
Domestic Guarantors. The obligations of each Domestic Guarantor will be limited
to the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Domestic 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 Domestic Guarantor in respect
of the obligations of such other Domestic Guarantor under its Domestic Guarantee
or pursuant to its contribution obligations under the Indenture, result in the
obligations of such Domestic Guarantor under the Domestic Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under federal or
state law. Each Domestic Guarantor that makes a payment or distribution under a
Domestic Guarantee will be entitled to a contribution from each other Domestic
Guarantor in a pro rata amount based on the Adjusted Net Assets of each Domestic
Guarantor.
The Notes will be guaranteed on an unsecured senior basis by the Canadian
Guarantors, to the extent permitted by law, including financial assistance
restrictions imposed by corporate legislation. All payments pursuant to the
Canadian Guarantees by the Canadian Guarantors will be effectively subordinated
to all secured indebtedness of such Canadian Guarantors to the extent of the
assets securing such indebtedness.
A Guarantor other than Pierce Leahy will be released from all of its
obligations under its Guarantee if all or substantially all of its assets are
sold or all of its Capital Stock is sold, in each case in a transaction in
compliance with the covenants described under "Limitation on Certain Asset
Sales" and "Merger, Consolidation or Sale of Assets," or the Guarantor other
than Pierce Leahy merges with or into or consolidates with, or transfers all or
substantially all of its assets to, Pierce Leahy or another Guarantor in a
transaction in compliance with "Merger, Consolidation or Sale of Assets," and
such Guarantor 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 transaction have been complied with.
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(i) default in payment of any principal of, or premium, if any, on the
Notes;
(ii) default for 30 days in payment of any interest on the Notes after such
interest becomes due and payable;
(iii) default by the Issuer, Pierce Leahy or any other Guarantor in the
observance or performance of any other covenant in the Notes or the Indenture
for 60 days after written notice from the Trustee or the holders of not less
than 25% in aggregate principal amount of the Notes then outstanding;
(iv) 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 Pierce Leahy
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 as provided in the Indenture, 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 as provided in the Indenture;
(v) any 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) shall be rendered against Pierce Leahy or any Restricted Subsidiary
thereof, and shall not be discharged for any period of 60 consecutive days
during which a stay of enforcement shall not be in effect; and
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(vi) certain events involving bankruptcy, insolvency or reorganization of the
Issuer, Pierce Leahy or any other Restricted Subsidiary.
The Indenture provides that the Trustee may withhold notice to the holders of
the Notes of any default (except in payment of principal or premium, if any, or
interest on the Notes) if the Trustee in good faith determines it to be in the
best interest of the holders of the Notes to do so.
The Indenture provides that if an Event of Default (other than an Event of
Default resulting from certain events of bankruptcy, insolvency or
reorganization of Pierce Leahy or the Issuer) shall have occurred and be
continuing, then the Trustee or the holders of not less than 25% in aggregate
principal amount of the Notes then outstanding may declare to be immediately due
and payable the entire principal amount of all the Notes then outstanding plus
premium, if any, and accrued 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 Pierce Leahy or the Issuer and the representative of the
holders of Senior Indebtedness under or in respect of the Credit Facility, of
notice of the acceleration of the Notes; provided, however, that after such
acceleration but before a judgment or decree based on acceleration is obtained
by the Trustee, the holders of a majority in aggregate principal amount of
outstanding Notes may, under certain circumstances, rescind and annul such
acceleration if all Events of Default, other than nonpayment of accelerated
principal, premium, if any, or interest, have been cured or waived as provided
in the Indenture. In case an Event of Default resulting from certain events of
bankruptcy, insolvency or reorganization with respect to Pierce Leahy or the
Issuer shall occur, the principal, premium 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 holders of a majority in principal amount of the Notes then outstanding
shall have the right to waive any existing default or Event of Default or
compliance with any provision of the Indenture or the Notes and to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, subject to certain limitations specified in the Indenture.
No holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such holder shall
have previously given to the Trustee written notice of a continuing Event of
Default and unless also the holders of at least 25% in aggregate principal
amount of the outstanding Notes shall have made written request and offered
reasonable indemnity to the Trustee to institute such proceeding as a trustee,
and unless the Trustee shall not have received from the holders of a majority in
aggregate principal amount of the outstanding Notes a direction inconsistent
with such request and the Trustee shall have failed to institute such proceeding
within 60 days. However, such limitations do not apply to a suit instituted for
payment of principal, premium, if any, or interest on a Note on or after the
respective due dates expressed in such Note.
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that the Issuer may elect either (a) to defease and be
discharged from any and all obligations with respect to the Notes (except for
the obligations to register the transfer or exchange of such Notes, to replace
temporary or mutilated, destroyed, lost or stolen Notes, to maintain an office
or agency in respect of the Notes and to hold monies for payment in trust)
("defeasance") or (b) to be released from its obligations with respect to the
Notes under certain covenants contained in the Indenture and described above
under "Certain Covenants" ("covenant defeasance"), upon the deposit with the
Trustee (or other qualifying trustee), in trust for such purpose, of money
and/or U.S. Government Obligations which through the payment of principal and
interest in accordance with their terms will provide money, in an amount
sufficient to pay the principal of, premium, if any, and interest on the Notes,
on the scheduled due dates therefor or on a selected date of redemption in
accordance with the terms of the Indenture things, the Issuer has delivered to
the Trustee an opinion of counsel (as specified in the Indenture) (i) to the
effect that neither the trust nor the Trustee will be required to register as an
investment company under the Investment Company Act of 1940, as amended, and
(ii) to the effect that holders of the Notes or persons in their
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positions will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit, defeasance and discharge and will be
subject to federal income tax on the same amount and in the same manner and at
the same times, as would have been the case if such deposit, defeasance and
discharge had not occurred, which, in the case of defeasance only, must be based
upon a private letter ruling concerning the Notes, a published ruling of the
Internal Revenue Service or a change in applicable federal income tax law.
MODIFICATION OF INDENTURE
From time to time, the Issuer, Pierce Leahy and the Trustee may, without the
consent of holders of the Notes, modify, amend, waive, restate or supplement the
provisions of the Indenture or the Notes for certain specified purposes,
including providing for uncertificated Notes in addition to certificated Notes,
and curing any ambiguity, defect or inconsistency, or making any other change
that does not materially and adversely affect the rights of any holder. The
Indenture contains provisions permitting the Issuer, Pierce Leahy and the
Trustee, with the consent of holders of at least a majority in principal amount
of the outstanding Notes, to modify, amend, waive or supplement the Indenture or
the Notes, except that no such modification shall, without the consent of each
holder affected thereby, (i) reduce the amount of Notes whose holders must
consent to an amendment, supplement, or waiver to the Indenture or the Notes,
(ii) reduce the rate of or change the time for payment of interest on any Note,
(iii) reduce the principal of or premium on or change the stated maturity of any
Note, (iv) make any Note payable in money other than that stated in the Note or
change the place of payment from New York, New York, (v) change the amount or
time of any payment required by the Notes or reduce the premium payable upon any
redemption of Notes, or change the time before which no such redemption may be
made, (vi) waive a default on the payment of the principal of, interest on, or
redemption payment with respect to any Note, or (vii) take any other action
otherwise prohibited by the Indenture to be taken without the consent of each
holder affected thereby.
The consent of the holders is not necessary to approve the particular form of
a proposed amendment. It is sufficient if such consent approves the substance
of the proposed amendment.
REPORTS TO HOLDERS
So long as Pierce Leahy is subject to the periodic reporting requirements of
the Exchange Act, it will continue to furnish the information required thereby
to the Commission and to the holders of the Notes. The Indenture provides that
even if Pierce Leahy is entitled under the Exchange Act not to furnish such
information to the Commission or to the holders of the Notes, it will
nonetheless continue to furnish such information to the Commission and holders
of the Notes.
COMPLIANCE CERTIFICATE
Pierce Leahy and the Issuer will deliver to the Trustee on or before 100 days
after the end of Pierce Leahy's fiscal year and on or before 50 days after the
end of each of the first, second and third fiscal quarters in each year an
Officers' Certificate stating whether or not the signers know of any Default or
Event of Default that has occurred. If they do, the certificate will describe
the Default or Event of Default and its status.
THE TRUSTEE
The Trustee under the Indenture is the registrar and paying agent with regard
to the Notes. The Indenture provides that, except during the continuance of an
Event of Default which is continuing, the Trustee will perform only such duties
as are specifically set forth in the Indenture. During the existence of an
Event of Default which is continuing, the Trustee will exercise such rights and
powers vested in it under the Indenture and use the same degree of care and
skill in its exercise as a prudent person would exercise under the circumstances
in the conduct of such person's own affairs.
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The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee, should it
become a creditor of Pierce Leahy or the Issuer, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of any
such claims, as security or otherwise. The Trustee is permitted to engage in
other transactions; provided, however, that if it acquires any conflicting
interest, it must eliminate such conflict or resign.
TRANSFER AND EXCHANGE
Holders of the Notes may transfer or substitute Notes in accordance with the
Indenture. The Registrar under such Indenture 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
is not required to transfer or substitute any Note selected for redemption.
Also, the Registrar is not required to transfer or substitute any Note for a
period of 15 days before the day of mailing of the notice of redemption of the
Notes to be redeemed.
The Original Notes were issued in a transaction exempt from registration under
the Act and will be subject to the restrictions on transfer.
The registered holder of a Note may be treated as the owner of it for all
purposes.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
covenants contained in the Indenture. Reference is made to the Indenture for
the full definition of all such terms as well as any other capitalized terms
used herein for which no definition is provided.
"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 Pierce Leahy or one of its Restricted
Subsidiaries or which is the subject of a binding acquisition agreement
requiring the calculation of EBITDA for purposes of the covenant restricting the
incurrence of Indebtedness and, in each case, with respect to which financial
results on a consolidated basis with Pierce Leahy or one of its Restricted
Subsidiaries 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 cost reductions calculated in good
faith, by Pierce Leahy 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. Each such
Officers' Certificate shall be signed by the Chief Financial Officer and another
officer of Pierce Leahy. Acquisition EBITDA of a business shall be a fixed
number determined as of the date the calculation of EBITDA for purposes of the
covenant restricting the incurrence of Indebtedness 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 Pierce Leahy). 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 Pierce
Leahy or a Restricted Subsidiary 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 Pierce Leahy
for a full fiscal quarter subsequent to its acquisition by Pierce Leahy or a
Restricted Subsidiary are not yet available.
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"ADJUSTED EBITDA" means, without duplication, for any Person, 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
exceeds 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.
"ASSET SALE" means the sale, transfer or other disposition (other than to
Pierce Leahy 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 Pierce Leahy, (b) all or substantially all of the
assets of Pierce Leahy or of any Restricted Subsidiary thereof, (c) real
property of Pierce Leahy or a Restricted Subsidiary or (d) all or substantially
all of the assets of any business property, or part thereof, owned by Pierce
Leahy or any Restricted Subsidiary thereof, or a division, line of business or
comparable business segment of Pierce Leahy or any Restricted Subsidiary
thereof; provided that Asset Sales shall not include (i) sales, leases,
conveyances, transfers or other dispositions to Pierce Leahy 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 "Merger, Consolidation or Sale of
Assets" above and (iii) transfers or other distributions of assets which
constitute (1) Permitted Investments or (2) Restricted Payments made in
compliance with the covenant described under "Certain Covenants-Limitation on
Restricted Payments."
"ASSET SALE PROCEEDS" means, with respect to any Asset Sale, (i) cash received
by Pierce Leahy 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 Pierce Leahy 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 Pierce Leahy 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 Pierce
Leahy 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" under the Indenture 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 the rate of
interest implicit in such transaction)
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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 Sales that have not been applied
in accordance with clauses (iii)(a) or (iii)(b) of "Certain Covenants-Limitation
on Certain Asset Sales," and which has not yet been the basis for an Excess
Proceeds Offer in accordance with clause (iii)(c), of the first paragraph of
"Certain Covenants-Limitation on Certain Asset Sales."
"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.
A "CHANGE OF CONTROL" 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 Common Stock of Pierce Leahy, (ii) there
shall be consummated any consolidation or merger of Pierce Leahy in which Pierce
Leahy is not the continuing or surviving corporation or pursuant to which the
Common Stock of Pierce Leahy would be converted into cash, securities or other
property, other than a merger or consolidation of Pierce Leahy in which the
holders of the Common Stock of Pierce Leahy 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 (iii) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Board of Directors of Pierce
Leahy (together with any new directors whose election by such Board of Directors
or whose nomination for election by the shareholders of Pierce Leahy 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 Pierce Leahy.
"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.
"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 Pierce
Leahy).
"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
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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 1996 Indenture, the 1997 Indenture or the 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 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 nonrecurring gains and losses shall be
excluded.
"CREDIT FACILITY" means the credit agreement or credit agreements, in
existence on the date of the Indenture, by and among Pierce Leahy, any or all
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). Pierce Leahy shall promptly notify the Trustee
of any such refunding, replacement, restructuring or refinancing of the Credit
Facility.
"DESIGNATED SENIOR INDEBTEDNESS," as to the Issuer, Pierce Leahy or any other
Guarantor, as the case may be, means any Senior Indebtedness (a) under the
Credit Facility, or (b) which at the time of determination exceeds $15,000,000
in aggregate principal amount (or accredited value in the case of Indebtedness
issued at a discount) outstanding or available under a committed facility, and
(i) 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 (ii) as to which the Trustee
has been given written notice of such designation.
"DISQUALIFIED CAPITAL STOCK" means any Capital Stock of Pierce Leahy 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
Pierce Leahy and (ii) any Preferred Stock of Pierce Leahy, with respect to
either of which, under the terms of such Preferred Stock, by agreement or
otherwise, such Restricted Subsidiary or Pierce Leahy 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 Pierce
Leahy 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 Pierce Leahy or a Restricted
Subsidiary, which provisions have substantially the same effect as the
provisions of the Indenture described under "Change of Control," shall not be
deemed to be Disqualified Capital Stock solely by virtue of such provisions, and
provided, further, that Capital Stock owned by Pierce Leahy or a Wholly-Owned
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 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
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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 Pierce Leahy each of the foregoing items shall be
determined on a consolidated basis with respect to Pierce Leahy 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.
"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 Indebtedness 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 lie 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 Pierce Leahy,
Disqualified Capital Stock of Pierce Leahy or any Restricted Subsidiary thereof,
and (vi) obligations of any such Person 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 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
Pierce Leahy 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.
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"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 a part of the assets acquired by Pierce Leahy or a Restricted
Subsidiary in connection with an acquisition of assets which is otherwise
permitted by the terms of the Indenture), loan or capital contribution to (by
means of transfers of property 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 repurchase or redemption of
securities of any Person by such Person.
"ISSUE DATE" means the date the Notes are first issued by the Issuer and
authenticated by the Trustee under the 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).
"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 (i) in the case of any sale of Capital Stock by Pierce
Leahy or a Restricted Subsidiary, the aggregate net proceeds received by Pierce
Leahy or a Restricted Subsidiary, after payment of expenses, commissions and the
like incurred in connection therewith, whether such proceeds are in cash or in
property (valued at the fair market value thereof, as determined in good faith
by the Board of Directors, at the time of receipt), (ii) in the case of any
exchange, exercise, conversion or surrender of outstanding securities of any
kind for or into shares of Capital Stock of Pierce Leahy or a Restricted
Subsidiary 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
Pierce Leahy or any Restricted Subsidiary 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 Pierce Leahy or a
Restricted Subsidiary in connection therewith) and (iii) in the case of any
issuance of any Indebtedness by Pierce Leahy or a 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.
"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.
"NOTES" means the securities that are issued under the Indenture, as amended,
restated or supplemented from time to time pursuant to the Indenture.
