424(b)(3)
Registration No. 333-44185
PROSPECTUS
$350,000,000
Iron Mountain Incorporated
Debt Securities, Preferred Stock, Depositary Shares,
Common Stock and Warrants
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Iron Mountain Incorporated (the "Company" or "Iron Mountain") may from
time to time offer in one or more series (i) its debt securities (the "Debt
Securities"), (ii) its shares of preferred stock, par value $.01 per share (the
"Preferred Stock"), (iii) fractional shares of the Preferred Stock (the
"Depositary Shares"), (iv) its shares of common stock, par value $.01 per share
(the "Common Stock"), or (v) warrants to purchase any of the above securities
(the "Warrants"), with an aggregate public offering price of up to $350,000,000
on terms to be determined at the time of offering. The Debt Securities,
Preferred Stock, Depositary Shares, Common Stock and Warrants may be offered,
separately or together, in separate series, in amounts, at prices and on terms
to be set forth in a supplement to this Prospectus (a "Prospectus Supplement").
In connection with the Debt Securities, substantially all of the
present and future subsidiaries of Iron Mountain (the "Guarantors") may, on a
joint and several basis, offer full and unconditional guarantees ("Guarantees")
of Iron Mountain's obligations under the Debt Securities. The Debt Securities,
Guarantees, Preferred Stock, Depository Shares, Common Stock and Warrants are
collectively referred to as the "Offered Securities."
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable: (i) in the case of Debt
Securities, the specific title, aggregate principal amount, currency, form
(which may be registered or bearer, or certificated or global), authorized
denominations, maturity, rate (or manner of calculation thereof) and time of
payment of interest, terms for redemption at the option of the Company or
repayment at the option of the holder, terms for sinking fund payments, terms
for conversion into Preferred Stock, Depositary Shares or Common Stock, terms of
subordination to other indebtedness of the Company, terms of related Guarantees
(if any), terms of security or pledge of assets (if any), and any original issue
discount and any initial public offering price; (ii) in the case of Preferred
Stock, the specific title and stated value, any dividend, liquidation,
redemption, conversion, voting and other rights, and any initial public offering
price; (iii) in the case of Depositary Shares, the fractional shares of
Preferred Stock represented by each Depositary Share; (iv) in the case of Common
Stock, any offering price; and (v) in the case of Warrants, the securities to
which they relate, duration, offering price, exercise price and detachability.
----------------------
See "RISK FACTORS" at page 1 for certain information that should be
considered by prospective investors.
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 COM-
MISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------
The date of this Prospectus is January 20, 1998.
<PAGE>
The applicable Prospectus Supplement will also contain information,
where applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Offered Securities
covered by such Prospectus Supplement. Any statement contained in this
Prospectus will be deemed to be modified or superseded by any inconsistent
statement contained in the accompanying Prospectus Supplement.
The Common Stock is traded on the Nasdaq National Market System under
the symbol "IMTN." Application will be made to list any shares of Common Stock
sold pursuant to a Prospectus Supplement on the Nasdaq National Market System,
subject to official notice of issuance. Iron Mountain has not yet determined
whether any of the Debt Securities, Preferred Stock or Depository Shares offered
hereby will be listed on any exchange or over-the-counter market. If Iron
Mountain decides to seek listing of any such Offered Securities, the Prospectus
Supplement relating thereto will disclose such exchange or market.
The Offered Securities may be offered directly, through agents
designated from time to time by the Company or to or through underwriters or
dealers. If any agents or underwriters are involved in the sale of any of the
Offered Securities, their names, and any applicable purchase price, fee,
commission or discount arrangement between or among them, will be set forth, or
will be calculable from the information set forth, in an accompanying Prospectus
Supplement. See "Plan of Distribution." No Offered Securities may be sold
without delivery of a Prospectus Supplement describing the method and terms of
the offering of such Offered Securities.
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No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus in connection with the offer contained in this Prospectus and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Company or any underwriters, agents or dealers.
This Prospectus does not constitute an offer to sell or solicitation of an offer
to buy securities in any jurisdiction 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 Company and its subsidiaries
since the date hereof or the information contained or incorporated by reference
herein is correct at any time subsequent to the date hereof.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") in Washington, D.C., a registration statement on Form S-3
(together with all exhibits, schedules and amendments thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Offered Securities. This Prospectus, which is a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement. Statements in this Prospectus as to the contents of any
contract or other document are not necessarily complete, and in each instance
reference is made to the copy of such contract or other documents filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference and the exhibits and schedules thereto. For
further information concerning the Company and the Offered Securities, reference
is made to the Registration Statement. Copies of the Registration Statement may
be obtained from the Commission at its principal office in Washington, D.C. upon
payment of the prescribed fee.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports and other information with the Commission.
The Registration Statement, the exhibits and schedules forming a part thereof
and the reports, proxy statements and other information filed by the Company
with the Commission can be inspected and copies obtained at the public reference
facilities maintained by the Commission at Judiciary Plaza, Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following regional offices of
the Commission: Chicago Regional Office,
(ii)
<PAGE>
Suite 1400, 500 West Madison Street, Chicago, Illinois 60661-2511; and New York
Regional Office, Seven World Trade Center, New York, New York 10048. Copies of
such material can be obtained at prescribed rates from the Public Reference
Section of the Commission at its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission maintains a World Wide Web site that
contains reports, proxy and information statements and other information
regarding registrants, including the Company, that file electronically with the
Commission. The address of the site is http://www.sec.gov. In addition, reports,
proxy statements and other information concerning the Company may be inspected
at the offices of Nasdaq operations, 1735 K Street N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by Iron Mountain with
the Commission (File No. 0-27584) pursuant to the Exchange Act, are hereby
incorporated in this Prospectus and specifically made a part hereof by
reference: (i) Annual Report on Form 10-K for the fiscal year ended December 31,
1996 (the "Annual Report"), (ii) Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997, (iii) Current
Reports on Form 8-K dated June 25, 1997 (as amended August 26, 1997), October 1,
1997, October 16, 1997 (as amended November 10, 1997), October 30, 1997,
November 25, 1997 and January 13, 1998 and (iv) the description of the Common
Stock contained in the Company's Registration Statement on Form 8-A dated
January 18, 1996. In addition, the financial information contained in Iron
Mountain's Registration Statements on Form S-4 (i) File No. 333-24635, filed
with the Commission on April 4, 1997, as amended on May 7, 1997 and May 13,
1997, as made effective by the Commission on May 14, 1997, and (ii) File No.
333-41715, filed with the Commission on December 8, 1997, as made effective by
the Commission on December 11, 1997 is incorporated herein by reference. All
documents filed by Iron Mountain pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Offered Securities shall be deemed to be
incorporated by reference into the Registration Statement and to be a part
hereof from the respective dates of filing of any such documents.
Any statement contained herein or in a document incorporated or deemed
to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein (or in the applicable Prospectus Supplement), or in any other
subsequently filed document that also is or is deemed to be incorporated herein
by reference, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person
to whom this Prospectus is delivered, upon the written or oral request of such
person, a copy of any and all of the information that has been incorporated by
reference in this Prospectus (excluding exhibits unless such exhibits are
specifically incorporated by reference into the information that this Prospectus
incorporates). Requests for such copies should be made to the Company at its
principal executive offices, 745 Atlantic Avenue, Boston, Massachusetts 02111,
Attention: John F. Kenny, Jr., Executive Vice President and Chief Financial
Officer.
(iii)
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RISK FACTORS
Investors should carefully consider the following risk factors, in
addition to the other information contained in this Prospectus and any
Prospectus Supplement, before purchasing any of the Offered Securities. This
Prospectus sets forth or incorporates by reference forward-looking statements
within the meaning of Section 27A of the Securities Act, such as those regarding
the goals, beliefs, plans or current expectations of the Company and its
management and other statements contained in this Prospectus regarding matters
that are not historical facts. Because such forward-looking statements include
risks and uncertainties, actual results may differ materially from those
expressed in or implied by such forward-looking statements. Factors that could
cause actual results to differ materially include, but are not limited to, the
risk factors set forth below and the matters set forth or incorporated by
reference in this Prospectus generally and any Prospectus Supplement. The
Company undertakes no obligation to release publicly the results of any
revisions to these forward-looking statements that may be made to reflect future
events or circumstances or to reflect unanticipated events.
Risks Associated with Acquisition Strategy
Iron Mountain has pursued and intends to continue to pursue
acquisitions of records management and related service businesses as a key
component of its growth strategy. Certain risks are inherent in an acquisition
strategy, such as increasing leverage and debt service requirements and
combining disparate company cultures and facilities, which could adversely
affect Iron Mountain's operating results. The success of any completed
acquisition will depend in part on Iron Mountain's ability to integrate
effectively the acquired businesses into Iron Mountain. The process of
integrating such acquired businesses may involve unforeseen difficulties and may
require a disproportionate amount of management's attention and Iron Mountain's
financial and other resources. No assurance can be given that additional
suitable acquisition candidates will be identified, financed and purchased on
acceptable terms, or that recent acquisitions or future acquisitions, if
completed, will be successful.
In September, 1997 Iron Mountain amended and restated its bank
facility, dated as of September 30, 1996 among Iron Mountain, the lenders party
thereto and The Chase Manhattan Bank, as Administrative Agent (the "Credit
Agreement"). Under the terms of the Credit Agreement, acquisitions by Iron
Mountain involving in excess of (i) $65 million (other than the acquisition of
Arcus Group, Inc. (the "Arcus Acquisition") and the acquisition of HIMSCORP,
Inc. ("HIMSCORP")) for any one acquisition and (ii) $150 million in the
aggregate or $100 million in cash for 1998 or any subsequent year require the
approval of lenders holding 51% or more of the commitments under the Credit
Agreement. No assurance can be given that the lenders will consent to any
acquisitions that Iron Mountain proposes to make in excess of such limits.
The size, timing and integration of possible future acquisitions may
cause substantial fluctuations in operating results from quarter to quarter. As
a result, operating results for any quarter may not be indicative of the results
that may be achieved for any subsequent fiscal quarter or for a full fiscal
year.
Competition; Alternative Technologies
Iron Mountain has one or more competitors in all geographic areas
where it operates. Iron Mountain believes that competition for customers is
based on price, reputation for reliability, quality of service and scope and
scale of technology, and believes that it generally competes effectively based
on these factors. As a result of this competition, the records management
industry has for the past several years experienced downward pricing pressures.
While Iron Mountain believes that this pricing climate is stabilizing, there can
be no assurance that prices will not decline further, as competitors seek to
gain or preserve market share. Should a further downward trend in pricing occur
or continue for an extended period of time, it could have a material adverse
effect on Iron Mountain's results of operations. Iron Mountain also competes for
acquisition candidates. Some of Iron Mountain's competitors may possess greater
financial and other resources than Iron Mountain. If any such competitor were to
devote additional resources to the records management business and such
acquisition candidates or to focus its strategy on Iron Mountain's markets, Iron
Mountain's results of operations could be adversely affected. In addition, Iron
Mountain faces competition from the internal records management capability of
its current and potential
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customers. There can be no assurance that these organizations will outsource
more of their records management needs or that they will not bring in-house some
or all of the functions they currently outsource.
The substantial majority of Iron Mountain's revenues have been derived
from the storage of paper documents and from related services. Such storage
requires significant physical space. Alternative technologies for generating,
capturing, managing, transmitting and storing information have been developed,
many of which require significantly less space than paper. Such technologies
include computer media, microforms, audio/video tape, film, CD-ROM and optical
disk. None of these technologies has replaced paper as the principal means for
storing information. However, there can be no assurance that one or more
non-paper-based technologies (whether 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 Iron Mountain's business.
Financial Leverage; Debt Service Requirements
Iron Mountain is highly leveraged due to the substantial indebtedness
it has incurred primarily to finance acquisitions and expand its operations.
Iron Mountain expects to continue to borrow under the Credit Agreement and
possible future credit arrangements in order to finance possible future
acquisitions and for general corporate purposes.
The ability of Iron Mountain to repay its indebtedness depends upon
future operating performance, which is subject to the success of Iron Mountain's
business strategy, prevailing economic conditions, levels of interest rates and
financial, business and other factors, many of which are beyond Iron Mountain's
control. The debt service obligations of Iron Mountain could have important
consequences, including the following: (i) the ability of Iron Mountain to
obtain additional financing for future working capital needs or for possible
future acquisitions or other purposes may be limited; (ii) a substantial portion
of Iron Mountain's cash flow from operations will be dedicated to the payment of
principal and interest on its indebtedness, thereby reducing funds available for
other purposes; (iii) Iron Mountain may be more vulnerable to adverse economic
conditions than some of its competitors and thus may be limited in its ability
to withstand competitive pressures; and (iv) Iron Mountain may be more highly
leveraged than certain of its competitors, which may place it at a competitive
disadvantage.
A substantial portion of Iron Mountain's cash flow from operations is
required for debt service. Management believes that cash flow from operations in
conjunction with borrowings from existing and possible future credit facilities
will be sufficient for the foreseeable future to meet debt service requirements
and to make possible future acquisitions and capital expenditures. However,
there can be no assurance in this regard, and Iron Mountain's leverage could
make it vulnerable to a downturn in the operating performance of its
subsidiaries, a downturn in economic conditions or, because borrowings under the
Credit Agreement bear interest at rates which fluctuate, increases in interest
rates on borrowings under the Credit Agreement. If such cash flow were not
sufficient to meet such debt service requirements or payments of principal, Iron
Mountain could be required to sell additional equity securities, refinance its
obligations or dispose of assets in order to make such scheduled payments. There
can be no assurance that Iron Mountain would be able to effect any of such
transactions or do so on favorable terms.