"OFFICERS' CERTIFICATE" means, with respect to any Person, a certificate
signed by the Chief Executive Officer, the Controller, the President or any Vice
President and the Chief Financial Officer or any Treasurer of such Person that
shall comply with applicable provisions of the Indenture.
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"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 Pierce Leahy or any Restricted Subsidiary arising under
or in connection with the Credit Facility in an aggregate amount at any one
time outstanding not to exceed $100,000,000;
(ii) Indebtedness of the Issuer (and related guarantees) or a Canadian
Guarantor arising under or in connection with the Credit Facility in an
aggregate amount at any one time outstanding not to exceed Cdn. $40,000,000;
(iii) Indebtedness under the 1997 Notes and the guarantees thereof;
(iv) Indebtedness under the 1996 Notes and the guarantees thereof;
(v) Indebtedness under the Notes and the Guarantees;
(vi) Indebtedness not covered by any other clause of this definition which is
outstanding on the date of the Indenture;
(vii) Indebtedness of Pierce Leahy to any Restricted Subsidiary and
Indebtedness of any Restricted Subsidiary to Pierce Leahy or another Restricted
Subsidiary;
(viii) 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
consolidated total assets of Pierce Leahy and its Subsidiaries;
(ix) Interest Rate Agreements;
(x) additional Indebtedness of Pierce Leahy or a Restricted Subsidiary not
to exceed an aggregate of $3,000,000 in principal amount outstanding at any
time; and
(xi) Refinancing Indebtedness.
"PERMITTED INVESTMENTS" means, for any Person, Investments made on or after
the date of the Indenture consisting of
(i) Investments by Pierce Leahy, or by a Restricted Subsidiary, in Pierce
Leahy or a Restricted Subsidiary; and
(ii) Temporary Cash Investments; and
(iii) Investments by Pierce Leahy, or a Restricted Subsidiary, 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 Pierce Leahy, (b) such Person is merged, consolidated or
amalgamated with or into, or
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transfers or conveys substantially all of its assets to, or is liquidated into,
Pierce Leahy or a Restricted Subsidiary thereof or (c) such business or assets
are owned by Pierce Leahy or a Restricted Subsidiary; and
(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 Pierce Leahy Nonqualified Stock Option Plan in an
amount not to exceed $2,000,000; and
(v) an Investment that is made by Pierce Leahy or a Restricted Subsidiary 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 Pierce Leahy
or Restricted Subsidiary solely as partial consideration for the consummation
of an Asset Sale that is otherwise permitted under the covenant described under
"Certain Covenants-Limitation on Certain Asset Sales"; and
(vi) accounts receivable of Pierce Leahy and its Restricted Subsidiaries
generated in the ordinary course of business; and
(vii) Investments existing on the Issue Date; and
(viii) Investments for any purpose not to exceed $2,000,000.
"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 Pierce Leahy or at the time such
Person is merged into or consolidated with Pierce Leahy or any of its Restricted
Subsidiaries or at the time such business is acquired by Pierce Leahy or a
Restricted Subsidiary, provided that such Liens are not incurred in anticipation
of such Person becoming a Restricted Subsidiary of Pierce Leahy or merging into
or consolidating with Pierce Leahy or any of its Restricted Subsidiaries or such
business being acquired by Pierce Leahy 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 Pierce Leahy or any of its Restricted Subsidiaries, (iv) Liens securing
industrial revenue bonds or mortgages on real property, (v) Liens to secure
Purchase Money Indebtedness that is otherwise permitted under the 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 in 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 or mortgage loans related to real
property permitted to be incurred under clause (viii) 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) 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 Pierce Leahy's or any Restricted
Subsidiary's use of such Property, (xii) Liens existing on the date of the
Indenture and (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 (1) in the ordinary course of business or in connection with the
enforcement of rights or claims of Pierce Leahy or a Subsidiary thereof or (2)
in connection with judgments that do not give rise to 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
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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 periods for which
Pierce Leahy was taxed as an S corporation or other pass-through entity for
federal income tax purposes, distributions to the holders of Capital Stock of
Pierce Leahy 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
Pierce Leahy would be required to pay as a result of Pierce Leahy'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).
"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.
"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 Pierce Leahy 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.
"REFINANCING INDEBTEDNESS" means Indebtedness that refunds, refinances,
renews, replaces or extends any Indebtedness of Pierce Leahy or a Restricted
Subsidiary outstanding on the Issue Date or other Indebtedness permitted to be
incurred by Pierce Leahy or its Restricted Subsidiaries pursuant to the terms of
the 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 with respect to Indebtedness of the
Issuer and the relevant Guarantee with respect to the Indebtedness of a
Guarantor 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 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
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extended, except that the Issuer or any Guarantor may incur Refinancing
Indebtedness to refund, refinance or extend Indebtedness of the Issuer or any
Guarantor.
"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
Pierce Leahy or any Restricted Subsidiary or any payment made to the direct or
indirect holders (in their capacities as such) of Capital Stock of Pierce Leahy
or any Restricted Subsidiary (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, dividends or
distributions payable to Pierce Leahy or to a Wholly-Owned Subsidiary of Pierce
Leahy); (ii) the purchase, redemption or other acquisition or retirement for
value of any Capital Stock of Pierce Leahy or any of its Restricted Subsidiaries
(other than Capital Stock owned by Pierce Leahy or a Wholly-Owned Subsidiary of
Pierce Leahy, excluding Disqualified Capital Stock); (iii) the purchase,
defeasance, repurchase, redemption or other 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 (x) the Notes with respect to such an action
by the Issuer or (y) to the respective Guarantee with respect to such an action
by a Guarantor, in each case, (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 Pierce Leahy; and (vi) forgiveness of any Indebtedness of an
Affiliate of Pierce Leahy (other than a Restricted Subsidiary) to Pierce Leahy
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 Pierce Leahy in the annual amount of $96,000 shall not constitute
a Restricted Payment.
"RESTRICTED SUBSIDIARY" means a Subsidiary of Pierce Leahy having either
assets or shareholders' equity in excess of $5,000 other than an Unrestricted
Subsidiary and includes all of the Subsidiaries of Pierce Leahy existing as of
the Issue Date having either assets or shareholders' equity in excess of $5,000.
The Board of Directors of Pierce Leahy may designate any Unrestricted Subsidiary
or any 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), Pierce Leahy or a Restricted Subsidiary could have
incurred at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to the "Limitation on Additional Indebtedness" covenant.
"SALE AND LEASE-BACK TRANSACTION" means any arrangement with any Person
providing for the leasing by Pierce Leahy or any Restricted Subsidiary of Pierce
Leahy of any real or tangible personal property, which property (i) has been or
is to be sold or transferred by Pierce Leahy 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.
"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 Pierce Leahy or its Restricted
Subsidiaries owed to lenders under or in respect of the Credit Facility, (b) all
obligations of Pierce Leahy or its Restricted Subsidiaries with respect to any
Interest Rate Agreement, (c) all obligations of Pierce Leahy or its Restricted
Subsidiaries 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 Pierce Leahy or its Restricted Subsidiaries which does not
provide that (1) with respect to Indebtedness of the Issuer or a Canadian
Guarantor, such Indebtedness is subordinate to the Notes or such Canadian
Guarantee, as
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applicable, and (2) with respect to Indebtedness of a Domestic Guarantor, such
Indebtedness is to rank pari passu with or subordinate to such Domestic
Guarantee 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 Pierce Leahy to any of its Subsidiaries, (ii) Indebtedness
represented by any Domestic Guarantees, (iii) Indebtedness represented by the
1996 Notes, the 1997 Notes and their respective 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 the Indenture.
"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 Standard & Poor's Ratings Group and A-2 by Moody's Investors
Service, Inc., 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 the preceding clauses
(i) and (ii); (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 Pierce Leahy)
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 Investors Service, Inc. or
"A-1" by Standard & Poor's Ratings Group.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary of an Unrestricted
Subsidiary and (ii) any Subsidiary of Pierce Leahy which is classified after the
Issue Date as an Unrestricted Subsidiary by a resolution adopted by the Board of
Directors; provided that the Issuer may not be an Unrestricted Subsidiary; and
provided further, however, 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 under "Limitation on
Restricted Payments." The Trustee shall be given prompt notice by Pierce Leahy
of each resolution adopted by the Board of Directors under this provision,
together with a copy of each such resolution adopted.
"WHOLLY-OWNED SUBSIDIARY" means any Restricted Subsidiary, 99% or more of the
outstanding Capital Stock (other than directors' qualifying shares) of which is
owned, directly or indirectly, by Pierce Leahy.
BOOK-ENTRY; DELIVERY AND FORM
The Original Notes were issued in the form of either a Regulation S Global
Note which was sold in an offshore transactions in reliance on Regulation S
(each, a "Regulation S Global Note") or a Restricted Global Note which was
issued in reliance on Rule 144A (each, a "Restricted Global Note", and together
with the Regulation S Global Note, the "Original Global Notes"). The Original
Notes were represented by one or more Original Global Notes,
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in definitive, fully registered form without interest coupons and were deposited
with the Trustee as custodian for The Depository Trust Company ("DTC" or the
"Depository") and registered in the name of a nominee of DTC for the accounts of
Euroclear and Cedel.
The Exchange Notes will initially be issued in the form of one or more Global
Notes (collectively, the "Exchange Global Notes"). The Exchange Global Notes
will be deposited on the date of the closing of the Exchange Offer, with, or on
behalf of, and registered in the name of a nominee of the DTC. "Global Notes"
means the Original Global Notes or the Exchange Global Notes, as the case may
be.
Notes that are issued as described below under "--Certificated Securities"
will be issued, in registered form, without interest coupons ("Certificated
Securities").
THE GLOBAL NOTES
Upon issuance of each Global Note, DTC or the custodian will credit, on its
internal system, the respective principal amount of the individual beneficial
interest represented by such Global Note to the accounts of Persons who have
accounts with such depository. Such accounts initially will be designated by or
on behalf of the Initial Purchasers. Ownership of beneficial interests in a
Global Note will be limited to Persons who have accounts with DTC
("participants") or Persons who hold interests through participants. Ownership
of beneficial interests in the Global Note will be shown on, and the transfer of
that ownership will be effected only through, records maintained by DTC or its
nominee (with respect to interests of participants) and the records of
participants (with respect to interests of persons other than participants).
Qualified Institutional Buyers may hold their interests in the Restricted Global
Note directly through DTC if they are participants in such system, or indirectly
through organizations which are participants in such system.
Investors may hold their interests in a Global Note directly through Cedel or
Euroclear, if they are participants in such systems, indirectly through
organizations that are participants in such systems or through organizations
other than Euroclear and Cedel that are participants in the DTC system. Cedel
and Euroclear will hold interests in a Global Note on behalf of their
participants through DTC.
So long as DTC, or its nominee, is the registered owner or holder of a Global
Note, DTC or such nominee, as the case may be, will be considered the sole owner
or holder of the Notes represented by such Global Note for all purposes under
the Indenture and the Notes. In addition, no beneficial owner of an interest in
a Global Note will be able to transfer that interest except in accordance with
DTC's applicable procedures, in addition to those provided for under the
Indenture and, if applicable, those of Euroclear and Cedel.
Payments of the principal of, and interest on, the Global Notes will be made
to DTC or its nominee, as the case may be, as the registered owner thereof.
Neither the Issuer, the Trustee nor any paying agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Notes
or for maintaining, supervising or reviewing any records relating to such
beneficiary ownership interests.
The Issuer expects that DTC or its nominee, upon receipt of any payment of
principal or interest in respect of a Global Note, will credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Note as shown on the records of
DTC or its nominee. The Issuer also expects that payments by participants to
owners of beneficial interests in such Global Note held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers registered
in the names of nominees for such customers. Such payments will be the
responsibility of such participants.
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Transfers between participants in DTC will be effected in the ordinary way in
accordance with DTC rules and will be settled in next-day funds. Transfers
between participants in Euroclear and Cedel will be effected in the ordinary way
in accordance with their respective rules and operating procedures.
The Issuer understands that DTC will take any action permitted to be taken by
a holder (including the presentation of Notes for exchange) only at the
direction of one or more participants to whose account DTC interests in the
Global Notes is credited and only in respect of such portion of the aggregate
principal amount of Notes as to which such participant or participants has or
have given such direction. However, if there is an Event of Default under the
Notes, DTC will exchange the Global Notes for Certificated Notes which it will
distribute to its participants.
The Issuer understands that DTC is a limited purpose trust company organized
under the laws of the State of New York, a "banking organization" within the
meaning of New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the Uniform Commercial Code and a
"Clearing Agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for its participants and
facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations and certain other organizations. Indirect
access to the DTC system is available to others such as banks, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly ("indirect participants").
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures in
order to facilitate transfers of interests in the Global Notes among
participants of DTC, Euroclear and Cedel, they are under no obligation to
perform or continue to perform such procedures, and such procedures may be
discontinued at any time. Neither the Issuer, Pierce Leahy nor the Trustee will
have any responsibility for the performance by DTC, Euroclear or Cedel or their
respective participants or indirect participants of their respective obligations
under the rules and procedures governing their operations.
CERTIFICATED NOTES
A Global Note is exchangeable for Certificated Notes if (i) the Depository
notifies the Issuer that it is unwilling or unable to continue as a Depository
for such Global Note or if at any time the Depository ceases to be a clearing
agency registered under the Exchange Act and in either case the Issuer thereupon
fails to appoint a successor Depository within 90 days, (ii) the Issuer executes
and delivers to the Trustee a written notice that such Global Note shall be
issuable and transferable in certificated form or (iii) there shall have
occurred and be continuing an Event of Default or an event which, with the
giving of notice or lapse of time or both, would constitute an Event of Default
with respect to the Notes represented by such Global Note. Any Global Note that
is exchangeable for Certificated Notes pursuant to the preceding sentence will
be transferred to, and registered and exchanged for, Certificated Notes in
authorized denominations, without legends applicable to a Global Note but with
the legend referred to under "Notice to Investors" (unless the Issuer determines
otherwise in accordance with applicable law), subject, with respect to such
Notes, to the provisions of such legend, and registered in such names as the
Depository holding such Global Note may direct. Subject to the foregoing, a
Global Note is not exchangeable, except for a Global Note of like denomination
to be registered in the name of the Depository or its nominee. In the event
that a Global Note becomes exchangeable for Certificated Notes, (i) Certificated
Notes will be issued only in fully registered form in denominations of $1,000 or
integral multiples thereof, (ii) payment of principal, any repurchase price, and
interest on the Certificated Notes will be payable, and the transfer of the
Certificated Notes will be registrable, at the office or agency of the Issuer
maintained for such purposes, and (iii) no service charge will be made for any
registration or transfer or exchange of the Certificated Notes, although the
Issuer may require payment of a sum sufficient to cover any tax or governmental
charge imposed in connection therewith.
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DESCRIPTION OF CAPITAL STOCK OF PIERCE LEAHY
The authorized capital stock of Pierce Leahy consists of 80,000,000 shares of
Common Stock, par value $.01 per share (the "Common Stock"), and 10,000,000
shares of Preferred Stock, par value $.01 per share (the "Preferred Stock"). As
of May 31, 1998, there were 17,025,990 shares of Common Stock outstanding. No
shares of Preferred Stock are currently outstanding.
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 Pierce Leahy, after payment or provision for
payment of all of Pierce Leahy'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 Pierce Leahy'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 Pierce Leahy. As of the date
of this Offering Memorandum, Pierce Leahy 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 PIERCE LEAHY'S ARTICLES OF
INCORPORATION AND BYLAWS
Pierce Leahy 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 Pierce Leahy 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 Pierce Leahy). In addition, Sections 2551-
2556 also impose certain restrictions on business combinations involving Pierce
Leahy 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, 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.
-107-
<PAGE>
Pierce Leahy's Bylaws provide that its 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 of Directors.
Accordingly, at each annual meeting of shareholders, only approximately one-
third of Pierce Leahy's directors will be elected.
Certain other provisions of Pierce Leahy's Articles of Incorporation and
Bylaws could also have the effect of preventing or delaying any change in
control of Pierce Leahy, 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 Pierce Leahy, 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 Pierce Leahy'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 Pierce Leahy.
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 Pierce Leahy's taxes pursuant to local, Pennsylvania or federal
law. These provisions offer persons who serve on the Board of Directors of
Pierce Leahy 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 Pierce Leahy, 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 of Pierce Leahy, shall be indemnified by Pierce Leahy 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 Pierce Leahy, or a
director, officer, employee, agent, 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 Pierce
Leahy 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.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes certain federal income tax considerations
for holders who elect to substitute their Original Notes for Exchange Notes in
the Exchange Offer. This summary does not address specific tax aspects of the
Exchange Offer which may be relevant to certain holders such as foreign persons,
financial institutions, broker-dealers, tax-exempt organizations or insurance
companies. THEREFORE, EACH HOLDER OF A NOTE SHOULD CONSULT HIS OR HER OWN TAX
ADVISOR CONCERNING THE PARTICULAR FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES OF SUBSTITUTING HIS OR HER ORIGINAL NOTES FOR EXCHANGE NOTES IN THE
EXCHANGE OFFER.
Under current provisions of the Internal Revenue Code of 1986, as amended, the
Treasury Regulations promulgated thereunder and current judicial authority and
administrative rulings and practice, a substitution of the debt instrument of
an issuer for a new debt instrument of the issuer will be treated as an
"exchange" for federal income tax purposes if the new debt instrument differs
materially either in kind or in extent from the old debt instrument. Because the
Exchange Notes are substantially identical to the Original Notes and because the
exchange was contemplated by the Indenture pursuant to which the Original Notes
were sold, the Exchange Notes and Original Notes should not be considered to
differ materially either in kind or in extent and, accordingly, the substitution
-108-
<PAGE>
should not constitute an "exchange" for federal income tax purposes. Therefore,
for federal income tax purposes, no gain or loss should be recognized by the
holder on the substitution of an Original Note for an Exchange Note, the
holder's adjusted tax basis in the Exchange Note should be the same as his or
her basis in the Original Note and the holding period for the Exchange Note
should be the same as the holding period for the Original Note.
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of the principal Canadian federal income
tax considerations generally applicable to a holder of the Notes or the Exchange
Notes acquired hereunder. This summary is generally applicable to a holder who,
for purposes of the Income Tax Act (Canada) (the "Act"), holds the Notes and the
Exchange Notes acquired hereunder as capital property, deals at arm's length
with the Issuer and each Canadian Guarantor, is not affiliated with the Issuer
or a Canadian Guarantor, is a non-resident or is deemed to be a non-resident of
Canada for purposes of the Act, is a resident of the United States for purposes
of the Canada-United States Income Tax Convention (1980) (the "Convention"), and
has not and will not use or hold or be deemed to use or hold the Notes or the
Exchange Notes in or in the course of carrying on business in Canada. This
summary does not apply to a holder that is a "financial institution," as defined
in section 142.2 of the Act, as such definition is proposed to be amended by the
Proposed Tax Amendments (as hereinafter defined).
This summary is based on the current provisions of the Act, the regulations
thereunder (the "Regulations"), the Convention, counsel's understanding of the
current published administrative and assessing practices of Revenue Canada,
Customs, Excise & Taxation ("Revenue Canada") and on a certificate of an officer
of the Issuer as to certain matters of fact.
This summary also takes into account all specific proposals to amend the Act
and regulations publicly announced by the Department of Finance of Canada prior
to the date hereof (collectively, the "Proposed Tax Amendments"). No assurances
can be given that the Proposed Tax Amendments will be enacted or will be enacted
as tabled, announced or advised. Otherwise this summary does not take into
account or anticipate any changes in law, or the administration thereof, whether
by legislative, governmental or administrative action, nor does it take into
account provincial, territorial or foreign income tax legislation or
considerations which may differ significantly from those discussed herein.
THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO BE, NOR SHOULD
IT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE TO ANY PARTICULAR HOLDER OF THE NOTES
OR THE EXCHANGE NOTES. ACCORDINGLY, PROSPECTIVE INVESTORS SHOULD CONSULT THEIR
OWN TAX ADVISORS WITH RESPECT TO THEIR OWN PARTICULAR CIRCUMSTANCES.
FOREIGN CURRENCY TRANSLATION ISSUES
Generally, all amounts relevant to the computation of income under the Act
which are payable, paid, receivable, received or expressed in a foreign currency
must be translated into Canadian Dollars using an appropriate exchange rate. A
holder's cost and proceeds of disposition of a Note or an Exchange Note must be
translated into Canadian Dollars at the date of acquisition and at the date of
disposition, respectively. Interest on the Notes or the Exchange Notes will
generally be translated into Canadian Dollars at the date on which such interest
is paid or credited.
NOTES AND EXCHANGE NOTES
In the absence of an exemption under the Act or the Convention, interest paid
or credited by the Issuer to a holder is subject to a non-resident withholding
tax of 25% of the gross amount of the interest under the Act. The rate of such
withholding tax is reduced by the Convention to 10%. The Act provides for an
exemption from non-resident withholding tax on interest payable on indebtedness
of the Issuer to a holder who deals at arm's length with the Issuer provided
that the Issuer may not under any circumstances be obliged to pay more than 25%
of the aggregate principal amount of the indebtedness within five years from the
date of issue of the indebtedness, except in the event
-109-
<PAGE>
of a failure or a default under the terms of the indebtedness or in the case of
certain other events including in the event the terms of the indebtedness become
unlawful. Based in part on a certificate of an officer of the Issuer, amounts
of interest paid or credited by the Issuer on the Notes and the Exchange Notes
to holders dealing at arm's length with the Issuer will not be subject to non-
resident withholding under the Act.
A holder will not generally be subject to tax under the Act in respect of any
capital gain, or entitled to deduct any capital loss, realized on the
disposition of a Note or an Exchange Note.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. This Prospectus, as it may
be amended or supplemented from time to time, may be used by a broker-dealer in
connection with the resale of Exchange Notes received in exchange for Original
Notes where such Original Notes were acquired as a result of market-making
activities or other trading activities. The Company has agreed that for a
period of 180 days after the Expiration Date, it will use reasonable efforts to
make this Prospectus, as amended or supplemented, available to any broker-dealer
for use in connection with any such resale; provided that such broker-dealer
indicates in the Letter of Transmittal that it is a broker-dealer. In addition,
until _______ __, 1998, all broker-dealers effecting transactions in the
Exchange Notes may be required to deliver a Prospectus.
The Company will not receive any proceeds from any sale of Exchange Notes by
broker-dealers or any other persons. Exchange Notes received by broker-dealers
for their own account pursuant to the Exchange Offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or at negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such
Exchange Notes. Any broker-dealer that resells Exchange Notes that were
received by it for its own account pursuant to the Exchange Offer and any broker
or dealer that participates in a distribution of such Exchange Notes may be
deemed to be an "underwriter" within the meaning of the Securities Act, and any
profit on any such resale of Exchange Notes and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
For a period of 180 days after the Expiration Date, the Company will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents in the Letter
of Transmittal.
By acceptance of this Exchange Offer, each broker-dealer that receives
Exchange Notes pursuant to the Exchange Offer agrees that, upon receipt of
notice form the Company of the happening of any event which makes any statement
in the Prospectus untrue in any material respect or which requires the making of
any changes in the Prospectus in order to make the statements therein not
misleading (which notice the Company agrees to deliver promptly to such broker-
dealer, such broker-dealer will suspend use of the Prospectus until the Company
has amended or supplements the Prospectus to correct such misstatement or
omission and has furnished copies of the amended or supplemented Prospectus to
such broker-dealer. If the Company gives any such notice to suspend the use of
the Prospectus, it shall extend the 180-day period referred to the above by the
number of days during the period from and including the date of the giving of
such notice up to and including when broker-dealers have received copies of the
supplement or amended Prospectus necessary to permit resales of Exchange Notes.
-110-
<PAGE>
The Company has agreed to pay all expenses incident to the Company's
performance of, or compliance with, the Registration Agreement and will
indemnify the holders (including any broker-dealers) and certain parties related
to the holders against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the Notes offered hereby will be passed
upon for the Issuer and Pierce Leahy 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.
EXPERTS
The financial statements and schedules of Pierce Leahy Corp. as of December
31, 1997 and 1996, and for each of the three years in the period ended December
31, 1997, incorporated by reference 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
incorporated by reference in reliance upon the authority of said firm as experts
in giving said reports.
The financial statements of Archivex Inc. as of November 30, 1997 and 1996,
and for the three years in the period ended November 30, 1997, incorporated by
reference in this Prospectus and elsewhere in this Registration Statement, have
been audited by Friedman & Friedman, chartered accountants, as indicated in
their report with respect thereto, and are incorporated by reference in reliance
upon the authority of said firm as experts in giving said reports.
The financial statements of Kestrel Holdings, Inc. as of September 30, 1997,
and for the year then ended, included in this Prospectus and elsewhere in this
Registration Statement, have been audited by James N. Howard and Associates,
P.C., independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference in reliance upon the authority of
said firm as experts in giving said reports.
-111-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
KESTREL HOLDINGS, INC.
Report of Independent Public Accountants ................................. F-2
Balance Sheets ........................................................... F-3
Statements of Income ..................................................... F-4
Statements of Stockholders' Equity ....................................... F-5
Statements of Cash Flows ................................................. F-6
Summary of Accounting Policies ........................................... F-8
Notes to Financial Statements ............................................ F-10
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Kestrel Holdings, Inc.
Houston, Texas
We have audited the accompanying balance sheet of Kestrel Holdings, Inc. and
Subsidiaries, as of September 30, 1997, and the related statements of income,
stockholders' 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Kestrel Holdings, Inc. and
Subsidiaries, at September 30, 1997, and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ James N. Howard and Associates P.C.
Dallas, Texas
December 5, 1997
F-2
<PAGE>
KESTREL HOLDINGS, INC. AND SUBSIDIARIES
BALANCE SHEETS
<TABLE>
<CAPTION>
====================================================================================
SEPTEMBER 30, JUNE 30,
1997 1998
- ------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash $ 215,119 $ 28,146
Accounts receivable
Trade, less allowance for doubtful
accounts of $9,500 and $208,401 1,687,308 1,573,577
Prepaid expenses 639,320 169,436
- ------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 2,541,747 1,771,159
PROPERTY AND EQUIPMENT, less accumulated
depreciation and amortization 15,713,697 15,662,648
OTHER ASSETS, net of amortization 624,786 380,157
- ------------------------------------------------------------------------------------
$18,880,230 $17,813,964
====================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable - trade $ 542,396 $ 191,988
Accrued expenses 602,583 650,757
Advance rentals billed 897,182 919,810
Current maturities of long-term debt 1,564,712 2,720,205
- ------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 3,606,873 4,482,760
Deferred income taxes 1,441,943 1,512,037
Long-term accrued rent 659,926 605,160
Long-term payable to stockholder 89,013 -
Long-term debt, less current maturities 8,020,090 8,315,553
- ------------------------------------------------------------------------------------
TOTAL LIABILITIES 13,817,845 14,915,510
- ------------------------------------------------------------------------------------
Stockholders' equity
Common stock, no par value; 1,000,000
shares authorized; 10,000 shares issued in 1997;
10,101 shares issued in 1998 10,000 82,500
Retained earnings 5,052,385 2,815,954
- ------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 5,062,385 2,898,454
- ------------------------------------------------------------------------------------
$18,880,230 $17,813,964
====================================================================================
</TABLE>
The accompanying accounting policies and notes are an integral part of
these financial statements.
F-3
<PAGE>
KESTREL HOLDINGS, INC. AND SUBSIDIARIES
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
========================================================================================
YEAR ENDED NINE MONTHS ENDED
SEPTEMBER 30, JUNE 30,
-----------------------
1997 1997 1998
- ----------------------------------------------------------------------------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
REVENUE
Storage $ 6,967,126 $5,139,717 $ 5,818,029
Services 4,519,992 3,373,238 3,841,557
Other 2,124,511 1,431,158 529,724
- ----------------------------------------------------------------------------------------
TOTAL REVENUE 13,611,629 9,944,113 10,189,310
- ----------------------------------------------------------------------------------------
OPERATING EXPENSES
General and administrative 5,635,045 3,813,347 4,006,729
Salaries 4,061,235 2,916,551 3,620,715
Rent - data center space 1,091,201 798,523 947,505
- ----------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 10,787,481 7,528,421 8,574,949
- ----------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 2,824,148 2,415,692 1,614,361
- ----------------------------------------------------------------------------------------
OTHER EXPENSES (INCOME)
Interest expense 847,917 629,222 711,980
Depreciation and amortization 931,021 705,097 814,289
Other 254,833 248,072 (58,616)
- ----------------------------------------------------------------------------------------
TOTAL OTHER EXPENSES, net 2,033,771 1,582,391 1,467,653
- ----------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 790,377 833,301 146,708
- ----------------------------------------------------------------------------------------
INCOME TAXES
Current 291,631 255,194 75,000
Deferred 76,080 88,627 70,094
- ----------------------------------------------------------------------------------------
TOTAL INCOME TAXES 367,711 343,821 145,094
- ----------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS 422,666 489,480 1,614
DISCONTINUED OPERATIONS
Loss from document imaging segment (net
of income tax benefit of $122,631
and $86,198) (238,048) (164,909) -
- ----------------------------------------------------------------------------------------
NET INCOME $ 184,618 $ 324,571 $ 1,614
========================================================================================
</TABLE>
The accompanying accounting policies and notes are an integral part of
these financial statements.
F-4
<PAGE>
KESTREL DATA MANAGEMENT AND STORAGE, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
======================================================================================
COMMON RETAINED
STOCK EARNINGS TOTAL
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE, September 30, 1996 $10,000 $ 4,867,767 $ 4,877,767
NET INCOME - 184,618 184,618
- --------------------------------------------------------------------------------------
BALANCE, September 30, 1997 10,000 5,052,385 5,062,385
NET INCOME (unaudited) - 1,614 1,614
DISTRIBUTION OF SUBSIDIARY
TO STOCKHOLDERS (unaudited) - (2,238,045) (2,238,045)
SALE OF 101 SHARES OF COMMON STOCK (unaudited) 72,500 - 72,500
- --------------------------------------------------------------------------------------
BALANCE, June 30, 1998 (unaudited) $82,500 $ 2,815,954 $ 2,898,454
======================================================================================
</TABLE>
The accompanying accounting policies and notes are an integral part of
these financial statements.
F-5
<PAGE>
KESTREL HOLDINGS, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
=================================================================================================
YEAR ENDED NINE MONTHS ENDED
SEPTEMBER 30, JUNE 30,
--------------------
1997 1997 1998
- -------------------------------------------------------------------------------------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 184,618 $ 324,571 $ 1,614
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization
Continuing operation 935,611 705,097 760,013
Discontinued operation 152,349 112,241 -
Provision for bad debts 3,200 - 198,901
(Increase) decrease in accounts receivable 270,339 (30,629) (464,168)
(Increase) decrease in prepaid expenses (108,050) (47,690) 242,097
Decrease in other assets 146,199 142,400 3,411
Increase (decrease) in accounts payable
and accrued expenses 205,585 (185,165) (243,517)
Decrease in amounts payable
to stockholders (2,760) (2,070) (89,013)
Increase (decrease) in advance rentals billed (8,617) (81,999) 22,628
Increase in deferred income taxes 76,080 88,627 70,094
- -------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,854,554 1,025,383 502,060
- -------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Property additions (1,728,468) (1,574,788) (1,789,036)
Payment for purchase of SDA (490,000) (490,000) -
Other 9,613 9,613 -
- -------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (2,208,855) (2,055,175) (1,789,036)
- -------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable 6,746,518 2,915,577 4,148,978
Payment of notes payable (6,421,550) (1,848,211) (2,698,022)
Cash distributions to stockholders - - (423,453)
Proceeds from sale of common stock - - 72,500
- -------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 324,968 1,067,366 1,100,003
- -------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH (29,333) 37,574 (186,973)
CASH, beginning of period 244,452 244,452 215,119
- -------------------------------------------------------------------------------------------------
CASH, end of period $ 215,119 $ 282,026 $ 28,146
=================================================================================================
</TABLE>
The accompanying accounting policies and notes are an integral part of
these financial statements.