Casualty
Iron Mountain currently maintains and intends to continue to maintain,
to the extent such insurance is available on commercially reasonable terms,
comprehensive liability, fire, flood and earthquake (where appropriate) and
extended coverage insurance with respect to the properties that it now owns or
leases or that it may in the future own or lease, with customary limits and
deductibles. Certain types of loss, however, may not be fully insurable on a
cost-effective basis, such as losses from earthquakes, or may be altogether
uninsurable, such as losses from riots. Iron Mountain has in the past suffered
damages and losses from an earthquake and a riot in California, which damages
and losses were substantially covered by insurance. In March 1997, Iron Mountain
experienced three fires, all of which authorities have determined were caused by
arson and which resulted in extensive damage to one and
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destruction of the Company's other records management facility in South
Brunswick Township, New Jersey. Iron Mountain has filed several insurance claims
related to the South Brunswick fires, including a significant claim under its
business interruption insurance policy. Some of the Company's customers or their
insurance carriers have asserted claims or filed lawsuits as a consequence of
the destruction of or damage to their records due to the fires. The Company is a
defendant in three such lawsuits. The outcome of these claims and proceedings
cannot be predicted. Based on its present assessment of the situation, after
consultation with legal counsel, management does not believe that the outcome of
these claims and lawsuits will have a material adverse effect on Iron Mountain's
financial condition or results of operations, although there can be no assurance
in this regard.
In the future, should uninsured losses or damages occur, Iron Mountain
could lose both its investment in and anticipated profits and cash flow from the
affected property and may continue to be obligated on any leasehold obligations,
mortgage indebtedness or other obligations related to such property. As a
result, any such loss could materially adversely affect Iron Mountain.
History of Losses; EBITDA Objective
Iron Mountain has a history of experiencing net losses applicable to
common stockholders. Such net losses are attributable in part to significant
non-cash charges associated with Iron Mountain's pursuit of its growth strategy,
namely, (i) depreciation and amortization expenses associated with expansion of
Iron Mountain's storage capacity and (ii) goodwill amortization associated with
acquisitions accounted for under the purchase method. In addition, net income
applicable to common stockholders has been negatively affected by a charge for
accretion of a redeemable put warrant and, in 1996, by an extraordinary charge
related to the early retirement of debt. The put warrant was redeemed in
February 1996, upon completion of Iron Mountain's initial public offering.
Iron Mountain's primary financial objective is to increase its earnings
before interest, taxes, depreciation, amortization and extraordinary items
("EBITDA"), which is a source of funds to service indebtedness and for
investment in continued internal growth and growth through acquisitions, and not
net income and net income applicable to common stockholders. Iron Mountain has
benefited from growth in EBITDA, while net losses applicable to common
stockholders have increased over such period. Based on its experience in the
records management industry, Iron Mountain believes that EBITDA is an important
tool for measuring the performance of records management companies (including
potential acquisition targets) in several areas, such as liquidity, operating
performance and leverage. In addition, lenders use EBITDA as a criterion in
evaluating records management companies, and Iron Mountain's financing
agreements contain covenants in which EBITDA is used as a measure of financial
performance. Other measures of Iron Mountain's financial performance, such as
net income and net income applicable to common stockholders, have been
negatively affected by pursuit of Iron Mountain's objective to increase EBITDA
and may be negatively affected in the future. In addition, execution of Iron
Mountain's growth strategy could result in future net losses due to increased
interest expense associated with borrowings under the Credit Agreement and
possible future credit arrangements and increased depreciation and amortization
expenses.
Anti-Takeover Effect of Certain Provisions of Iron Mountain's Certificate of
Incorporation, By-Laws and the Notes Indentures
Certain provisions of Iron Mountain's Amended and Restated Certificate
of Incorporation (the "Restated Certificate") and Iron Mountain's By-Laws (the
"By-Laws") could have the effect of making it more difficult for a third party
to acquire, or discouraging a third party from acquiring, a majority of the
outstanding capital stock of Iron Mountain and could make it more difficult to
consummate certain types of transactions involving an actual or potential change
in control of Iron Mountain, such as a merger, tender offer or proxy contest.
The Restated Certificate also provides for three classes of Directors, as equal
in number as possible, to be elected on a staggered basis (one class per year).
As a result of such a provision, it would generally require at least two
elections of the Iron Mountain Board to replace a majority of the members of the
Iron Mountain Board, thereby enabling existing management to exercise
significant control over Iron Mountain's affairs during such period. Pursuant to
the Restated Certificate, shares of Preferred Stock may be issued in the future
without further stockholder approval and
3
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upon such terms and conditions, and having such rights, privileges and
preferences (including the right to vote and the right to convert into Common
Stock), as the Iron Mountain Board may determine. Pursuant to the By-Laws,
approximately 4 million shares of Common Stock that were issued by the Company
in five acquisitions are subject to restrictions on transfer for varying periods
of time, all of which expire by January 1999. A significant portion of such
shares are held by affiliates.
Iron Mountain currently has outstanding $165,000,000 in aggregate
principal amount of 10 1/8% Senior Subordinated Notes due 2006 issued in October
1996 (the "1996 Notes") and $250,000,000 in aggregate principal amount of 8 3/4%
Senior Subordinated Notes due 2009 issued in October 1997 (the "1997 Notes," and
collectively with the 1996 Notes, the "Senior Subordinated Notes"). Under
certain circumstances relating to a change of control of Iron Mountain (a
"Change of Control") as set forth in the indentures for the Senior Subordinated
Notes (the "Notes Indentures"), Iron Mountain will be required to make an offer
to purchase all of the outstanding Senior Subordinated Notes at a purchase
price, in cash, equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of purchase. There can be no assurance that
Iron Mountain would be able to obtain such funds through a refinancing of the
Senior Subordinated Notes to be purchased or otherwise, or that the purchase
would be permitted under the Credit Agreement. Also, the requirement that Iron
Mountain make an offer to purchase all of the Senior Subordinated Notes then
outstanding in the event of a Change of Control may have the effect of deterring
a third party from effecting a transaction that would constitute a Change of
Control.
Control by Principal Stockholders
The voting power held by certain large stockholders of Iron Mountain
may have the effect of discouraging certain types of transactions involving an
actual or potential change of control of Iron Mountain, including transactions
in which the holders of Common Stock might otherwise receive a premium for their
shares over then-current market prices. In addition, as a result of such voting
power such stockholders have the ability to significantly affect the election of
Directors of Iron Mountain who, in turn, control the management and affairs of
Iron Mountain.
Restrictions Imposed by Terms of Indebtedness; Dependence Upon Operations of
Subsidiaries
The Credit Agreement and the Notes Indentures contain covenants
restricting or limiting the ability of the Company and its subsidiaries to,
among other things: (i) incur additional indebtedness; (ii) pay dividends or
make other restricted payments; (iii) make asset dispositions; (iv) permit
liens; (v) enter into sale and leaseback transactions; (vi) enter into certain
mergers; (vii) make certain investments; and (viii) enter into transactions with
related persons. This may adversely affect the Company's ability to pursue its
acquisition strategy. The Credit Agreement also requires the Company to maintain
specific financial ratios and to satisfy certain financial condition tests. The
Company's ability to meet those financial ratios and financial condition tests
can be affected by events beyond its control, and there can be no assurance that
the Company will meet those tests. The breach of any of those covenants could
result in a default under the Credit Agreement, the Notes Indentures or all of
them. In the event of a default under the Credit Agreement or the Notes
Indentures, the lenders could seek to declare all amounts outstanding under the
Credit Agreement, together with accrued and unpaid interest, if any, to be
immediately due and payable. If the Company were unable to repay those amounts,
the lenders under the Credit Agreement could proceed against the collateral
granted to them to secure that indebtedness. If the indebtedness under the
Credit Agreement or the Notes Indentures were to be accelerated, there can be no
assurance that the assets of the Company would be sufficient to repay in full
that indebtedness and the other indebtedness of the Company.
Substantially all of the tangible assets of the Company are held by,
and substantially all of the Company's operating revenues are derived from
operations of, the Company's subsidiaries. Therefore, the Company's ability to
pay interest and principal when due under the Credit Agreement and the Senior
Subordinated Notes is dependent upon the receipt of sufficient funds from such
subsidiaries. The Company's obligations under the Credit Agreement and the
Senior Subordinated Notes are guaranteed, jointly and severally, by
substantially all of the Company's present and future subsidiaries.
4
<PAGE>
Environmental Matters
As of September 30, 1997 Iron Mountain owned or leased over 150 records
management facilities. Under various federal, state and local environmental
laws, ordinances and regulations ("Environmental Laws"), an owner of real estate
or a lessee conducting operations thereon may become liable for the costs of
investigation, removal or remediation of soil and groundwater contaminated by
certain hazardous substances or wastes or petroleum products. Certain such laws
impose cleanup responsibility and liability without regard to whether the owner
or operator of the real estate or operations thereon knew of or was responsible
for the contamination, and whether or not operations at the property have been
discontinued or title to the property has been transferred. In addition, the
presence of such substances, or the failure to properly remediate such property,
may adversely affect the current property owner's or operator's ability to sell
or rent such property or to borrow using such property as collateral. The owner
or operator of contaminated real estate also may be subject to common law claims
by third parties based on damages and costs resulting from off-site migration of
the contamination.
Certain Environmental Laws govern the removal, encapsulation or
disturbance of asbestos-containing materials ("ACMs"). Such laws may impose
liability for release of ACMs and may enable third parties to seek recovery from
owners or operators of real estate for personal injury associated with exposure
to such substances. Certain facilities operated by Iron Mountain contain or may
contain ACMs. In addition, certain of the properties formerly or currently owned
or operated by Iron Mountain were previously used for industrial or other
purposes that involved the use or storage of hazardous substances or petroleum
products or the generation and disposal of hazardous wastes, and in some
instances, included the operation of underground storage tanks ("USTs"). In
connection with its former and current ownership or operation of certain
properties, Iron Mountain may be potentially liable for environmental costs such
as those discussed above. Iron Mountain has from time to time conducted certain
environmental investigations and remedial activities at certain of its former
and current facilities, but an in-depth environmental review of all properties
has not yet been conducted by or on behalf of Iron Mountain.
Iron Mountain believes it is in substantial compliance with all
applicable material Environmental Laws. No assurance can be given that there
are, or as a result of possible future acquisitions there will be, no
environmental conditions for which Iron Mountain might be liable in the future
or that future regulatory action, as well as compliance with future
Environmental Laws, will not require Iron Mountain to incur costs for or at its
properties that could have a material adverse effect on Iron Mountain's
financial condition and results of operations.
No Intention to Pay Dividends
Iron Mountain has never declared or paid cash dividends on its capital
stock. Iron Mountain intends to retain future earnings for use in its business
and does not anticipate declaring or paying any cash dividends on shares of
Common Stock in the foreseeable future. In addition, Iron Mountain is currently
restricted under the terms of the Credit Agreement and the Notes Indentures from
declaring or paying cash dividends on its Common Stock.
5
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THE COMPANY
Iron Mountain is America's largest records management company, as
measured by its revenues. The Company is a national, full-service provider of
records management and related services, enabling customers to outsource records
management functions. Iron Mountain has a diversified customer base, which
includes more than half of the Fortune 500 and numerous commercial, legal,
banking, healthcare, accounting, insurance, entertainment and government
organizaitions. The Company provides storage and related services for all major
media, including paper (the dominant form of record storage), computer disk and
tapes, microfilm and microfiche, master audio and video tapes, film and optical
disks, X-rays and blueprints. Iron Mountain's principal services provided to its
storage customers include courier pick-up and delivery, filing, retrieval and
destruction of records, database management, customized reporting and disaster
recovery support. The Company also sells storage materials and provides
consulting, facilities management, information technology staffing and other
outsourcing services.
Iron Mountain was incorporated in Delaware in 1990 but its predecessor
operations date from 1951. The principal executive office of the Company is
located at 745 Atlantic Avenue, Boston, Massachusetts 02111. Its telephone
number is (617) 357-4455.
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Offered Securities
for general corporate purposes, which may include acquisitions, investments and
the repayment of indebtedness outstanding at such time or the reduction of
amounts outstanding under the Credit Agreement or any other credit facility.
Pending utilization as set forth above, the proceeds from the sale of the
Offered Securities will be invested in short-term, dividend-paying or
interest-bearing investment grade securities.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratio of
earnings to fixed charges for the periods indicated (dollars in thousands):
<TABLE>
<CAPTION>
Pro Forma(1)
-------------------------
For the year For the nine
Nine months ended ended months ended
Year ended December 31, September 30, December 31, September 30,
-------------------------------------------- ---------------------
1992 1993 1994 1995 1996 1996 1997 1996 1997
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings
to fixed charges 1.3x 1.3x 1.2x 1.1x 1.1x 1.1x 0.9x(2) 0.7x(3) 0.8x(4)
<FN>
- ------------
1 Does not include results of operations prior to the date of
acquisition, or pro forma adjustments, for acquisitions completed by
HIMSCORP or Arcus Group, Inc. in 1996 and 1997.
2 The Company reported a pretax loss for the nine months ended September
30, 1997. For such period the Company would have needed to generate
additional income from continuing operations, before provision for
income taxes, of $2,156 to cover its fixed charges of $24,425.
3 On a pro forma basis, the Company would have needed to generate
additional income from continuing operations, before provision for
income taxes, of $17,779 to cover its fixed charges of $56,433.
4 On a pro forma basis, the Company would have needed to generate
additional income from continuing operations, before provision for
income taxes, of $7,601 to cover its fixed charges of $44,366.
</FN>
</TABLE>
The ratios of earnings to fixed charges presented above were computed
by dividing the Company's earnings by fixed charges. For this purpose, earnings
have been calculated by adding fixed charges to income (loss) before provision
for income taxes. Fixed charges consist of interest costs, whether expensed or
capitalized, the interest component of rental expense, if any, amortization of
debt discounts and deferred financing costs, whether expensed or capitalized.
6
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be direct obligations of the Company, which
may be secured or unsecured, and which may be senior or subordinated
indebtedness of the Company. The Debt Securities may be fully and
unconditionally guaranteed on a secured or unsecured, senior or subordinated
basis, jointly and severally by the Guarantors. The Debt Securities will be
issued under one or more indentures (an "Indenture") between the Company and a
trustee (an "Indenture Trustee"). Any Indenture will be subject to, and governed
by, the Trust Indenture Act of 1939, as amended (the "TIA"). The statements made
hereunder relating to any Indentures and the Debt Securities to be issued
thereunder are summaries of certain anticipated provisions thereof and do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all provisions of the Indentures and such Debt Securities.