F-6
<PAGE>
KESTREL HOLDINGS, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS (CONTINUED)
================================================================================
- --------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - YEAR ENDED SEPTEMBER 30,
1997:
The Companies paid approximately $817,000 for interest. Cash payments for income
taxes totaled $120,000.
As described in Note 1 to the financial statements, 61.25 percent of the capital
stock of Servicio De Archivos, S.A. was acquired during the year ended September
30, 1997 as follows:
<TABLE>
<S> <C>
Fair value of assets acquired $ 605,879
Cash paid for common stock (490,000)
---------------------------------------------------
Liabilities assumed $ 115,879
===================================================
</TABLE>
The accompanying accounting policies and notes are an integral part of
these financial statements.
F-7
<PAGE>
KESTREL HOLDINGS, INC. AND SUBSIDIARIES
SUMMARY OF ACCOUNTING POLICIES
================================================================================
<TABLE>
<S> <C>
NATURE OF BUSINESS Kestrel Holdings, Inc. (KHI), through its
subsidiaries, provides management, storage, and
servicing of client's business records, magnetic
media, and technical data, as well as providing
consulting services, database development, document
imaging and CD-ROM production.
PRINCIPLES OF The consolidated financial statements include the
CONSOLIDATION accounts of KHI and its wholly-owned subsidiaries,
Alpha Welch Properties, Inc., Kestrel Data Management
and Storage, Inc. (KDM&S), Kestrel Servicio De
Archivos, Inc. (KSAI) and KSAI's 61.25 percent owned
subsidiary, Servicio De Archivos, S.A. (SDA). All
significant intercompany transactions, profits, and
balances have been eliminated.
INTERIM FINANCIAL The consolidated balance sheet as of June 30, 1998
STATEMENTS and the consolidated statements of income for the
nine months ended June 30, 1998 and 1997 are
unaudited and, in the opinion of management of KHI,
include all adjustments (consisting only of normal
recurring adjustments) necessary for fair
presentation of the results for those interim
periods. The results of operations for the nine
months ended June 30, 1998 and 1997 are not
necessarily indicative of the results to be expected
for the full year.
PROPERTY, EQUIPMENT, Assets are stated at cost. Depreciation and
DEPRECIATION, AND amortization are computed using the straight-line
AMORTIZATION method over the estimated useful lives of the assets.
OTHER ASSETS Costs in excess of the fair value of the assets of
acquired businesses totaled $336,029, and are being
amortized over 15 and 27 years using the straight-
line method. Accumulated amortization at September
30, 1997 totaled $103,612.
Costs associated with refinancing debt during 1994
totaled $218,626, and are being amortized over the
life of the associated loans of five and 15 years.
Accumulated amortization at September 30, 1997
totaled $77,304.
ADVANCE RENTALS Advance rentals billed consists primarily of billings
BILLED to customers, net of amounts amortized into income,
at the beginning of their contractual billing
periods; monthly, quarterly, semiannually, or
annually, which are not refundable.
INCOME TAXES Deferred income taxes are provided for temporary
differences arising from differences between
financial statement and income tax bases of assets
and liabilities.
</TABLE>
F-8
<PAGE>
KESTREL HOLDINGS, INC. AND SUBSIDIARIES
SUMMARY OF ACCOUNTING POLICIES (Continued)
================================================================================
<TABLE>
<S> <C>
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.
</TABLE>
F-9
<PAGE>
KESTREL HOLDINGS, INC. AND SUSIDIARIES
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. ACQUISITION
In November 1996, KHI organized Kestrel Servicio De Archivos, Inc. for the
purpose of purchasing an interest in a records storage and management
company in Buenos Aires, Argentina. In December 1996, KSAI acquired a 61.25
percent interest in Servicio De Archivos S.A. The purchase price, $490,000,
exceeded the fair value of the tangible assets acquired by $213,221, which
is recorded as goodwill. The goodwill is included in the consolidated
balance sheets in other assets and is being amortized over the estimated
life of 15 years. The entire net operating loss of SASA from the date of
acquisition of $317,000 has been recorded in the consolidated statements of
income of KHI. None of the loss has been allocated to the 38.75 percent
minority interest owners because they are not being required to fund their
portion of the losses.
2. DISCONTINUED OPERATIONS
In 1996, two of KHI's subsidiaries, Houston Data Management, Inc. and
Houston Data Management, Ltd., were merged together and changed their name
to Kestrel Imaging and Information Management, Inc. (KIIM). KHI transferred
its ownership in KIIM to KDM&S.
Effective September 30, 1997, the decision was made to close down the
operations of KIIM. KIIM was marketing digital image management systems,
scanning services and CD-ROM conversions. Since the operations of KIIM
constituted a separate segment, the net losses incurred by KIIM for the year
are reflected in the financial statements as discontinued operations. The
net assets of KIIM, which are comprised primarily of computer related
equipment, have not been segregated in the financial statements because the
majority of th e assets will be retained and used by KDM&S in other lines of
business.
3. PROPERTY AND EQUIPMENT
Data processing equipment includes capitalized software costs with a net
book value of approximately $491,000 at September 30, 1997. The costs
include labor and overhead incurred in the development of the software.
Amortization of the costs using the straight-line method over five years
totaled approximately $92,350. Because computer software is subject to
continuing technological changes, it is possible that the software could
become obsolete, requiring the costs to be written off or amortized more
rapidly.
F-10
<PAGE>
KESTREL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
================================================================================
3. PROPERTY AND EQUIPMENT (CONTINUED)
Property and equipment at September 30, 1997 consisted of the following:
<TABLE>
<CAPTION>
Estimated
useful
lives
<S> <C> <C>
---------------------------------------------------------------------
Land - $ 1,915,871
Buildings and improvements 8 - 40 yrs. 11,443,907
Data center equipment 5 - 40 yrs. 5,465,990
Office furniture and data
processing equipment 4 - 5 yrs. 3,563,026
---------------------------------------------------------------------
22,388,794
Less accumulated depreciation
and amortization (6,675,097)
---------------------------------------------------------------------
Net property and equipment $15,713,697
=====================================================================
</TABLE>
4. LONG-TERM DEBT
Long-term debt, including capital lease obligations, at September 30, 1997
consisted of the following:
<TABLE>
--------------------------------------------------------------------
<S> <C>
Bank note payable $9,260 monthly, plus
interest at 7.6%; collateralized by
land and buildings; remaining
balance due January, 1999 $ 1,810,584
Mortgage note payable $12,005 monthly,
including interest at 8.25% through
April, 2009; collateralized by land
and buildings 1,072,494
Bank note payable $38,000 quarterly,
plus interest at the bank's margin rate
plus 2.5%; guaranteed by a shareholder
of the Company 646,000
Bank note payable $30,100 monthly,
plus interest at $8.36% through May,
1999; collateralized by equipment 551,632
</TABLE>
F-11
<PAGE>
KESTREL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
================================================================================
4. LONG-TERM DEBT (CONTINUED)
<TABLE>
--------------------------------------------------------------------
<S> <C>
Mortgage note payable in monthly installments
of $16,735, including interest at 8.25%,
due April, 2009; collateralized by land
and building $1,494,991
Bank note payable $4,730 monthly,
plus interest at 8.75% through
January, 1999, when the remaining
balance is due; collateralized by
land and buildings 936,593
Revolving line of credit; interest payable
monthly at prime plus .5%, matures
January, 1999; collateralized by
accounts receivable 175,000
Bank note payable $16,667 monthly,
plus interest at 8.65% through January,
2002; collateralized by equipment 866,664
Bank note payable in 48 equal monthly
installments beginning November, 1997,
with interest at prime plus .5%;
collateralized by equipment 1,073,986
Bank note payable of $11,250 monthly,
plus interest at prime plus .5%,
remaining balance due October, 2000;
collateralized by equipment 416,250
Capitalized lease obligations (see Note 6) 540,608
--------------------------------------------------------------------
9,584,802
Less current maturates (1,564,712)
--------------------------------------------------------------------
$ 8,020,090
====================================================================
</TABLE>
Advances under the revolving line of credit are limited to a defined
percentage of eligible receivables. The line of credit had a maximum
commitment of $1,200,000 at September 30, 1997.
F-12
<PAGE>
KESTREL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
================================================================================
4. LONG-TERM DEBT (CONTINUED)
Loan agreements of KDM&S contain covenants which provide for, among other
things, the maintenance of certain financial ratios and limitations on the
amounts of dividends and distributions made by KDM&S.
The required annual principal payments for the next five years and
thereafter are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
ENDING IN
------------------------------------------
<S> <C>
1998 $1,564,712
1999 4,028,903
2000 1,095,424
2001 829,332
2002 319,060
Thereafter 1,747,371
------------------------------------------
$9,584,802
==========================================
</TABLE>
5. RELATED PARTIES
Transactions with related parties are comprised of a long-term payable for
accrued expenses, which is not expected to be repaid during the next fiscal
year.
6. COMMITMENTS AND CONTINGENCIES
KDM&S leases data center space, automobiles, and equipment under
noncancelable operating and capital leases expiring 1998 through 2006, and
other data center space under cancelable or monthly rental agreements. Rent
expense for all operating leases totaled approximately $1,270,000 during the
year ended September 30, 1997. Capital leases are included with long-term
debt and amortization of capitalized costs are included in depreciation.
The following is an analysis of the leased property under capital leases by
major class:
<TABLE>
<S> <C>
Data center equipment $ 626,677
Office equipment 203,023
------------------------------------------------------
829,700
Less accumulated amortization (135,449)
------------------------------------------------------
$ 694,251
======================================================
</TABLE>
F-13
<PAGE>
KESTREL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
================================================================================
6. COMMITMENTS AND CONTINGENCIES (CONTINUED)
The future minimum rental payments required under the leases for the next
five years are as follows:
<TABLE>
<CAPTION>
Fiscal year Capital Operating
ending in leases leases
<S> <C> <C>
============================================================================
1998 $ 203,256 $1,310,000
1999 203,256 1,330,000
2000 186,136 1,095,000
2001 20,946 1,040,000
2002 - 1,000,000
------------------------------------------------------------
Total minimum lease payments 613,594
Less amount representing interest (72,986)
------------------------------------------------------------
Present value of minimum lease
payments 540,608
Less current maturates (164,290)
------------------------------------------------------------
Long-term portion $ 376,318
============================================================
</TABLE>
Certain data center leases include periods of free or reduced rent payments
for a period of time and increasing rent payments over the remainder of the
leases. The Company expenses the total rental obligations using the
straight-line method over the lease term. At September 30, 1997, the amount
of rent, which had been expensed but not yet paid, totaled $659,925. The
future rental payments for operating leases for the year ending September
30, 1998 of $1,310,000 reflects the actual payments to be made during that
fiscal year. The actual expense, which will be recorded in the financial
statements, will be approximately $53,000 higher.
The Companies located in the United States maintain a 401(k) retirement plan
whereby eligible employees may contribute up to 15 percent of their salary.
The Companies contribute 50 cents for every dollar contributed by the
employees up to three percent of the employees' gross pay. The contributions
to the Plan by the Companies totaled approximately $35,000 for the year
ended September 30, 1997.
7. INCOME TAXES
The financial statements include a deferred income tax liability for the
differences between financial and tax bases of net assets. Deferred taxes
result primarily from using a faster rate of depreciation for income tax
purposes than is used for financial statement purposes.
F-14
<PAGE>
KESTREL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
================================================================================
7. INCOME TAXES (CONTINUED)
Income tax expense for the year ended September 30, 1997, is higher than the
statutory tax rate because a valuation allowance has been recorded for the
tax benefit, approximately $95,000, from the loss of the Company's Argentina
subsidiary, KSAI. The loss carryforward of KSAI, approximately $317,000,
expires in 2002.
A reconciliation of the income tax expense at the federal statutory rate to
income tax expense at the effective rate for the year ended September 30,
1997 is as follows:
<TABLE>
<S> <C>
Income tax expense at the federal statutory rate (34%) $268,728
Adjustment of valuation allowance 95,000
Other 3,983
-------------------------------------------------------------------
Income tax expense at the effective rate (46.5%) $367,711
===================================================================
</TABLE>
8. DISTRIBUTION OF SUBSIDIARY (UNAUDITED)
Effective in May, 1998, KHI distributed the stock of KSAI to the
stockholders of KHI. KHI recorded a dividend of $2,238,045, representing its
basis in KSAI on the date of distribution.
F-15
<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 Issuer, Pierce Leahy Corp. or any other person. This
Prospectus does not constitute an offer to sell or the solicitation of an offer
to buy to any person in any jurisdiction in which such offer or solicitation is
not authorized or in which the person making such offer or solicitation is not
qualified to do so or to any person to whom it is unlawful to make such offer or
solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstances create an implication that there has
been no change in the affairs of the Issuer or Pierce Leahy Corp. since the date
as of which information is given in this Prospectus.
TABLE OF CONTENTS
Page
----
Available Information.......................................................
Incorporation of Certain Documents by Reference.............................
Prospectus Summary..........................................................
Risk Factors................................................................
The Exchange Offer..........................................................
The Company.................................................................
The Issuer..................................................................
Use of Proceeds.............................................................
Capitalization..............................................................
Pro Forma Financial Date of Pierce Leahy Corp...............................
Selected Historical and Pro Forma...........................................
Consolidated Statement of Operations, Other Data and........................
Balance Sheets of Pierce Leahy Corp.........................................
Pro Forma Financial Data....................................................
Management's Discussion and Analysis of
Financial Condition and Results of Operations...............................
Business....................................................................
Management..................................................................
Certain Transactions........................................................
Principal Shareholders of Pierce Leahy......................................
Description of Certain Indebtedness.........................................
Description of Credit Facility..............................................
Description of the Notes....................................................
Description of Capital Stock of Pierce Leahy................................
Certain United States Federal Income Tax Considerations.....................
Canadian Federal Income Tax Considerations..................................
Plan of Distribution........................................................
Legal Matters...............................................................
Index to Financial Statements...............................................
---------
Until ____________ __, 1998, (90 days after the date of this Prospectus), all
dealers effecting transactions in the Exchange Notes, 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
selling Exchange Notes received in exchange for Original Notes held for their
own account. See "Plan of Distribution."
[LOGO]
PIERCE LEAHY COMMAND COMPANY
Offer to Exchange its 8-1/8% Senior Notes due 2008 which have been registered
under the Securities Act for any and all outstanding 8-1/8% Senior Subordinated
Notes due 2008
-----------------
PROSPECTUS
-----------------
__________, 1998
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20.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
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.
<PAGE>
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.
Item 21. Exhibits and Financial Statement Schedules.