General
The Company has filed with the Registration Statement with respect to
the Offered Securities a form of Indenture (as supplemented from time to time,
the "Senior Indenture") relating to the Senior Securities (as defined) and a
form of Indenture (as supplemented from time to time, the "Subordinated
Indenture") relating to the Senior Subordinated Securities (as defined) and
Subordinated Securities (as defined). The Debt Securities will be direct
obligations of the Company and, if issued under the Senior Indenture, will rank
equally and ratably in right of payment with other indebtedness of the Company
that is not subordinated (the "Senior Securities"), or, if issued under the
Subordinated Indenture, will be subordinated in right of payment to the prior
payment in full of Senior Indebtedness (as defined in the applicable Prospectus
Supplement) and may rank equally and ratably with the Senior Subordinated Notes
and any other senior subordinated indebtedness ("Senior Subordinated
Securities") or may be subordinated in right of payment to the Senior
Subordinated Notes and such other senior subordinated indebtedness
("Subordinated Securities"). See "--Subordination." The Debt Securities may be
issued without limit as to aggregate principal amount, in one or more series, in
each case as established from time to time in or pursuant to authority granted
by a resolution of the Board of Directors of the Company or as established in
one or more indentures supplemental to any Indenture. All Debt Securities of one
series need not be issued at the same time and, unless otherwise provided, a
series may be reopened, without the consent of the holders of the Debt
Securities of such series, for issuances of additional Debt Securities of such
series.
It is anticipated that any Indenture will provide that the Company may,
but need not, designate more than one Indenture Trustee thereunder, each with
respect to one or more series of Debt Securities. Any Indenture Trustee under
any Indenture may resign or be removed with respect to one or more series of
Debt Securities, and a successor Indenture Trustee may be appointed to act with
respect to such series. In the event that two or more persons are acting as
Indenture Trustee with respect to different series of Debt Securities, each such
Indenture Trustee shall be a trustee of a trust under the applicable Indenture
separate and apart from the trust administered by any other Indenture Trustee,
and, except as otherwise indicated herein, any action described herein to be
taken by the Indenture Trustee may be taken by each such Indenture Trustee with
respect to, and only with respect to, the one or more series of Debt Securities
for which it is Indenture Trustee under the applicable Indenture.
Reference is made to the Prospectus Supplement relating to the series
of Debt Securities being offered for the specific terms thereof, including,
where applicable, the following:
(1) the title of such Debt Securities and whether such Debt
Securities are Senior Securities, Senior Subordinated
Securities or Subordinated Securities;
(2) the aggregate principal amount of such Debt Securities and any
limit on such aggregate principal amount;
(3) the percentage of the principal amount at which such Debt
Securities will be issued and, if other than the principal
amount thereof, the portion of the principal amount thereof
payable upon
7
<PAGE>
declaration of acceleration of the maturity thereof, or (if
applicable) the portion of the principal amount of such Debt
Securities which is convertible, or the method by which any
such portion shall be determined;
(4) if convertible, the terms on which such Debt Securities are
convertible, including the initial conversion price or rate
and the conversion period and any applicable limitations on
the ownership or transferability of the securities into which
such Debt Securities are convertible;
(5) the date or dates, or the method for determining such date or
dates, on which the principal of such Debt Securities will be
payable;
(6) the rate or rates (which may be fixed or variable), or the
method by which such rate or rates shall be determined, at
which such Debt Securities will bear interest, if any;
(7) the date or dates, or the method for determining such date or
dates, from which any interest will accrue, the dates on which
any such interest will be payable, the record dates for such
interest payment dates, or the method by which any such date
shall be determined, the person to whom such interest shall be
payable, and the basis upon which interest shall be calculated
if other than that of a 360-day year of 12 months consisting
of 30 days each;
(8) the place or places where (i) the principal of, any premium
and interest on, and any additional amounts payable in respect
of such Debt Securities will be payable, (ii) such Debt
Securities may be surrendered for conversion or registration
of transfer or exchange and (iii) notices or demands to or
upon the Company in respect of such Debt Securities and the
applicable Indenture may be served;
(9) the period or periods within which, the price or prices at
which and the terms and conditions upon which such Debt
Securities may be redeemed, as a whole or in part, at the
option of the Company, if the Company is to have such an
option;
(10) the obligation, if any, of the Company to redeem, repay or
purchase such Debt Securities pursuant to any sinking fund or
analogous provision or at the option of a holder thereof, and
the period or periods within which, the price or prices at
which and the terms and conditions upon which such Debt
Securities will be redeemed, repaid or purchased, as a whole
or in part, pursuant to such obligation;
(11) if other than U.S. dollars, the currency or currencies in
which such Debt Securities are denominated and payable, which
may be a foreign currency or units of two or more foreign
currencies or a composite currency or currencies, and the
terms and conditions relating thereto;
(12) if the principal of or premium, if any, or interest on such
Debt Securities is to be payable, at the election of the
Company or a holder thereof, in one or more currencies or
currency units other than that or those in which such Debt
Securities are stated to be payable, the currency, currencies
or currency units in which payment of the principal of and
premium, if any, and interest on Debt Securities of such
series as to which such election is made shall be payable, and
the periods within which and the terms and conditions upon
which such election is to be made;
(13) whether the amount of payments of interest on, principal of or
premium, if any, on such Debt Securities may be determined
with reference to an index, formula or other method (which
index, formula or method may, but need not, be based on a
currency, currencies, currency unit or units or composite
currency or currencies) and the manner in which such amounts
shall be determined;
8
<PAGE>
(14) the events of default or covenants of such Debt Securities, to
the extent different from or in addition to those described in
this Prospectus, and any provisions granting special rights to
the holders of such Debt Securities upon the occurrence of
events specified in such Prospectus Supplement;
(15) whether such Debt Securities will be issued in certificated
and/or book-entry form;
(16) whether such Debt Securities will be in registered or bearer
form and, if in registered form, the denominations thereof if
other than $1,000 and any integral multiple thereof and, if in
bearer form, the denominations thereof and terms and
conditions relating thereto;
(17) whether any of such Debt Securities are to be issuable in
permanent global form (a "Global Security") and, if so, the
terms and conditions, if any, upon which interests in such
Global Security may be exchanged, in whole or in part, for the
individual Debt Securities represented thereby;
(18) the applicability, if any, of the defeasance and covenant
defeasance provisions described in this Prospectus or any
modification thereof;
(19) if such Debt Securities are to be issued upon the exercise of
debt warrants, the time, manner and place for such Debt
Securities to be authenticated and delivered;
(20) whether and under what circumstances the Company will pay
additional amounts on such Debt Securities in respect of any
tax, assessment or governmental charge and, if so, whether the
Company will have the option to redeem such Debt Securities in
lieu of making such payment;
(21) the subordination provisions, if any, relating to such Debt
Securities;
(22) the provisions, if any, relating to any security provided for
such Debt Securities; and
(23) the provisions, if any, relating to any guarantee of such Debt
Securities.
The Debt Securities may provide for less than the entire principal
amount thereof to be payable upon declaration of acceleration of the maturity
thereof ("Original Issue Discount Securities"). If material or applicable,
special U.S. federal income tax, accounting and other considerations applicable
to Original Issue Discount Securities will be described in the applicable
Prospectus Supplement.
Except as described under "--Merger, Consolidation or Sale of Assets"
or as may be set forth in any Prospectus Supplement, an Indenture will not
contain any other provisions that would limit the ability of the Company to
incur indebtedness or that would afford holders of the Debt Securities
protection in the event of a highly leveraged or similar transaction involving
the Company or in the event of a change of control. Reference is made to the
applicable Prospectus Supplement for information with respect to any deletions
from, modifications of or additions to the events of default or covenants that
are described below, including any addition of a covenant or other provisions
providing event risk or similar protection.
Denominations, Interest, Registration and Transfer
Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series that are registered securities, other than Global
Securities (which may be of any denomination), shall be issuable in
denominations of $1,000 and any integral multiple thereof.
9
<PAGE>
Unless otherwise specified in the applicable Prospectus Supplement, the
interest on and principal of and premium, if any, on any series of Debt
Securities will be payable at the corporate trust office of the Indenture
Trustee, initially at the address which will be set forth in the applicable
Prospectus Supplement; provided that, at the option of the Company, payment of
interest may be made by check mailed to the address of the person entitled
thereto as it appears in the applicable register or by wire transfer of funds to
such person at an account maintained within the United States.
Any interest not punctually paid or duly provided for on any interest
payment date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the holder on the applicable regular record
date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
applicable Indenture Trustee, notice whereof shall be given to the holder of
such Debt Security not less than 10 days prior to such Special Record Date, or
may be paid at any time in any other lawful manner, all as more completely
described in the applicable Indenture.
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of such
Debt Securities at the corporate trust office of the applicable Indenture
Trustee. In addition, subject to certain limitations imposed upon Debt
Securities issued in book-entry form, the Debt Securities of any series may be
surrendered for conversion or registration of transfer thereof at the corporate
trust office of the applicable Indenture Trustee. Every Debt Security
surrendered for conversion, registration of transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer. No service charge
will be made for any registration of transfer or exchange of any Debt
Securities, but the Indenture Trustee or the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith. If the applicable Prospectus Supplement refers to any
transfer agent (in addition to the Indenture Trustee) initially designated by
the Company with respect to any series of Debt Securities, the Company may at
any time rescind the designation of any such transfer agent or approve a change
in the location through which any such transfer agent acts, except that the
Company will be required to maintain a transfer agent in each place of payment
for such series. The Company may at any time designate additional transfer
agents with respect to any series of Debt Securities.
Neither the Company nor any Indenture Trustee shall be required to (i)
issue, register the transfer of or exchange Debt Securities of any series during
a period beginning at the opening of business 15 days before any selection of
Debt Securities of that series to be redeemed and ending at the close of
business on (a) if such Debt Securities are issuable only as registered
securities, the day of the mailing of the relevant notice of redemption and (b)
if such Debt Securities are issuable as bearer securities, the day of the first
publication of the relevant notice of redemption or, if such Debt Securities are
also issuable as registered securities and there is no publication, the mailing
of the relevant notice of redemption; (ii) register the transfer of or exchange
any registered security so selected for redemption in whole or in part, except,
in the case of any registered security to be redeemed in part, the portion
thereof not to be redeemed; (iii) exchange any bearer security so selected for
redemption except that such a bearer security may be exchanged for a registered
security of that series and like tenor; provided that such registered security
shall be simultaneously surrendered for redemption; or (iv) issue, register the
transfer of or exchange any Debt Security which has been surrendered for
repayment at the option of the holder, except the portion, if any, of such Debt
Security not to be so repaid.
10
<PAGE>
Merger, Consolidation or Sale of Assets
The Company may not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another entity unless: (a) the
Company is the surviving corporation or the entity formed by or surviving any
such consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (b) the entity formed by or
surviving any such consolidation or merger (if other than the Company) or the
entity to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all the obligations of the Company
under the Debt Securities and any Indenture (pursuant to a supplemental
indenture in a form reasonably satisfactory to the applicable Indenture
Trustee); and (c) immediately after such transaction no event of default under
the applicable Indenture, and no event which, after notice or the lapse of time,
or both, would become such an event of default exists.
Certain Covenants
Provision of Financial Information. Whether or not required by the
rules and regulations of the Commission, so long as any Debt Securities are
outstanding, the Company will furnish to the holders of Debt Securities (a) all
quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the Company
were required to file such Forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon by the Company's certified
independent accountants and (b) all financial information that would be required
to be included in a Form 8-K filed with the Commission if the Company were
required to file such reports. In addition, whether or not required by the rules
and regulations of the Commission, the Company will file a copy of all such
information and reports with the Commission for public availability (unless the
Commission will not accept such a filing) and make such information available to
investors who request it in writing.
Additional Covenants. Any additional or different covenants of the
Company (or modifications to the foregoing covenants) with respect to any series
of Debt Securities will be set forth in the applicable Prospectus Supplement.
Events of Default, Notice and Waiver
Each Indenture will provide that the following events are "Events of
Default" with respect to any series of Debt Securities issued thereunder; (a)
default for 30 days in the payment of any installment on any Debt Security of
such series; (b) default in the payment of the principal of (or premium, if any,
on) any Debt Security of such series at its maturity; (c) default in making any
sinking fund payments as required for any Debt Security of such series; (d)
default in the performance of any other covenant of the Company contained in the
applicable Indenture (other than a covenant added to such Indenture solely for
the benefit of a series of Debt Securities issued thereunder other than such
series), such default having continued for 60 days after written notice as
provided in such Indenture; (e) default in the payment of an aggregate principal
amount exceeding a specified dollar amount of any evidence of indebtedness of
the Company or any mortgage, indenture or other instrument under which such
indebtedness is issued or by which such indebtedness is secured, such default
having occurred after the expiration of any applicable grace period and having
resulted in the acceleration of the maturity of such indebtedness or
constituting a default in the payment of such indebtedness at final maturity,
but only if such indebtedness is not discharged or such acceleration is not
rescinded or annulled; (f) certain events of bankruptcy, insolvency or
reorganization, or court appointment of a receiver, liquidator or trustee of the
Company or any Significant Subsidiary (as hereinafter defined) or any of their
respective property; and (g) any other event of default provided with respect to
a particular series of Debt Securities. The term "Significant Subsidiary" means
each significant subsidiary (as defined in Regulation S-X promulgated under the
Securities Act) of the Company.
11
<PAGE>
If an Event of Default (other than an Event of Default described in
clause (f) above) under any Indenture with respect to Debt Securities of any
series at the time outstanding occurs and is continuing, then in every such case
the applicable Indenture Trustee or the holders of at least 25% in principal
amount of the outstanding Debt Securities of that series may declare the
principal amount (or, if the Debt Securities of that series are Original Issue
Discount Securities or indexed securities, such portion of the principal amount
as may be specified in the terms thereof) of all of the Debt Securities of that
series to be due and payable immediately by written notice thereof to the
Company (and to the applicable Indenture Trustee if given by the holders). If an
Event of Default described in clause (f) above with respect to the Debt
Securities of any series at the time outstanding shall occur, the principal
amount of all the Debt Securities of that series (or, in the case of any such
Original Issue Discount Security or other Debt Security, such specified amount)
will automatically, and without any action by the Indenture Trustee or any
holder of such series of Debt Securities, become immediately due and payable.
However, at any time after such a declaration of acceleration with respect to
Debt Securities of such series (or of all Debt Securities then outstanding under
the applicable Indenture, as the case may be) has been made, but before a
judgment or decree for payment of the money due has been obtained by the
applicable Indenture Trustee, the holders of not less than a majority in
principal amount of outstanding Debt Securities of such series (or of all Debt
Securities then outstanding under the applicable Indenture, as the case may be)
may rescind and annul such declaration and its consequences if (i) the Company
shall have deposited with the applicable Indenture Trustee all required payments
of the principal of (and premium, if any) and interest on the Debt Securities of
such series (or of all Debt Securities then outstanding under the applicable
Indenture, as the case may be), plus certain fees, expenses, disbursements and
advances of the applicable Indenture Trustee, and (ii) all Events of Default,
other than the non-payment of accelerated principal (or specified portion
thereof), or premium, if any, or interest on the Debt Securities of such series
(or of all Debt Securities then outstanding under the applicable Indenture, as
the case may be) have been cured or waived as provided in the applicable
Indenture. Each of the Indentures will also provide that the holders of not less
than a majority in principal amount of the outstanding Debt Securities of any
series (or of all Debt Securities then outstanding under the applicable
Indenture, as the case may be) may waive any past default with respect to such
series and its consequences, except a default (i) in the payment of the
principal of (or premium, if any) or interest on any Debt Security of such
series or (ii) in respect of a covenant or provision contained in the applicable
Indenture that cannot be modified or amended without the consent of the holder
of each outstanding Debt Security affected thereby.
The Indenture Trustee will be required to give notice to the holders of
Debt Securities within 90 days of a default under the applicable Indenture
unless such default has been cured or waived; provided, however, that such
Indenture Trustee may withhold notice to the holders of any series of Debt
Securities of any default with respect to such series (except a default in the
payment of the principal of (or premium, if any) or interest on any Debt
Security of such series or in the payment of any sinking fund installment in
respect of any Debt Security of such series) if specified responsible officers
of such Indenture Trustee consider such withholding to be in the interest of
such holders.
Each Indenture will provide that no holders of Debt Securities of any
series may institute any proceedings, judicial or otherwise, with respect to the
Indenture or for any remedy thereunder, except in the case of failure of the
Indenture Trustee, for 60 days, to act after it has received a written request
to institute proceedings in respect of an event of default from the holders of
not less than a majority in principal amount of the outstanding Debt Securities
of such series, as well as an offer of reasonable indemnity. This provision will
not prevent, however, any holder of Debt Securities from instituting suit for
the enforcement of payment of the principal of (and premium, if any) and
interest on such Debt Securities at the respective due dates thereof.
Subject to provisions in the applicable Indenture relating to its
duties in case of default, no Indenture Trustee will be under any obligation to
exercise any of its rights or powers under such Indenture at the request or
direction of any holders of any series of Debt Securities then outstanding under
such Indenture, unless such holders shall have offered to the Indenture Trustee
reasonable security or indemnity. The holders of not less than a majority in
principal amount of the outstanding Debt Securities of any series (or of all
Debt Securities then outstanding under the applicable Indenture, as the case may
be) shall have the right to direct the time, method and place of conducting
12
<PAGE>
any proceeding for any remedy available to the applicable Indenture Trustee, or
of exercising any trust or power conferred upon such Indenture Trustee. However,
an Indenture Trustee may refuse to follow any direction which is in conflict
with any law or the Indenture, which may involve such Indenture Trustee in
personal liability or which may be unduly prejudicial to the holders of Debt
Securities of such series not joining therein.
The Company will be required to deliver to each Indenture Trustee
annually a certificate, signed by one of several specified officers of the
Company, stating whether or not such officer has knowledge of any default under
the applicable Indenture and, if so, specifying each such default and the nature
and status thereof.
Modification of the Indenture
Modifications and amendments of an Indenture will be permitted to be
made, and a waiver of any existing default or compliance with any provision may
be made, only with the consent of the holders of not less than a majority in
principal amount of all outstanding Debt Securities or series of outstanding
Debt Securities which are affected by such modification, amendment or waiver;
provided, however, that no such modification, amendment or waiver may, without
the consent of the holder of each such Debt Security affected thereby, (i)
change the stated maturity of the principal of, or any installment of interest
(or premium, if any) on any such Debt Security; (ii) reduce the principal amount
of, or the rate or amount of interest on, or any premium payable on redemption
of, any such Debt Security, or reduce the amount of principal of an Original
Issue Discount Security that would be due and payable upon declaration of
acceleration of the maturity thereof or would be provable in bankruptcy, or
adversely affect any right of repayment of the holder of any such Debt Security;
(iii) change the place of payment, or the coin or currency, for payment of
principal of, premium, if any, or interest on any such Debt Security; (iv)
impair the right to institute suit for the enforcement of any payment on or with
respect to any such Debt Security; (v) reduce the percentage of outstanding Debt
Securities of any series necessary to modify or amend the Indenture, to waive
compliance with certain provisions thereof or certain defaults and consequences
thereunder or to reduce the quorum or voting requirements set forth in such
Indenture; or (vi) waive a default or event of default in the payment of
principal of or premium, if any, or interest on the Debt Securities (except a
recision of acceleration of the Debt Securities by holders of not less than a
majority in principal amount of Debt Securities or series of Debt Securities
affected thereby and that resulted from such acceleration); or (vii) modify any
of the foregoing provisions or any of the provisions relating to the waiver of
certain past defaults or certain covenants, except to increase the required
percentage to effect such action or to provide that certain other provisions may
not be modified or waived without the consent of the holder of such Debt
Security.
Modifications and amendments of an Indenture will be permitted to be
made by the Company and the applicable Indenture Trustee thereunder without the
consent of any holder of Debt Securities for any of the following purposes: (i)
to evidence the succession of another person to the Company as obligor under
such Indenture; (ii) to add to the covenants of the Company for the benefit of
the holders of all or any series of Debt Securities or to surrender any right or
power conferred upon the Company in such Indenture; (iii) to add events of
default for the benefit of the holders of all or any series of Debt Securities;
(iv) to add or change any provisions of the Indenture to facilitate the issuance
of, or to liberalize certain terms of, Debt Securities in bearer form, or to
permit or facilitate the issuance of Debt Securities in uncertificated form;
provided that such action shall not adversely affect the interests of the
holders of the Debt Securities in any material respect; (v) to change or
eliminate any provisions of the Indenture; provided that any such change or
elimination shall become effective only when there are no Debt Securities
outstanding of any series created prior thereto which are entitled to the
benefit of such provision; (vi) to secure the Debt Securities; (vii) to
establish the form or terms of Debt Securities of any series, including the
provisions and procedures, if applicable, for the conversion of such Debt
Securities into Common Stock or Preferred Stock; (viii) to provide for the
acceptance of appointment by a successor Indenture Trustee or facilitate the
administration of the trusts under an Indenture by more than one Indenture
Trustee; (ix) to cure any ambiguity, defect or inconsistency in an Indenture;
provided that such action shall not adversely affect the interests of holders of
Debt Securities of any series in any material respect; or (x) to supplement any
of the provisions of an Indenture to the extent necessary to permit or
facilitate defeasance and discharge of any series of such Debt Securities;
13
<PAGE>
provided that such action shall not adversely affect the interests of the
holders of the Debt Securities of any series in any material respect.
Each Indenture will provide that in determining whether the holders of
the requisite principal amount of outstanding Debt Securities of a series have
given any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security that
shall be deemed to be outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof, (ii) the principal amount
of a Debt Security denominated in a foreign currency that shall be deemed
outstanding shall be the U.S. dollar equivalent, determined on the issue date
for such Debt Security, of the principal amount (or, in the case of an Original
Issue Discount Security, the U.S. dollar equivalent on the issue date of such
Debt Security of the amount determined as provided in (i) above), (iii) the
principal amount of an indexed security that shall be deemed outstanding shall
be the principal face amount of such indexed security at original issuance,
unless otherwise provided with respect to such indexed security in the
applicable Indenture, and (iv) Debt Securities owned by the Company or any other
obligor upon the Debt Securities or any affiliate of the Company or of such
other obligor shall be disregarded.
Each Indenture will contain provisions for convening meetings of the
holders of each series of Debt Securities. A meeting may be called at any time
by an Indenture Trustee, and also, upon request, by the Company or the holders
of at least 25% in principal amount of the outstanding Debt Securities of such
series, in any such case, upon notice given as provided in such Indenture.
Except for any consent that must be given by the holder of each Debt Security
affected by certain modifications, amendments and waiver of an Indenture, any
resolution presented at a meeting or adjourned meeting duly reconvened at which
a quorum is present may be adopted by the affirmative vote of the holders of a
majority in principal amount of the outstanding Debt Securities of that series;
provided, however, that, except as referred to above, any resolution with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that may be made, given or taken by the holders of a
specified percentage, which is less than a majority, in principal amount of the
outstanding Debt Securities of a series may be adopted at a meeting or adjourned
meeting duly reconvened at which a quorum is present by the affirmative vote of
the holders of such specified percentage in principal amount of the outstanding
Debt Securities for that series. Any resolution passed or decision taken at any
meeting of holders of Debt Securities of any series duly held in accordance with
the applicable Indenture will be binding on all holders of Debt Securities of
that series. The quorum at any meeting called to adopt a resolution, and at any
reconvened meeting, will be persons holding or representing a majority in
principal amount of the outstanding Debt Securities of a series; provided,
however, that if any action is to be taken at such meeting with respect to a
consent or waiver which may be given by the holders of not less than a specified
percentage in principal amount of the outstanding Debt Securities of a series,
the persons holding or representing such specified percentage in principal
amount of the outstanding Debt Securities of such series will constitute a
quorum.
Notwithstanding the foregoing provisions, each Indenture will provide
that if any action is to be taken at a meeting of holders of Debt Securities of
any series with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action that such Indenture expressly provides
may be made, given or taken by the holders of such series and one or more
additional series: (i) there shall be no minimum quorum requirement for such
meeting and (ii) the principal amount of the outstanding Debt Securities of such
series that vote in favor of such request, demand, authorization, direction,
notice, consent, waiver or other action shall be taken into account in
determining whether such request, demand, authorization, direction, notice,
consent, waiver or other action has been made, given or taken under such
Indenture.
Discharge, Defeasance and Covenant Defeasance
The Company may discharge certain obligations to holders of any series
of Debt Securities that have not already been delivered to the applicable
Indenture Trustee for cancellation and that either have become due and payable
or will become due and payable within one year (or scheduled for redemption
within one year) by
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irrevocably depositing with such Indenture Trustee, in trust, funds in such
currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable in an amount sufficient to
pay the entire indebtedness on such Debt Securities in respect of principal (and
premium, if any) and interest to the date of such deposit (if such Debt
Securities have become due and payable) or to the stated maturity or redemption
date, as the case may be.
An Indenture may provide that, if certain provisions thereof are made
applicable to the Debt Securities of or within a series pursuant to the
Indenture, the Company may elect either (i) to defease and be discharged from
any and all obligations with respect to such Debt Securities (except for the
obligation to pay additional amounts, if any, upon the occurrence of certain
events of tax, assessment or governmental charge with respect to payments on
such Debt Securities and the obligations to register the transfer or exchange of
such Debt Securities, to replace temporary or mutilated, destroyed, lost or
stolen Debt Securities, to maintain an office or agency in respect of such Debt
Securities and to hold moneys for payment in trust) ("defeasance") or (ii) to be
released from its obligations with respect to such Debt Securities under certain
sections of such Indenture (including the restrictions described under
"--Certain Covenants") and, if provided pursuant to such Indenture, its
obligations with respect to any other covenant, and any omission to comply with
such obligations shall not constitute a default or an event of default with
respect to such Debt Securities ("covenant defeasance"), in either case upon the
irrevocable deposit by the Company with the applicable Indenture Trustee, in
trust, of an amount, in such currency or currencies, currency unit or units of
composite currency or currencies in which such Debt Securities are payable at
stated maturity, or Government Obligations (as defined below), or both,
applicable to such Debt Securities which through the scheduled payment of
principal and interest, in accordance with their terms will provide money in an
amount sufficient to pay the principal of (and premium, if any) and interest on
such Debt Securities, and any mandatory sinking fund or analogous payments
thereon, on the scheduled dates therefor.
Such a trust may be established only if, among other things, the
Company has delivered to the applicable Indenture Trustee an opinion of counsel
(as specified in the applicable Indenture) to the effect that the holders of
such Debt Securities will not recognize income, gain or loss for U.S. federal
income tax purposes as a result of such defeasance or covenant defeasance and
will be subject to U.S. federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such defeasance or
covenant defeasance had not occurred.
"Government Obligations" means securities which are (i) direct
obligations of the United States of America or the government which issued the
foreign currency in which the Debt Securities of a particular series are
payable, for the payment of which its full faith and credit is pledged or (ii)
obligations of a person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such government which issued
the foreign currency in which the Debt Securities of a particular series are
payable, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America or such other government,
which, in either case, are not callable or redeemable at the option of the
issuer thereof, and shall also include a depository receipt issued by a bank or
trust company as custodian with respect to any such Government Obligation or a
specific payment of interest on or principal of any such Government Obligation
held by such custodian for the account of the holder of a depository receipt;
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the Government
Obligations or the specific payment of interest on or principal of the
Government Obligations evidenced by such depository receipt.