Exhibit
No. Exhibit
- ----------------
3.1(a) Memorandum of Association of Pierce Leahy Command Company (the
"Issuer")
3.1(b) Certificate of Incorporation of Pierce Leahy (incorporated by
reference to Exhibit 3.1 to Pierce Leahy's Registration Statement on
Form S-1, File No. 333-23121)
3.1(c) Certificate of Incorporation of Monarch Box, Inc. ("Monarch")
3.1(d) Certificate of Incorporation of Advanced Box, Inc. ("Advanced")
3.1(e) Memorandum of Association of Archivex Limited ("Archivex")
3.2(a) Articles of Association of the Issuer
3.2(b) Amended and Restated By-laws of Pierce Leahy (incorporated by
reference to Exhibit 3.2 to Pierce Leahy's Registration Statement on
Form S-1, File No. 333-23121)
3.2(c) By-Laws of Monarch
3.2(d) By-Laws of Advanced
3.2(e) Articles of Association of Archivex
4.1(a) Indenture dated as of July 15, 1996 by and between Pierce Leahy and
The United States Trust Company of New York, as trustee (incorporated
by reference to Exhibit 4.4 to Pierce Leahy's Registration Statement
on Form S-1, File No. 333-23121)
4.1(b) Indenture, dated as of July 7, 1997, by and between Pierce Leahy and
The Bank of New York ("Bank"), as trustee (incorporated by reference
to Exhibit 10.5 to Pierce Leahy's Annual Report on Form 10-K for the
year ended December 31, 1997)
4.1(c) Indenture, dated as of April 7, 1998, by and among the Issuer, Pierce
Leahy and the Bank, as trustee
4.2 Forms of Original Notes for $135,000,000 principal amount of 8 1/8%
Senior Notes of Issuer due 2008 ("1998 Notes")
4.3 Forms of Exchange Notes for the 1998 Notes (included in Exhibit
4.1(c))
4.4 Registration Agreement, dated as of April 7, 1998, by and among the
Issuer, Pierce Leahy, Salomon Brothers Inc, CIBC Oppenheimer Corp.
and PaineWebber Incorporated (the "Initial Purchasers")
*5 Opinion of Cozen and O'Connor
9 Amended and Restated Voting Trust Agreement by and among certain
shareholders of Pierce Leahy
<PAGE>
(incorporated by reference to Exhibit 9 to Pierce Leahy's Annual
Report on Form 10-K for the year ended December 31, 1997)
10(a) Stock Purchase Agreement, dated as of February 27, 1997, between
Pierce Leahy, Records Management Services, Inc. and certain
shareholders of Records Management Services, Inc. (incorporated by
reference to Exhibit 10.7 to Pierce Leahy's Annual Report on Form 10-K
for the year ended December 31, 1996)
10(b) Purchase Agreement (the "Purchase Agreement"), dated as of April 2,
1998 by and among the Issuer, Pierce Leahy and the Initial Purchasers
10(c) Domestic Guarantee of Monarch
10(d) Domestic Guarantee of Advanced
10(e) Canadian Guarantee of Archivex
10(f) Non-Qualified Stock Option Plan of Pierce Leahy (incorporated by
reference to Exhibit 10.3 to Pierce Leahy's Registration Statement on
Form S-1, File No. 333-23121)
10(g) 1997 Stock Option Plan of Pierce Leahy (incorporated by reference to
Exhibit 10._ to Pierce Leahy's Registration Statement on Form S-1,
File No. 333-23121)
10(h)(i) Credit Agreement dated as of August 12, 1997, as amended by Amendment
No. 1, by and among the Issuer, Pierce Leahy, the several lenders from
time to time parties thereto, Canadian Imperial Bank of Commerce, as
Canadian Administrative Agent, and Canadian Imperial Bank of Commerce,
New York Agency, as U.S. administrative agent, together with certain
collateral documents attached thereto, including the form of US$ Note,
the form of Canadian$ Note, and the form of the U.S. Global Guarantee
and Security Agreement made by Pierce Leahy, certain of its affiliates
and subsidiaries and its shareholders in favor of the U.S.
Administrative Agent (the "Credit Agreement") (incorporated by
reference to Exhibit 10.3 to Pierce Leahy's Annual Report on Form 10-K
for the year ended December 31, 1997)
10(h)(ii)Amendments Nos. 2 and 3 to the Credit Agreement
*10(h)(iii)Amendment No. 4 to the Credit Agreement
10(i) Tax Indemnification Agreement by and among Pierce Leahy and certain of
its shareholders (incorporated by reference to Exhibit 10.8 to Pierce
Leahy's Registration Statement on Form S-1, File No. 333-23121)
10(j) Guarantee of Advanced of the $200,000.00 principal amount of 11 1/8%
Senior Subordinated Notes of Pierce Leahy due 2006 ("1996 Notes")
10(k) Guarantee of Advanced of the $120,000.00 principal amount of 9 1/8% of
Senior Subordinated Notes of Pierce Leahy due 2007 ("1997 Notes")
10(l) Guarantee of Monarch of the 1996 Notes
10(m) Guarantee of Monarch of the 1997 Notes
12 Statement re: Computation of Ratios (incorporated by reference to
Exhibit 12 to Pierce Leahy's Annnual Report on Form 10-K for the year
ended December 31, 1997)
21 Subsidiaries of Pierce Leahy (incorporated by reference to Exhibit 21
to Pierce Leahy's Annnual Report on Form 10-K for the year ended
December 31, 1997)
*23(a) Consent of Arthur Andersen LLP
*23(b) Consent of Friedman & Friedman, Chartered Accountants
*23(c) Consent of James N. Howard and Associates, P.C.
*23(d) Consent of Cozen and O'Connor (included in Exhibit 5)
24 Power of Attorney (included on signature page)
25 Statement of eligibility of Trustee, The Bank of New York, on Form T-1
*99.1 Form of Letter of Transmittal
*99.2 Form of Notice of Guaranteed Delivery
____________
* Filed with this amendment.
<PAGE>
(b) FINANCIAL STATEMENT SCHEDULES
Schedule of Valuation and Qualifying Accounts
All other financial statement schedules are omitted because they either are
not applicable or the required information is included in the financial
statements or notes thereto appearing elsewhere in this Registration Statement.
(c) NOT APPLICABLE.
Item 22. Undertakings.
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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 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 Act and will be governed by the final adjudication of
such issue.
(b) The undersigned Registrant hereby undertakes to file an application for
the purposes of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
(c) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(d) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(e) The undersigned Registrant hereby undertakes; (1) to file, during any
period in which offers or sales are being made, a post-effective amendment to
this Registration Statement; (i) to include any Prospectus required by Section
10(a)(3) of the Securities Act of 1933; (ii) to reflect in the Prospectus any
facts or events arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which individually or in
the aggregate, represent a fundamental change in the information set forth in
the Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of the
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of Prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than 20% change in the maximum aggregate offering price set forth in the
"calculation of registration fee" table in the effective Registration Statement;
and (iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement; (2) that, for
the purpose of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof; and
(3) to remove from registration by means of a
<PAGE>
post-effective amendment any of the securities being offered which remain unsold
at the termination of the offering.
(f) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) of 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO
BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN KING
OF PRUSSIA, PENNSYLVANIA, ON SEPTEMBER 5, 1998:
PIERCE LEAHY CORP. ("Pierce Leahy")
BY: /s/ J. Peter Pierce
-------------------------------------------
J. Peter Pierce as President of Pierce Leahy
PIERCE LEAHY COMMAND COMPANY ("Command")
ARCHIVEX LIMITED ("Archivex")
ADVANCED BOX, INC. ("Advanced")
MONARCH BOX, INC. ("Monarch")
BY: /s/ Douglas B. Huntley
-----------------------------------------------
Douglas B. Huntley as Vice President of Command
Vice President of Archivex
Treasurer of Advanced
Treasurer of Monarch
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Joseph A. Samson constitutes and
appoints J. Peter Pierce and Douglas B. Huntley, and each of them, his true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
thereto, and other documentation in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitute or substitutes, may
lawfully do or cause to be done by virtue thereof.
/s/ Joseph A. Samson Principal Financial and September 5, 1998
- ------------------------------
Joseph A. Samson Accounting Officer of
Command
<PAGE>
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>
* Director of Pierce Leahy September 5,
- ------------------------------------------------- 1998
LEO W. PIERCE, SR.
Director and September 5,
/s/ J. Peter Pierce Principal Executive 1998
- -------------------------------------------------
J. PETER PIERCE Officer of Pierce Leahy,
Director of Command
and Archivex and
Principal Executive
Officer of Archivex
/s/ Douglas B. Huntley Director and Principal September 5,
- -------------------------------------------------
DOUGLAS B. HUNTLEY Financial and Accounting 1998
Officer of Pierce Leahy;
Director of Command,
Principal Financial and
Accounting Officer of
Advanced and Monarch
* Principal Executive September 5,
- -------------------------------------------------
RICHARD S. INGRAM Officer of Command and 1998
Director and Principal
Financial and Accounting
Officer of Archivex
* Director of Pierce Leahy September 5,
- -------------------------------------------------
THOMAS A. DECKER 1998
* Principal Executive September 5,
- -------------------------------------------------
LISA G. GOLDSCHMIDT Officer of Advanced and 1998
Monarch
* Director of Pierce Leahy September 5,
- -------------------------------------------------
J. ANTHONY HAYDEN 1998
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
* Director of Pierce Leahy September 5,
- -------------------------------------------------
ALAN B. CAMPELL 1998
* Director of Pierce Leahy September 5,
- -------------------------------------------------
DELBERT S. CONNER 1998
* Director of Advanced and September 5,
- -------------------------------------------------
JOSEPH P. LINAUGH Monarch 1998
* Director of Advanced and September 5,
- -------------------------------------------------
THOMAS GROGAN Monarch 1998
Director of Advanced and
- -------------------------------------------------
VICTORIA GARRETT Monarch
</TABLE>
*By: /s/ J. Peter Pierce
-------------------------------------------
J. Peter Pierce, As Attorney in Fact
<PAGE>
Exhibit 5
[LETTERHEAD OF COZEN AND O'CONNOR]
September 5, 1998
Pierce Leahy Corp.
631 Park Avenue
King of Prussia, PA 19406
Re: Registration Statement on Form S-4
File No. 333-58569
----------------------------------
Ladies and Gentlemen:
As counsel to Pierce Leahy Corp., a Pennsylvania corporation ("Pierce
Leahy"), and special counsel to Pierce Leahy Command Company, a Nova Scotia
unlimited liability company (the "Issuer"), we have assisted in preparation of
the Registration Statement on Form S-4, File No. 333-58569 (the "Registration
Statement"), with respect to the registration under the Securities Act of 1933,
as amended, of $135,000,000 principal amount of the Issuer's 8-1/8% Senior Notes
due 2008 (the "Notes") to be issued under an Indenture dated as of April 7, 1998
(the "Indenture") among the Issuer, Pierce Leahy and the Bank of New York, as
trustee (the "Trustee"). The Notes are guaranteed (collectively, the
"Guarantees") by Pierce Leahy and the other subsidiaries of Pierce Leahy set
forth in the Registration Statement as guarantors (collectively, the
"Guarantors").
In connection therewith, we have examined the originals or copies,
certified or otherwise identified to our satisfaction, of the charter documents
of the Issuer, Pierce Leahy and the other Guarantors, minutes and resolutions of
their respective Boards of Directors and shareholders, the Indenture and such
other documents and corporate records relating to the Issuer, Pierce Leahy and
the other Guarantors and the issuance of the Notes and the Guarantees covered by
the Registration Statement as we have deemed necessary or appropriate for
purposes of rendering this opinion.
In our examinations of documents, instruments and other papers, we
have assumed the genuineness of all signatures on original and certified
documents and the conformity to original and certified documents of all copies
submitted to us as conformed, photostatic and other copies. As to matters of
fact which have not been independently established, we have relied upon
representations of officers of Pierce Leahy and the Issuer.
Based upon the foregoing examination, information and assumptions, it
is our opinion that upon execution of the Notes by the Issuer and the Guarantees
by the respective Guarantors, authentication of the Notes by the Trustee and
issuance and delivery of the Notes and the Guarantees in the manner provided in
the Indenture and the Registration Statement, the Notes and the Guarantees will
be legally issued, valid and binding obligations of the Issuer and the
respective Guarantors to the extent set forth
<PAGE>
Pierce Leahy Corp.
September 5, 1998
Page 2
__________________________
in the Notes, the Indenture and the respective Guarantees, as applicable,
subject in each case to all applicable bankruptcy, insolvency, fraudulent
conveyance, moratorium and other laws affecting the rights of creditors
generally and by equitable principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
We hereby consent to the reference to our firm in the Registration
Statement under the Prospectus caption "Legal Matters" and to the inclusion of
this opinion as Exhibit 5 to the Registration Statement.
Very truly yours,
COZEN AND O'CONNOR
<PAGE>
EXHIBIT 10(h)(iii)
FOURTH AMENDMENT AND CONSENT, dated as of June 12, 1998 (this "Amendment
---------
and Consent"), to the Amended and Restated Credit Agreement, dated as of August
- -----------
12, 1997 (as the same may be amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"), among PIERCE LEAHY CORP., a Pennsylvania
----------------
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 modified 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. Amendment to Subsection 8.9 of the Credit Agreement. Subsection 8.9
---------------------------------------------------
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:
Period Ratio
- ------------------------------------- ------------
From and including the Closing Date 1.50 to 1.00
through December 31, 1997
From and including January 1, 1998 1.75 to 1.00
through June 11, 1998
From and including June 12, 1998 1.50 to 1.00
through March 31, 1999
From and including April 1, 1999 2.00 to 1.00
through December 31, 2000
<PAGE>
2
Period Ratio
- ------------------------------------- ------------
From and including January 1, 2001 2.50 to 1.00
and thereafter
- ---------------------------------------------------
2. 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 8.10(a) of the Credit paragraph and
substituting in lieu thereof the following table:
Period Ratio
- ------------------------------------- ------------
From and including the Closing Date 6.00 to 1.00
through June 11, 1998
From and including June 12, 1998 6.50 to 1.00
through March 31, 1999
From and including April 1, 1999 to 6.00 to 1.00
December 31, 2000
From and including January 1, 2001 5.50 to 1.00
through December 31, 2001
From and including January 1, 2002 4.50 to 1.00
through December 31, 2002
From and including January 1, 2003 3.50 to 1.00
and thereafter
- ---------------------------------------------------
III. Consents.
---------
1. Consent to Acquisition of Kestrel Holdings, Inc. The Required
------------------------------------------------
Lenders hereby consent, in accordance with paragraph (d) of the proviso
contained in the definition of "Permitted Acquisition" in subsection 1.1 of the
Credit Agreement, to the acquisition (the "Kestrel Acquisition") of all of the
outstanding capital stock of Kestrel Holdings, Inc., a record storage company
with operations in Houston, Texas and Dallas, Texas, pursuant to the Stock
Purchase Agreement dated as of May 19, 1998 between the Company and the Sellers
named therein, a copy of which has been delivered to the US Administrative
Agent, and such Lenders further agree that the Kestrel Acquisition, as so
described, constitutes a "Permitted Acquisition" under the Credit Agreement.
2. Consents to Re-Set 1998 Acquisition Basket. The Required Lenders
------------------------------------------
hereby consent that, in connection with all calculations of the $85,000,000
limitation contained in paragraph (e)(y) of the proviso contained in the
definition of "Permitted Acquisition" in subsection 1.1 of the Credit Agreement
in connection with acquisitions proposed to be made during the period from the
date hereof to and including December 31, 1998, (a) the Kestrel Acquisition
shall be disregarded and (b) the Company shall be permitted to use an additional
<PAGE>
3
amount of proceeds of Acquisition Loans made during such period, in an aggregate
amount not to exceed US$10,000,000 above the amount otherwise permitted, to fund
additional Permitted Acquisitions during such period.
IV. Conditions to Effectiveness. This Amendment and Consent shall
---------------------------
become effective on the date (the "Amendment and Consent Effective Date") on
------------------------------------
which the Borrowers, each of the other Loan Parties, the US Administrative
Agent, the Canadian Administrative Agent and each of the Required Lenders shall
have executed and delivered to the US Administrative Agent this Amendment and
Consent.