Unless otherwise provided in the applicable Prospectus Supplement, if
after the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any series,
(i) the holder of a Debt Security of such series is entitled to, and does, elect
pursuant to the applicable Indenture or the terms of such Debt Security to
receive payment in a currency, currency unit or composite currency other than
that in which such deposit has been made in respect of such Debt Security, or
(ii) a Conversion Event (as defined below) occurs in respect of the currency,
currency unit or composite currency in which such deposit has been made, the
indebtedness represented by such Debt Security shall be deemed to have been, and
will be, fully
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discharged and satisfied through the payment of the principal of (and premium,
if any) and interest on such Debt Security as they become due out of the
proceeds yielded by converting the amount so deposited in respect of such Debt
Security into the currency, currency unit or composite currency in which such
Debt Security becomes payable as a result of such election or such cessation of
usage based on the applicable market exchange rate. "Conversion Event" means the
cessation of use of (i) a currency, currency unit or composite currency both by
the government of the country which issued such currency and for the settlement
of transactions by a central bank or other public institutions of or within the
international banking community, (ii) the ECU both within the European Monetary
System and for the settlement of transactions by public institutions of or
within the European Communities or (iii) any currency unit or composite currency
other than the ECU for the purposes for which it was established. Unless
otherwise provided in the applicable Prospectus Supplement, all payments of
principal of (and premium, if any) and interest on any Debt Security that is
payable in a foreign currency that ceases to be used by its government of
issuance shall be made in U.S. dollars.
If the Company effects covenant defeasance with respect to any Debt
Securities and such Debt Securities are declared due and payable because of the
occurrence of any event of default and the amount in such currency, currency
unit or composite currency in which such Debt Securities are payable, and
Government Obligations on deposit with the Trustee, are not sufficient to pay
amounts due on such Debt Securities at the time of the acceleration resulting
from such event of default (even though they would have been sufficient to pay
amounts due under such Debt Security and their stated time of maturity), the
Company would remain liable to make payment of such amounts due at the time of
acceleration.
Notwithstanding the description set forth under "--Subordination"
below, in the event that the Company deposits money or Government Obligations in
compliance with the applicable Indenture in order to defease all or certain of
its obligations with respect to any Senior Subordinated Securities or
Subordinated Securities, the moneys or Government Obligations so deposited will
not be subject to the subordination provisions of such Indenture and the
indebtedness evidenced by such Senior Subordinated Securities or Subordinated
Securities will not be subordinated in right of payment to the holders of senior
indebtedness and senior subordinated indebtedness (as the case may be) to the
extent of the moneys or Government Obligations so deposited.
The applicable Prospectus Supplement may further describe the
provisions, if any, permitting such defeasance or covenant defeasance, including
any modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
Conversion Rights
The terms and conditions, if any, upon which the Debt Securities are
convertible into Common Stock or Preferred Stock will be set forth in the
Prospectus Supplement relating thereto. Such terms will include whether such
Debt Securities are convertible into Common Stock or Preferred Stock, the
conversion price or rate (or manner of calculation thereof), the conversion
period, provisions as to whether conversion will be at the option of the holders
of the Company, the events requiring an adjustment of the conversion price or
rate and provisions affecting conversion in the event of the redemption of such
Debt Securities and any restrictions on conversion.
Subordination
The terms and conditions, if any, upon which Senior Subordinated
Securities or Subordinated Securities of a series are subordinated to Debt
Securities of another series or to other indebtedness of the Company will be set
forth in the applicable Prospectus Supplement. Such terms will include a
description of the indebtedness ranking senior to such Senior Subordinated
Securities or Subordinated Securities, the restrictions on payments to the
holders of such Senior Subordinated Securities or Subordinated Securities while
a default with respect to such senior indebtedness is continuing, the
restrictions, if any, on payments to the holders of such Senior Subordinated
Securities or Subordinated Securities following an Event of Default, and
provisions requiring holders of such Senior Subordinated Securities or
Subordinated Securities to remit certain payments to holders of senior
indebtedness.
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Global Securities
If so set forth in the applicable Prospectus Supplement, the Debt
Securities of a series may be issued in whole or in part in the form of one or
more Global Securities that will be deposited with, or on behalf of, a
depositary identified in the applicable Prospectus Supplement relating to such
series. Global Securities may be issued in either registered or bearer form and
in either temporary or permanent form. The specific terms of the depositary
arrangement with respect to any such series of Debt Securities will be described
in the applicable Prospectus Supplement.
DESCRIPTION OF CAPITAL STOCK
The following description of the capital stock of Iron Mountain and
certain provisions of the Restated Certificate and the By-Laws is a summary and
is qualified in its entirety by reference to the Restated Certificate and the
By-Laws.
Iron Mountain's authorized capital stock consists of 100,000,000 shares
of Common Stock, 1,000,000 shares of nonvoting common stock, $.01 par value per
share ("Nonvoting Common Stock") and 2,000,000 shares of Preferred Stock. No
shares of Preferred Stock have been issued. There were 13,452,917 shares of
Common Stock held by 219 holders of record and no shares of Nonvoting Common
Stock issued and outstanding as of January 5, 1998.
Common Stock
The rights of holders of the Common Stock and the Nonvoting Common
Stock are identical in all respects except voting and convertibility.
Dividends. Holders of record of shares of Common Stock and Nonvoting
Common Stock on the record date fixed by the Iron Mountain Board are entitled to
receive such dividends as may be declared by the Iron Mountain Board out of
funds legally available for such purpose. No dividends may be declared or paid
in cash or property on any share of either class, however, unless simultaneously
the same dividend is declared or paid on each share of the other class. In the
case of any stock dividend, holders of each class are entitled to receive the
same percentage dividend (payable in shares of that class) as the holders of the
other class.
Iron Mountain is currently restricted under the terms of the Credit
Agreement and the Notes Indentures from paying cash dividends on the Common and
Nonvoting Common Stock. Even if funds were to be available, Iron Mountain does
not intend to pay dividends in the foreseeable future.
Voting Rights. Except as otherwise required by law, on each matter
submitted for a vote of stockholders, holders of shares of Common Stock are
entitled to one vote per share and holders of Nonvoting Common Stock are not
entitled to vote.
Under the Restated Certificate, the vote of holders of at least 80% of
the voting power of all outstanding shares of capital stock entitled to vote
generally in the election of Directors, voting together as a single class (the
"Voting Power"), is required for the amendment or repeal of, or the adoption of
any provision inconsistent with, provisions of the Restated Certificate
establishing a classified Board of Directors. The vote of holders of at least
662/3% of such Voting Power is required for the amendment or repeal of, or the
adoption of any provision inconsistent with, provisions of the Restated
Certificate authorizing the Preferred Stock, Common Stock and Nonvoting Common
Stock or specifying the terms of the Common Stock and the Nonvoting Common Stock
(including any amendment to increase any shares of authorized capital stock).
Certain other provisions also require such a 662/3% vote. See "DGCL and Certain
Provisions of the Restated Certificate and the By-Laws." There are no cumulative
voting rights in the election of the Board of Directors of the Company.
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Conversion Provisions. Shares of Nonvoting Common Stock are
convertible, at any time at the option of the holder, on a share-for-share basis
into shares of Common Stock without the payment of any additional consideration;
provided that the conversion of any shares of Nonvoting Common Stock by a "bank
holding company" under the Bank Holding Company Act of 1956, as amended, or an
affiliate thereof is prohibited if the conversion of the total number of shares
of Nonvoting Common Stock held by such holder would cause it to be in violation
of such Act.
Liquidation Rights. Upon liquidation, dissolution or winding-up of Iron
Mountain, the holders of Common Stock and Nonvoting Common Stock are entitled to
share ratably (based on the number of shares held) in all assets available for
distribution after payment in full of creditors and payment in full to any
holders of Preferred Stock then outstanding of any amount required to be paid
under the terms of such Preferred Stock.
Other Provisions. The outstanding shares of Common Stock and Nonvoting
Common Stock are validly issued, fully paid and nonassessable. In any merger,
consolidation or business combination, holders of each class will receive
identical consideration, except that in any such transaction in which shares of
stock are distributed, such shares may differ as to voting rights to the extent
that voting rights now differ between the two classes. Neither class may be
subdivided, consolidated, reclassified or otherwise changed unless,
concurrently, the other class is subdivided, consolidated, reclassified or
otherwise changed in the same proportion and in the same manner.
The Transfer Agent and Registrar for the Common Stock is Boston
Equiserve Limited Partnership, 150 Royall Street, Canton, Massachusetts 02021
(telephone number (781) 575-2000).
The Iron Mountain Board has the power to issue shares of authorized but
unissued Common Stock and Nonvoting Common Stock without further stockholder
action. The holders of Common Stock and Nonvoting Common Stock are not entitled
to preemptive or subscription rights. The issuance of such unissued shares could
have the effect of diluting the earnings per share and book value per share of
currently outstanding shares of Common Stock.
Preferred Stock
The authorized and unissued shares of Preferred Stock may be issued
with such designations, preferences, limitations and relative rights as the Iron
Mountain Board may authorize including, but not limited to: (i) the distinctive
designation of each series and the number of shares that will constitute such
series; (ii) the voting rights, if any, of shares of such series; (iii) the
dividend rate on the shares of such series, any restriction, limitation or
condition upon the payment of such dividends, whether dividends shall be
cumulative, and the dates on which dividends are payable; (iv) the prices at
which, and the terms and conditions on which, the shares of such series may be
redeemed, if such shares are redeemable; (v) the purchase or sinking fund
provisions, if any, for the purchase or redemption of shares of such series;
(vi) any preferential amount payable upon shares of such series in the event of
the liquidation, dissolution or winding-up of Iron Mountain or the distribution
of its assets; and (vii) the price or rates of conversion at which, and the
terms and conditions on which the shares of such series may be converted into
other securities, if such shares are convertible. Although Iron Mountain has no
present intention to issue shares of Preferred Stock, the issuance of Preferred
Stock, or the issuance of rights to purchase such shares, could discourage an
unsolicited acquisition proposal and the rights of holders of Common Stock will
be subject to, and may be adversely affected by, the rights of holders of any
Preferred Stock that may be issued in the future.
The following description of the Preferred Stock sets forth certain
general terms and provisions of the Preferred Stock to which any Prospectus
Supplement may relate. The statements below describing the Preferred Stock are
in all respects subject to and qualified in their entirety by reference to the
applicable provisions of the Restated Certificate (including any applicable
Certificates of Designation) and the By-Laws.
Reference is made to the Prospectus Supplement relating to the
Preferred Stock offered thereby for specific terms, including:
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(1) the title of such Preferred Stock;
(2) the number of shares of such Preferred Stock offered, the par
value, the liquidation preference per share and the offering
price of such Preferred Stock;
(3) the dividend rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to such Preferred
Stock;
(4) the date from which dividends on such Preferred Stock shall
accumulate, if applicable;
(5) the procedures for any auction and remarketing, if any, for
such Preferred Stock;
(6) the provision for a sinking fund, if any, for such Preferred
Stock;
(7) the provision for redemption, if applicable, of such Preferred
Stock;
(8) any listing of such Preferred Stock on any securities
exchange;
(9) the terms and conditions, if applicable, upon which such
Preferred Stock will be convertible into Common Stock of the
Company or another series of Offered Securities, including the
conversion price (or manner of calculation thereof);
(10) whether interests in such Preferred Stock will be represented
by Depositary shares as more fully described below under
"Description of Depositary Shares;"
(11) any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock;
(12) a discussion of federal income tax considerations applicable
to such Preferred Stock;
(13) the relative ranking and preferences of such Preferred Stock
as to dividend rights and rights upon liquidation, dissolution
or winding up of the affairs of the Company;
(14) any limitations on issuance of any series of Preferred Stock
ranking senior to or on a parity with such series of Preferred
Stock as to dividend rights and rights upon liquidation,
dissolution or winding up of the affairs of the Company; and
(15) any limitations on direct or beneficial ownership and
restrictions on transfer.
As described under "Description of Depositary Shares," the Company may,
at its option, elect to offer Depositary Shares evidenced by depositary receipts
("Depositary Receipts"), each representing a fractional interest (to be
specified in the Prospectus Supplement relating to the particular series of the
Preferred Stock) in a share of the particular series of the Preferred Stock
issued and deposited with a Depositary (as defined below).
Rank
Unless otherwise determined by the Iron Mountain Board and specified in
the applicable Prospectus Supplement, it is expected that the Preferred Stock
will, with respect to dividend rights and rights upon liquidation, dissolution
or winding up of the Company, rank (i) senior to all Common Stock, and to all
equity securities ranking junior to such Preferred Stock; (ii) on a parity with
all equity securities issued by the Company the terms of which specifically
provide that such equity securities rank on a parity with the Preferred Stock;
and (iii) junior to all equity securities issued by the Company the terms of
which specifically provide that such equity securities rank senior to the
Preferred Stock.
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Dividends
Holders of Preferred Stock of each series shall be entitled to receive,
when, as and if declared by the Iron Mountain Board, out of assets of the
Company legally available for payment, cash dividends at such rates and on such
dates as will be set forth in the applicable Prospectus Supplement. Each such
dividend shall be payable to holders of record as they appear on the stock
transfer books of the Company (or, if applicable, on the records of the
Depositary referred to below under "Description of Depositary Shares") on such
record dates as shall be fixed by the Board.
Dividends on any series of the Preferred Stock may be cumulative or
noncumulative, as provided in the applicable Prospectus Supplement. Dividends,
if cumulative, will be cumulative from and after the date set forth in the
applicable Prospectus Supplement. If the Iron Mountain Board fails to declare a
dividend payable on a dividend payment date on any series of the Preferred Stock
for which dividends are noncumulative, then the holders of such series of the
Preferred Stock will have no right to receive a dividend in respect of the
dividend period ending on such dividend payment date, and the Company will have
no obligation to pay the dividend accrued for such period, whether or not
dividends on such series are declared payable on any future dividend payment
date.
If Preferred Stock of any series are outstanding, no full dividends
shall be declared or paid or set apart for payment on the Preferred Stock of the
Company of any other series ranking, as to dividends, on a parity with or junior
to the Preferred Stock of such series for any period unless (i) if such series
of Preferred Stock has a cumulative dividend, full cumulative dividends have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for such payment on the Preferred Stock of
such series for all past dividend periods and the then current dividend period
or (ii) if such series of Preferred Stock does not have a cumulative dividend,
full dividends for the then current dividend period have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment on the Preferred Stock of such
series. When dividends are not paid in full (or a sum sufficient for such full
payment is not so set apart) upon the Preferred Stock of any series and the
shares of any other series of Preferred Stock ranking on a parity as to
dividends with the Preferred Stock of such series, all dividends declared upon
Preferred Stock of such series and any other series of Preferred Stock shall in
all cases bear to each other the same ratio that accrued dividends per share on
the Preferred Stock of such series (which shall not include any accumulation in
respect of unpaid dividends for prior dividend periods if such Preferred Stock
do not have a cumulative dividend) and such other series of Preferred Stock bear
to each other. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on Preferred Stock of
such series which may be in arrears.
Except as provided in the immediately preceding paragraph, unless (i)
if such series of Preferred Stock has a cumulative dividend, full cumulative
dividends on the Preferred Stock of such series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the repayment thereof
set apart for payment for all past dividend periods and the then current
dividend period, and (ii) if such series of Preferred Stock does not have a
cumulative dividend, full dividends on the Preferred Stock of such series have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for payment for the then current dividend
period, no dividends (other than in Common Stock or other capital stock ranking
junior to the Preferred Stock of such series as to dividends and upon
liquidation) shall be declared or paid or set aside for payment or other
distribution shall be declared or made upon the Common Stock or any other
capital stock of the Company ranking junior to or on a parity with the Preferred
Stock of such series as to dividends or upon liquidation, nor shall any Common
Stock or any other capital stock of the Company ranking junior to or on a parity
with the Preferred Stock of such series as to dividends or upon liquidation be
redeemed, purchased or otherwise acquired for any consideration (or any moneys
be paid to or made available for a sinking fund for the redemption of any shares
of any such stock) by the Company (except by conversion into or exchange for
other capital stock of the Company ranking junior to the Preferred Stock of such
series as to dividends and upon liquidation and except pursuant to certain pro
rata offers to purchase or a concurrent redemption of all, or a pro rata portion
of, the outstanding shares of the Preferred Stock of such series and any other
series of Preferred Stock ranking on a parity with such series as to dividends
and liquidation).
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Any dividend payment made on shares of a series of Preferred Stock
shall first be credited against the earliest accrued but unpaid dividend due
with respect to shares of such series which remains payable.
Redemption
If so provided in the applicable Prospectus Supplement, the Preferred
Stock will be subject to mandatory redemption or redemption at the option of the
Company, as a whole or in part, in each case upon the terms, at the times and at
the redemption prices set forth in such Prospectus Supplement.
The Prospectus Supplement relating to a series of Preferred Stock that
is subject to mandatory redemption will specify the number of such Preferred
Stock that shall be redeemed by the Company in each year commencing after a date
to be specified, at a redemption price per share to be specified, together with
an amount equal to all accrued and unpaid dividends thereon (which shall not, if
such Preferred Stock do not have a cumulative dividend, include any accumulation
in respect of unpaid dividends for prior dividend periods) to the date of
redemption. The redemption price may be payable in cash or other property, as
specified in the applicable Prospectus Supplement. If the redemption price for
Preferred Stock of any series is payable only from the net proceeds of the
issuance of capital stock of the Company, the terms of such Preferred Stock may
provide that, if no such capital stock shall have been issued or to the extent
the net proceeds from any issuance are insufficient to pay in full the aggregate
redemption price then due, such Preferred Stock shall automatically and
mandatorily be converted into shares of the applicable capital stock of the
Company pursuant to conversion provisions specified in the applicable Prospectus
Supplement.
Notwithstanding the foregoing, unless (i) if such series of Preferred
Stock has a cumulative dividend, full cumulative dividends on all shares of any
series of Preferred Stock shall have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for
payment for all past dividend periods and the then current dividend period, and
(ii) if such series of Preferred Stock does not have a cumulative dividend, full
dividends on the Preferred Stock of any series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for the then current dividend period, no shares of any
other series of Preferred Stock ranking, as to dividends and upon liquidation,
on parity with or junior to the Preferred Stock of such series shall be redeemed
unless all outstanding series of Preferred Stock of such series are
simultaneously redeemed and the Company shall not purchase or otherwise acquire
directly or indirectly any Preferred Stock of such series (except by conversion
into or exchange for capital stock of the Company ranking junior to the
Preferred Stock of such series as to dividends and upon liquidation); provided,
however, that the foregoing shall not prevent the purchase or acquisition of
Preferred Stock of such series pursuant to a purchase or exchange offer made on
the same terms to holders of all outstanding Preferred Stock of such series.
If fewer than all of the outstanding Preferred Stock of any series are
to be redeemed, the number of Preferred Stock to be redeemed will be determined
by the Company and such shares may be redeemed pro rata from the holders of
record of such shares in proportion to the number of such shares held by such
holders (with adjustments to avoid redemption of fractional shares) or by lot in
manner determined by the Company.
Notice of redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of record of Preferred Stock
of any series to be redeemed at the address shown on the stock transfer books of
the Company. Each notice shall state: (i) the redemption date; (ii) the number
of shares and series of the Preferred Stock to be redeemed; (iii) the redemption
price; (iv) the place or places where certificates for such Preferred Stock are
to be surrendered for payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date; and (vi) the
date upon which the holder's conversion rights, if any, as to such shares shall
terminate. If fewer than all the Preferred Stock of any series are to be
redeemed, the notice mailed to each such holder thereof shall also specify the
number of Preferred Stock to be redeemed from each such holder. If notice of
redemption of any Preferred Stock has been given and if the funds necessary for
such redemption have been set aside by the Company in trust for the benefit of
the holders of any of the Preferred Stock
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so called for redemption, then from and after the redemption date dividends will
cease to accrue on such Preferred Stock, and any and all rights of the holders
of such shares will terminate, except the right to receive the redemption price.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Company, then, before any distribution or payment shall
be made to the holders of any Common Stock or any other class or series of
capital stock of the Company ranking junior to a series of Preferred Stock in
the distribution of assets upon any liquidation, dissolution or winding up of
the Company, the holders of such series of Preferred Stock shall be entitled to
receive out of assets of the Company legally available for distribution to
shareholders liquidating distributions in the amount of the liquidation
preference per share (set forth in the applicable Prospectus Supplement), plus
an amount equal to all dividends accrued and unpaid thereon (which shall not
include any accumulation in respect of unpaid dividends for prior dividend
periods if such Preferred Stock do not have a cumulative dividend). After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of Preferred Stock will have no right or claim to any of
the remaining assets of the Company. In the event that upon any such voluntary
or involuntary liquidation, dissolution or winding up, the available assets of
the Company are insufficient to pay the amount of the liquidating distributions
on all outstanding shares of a series of Preferred Stock and the corresponding
amounts payable on all shares of other classes or series of capital stock of the
Company ranking on a parity with such series of Preferred Stock in the
distribution of assets (including, if applicable, other series of Preferred
Stock), then the holders of such series of Preferred Stock and all other such
classes or series of capital stock shall share ratably in any such distribution
of assets in proportion to the full liquidating distributions to which they
would otherwise be respectively entitled.
If liquidating distributions shall have been made in full to all
holders of Preferred Stock, the remaining assets of the Company shall be
distributed among the holders of any other classes or series of capital stock
ranking junior to the Preferred Stock upon liquidation, dissolution or winding
up, according to their respective rights and preferences and in each case
according to their respective number of shares. For such purposes, the
consolidation or merger of the Company with or into any other trust or
corporation, or the sale, lease or conveyance of all or substantially all of the
property or business of the Company, shall not be deemed to constitute a
liquidation, dissolution or winding up of the Company.
Voting Rights
Holders of the Preferred Stock will not have any voting rights, except
as set forth below or as otherwise from time to time required by law or as
indicated in the applicable Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, at any
time dividends on any Preferred Stock shall be in arrears for a specified number
of consecutive quarterly periods, the holders of such Preferred Stock and any
other series of Preferred Stock upon which like voting rights have been
conferred and are exercisable (voting separately as a class) will be entitled to
vote for the election of two additional directors of the Company at the next
annual meeting of shareholders and at each subsequent meeting until (i) if such
series of Preferred Stock has a cumulative dividend, all dividends accumulated
on such Preferred Stock for the past dividend periods and the then current
dividend period shall have been fully paid or declared and a sum sufficient for
the payment thereof set aside for payment or (ii) if such series of Preferred
Stock does not have a cumulative dividend, four consecutive quarterly dividends
shall have been fully paid or declared and a sum sufficient for the payment
thereof set aside for payment.
Unless otherwise specified in the applicable Prospectus Supplement, so
long as any Preferred Stock remain outstanding, the Company shall not, without
the affirmative vote or consent of the holders of a majority of the shares of a
series of Preferred Stock outstanding at the time that is adversely affected,
given in person or by proxy, either in writing or at a meeting (such series
voting separately as a class), (i) authorize or create, or increase the
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authorized or issued amount of, any class or series of capital stock ranking
prior to such series of Preferred Stock with respect to payment of dividends or
the distribution of assets upon liquidation, dissolution or winding up, or
reclassify any authorized capital stock of the Company into any such shares, or
create, authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such shares; or (ii) amend, alter or repeal
the provisions of the certificate of designation for such series of Preferred
Stock, whether by merger, consolidation or otherwise, so as to materially and
adversely affect any right, preference, privilege or voting power of such series
of Preferred Stock or the holders thereof; provided, however, that any increase
in the amount of the authorized Preferred Stock or the creation or issuance of
any other series of Preferred Stock, or any increase in the amount of authorized
shares of such series or any other series of Preferred Stock, in each case
ranking on a parity with or junior to the Preferred Stock of such series with
respect to payment of dividends or the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be effected, all outstanding shares of such series of Preferred Stock
shall have been redeemed or called for redemption and sufficient funds shall
have been deposited in trust to effect such redemption.
As more fully described under "Description of Depositary Shares" below,
if the Company elects to issue Depositary Shares, each representing a fraction
of share of a series of the Preferred Stock, each such Depositary will, in
effect be entitled to such fraction of a vote per Depositary Share.
Conversion Rights
The terms and conditions, if any, upon which shares of any series of
Preferred Stock may be converted into or exchanged for Common Stock or another
series of Preferred Stock or other series of Offered Securities will be set
forth in the Prospectus Supplement relating thereto. Such terms will include the
number of Common Stock or other securities into which the Preferred Share is
convertible or exchangeable, conversion or exchange price (or manner of
calculation thereof), the conversion or exchange period, provisions as to
whether conversion or exchange will be at the option of the holders of the
Preferred Stock or the Company, the events requiring an adjustment of the
conversion or exchange price and provisions affecting conversion or exchange in
the event of the redemption such Preferred Stock.
DESCRIPTION OF DEPOSITARY SHARES
General
The description set forth below and in any applicable Prospectus
Supplement of certain provisions of any Deposit Agreement (as defined below) and
of the Depositary Shares and depositary receipts representing Depositary Shares
("Depositary Receipts") does not purport to be complete and is subject to and
qualified in its entirety by reference to the forms of Deposit Agreement and
Depositary Receipts relating to each series of the Preferred Stock which have
been or will be filed with the Commission at or prior to the time of the
offering of such series of the Preferred Stock.
The Company may, at its option, elect to offer fractional interests in
shares of Preferred Stock, rather than shares of Preferred Stock. In the event
such option is exercised, the Company will provide for the issuance by a
Depositary (as defined below) to the public of Depositary Receipts, each of
which will represent a fractional interest to be set forth in the Prospectus
Supplement relating to a particular series of the Preferred Stock which will be
filed with the Commission at or prior to the time of the offering of such series
of the Preferred Stock as described below. Preferred Stock of each series
represented by Depositary Shares will be deposited under a separate deposit
agreement (each, a "Deposit Agreement") among the Company and the depositary
named therein (a "Depositary").
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The Prospectus Supplement relating to a series of Depositary Shares will set
forth the name and address of the Depositary. Subject to the terms of the
applicable Deposit Agreement, each owner of a Depositary Share will be entitled,
in proportion to the fractional interest of a share of a particular series of
Preferred Stock represented by such Depositary Share to all the rights and
preferences of the Preferred Stock represented by such Depositary Shares
(including dividend, voting, conversion, redemption and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Upon surrender of Depositary
Receipts at the office of the Depositary and upon payment of the charges
provided in the Deposit Agreement and subject to the terms thereof, a holder of
Depositary Shares is entitled to have the Depositary deliver to such holder the
shares of Preferred Stock underlying the Depositary Shares evidenced by the
surrendered Depositary Receipts.
Dividends and Other Distributions
A Depositary will be required to distribute all cash dividends or other
cash distributions received in respect of the applicable Preferred Stock to the
record holders of Depositary Receipts evidencing the related Depositary Shares
in proportion to the number of such Depositary Receipts owned by such holders,
subject to certain obligations of holders to file proofs, certificates and other
information and to pay certain charges and expenses to such Depositary.
Fractions will be rounded down to the market whole cent.
In the event of a distribution other than in cash, a Depositary will be
required to distribute property received by it to the record holders of
Depositary Receipts entitled thereto, subject to certain obligations of holders
to file proofs, certificates and other information and to pay certain charges
and expenses to such Depositary, unless such Depositary determines that it is
not feasible to make such distribution, in which case such Depositary may, with
the approval of the Company, sell such property and distribute the net proceeds
from such sale to such holders.
No distributions will be made in respect of any Depositary Share to the
extent that it represents any Preferred Stock which have been converted or
exchanged. The Deposit Agreement will also contain provisions relating to the
manner in which any subscription or similar rights offered by the Company to
holders of the Preferred Stock shall be made available to holders of Depositary
Shares.