V. General.
-------
1. Representation and Warranties. To induce the Administrative Agents
-----------------------------
and the Lenders to enter into this Amendment and Consent, the Company hereby
represents and warrants to the Administrative Agents 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
<PAGE>
4
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 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
(other than any representations and warranties made as of a specific date,
which continue to be true and correct in all material respects as of such
date).
2. Payment of Expenses. The Company agrees to pay or reimburse the
-------------------
Administrative Agents for all of their 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 and the Canadian Administrative Agent.
3. No Other Amendment 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>
5
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:/s/ Joseph P. Linaugh
-----------------------
Title: Vice President
PIERCE LEAHY COMMAND COMPANY
By:/s/ Joseph P. Linaugh
-----------------------
Title: Vice President
CANADIAN IMPERIAL BANK OF COMMERCE,
NEW YORK AGENCY,
as US Administrative Agent and as a US$ Lender
By:/s/ Tefta Ghilaga
-------------------
Title: Executive Director
CIBC Oppenheimer Corp., AS AGENT
CANADIAN IMPERIAL BANK OF COMMERCE
as Canadian Administrative Agent and
as a C$ Lender
By:/s/ Tefta Ghilaga
-------------------
Title: Executive Director
CIBC Oppenheimer Corp., AS AGENT
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION
as a Lender
By:/s/ Terrence A. Walsh
-----------------------
Title: Vice President
<PAGE>
6
BANK OF AMERICA CANADA
as a Lender
By:/s/ Richard J. Hall
---------------------
Title: Vice President
FIRST UNION BANK, N.A.
(successor by merger to Corestates Bank, N.A.)
as a Lender
By:/s/ Karl F Schultz
--------------------
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
as a Lender
By:__
Title:
FLEET NATIONAL BANK
as Documentation Agent and as Lender
By:/s/ James C. Silva
---------------------
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF MARYLAND
as a Lender
By:/s/ John C. Acker
-------------------
Title: Vice President
HELLER FINANCIAL
as a Lender
By:/s/ Patrick Hayes
-------------------
Title: Vice President
<PAGE>
7
ROYAL BANK OF CANADA
as a Lender
By:
---------------------------
Title:
STATE STREET BANK AND TRUST COMPANY
as a Lender
By:/s/ Hamilton H. Wood, Jr.
---------------------------
Title: Vice President
THE BANK OF NEW YORK
as a Lender
By:/s/ Peter H. Abdill
---------------------
Title: Vice President
<PAGE>
8
ACKNOWLEDGEMENT AND CONSENT
Each of the undersigned, as a Guarantor under that certain Amended and
Restated US Global Guarantee and Security Agreement, dated as of August 12,
1997, made by each of such Guarantors in favor of the US Administrative Agent,
hereby acknowledges and consents to the execution and delivery of this Amendment
and Consent to which this Acknowledgement and Consent is attached and hereby
reaffirms its obligations as a Guarantor under said US Global Guarantee and
Security Agreement.
PIERCE LEAHY CORP.
PIERCE MARYLAND, LLC
By:/s/ Joseph P. Linaugh
---------------------
Title: Vice President
PLC COMMAND I, INC.
PLC COMMAND II, INC.
By:/s/ Joseph P. Linaugh
---------------------
Title: Assistant Secretary
PLC COMMAND I, L.P.
By PLC Command I, Inc., as
its general partner
By:/s/ Joseph P. Linaugh
---------------------
Title: Assistant Secretary
PLC COMMAND II, L.P.
By PLC Command II, Inc., as
its general partner
By:/s/ Joseph P. Linaugh
---------------------
Title: Assistant Secretary
MONARCH BOX, INC.
ADVANCED BOX, INC.
By:/s/ Lisa G. Goldschmidt
-----------------------
Title: President
<PAGE>
9
ACKNOWLEDGEMENT AND CONSENT
The undersigned, as Guarantor under that certain Guarantee, dated as
of April 7, 1998, and as Assignor under that certain Security Agreement, dated
as of April 7, 1998, each made by the undersigned in favor of the Canadian
Administrative Agent and the C$ Lenders, hereby acknowledges and consents to the
execution and delivery of this Amendment and Consent to which this
Acknowledgement and Consent is attached and hereby reaffirms its obligations as
Guarantor under said Guarantee and as Assignor under said Security Agreement.
ARCHIVEX LIMITED
By: /s/ Joseph P. Linaugh
---------------------
Title: Vice President
<PAGE>
10
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges and consents to the execution and
delivery of this Amendment and Consent to which this Acknowledgement and Consent
is attached and hereby reaffirms its obligations under the Canadian Security
Documents, made in favor of the Canadian Administrative Agent and the C$
Lenders, to which it is a party.
PIERCE LEAHY COMMAND COMPANY
By: /s/ Joseph P. Linaugh
---------------------
Title: Vice President
<PAGE>
EXHIBIT 12
PIERCE LEAHY CORP.
RATIO OF EARNINGS TO FIXED CHARGES CALCULATION
REGISTRATION STATEMENT
<TABLE>
<CAPTION>
Year ended December 31, Six months ended June 30,
------------------------------------------------------------ -------------------------------
Pro forma Pro forma
1993 1994 1995 1996 1997 1997 1997 1998 1998
-------- -------- -------- ------- ------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EARNINGS:
Income (loss) before income
taxes and extraordinary items $ 2,972 $ 1,200 $ 5,347 $ 2,523 $(1,737) $(12,368) $ (39) $(4,529) $(6,121)
Plus: Fixed Charges 9,850 11,303 14,321 22,894 36,179 49,504 18,395 23,638 26,248
-------- ------- -------- -------- -------- --------- -------- -------- --------
Adjusted Earnings $12,822 $12,503 $19,668 $25,417 $34,442 $ 37,136 $18,356 $19,109 $20,127
-------- ------- -------- -------- -------- --------- -------- -------- --------
FIXED CHARGES:
Interest Expense $ 6,160 $ 7,216 $ 9,622 $17,225 $29,262 $ 42,587 $14,855 $18,683 $21,293
Rent Expense 3,690 4,087 4,699 5,669 6,917 6,917 3,540 4,955 4,955
-------- ------- -------- -------- -------- --------- -------- -------- --------
Total $ 9,850 $11,303 $14,321 $22,894 $36,179 $ 49,504 $18,395 $23,638 $26,248
-------- ------- -------- -------- -------- --------- -------- -------- --------
EARNINGS TO FIXED CHARGE RATIO 1.30x 1.11x 1.37x 1.11x(1)(1,737) (1)(12,368) (1)(39) (1)(4,529) (1)(6,121)
======== ======= ======== ======== ======== ======== ======= ======== ========
</TABLE>
- -------------------------------------
(1) Earnings were inadequate to cover fixed changes by the amount indicated.
<PAGE>
Exhibit 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated February 27, 1998
included in Pierce Leahy Corp.'s Form 10-K for the year ended December 31, 1997
and to all references to our Firm included in this registration statement.
Arthur Andersen LLP
Philadelphia, Pa.,
September 4, 1998
<PAGE>
Exhibit 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
We consent to the incorporation by reference in this registration statement
(Form S-4) of Pierce Leahy Corp. of our report dated January 13, 1998 (except as
a note 11 which is as of February 4, 1998) to the shareholders of Archivex Inc.
included in Pierce Leahy Corp.'s Form 8-K dated July 2, 1998 and to all
references to our Firm included in this registration statement.
Friedman & Friedman
Chartered Accountants
Montreal, Quebec
September 4, 1998
<PAGE>
Exhibit 23(c)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our report
dated December 5, 1997 and to all references to our Firm included in this
registration statement.
James N. Howard and Associates, P.C.
Dallas, Texas
September 4, 1998
<PAGE>
Exhibit 99.1
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
8 1/8% SENIOR NOTES DUE 2008
OF
PIERCE LEAHY COMMAND COMPANY
PURSUANT TO THE PROSPECTUS DATED ________, 1998
============================================================================
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON ____________, 1998 (THE "EXPIRATION DATE"), UNLESS THE
EXCHANGE OFFER IS EXTENDED, IN WHICH CASE THE TERM "EXPIRATION DATE"
SHALL MEAN THE LATEST DATE AND TIME TO WHICH THE EXCHANGE OFFER IS
EXTENDED. TENDERS MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW
YORK CITY TIME, ON THE EXPIRATION DATE.
============================================================================
The Exchange Agent is:
THE BANK OF NEW YORK
By Facsimile: By Hand/Overnight Courier:
(212) 815-6339 The Bank of New York
(For Eligible Institutions Only) 101 Barclay Street
Corporate Trust Services Window,
Confirm by Telephone or for Information: Ground Level
(212) 815-2963 New York, NY 10286
Attention: Reorganization Section, 7E
Santino Ginocchietti
By Registered or Certified Mail:
The Bank of New York
101 Barclay Street, 7E
New York, NY 10286
Attention: Reorganization Section, 7E
Santino Ginocchietti
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
The undersigned acknowledges receipt of the Prospectus dated ____________,
1998 (the "Prospectus"), of Pierce Leahy Command Company, a Nova Scotia
unlimited liability company (the "Company"), and this Letter of Transmittal (the
"Letter of Transmittal"), which together with the Prospectus constitutes the
Company's offer (the "Exchange Offer") to exchange $1,000 principal amount of
its 8 1/8% Senior Notes due 2008 (the "Exchange Notes") for each $1,000
principal amount of its outstanding 8 1/8% Senior Notes due 2008 (the "Original
Notes"). Like the Original Notes, the Exchange Notes will be guaranteed on an
unsecured senior subordinated basis by Pierce Leahy Corp. and its two U.S.
subsidiaries, Advanced Box, Inc. and Monarch Box, Inc., and guaranteed on a
senior unsecured basis by Archivex Limited. Recipients of the Prospectus should
read the requirements described in such Prospectus with respect to eligibility
to participate in the Exchange Offer. Capitalized terms used but not defined
herein have the meaning given to them in the Prospectus.
The undersigned hereby tenders the Original Notes described in the box
entitled "Description of Original Notes" on page 3 pursuant to the terms and
conditions described in the Prospectus and this Letter of Transmittal. The
undersigned is the registered owner of all the Original Notes and the
undersigned represents that it has received from each beneficial owner of
Original Notes ("Beneficial Owners") a duly completed and executed form of
"Instructions" included as part of this Letter of Transmittal, instructing the
undersigned to take the action described in this Letter of Transmittal.
This Letter of Transmittal is to be used by a holder of Original Notes (i)
if certificates representing Original Notes are to be forwarded herewith, (ii)
if delivery of Original Notes is to be made by book-entry transfer to the
Exchange Agent's account at The Depository Trust Company ("DTC"), pursuant to
the procedures set forth in the section of the Prospectus entitled "The Exchange
Offer--Procedures for Tendering," or (iii) if a tender is made pursuant to the
guaranteed delivery procedures in the section of the Prospectus entitled "The
Exchange Offer--Guaranteed Delivery Procedures."
<PAGE>
The undersigned hereby represents and warrants that the information
received from the beneficial owners is accurately reflected in the boxes
entitled "Beneficial Owner(s)--Purchaser Status" and "Beneficial Owner(s)--
Residence."
Any beneficial owner whose Original Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder of Original Notes promptly and
instruct such registered holder of Original Notes to tender on behalf of the
beneficial owner. If such beneficial owner wishes to tender on its own behalf,
such beneficial owner must, prior to completing and executing this Letter of
Transmittal and delivering its Original Notes, either make appropriate
arrangements to register ownership of the Original Notes in such beneficial
owner's name or obtain a properly completed assignment from the registered
holder of Original Notes. The transfer of record ownership may take considerable
time.
In order to properly complete this Letter of Transmittal, a holder of
Original Notes must (i) complete Box 1 entitled "Description of Original Notes,"
(ii) complete Boxes 4 and 5 entitled "Beneficial Owner(s)--Residence" and
"Beneficial Owner(s)--Purchaser Status," (iii) if appropriate, check and
complete the boxes relating to book-entry transfer, guaranteed delivery, Special
Issuance Instructions and Special Delivery Instructions, (iv) sign the Letter of
Transmittal by completing Box 6 entitled "Sign Here" and (v) complete the
Substitute Form W-9. Each holder of Original Notes should carefully read the
detailed instructions below prior to completing the Letter of Transmittal.
Holders of Original Notes who desire to tender their Original Notes for
exchange and (i) whose Original Notes are not immediately available, (ii) who
cannot deliver their Original Notes and all other documents required hereby to
the Exchange Agent on or prior to the Expiration Date or (iii) who are unable to
complete the procedure for book-entry transfer on a timely basis, must tender
the Original Notes pursuant to the guaranteed delivery procedures set forth in
the section of the Prospectus entitled "The Exchange Offer--Guaranteed Delivery
Procedures." See Instruction 2.
Holders of Original Notes who wish to tender their Original Notes for
exchange must complete columns (1) through (3) in Box 1 on page 3 entitled
"Description of Original Notes," complete the applicable boxes below Box 1 and
sign Box 6 on page 7 entitled "Sign Here." If only columns (1) through (3) of
Box 1 are completed, such holder of Original Notes will have tendered for
exchange all Original Notes listed in column (3) of Box 1. If the holder of
Original Notes wishes to tender for exchange less than all of such Original
Notes, column (4) of Box 1 must be completed in full. In such case, please refer
to Instruction 5.
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================
BOX 1 DESCRIPTION OF ORIGINAL NOTES
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(1) (2) (3) (4)
Original Note Aggregate Principal
Name(s) and Address(es) of Registered Holder(s) of Number(s) Principal Amount
Original Note(s), exactly as name(s) appear(s) on (Attach signed Amount Tendered
Original Note Certificate(s) Additional List if Represented by For
(Please fill in, if blank) necessary) Certificate(s)1 Exchange (must
be in integral
multiples of
$1,000)2
- --------------------------------------------------------------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
==============================================================================================================
</TABLE>
1 Unless otherwise indicated in the column "Principal Amount Tendered For
Exchange," any tendering Holder of Original Notes will be deemed to have
tendered the entire aggregate principal amount represented by the column
labelled "Aggregate Principal Amount Represented by Certificate(s)."
2 The minimum permitted tender is $1,000 in principal amount of Original
Notes, and all tenders must be integral multiples of $1,000 principal
amount of Original Notes.
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND
COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS (AS HEREINAFTER
DEFINED) ONLY):
Name of Tendering Institution: __________________________________________
Account Number: __________________________________________
Transaction Code Number: __________________________________________
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING
(FOR USE BY ELIGIBLE INSTITUTIONS ONLY):
Name of Registered Holder of Original Note(s): _____________________
Date of Execution of Notice of Guaranteed Delivery: _____________________
Window Ticket Number (if available): _____________________
Name of Institution which Guaranteed Deliver: _____________________
Account Number (if delivered by book-entry transfer): _____________________
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: _________________________________________________________
Address: _________________________________________________________
_________________________________________________________
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
BOX 2 BOX 3
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 6, 7 and 8) (See Instructions 1, 6, 7 and 8)
To be completed ONLY (i) if the Exchange Notes To be completed ONLY if the Exchange Notes
issued in exchange for Original Notes, certificates issued in exchange for Original Notes, certificates
for Original Notes in a principal amount not for Original notes in a principal amount not
exchanged for Exchange Notes, or Original Notes exchanged for Exchange Notes, or Original Notes
(if any) not tendered for exchange, are to be issued (if any) not tendered for exchange, are to be mailed
in the name of someone other than the undersigned or delivered (i) to someone other than the
or (ii) if Original Notes tendered by book-entry undersigned or (ii) to the undersigned at an address
transfer which are not exchanged are to be returned other than the address shown below the
by credit to an account maintained at DTC. undersigned's signature.