Redemption of Depositary Shares
If a series of the Preferred Stock underlying the Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the proceeds
received by the Depositary resulting from the redemption, in whole or in part,
of such series of the Preferred Stock held by the Depositary. The Depositary
shall mail notice of redemption not less than 30 and not more than 60 days prior
to the date fixed for redemption to the record holders of the Depositary
Receipts evidencing the Depositary Shares to be so redeemed at their respective
addresses appearing in the Depositary's books. The redemption price per
Depositary Share will be equal to the applicable fraction of the redemption
price per share payable with respect to such series of the Preferred Stock.
Whenever the Company redeems shares of Preferred Stock held by the Depositary,
the Depositary will redeem as of the same redemption date the number of
Depositary Shares relating to shares of Preferred Stock so redeemed. If less
than all of the Depositary Shares are to be redeemed, the Depositary Shares to
be redeemed will be selected by lot or pro rata as may be determined by the
Depositary.
After the date fixed for redemption, the Depositary Shares so called
for redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares and the related Depositary Receipts will cease,
except the right to receive the moneys payable upon such redemption and any
money or other property to which the holders of such Depositary Shares were
entitled upon such redemption upon surrender to the Depositary of the Depositary
Receipts evidencing such Depositary Shares.
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Voting of the Preferred Stock
Upon receipt of notice of any meeting at which the holders of the
applicable Preferred Stock are entitled to vote, a Depositary will be required
to mail the information contained in such notice of meeting to the record
holders of the Depositary Receipts evidencing the Depositary Shares which
represent such Preferred Stock. Each record holder of Depositary Receipts
evidencing Depositary Shares on the record date (which will be the same date as
the record date for the Preferred Stock) will be entitled to instruct such
Depositary as to the exercise of the voting rights pertaining to the amount of
Preferred Stock represented by such holder's Depositary Shares. Such Depositary
will endeavor, insofar as practical, to vote the amount of Preferred Stock
represented by such Depositary Shares in accordance with such instructions, and
the Company will agree to take all reasonable action which may be deemed
necessary by such Depositary in order to enable such Depositary to do so. Such
Depositary will be required to abstain from voting the amount of Preferred Stock
represented by such Depositary Shares to the extent it does not receive specific
instructions from the holders of Depositary Receipts evidencing such Depositary
Shares. The Depositary will not be responsible for any failure to carry out any
instruction to vote, or for the manner or effect of any such vote made, as long
as such action or non-action is in good faith and does not result from gross
negligence or willful misconduct of such Depositary.
Liquidation Preference
In the event of the liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, the holders of each Depositary Share
will be entitled to the fraction of the liquidation preference accorded each
share of Preferred Stock represented by such Depositary Share, as set forth in
the applicable Prospectus Supplement.
Conversion of Preferred Stock
The Depositary Shares, as such, will not be convertible into or
exchangeable for Common Stock, Preferred Stock or any other securities or
property of the Company. Nevertheless, if so specified in the applicable
Prospectus Supplement relating to an offering of Depositary Shares, the
Depositary Receipts may be surrendered by holders thereof to the applicable
Depositary with written instructions to such Depositary to instruct the Company
to cause conversion or exchange of the Preferred Stock represented by the
Depositary Share evidenced by such Depositary Receipts into Common Stock, other
shares of Preferred Stock of the Company or such other Offered Securities as
shall be provided therein, and the Company will agree that upon receipt of such
instruction and any amounts payable in respect thereof, it will cause the
conversion or exchange thereof utilizing the same procedures as those provided
for delivery of Preferred Stock to effect such conversion or exchange. If the
Depositary Shares evidenced by a Depositary Receipt are to be converted in part
only, a new Depositary Receipt or Depositary Receipts will be issued for any
Depositary Shares not to be converted.
Amendment and Termination of a Deposit Agreement
Any form of Depositary Receipt evidencing Depositary Shares and any
provision of a Deposit Agreement will be permitted at any time to be amended by
agreement between the Company and the applicable Depositary. However, any
amendment that materially and adversely alters the rights of the holders of
Depositary Shares will not be effective unless such amendment has been approved
by the existing holders of at least a majority of the applicable Depositary
Shares then outstanding. Every holder of an outstanding Depositary Receipt at
the time any such amendment becomes effective shall be deemed, by continuing to
hold such Depositary Receipt, to consent and agree to such amendment and to be
bound by the applicable Deposit Agreement as amended thereby.
Any Deposit Agreement may be terminated by the Company upon not less
than 30 days' prior written notice to the applicable Depositary if a majority of
each series of Preferred Stock affected by such termination consents to such
termination, whereupon such Depositary will be required to deliver or make
available to each holder of Depositary Receipts, upon surrender of the
Depositary Receipts held by such holder, such number of
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whole or fractional Preferred Stock as are represented by the Depositary Shares
evidenced by such Depositary Receipts together with any other property held by
such Depositary with respect to such Depositary Receipts. In addition, a Deposit
Agreement will automatically terminate if (i) all outstanding Depositary Shares
thereunder shall have been redeemed; (ii) there shall have been a final
distribution in respect of the related Preferred Stock in connection with any
liquidation, dissolution or winding up of the Company and such distribution
shall have been distributed to the holders of Depositary Receipts evidencing the
Depositary Shares underlying such Preferred Stock; or (iii) each of the related
Preferred Stock shall have been converted or exchanged into securities not so
represented by Depositary Shares.
Charges of a Depositary
The Company will pay all transfer and other taxes and governmental
charges arising solely from the existence of a Deposit Agreement. In addition,
the Company will pay the fees and expenses of a Depositary in connection with
the initial deposit of the Preferred Stock and any redemption of Preferred
Stock. However, holders of Depositary Receipts will pay any transfer or other
governmental charges and the fees and expenses of a Depositary for any duties
requested by such holders to be performed which are outside of those expressly
provided for in the applicable Deposit Agreement.
Resignation and Removal of Depositary
A Depositary may resign at any time by delivering to the Company notice
of its election to do so, and the Company may at any time remove a Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary. A successor Depositary will be required to be appointed
within 60 days after delivery of the notice of resignation or removal and will
be required to be a bank or trust company having its principal office in the
United States and having a combined capital and surplus of at least $50 million.
Miscellaneous
A Depositary will be required to forward to holders of Depositary
Receipts any reports and communications from the Company which are received by
such Depositary with respect to the related Preferred Stock.
Neither Depositary nor the Company will be liable if it is prevented
from or delayed in, by law or any circumstances beyond its control, performing
its obligations under a Deposit Agreement. The obligations of the Company and a
Depositary under a Deposit Agreement will be limited to performing their duties
thereunder in good faith and without gross negligence or willful misconduct, and
neither the Company nor any applicable Depositary will be obligated to prosecute
or defend any legal proceeding in respect of any Depositary Receipts, Depositary
Shares or Preferred Stock represented thereby unless satisfactory indemnity is
furnished. The Company and any Depositary will be permitted to rely on written
advice of counsel or accountants, on information provided by persons presenting
Preferred Stock represented thereby for deposit, holders of Depositary Receipts
or other persons believed in good faith to be competent to give such
information, and on documents believed in good faith to be genuine and signed by
a proper party.
In the event a Depositary shall receive conflicting claims, requests or
instructions from any holders of Depositary Receipts, on the one hand, and the
Company, on the other hand, such Depositary shall be entitled to act on such
claims, requests or instructions received from the Company.
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DESCRIPTION OF WARRANTS
The Company may issue, together with any other series of Offered
Securities or separately, Warrants entitling the holder to purchase from or sell
to the Company, or to receive from the Company the cash value of the right to
purchase or sell, Debt Securities, Preferred Stock, Depositary Shares or Common
Stock. Any Warrants will be issued under Warrant Agreements (each a "Warrant
Agreement") to be entered into between the Company and a warrant agent (the
"Warrant Agent"), all as set forth in the applicable Prospectus Supplement
relating to the particular issue of Warrants.
In the case of each series of Warrants, the applicable Prospectus
Supplement will describe the terms of the Warrants being offered thereby,
including the following, if applicable: (i) the offering price; (ii) the
currencies in which such Warrants are being offered; (iii) the number of
Warrants offered; (iv) the securities underlying the Warrants; (v) the exercise
price, the procedures for exercise of the Warrants and the circumstances, if
any, that will cause the Warrants to be deemed to be automatically exercised;
(vi) the date on which the right shall expire; (vii) U.S. federal income tax
consequences; and (viii) other terms of the Warrants.
Warrants may be exercised at the appropriate office of the Warrant
Agent or any other office indicated in the applicable Prospectus Supplement.
Prior to the exercise of Warrants entitling the holder to purchase any
securities, holders of such Warrants will not have any of the rights of holders
of the securities purchasable upon such exercise and will not be entitled to
payments made to holders of such securities.
The Warrant Agreements may be amended or supplemented without the
consent of the holders of the Warrants issued thereunder to effect changes that
are not inconsistent with the provisions of the Warrants and that do not
adversely affect the interests of the holders of the Warrants.
DGCL AND CERTAIN PROVISIONS OF THE RESTATED CERTIFICATE
AND THE BY-LAWS
The Restated Certificate and the By-Laws contain certain provisions
that could delay or make more difficult the acquisition of Iron Mountain by
means of a tender offer, a proxy contest or otherwise. These provisions, as
described below, are expected to discourage certain types of coercive takeover
practices and inadequate takeover bids and to encourage persons seeking to
acquire control of Iron Mountain first to negotiate with Iron Mountain. Iron
Mountain believes that the benefits of increased protection of its ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to acquire
or restructure Iron Mountain outweigh the disadvantages of discouraging such
proposals because, among other things, negotiations with respect to such
proposals could result in an improvement of their terms.
Classified Board of Directors
The Restated Certificate and the By-Laws provide for a Board of
Directors that is divided into three classes of Directors, as nearly equal in
number as possible, with the term of each class expiring in a different year.
The By-Laws provide that the number of Directors will be fixed from time to time
exclusively by the Iron Mountain Board, but shall consist of not more than 15
nor less than three Directors. The classified Iron Mountain Board is intended to
promote continuity and stability of Iron Mountain's management and policies
since a majority of the Directors at any given time will have prior experience
as Directors of Iron Mountain. Such continuity and stability facilitates
long-range planning of Iron Mountain's business and ensures the quality of its
business operations. The classification of Directors has the effect of making it
more difficult to change the composition of the Iron Mountain Board. At least
two annual stockholder meetings, instead of one, would be required to effect a
change in the majority control of the Iron Mountain Board, except in the event
of vacancies resulting from removal (in which case the remaining Directors will
fill the vacancies so created). See "--Removal of Directors; Filling Vacancies
on the Iron Mountain Board."
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Removal of Directors; Filling Vacancies on the Iron Mountain Board
The Restated Certificate and Iron Mountain By-Laws provide that an Iron
Mountain Director may be removed by the stockholders only for cause at any time
during such Director's term of office by affirmative vote of the holders of at
least 80% of the Voting Power.
The By-Laws and the Restated Certificate both provide that a vacancy on
the Iron Mountain Board, including a vacancy created by an increase in the size
of the Iron Mountain Board by the Directors, may be filled by a majority of the
remaining Directors or by a sole remaining Director, or if no Directors remain,
then by the stockholders. The Restated Certificate also provides that any
Director elected by the Iron Mountain Board to replace another Director of a
given class of Directors will hold office until the next election of such class
of Directors. These provisions are to ensure that a third party would be
precluded from removing incumbent Directors and simultaneously gaining control
of the Iron Mountain Board by filling the vacancies created by such removal with
its own nominees. Moreover, even if the holders of the outstanding Common Stock
were to vote to remove Directors for cause, only the remaining Directors would
have the power to fill the vacancies created by such removal, unless such vote
provided for the removal of the entire Iron Mountain Board for cause.
Amendment of Certain Provisions of the Restated Certificate and the By-Laws
The Restated Certificate and the By-Laws contain provisions requiring
the affirmative vote of the holders of at least 662/3% of the Voting Power to
amend certain provisions of the Restated Certificate and the By-Laws. This
supermajority voting provision also applies to (i) the provisions of the
Restated Certificate authorizing Iron Mountain to release its Directors from any
liability for monetary damages as a result of any breach of their fiduciary
duties, with certain exceptions mandated by the DGCL, and (ii) the provisions
allowing for the indemnification of officers and Directors of Iron Mountain. The
Restated Certificate provides that the By-Laws may be amended only by a majority
of the full Iron Mountain Board or by the stockholders holding at least 662/3%
of the Voting Power. The DGCL provides that by-laws may not be amended by a
corporation's Board of Directors unless the corporation's certificate of
incorporation expressly authorizes such amendments by the Board of Directors;
the Restated Certificate includes such a provision. Under the Restated
Certificate, at least 80% of the Voting Power is required to approve amendments
to those provisions of the Restated Certificate or Iron Mountain By-Laws
establishing a classified Board, specifying notice requirements for stockholder
nominations of Directors or business to be brought by a stockholder before an
annual meeting and limiting the rights of stockholders to remove Directors or
fill vacancies on the Iron Mountain Board, to call special meetings or to effect
actions by written consent.
Stockholder Actions and Meetings
Iron Mountain's Restated Certificate provides that stockholder action
may be taken only at an annual or special meeting of stockholders and prohibits
stockholders action by written consent in lieu of a meeting. The Restated
Certificate and Iron Mountain By-Laws provide that special meetings of
stockholders can be called by the Chairman of the Board of Directors, if any, or
the Iron Mountain Board pursuant to a resolution approved by a majority of the
members of the Iron Mountain Board. The business permitted to be conducted at
any special meeting of stockholders is limited to the business brought before
the meeting by the Iron Mountain Board. The ByLaws set forth an advance notice
procedure with regard to the nomination, other than by or at the direction of
the Iron Mountain Board, of candidates for election as directors and with regard
to business brought before an annual meeting of stockholders of Iron Mountain.
Delaware Anti-Takeover Statute
Subject to certain exceptions set forth therein, Section 203 of the
DGCL provides that a corporation shall not engage in any business combination
with any "interested stockholder" for a three-year period following the date
that such stockholder becomes an interested stockholder unless (i) prior to such
date, the board of directors of the corporation approved either the business
combination or the transaction that resulted in the stockholder becoming
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an interested stockholder, (ii) upon consummation of the transaction that
resulted in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding certain shares) or
(iii) on or subsequent to such date, the business combination is approved by the
board of directors of the corporation and by the affirmative vote of at least
662/3% of the outstanding voting stock which is not owned by the interested
stockholder. Except as specified therein, an interested stockholder is defined
to mean any person that (a) is the owner of 15% or more of the outstanding
voting stock of the corporation or (b) is an affiliate or associate of the
corporation and was the owner of 15% or more of the outstanding voting stock of
the corporation at any time within three years immediately prior to the relevant
date, or any affiliate or associate of such person referred to in (a) or (b) of
this sentence. Under certain circumstances, Section 203 of the DGCL makes it
more difficult for an interested stockholder to effect various business
combinations with a corporation for a three-year period, although the
stockholders may, by adopting an amendment to the corporation's certificate of
incorporation or by-laws, elect not to be governed by this section, effective
twelve months after adoption. The Restated Certificate and the By-Laws do not
exclude Iron Mountain from the restrictions imposed under Section 203 of the
DGCL. It is anticipated that the provisions of Section 203 of the DGCL may
encourage companies interested in acquiring Iron Mountain to negotiate in
advance with the Iron Mountain Board.
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DESCRIPTION OF INDEBTEDNESS
The summaries contained herein of certain of the indebtedness of Iron
Mountain do not purport to be complete and are qualified in their entirety by
reference to the provisions of the various agreements and indentures related
thereto, which are filed as exhibits to the Registration Statement of which this
Prospectus is a part and to which reference is hereby made.
Credit Agreement
The Credit Agreement, as currently in effect, is a $250.0 million
revolving credit facility that matures on September 30, 2002. Upon maturity, all
outstanding revolving credit loans and other amounts payable thereunder will
become due.
Borrowings under the Credit Agreement may be used to finance possible
future acquisitions, as well as for working capital and general corporate
purposes. The Company's obligations under the Credit Agreement are guaranteed by
substantially all of Iron Mountain's subsidiaries and are secured by the pledge
of the stock of such subsidiaries. Prepayment of outstanding borrowings under
the Credit Agreement are required in certain circumstances out of the proceeds
of certain insurance payments, condemnations, issuances of indebtedness and
asset dispositions.
The Credit Agreement permits the Company to elect interest rates from
time to time, as to all or a portion of the borrowings made thereunder, at
interest rates based upon the applicable reference rate and margin or spread
over such reference rate (which spread varies based upon the ratio of the
Company's indebtedness to EBITDA). The reference rate, at the Company's option,
may be based upon (i) a fluctuating rate of interest equal to the higher rates,
or (ii) for interest periods of 1, 2, 3, 6 or (if available) 12 months, the
interest rates prevailing on the date of determination for the selected interest
period in the London interbank market.
The Credit Agreement contains covenants restricting the ability of Iron
Mountain and its subsidiaries to, among other things: (i) declare dividends or
redeem or repurchase capital stock; (ii) make optional payments and
modifications of subordinated and other debt instruments; (iii) incur liens and
engage in sale and leaseback transactions; (iv) make loans and investments; (v)
incur indebtedness and contingent obligations; (vi) make capital expenditures;
(vii) engage in mergers, acquisitions and assets sales; (viii) enter into
transactions with affiliates; and (ix) make changes in their lines of business.
Iron Mountain is also required to comply with financial covenants with respect
to: (i) a maximum leverage ratio; (ii) a minimum interest coverage ratio; and
(iii) a minimum fixed charge coverage ratio. The Credit Agreement also contains
customary affirmative covenants and events of default.
The Senior Subordinated Notes
In October 1996, the Company issued $165.0 million principal amount of
the 1996 Notes, and in October 1997, the Company issued $250.0 million principal
amount of the 1997 Notes. The 1996 Notes mature on October 1, 2006, and bear
interest at a rate of 10 1/8% per annum, payable semi-annually in arrears on
April 1 and October 1. The 1997 Notes mature on September 30, 2009, and bear
interest at a rate of 8 3/4% per annum, payable semi-annually in arrears on
March 31 and September 30. Both the 1996 Notes and the 1997 Notes are general,
unsecured obligations of the Company, subordinated in right of payment to senior
indebtedness of the Company, and are guaranteed on an unsecured, senior
subordinated and joint and several basis by substantially all of the Company's
present and future subsidiaries.
Each of the Notes Indentures provides that the Company may redeem up to
35% of the initial principal amount of the 1996 Notes and the 1997 Notes,
respectively, for a period of 36 months after the date of issuance with the net
proceeds of one or more equity offerings, whether such offerings are registered
pursuant to the
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Securities Act or not (unless such equity securities are redeemable prior to the
maturity of the 1996 Notes or the 1997 Notes, as the case maybe). In such event,
the redemption price for the 1996 Notes would be 109.125%, and the redemption
price for the 1997 Notes would be 108.75%, of the aggregate principal amount
plus, in each case, accrued and unpaid interest. Each of the Notes Indentures
also provides that the Company must repurchase, at the option of the holders,
the 1996 Notes and the 1997 Notes, respectively, at 100% of their principal
amount, plus accrued and unpaid interest, upon the occurrence of a "Change of
Control," as defined therein. Except for required repurchases upon the
occurrence of a change of control or in the event of certain asset sales, each
as described in the respective Indenture, the Company is not required to make
sinking fund or redemption payments with respect to the 1996 Notes or the 1997
Notes. The 1996 Notes become redeemable at the option of the Company at stated
premiums commencing October 1, 2001. The 1997 Notes become redeemable at the
option of the Company at stated premiums commencing September 30, 2002. Prior to
September 30, 2002, the 1997 Notes are also redeemable at the option of the
Company, in whole or in part, at a specified make-whole price.
The Notes Indentures contain covenants restricting or limiting the
ability of the Company and its subsidiaries to, among other things: (i) incur
additional indebtedness, including indebtedness ranking senior to the 1996 Notes
and the 1997 Notes and junior to any senior indebtedness; (ii) pay dividends or
make other restricted payments; (iii) make asset dispositions; (iv) permit
liens; (v) enter into sale and leaseback transactions; (vi) enter into certain
mergers; (vii) make certain investments; and (viii) enter into transactions with
related persons.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities to one or more underwriters
for public offering and sale by them or may sell the Offered Securities to
investors directly or through agents. Any such underwriter or agent involved in
the offer and sale of the Offered Securities will be named in the applicable
Prospectus Supplement.
The distribution of Offered Securities may be effected from time to
time in one or more transactions at a fixed price or prices, which may be
changed, at market prices prevailing at the time of sale, at prices related to
such market prices or at negotiated prices. In connection with the sale of
Offered Securities, underwriters or agents may receive or be deemed to have
received compensation from the Company or from purchasers in the form of
underwriting discounts, concessions or commissions. Underwriters may sell
Offered Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters or from purchasers.
Any underwriting compensation paid by the Company to underwriters or
agents in connection with the offering of Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Offered Securities may be
deemed to be underwriters, and any discounts, concessions and commissions
received by them and any profit realized by them on resale of the Offered
Securities may be deemed to be underwriting discounts and commissions, under the
Securities Act. Underwriters, dealers and agents may be entitled, under
agreements entered into with the Company, to indemnification against and
contribution toward certain civil liabilities, including liabilities under the
Securities Act.
If so indicated in the applicable Prospectus Supplement, the Company
will authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Offered Securities from the
Company at the public offering price set forth in such Prospectus Supplement
pursuant to contracts providing for payment and delivery on a future date or
dates. Institutions with whom such contracts, when authorized, may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions, and other
institutions, but will in all cases be subject to the approval of the Company.
Any such contracts will be subject to the condition that the purchase by an
institution of the Offered Securities covered by its contracts shall not at the
time of delivery be prohibited under the law of any jurisdiction in the United
States to which such institution is subject and, if a portion of the Offered
Securities is being sold to underwriters, may be subject to the condition that
the Company shall have sold to such underwriters the Offered
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Securities not sold for delayed delivery. The underwriters and such other
persons will not have any responsibility in respect of the validity or
performance of such contracts.
Unless otherwise specified in the related Prospectus Supplement, each
series of Offered Securities will be a new issue with no established trading
market, other than shares of Common Stock, which are listed on the Nasdaq
National Market. Any shares of Common Stock sold pursuant to a Prospectus
Supplement will be listed on the Nasdaq National Market. The Company may elect
to list any other series of Offered Securities on an exchange, but is not
obligated to do so. Any underwriters to whom Offered Securities are sold by the
Company for public offering and sale may make a market in such Offered
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of or the trading markets for any Offered Securities.
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with and perform services for the Company and its
subsidiaries in the ordinary course of business.
The specific terms and manner of sale of the Offered Securities will be
set forth or summarized in the applicable Prospectus Supplement.
LEGAL MATTERS
Certain legal matters with respect to the Offered Securities offered by
the Company will be passed upon for the Company by Sullivan & Worcester LLP,
Boston, Massachusetts. Jas. Murray Howe, Secretary of Iron Mountain, is of
counsel to Sullivan & Worcester LLP and beneficially owns 3,855 shares of common
stock.
EXPERTS
The consolidated financial statements and schedule of Iron Mountain
Incorporated and its subsidiaries for the three years ended December 31, 1996,
included in Iron Mountain's Annual Report on Form 10-K, have been audited by
Arthur Andersen LLP, independent public accountants, as stated in their reports
with respect thereto, and are incorporated by reference herein in reliance upon
the authority of said firm as experts in giving said reports.
The financial statements of Nashville Vault Company, Ltd. for the year
ended December 31, 1995, included in Iron Mountain's Registration Statement on
Form S-4 (file No. 333-24635, effective date May 14, 1997), have been audited by
Geo. S. Olive & Co. LLC, independent public accountants, as stated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said report.
The financial statements of International Record Storage and Retrieval
Services, Inc. for the year ended December 31, 1995, included in Iron Mountain's
Registration Statement on Form S-4 (file No. 333-24635, effective date May 14,
1997), have been audited by Rothstein, Kass & Company, P.C., independent public
accountants, as stated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said report.
The financial statements of Mohawk Business Record Storage, Inc. for
the year ended December 31, 1995, included in Iron Mountain's Registration
Statement on Form S-4 (file No. 333-24635, effective date May 14, 1997), have
been audited by Arthur Andersen LLP, independent public accountants, as stated
in their report with respect thereto, and are incorporated by reference herein
in reliance upon the authority of said firm as experts in giving said report.
The financial statements of Security Archives of Minnesota for the year
ended December 31, 1996, included in Iron Mountain's Current Report on Form 8-K
dated October 30, 1997, have been audited by Arthur Andersen
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LLP, independent public accountants, as stated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said report.
The financial statements of Wellington Financial Services, Inc. for the
year ended December 31, 1996, included in Iron Mountain's Current Report on Form
8-K dated October 30, 1997, have been audited by Arthur Andersen LLP,
independent public accountants, as stated in their report with respect thereto,
and are incorporated by reference herein in reliance upon the authority of said
firm as experts in giving said report.
The financial statements of Allegiance Business Archives, Ltd. for the
year ended December 31, 1996, included in Iron Mountain's Current Report on Form
8-K dated November 25, 1997, have been audited by Stout, Causey & Horning, P.A.,
independent public accountants, as stated in their report with respect thereto,
and are incorporated by reference herein in reliance upon the authority of said
firm as experts in giving said report.
The financial statements and schedule of Safesite Records Management
Corporation for the three years ended December 31, 1996, included in Iron
Mountain's Registration Statement on Form S-4 (file no. 333-24635, effective
date May 14, 1997), have been audited by Arthur Andersen LLP, independent public
accountants, as stated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said reports.
The financial statements of Concorde Group, Inc. and Neil Trucker Trust
for the year ended December 31, 1996, included in Iron Mountain's Current Report
on Form 8-K dated October 30, 1997, have been audited by Fisher, Schacht &
Oliver LLP, independent public accountants, as stated in their report with
respect thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said report.
The financial statements of Data Securities International, Inc. for the
year ended December 31, 1996, included in Iron Mountain's Current Report on Form
8-K dated October 30, 1997, have been audited by Arthur Andersen LLP,
independent public accountants, as stated in their report with respect thereto,
and are incorporated by reference herein in reliance upon the authority of said
firm as experts in giving said report.
The financial statements of Records Retention/FileSafe, LP for the two
years ended December 31, 1996, included in Iron Mountain's Current Report on
Form 8-K dated November 25, 1997, have been audited by Abbott Stringham & Lynch,
independent public accountants, as stated in their report with respect thereto,
and are incorporated by reference herein in reliance upon the authority of said
firm as experts in giving said report.
The consolidated financial statements of HIMSCORP, Inc. and
Subsidiaries for the period February 1, 1995 to December 31, 1995 and for the
year ended December 31, 1996, appearing in Iron Mountain's Current Reports on
Form 8-K dated October 30, 1997 and November 25, 1997, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports thereon
included therein, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Arcus Technology Services,
Inc. (Successor Company) for the year ended December 31, 1996 and the five
months ended December 31, 1995 and the consolidated financial statements of
Arcus, Inc. (Predecessor Company) for the seven months ended July 31, 1995 and
the year ended December 31, 1994, appearing in Iron Mountain's Current Reports
on Form 8-K dated October 30, 1997 and November 25, 1997, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports thereon
included therein, and are incorporated by reference herein in reliance upon the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Arcus Group, Inc. for the two
years in the period ended December 31, 1996, appearing in Iron Mountain's
Current Reports on Form 8-K dated October 30, 1997 and November 25, 1997, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereof included
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therein, and are incorporated by reference herein in reliance upon the authority
of such firm as experts in accounting and auditing.
The consolidated financial statements of Arcus Group, Inc. for the year
ended December 31, 1994, included in Iron Mountain's Current Report on Form 8-K
dated November 25, 1997, have been audited by Arthur Andersen LLP, independent
public accountants, as stated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said report.
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