Issue to: Mail or deliver to:
Name ______________________________________________ Name _____________________________________________
(Please Print) (Please Print)
Address ___________________________________________ Address __________________________________________
- ---------------------------------------------------- ----------------------------------------------------
- ---------------------------------------------------- ----------------------------------------------------
(Include Zip Code) (Include Zip Code)
----------------------------------------------------
- ---------------------------------------------------- (Tax Identification or Social Security No.)
(Tax Identification or Social Security No.)
Credit Original Notes not exchanged and delivered
by book-entry transfer to DTC account set forth
below:
- ----------------------------------------------------
(Account Number)
============================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================
BOX 4 BENEFICIAL OWNER(S) - RESIDENCE
<S> <C>
State of Domicile/Principal Place of Business of Each Principal Amount of Original Notes
Beneficial Owner of Original Notes Held for Account of Beneficial Owner(s)
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
============================================================================================================
</TABLE>
<TABLE>
<CAPTION>
============================================================================================================
BOX 5 BENEFICIAL OWNER(S) - PURCHASER STATUS
- ------------------------------------------------------------------------------------------------------------
<S> <C>
The beneficial owner of each of the Original Notes described herein is (check the box that applies):
[ ] A "Qualified Institutional Buyer" (as defined in Rule 144A under the Securities Act of 1933 (the
"Securities Act"))
[ ] A non "U.S. person" (as defined in Regulation S of the Securities Act) that purchased the Original
Notes outside the United States in accordance with Rule 904 under the Securities Act
[ ] Other (describe) ____________________________________________________________________________________
-----------------------------------------------------------------------------------------------------
============================================================================================================
</TABLE>
<PAGE>
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
Pursuant to the offer by Pierce Leahy Command Company, a Nova Scotia
unlimited liability company (the "Company"), upon the terms and subject to the
conditions set forth in the Prospectus dated ____________, 1998 (the
"Prospectus") and this Letter of Transmittal (the "Letter of Transmittal"),
which together with the Prospectus constitutes the Company's offer (the
"Exchange Offer") to exchange $1,000 principal amount of its 8 1/8% Senior Notes
due 2008 (the "Exchange Notes") for each $1,000 principal amount of its
outstanding 8 1/8% Senior Subordinated Notes due 2008 (the "Original Notes"),
the undersigned hereby tenders to the Company for exchange the Original Notes
indicated above. Like the Original Notes, the Exchange Notes will be guaranteed
on an unsecured senior subordinated basis by Pierce Leahy Corp., Advanced Box,
Inc. and Monarch Box, Inc., and guaranteed on a senior unsecured basis by
Archivex Limited.
By executing this Letter of Transmittal and subject to and effective upon
acceptance for exchange of the Original Notes tendered for exchange herewith,
the undersigned will have irrevocably sold, assigned, transferred and exchanged,
to the Company, all right, title and interest in, to and under all of the
Original Notes tendered for exchange hereby, and hereby will have appointed the
Exchange Agent as the true and lawful agent and attorney-in-fact (with full
knowledge that the Exchange Agent also acts as agent of the Company) of such
holder of Original Notes with respect to such Original Notes, with full power of
substitution to (i) deliver certificates representing such Original Notes, or
transfer ownership of such Original Notes on the account books maintained by DTC
(together, in any such case, with all accompanying evidences of transfer and
authenticity), to the Company, (ii) present and deliver such Original Notes for
transfer on the books of the Company and (iii) receive all benefits and
otherwise exercise all rights and incidents of beneficial ownership with respect
to such Original Notes, all in accordance with the terms of the Exchange Offer.
The power of attorney granted in this paragraph shall be deemed to be
irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that (i) the undersigned is
the owner, (ii) has a net long position within the meaning of Rule 14e-4 under
the Securities Exchange Act as amended ("Rule 14e-4") equal to or greater than
the principal amount of Original Notes tendered hereby, (iii) the tender of such
Original Notes complies with Rule 14e-4 (to the extent that Rule 14e-4 is
applicable to such exchange), (iv) the undersigned has full power and authority
to tender, exchange, assign and transfer the Original Notes and (v) that when
such Original Notes are accepted for exchange by the Company, the Company will
acquire good and marketable title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claims.
The undersigned will, upon receipt, execute and deliver any additional documents
deemed by the Exchange Agent or the Company to be necessary or desirable to
complete the exchange, assignment and transfer of the Original Notes tendered
for exchange hereby.
The undersigned hereby further represents to the Company that (i) the
Exchange Notes to be acquired by the undersigned in exchange for the Original
Notes tendered hereby and any beneficial owner(s) of such Original Notes in
connection with the Exchange Offer will be acquired by the undersigned and such
beneficial owner(s) in the ordinary course of business of the undersigned, (ii)
the undersigned (if not a broker-dealer referred to in the last sentence of this
paragraph) are not participating and do not intend to participate in the
distribution of the Exchange Notes, (iii) the undersigned have no arrangement or
understanding with any person to participate in the distribution of the Exchange
Notes, (iv) the undersigned and each beneficial owner acknowledge and agree that
any person participating in the Exchange Offer for the purpose of distributing
the Exchange Notes must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction of the Exchange Notes acquired by such person and cannot rely on the
position of the staff of the Commission set forth in certain no-action letters,
(v) the undersigned and each beneficial owner understand that a secondary resale
transaction described in clause (iv) above should be covered by an effective
registration statement containing the selling securityholder information
required by Item 507 or Item 508, as applicable, of Regulation S-K of the
Commission and (vi) neither the undersigned nor any beneficial owner is an
"affiliate" of the Company, as defined under Rule 405 under the Securities Act.
If the undersigned is a broker-dealer that will receive Exchange Notes for its
own account in exchange for Original Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes received in respect of such
Original Notes pursuant to the Exchange Offer; however, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the assignment and transfer of the Original Notes tendered
hereby.
For purposes of the Exchange Offer, the Company will be deemed to have
accepted for exchange, and to have exchanged, validly tendered Original Notes,
if, as and when the Company gives oral or written notice thereof to the Exchange
Agent. Tenders of Original Notes for exchange may be withdrawn at any time prior
to 5:00 p.m., New York City time, on the Expiration Date. See "The Exchange
Offer--Withdrawal of Tenders" in the Prospectus. Any Original Notes tendered by
the undersigned and not accepted for exchange will be returned to the
undersigned at the address set forth above unless otherwise indicated in Box 3
on page 4 entitled "Special Delivery Instructions" as promptly as practicable
after the Expiration Date.
The undersigned acknowledges that the Company's acceptance of Original
Notes validly tendered for exchange pursuant to any one of the procedures
described in the section of the Prospectus entitled "The Exchange Offer" and in
the instructions hereto will constitute a binding agreement between the
undersigned and the Company upon the terms and subject to the conditions of the
Exchange Offer.
Unless otherwise indicated in the box entitled "Special Issuance
Instructions," please return any Original Notes not tendered for exchange in the
name(s) of the undersigned. Similarly, unless otherwise indicated in Box 3 on
page 4 entitled "Special Delivery Instructions," please mail any certificates
for Original Notes not tendered or exchanged (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature(s).
In the event that both Boxes 2 and 3, "Special Issuance Instructions" and
"Special Delivery Instructions," are completed, please issue the certificates
representing the Exchange Notes issued in exchange for the Original Notes
accepted for exchange in the name(s) of, and return any Original Notes not
tendered for exchange or not exchanged to, the person(s) so indicated. The
undersigned recognizes
<PAGE>
that the Company has no obligation pursuant to the "Special Issuance
Instructions" and "Special Delivery Instructions" to transfer any Original Notes
from the name of the holder of Original Note(s) thereof if the Company does not
accept for exchange any of the Original Notes so tendered for exchange or if
such transfer would not be in compliance with any transfer restrictions
applicable to such Original Note(s).
In order to validly tender Original Notes for exchange, holders of Original
Notes must complete, execute, and deliver this Letter of Transmittal.
Except as stated in the Prospectus, all authority herein conferred or
agreed to be conferred shall survive the death, incapacity, or dissolution of
the undersigned, and any obligation of the undersigned hereunder shall be
binding upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as otherwise stated in the Prospectus, this tender for
exchange of Original Notes is irrevocable.
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------
BOX 6 SIGN HERE
- ------------------------------------------------------------------------------------------------------------
(Signature(s) of Owner(s))
Date: , 1998
Must be signed by the registered holder(s) of Original Notes exactly as name(s) appear(s) on
certificate(s) representing the Original Notes or on a security position listing or by person(s)
authorized to become registered Original Note holder(s) by certificates and documents transmitted
herewith. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or other acting in a fiduciary or representative capacity, please provide
the following information. (See Instruction 6).
Name(s): ___________________________________________________________________________________________________
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
(Please Print)
Capacity (full title): _____________________________________________________________________________________
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
Address: ___________________________________________________________________________________________________
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
(Include Zip Code)
Principal place of business (if different from address listed above): ______________________________________
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone No. ( )_________________________________________________________________________
Tax Identification or Social Security Nos.:_________________________________________________________________
Please complete Substitute Form W-9
GUARANTEE OF SIGNATURE(S)
(Signature(s) must be guaranteed if required by Instruction 1)
Authorized Signature:_______________________________________________________________________________________
Dated:______________________________________________________________________________________________________
Name and Title:_____________________________________________________________________________________________
(Please Print)
Name of Firm:_______________________________________________________________________________________________
============================================================================================================
</TABLE>
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by an institution
which is (1) a member firm of a registered national securities exchange or of
the National Association of Securities Dealers, Inc., (2) a commercial bank or
trust company having an office or correspondent in the Unites States. or (3) an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Securities Exchange Act which is a member of one of the following recognized
Signature Guarantee Programs (an "Eligible Institution"):
a. The Securities Transfer Agents Medallion Program (STAMP)
b. The New York Stock Exchange Medallion Signature Program (MSP)
c. The Stock Exchange Medallion Program (SEMP)
Signatures on this Letter of Transmittal need not be guaranteed (i) if this
Letter of Transmittal is signed by the registered holder(s) of the Original
Notes tendered herewith and such registered holder(s) have not completed the box
entitled "Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (ii) if such Original Notes are
tendered for the account of an Eligible Institution. IN ALL OTHER CASES, ALL
SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION.
2. DELIVERY OF THIS LETTER OF TRANSMITTAL AND ORIGINAL NOTES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be completed by holders of
Original Notes (i) if certificates are to be forwarded herewith or (ii) if
tenders are to be made pursuant to the procedures for tender by book-entry
transfer or guaranteed delivery set forth in the section of the Prospectus
entitled "The Exchange Offer." Certificates for all physically tendered Original
Notes or any confirmation of a book-entry transfer (a "Book-Entry
Confirmation"), as well as a properly completed and duly executed copy of this
Letter of Transmittal or facsimile hereof, and any other documents required by
this Letter of Transmittal, must be received by the Exchange Agent at its
address set forth on the cover of this Letter of Transmittal prior to 5:00 p.m.,
New York City time, on the Expiration Date. Holders of Original Notes who elect
to tender Original Notes and (i) whose Original Notes are not immediately
available or (ii) who cannot deliver the Original Notes or other required
documents to the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date, must tender their Original Notes according to the guaranteed
delivery procedures set forth in the Prospectus. Holders may have such tender
effected if: (a) such tender is made by or through an Eligible Institution; and
(b) prior to 5:00 p.m., New York City time, on the Expiration Date, the Exchange
Agent has received from such Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery, setting forth the name and address of
the holder of such Original Notes, the certificate numbers(s) of such Original
Notes and the principal amount of Original Notes tendered for exchange, stating
that tender is being made thereby and guaranteeing that, within five New York
Stock Exchange trading days after the Expiration Date, the certificate(s)
representing such Original Notes (or a Book-Entry Confirmation), in proper form
for transfer, and any other documents required by this Letter of Transmittal,
will be deposited by such Eligible Institution with the Exchange Agent; and (c)
a properly executed Letter of Transmittal (or a facsimile hereof), as well as
the certificate(s) for all tendered Original Notes in proper form for transfer
or a Book-Entry Confirmation, together with any other documents required by this
Letter of Transmittal, are received by the Exchange Agent within five New York
Stock Exchange trading days after the Expiration Date.
THE METHOD OF DELIVERY OF ORIGINAL NOTES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER. EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. INSTEAD OF
DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND
DELIVERY SERVICE, PROPERLY INSURED. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. NEITHER THIS LETTER
OF TRANSMITTAL NOR ANY ORIGINAL NOTES SHOULD BE SENT TO THE COMPANY.
No alternative, conditional or contingent tenders will be accepted. All
tendering holders of Original Notes, by execution of this Letter of Transmittal
(or facsimile hereof, if applicable), waive any right to receive notice of the
acceptance of their Original Notes for exchange.
3. INADEQUATE SPACE. If the space provided in Box 1 on page 3 entitled
"Description of Original Notes" is inadequate, the certificate numbers and
principal amounts of the Original Notes being tendered should be listed on a
separate signed schedule affixed hereto.
4. WITHDRAWALS. A tender of Original Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the Expiration Date by delivery of
written or facsimile notice of withdrawal to the Exchange Agent at the address
set forth on the cover of this Letter of Transmittal. To be effective, a notice
of withdrawal of Original Notes must (i) specify the name of the person who
tendered the Original Notes to be withdrawn (the "Depositor"), (ii) identify the
Original Notes to be withdrawn (including the certificate number or numbers and
aggregate principal amount of such Original Notes), and (iii) be signed by the
holder of Original Notes in the same manner as the original signature on the
Letter of Transmittal by which such Original Notes were tendered (including any
required signature guarantees). Any Original Notes withdrawn will thereafter be
deemed not validly tendered for purposes of the Exchange Offer and no Exchange
Notes will be issued with respect thereto unless the Original Notes so withdrawn
are validly retendered. Properly withdrawn Original Notes may be retendered by
following one of the procedures described in the section of the Prospectus
entitled "The Exchange Offer--Procedures for Tendering" at any time prior to
5:00 p.m., New York City time, on the Expiration Date.
5. PARTIAL TENDERS. Tenders of Original Notes will be accepted only in
integral multiples of $1,000 principal amount. If a tender for exchange is to be
made with respect to less than the entire principal amount of any Original
Notes, fill in the principal amount of Original Notes which are tendered for
exchange in column (4) of the box entitled "Description of Original Notes," as
more fully described in the footnotes thereto. In case of a partial tender for
exchange, a new certificate, in fully registered form, for the remainder
<PAGE>
of the principal amount of the Original Notes, will be sent to the holders of
Original Notes unless otherwise indicated in the appropriate box on this Letter
of Transmittal as promptly as practicable after the expiration or termination of
the Exchange Offer.
6. SIGNATURES ON THIS LETTER OF TRANSMITTAL, ASSIGNMENT AND ENDORSEMENTS.
(a) The signature(s) of the holder of Original Notes on this Letter of
Transmittal must correspond with the name(s) as written on the face of the
Original Notes without alternation, enlargement or any change whatsoever.
(b) If tendered Original Notes are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
(c) If any tendered Original Notes are registered in different names
on several certificates, it will be necessary to complete, sign and submit as
many separate copies of this Letter of Transmittal and any necessary or required
documents as there are different registrations or certificates.
(d) When this Letter of Transmittal is signed by the holder of the
Original Notes listed and transmitted hereby, no endorsements of Original Notes
or assignments are required. If, however, Original Notes not tendered or not
accepted, are to be issued or returned in the name of a person other than the
holder of Original Notes, then the Original Notes transmitted hereby must be
endorsed or accompanied by a properly executed assignment in a form satisfactory
to the Company, in either case signed exactly as the name(s) of the holder of
Original Notes appear(s) on the Original Notes. Signatures on such Original
Notes or assignments must be guaranteed by an Eligible Institution (unless
signed by an Eligible Institution).
(e) If this Letter of Transmittal or Original Notes or assignments are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Company of their authority so to act must be submitted with
this Letter of Transmittal.
(f) If this Letter of Transmittal is signed by a person other than the
registered holder of Original Notes listed, the Original Notes must be endorsed
or accompanied by a properly executed assignment, in either case signed by such
registered holder exactly as the name(s) of the registered holder of Original
Notes appear(s) on the certificates. Signatures on such Original Notes or
assignments must be guaranteed by an Eligible Institution (unless signed by an
Eligible Institution).
7. TRANSFER TAXES. Except as set forth in this Instruction 7, the Company
will pay all transfer taxes, if any, applicable to the transfer and exchange of
Original Notes pursuant to the Exchange Offer. If, however, issuance of Exchange
Notes is to be made to, or Original Notes not tendered for exchange are to be
issued or returned in the name of, any person other than the holder of Original
Notes, and satisfactory evidence of payment of such taxes or exemptions from
taxes therefrom is not submitted with this Letter of Transmittal, the amount of
any transfer taxes payable on account of the transfer to such person will be
imposed on and payable by the holder of Original Notes tendering Original Notes
for exchange prior to the issuance of the Exchange Notes or the return of
Original Notes in another name.
8. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If the Exchange Notes are
to be issued, or if any Original Notes not tendered for exchange are to be
issued or sent to someone other than the holder of Original Notes or to an
address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. Holders of Original Notes tendering Original
Notes by book-entry transfer may request that Original Notes not accepted be
credited to such account maintained at DTC as such holder of Original Notes may
designate.
9. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt), compliance with conditions, acceptance and
withdrawal of tendered Original Notes will be determined by the Company in its
sole discretion, which determination will be final and binding. The Company
reserves the absolute right to reject any and all Original Notes not properly
tendered or any Original Notes the Company's acceptance of which would, in the
opinion of counsel for the Company, be unlawful. The Company also reserves the
right to waive any defects, irregularities or conditions of tender as to
particular Notes. The Company's interpretation of the terms and conditions of
the Exchange Offer (including the instructions in the Letter of Transmittal)
will be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Original Notes must be cured within
such time as the Company shall determine. Although the Company intends to notify
holders of defects or irregularities with respect to tenders of Original Notes,
neither the Company, the Exchange Agent nor any other person shall incur any
liability for failure to give such notification. Tenders of Original Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Original Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering holders,
unless otherwise provided in this Letter of Transmittal, as soon as practicable
following the Expiration Date.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to
waive, amend or modify certain of the specified conditions as described under
"The Exchange Offer--Certain Conditions to the Exchange Offer" in the Prospectus
in the case of any Original Notes tendered (except as otherwise provided in the
Prospectus).
11. MUTILATED, LOST, STOLEN OR DESTROYED ORIGINAL NOTES. Any tendering
Holder whose Old Notes have been mutilated, lost, stolen or destroyed should
contact the Exchange Agent at the address listed below for further instructions:
The Bank of New York
101 Barclay Street
Corporate Trust Services Window, Ground Level
New York, NY 10286
Attention: Reorganization Section, 7E Santino Ginocchietti
(212) 815-2963
<PAGE>
12. REQUESTS FOR INFORMATION OR ADDITIONAL COPIES. Requests for
information or for additional copies of the Prospectus and this Letter of
Transmittal may be directed to the Exchange Agent at the address or telephone
number set forth on the cover of this Letter of Transmittal.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF, IF APPLICABLE)
TOGETHER WITH CERTIFICATES, OR CONFIRMATION OF BOOK-ENTRY OR THE NOTICE OF
GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE
EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under current federal income tax law, a holder of Original Notes whose
tendered Original Notes are accepted for exchange may be subject to backup
withholding unless the holder provides the Company (as payor), through the
Exchange Agent, with either (i) such holder's correct taxpayer identification
number ("TIN") on Substitute Form W-9 contained herein, certifying that the TIN
provided on Substitute Form W-9 is correct (or that such holder of Original
Notes is awaiting a TIN) and that (A) the holder of Original Notes has not been
notified by the Internal Revenue Service that he or she is subject to backup
withholding as a result of a failure to report all interest or dividends or (B)
the Internal Revenue Service has notified the holder of Original Notes that he
or she is no longer subject to backup withholding; or (ii) an adequate basis for
exemption from backup withholding. If such holder of Original Notes is an
individual, the TIN is such holder's social security number. If the Exchange
Agent is not provided with the correct taxpayer identification number, the
holder of Original Notes may be subject to certain penalties imposed by the
Internal Revenue Service.
Certain holders of Original Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. Exempt holders of Original Notes should
indicate their exempt status on Substitute Form W-9. A foreign individual may
qualify as an exempt recipient by submitting to the Exchange Agent a properly
completed Internal Revenue Service Form W-8 (which the Exchange Agent will
provide upon request) signed under penalty of perjury, attesting to the holder's
exempt status. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "Guidelines") for additional
instructions.
If backup withholding applies, the Company is required to withhold 31% of
any payment made to the holder of Original Notes or other payee. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
The holder of Original Notes is required to give the Exchange Agent the TIN
(e.g., social security number or employer identification number) of the record
owner of the Original Notes. If the Original Notes are held in more than one
name or are not held in the name of the actual owner, consult the enclosed
Guidelines for additional guidance regarding which number to report.
INSTRUCTION TO REGISTERED HOLDER
FROM BENEFICIAL OWNER
OF
8 1/8% SENIOR NOTES DUE 2008 OF PIERCE LEAHY COMMAND COMPANY
The undersigned hereby acknowledges receipt of the Prospectus dated
____________, 1998 (the "Prospectus") of Pierce Leahy Command Company, a Nova
Scotia unlimited liability company (the "Company"), and the accompanying Letter
of Transmittal (the "Letter of Transmittal"), that together constitute the
Company's offer (the "Exchange Offer"). Capitalized terms used but not defined
herein have the meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder, as to the action to be taken
by you relating to the Exchange Offer with respect to the 8 1/8% Senior Notes
due 2008 (the "Original Notes") held by you for the account of the undersigned.
The aggregate face amount of the Original Notes held by you for the account
of the undersigned is (fill in amount):
$ of the Original Notes.
With respect to the Exchange Offer, the undersigned hereby instructs you
(check appropriate box):
[ ] To TENDER the following Original Notes held by you for the account
of the undersigned (insert principal amount of Original Notes to be tendered, if
any):
$ of the Original Notes.
[ ] NOT to TENDER any Original Notes held by you for the account of
the undersigned.
If the undersigned instructs you to tender the Original Notes held by you
for the account of the undersigned, it is understood that you are authorized (a)
to make, on behalf of the undersigned (and the undersigned, by its signature
below, hereby makes to you), the representations and warranties contained in the
Letter of Transmittal that are to be made with respect to the undersigned as a
beneficial owner of the Original Notes, including but not limited to the
representations that (i) the undersigned's principal residence is in the state
of (fill in state) , (ii) the undersigned is
acquiring the Exchange Notes in the ordinary course of business of the
undersigned, (iii) the undersigned is not participating, does not intend to
participate, and has no arrangement or understanding with any person to
participate, in the distribution of Exchange Notes, (iv) the undersigned
acknowledges that any person participating in the Exchange Offer for the purpose
of distributing the Exchange Notes must comply with the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended, in
connection with any resale transaction of the Exchange Notes acquired by such
person and cannot rely on the position of the Staff of the Securities and
Exchange Commission set forth in certain no-action letters (See the section of
the Prospectus entitled "The Exchange Offer--Purposes and Effects of the
Exchange Offer"), (v) the undersigned
<PAGE>
understands that a secondary resale transaction described in clause (iv) above
should be covered by an effective registration statement containing the selling
securityholder information required by Item 507 or Item 508, if applicable, of
Regulation S-K of the Commission, (vi) the undersigned is not an "affiliate," as
defined in Rule 405 under the Securities Act, of the Company, (vii) if the
undersigned is not a broker-dealer, that it is not engaged in, and does not
intend to engage in, a distribution of Exchange Notes and (viii) if the
undersigned is a broker-dealer that will receive Exchange Notes for its own
account in exchange for Original Notes that were acquired as a result of market-
making activities or other trading activities, it acknowledges that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes received in respect of such
Original Notes pursuant to the Exchange Offer; however, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act; (b) to agree, on
behalf of the undersigned, as set forth in the Letter of Transmittal; and (c) to
take such other action as necessary under the Prospectus or the Letter of
Transmittal to effect the valid tender of Original Notes.
The purchaser status of the undersigned is (check the box that applies):
[ ] A "Qualified Institutional Buyer" (as defined in Rule 144A under Securities
Act)
[ ] A non "U.S." person" (as defined in Regulation S of the Securities Act)
that purchased the Original Notes outside the United States in accordance
with Rule 904 under the Securities Act
[ ] Other (describe)___________________________________________________________
___________________________________________________________________________
<TABLE>
<CAPTION>
<S> <C>
============================================================================================================
BOX 7
SIGN HERE
Name of Beneficial Owner(s):________________________________________________________________________________
Signature(s):_______________________________________________________________________________________________
Name(s) (please print):_____________________________________________________________________________________
Address:____________________________________________________________________________________________________
Principal place of business (if different from address listed above):_______________________________________
Telephone Number(s):________________________________________________________________________________________
Taxpayer Identification or Social Security Number(s):_______________________________________________________
Date:_______________________________________________________________________________________________________
============================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================
PAYER'S NAME:
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PART 1--PLEASE PROVIDE YOUR TIN
SUBSTITUTE IN THE BOX AT RIGHT AND CERTIFY ________________________________
BY SIGNING AND DATING BELOW Social Security Number
FORM W-9
OR
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE ________________________________
Employer Identification Number
---------------------------------------------------------------------
PAYER'S REQUEST FOR
TAXPAYER
IDENTIFICATION NUMBER (TIN)
PART 2--Certification Under Penalties of PART 3--
Perjury, I certify that:
Awaiting TIN [ ]
(1) The number shown on this form is my
current taxpayer identification number (or I
am waiting for a number to be issued to
me) and
(2) I am not subject to backup withholding
either because I have not been notified by
the Internal Revenue Service (the "IRS")
that I am subject to backup withholdings as
a result of a failure to report all interest or
dividends, or the IRS has notified me that I
am no longer subject to backup
withholding.
---------------------------------------------------------------------
CERTIFICATE INSTRUCTIONS-You must cross out item (2) in Part 2 above
if you have been notified by the IRS that you are subject to backup
withholding because of under reporting interest or dividends on your
tax return. However, if after being notified by the IRS that you are
subject to backup withholding you receive another notification from
the IRS stating that you are no longer subject to backup withholding,
do not cross out item (2).
SIGNATURE_______________________________________________DATE_________
NAME_________________________________________________________________
ADDRESS______________________________________________________________
CITY______________________________________STATE_____ZIP CODE_________
============================================================================================================
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTION FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECK THE BOX IN PART 3 OF SUBSTITUTION FORM W-9
<TABLE>
<CAPTION>
<S> <C>
============================================================================================================
PAYOR'S NAME: UNITED STATES TRUST COMPANY OF NEW YORK
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and
either (a) I have mailed or delivered an application to receive a taxpayer identification number to the
appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to
mail or deliver such an application in the near future. I understand that if I do not provide a taxpayer
identification number with sixty (60) days, 31% of all reportable payments made to me thereafter will be
withheld until I provide such a number.
___________________________________________________________________________ ______________________________
SIGNATURE DATE
============================================================================================================
</TABLE>
<PAGE>
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF ALL OUTSTANDING
8 1/8% SENIOR NOTES DUE 2008
IN EXCHANGE FOR
8 1/8% SENIOR NOTES DUE 2008
This form, or one substantially equivalent hereto, must be used by a holder
to accept the Exchange Offer of Pierce Leahy Command Company, a Nova Scotia
unlimited liability company (the "Company"), and to tender its 8 1/8% Senior
Notes due 2008 (the "Old Notes") to the Exchange Agent pursuant to the
guaranteed delivery procedures described in "The Exchange Offer -- Guaranteed
Delivery Procedures" of the Company's Prospectus, dated _________________, 1998
(the "Prospectus") and in Instruction 2 to the related Letter of Transmittal.
Any holder who wishes to tender Old Notes pursuant to such guaranteed delivery
procedures must ensure that the Exchange Agent receives this Notice of
Guaranteed Delivery prior to the Expiration Date (as defined below) of the
Exchange Offer. Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus or the Letter of Transmittal.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
_________________, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). OLD NOTES
TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M.,
NEW YORK CITY TIME, ON THE BUSINESS DAY PRIOR TO THE EXPIRATION DATE.
The Exchange Agent for the Exchange Offer is:
THE BANK OF NEW YORK
By Hand/Overnight Courier: By Registered or Certified Mail:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street, 7E
Corporate Trust Services Window New York, New York 10286
Ground Level Attention: Reorganization Section, 7E
New York, New York 10286 Santino Ginocchietti
Attention: Reorganization Section, 7E
Santino Ginocchietti
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 815-6339
Confirm by Telephone or for Information:
(212) 815-2963
--------------------------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET
FOR ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE IN THE BOX PROVIDED ON
THE LETTER OF TRANSMITTAL FOR GUARANTEE OF SIGNATURES.
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or is a commercial bank or trust company having an office or correspondent in
the United States, or is otherwise an "eligible guarantor institution" within
the meaning of Rule 17 Ad-15 under the Securities Exchange Act of 1934,
guarantees deposit with the Exchange Agent of the Letter of Transmittal (or
facsimile thereof), together with the Old Notes tendered hereby in proper form
for transfer (or confirmation of the book-entry transfer of such Old Notes into
the Exchange Agent's account at the Book-Entry Transfer Facility described in
the Prospectus under the caption "The Exchange Offer -- Book-Entry Transfer" and
the Letter of Transmittal) and any other required documents, all by 5:00 p.m.,
New York City time, within five business days following the Expiration Date.
<TABLE>
<CAPTION>
<C> <S>
Name of Firm:_________________________________ ________________________________
(AUTHORIZED SIGNATURE)
Address:______________________________________
(INCLUDE ZIP CODE) Name:___________________________
Area Code and Tel. Number:____________________ Title:__________________________
(PLEASE TYPE OR PRINT)
Date:_____________________, 1997
</TABLE>
DO NOT SEND OLD NOTES WITH THIS FORM. ACTUAL SURRENDER OF OLD NOTES MUST
BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY
EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Old Notes set forth below pursuant to the guaranteed delivery procedures set
forth in the Prospectus and in Instruction 2 of the Letter of Transmittal.
The undersigned hereby tenders the Old Notes listed below:
<TABLE>
<CAPTION>
<C> <S>
Certificate Number(s) (if known) of Old Notes or Account Aggregate Principal Amount Aggregate Principal Amount
Number at the Book-Entry Facility Represented Tendered
- ---------------------------------------------------------- -------------------------- ---------------------------
- ---------------------------------------------------------- -------------------------- ---------------------------
- ---------------------------------------------------------- -------------------------- ---------------------------
- ---------------------------------------------------------- -------------------------- ---------------------------
- ---------------------------------------------------------- -------------------------- ---------------------------
- ---------------------------------------------------------- -------------------------- ---------------------------
</TABLE>
PLEASE SIGN AND COMPLETE
<TABLE>
<CAPTION>
<C> <S>
Names of Record Holders:___________________________________ Signatures:__________________________________________
Address:___________________________________________________ _____________________________________________________
- ----------------------------------------------------------- Dated:_________________________________________, 1997
Area Code and Telephone Numbers:___________________________
- -----------------------------------------------------------
</TABLE>
This Notice of Guaranteed Delivery must be signed by the Holder(s) exactly
as their name(s) appear on certificates for Old Notes or on a security position
listing as the owner of Old Notes, or by person(s) authorized to become
holder(s) by endorsements and documents transmitted with this Notice of
Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Capacity:
- --------------------------------------------------------------------------------
Address(es):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
